Consob Warning Notice n. 5/20 of March 26, 2020

Brexit with the withdrawal agreement - Measures to ensure the operation of Italian trading venues in the United Kingdom

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with the aim of ensuring business continuity in the UK for Italian entities in the event of a no-deal Brexit are thus no longer applicable. Consob Communication no. 4 of March 14, 2019 should also be considered outdated.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 Italian trading venues in the UK will be subject, as appropriate, to the release of a measure of clearance or authorisation.

By the end of the above-mentioned transition period, Italian trading venues wishing to operate in the UK, will need to obtain, as appropriate, a measure of clearance (for regulated markets and MTFs managed by a market operator) or authorisation (for MTFs managed by Italian investment firms - Società di Intermediazione Mobiliare or Sim) in order to extend their activity in the United Kingdom, pursuant to, respectively, Articles 70(2) and 26(6) of Legislative Decree no. 58/1998 (the Italian Consolidated Law on Finance – CL).

Those measures are issued by Consob for all trading venues (with the exception of the wholesale regulated market in government securities), 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, Italian market operators wishing to operate in the United Kingdom after the end of the transition period are invited to timely apply to Consob for clearance or authorisation, 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, Italian trading venues could operate in the United Kingdom (as well as UK trading venues in Italy).

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

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.

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.

In light of the above, all Italian trading venues which have already applied for clearance or authorisation in order to extend their activity in the United Kingdom are hereby invited to:

- confirm their interest to obtain clearance or authorisation, pursuant to respectively, Articles 70(2) or 26(6) 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.