Legal Updates

 Financial ServicesDecember 13, 2022

ESMA consults on passporting under MiFID

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For further information on any of the issues discussed in this publication please contact the related contact(s) on this page.

On 17 November 2022, the European Securities and Markets Authority (ESMA) announced that it was seeking input on the review of the technical standards under Article 34 of MiFID II[1], governing the provision of investment services across the EU.

The Consultation Paper can be found here.


Article 34 of MiFID II requires ESMA to develop draft regulatory technical standards (RTS) and implementing technical standards (ITS) to: (i) specify the information to be notified by firms which wish to provide cross-border investment services without the establishment of a branch; and (ii) establish standard forms, templates, and procedures for the transmission of that information.

ESMA published its Final Report, including the relevant draft RTS and ITS in June 2015 and the technical standards came into effect from 3 January 2018 as Commission Delegated Regulation (EU) 2017/1018 and Commission Implementing Regulation (EU) 2017/2382.

Since then, ESMA has noted some practical shortcomings regarding the implementation of the freedom to provide services under Article 34 and identified areas where the RTS and ITS could be improved.

ESMA and National Competent Authorities (NCAs) have noted that the continuing digitalisation of financial services, coupled with the pandemic creating conditions that increasingly exposed retail investors to securities markets, have resulted in a marked increase in cross-border activities. While ESMA welcomes this increase in activity as consistent with the objective of developing a single EU market in financial services, it notes that without an increased supervisory focus, there is a risk that investors’ trust is undermined.

The freedom to provide services without the establishment of a branch in host member states relies on the supervision of the home NCA and on the co-operation between home and host NCAs. Any investment firm wishing to avail of the passporting rights is required to notify its home NCA of its intention to do so through an investment services and activities passport notification.

The information the home NCA receives at the passport notification stage therefore plays an essential role in allowing for scrutiny of the investment firm’s planned cross-border activities.

Proposed Changes

The main amendments proposed in the Consultation Paper will require investment firms to furnish the following additional information at the passport notification stage:

  • the marketing means the firm will use in host Member States;
  • the language(s) for which the investment firm has the necessary arrangements to deal with complaints from clients from each of the host Member States in which it provides services;
  • the Member States in which the firm will actively use its passport, as well as the categories of clients targeted; and
  • the investment firm’s internal organisation in relation to the cross-border activities of the firm.

Next steps

The Consultation Paper sets out the analysis behind the proposed amendments to the RTS and ITS and poses questions to industry stakeholders. The draft amending regulations are also included.

The consultation closes on 17 February 2023. ESMA will consider the feedback it receives in Q2 2023 and expects to publish a final report by the end of 2023.

If you have any questions relating to the matters outlined in this briefing, please get in touch with the author or with your usual Dillon Eustace contact.


[1] Directive 2014/65/EU (Markets in Financial Instruments Directive)

DISCLAIMER: This document is for information purposes only and does not purport to represent legal advice. If you have any queries or would like further information relating to any of the above matters, please refer to the contacts above or your usual contact in Dillon Eustace.

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