The Third Country Regime for Investment Firms

Abstract

In this article we discuss how an investment firm established outside the EU may provide services (to clients) in the EU. We explore how such third country firms may enter the European market and discuss the current state of the third country regimes as provided (partly) under EU law, their use – or notable lack thereof – and the challenges involved in the supervision of third country firms. We note that the recent updates to the third country equivalence regime for the provision of services to professional clients render the use of this regime even more difficult. In respect of the (optional) third country regime for the provision of services to retail clients, we observe that this regime is much akin to a full license requirement, albeit with notable difficulties when it comes to supervision and enforcement. Altogether, we come to the unfortunate conclusion that the EU third country regime for investment firms established in third countries can barely be called successful.

Keywords: Investment firms ⸱ Third country ⸱ Market access ⸱ Equivalence ⸱ ESMA registration ⸱ Branch office ⸱ Subsidiary ⸱ Reverse solicitation ⸱ Supervision ⸱ Member State option ⸱ Investment services ⸱ Investment activities ⸱ MiFID II ⸱ MiFIR ⸱ IFD ⸱ IFR ⸱ CRD6

JEL Classification: G15, G21, G23, G2, K22, K23