Article 22 of Law Decree No. 183 of 31 December 2020 (the so-called “Milleproroghe Decree”) allows certain regulated firms based in the United Kingdom to continue operating in Italy for six months post-Brexit to a limited extent and provided that certain conditions are met.
The Milleproroghe Decree entered into force on 1 January 2021 and shall be converted into law within the following 60 days. The Milleproroghe Decree provides for a domestic transition period of six months, starting from 1 January 2021, during which the following UK entities:
i.UK banks;
ii.UK e-money institutions with a branch in Italy; and
iii.UK investment firms (together with the entities under 1. and 2. above, the Relevant UK Entities),
may continue to operate in Italy provided that they have filed an application for obtaining a local licence with the relevant Italian regulator by 31 December 2020 (the “Temporary Regime”).
The Relevant UK Entities mentioned above may benefit from the Temporary Regime until the later of the date on which the relevant Italian regulator will grant the local licence and 30 June 2021.
The Temporary Regime does not apply to UK banks and UK investment firms which, as of 31 December 2020, provide MiFID investment services and/or activities to Italian retail clients and/or professional clients upon request on a cross-border basis. Therefore, the performance of investment services and activities to Italian retail clients and/or professional clients upon request on a cross-border basis must be terminated.
According to the Temporary Regime, only ordinary management of pre-existing contracts and/or positions is allowed (i.e. Relevant UK Entities may not enter into a new contract/position or amend any provisions of pre-existing contracts) with the exception of OTC derivatives for which the management of life cycle events is permitted even if it may imply amendments to existing positions or entering into new contracts.
Further requirements and restrictions may apply to UK banks and UK investment firms when operating in Italy through a local branch.
In cases where the authorisation to operate in Italy as a third-country intermediary is rejected, the Relevant UK Entities must cease the performance of their services and/or activities to Italian clients as soon as possible and, in any case, no later than three months from the date on which the relevant Italian regulator has notified the intention to not grant the local licence.
