MiFID II /MiFIR – CSSF Circular 19/716 provides Access Regime for Third-Country firms


MiFID II /MiFIR – CSSF Circular 19/716 provides Access Regime for Third-Country firms

17 April 2019

Regulatory News Alert

Context and Objectives

On April 10, the Commission de Surveillance du Secteur Financier (“CSSF”) published the new Circular 19/716 (“Circular”) on the provision of investment services and ancillary activities in Luxembourg by third-country firms.

The Circular clarifies the procedure that third-country firms must comply with in order to benefit from the regime in Article 32-1(1), second subparagraph of the Law of 5 April 1993 on the financial sector, as amended (“LFS”).

Different regimes available

As a first step, in order to distinguish between different options and to determine an appropriate regime that is applicable to the particular case, third-country firms would need to identify:

  • The type of service it intends to provide (investment service or any other service covered by the LFS) 
  • The type of clients it intends to serve according to the MiFID II client classification rules (retail clients, per se professional clients, professional clients on request or eligible counterparties).

Retail clients or professional clients on request – Branch Model

Third country firms targeting retail clients or professional clients on request are required to establish a branch in Luxembourg in order to provide investment services to such prospects.

Per se professional clients or eligible counterparties – Branch Model or, if conditions fulfilled, Free Provision of Services

Where the third-country firm intends to provide services to per se professional clients or eligible counterparties, it can do so either through a branch established in Luxembourg or on a cross-border basis (therefore, without the need to establish a branch).

Where the third country firm decides to go with the latter option and therefore, provide the investment services directly, it can do so only if one of the two following options is available:

  • “European regime”; based on an equivalence decision of the European Commission and registration in the index of third-country firms kept by the European Securities and Markets Authority (ESMA), or
  • where there is no such equivalence decision from the European Commission, third country firm may rely on a decision made by the CSSF, hence, the so-called “National Regime”.

It is important to note however that the National Regime does not grant a European Passport to the third-country firm and therefore does not provide access to the whole EU market.

Reverse Solicitation Rules

Third-country firm may provide investment services without having to establish a branch in Luxembourg or without an equivalence decision in place, if such service is exclusively initiated by a client (“reverse solicitation”).

Instances of reverse solicitation should be assessed on a case-by-case basis, notably by taking into account the ESMA Q&A published in this respect.

Reverse solicitation does not however entitle the third-country firm to market new categories of investment products or services to this client.

How Deloitte can help?

Deloitte’s advisory specialists and dedicated services will help you design and implement your business strategy in light of the future evolution of the regulatory framework and market trends.

Deloitte has developed D.Ready for MIFID II, a service that allows you to assess, evidence and help remediate potential gaps in your MIFID II implementation, this service might also aid in preparation for external reviews.

Deloitte can also help you with its RegWatch service to stay ahead of the regulatory curve to better manage and plan for upcoming regulations.

PDF - 35kb


Simon Ramos
Partner – IM Advisory & Consulting Leader
Tel : +352 45145 2702

Pascal Martino
Partner – Banking Leader
Tel : +352 45145 2119

Xavier Zaegel
Partner – Financial Industry Solutions
Tel : +352 45145 2748

Julie Van Cleemput
Director – Strategy & Regulatory Consulting
Tel : +352 45145 2989

Benoit Sauvage
Senior Manager – RegWatch,
Strategy & Consulting
Tel : +352 45145 4220

Marijana Vuksic
Manager – Strategy, Regulatory & Corporate Finance
Tel : +352 45145 2311

Did you find this useful?