In December 2020, ahead of the hard Brexit, the Cyprus Securities and Exchange Commission (CySEC) introduced a Temporary Permissions Regime (TPR) for Investment Firms authorized and regulated by the FCA in the UK. The TPR aimed to facilitate the smooth post-Brexit transition for investment firms following the Brexit deadline of 31st December 2020.

In total, 88 FCA firms entered the Cyprus TPR registry for one year until the end of 2021. Soon after entering the TPR, many of the 88 FCA investment firms sought to continue their solicited activities in Cyprus by submitting relevant investment services license applications to CySEC. The review of these applications is still ongoing and CySEC has decided to proceed with amending Directive 87-04, allowing companies operating under TPR to continue to operate under this regime, until their application is reviewed.

The Cyprus TPR, as a national regime provided the opportunity to UK investment firms to permissibly solicit and enter into new contracts with per se professional clients or eligible counterparties in Cyprus on a cross-border basis until 31 December 2021, without a physical presence in Cyprus, under the condition that they only offer their services to eligible counterparties and/or professional clients based in Cyprus, which is now extended until their application is reviewed.

More details regarding the grandfathering of the operations of UK Groups operating under TPR, which have sought to establish a physical presence in Cyprus can be found in the policy statement PS-02-2021.

What are the next steps?

The entities that will be able to continue to operate based on TPR after 31 December 2021, will be published in a relevant section of the CySEC website. The remaining TPR entities will have to cease their activities in the Republic by the 1st of January 2022.

It is worth noting that firms that will receive their authorisation to become Cyprus Investment Firms (CIF), will have a period of additional six months to migrate clients to the Cyprus entity.

Finally, the policy statement applies to FCA investment firms that already submitted an application to CySEC for establishing a new CIF or are in the process of acquiring stakes in existing CIF or establishing a branch or seeking to submit an application by 31st December 2021.

The Investment Firms Licensing team at SALVUS supported our clients throughout this period on what was needed and what was to be expected. We supported in the preparation and submission of new applications to get a CySEC investment services license and in the acquisition of an existing CIF licensed entities. In addition, we proactively engaged the regulator as to details and the timing of the announcement of the grandfathering regime.

We remain at your disposal should you have any questions on the TPR and we are ready to support you find a solution appropriate to your needs. Contact us at info@salvusfunds.com.

#StayAhead

Should you be interested to read about relevant topics on the licensing procedure of a Cyprus Investment Firm (CIF), please visit the selected articles below:

• Cyprus Investment Firms (CIF) under CySEC
• CySEC CIF Application: All steps until activation
• Q&A for the Cyprus Investor Compensation Fund (ICF)

The information provided in this News item is for general information purposes only. You should always seek professional advice suitable to your needs.