SUP 13.7 Changes to cross border services

1. (1)

   Where a UK firm is exercising an EEA right under the UCITS Directive, MiFID, the Insurance Directives, AIFMD or the IDD14 and is providing cross border services into another EEA State, any changes to the details of the services are governed by the EEA Passport Rights Regulations.13

2. (2)

   References to regulations in this section are to the EEA Passport Rights Regulations.13

3. (3)
   1. (a)

      A UK firm which is not an authorised person should note that contravention of the prohibition imposed by regulation 12(1), 12A(1) or 16(1) is an offence.13

   2. (b)

      It is a defence, however, for the UK firm to show that it took all reasonable precautions and exercised due diligence to avoid committing the offence.13

4. (4)

   Where a UK MiFID investment firm exercises an EEA right under MiFID to provide cross border services, any changes to the details of the services are also governed by MiFID RTS 3A and MiFID ITS 4A.13

UK firms should also note that changes to the details of cross border services may lead to changes to the applicable provisions to which the UK firm is subject.

If a UK firm is passporting under the UCITS Directive, regulation 12(1) states that the UK firm must not make a change in its programme of operations, or the activities to be carried on under its EEA right, unless the relevant requirements in regulation 12(2) have been complied with. These requirements are:

1. (1)

   the UK firm has given a notice to the FCA15 and to the Host State regulator stating the details of the proposed change; or

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2. (2)

   if the change arises as a result of circumstances beyond the UK firm's control, the UK firm has as soon as practicable (whether before or after the change) given a notice to the FCA15 and to the Host State regulator, stating the details of the change.2

   15

Standard forms are15 available from the FCA authorisations team 15(see SUP 13.12 (Sources of further information)) to give the notices to the FCA referred to in15 SUP 13.7.3 G (1) and SUP 13.7.3A G.5

5If a UK firm is providing cross border services in a particular EEA State in exercise of an EEA right deriving from MiFID, the UK firm must comply with the requirements of regulation 12A(2) before it makes a change to its programme of operations, including:

1. (1)

   changing the activities to be carried on in exercise of13 that EEA right;

2. (2)

   using, for the first time, any tied agent to provide services in the territory of that EEA State; or

3. (3)

   ceasing to use any tied agent to provide services in the territory of that EEA State.

5The requirements of regulation 12A(2) are that:

1. (1)

   the UK firm has given notice to the appropriate UK regulator15 stating the details of the proposed change; and

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2. (2)

   the period of one month beginning with the day on which the UK firm gave the notice mentioned in (1) has elapsed.

13A UK MiFID investment firm is also required to notify the FCA of any changes to the information in its investment services and activities passport notification, including changes relating to a UK tied agent, in accordance with:

1. (1)

   article 4 (Information to be notified concerning the change of investment services and activities particulars) of MiFID RTS 3A; and

2. (2)

   article 7 (Submission of the change of investment services and activities particulars notification) of MiFID ITS 4A.

1. (1)

   13If any of the details in an investment services and activities passport notification change, a UK MiFID investment firm is required to notify the FCA by completing the form in Annex I of MiFID ITS 4A.

   [Note: article 7(1) of MiFID ITS 4A]

2. (2)

   When communicating a change to investment services and/or activities, ancillary services or financial instruments, the firm is required to list all:

   1. (a)

      the investment services and/or activities and ancillary services that it currently provides or intends to provide in the future; and

   2. (b)

      the financial instruments that are relevant to those activities and services.

13If any of the details in the notification for the provision of arrangements to facilitate access to an MTF or an OTF change, the investment firm operating the MTF or the OTF is required to notify the FCA by completing the form in Annex IV of MiFID ITS 4A.

[Note: article 11(1) of MiFID ITS 4A]

1. (1)

   13Each of the forms in MiFID ITS 4A referred to in SUP 13.7.3DG and SUP 13.7.3EG is replicated in SUP 13 Annex 2R.

2. (2)

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

3. (3)

   The forms should be submitted in accordance with SUP 13.8.1R.

