The Central Bank of Ireland is open and ready to accept under its wing UK-regulated financial entities seeking authorization under a new jurisdiction in the Brexit concept, the bank’s Deputy Governor Cyril Roux was cited as saying in a statement published by the bank on Thursday. Potential applicants will find the Central Bank to be engaged, efficient, open, and rigorous.
After the Brexit vote, where UK residents decided via a referendum to leave the EU, there has been a material increase in the number of authorization queries from UK authorized firms, according to the bank’s DG.
“Many of these engagements have been preliminary in nature. But several have moved in the pre-application or application phase and this is likely to continue in the coming months as UK firms prepare for the possibility of a loss of passporting rights into the EU,” Roux said.
The central bank’s representative emphasized that the regulatory body is not against the investment banking or trading markets has not “dissuade any such entities from seeking authorisation nor are we planning to do so”.
In response to the growing interest in Ireland on the part of financial institutions, the regulator is prepared to meet the challenge and expand its resources and staff-up, if required.
“Our workforce planning for next year reflects the additional resources needed to deal with applications that will come our way, and we have built in contingency should the need arise,” Roux said.
License applicants will undergo a rigorous process where they will need to satisfy all local requirements and secure deposits, premiums, or client asset from loss stemming from incompetence, mis-governance or outright failure, as well as to show a substantive presence in Ireland.
“In authorizing a firm, we will want to be satisfied that we are authorizing a business or line of business that will be run from Ireland and which we will be effectively supervising,” the central bank’s deputy governor noted.
Outsourcing and insourcing activities will be allowed, but with some restrictions. Entities regulated by the Central Bank of Ireland will be able to outsource activities, but not responsibility.
“A firm may not outsource to the extent that it is effectively hollowing out its regulated activity,” Roux stressed.
After the Brexit vote, many forex brokers are expected to fleet from the country. A UK license grants access to the rest of the markets in the European Economic Area (EEA), or at least for now. The country decided earlier in 2016 via a referendum to leave the EU and it is not certain whether it would retain single market passporting rights. The UK is the world’s largest forex hub, accounting for some 37% of the world’s forex trading volumes and a potential change would affect a number of market participants.
A single FCA-licenced forex broker, LMax Exchange, has said it is looking for alternative regulatory authorities. The broker has expressed intentions to begin regulatory filings in Ireland in the beginning of 2017 if the UK losses its EU single market passporting rights .