Luxembourg's financial regulator, the CSSF, recently issued advice to managers of Luxembourg funds, providing some reassurance regarding (i) the delegation of portfolio management and/or risk management to the UK and (ii) the temporary permissions regime (TPR), should a ‘no deal’ Brexit become a reality.
With respect to delegation of portfolio management and/or risk management, the CSSF is striving to ensure the necessary collaboration between the FCA in the UK and the CSSF in Luxembourg is in place on 29 March 2019 in the event of a “no deal” Brexit. Delegation to UK delegates should therefore continue to be possible, as long as the UK delegates meet all the applicable requirements.
EEA firms and funds that wish to make use of the UK’s TPR should formally notify the FCA. The TPR will allow those who currently passport into the UK to continue operating in the UK should the UK exit the EU with no transitional arrangements in place. Notification to the FCA by affected bodies should be made of their intent to use the regime by 28 March at the latest, in order to receive temporary permission and continue providing services into the UK for a limited period after 29 March 2019 while seeking FCA authorisation. The CSSF should be kept informed of such applications by Luxembourg funds. Additional information is available on the FCA website.