13A UK MiFID investment firm should use the relevant form in SUP 13 Annex 2AR to notify the FCA that it intends to:

1. (1)

   change its programme of operations by ceasing to provide cross border services; or

2. (2)

   change its programme of operations by ceasing to provide cross border services through a tied agent established in the UK; or

3. (3)

   terminate in the territory of an EEA State, the provision of arrangements to facilitate access to, and trading on, an MTF or OTF by remote users, members or participants established in that EEA State.

5For further details on giving the notices to the appropriate UK regulator, as described in SUP 13.7.3 G (1), SUP 13.7.3AG and SUP 13.7.3BG12, UK firms may wish to use the standard electronic15 form available from the FCA and PRA authorisation teams 15(see SUP 13.12 (Sources of further information)).

A UK firm providing cross border services under the CRD7 14is not required to supply a change to the details of cross border services notice5.3

1. (1)

   14A UK firm which has exercised an EEA right under the IDD to provide a cross border service must not make any material change to the relevant details unless it has satisfied the requirements in regulation 17(C)(2).

2. (2)

   The requirements in regulation 17(C)(2) are that:

   1. (a)

      the UK firm has given a notice to the appropriate UK regulator stating the details of the proposed change; and

   2. (b)

      the period of one month, beginning with the date on which the UK firm gave the notice, has elapsed.

15Where the PRA is the appropriate UK regulator, it will consult the FCA before deciding whether to give consent to a change (or proposed change) and where the FCA is the appropriate UK regulator, it will consult the PRA before deciding whether to give consent in relation to a UK firm whose immediate group includes a PRA-authorised person.

If a UK firm has exercised an EEA right under AIFMD to provide cross-border services to manage an AIF, regulation 17A(2) states that the UK firm must not make a material change to:

1. (1)

   the programme of operations, or the EEA activities, to be carried out in exercise of that right; or

2. (2)

   the EEA States in which it manages AIFs; or

3. (3)

   the identity of the AIFs it manages in those EEA States;

unless the UK firmcomplies with the relevant requirements in regulation 17A(4) for a planned change or regulation 17A(5) for an unplanned change (see SUP 13.6.9CG (2) and SUP 13.6.9CG (3)).

9If a UK firm has exercised an EEA right deriving from AIFMD to provide cross-border services to market an AIF, regulation 17A(3) states that it must not make a material change to any of the following:

1. (1)

   the programme of operations identifying the AIF the AIFM intends to market and information on where the AIF is established;

2. (2)

   the AIF rules or instruments of incorporation;

3. (3)

   the depositary of the AIF;

4. (4)

   the description of, or information on, the AIF available to investors;

5. (5)

   if the AIF is a feeder AIF, the jurisdiction where the master AIF is established;

6. (6)

   any additional information referred to in FUND 3.2.2 R (Prior disclosure of information to investors), for each AIF the AIFM intends to market;

7. (7)

   the EEA States in which the AIFM intends to market the units or shares of the AIF to an investor that is a professional client; and

8. (8)

   information about arrangements made for the marketing of the AIF and, where relevant, arrangements to prevent the AIF from being marketed to an investor that is a retail client, including where the AIFM relies on the activities of independent entities to provide investment services for the AIF;

unless the UK firm complies with regulation 17A(4) for a planned change or regulation 17A(5) for an unplanned change (see SUP 13.6.9CG (2) and SUP 13.6.9CG (3)).

1. (1)

   11A UK firm which has exercised an EEA right deriving from the MCD to provide a cross border service, must not make any material changes to the service unless it has complied with the requirements in regulation 17(B)(2).

2. (2)

   The requirements in regulation 17(B)(2) are that;

   1. (a)

      the UK firm has given notice to the FCA stating the details of the proposed change; and

   2. (b)

      the period of one month has elapsed, beginning with the day on which the UK firm gave notice.

3. (3)

   Paragraph (1) does not apply to a changes occasioned by circumstances beyond the control of the UK firm.