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Pegasus - Third country issues



International team

Our team of financial services regulation lawyers across the world provide a global service and something extra: ‘connectivity’. We are inter-connected across jurisdictions, across industry sectors, and across regulatory fronts, enabling our teams to advise clients operating in the financial services sector on managing regulatory risk, including multi-jurisdictional compliance matters. Please refer to our global brochure.

Third country matrix

We have produced country specific regulatory Q&As that are intended to give an overview of the key regulatory issues for firms looking to conduct business in a particular jurisdiction. For further information please click on the relevant jurisdiction.

Australia Canada France Germany Hong Kong Italy Poland The Netherlands China  UKWhite

MiFID II – Key issues for third country firms

Access of third-country firms (TCFs) into EU markets is not currently harmonised under MiFID, but instead left to the discretion of Member States, subject to the restriction that they do not give TCFs more favourable treatment than European firms. Of all the provisions in MiFID II and MiFIR, the third country provisions were subject to some of the most heated debate. However, following the European Parliament’s approval of the Level 1 texts on 15 April 2014 the position is as follows:

  • If dealing with retail clients or opted up professional clients, TCFs are required to establish a branch.
  • If dealing with professional clients or eligible counterparties, TCFs can provide services without a branch if the TCF is: (1) authorised in the third country; (2) on the ESMA register as a result of an equivalence decision; and (3) a cooperation agreement has been established with the third country.
  • A third country is equivalent if the third country has a sufficient conduct of business and prudential framework and is deemed equivalent by the European Commission.
  • Transitional provisions will govern until the EU equivalence assessment has been made; Member States can continue to maintain national regimes.
  • Third country equivalence is not just based on technical equivalence, but also non-discrimination assessments.
  • ESMA will maintain a register of TCFs allowed to provide investment services or activities in the EU.