The European Securities and Markets Authority (ESMA) has published a supervisory briefing on triangular passporting, providing guidance for investment firms and national competent authorities on the application of passporting rules under the Markets in Financial Instruments Directive (MiFID II). The briefing, dated 7 July 2026, aims to clarify the regulatory framework for firms that provide cross-border services involving multiple EU member states, a practice known as triangular passporting.
Triangular passporting occurs when an investment firm established in one EU member state provides services to clients in a second member state through a branch or tied agent located in a third member state. The briefing addresses the conditions under which such arrangements are permissible and the notification requirements that apply. ESMA emphasises that firms must ensure compliance with host state rules and that competent authorities coordinate supervision to avoid regulatory gaps.
The document is addressed to national competent authorities and investment firms, offering practical examples and case studies to illustrate common scenarios. It highlights the need for clear communication between home and host regulators, particularly when a branch or tied agent in one member state serves clients in another. ESMA also reminds firms that triangular passporting does not exempt them from obligations under anti-money laundering directives or local conduct-of-business rules.
Stakeholder impact is expected to be moderate. Investment firms that engage in cross-border activities across multiple EU jurisdictions will benefit from greater clarity on regulatory expectations, potentially reducing compliance costs and legal uncertainty. National competent authorities will gain a common framework for assessing triangular passporting notifications, which may streamline supervisory cooperation. However, firms with complex structures may face increased administrative burdens if they need to adjust their operations to meet the clarified requirements. Clients of such firms may experience more consistent protection across borders, though the direct impact on retail investors is likely limited.
ESMA's briefing is non-binding but signals the regulator's interpretation of existing rules, and national authorities are expected to take it into account in their supervisory practices. No further legislative action is anticipated at this stage.