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Circular C233 (MiFID II – main changes in relation to Passporting Issues and new Notification Forms)

Through the Circular, CySEC informs the Cypriot Investment Firms (“CIFs”) regarding their obligations emanating under Articles 35 and 36 of Law 87(I)/2017 (“the Law”), which transposes Directive 2014/65/EU (“MiFID II”) into Cyprus national legislation and which will enter into force from 03.01.18 onwards, in relation to Passporting Issues and the establishment of a Branch. The obligations emanating from the abovementioned Articles are further elaborated in the following delegated and implementing acts in relation to the passport notification process:

  1. Commission Delegated Regulation (EU) 2017/1018 of 29.06.16 supplementing MiFID II regarding regulatory technical standards specifying information to be notified by Investment Firms, Market Operators and Credit Institutions; and
  2. Commission Implementing Regulation (EU) 2017/981 of 07.06.17 laying down implementing technical standards with regard to standard forms, templates and procedures for the transmission of information in accordance with MiFID II. Also accessible via ESMA’s Final Report MiFID II/MiFIR draft Technical Standards of 29.06.15 on authorisation, passporting, registration of third country firms and cooperation between competent authorities (see ITS 4).

MIFID II passporting regime will apply to a broader range of activities, services and financial instruments than the MIFID I passporting regime, because of the increase in the scope of services/activities and financial instruments under MIFID II. The Circular is important to all CIFs that:

  • Want to operate an OTF;
  • Perform services in relation to the new financial instrument emission allowances;
  • Fall within the revised exemptions under MiFID II and the Law (see part 5 of the Appendix of the Announcement 11.04.17);
  • Will need to be authorized to deal on own account, as a result of the scope of that being extended to include matched principal trading;
  • Are currently passporting services in relation to derivatives of emission allowances and their passport does not include the financial instruments of number 4 Part III, First Appendix of the Law.

Main Changes [in addition to the changes highlighted in Announcement dd04.09.17 (replaces Announcement dd11.08.17)]:

  1. Investment firms will be required to submit one passport notification for each member state in which they intend to provide cross-border services;
  2. New forms will be introduced for the notifications relating to the:
  3. freedom to provide services in another member state;
  4. establishment of a Branch;
  5. appointment of a Tied Agent in member states;
  6. provision of arrangements to facilitate access to an MTF or OTF; and the
  7. termination of the operation of a Branch or cessation of the use of a Tied Agent established in another EEA state or in the Republic.

CySEC’s expects that: CIFs must consider whether their existing Passport licenses / authorisations need to be amended under the scope of the Law and submit the new Passport notifications by 29.09.17 using the new forms available on CySEC’s website. The same will apply from 03.01.18 onwards for any existing CIFs that will wish to amend their existing passport.

 

All other passporting notifications (i.e. that are not under the scope of the Law) made until 08.12.17 shall be submitted as usual using the existing Forms. From 11.12.17 onwards all notifications must be submitted using the below listed new forms:

  1. Form 87-00-04   –   Notification of intention to freely provide/perform services/activities in another Member State (EEA)
  2. Form 87-00-05   –   Notification for the provision of arrangements to facilitate access to an MTF or OTF
  3. Form 87-00-06   –   Notification of intention to establish a Branch in another EEA state
  4. Form 87-00-07   –   Notification of intention to use a Tied Agent established in another EEA State and change of Tied Agent particulars
  5. Form 87-00-08   –   Notification of the termination of the operation of a Branch or cessation of the use of a Tied Agent established in another EEA state or in the Republic.

CIFs intending to establish a Branch or appoint a Tied Agent are urged to submit the relevant notifications (i.e. Form 87-00-06 and Form 87-00-07) from 03.11.17 onwards.

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