The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, today publishes a Supervisory Briefing to ensure convergence across the European Union (EU) in the supervision of the cross-border activities of investment firms.

The free provision of services in the EU rests on the supervision of the home NCA and on the cooperation between home and host supervisors. To this end, this briefing covers the following areas:

authorization of firms with cross-border plans;
processing of passport notifications and their impact on the supervisory approach applied to firms;
arrangements in place to carry out ongoing supervisory activities;
carrying out ongoing supervision; and
carrying out investigations and inspections.
Background

Given the importance of the provision of investment services across the EU under MiFID II, and concerns that emerged in the past on instances of cross-border activities provided to the detriment of investors’ interests, the Board of Supervisors of ESMA decided to launch 2021 a peer review on the supervision of cross-border activities of investment firms.

On 10 March 2022, ESMA published a peer review report on the supervision of cross-border activities of investment firms. In its report, ESMA identified the need for home supervisors to significantly improve their approach in the authorization, ongoing supervision, and enforcement work, relating to investment firms’ cross-border activities to retail clients. This includes calibrating their supervisory work to the nature, scale, and complexity of those firms’ cross-border activities and the risks they pose.