ESMA publishes Final Report on revised technical standards for passporting

ESMA released its Final Report on the revised draft technical standards for passporting under Article 34 of MiFID II. The report focuses on enhancing investor protection and ensuring the uniform application of regulations within the EU’s financial markets.
The proposed amendments include targeted changes to the existing RTS and ITS, with the main objective of providing NCAs with more detailed information from investment firms engaged in cross-border activities. By doing so, ESMA aims to improve the supervision and oversight of cross-border services provided by investment firms across the EU.
The revised technical standards introduce new information requirements for investment firms during the passporting stage:
1. an overview of all host member states the investment firm intends to provide services in;
2. the type of client targeted by such passporting activity (retail/professional clients);
3. the date on which the firm plans to launch its activities;
4. specifics on the marketing means an investment firm intends to use to target their customers (e.g. social media, mobile apps, or dedicated websites);
5. details on the languages in which the investment firms may handle customer complaints in the host member states;
6. the internal organization of an investment firm relating to the cross-border activity (lines of reporting, internal control functions, etc.)
Moreover, a new investment services and activities passport notification will be implemented to provide NCAs with additional insights into a firm’s planned or existing cross-border activities. This notification process will help regulators stay informed about changes in firms‘ cross-border strategies, supporting the effective supervision of these activities and mitigating potential risks to investors.
ESMA emphasizes that the increasing trend of cross-border activities among investment firms has clear advantages for consumers and firms, as it fosters competition and expands investment opportunities for retail investors. However, it also highlights the need for increased supervisory focus and cooperation efforts from NCAs to safeguard investors‘ trust and prevent potential threats to the single market’s development.