Fifty five hundred British financial institutions may lose the ability to operate in the European Union as a result of Brexit. More than 1 800 of these companies are currently operating in France. In order to help them to redeploy their activities in France and in other EU countries, a new regulatory framework has been implemented in France. This new set of rules eases the licensing process by using the authorization granted by the FCA.
Brexit and the European Passport
According to the Financial Conduct Authority (FCA), due to Brexit, almost 5 500 British institutions could lose their access to the European Union market as a consequence of the loss of the European passport which provides a right to operate in the EU. They include 107 British asset management companies, 41 electronic currency institutions, 234 payment institutions, 1 238 investment firms and 222 insurance companies exercising directly in France or through their branches.
On the 28th of September 2016, the French Financial Markets Authority (”Autorité des Marchés Financiers“, the FMA) and the French banking and insurance regulator (“Autorité de Contrôle Prudentiel et de Résolution”) introduced a simplified procedure that allows financial institutions, that already obtained their agreement in the United Kingdom, to “duplicate” it in order to preserve their ability to operate in the EU.
This procedure allows them to obtain a new license inside the European Union and to keep the right to a European passport while keeping the British license.
For a British institution the French license provides a dual advantage. On the one hand it allows it to continue its activity in France, regardless of Brexit. On the other hand it allows it to conserve the passports already obtained and the right to operate in the European Union states through their French hub.
The AGILITY procedure dedicated to the asset management companies
In order to facilitate operations of the asset management companies and of the FinTech activities, the FMA launched the AGILITY programme. This programme, which combines simplicity and rapidity, includes three main elements:
A fast track process for insurance undertakings, payment institutions and investment firms
The insurance bodies, payment institutions, electronic money institutions and investment firms benefit from a similar procedure. They can apply to the French banking and insurance regulator to “duplicate” their authorization. This procedure does not apply to the credit institutions, unless they provide investment services.
The process includes:
The French market ready to welcome new players
As a leading financial market, Paris distinguishes itself through its dynamism and its creativity. Having created over a million jobs, it is ranked as the 3rd most innovative market.
With over 3°400 billion euros under management in 2015, the French asset management market is one of the major financial markets in Europe.
For its part, the insurance sector, the second in Europe, finds itself in a constant growth (+12% in 2015).
More than fifty British financial institutions subsidiaries are already present in France and benefit from the growth of the French Finance Hub.
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© Duhamel Blimbaum AARPI