New CSSF publication on Brexit

On 31 January 2020, the Commission de Surveillance du Secteur Financier (the “CSSF”) published a new Press Release in the context of Brexit (Press Release 20/03) following the ratification of the UK withdrawal agreement (the “Withdrawal Agreement”) by the Council of the European Union on 30 January 2020.

What is the impact of the withdrawal agreement?

Since 1 February 2020, the UK is no longer a member of the EU and its institutions. However, according to the terms of the Withdrawal Agreement, a time-limited transition period has been agreed and will last until 31 December 2020 (the “Transition Period”).

During the Transition Period, (i) EU laws and regulations will continue to apply in the UK as if it were a Member State; and (ii) UK entities (including, investment firms, credit institutions and investment fund managers) can continue to provide services in Luxembourg on a cross-border basis and will hence not lose their current passporting rights.

Absence of a hard Brexit for Luxembourg?

The previous CSSF Press Releases on the topic (i.e. Press Releases 19/05, 19/18, 19/33, 19/34, 19/41, 19/43, 19/48 and 19/54 regarding the transitional regime under the laws of 8 April 2019 on Brexit (the “Brexit Laws”)) were issued on the assumption of the loss of passporting rights for impacted UK entities, namely on the assumption of a hard Brexit scenario. 

As such scenario is -for the time being- no longer relevant, (i) the CSSF’s individual decisions granting the 12-month transitional regime to UK entities in accordance with the Brexit Laws; and (ii) all notifications made in this context through the dedicated e-Desk portals have lapsed.
Moreover, the Brexit dedicated e-Desk portals are closed with immediate effect.

What’s next?

The EU and UK will now start negotiating the arrangements that would apply at the end of the Transition Period. Given the current lack of visibility regarding the outcome of the negotiations, it would seem cautious for UK entities which are likely to be impacted by Brexit to continue to take all necessary steps to prepare and anticipate the end of the transition period. Impacted entities should also ensure that their clients and investors are adequately informed of any contingency planning made to mitigate potential “cliff-edge” issues after the lapse of the transition period.

For any questions regarding the above and your Brexit planning more generally, please contact your usual Linklaters contact.