On 22 December 2020, the Cyprus Securities and Exchange Commission ("CySEC") announced the introduction of a Temporary Permissions Regime (the "Cyprus TPR") which applies to UK-authorized investment firms (but not UK-authorized credit institutions as regards MiFID II regulated services and activities) in order to facilitate smooth post-Brexit transition for Cyprus Investment Firms ("CIFs") having arrangements with UK firms in the event that the UK and EU will not reach a deal by the end of the Brexit transition period, i.e. 31 December 2020.
- The Cyprus TPR, as a Cyprus-specific national regime in accordance with MiFIR discretion to member states in the absence of an equivalence decision by the EU Commission, gives the opportunity to UK investment firms, which do not currently operate via a branch in Cyprus and which will notify their intention to CySEC on time, to permissibly solicit and enter into new contracts with per se professional clients and/or eligible counterparties in Cyprus on a cross-border basis until 31 December 2021, unless a relevant equivalence decision is taken by the EU Commission in the meantime pursuant to Article 46(2)(a) MiFIR. However, from 1 January 2022, UK firms which provided investments services on the basis of the Cyprus TPR and may wish to continue soliciting per se professional clients and/or eligible counterparties in Cyprus, will be required to establish a Cyprus branch to be authorized by CySEC in accordance with the applicable framework for third country (i.e. non-EU) investment firms. Finally, UK investment firms operating in Cyprus via a branch and offering services only to the above mentioned categories of clients may continue to operate after the end of the Brexit transition period on the same conditions until a relevant equivalence decision is taken (or denied) by the EU Commission MiFIR.
- UK investment firms wishing to make
use of the Cyprus TPR must submit a relevant notification form to
CySEC by 31 December 2020:
- In such notification form the interested UK investment firm simply has to set out its entity identification and authorization details and, as applicable, the list of investment services and activities, as well as ancillary services under MiFID II, which it intends to continue offering to Cyprus on a cross-border basis to such professional clients and eligible counterparties.
- The relevant notification should be emailed to CySEC at TPR@cysec.gov.cy.
- The default Cyprus law position is that after the end of the Brexit transition period, UK investment firms and credit institutions will be regarded as 'third country firms' under the MiFID II/ Cyprus Investment Services Law nomenclature. Thus, subject to the above transitional arrangements under the Cyprus TPR, the marketing and solicitation of the MiFID II investment services and/or investment activities, including any relevant ancillary services, at the initiative of UK firms to retail clients and elective professional clients under the MiFID client categorization in Cyprus after 31 December 2020 will trigger relevant branch licensing obligations in Cyprus for such UK firms.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.