Is there an existing Cooperation Agreement or Memorandum of Understanding in place between the UK's Financial Conduct Authority (FCA) and the Cyprus Securities and Exchange Commission (CySEC)?
No. However, Steven Maijoor, chair of the European Securities and Markets Authority (ESMA), has announced that ESMA will ensure that there are Memoranda of Understanding in place between all National Competent Authorities and the FCA prior to a 'Brexit day' on 29 March 2019.
How will the CySEC treat UK funds (UCITS funds and AIFs) that are currently passported in Cyprus under the UCITS/AIFM Directive after Brexit?
As third country funds, i.e. non-EEA funds. Both UCITS and AIFMs would have to comply with Cyprus' private placement regime to market units, and where applicable manage funds (pending the implementation of the third-country regime under the AIFMD) in Cyprus.
Will UK funds (UCITS funds and AIFs) currently passported in Cyprus under the UCITS/AIFM Directive have to (re)register or make any notification with the CySEC as a result of Brexit?
It is not yet clear. Has the CySEC introduced a streamlined process for setting up a management company or fund in Cyprus with a view to making it attractive for UK managers and/or UK funds to set up in/re-domicile?
Has the CySEC published any guidance around delegation, including delegation of portfolio management, from a local UCITS management company or AIFM back to a UK based entity? If not, what is the current position on delegation from a local UCITS management company or AIFM to a non-EEA country?
No. The current position is as follows:
- AIFM - Art. 20 AIFM Directive 2011/61/EU and Delegated Regulation (EU) No 231/2013 applies
- UCITS - Art. 13 UCITS Directive 2009/65/ EC and Directive 2010/43/EU applies
- in order for delegation to be permitted under AIFM Directive or UCITS Directive, a cooperation agreement must be in place between the EU member state regulator and the non-EEA member state regulator
If a UK fund manager is currently providing services (e.g. MiFID services) in Cyprus, will these services be deemed to be carried out from the UK or from Cyprus after Brexit?
There is no Cyprus-specific regulatory guidance as to when such investment services would be deemed to be carried out from the UK or from Cyprus. If the services are deemed to be carried out from Cyprus, the relevant manager must comply with the Cyprus regulatory requirements for the provision of investment services and activities by third country nationals.
Originally published in Eversheds Sutherland
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.