The United Kingdom has been included in the list of jurisdictions, which are deemed equivalent for the application of the national third-country regime in Luxembourg.
On 23 December 2020, CSSF Regulation No. 20-09 of 14 December 2020, amending CSSF Regulation No. 20-02 of 29 June 2020 on the equivalence of certain third countries with respect to supervision and authorisation rules for the purpose of providing investment services or performing investment activities and ancillary services by third-country firms (“Regulation No. 20-09”) was published in the Official Journal of the Grand Duchy of Luxembourg.
In the absence of an equivalence decision by the European Commission in accordance with Article 47(1) of Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (the “MiFIR”), Regulation No. 20-09 includes the United Kingdom in the list of jurisdictions, which are deemed equivalent for the application of the national third-country regime for the purposes of MiFIR. Regulation No. 20-09 applies since 1 January 2021.
Therefore, a UK firm may, subject to certain conditions set forth in Circular CSSF 19/716 as amended by Circular CSSF 20/743, provide investment services or activities as well as ancillary services in Luxembourg to eligible counterparties and professional clients per se, without setting up a branch in Luxembourg.
In a press release of 24 December, the CSSF explained that in order for a UK firm to benefit from this national third-country regime, it must submit a complete application file to the CSSF, without delay.
ESMA issued a reminder to firms of the MiFID II reverse solicitation rules in the context of the end of the UK transition period.
On 13 January 2021, ESMA issued a statement to remind market participants of the requirements on the provision of investments services to retail or professional clients by firms not established or situated in the European Union under Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (the “MiFID II”).
By way of background, pursuant to Article 42 of MiFID II where a retail client or professional client established or situated in the Union initiates at its own exclusive initiative the provision of an investment service or activity by a third-country firm, the third country firm is not subject to the requirements under Article 39 of MiFID II (establishment of a branch).
ESMA reminds firms of previous guidance which it has issued on the interpretation of Article 42 MiFID II. By way of example, ESMA mentioned that it has seen some firms include in their Terms of Business a pop-up “I agree” box whereby clients state that any transaction is executed on the initiative of the client. Such a requirement is not sufficient to circumvent the MiFID II requirements. Where a third-country firm (which now includes any UK firm) solicits clients or potential clients in the EU or promotes or advertises investment services or activities together with ancillary services in the EU, it shall not be deemed as a service provided at the own exclusive initiative of the client.