On 29 March 2017 the United Kingdom notified the European Union (EU) of its intention to withdraw from the Union (Brexit). After complex negotiations, in November 2018 the EU and the UK agreed on a draft Withdrawal Agreement. The Agreement establishes a transition period (lasting at least until the end of December 2020) during which the European Treaties and EU legislation will continue to apply to the United Kingdom. During the transition period the two parties are to negotiate an agreement on future EU-UK relations, whose main elements are outlined in a Political Declaration agreed at the same time as the draft Withdrawal Agreement. However, the Agreement has still not been ratified by the British Parliament. On 10 April 2019 the European Council decided to extend the withdrawal deadline to 31 October 2019. If the United Kingdom ratifies the Withdrawal Agreement before that date, the withdrawal will take place on the first day of the month following the ratification. The original deadline (subsequently extended to 12 April) was 29 March 2019, two years after the notification of withdrawal, in accordance with Article 50 of the Treaty on European Union.
If at the end of the extension period the Withdrawal Agreement has still not been ratified and consequently fails to come into force, bilateral EU-UK relations could be broken off abruptly (the cliff-edge scenario). Among other things, the current system of mutual recognition of authorizations and of supervisory systems for financial markets and intermediaries (the single passport) would cease to apply. European and Italian authorities and institutions are working to ensure adequate preparation for a no-deal Brexit; banks and other financial intermediaries are called upon to actively prepare for the consequences of such a scenario.
The Italian Government issued Decree Law 22 of 25 March 2019 that contains, in Chapter II, Section I, transitional measures to ensure the operational continuity of intermediaries and markets including in the event of a no-deal Brexit. The Decree Law was subsequently converted into law and amended by Parliament (Law 41 of 20 May 2019, published in the Gazzetta Ufficiale of 24 May 2019).
Documents by the Bank of Italy
Following the publication in the Gazzetta Ufficiale of Law 41 of 20 May 2019, which converted Decree Law 22 of 25 March 2019 (English translation available here), the Bank of Italy has published updated instructions for Italian intermediaries operating in the UK and for UK intermediaries operating in Italy, respectively.
- Instructions to Italian intermediaries operating in the UK (only in Italian; 10 June 2019; updating the Instructions dated 27 March 2019)
- Instructions to UK intermediaries operating in Italy (10 June 2019; updating the Instructions dated 27 March 2019).
The Bank of Italy has called on British financial institutions operating in Italy to inform their Italian clients about the actions they have taken in relation to Brexit and its consequences for existing contractual relations.