At the moment, many of the Finnish institutional investors make extensive use of UK investment firms and third-country – such as USA, CHE, JPN and CAN – companies which have an UK subsidiary. Said companies are currently operating within the EU under the freedom to provide investment services and the pursuit of investment activities (EU passport).
However, Brexit may lead to the loss of the right to provide services within the EU under the EU passport by UK and UK licensed third-country investment firms. This would not just make it impossible for Finnish institutional investors to make current use of investment services but would also weaken the ability of institutional investors to diversify their investments and put out tenders for investment services.
Finnish institutional investors need to be able to receive investment services from the best service providers of the industry, regardless of where the service provider is established.
Due to the reduction in available service providers and for the purpose of risk diversification the Finnish Government has seen it necessary to add new regulation to the Investment Services Act (747/2012). The new regulation would allow the Finnish Financial Supervision Authority to grant permits to third country companies to provide investment services, engage in investment activities and to provide auxiliary services to professional clients and so-called eligible counterparties across the border without establishing a branch in Finland.
The new regulation would also enable foreign ETA investment firms or EEA credit institutions to continue operating in Finland without interruption and disruption even before the Finnish Financial Supervisory Authority has granted a permit. This provision could be applied, for example, by those UK service providers whose purpose is to continue operating in Finland after Brexit and to apply for a license from the Financial Supervisory Authority.
The new legislation will come into force as soon as possible – however, no later than the cut-off date of Brexit day (29.3.2019).
Nordic Law has assisted various actors within the Finnish financial market, whereby do not hesitate to contact us if the new regulation is of interest.