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On 7 July 2026, the European Securities and Markets Authority (ESMA) published its supervisory briefing on triangular passporting (the “Briefing”).
The Briefing aims to ensure consistent supervisory approaches to triangular passporting under MiFID II (Directive 2014/65/EU) among national competent authorities (NCAs).
Triangular passporting occurs when an authorised entity in its home Member State (the “Home Member State”) uses a branch or tied agent established in a host Member State (the “Member State B”) under the freedom of establishment to provide investment services in another host Member State (the “Member State C”) under the freedom to provide services and activities on a cross-border basis.
Even though the principle is not new, clarifications set out by ESMA are useful to ensure consistent supervisory approaches amongst NCAs.
Principle underlying triangular passporting
An entity shall not engage in triangular passporting in order to circumvent supervisory oversight or to obtain the benefit of more favourable regulatory practices, including through "forum shopping”.
The relevant entity wishing to carry out triangular passporting shall notify the NCA of its Home Member State of its intention to use a branch or tied agent established in a host Member State B to provide services and activities in another Member State C. To this end, the relevant entity shall be required to use the form available for the freedom to provide services. It can further add a cover letter to indicate the branch or tied agent located in the host Member State B.
An entity relying on triangular passporting is expected to regularly conduct an internal assessment of the risks arising from this specific cross-border model. These risks may relate to e.g. investor protection, anti-money laundering and counter-terrorist financing, responsibilities regarding outsourcing of services, and third-party risks. The entity also conducts appropriate assessments and monitoring of the activities of its appointed tied agents.
Clients’ information and protection
Entities shall clearly inform their clients in the host Member State C that the service is provided through a branch or tied agent established in another host Member State B. Entities shall also inform their clients that the NCA of the Home Member State is responsible for supervising the services provided. Any information provided shall be fair, clear and not misleading.
Relevant entities also inform their clients of their access to complaints and redress procedures, in the Member State where the branch/tied agent is established or the Home Member State. Thus, clients can submit their complaints free of charge to either the head office in the Home Member State, or the branch or tied agent in the host Member State B. Further, clients should be entitled to submit complaints in any language used by the relevant entity in its marketing communications or contractual documentation. Finally, the relevant entity includes such complaints in its records.
Supervisory responsibilities
The home NCA is responsible for supervising:
- the organisational requirements of the relevant entity, including the branch or tied agent located in the host Member State B and
- the provision of all cross-border services by the entity, whether these services are provided from the Home Member State or from a branch or tied agent established in host Member State B. This includes organisational requirements and conduct-of-business requirements for services provided in the host Member State C.
The host NCA in Member State B is responsible for supervising the branch’s or tied agent’s conduct of business requirements when providing services in such Member State.
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.
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