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ESMA consults on rules for passporting for investment firms

17 November 2022

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is seeking input on the review of the technical standards under Article 34 of the Markets in Financial Instruments Directive (MiFID II), covering the provision of investment services across the EU.

The main amendments proposed add the following items to the information that investment firms are required to provide at the passporting stage:

  • the marketing means the firm will use in host Member States;
  • the language(s) for which the investment firm has the necessary arrangements to deal with complaints from clients from each of the host Member States in which it provides services;
  • in which Member States the firm will actively use its passport as well as the categories of clients targeted; and
  • the investment firm’s internal organisation in relation to the cross-border activities of the firm.

The cross-border provision of investment services is a key element of the single market of financial services as it fosters competition and expands the offer available to consumers who can choose among a broader number of firms and investment opportunities.

Lately, ESMA and NCAs have noted the continued increase in cross-border activities to retail clients provided under the MiFID II free provision of services regime. This increase results from several factors, including the development of the single market and the digitalisation of financial services, which further facilitates firms to provide services across borders. The pandemic has also created conditions that contributed to an increase in retail investors’ exposure to securities markets, including cross-border.

This is a welcome development, consistent with the objective to develop the single market for financial services in the EU.

However, the increase in cross-border activities by investment firms clearly requires NCAs to increase their focus on the supervision of cross-border activities and on cooperation. A development of cross-border activities which is not accompanied by increased supervisory focus risks undermining investors’ trust and backfiring on the achievement of the single market.

Next Steps

The consultation closes on 17 February 2023. ESMA will consider the feedback it receives to the consultation in Q2 2023 and expects to publish a final report by the end of 2023.

Further information:

Solveig Kleiveland
Acting Team Leader
✆ +33 (0)1 58 36 43 27
@ Email: