Securities trading firms that are authorised in one EEA state and supervised in that state may perform their activities in another EEA member state under the freedom to provide services or the freedom of establishment and thereby make use of the European passport. They do not require separate authorisation from the supervisory authority of the host country. However, the authorisation must cover the activities in question.

Capital investments, foreign exchange and units of account are not covered by the European passport under MiFID II and are governed by the regulations in the respective host country.

If a securities trading firm intends to carry out activities in another EEA member state, the home supervisor of that institution must be notified of this intention.

Legal bases

Notification procedure

Outgoing passport (section 24a of the KWG)

Section 24a of the KWG sets out the rules applicable to institutions that are domiciled in Germany and intend to carry out activities in another member state of the European Economic Area (EEA) either by way of establishing a branch, by providing cross-border services, for example via the internet, or by using tied agents.

Notifications must include an English translation. This is not required if activities are to be performed in Belgium, Austria, Liechtenstein or Luxembourg, since German is the official language of these countries.

Notifications submitted under Directive 2004/39/EC (MiFID I) remain valid even now that MiFID II has entered into force. However, the securities trading firms are responsible for adapting any existing notifications to the amended legal provisions.

Branches

If a securities trading firm plans to establish a branch abroad, BaFin must be informed of this using the form “Branch passport notification”. BaFin assesses whether the notification is complete and – provided no reason exists to doubt the adequacy of the organisational structure and financial soundness of the company – transmits it to the competent supervisory authority abroad within three months.

Changes in the organisational structure must be notified in writing to BaFin at least one month before they become effective.

Cross-border services

If a German securities trading firm intends to carry out activities in an EEA state and does not wish to establish a branch, the firm notifies BaFin of this using the form “Investment services and activities passport notification”.

BaFin examines whether the notification is complete and – provided no reason exists to doubt the adequacy of the organisational structure and financial soundness of the company – transmits it to the competent supervisory authority abroad within one month.

Changes in the organisational structure must be notified in writing to BaFin at least one month before they become effective.

Tied agents

If a German securities trading firm intends to use tied agents in order to carry out activities in another EEA state, these tied agents may either be domiciled in the home country (here: Germany) or in the host country.

If the tied agent is domiciled in Germany, the form “Investment services and activities passport notification” must be completed, including the separate information regarding the agent.

If the tied agent is domiciled in the host country, the securities trading firm notifies BaFin of this using the form “Tied agent passport notification”. BaFin assesses whether the notification is complete and – provided no reason exists to doubt the adequacy of the organisational structure and financial soundness of the company – transmits it to the competent supervisory authority abroad within three months.

Changes in the organisational structure must be notified in writing to BaFin at least one month before they become effective.

Incoming passport (section 53b of the KWG)

Section 53b of the KWG sets out the rules applicable to institutions that are domiciled in the EEA and intend to carry out activities in Germany either by way of establishing a branch, by providing cross-border services, for example via the internet, or by using tied agents.

Branches

If BaFin receives a complete notification from the competent bodies (supervisory authority of an EEA member state) to establish a branch in Germany, it assesses all the necessary information and registers the branch in a database. BaFin also informs the Deutsche Bundesbank and other organisational units within BaFin (e.g. the units responsible for the prevention of money laundering) and makes preparations to supervise the branch.
Within two months of BaFin having received the complete notification, a letter of confirmation is sent to the foreign supervisory authority, and the so-called “Welcome Letter” is sent to the branch’s parent company with information on national legislation.

Cross-border services

If BaFin receives a complete notification regarding the provision of cross-border services in Germany from the supervisory authority of an EEA member state, it assesses all the necessary information and registers the securities trading firm as cross-border services provider in a database.

Tied agents

Securities trading firms domiciled in the EEA may carry out activities in Germany using tied agents. The tied agent may either be domiciled in the host country (here: Germany) or in another EEA member state. If the tied agent is domiciled in Germany, the securities trading firm is responsible for registering the agent in the relevant BaFin register. To do this, the firm is given electronic access by BaFin to enter and update the data in the register.

Further information

The relevant forms in English and German are available to download under "Additional information".

Please note: if the forms contain a reference to a “compensation scheme”, this concerns the accredited compensation scheme of which the securities trading firm is a member.

Further details concerning the information that has to be submitted regarding the investment services, investment activities, ancillary services and financial instruments can be found in Annex I to MiFID II.

When sending the notifications, please also submit the form "Einhaltung der ausländischen Vorschriften bezüglich Produktintervention” (Compliance with the foreign regulations regarding product intervention – form only available in German).

If you intend to establish a branch and have a regulatory-capital compensating insurance (eigenkapitalersetzende Versicherung), section 33 (1) sentence 2 of the KWG, please check whether the insurance covers the branch or whether additional cover is necessary.

Contact

Notifications can be submitted to BaFin either electronically or by post to the following address: