New Cross-Border Regulations Proposed by ESMA

New Cross-Border Regulations Proposed by ESMA

ESMA has plans to bolster the foundations of passporting right that have been a major part of European regulations. The European Securities and Markets Authority (ESMA) will be adding new rules to the Markets in Financial Instruments Directive (MiFID II) covering the passporting rights of licensed financial firms.

If these new guidelines are approved all ESMA covered investment firms will need to change up their approach. For one they will have to meet specific customers’ need and wants, to provide language packs to be used for customer complaints. Moreover, ESMA wants more details on what markets the passport rights apply to, alongside the specific categories of the customers under the passporting agreement. The last big requirement is for companies to change their internal organizations to accommodate cross-border passporting activities.

The regulator will close all consolations on the subject on 17 February 2023 and will welcome all feedback during Q2 of the same year. By the end of 2023 it is expected for ESMA to come out with a final report.

Meanwhile, CySEC recently received some recommendations by ESMA, namely urging the firm to increase its HR capacity in order to better supervise all cross-border activities, as well as reinforcing said supervisory actions.

Passporting allows licensed EU brokers and investment firms to offer its services to various EU jurisdictions without being fully regulated in these given jurisdictions.

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