Cross-Border Business of UK Credit Institutions and Investment Firms with German Clients in light of Brexit, MiFIR and MiFID II

Abstract

The passporting framework currently offers UK institutions a cost-effective access to the EEA financial markets for their cross-border activities. As this privileged access may cease to apply after Brexit UK institutions will possibly have to rearrange their approach to access the EEA financial markets. This article discusses the different options available to UK institutions if they want to continue their cross-border activities in Germany. It analyses the requirements and advantages of either establishing a licensed subsidiary under the sole supervision of BaFin and/or the ECB, or of a new ‘EEA hub’ in another EEA country. Further alternatives include cross-border services under the MiFID II/MiFIR framework that is applicable since 3 January 2018, the establishment of third-country branches, the German national exemption from licensing requirements, the privileged treatment through a German ordinance and possible activities on the basis of reverse solicitation.