The European Union’s financial regulator has issued a stern warning to City companies to adopt “questionable practices” to overcome the effects of Brexit.
The European Securities and Markets Authority issued a statement on 13 January to remind companies of the “requirements for the provision of investment services to retail or professional customers by companies not established or established in the European Union”.
The statement said the watchdog was aware that some financial services companies in London were using “questionable practices” to continue working in the European trading bloc following the UK’s transition into Brexit on December 31st.
As an example of one such questionable practice, Esma cited the use of companies for steep claim, a provision in European law that allows financial institutions to provide cross-border services to a client without being registered or authorized in a member state that client, in so far as services are provided by the client’s enterprise.
Some companies seem to be trying to avoid requirements “by including standard clauses in their Terms of Business or by using“ I Agree ”pop-up boxes where clients say any trade is executed on the client’s specific initiative ”, Esma said, adding that this was not possible.
His statement said “the unauthorized provision of investment services in the EU” leaves companies open “to the risk of administrative or criminal proceedings, for the imposition of relevant sanctions”.
Financial News on January 11 reported that traders and bankers in the city, trapped flat by Brexit, had offered some “potentially dubious” jobs to get bargains online, according to Neil Robson, a London-based partner in the markets finance and practice financing at U.S. law firm Katten Muchin Rosenman.
Locked companies are thinking: “What is the lowest level we can get away with, what is the lowest population we can move and meet EU requirements?” Robson said FN in early January. “The message I’ve been trying to get through is: the world has changed, you can’t keep going.”
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