Newsalert - ESMA - MiFID II Supervisory Briefing

On 6 February 2019, the European Securities and Markets Authority (ESMA) has published the document “MiFID II Supervisory briefing” aimed at EU Competent Authorities (CAs) on the supervision of non-EU branches of EU firms providing investment services and activities in the context of the United Kingdom withdrawing from the European Union.

The Supervisory briefing is designed to help EU CAs make their judgment during the authorisation and the supervision of investment firms and of credit institutions providing investment services and/or performing investment activities that intend to establish (or have established) a branch in a non-EU jurisdiction.

The Supervisory briefing is structured around the following three elements:

i. Supervisory expectations in relation to the authorisation of investment firms: to avoid the establishment of “empty shell” companies, ESMA sets out detailed information that must be provided by the applicant seeking authorization, such as, inter alia, the activities and the functions that will be performed by the non-EU branches and their contribute to the investment firm’s or group’s strategy; the expected number and the geographical distribution of the clients with which the non-EU branch will be dealing; a description of how the firm will ensure that any local legal requirements in the non-EU jurisdiction do not interfere with the compliance by the EU firm with legal requirements applicable to it in accordance with EU law. According to ESMA, CAs must pay particular attention to the organisational structure of the non-EU branch, their local control and risk management, which shall be commensurate with the nature, the scale and the complexity of business of the applicant;

ii. Ongoing supervisory activity of non-EU branches (including reporting and collection of information): firms should provide the CA of their home Member State with relevant information on any new non-EU branch that they plan to establish or on any material change in the activities of non-EU branches already established; for this purpose, the Document defines a variety of information that CAs should request on a regular basis, following aspects concerning the activities of non-EU branches;

iii. Supervisory activity and coordination with non-EU Competent Authorities (non-EU CAs).

Download the Supervisory Briefing