KNF warns against the consequences of hard Brexit

In its latest communication, the Polish Financial Supervision Authority informs about the consequences for Polish residents in the event of a so-called Brexit hard. The biggest problem is the fact that in such a situation the institutions having only British licenses will not be allowed to continue operations in Poland.

Brexit - but what?

Two scenarios are most likely to occur in which the United Kingdom leaves the European community:

1. The exit of the United Kingdom from the European Union based on an existing contract, and negotiations of a trade agreement,
2. Hard Brexit - a situation in which the UK leaves the EU without having to settle the withdrawal by any agreement and agreement of both parties.

The second scenario seems much more brutal and may come true at the end of March this year. This is when the UK would be treated as a "third country" outside the EU.

The message reads:

The ultimate conditions for the functioning of the financial market and the services provided on it in relation to the relations with British entities, resulting from brexit, depend primarily on:

• the ratification of the agreement between the EU and the United Kingdom setting out the rules for the exit of the United Kingdom from EU structures;
• possible "emergency" solutions in the case of non-contractual brexit;
• negotiations of the terms of EU-United Kingdom cooperation in the provision of financial services.

In the absence of an agreement to leave the UK with the EU, the most important risks with regard to the financial market should be:

• loss on 30 March 2019 year by entities based in the United Kingdom the right to provide financial services in the EU based on existing licenses or permits granted by the UK Financial Supervisory Authorities (based on the so-called one European passport, under the EU freedom to provide services and the freedom of establishment);
• separation of legal systems and, consequently, the emergence of differences between them (including differences in regulations and standards regarding the financial market, protection of statutory protected secrets, data processing or outsourcing);
• lack of freedom of movement of persons of relevance to entities conducting economic activity.

KNF in its communication also reminds about the information obligation of British companies which was imposed by ESMA. Pursuant to the guidelines, clients may expect financial entities providing services for their benefit to provide detailed information on the possible effects of the exit of the United Kingdom from the European Union, as well as actions taken by the entity in the context of upcoming changes.

Hard Brexit and Forex brokers

On the Polish market, several brokers with the British FCA license are more exposed. These are Tickmill UK, XM, CMC Markets and Admiral Markets. In the case of the first two companies, there is practically no threat to Polish customers, because both have subsidiaries using a Cyprus license (CySEC), which will enable them to continue their operations in a smooth manner. CMC Markets and Admiral Markets are currently operating in Poland only with the use of the British license with notification from the Polish Financial Supervision Authority.

In its communication, the Polish regulator reminds that in the situation, financial entities using the British license will not be able to continue their operations in Poland until obtaining the necessary permits and / or licenses (depending on the type of business) from the Commission:

"They will be able to operate on Polish territory only after appropriate proceedings before the Financial Supervision Authority (depending on the entity and type of its activity, it may mean, among others, the need to obtain appropriate permission from the PFSA) and supervision over such entities will be exercised in the law range. "

Admiral Markets already some time ago he was sending a message about the brexit situation, which we wrote about here.

CMC Markets in the official communication for our readers assures that Brexitu's speech will not cause difficulties in servicing transactions and keeping bills. A new entity registered under the German BaFIN regulator was specially created for this purpose.

CMC Markets stand:

“CMC Markets clients from the European Union will be able to trade the markets in the same way as they do today. In 2016, we created a Brexit plan. Last year, in line with this plan, a new unit was established in Germany, which will be able to serve customers from the EU. As soon as politicians - decision makers from the European Union and Great Britain explain Brexit issues, we will inform our clients about the next steps. For now, there is still no definitive official position regarding the final relationship between the European Union and Great Britain. "

Beware of cheats

In addition to legal and formal information on the effects of Brexit, the KNF also sensitizes the possibility of a wave of fraud that can exploit the effect of confusion. In the face of changes taking place, the risk of criminal activities in the form of, among others, phishing of personal data, presenting false investment and commercial offers. In the case of contact from unknown entities, it is worth checking them carefully

Fragment of the KNF communication:

Any reasonable request for contact, for example personal, telephone or e-mail initiated by entities referring to brexit, regarding financial services, should be verified directly with the financial market entity with whom the recipient of financial services signed the contract or intends to sign it, using for this purpose, contact details included in the contract or website of the entity.

Official communication from the Polish Financial Supervision Authority