BaFin urges regulatory action ahead of Hard Brexit, stating that Germany is now in the process of working on more than 25 banking licenses with the Brexit deadline approaching.
31 August, AtoZ Markets – The head of Germany’s Federal Financial Supervisory Authority (BaFin) has stated that financial regulators could adopt some emergency measures in case of the Hard Brexit.
BaFin Urges Regulatory Action Ahead of Hard Brexit
According to some of the online reports, Felix Hufeld has spoken during the banking conference in Frankfurt, where he has stated that it might be the case that the UK leaves the European Union (EU) without an exit deal that clarifies a number of outstanding legal matters. In this case, BaFin could bring some temporary measures in place.
He has been quoted as saying:
“These would be just temporary fixes to avoid chaos.”
It is known that Mr. Hufeld did not get any more specific. However, he reportedly also stated that Germany is now in the process of working on more than 25 banking licenses with the Brexit deadline approaching.
This comes as the most precise number that BaFin has disclosed. The UK has official triggered Brexit by invoking the Article 50 earlier last year. Therefore, a number of international banks have been busy moving their UK operations out of the country to some other EU countries. In fact, Germany has welcomed a lot of such financial institutions.
As per the European Securities and Markets Authority (ESMA), in case a financial institution intends to provide financial services in the territory of the EU or to the EU-based clients, it has to have a licensed company in one of the 27 member states.
There is a tentative agreement that enables financial institutions a transition period until December 2020. However, it is not legally binding until the Brexit deal is finalized by the UK and the EU.
Until that time, financial institutions and regulators will have to be prepared for any outcome. As a matter of fact, some regulators, such as ESMA, the Cyprus Securities and Exchange Commission (CySEC) and the European Banking Authority have been publishing warnings for financial institutions to take appropriate actions ahead of the deadline. This also means receiving proper authorization to operate in the EU.
CySEC Calls for timely applications
AtoZ Markets earlier reported that one of the latest announcement on CySEC’s website was addressed to market participants is related to the possibility of Hard Brexit that might come in March 2019. The regulator has stated that any firm that is intending to ensure its application will be considered before a Hard Brexit, needs to have its paperwork completed and submitted to CySEC by the end of September.
As the response from the market, the regulator has seen an increase in CIF license application in Cyprus by the UK firms that are licensed by the FCA.
The regulator also notes that all the relevant information and application forms required for authorization and the relevant announcement concerning the Authorisation process can be found on CySEC website.
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