Q&A – Brexit impact on financial services in Belgium
As of 1 January 2021, UK regulated entities are no longer allowed to make use of the European Union (EU) passport mechanism which allowed them to offer financial services across the EU on the basis of free provision of services or by establishing a local branch. In the Q&A below, we envisage the most significant impact of Brexit on the provision of financial services in Belgium or to Belgian residents by UK regulated entities.
While everything hinted a hard Brexit, i.e. a Brexit without an agreement settled between the parties, the EU and the UK unexpectedly found common ground on the 24 December 2020. From now on, the “Trade and Cooperation Agreement” (the TCA) is the Treaty that will govern the relationship between the EU and the UK. In addition to provisions relating to the provision of services in general (including financial services), the TCA also comprises a specific section on financial services. However, the UK and EU have not agreed upon a general equivalence mechanism (or mutual recognition regime). To continue business in the EU, UK financial services providers will thus have to comply with local legal obligations on market access (including authorisation requirements) and supervision that equally apply for all other third country providers.
In addition to the TCA, the EU and UK have also made a (non-binding) Joint declaration on financial services regulatory cooperation in which parties agree that by March 2021 a Memorandum of Understanding should further establish the framework for the cooperation for financial services. In this regard “the Parties will discuss, inter alia, how to move forward on both sides with equivalence determinations between the Union and United Kingdom, without prejudice to the unilateral and autonomous decision-making process of each side”. But as to date, no such rules are in place, the provision of financial services by UK regulated entities in Belgium are subject to the general conditions for third country providers.
In the Q&A below, we envisage the most significant impact of Brexit on the provision of financial services in Belgium or to Belgian residents by UK regulated entities. We focus on the consequences for investment services, banking services and financings, regulated markets, MTFs and OTF and securitisation. For the impact of Brexit on insurance services, see our specific Q&A here
The impact of Brexit on choice of English law and of English courts in existing and future financial contracts between professionals we address here.
Banking services and financings
Regulated markets, MTFs and OTFs
Vanessa MarquettePartner Attorney at Law
Vanessa Marquette, attorney at law, is a partner in the Banking and Finance Practice Group of our Brussels office and a member of the firmwide Restructuring & Insolvency team. She is recognized for her expertise in Banking and Finance with a focus on international finance law, regulated financial services, sustainable finance and banking litigation.T: +32 2 773 23 25 E: firstname.lastname@example.org
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