SUP 13.4 Providing cross border services into another EEA State

Guidance on where a cross border service is provided is given in SUP App 36.41

A UK firm17 or an AIFM exercising an EEA right to market an AIF under AIFMD13,9 cannot start providing cross border services into another EEA State under an EEA right unless it satisfies the conditions in paragraphs 20(1) of Part III of Schedule 3 to the Act and, if it derives its EEA right from17 AIFMD, MiFID or the UCITS Directive,13 paragraph 20(4B) of Part III of Schedule 3 to the Act. If a UK firm derives its EEA right from the MCD, it cannot start providing cross border services into another EEA State under an EEA right unless it satisfies the conditions in paragraphs 20(1) of Part III of Schedule 3 to the Act and paragraph 20(4BB) of Part III of Schedule 3 to the Act.16 It is an offence for a UK firm which is not an authorised person to breach this prohibition (paragraph 21 of Part III of Schedule 3 to the Act).The conditions are that:

1. (1)

   the UK firm has given the appropriate UK regulator,20 in the way specified by appropriate UK regulator's20 rules (see SUP 13.5.2 R), notice of its intention to provide cross border services (known as a notice of intention8) which:

   20208
   1. (a)

      identifies the activities which it seeks to carry on by way of provision of cross border services; and

   2. (b)

      includes such other information as may be specified by the appropriate UK regulator20 (see SUP 13.5.2 R); and

      20
2. (2)

   [deleted]17

   151520204
3. (3)

   if the UK firm is passporting under the IDD, the UK firm has19 received written notice from the appropriate UK regulator20 as described in SUP 13.4.5AG (paragraph 20 (3B)(b)19 of Schedule 3 to the Act)4; or13

   20
4. (4)

   13if the UK firm is passporting under AIFMD, the

   16

   firm16 has received written notice from the FCA as described in SUP 13.4.4-AG (1)(c).

5. (5)

   if the UK firm is passporting under the MCD, one month has elapsed, beginning with the date on which the firm receives the notice, as described in SUP 13.4.5 G.

4An appointed representative appointed by a firm to carry on insurance distribution activity19 on its behalf may provide cross border services in another EEA State under the IDD19. In this case, the notice of intention8 in SUP 13.4.2 G (1) should be given to the appropriate UK regulator20 by the firm on behalf of the appointed representative5.

4An exempt professional firm which is included in the record of unauthorised persons carrying on insurance distribution activity19 maintained by the FCA20 under article 93 of the Regulated Activities Order may provide cross border services in another EEA State under the IDD19 (see PROF 7.2).

8A tied agent appointed by a MiFID investment firm to carry on investment services and activities (and ancillary services where relevant) does not have its own passporting right to provide cross border services in another EEA State. However, a MiFID investment firm remains free to appoint a tied agent to do business in another EEA State and where it does so, the tied agent will benefit from its passport.

1. (1)

   A MiFID investment firm that wishes to obtain a passport for the activity of operating a multilateral trading facility or operating an organised trading facility18 should follow the procedures described in this chapter.18

2. (2)

   A UK market operator that operates a recognised investment exchange, a recognised auction platform (pursuant to the RAP regulations, the definition of regulated market in the Act is read for these purposes as including a recognised auction platform), an MTF or an OTF18 and wishes to provide cross border services into another EEA State should follow the procedure described in REC 4.2B.18

14A UK firm that is an AIFM may exercise an EEA right to market a UK AIF or EEA AIF managed by it under AIFMD when the following conditions are satisfied:

1. (1)

   the UK firm has given the FCA a notice of intentionSUP 13.5.2 R; and

2. (2)

   the FCA has sent a copy of the notice of intention to the Host State regulator where the AIF will be marketed and has given the UK firm written notice that it has done so.

1. (2)

   [deleted]17

2. (2A)

   If the UK firm’s EEA right derives from the IDD, paragraph 20(3B)(a) of Part III of Schedule 3 to the Act requires the appropriate UK regulator to send a copy of the notice of intention to the Host State regulator within one month of receipt.19

   8
3. (2B)

   Where a consent notice is given under the UCITS Directive, the FCA20 will at the same time:10

   20
   1. (a)

      communicate to the Host State regulator details of the compensation scheme intended to protect investors; and10

   2. (b)

      provide to the Host State regulator:10

      1. (i)

         confirmation that the firm has been authorised as a management company under the provisions of the UCITS Directive;10

      2. (ii)

         a description of the scope of the firm's authorisation; and

      3. (iii)

         details of any restriction on the types of EEA UCITS scheme that the firm is authorised to manage.

4. (3)

   If the UK firm's EEA right derives from the MCD, the FCA will give the Host State regulator a consent notice within one month of the date on which it received the UK firm's notice of intention.16

5. (4)

   Where a consent notice is given under the MCD in relation to a tied MCD credit intermediary, the consent notice will include details of:16

   1. (a)

      any MCD creditor or group to which the firm is tied; and

   2. (b)

      whether the MCD creditor or group take full and unconditional responsibility for the tied MCD credit intermediary's activities.

