Questions and Answers on MiFID II and MiFIR investor protection and intermediaries topics, 18 December 2017, ESMA35-43-349
Provision of investment services and activities by third country firms
Question 1 [Last update: 18 December 2017]
Article 42 of MiFID II regulates the provision of services by third country firms at the exclusive initiative of the client. How should “initiates at its own exclusive initiative the provision of an investment service or activity by a third-country firm” be understood in Article 42 of MiFID II?
According to Article 42 of MiFID II, where a retail client or professional client within the meaning of Section II of Annex II 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.
As provided in recital 111, in order to qualify for Article 42 of MiFID II, “where a third-country firm solicits clients or potential clients in the Union or promotes or advertises investment services or activities together with ancillary services in the Union, it should not be deemed as a service provided at the own exclusive initiative of the client”.
ESMA is of the view that such a solicitation, promotion or advertising should be considered regardless of the person through whom it is issued: the third country firm itself, an entity acting on its behalf or having close links with such third country firm or any other person acting on behalf of such firm.
As for the means of such solicitations, ESMA is of the view that every communication means used such as press releases, advertising on internet, brochures, phone calls or face-to-face meetings should be considered to determine if the client or potential client has been subject to any solicitation, promotion or advertising in the Union on the firm’s investment services or activities or on financial instruments.
It is reminded that such clarification is without prejudice to any provisions attached to the marketing of such products.
The client’s own exclusive initiative shall be assessed in concreto on a case by case basis for each investment service or activity provided, regardless of any contractual clause or disclaimer purporting to state, for example, that the third country firm will be deemed to respond to the exclusive initiative of the client.