NICOSIA – With the United Kingdom on the verge of leaving the European Union at the end of the year – negotiations linger – Cyprus will let some investment firms from there keep operating on the island through 2021.

The Cyprus Securities and Exchange Commission (CySEC) gave temporary permission while noting they would have to create a branch on the island to keep doing business or trade with other EU countries, said The Cyprus Mail.

CySEC noted there’s no deal yet in place about the cross-border provision of services after the so-called Brexit which means the UK will be considered a third country outside the 27-member state bloc.

There are now 52 UK firms providing services to Cyprus Investment Firms (“CIFs”) acting as their Liquidity Providers or otherwise and in total 86 CIFs have trading arrangements with UK firms, according to a statement.

“Where such contracts were established on a solicited basis, and not as a result of reverse solicitation” (meaning that an investor, who has not had any previous contact with an investment manager contacts that investment manager in respect of a potential investment in a fund), “they will need to be terminated in the case of a UK withdrawal from the EU, without an agreement on the cross-border provision of investment services,” it added.

CySEC said there was concern, however, about the continued functioning of the market, especially if there is an abrupt termination of a contract although Brexit has been a couple of years in the making.

“CySEC has established a Temporary Permission Regime without physical presence for UK firms providing investment services solely to professional clients and eligible counterparties, in order to allow for the smooth transition to new contracts on a reverse solicitation basis and for UK firms who wish to continue soliciting Cypriot professional clients and eligible counterparties to establish a physical presence in the Republic,” the agency said.