The European Securities and Markets Authority (ESMA) has published three opinions setting out sector-specific principles on relocations in the areas of investment firms, investment management and secondary markets. The opinions build on the general opinion that ESMA issued in May (here) and are addressed to national competent authorities of the 27 EU Member States remaining in the EU.
The ESMA opinion on investment firms sets out the principles based on the objectives and provisions of the MiFID framework, which are applied to the specific case of relocation of entities, activities and functions following the UK’s withdrawal from the EU. It seeks to supplement the principles set out in the earlier opinion by addressing regulatory and supervisory risks in the area of investment firms, in particular in relation to authorisation, substance requirements (including governance and outsourcing) and effective supervision. It should also be read, where appropriate, with the sector-specific opinion on secondary markets. The opinion emphasises that, in performing their role, national competent authorities (NCAs) should mitigate the risk of letter-box entities and ensure that any relocation is effective and investment firms comply with the MiFID framework from day one and on an on-going basis.
The opinion on investment management sets out principles based on the objectives and provisions of the UCITS Directive and the Alternative Investment Fund Managers Directive, which are applied to the specific case of relocation of entities, activities and functions following the UK’s withdrawal from the EU. In particular it addresses regulatory and supervisory risks in the area of investment management, particularly in relation to authorisation, governance and internal control, delegation and effective supervision.
The opinion on secondary markets addresses regulatory and supervisory arbitrage risks stemming from third country trading venues relocating in the EU27 seeking to outsource activities to their jurisdiction of origin. The principles on the outsourcing of activities by third country trading venues relocating in the EU27 elaborate on the requirements set out in Article 13 of MiFID and Articles 16 and 48 of MiFID II.