Brexit Update: TPR and TMPR For A Post-Transition Period
With the end of the Brexit transition period on December 31, 2020, EU law no longer applies in the UK. For many financial services businesses, this new reality will pose significant challenges. It will affect how funds are marketed by EU fund managers in the UK, who will lose all passporting rights. This means EEA-based firms can no longer passport into the UK and EEA-based investment funds can no longer be marketed under a passport in the UK.
As a result, the UK government has developed the temporary permissions regime (TPR) for EEA firms and the temporary marketing permissions regime (TMPR) for all investment funds marketed in the UK.
Through TPR, EEA-based firms that were operating in the UK pre-Brexit can continue to do so within the scope of their previous passport permission. This exception is only for a limited period, and only on the condition that the firm has notified the regulator.
Similarly, TMPR allows the marketing of EEA-based funds in the UK as done previously, also on the condition that the regulator has been notified.
If firms do not wish to use TPR or TMPR, they must continue using the National Private Placement Regime method to market AIFs in EU member states or the UK (as mentioned in the Article 42 of AIFMD) because the passporting system will no longer work for them. In the event that an EEA-based investor reaches out to a UK AIFM — without any initiation or prior approach from the AIFM based in UK — the UK AIFM can opt for reverse solicitation. However, each member state of the EEA has its own rules for reverse solicitation, so it is advisable to seek counsel from local authorities before using this option.