UK financial and investment companies provide regulated trading services to EU clients by relying on EU law rights to provide services across the EU by the means of “passporting”. The UK withdrew from the EU on 31 January 2020. Under the Withdrawal Agreement, UK firms have continued to provide investment and trading services across the EU during the transition period. The transition period will end on 31 December 2020.
Question: So how will it all affect EU clients after 1 January 2021?
Short Answer: The existing EU customers will NOT be affected by this at all. Only new customers will be affected; some of the British brokers, such as City Index and FXCM already announced that they would temporarily stop accepting EU customers, whereas others set up subsidiaries in the EU countries and will continue to serve EU customers.
What Exactly Will Happen To EU Clients On 1 January 2021
From 1 January 2021, along with all other UK financial firms, brokers will lose their current general rights to provide trading services to their EU clients. However, along with all other non-EU firms, UK brokers can continue to provide investment services to EU clients, if, at your own initiative, you request them to do so. This request for services from a client to a firm is known as “reverse solicitation”.
Question: Do I need to do anything to continue to receive the services after Brexit?
Answer: NO. If you continue to trade with or through your broker or have positions on your account which were opened on or before 31 December 2020, they will treat you as requesting your broker at your own initiative to continue to provide you with the existing services. They will provide you with these services in the usual way, subject to your existing Customer Agreement with them and any other notices or legends currently in place. They can continue to provide you with CFDs, spread betting, and forex but they will need your express consent or initiation to provide you with any other new products or services in the future. They may also continue to provide services to you as permitted under local law exemptions.
Question: Will anything happen to my open positions?
Answer: Your open positions will not be closed out simply because of Brexit, although they may be closed out if you do not meet your margin requirements, if there is a negative balance on your account, or in any other circumstances where the Customer Agreement specifies that they may close out one or more of your positions. Depending on a range of factors, there may be significant market movements affecting the value of your open positions at or around the end of the UK’s transition period on 31 December 2020.
If you do not wish to be treated as requesting that they continue to provide you with their existing services from 1 January 2021, please notify them. If you opt out, provided you are not in breach of your Customer Agreement, you will be given an opportunity to wind down any open positions you have in an orderly manner.
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