On 27 December 2020, the Dutch Minister of Foreign Affairs sent a letter to the Dutch Parliament (Tweede Kamer) on the Trade and Cooperation Agreement (TCA) reached on 24 December 2020 between the European Union (EU) and the United Kingdom (UK) on their future relationship. The Minister notes that financial institutions in the UK will lose their European Passport when the transitional period ends. In the letter, the Minister indicates that the key instrument for the provision of financial services will be the equivalence of the current regulatory frameworks of the EU and the UK. Both EU and the UK can determine the regulation and supervision of the other party equivalent. This would allow market access for financial institutions.
The European Commission has published a temporary equivalence decision for the framework of central clearing Parties in the UK. Any further equivalence decisions are not expected on the short term. Individual member states can still agree bilaterally with the UK whether or not their financial institutions have market access.
The EU and the UK have agreed to conclude a memorandum of understanding by March 2021. This will be the basis for further cooperation on equivalence and supervision.
Furthermore, the Dutch government does not consider it necessary to implement the temporary transition regime for UK investment firms that was proposed previously. According to the Dutch government, financial institutions have had sufficient time to amend contracts and/or relocate activities and sufficient preparations have been made. The Ministry of Finance will review the adequacy of the current Dutch third country regime for investment firms together with the Dutch Central Bank (De Nederlandsche Bank, DNB) and the Netherlands Authority for Financial Markets (Autoriteit Financiële Markten, AFM).
The Minister notes that the financial sector in general is well-prepared for the expiry of the transitional period and that no complications are anticipated at this moment. The Ministry of Finance, DNB and AFM will continue to monitor the developments on the financial markets and supervised institutions with increased intensity as any new and unexpected obstacles may occur.
The letter can be found here (Dutch only).