Brexit: Regulatory Convergence In Financial Services

Upon withdrawal from the EU, the United Kingdom ("UK") will become a third country under EU internal market regulation. UK financial sector firms will lose passporting rights granted by EU internal market directives allowing for the free provision of financial services throughout the Member States of the EU on a cross-border basis or by creating an establishment.

UK market participants are weighing up their options to maintain access to EU financial markets and may seek to relocate entities, activities or functions to the remaining 27 Member States. In this context, they may want to minimise the transfer of effective performance of functions of activities from the UK by relying on the outsourcing or delegation of certain activities or functions to UK-based entities.