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Brexit: More than 1 800 British financial institutions likely to settle down in France

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:

 

  1. The creation of the 2WeekTicket: this procedure allows the asset management company and the FinTech authorised in the UK to obtain a notice from the French Financial Markets Authority within two weeks. The notice informs the Company on its ability to fulfill the necessary conditions in order to be licenced in France (similar to the British ones). The documents can be provided exclusively in English (the authorisation provided by the FCA and a two page form). Once the 2WeekTicket is obtained, the British institution can start the domiciliation procedures. The French Financial Markets Authority commits to deliver the definitive agreement to the concerned companies in the two months that follow the notification of the 2WeekTicket, provided that all the documents are submitted;  

 

  1. The English assistance provided by the representatives of the French Financial Markets Authority. These agents will facilitate the setting up of the British companies and will accompany them during the entire procedure;

 

  1. The creation of a unique desk that will facilitate the relationship between the French regulators and the British companies. 

 

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:

 

  1. A fast track process based on the ability to use the authorization documents approved by the FCA. There is need to translate these documents. Thanks to this procedure, the British company can convert its current authorization, subject to minor modifications; 

 

  1. An English-speaking monitoring officer who will supervise the procedure.

 

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