1. (1)

   14If the UK firm's EEA right derives from AIFMD (other than the EEA right to market an AIF (referred to in (3)) and the condition in (2) is met, paragraph 20(3D) of Part III of Schedule 3 to the Act requires the FCA to:

   1. (a)

      send a copy of the notice of intention to the Host State regulator within one month of receipt;

   2. (b)

      include confirmation that the UK firm has been authorised by the FCA under AIFMD; and

   3. (c)

      immediately inform the UK firm that the notice of intention and confirmation have been sent to the Host State regulator;

2. (2)

   The condition referred to in (1) is that the FCA is satisfied that the firm complies and will continue to comply with:

   1. (a)

      the provisions implementing AIFMD, and

   2. (b)

      any directly applicable EU regulation made under AIFMD.

3. (3)

   If the UK firm's EEA right derives from AIFMD and relates to the EEA right to market an AIF and both the conditions in (4) are met, paragraph 20C of Part III of Schedule 3 to the Act requires the FCA to:

   1. (a)

      send a copy of the notice of intention to the Host State regulator within 20 working days of receipt;

   2. (b)

      include confirmation that the UK firm has been authorised by the FCA to manage AIFs with a particular investment strategy; and

   3. (c)

      where the notice of intention relates to an EEA AIF, inform the competent authority of the EEA AIF that the UK firm may start marketing the AIF in the EEA Statescovered by the notice of intention.

4. (4)

   The conditions referred to in (3) are that:

   1. (a)

      the FCA is satisfied that the UK firm complies, and will continue to comply with, AIFMD and any directly applicable EU regulation made under AIFMD; and

   2. (b)

      where the AIF is a feeder AIF, its master AIF is a UK AIF or EEA AIF that is managed by a full-scope UK AIFM or a full-scope EEA AIFM.

5. (5)

   If the FCA refuses to send a copy of the notice of intention to the Host State regulator it must notify the AIFM in writing and include the reasons for such refusal. In such case, the AIFM may refer the matter to the Tribunal.

20Where the PRA is the appropriate UK regulator, it will consult the FCA before deciding whether to give a consent notice and where the FCA is the appropriate UK regulator, it will consult the PRA before deciding whether to give a consent notice in relation to a UK firm whose immediate group includes a PRA-authorised person.

Save where SUP 13.4.5AG applies, when19 the appropriate UK regulator20 sends a copy of a notice of intention8, or if it gives a consent notice to the Host State regulator, it must inform the UK firm in writing that it has done so (paragraphs 2019(3D)(a)(iii)13 and (4) and 20C(9)13 of Schedule 3 to the Act).4

19If a UK firm’s EEA right derives from the IDD, when the Host State regulator has acknowledged receipt of the copy of the notice of intention, the appropriate UK regulator must:

1. (a)

   inform the UK firm in writing that the Host State regulator has received the notice of intention and that the firm may begin providing the services to which the notice of intention relates; and

2. (b)

   notify the firm of the applicable provisions (if any).

[Note: paragraph 20 (3B)(b) of Schedule 3 to the Act]

16If a UK firm is passporting under the MCD, then the Host State regulator will notify the UK firm if there are any applicable provisions within two months of receiving a consent notice.

10A UK firm seeking to provide collective portfolio management services in another EEA State under the freedom to provide cross border services, is advised that it will need to refer to the rules of the competent authority of the UCITS Home State implementing article 20 of the UCITS Directive which will require it to submit to that competent authority information relating to its depositary agreement and certain delegation arrangements.

1. (1)

   18A UK MiFID investment firm is required to submit an investment services and activities passport notification to the FCA by completing the form in Annex I of MiFID ITS 4A. The firm should complete a separate form for each EEA State it wishes to provide services into.

   [Note: article 4(1) of MiFID ITS 4A]

2. (2)

   A UK MiFID investment firm wishing to provide investment services or activities through a tied agent established in the UK is required to send an investment services and activities passport notification to the FCA by completing the parts of the form in Annex I of MiFID ITS 4A that are relevant to a tied agent. The firm should complete a separate form for each EEA State into which it wishes to provide services through a tied agent.

   [Note: article 4(3) of MiFID ITS 4A]

3. (3)

   A UK MiFID investment firm operating a multilateral trading facility or operating an organised trading facility that intends to provide appropriate arrangements to facilitate access to and trading on those systems by remote users, members or participants in another EEA State, is required to send the details of the Host State in which it intends to provide such arrangements to the FCA by completing the form in Annex IV of MiFID ITS 4A. If the firm is notifying in respect of more than one MTF or OTF, it should complete a separate form for each MTF or OTF.

   [Note: article 9 of MiFID ITS 4A]

4. (4)
   1. (a)

      Each of the forms in MiFID ITS 4A referred to in SUP 13.4.8G(1) to (3) is replicated in SUP 13 Annex 2R.

   2. (b)

      These versions should be used for the purposes of notifications to the FCA.

   3. (c)

      The forms should be submitted in accordance with SUP 13.5.3R.