04/02/2020

Brexit – news update

Following the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union (EU), which was ratified by the European Parliament on 29 January 2020, as of 1 February 2020 the United Kingdom is no longer a Member State of the EU.

What  will change and what will remain the same regarding financial services?

According to press releases from the European Commission (EC), published on 24 January 2020, and the European Securities and Markets Supervisory Authority (ESMA), published on 31 January 2020, the Withdrawal Agreement foresees a transitional period from 1 February to 31 December 2020.

During the transitional period, the EU law (MiFID II / MiFIR, EMIR, CSDR, AIFMD) will continue to apply to the rights and obligations of UK-based entities, and they have an obligation to adjust their business to the fact that from 1 January 2021 they will have the status of a third country company with respect to the EU Member States.

In practice, this means that the UK companies notified by 31 January 2020 for cross-border provision of services in the Republic of Croatia can freely provide services on the basis of an EU passport during the transitional period.

However, since the UK lost its EU Member State status, as of 1 February 2020, Hanfa will no longer receive new notifications from the FCA (Financial Conduct Authority) and the PRA (Prudential Regulation Authority) for cross-border provision of services. The UK companies that wish to provide services in the Republic of Croatia for the first time will have to meet the requirements laid down for each type of financial service for third country companies.

Next steps

Given the fact that the ratification of the Withdrawal Agreement in the European Parliament is the basis for the start of EU and UK negotiations on the terms of the withdrawal, Hanfa will monitor and regularly update information on arrangements reached in the area of provision of financial services, in order to keep the market and users informed of the potential impact of the agreements reached on their rights and interests.

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