Following the Ministry of Economy and Finance press release of 24 January 2019, last night the Italian Government approved the law decree aimed at ensuring financial stability and market integrity in the event of hard Brexit (the "Decree").
The final version of the Decree is expected to be issued soon and will enter into force upon the publication on the Official Journal.
Please find below some highlights based on the draft version of the Decree examined by the Government yesterday. Amendments in the final version of the Decree cannot be excluded at this stage but significant deviations from the below are not expected as the Decree was presented and approved on the same day.
- Who may take advantage of the TPR: A TPR regime of 18 months will be available for UK banks, investment firms and e-money institutions (EMIs) operating with a branch in Italy, subject to notification to the relevant regulator;
- Who must stop doing business:
- UK payment institutions, EMIs operating cross-border in Italy even by means of agents/distributors, collective asset managers and UCIs as well as banks and investment firms offering investment services on a cross-border basis toward retail clients and professional clients upon request are required to interrupt any activity in Italy upon hard Brexit and no transitional period is provided, save for a 6-month period to run-off the business;
- UK insurance undertakings and insurance intermediaries are required to interrupt any activity in Italy upon hard Brexit save for, respectively, a 18-month run-off period (unless IVASS grants an extension upon request) and a 6-month run-off period.
What to do next?
- At least 3 business days before hard Brexit, interested parties who intend to continue operating in Italy must notify competent authorities to take advantage of the TPR;
- Within a 6 month period from hard Brexit a request for authorisation to operate as non-EU or Italian entity after the TPR can be filed with the competent authorities;
- If no request for authorisation is filed within the immediately above mentioned 6-month period, a 6-month run-off period commences. As a consequence, the TPR is reduced to 12 months (instead of 18 months);
- Within 15 days from the entry into force of the Decree, entities required to stop doing business in Italy must send a communication to customers, other interested parties and competent authorities about the actions taken to ensure the orderly closure of the relationships in place;
- Within 15 days from hard Brexit, UK insurance intermediaries must inform policyholders, insured persons and beneficiaries about the actions taken to ensure the orderly closure of the relationships in place;
- Within 90 days from the entry into force of the Decree, UK insurance companies must file with IVASS an action plan for the management of the insurance policies in place.
Specific provisions are provided with respect to deposit taking, derivatives, loan agreements, trading venues, out-of-court dispute resolution systems and investors as well as deposit guarantee schemes.