![]() ![]() With its public statement, ESMA aims to remind firms that pursuant to MiFID II, where a third-country firm solicits (potential) clients in the EU or promotes or advertises investment services in the EU, the investment service is not provided at the initiative of the client and, therefore, MiFID II requirements apply. ![]() For example, ESMA states that some firms appear to be trying to circumvent MiFID II requirements by including general clauses in their Terms of Business or by using online pop-up boxes whereby clients state that any transactions are executed in the exclusive initiative of the client. With the end of the UK transition period on December 2020, ESMA notes that some “questionable” practices by firms around reverse solicitation have emerged. However, according to MiFID II, where a retail or professional client established or situated in the EU initiates at its own exclusive initiative the provision of an investment service or activity by a third-country firm, the third country firm is not subject to the MiFID II requirement to establish a branch and to obtain a license (so-called reverse solicitation). Pursuant to MiFID II, EU Member States may require that a third-country firm intending to provide investment services to retail or to professional clients in its territory have to establish a branch in that Member State or may conduct business requiring a license on a cross-border basis, without having a presence in Germany (so-called notification procedure/EU Passport). ![]() The third country status of the UK as of 2021 was explicitly confirmed by the German regulator BaFin in a recent publication. With the end of the UK transition period on December 2020, UK firms now qualify as third-country firms under the MiFID II regime. The European Securities and Markets Authority (ESMA) has recently issued a public statement to remind firms of the MiFID II requirements on the provision of investment services to retail or professional clients by third-country firms. ![]()
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