Brexit and Financial Services: What's Next?
In principle, U.K. firms will no longer have any right to undertake business with E.U.-based clients, and E.U.-based firms will no longer have rights to deal with U.K. clients.
The E.U. withdrawal agreement envisaged a transitional period that will operate from March 29, 2019 (exit day) to Dec. 31, 2020. During this period, all of the relevant E.U. directives will remain applicable in the U.K. and all firms will continue to benefit from the existing passporting arrangements. A corollary of this is that all obligations derived from E.U. law (in particular in relation to MiFID and the AIFMD) will continue to apply in full. The transitional period, however, is part of the general withdrawal agreement and is wholly dependent upon the outcome of negotiations with the European Commission. There is still a risk that this withdrawal agreement is not ratified and that the U.K. leaves the E.U. without an agreement.