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Third Countries Regime pursuant to MiFID II

Single aspects of future market access in Germany for investment firms from third countries according to MiFID II (Directive no. 2014/65 / EU) and MiFIR (Regulation (EU) No. 600/2014)

Part of the revision of MiFID was the intended uniform regulation of market access in the European Union (EU) for providers of investment services and activities from third countries.

However, the EU Member States could agree on a single set of rules only in the area of (so called “born”) professional clients and eligible counterparties. In the future, providers of investment services domiciled in a third country are allowed to provide cross borders services (without a branch) to professional clients and eligible counterparties, if the European Commission has issued an equivalence decision regarding prudential and business conduct requirements for the country of origin. In addition, a cooperation agreement between ESMA (European Securities and Markets Authority) and the relevant competent authority of the third country is needed. Furthermore, the provider must be authorized in its home country for the investment services to be provided in the EU and be subject to effective supervision and enforcement ensuring a full compliance with the requirements applicable in that third country. Last but not least, a registration of the investment firm (third country) with ESMA is required.

These provisions were included in MiFIR. As an EU regulation, the MiFIR is directly applicable in all EU Member States, so that the provisions contained therein are consistent across the EU. Although the regulation will come into effect on January 3, 2017, the new rules on cross border services by third country providers will only apply, when an equivalence decision and an agreement for cooperation between supervisors will have been obtained. Therefore, the national rules will continue to apply after January 3, 2017 for a transitional period of up to three years after the conclusion of an equivalence decision and an agreement for cooperation between supervisory authorities.

With respect to the market access from third countries for the provision of investment services to private clients or clients treated as professionals on their request, MiFID II foresees only an optional implementation of the single Member State. MiFID II provides for the establishment of a branch in case of the provision of investment services to these customer groups. It remains to be seen whether the individual Member States will implement the provisions of MiFID II and to what extent cross border investment services to these kind of clients will be possible on the basis of national rules, e.g. in Germany through the so called “Freistellungsverfahren” (exemption procedure).




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