The Cyprus Securities and Exchange Commission (CySEC) has announced that it has established a Temporary Permissions Regime, which does not require physical presence in Cyprus for UK firms when providing investment services (including when performing investment activities) solely to professional clients and eligible counterparties, based in Cyprus.

CySEC stated that this is in order to allow for a smooth transition to new contracts post-Brexit, concluded on a reverse solicitation basis, and for UK firms who wish to continue soliciting Cypriot professional clients and eligible counterparties to establish a physical presence in the Republic.

The regulator stated that there are currently 52 UK firms providing services to Cyprus Investment Firms (CIFs), such as those acting as their Liquidity Providers, and in total there are 86 CIFs that have trading arrangements with UK firms.

The Cyprus Temporary Permissions Regime is designed to assist the post-Brexit transition for these firms.

As of January 1, 2021, there will not be any further allowance for passporting of EU country financial services licenses to the UK, and vice versa, as part of Brexit. Brexit was actually formally effected earlier this year as of January 31, 2020, but a transition period of 11 months was agreed upon for licensed firms in each of the UK and EU to prepare for the “day after”. As a result, a number of FCA licensed FX and CFD brokers have established a licensed presence in Cyprus or in another EU jurisdiction, such as FXCM and Pepperstone.