Consob Warning Notice n. 4/20 of March 26, 2020

Brexit with the withdrawal agreement - Measures to ensure the operation of UK trading venues in Italy

With the approval – on January 30, 2020 – by the Council of the European Union (EU) of the agreement defining the procedures for the withdrawal of the United Kingdom of Great Britain and Northern Ireland ("United Kingdom") from the European Union, pursuant to Article 50 of the Treaty on European Union, the United Kingdom ceased to be a Member State of the Union as of February 1, 2020.

The transitional rules set out in Decree-Law No. 22 of 25 March 2019[1] with the aim of ensuring business continuity in Italy for UK entities in the event of a no-deal Brexit are thus no longer applicable. Consob Communication no. 4 of March 14, 2019 should also be considered outdated.

Under the terms of the aforementioned withdrawal agreement, a "transition period" has begun, which will last until December 31, 2020 (unless further extended), during which the European legislation, including in the area of secondary markets, will continue to apply as if the United Kingdom were still a Member State.

At the end of the transition period, the United Kingdom will be fully considered a Third Country, with the consequence that the cross-border activity of UK trading venues in Italy will be subject, as appropriate, to the release of a measure of authorisation or recognition.

By the end of the above-mentioned transition period, UK trading venues wishing to operate in Italy, will need to obtain, as appropriate, a measure of authorisation (as MTF or OTF) or recognition (for trading venues “equivalent” to regulated markets) in order to extend their activity in Italy[2], pursuant to, respectively, Articles 28 and 70(1)[3] CL.

Those measures are adopted by Consob in the presence of an “equivalence” assessment of the UK regulatory and supervisory framework, as well as of a cooperation agreement between Consob and the Financial Conduct Authority (FCA) of the United Kingdom.

In this context, UK market operators wishing to operate in Italy after the end of the transition period are invited to timely apply to Consob for authorisation or recognition, in accordance with the above-mentioned applicable regime.

In this regard, it is worth mentioning that, in March 2019, Consob introduced a number of measures to ensure that, post-Brexit, UK trading venues could operate in Italy (as well as Italian trading venues in the UK).

These measures were subject to a 'no-deal' scenario which, as stated above, did not materialise.

As the condition for the aforementioned measures to come into effect has not been fulfilled, Consob will therefore need to issue new measures, with effect from January 1, 2021, unless the transition period is further extended.

Moreover, in March and April 2019, Consob received further requests from some UK trading venue operators in order to continue operating in Italy after Brexit, and these too were based on a no-deal scenario.

Pursuant to the withdrawal agreement, the current regime of mutual recognition of authorisations and the supervisory system is extended by right until December 31, 2020.

In light of the above, all UK trading venues which have already applied for authorisation or recognition in order to continue operating in Italy on a cross-border basis are hereby invited to:

- confirm their interest to obtain authorisation or recognition, pursuant to, respectively, Articles 28 or 70(1) CL;

- report any changes and/or amendment to the information already provided under their original filing, by sending the relevant documentation.

The information requested above should be sent to the Market Division, Market Infrastructure Supervision Office, at the following email address

Paolo Savona

[1] The decree was converted, with amendments, by Law no. 41 of 20 May 2019.

[2] For the purposes of specific MiFID II/MIFIR provisions and within the framework of the rules governing the activities of third-country firms in Europe, equivalence may also be declared at European level, by the European Commission (Articles 23(1), 28(4) and 47 MiFIR), as set out in the political declaration that accompanied the withdrawal agreement with reference to the financial services area (Section IV).

[3] See also Article 51 of Consob Regulation no. 20249 of December 28, 2017 on markets.