Currently there are a large number of companies from European Union countries registered with the CNMV as investment service providers under the freedom to provide services that operate trading platforms.
As stated in their respective authorisations, they can address the Spanish market by offering the aforementioned services for which they have been authorised by their regulator once it is recognised by the CNMV.
However, since they are governed by the freedom to provide services, they cannot have a permanent structure and continuous activity in Spain.
If these companies wish to have a permanent and continuous activity in Spain, in our opinion, they must provide their services through an authorised agent or open a branch. Otherwise their actions would not be in accordance with the regulations.
Both structures require the prior authorisation of their regulator, which in turn must notify the CNMV. This communication will indicate, among other things, the scope of the services that the agent or branch can provide, as well as the organisational structure, representatives, business plan, etc.
Bearing in mind the above, the so-called IB (Introducing Broker) – which are companies that capture, refer or derive a client to a broker, and charge for the transactions made by the trader with the broker – in our opinion cannot carry out a permanent and continuous activity in Spain, for a company under the freedom to provide services.
Institutions under the freedom to provide services cannot authorise an IB in Spain to carry out the activity of attracting clients unless the IB is their agent in Spain. (which requires authorisation from the regulator)
Presential activities in Spain by entities under the freedom to provide services can only be temporary and the means transferred to Spain during that period cannot be fully operational.
Under no circumstances may the resources located in Spain on a temporary basis enjoy management and/or operational autonomy through a representative. For this it is necessary to open a branch, with prior authorisation.
The activity that this type of entity can carry out in Spanish territory, through a Spanish company, must be limited to generic publicity about the entity or its corporate purpose and in no case may they advertise financial instruments or promote the acquisition, management or marketing of investment institutions.
In conclusion, we are of the opinion that the companies in free provision of services that currently have contracts with IB (Introducing Broker), without authorization, are not properly complying with the regulations.
Felipe Martín Lopez
A.n.D Abogados. Partner