Tied Agent rules in EU
Generally speaking, if we look at the legal framework of a tied agent (or an intermediary) companies will be subject to the provisions of the Investment Services Law (IS) as well as the relevant Codes of Conduct for Investment Firm's and the Persons Employed by them.
A tied agent means, for the purposes of the IF law, "a person established in a Member State, who, acting under the full and unconditional responsibility of only one IF of a Member State, on whose behalf it acts, (i) promotes investment or/and ancillary services; (ii) attracts clients or prospective clients (iii) receives and transmits client orders in respect of investment services or financial instruments; (iv) places financial instruments and/or (v) provides advice to clientsor prospective clients in respect of those financial instruments or services.
An IF, or a credit institution, which decides to employ a tied agent, remains fully and unconditionally responsible for any action or omission on the part of the tied agent when acting on its behalf.
The CySEC maintains a register of tied agents who are registered and who are either:
- Established in the Republic and act on behalf of a CIF or a credit institution that has been authorized in the Republic;
- Established in the Republic and act on behalf of an IF or a credit institution that has been authorized in another Member State;
- Established in another Member State and act on behalf of a CIF or credit institution that has been authorized in the Republic, but the Member State in which the tied agents are established does not allow the appointment of tied agents.
A CIF may only appoint as tied agents persons who are registered in the public registers or the respective public registers of other member states.
Please note that there is no other categorization of tied agents in accordance with the IS Law.
With regards to notifications, every time a CIF appoints or
dismisses a tied agent, it must immediately notify CySEC, as well
as when it becomes aware of changes in the details of the tied
agent that are entered in the public register. Furthermore, a CIF
must notify to CySEC a table with the details of its tied
agents.
A tied agent registered in the public registers, must immediately
notify to the Commission every change with regards to his details
that are entered in the said public register.
A tied agent will only be registered by the CySEC, if the tied agent:
- is of sufficiently good repute;
- possesses appropriate general, commercial and professional knowledge so as to be able to accurately communicate all relevant information regarding the proposed service or financial instrument. Where the tied agent is a legal person, it has to employ at least one natural person who fulfills the above conditions.
In case of a tied agent being a legal person, it has to employ at least one natural person that fulfills the above stated conditions.
In relation to introducing brokers, they are also considered as tied agents. In the same way as a "tied agent", the introducing broker must be authorized by the CySEC and registered in the public register of tied agents. Regardless of the fact that the introducing broker is not located in Cyprus, he or she will still be deemed to be providing investment services/activities.
A CIF that appoints tied agents must take adequate measures in order to avoid any negative impact that the activities of the tied agent which are outside the scope of the IS Law could have on the activities carried out by the tied agent on behalf of the CIF.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
