CySEC issues circular in light of the FCA introduction of a Temporary Permissions Regime

The Cyprus Securities and Exchange Commission has issued a circular on the 22nd of January 2019[1] to all regulated entities outlining the UK Financial Conduct Authority (FCA) announcement to introduce a Temporary Permissions Regime (TPR) in light of the current Brexit turmoil.

As CySEC explains, the TPR aims to provide a backdrop in the event of a no-deal Brexit, in which case no transitional implementation period for adjustment will be entered. In such event, the UK will automatically become a ‘third country’ immediately and all European Economic Area (EEA) firms and investment funds will no longer benefit from passporting arrangements between the UK and the EU, thus risking having their operations severely disrupted.

The FCA has explained at an earlier Consultation Paper[2] that, the Permission will have the effect of temporarily authorizing firms in undertaking the regulated activities covered by their UK passport and be deemed to have permission under Part 4A of the Financial Services and Markets Act 2000. A separate TPR Funds Regulation will extend similar provisions to funds.

A very general outline of the firms and investment funds which can be admitted into the TPR is provided below:

Firms which can use the regime

• Firms which have passports under Schedule 3 to FSMA in place before exit day, including firms with top-up permission.
• Treaty firms under Schedule 4 to FSMA which qualify for authorization before exit day, including firms with top-up permission.
• Electronic money, payment institutions and registered account information service providers who are exercising their passporting rights under the Electronic Money Directive (EMD) or the Payment Services Directive (PSD2) before exit day.

Funds which can use the regime

• UCITS schemes
• Alternative Investment Funds (including EuVECAs, EuSEFs, ELTIFs and AIFs authorized as MMFs)

Proposals for other types of firms, such as credit rating agencies, trade repositories and data reporting service providers are also being considered.

The notification window for entering the TPR regime will be open until the 28th of March 2019, and it is mandatory for regulated entities and funds that wish to use the TPR to submit a notification within this timeframe.

[1]Circular C293, found here

[2] CP 18/29, found here