As discussed in our earlier blogposts from March and February, the newly amended Finnish Investment Services Act allows third-country firms, including UK firms after Brexit, to apply for a cross-border licence to provide investment services to per se professional clients and eligible counterparties in Finland.
Brexit Delay Postpones the Deadline for Submitting the Licence Application
Based on the Finnish Investment Services Act, by submitting the licence application before the Brexit day, a UK firm can continue to provide investment services after Brexit to both existing and new clients in Finland under its current authorisation until the Finnish Financial Supervisory Authority (the “FIN-FSA”) has processed the application.
According to the FIN-FSA, the processing of the application is likely to take several months. During this period, a UK firm may continue to provide investment services to per se professional clients and eligible counterparties in Finland after Brexit in accordance with, and to the extent covered by, its passport under the Markets in Financial Instruments Directive (“MiFID”) in Finland.
With Brexit day currently delayed to 31 October 2019, the deadline for submitting the application has been postponed accordingly. This provides an extended opportunity for UK firms to apply for the licence and benefit from the permission to continue to provide investment services into Finland uninterruptedly post Brexit.
However, given the possibility of the UK leaving before October, the extension for the submission timeline may end up being shorter than six months.
UK Ongoing Requirements Apply Under the Temporary Permission
When a UK firm is providing services in Finland under the above-mentioned temporary permission, it has to comply with the UK rules only, as was the case under its EU passport prior to Brexit.
Ongoing Requirements Under Cross-border Licence Are Similar to a Branch of a Third-Country Firm
Pursuant to the Finnish Investment Services Act, a third-country firm holding a cross-border licence must comply with the requirements applicable to a branch office of a third-country firm in Finland, excluding the branch requirements that only apply to retail clients and opt-up professional clients.
Requirements Largely Based on MiFID Without Gold-Plating
Most of the requirements applicable to a branch office of a third-country firm, as set out in the Finnish Investment Services Act, are based on MiFID. In general, the Finnish implementation of MiFID does not include any additional national obligations on top of what is set out in the Directive.
Cross-border licence holders must additionally comply with certain local requirements based on Finnish law, such as local rules on damages and criminal sanctions.
MiFIR Transaction Reporting Applies to Cross-Border Licence Holders
Cross-border licence holders will need to provide transaction reporting to the FIN-FSA based on the Investment Services Act, which refers to Article 26 of the Markets in Financial Instruments Regulation (MiFIR). The FIN-FSA has informally advised that the reporting capability is a prerequisite for granting a cross-border licence. Reporting must be conducted in compliance with ESMA’s technical MiFIR Transaction Reporting Instructions.
Hannes Snellman Assists with Cross-Border Licence Applications
Hannes Snellman is assisting a large number of UK investment firms and credit institutions in applying for the cross-border licence. We recommend that firms start to prepare the licence applications well before Brexit in order to benefit from the temporary permission.
Our financial services regulation team is available to discuss any questions on the licence and is happy to assist in applying for the licence before Brexit.
Specialist Partner at Hannes Snellman
Counsel at Hannes Snellman
Associate at Hannes Snellman
Associate Trainee at Hannes Snellman