Italiano: Brexit: al via il decreto legge recante misure urgenti per garantire la stabilità finanziaria e l'integrità dei mercati

On 20 March 2019, the Italian Council of Ministers approved a legislative decree introducing urgent measures to guarantee financial stability and market integrity in the event of withdrawal of the United Kingdom of Great Britain and Northern Ireland ("United Kingdom" or "UK") from the European Union without a deal (i.e. no-deal Brexit or hard Brexit).

This bridging solution is aimed at protecting the interests of depositors, investors and policyholders should the United Kingdom fail to ratify withdrawal agreements with the European Union.

Law Decree 22 of 25 March 2019 was published on the Italian Official Gazette no. 71 of 25 March 2019, and entered into force on 26 March 2019 (the "Decree"). The Decree will be effective as from the date of withdrawal of the United Kingdom scheduled for next 12 April or 22 May, depending on the outcome of the vote that the English Parliament will once again be called upon to cast ("Withdrawal Date").

Starting from the Withdrawal Date, an 18-month transition period (the "Transition Period") - not 21 months as originally expected in line with the draft withdrawal agreement between the United Kingdom and the European Union - will begin so to allow UK and Italian operators to comply with the new market scenario.

In accordance with the European Commission's communication of 13 November 2018 - COM(2018) 880 final - and to the regulatory measures adopted by the same Commission last December, the Decree's objective is to ensure the operating continuity of financial operators in the event of a hard Brexit, laying down specific provisions based on the type of regulated business (banking, financial and insurance) aimed at regulating conditions so that British banking, financial and insurance intermediaries operating in Italy and Italian ones operating in the United Kingdom can continue to operate during the Transition Period. 

UK Intermediaries allowed to continue their operations in Italy during the Transition Period

During the Transition Period, UK banks admitted to mutual banking recognition pursuant to Art. 1, para. 2, lett. f) of Law Decree 385, 1 September 1993 (Italian Consolidated Law on Banking - "TUB") that provide services in Italy (having established a branch or acting through a cross-border basis  - libera prestazione di servizi, "LPS"), may continue to do so in Italy subject to filing a prior notice with the Bank of Italy within three business days prior to the Withdrawal Date. 

In partial derogation to the foregoing, during the Transition Period, UK banks that provide savings collection services in Italy in LPS may continue their activity limited to the relationships existing before the Withdrawal Date; they may in no way, however, enter into new relationships or renew existing ones, and will need to file a prior notice with the Bank of Italy.

UK investment firms and UK banks providing investment services in Italy in LPS may, during the Transition Period, continue their activity solely vis-à-vis professional (private or public) clients and qualified counterparties, subject to filing a prior notice with the competent national authorities (i.e. Consob and Bank of Italy). However, in order to ensure continuity, during the Transition Period the same operators may continue - regardless of customer classification - managing transactions pertaining to OTC derivatives not subject to clearing, in place as of the Withdrawal Date. Also in this last case, operational activity is subject to filing a prior notice with the competent Italian supervisory authorities.

UK investment firms and UK banks providing investment services in Italy through an establishment (with branch) may continue their operations during the Transition Period vis-à-vis each customer category (retail, professional, qualified counterparty), subject to filing a prior notice with the competent national authorities (i.e. Consob and Bank of Italy).

UK investment firms and UK banks operating in Italy (both through establishment and in LPS) authorized, as of the date of the Decree's entry into force, to participate in government bond auctions, may continue to carry out banking and investment services for which they were authorized without the need to notify the Italian supervisory authorities. However, in the event the UK banks collect savings in Italy, they will need to notify the Bank of Italy.

E-money institutions of the United Kingdom which have already established a branch in Italy will be allowed to continue their activity during the Transition Period, subject to filing a prior notice with the Bank of Italy.

If UK operators - UK banks, UK investment firms operating in Italy through a branch or in LPS, and UK e-money institutions operating in Italy through a branch - intend to continue their respective activities in Italy after the Transition Period, they will need to apply within six months from the date of commencement of the Transition Period ("Term for the Application") for authorization to carry out their activities having established a branch or in LPS, according to the provisions currently applicable to third-country banks, third-country investment firms and third-country e-money institutions. As an alternative, they may also apply with the Italian supervisory authorities for the incorporation of an Italian intermediary no later than the Term for the Application.

If the UK banks, UK investment firms and the previously-mentioned UK e-money institutions fail to notify the competent Italian supervisory authorities - within three business days prior to the start date of the Transition Period – of their intention to continue operations during the Transition Period, they will proceed with the orderly termination of operations in Italy within a grace period that will end in the following six months commencing from the Withdrawal Date. Furthermore, if the same subjects do not start the authorization procedure as third-country operators or as Italian supervised intermediaries by the Term for the Application, they will have a grace period to cease activities in Italy within the six months following the expiry of the Term for the Application.

Both in the event of failure to notify or start the authorization procedure as a third-country operator or national within the terms stated above, the same UK operators will be required to communicate to their clients, to the other parties with whom they hold contractual relationships for the provision of services and to the competent authorities, what measures they have adopted for the orderly disposal of their activities.

However, UK banks or UK investment firms, even in the absence of the required notice to the Italian supervisory authorities to provide services during the Transition Period, will be able to manage transactions relating to OTC derivatives not subject to clearing, in place as of the Withdrawal Date, during the six months following the Withdrawal Date. Furthermore, if the same operators do not submit an application to regulate their activity within the Term for the Application, they may continue managing transactions relating to OTC derivatives in the grace period of six months following the expiry of the aforementioned Term for the Application.