ESMA sets out principles for regulating migrating UK firms

ESMA has published a set of principles that the regulators in the “EU27” should follow when assessing applications from UK institutions seeking an EU authorisation post-Brexit.  Key principles include:

  • that no authorisation will be automatically “grandfathered”;
  • that no institutions should be able to operate as a “letter-box” – so all outsourcing and delegation must be done only under strict conditions;
  • the local regulator should make sure it understands why the business wants to relocate; and
  • the local regulator should ensure substance requirements are met.

ESMA plans to follow up this initial opinion with detailed guidance for each sector in the financial markets.