The Department of Finance has issued its Feedback Statement on its public consultation on national discretions under MiFID II. The consultation dealt with the exercise of national discretions in relation to the implementation of MiFID II.

Of particular note to non-EU managers, the Minister for Finance (“Minister”) has decided to substantially maintain the current national regime for third countries as it concerns the provision of wholesale investment services. In this regard, the Minister has decided that the safe harbour currently in place for the provision of wholesale investment services by third country firms will remain. As a result, US and UK managers that provide services to UCITS and/or MiFID firms domiciled in Ireland will not be subject to full licensing requirements and the delegation model currently in wide use will be respected. However, to take account of changes to the legislative framework and to address certain concerns that were flagged during the consultation process, the safe harbour will no longer apply in the following circumstances:

  • if the firm provides investment services to retail or opt-up professionals in Ireland;
  • if the firm is registered by ESMA in accordance with Article 47 of MiFIR. However, in this case, a safe harbour still exists at EU level as opposed to national level;
  • in respect of third country firms whose home country is (i) on the FATF list of non-cooperative jurisdictions and which is not subject to authorisation and supervision in respect of the investment services provided to wholesale clients in Ireland or (ii) not a signatory to IOSCO’s Multilateral Memorandum of Understanding.

This approach is much more favourable than the previously anticipated outcome, as the Central Bank of Ireland had favoured dispensing with the safe harbour completely on the basis that the third country provisions under MiFID II would render them redundant. However, given that the third country rules under MiFID II are dependent on an equivalence decision by the European Commission, this is welcome news indeed for third country firms who can continue, for the foreseeable future, to provide investment services in Ireland to wholesale clients in Ireland provided that the firm’s head office is outside the EU and that they do not establish a branch in Ireland without having to wait for an equivalence decision.”