Since our Legal Update Finnish Ministry of Finance is Proposing a Cross-Border Licence for Third-Country Firms, the Government Proposal (HE 277/2018) for third-country firms to provide investment services on a cross-border basis to professional clients and eligible counterparties in Finland has taken a step forward and is currently being reviewed by the Finnish Parliament. The parliamentary review of the proposal has been expedited so that the amendments would enter into force at the latest by 29 March 2019.
The Commerce Committee of the Parliament is expected to publish its comments on the proposal between 4 and 8 February 2019. Based on the informal discussions with the Finnish Ministry of Finance, it is likely that the proposal will be passed in the Parliament without major changes.
This update is based on the Government Proposal and informal discussions held with the regulators, so the information below is subject to change.
Cross-Border Licence Application Requirements: The FIN-FSA to Publish Guidance
The Finnish Financial Supervisory Authority (the “FIN-FSA”) will publish guidance on how to apply for the cross-border licence once the law amendments are in their final form.
Based on the informal discussions with the FIN-FSA, the cross-border licence application process is intended to be simple and straightforward. No formal application form is expected to be used.
The regulator has indicated that the cross-border licence application requirements will be a narrower version of the requirements for third-country branch applications (cf. Articles 39 to 41 of MiFID II).
Brexit: Grandfathering for UK Firms
The proposal includes so-called grandfathering for UK firms. Based on the proposal, a UK firm may continue to provide investment services and activities in Finland after Brexit in accordance with, and to the extent covered by, its EU passport, provided that the UK firm submits its licence application before Brexit takes effect (currently, by 29 March 2019).
A UK firm may continue to provide services and activities in Finland based on its EU passport until the FIN-FSA has processed its licence application. According to the proposal, the FIN-FSA must process the application within six months of receiving all necessary information or at least within twelve months from the date on which the licence application was submitted to the regulator. In respect of a UK firm, the running of these deadlines begins after Brexit has taken effect.
A UK firm must comply with its home state’s (UK) conduct of business rules when applying the grandfathering exception.
Finnish Conduct of Business Rules Apply after the Granting of a Cross-Border Licence
Based on the proposal and informal discussions with the regulator, third-country firms will have to comply with certain Finnish conduct of business rules after the cross-border licence has been granted. However, the application of the Finnish conduct of business rules is limited, since the investment service and/or activity would be provided on a cross-border basis to professional clients and eligible counterparties only.
Hannes Snellman Assists with Cross-Border Licence Applications
Hannes Snellman’s financial services regulation team is available to discuss any questions on the licence, and we are happy to assist you in applying for the proposed cross-border licence from the FIN-FSA.
Specialist Partner at Hannes Snellman
Counsel at Hannes Snellman
Associate at Hannes Snellman