FSMA explains how UK firms may provide investment services in Belgium after Brexit

Maria Nikolova

The regulator asks investment firms governed by the UK law that are active in Belgium, to inform it whether they intend to pursue their activity in Belgium and, if so, under which form.

Belgium’s Financial Services and Markets Authority (FSMA) has provided some clarification on how UK firms may continue to provide their services in Belgium following the withdrawal of the UK from the European Union.

In a press release, the FSMA explains that after March 29, 2019, investment firms governed by the law of the UK would have to be treated as a third country.

On the date of entry into force of Brexit, investment firms governed by the law of the UK will be authorized to pursue, in Belgium, activity that they carry on in their home State, under certain conditions.

Third-country investment firms that intend to offer or supply investment services and/or perform investment activity in Belgium, by establishing branches, must first be authorized by a Belgian supervisory authority, which, depending on the case, will be the National Bank of Belgium or the FSMA.

Investment firms governed by the law of a third country that intend to offer or supply investment services and/or perform investment activities in Belgium, without establishing a branch, are authorized to do so, but they have to make sure that they comply with certain requirements:

(i) These must be services or activities actually provided or performed in their home State;

(ii) These companies can only approach the following investors:

  • eligible counterparties;
  • “per se” professional clients, i.e. clients considered professional in accordance with the provisions of Section I of Annex II of MiFID, and not clients who may be treated as professionals on request;
  • persons established in Belgium with the nationality of the home State of the company concerned or of a State in which this investment firm has established a branch.

The FSMA notes that it is legally empowered to prohibit the provision of investment services in Belgium to companies governed by the law of third States that do not offer the same opportunities to access their market to companies governed by Belgian law (the principle of reciprocity).

Given the announcement by the Financial Conduct Authority (FCA) abut the introduction of a temporary permissions regime for inbound passporting EEA firms, the FSMA should consider that the reciprocity condition has been fulfilled, as long as this temporary regime is in force.

The FSMA asks investment firms governed by the law of the UK that are active in Belgium, to inform the FSMA, as of now, if they intend to pursue their activity in Belgium and, if so, under which form (establishment of a branch or provision of services without establishing a branch).

If they have not yet done so, those that wish to establish or maintain a branch in Belgium are asked to submit an authorization dossier to the National Bank of Belgium or the FSMA, depending on the type of investment services or activity for which they are authorized in the UK. The FSMA also asks companies that wish to commence or carry on the supply of investment services in Belgium under the freedom to provide services, without establishing a branch, to notify the FSMA thereof, specifying the envisaged activity in Belgium and the categories of investors to which they intend to supply their investment services.

These applications for branch authorization and these notifications of the freedom to provide services will, however, only have a legal effect when the UK leaves the European Union, and failing the application of a transitional period during which companies governed by the law of the UK would benefit from a European passport or equivalent authorizations. It is only then that the FSMA or the NBB will be able to take into consideration any applications or notifications.

Investment firms governed by the law of the UK and that are currently included in the lists published by the FSMA of investment firms governed by the law of an EEA Member State active in Belgium, that do not obtain the authorization for their branch or that do not notify of their intention to provide investment services in Belgium under the freedom to provide services, or that do not fulfil the conditions of Article 14 of the Law of 25 October 2016, will be deleted from the aforementioned lists held by the FSMA.

The companies concerned will no longer be authorized to offer or supply investment services and perform investment activities in Belgium from the date on which they were deleted from the list. Any pursuit of activity will be punishable with criminal and/or administrative sanctions.

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