FS5 Group 2
Regulation of Banking and Financial Market
January 16th, 2013
ISEG BANK is a new French credit institution authorized in France by the Autorité de Contrôle Prudentiel - ACP -. The bank wishes to provide both French and European clients with investment services.Please advise on : 1. What are the applicable prudential rules in providing investment services across the European Economic Area ? 2. What are the conduct of business rules to be observed in relation to client protection.Make sure your answer are accurate from a regulotary perspective |
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B. Access to the business of credit institutions in the EU
Before starting his business to its European customers, the IB must receive approval from the ACP. This approval is granted, subject to conditions, by state, in terms of minimum capital, equity, quality of management and shareholders (or associates); although this approval may be withdrawn if the conditions are no longer met.
Once the approval is obtained, the institution can exercise as in its country of origin provided that it does not go against the law of the host country. The host country is free to subject in accordance with the European legislation to enforce specific provisions in their legislation.
1. Prudential provisions submitted by the ACP In France:
According to the Article L532-1, to provide investment services in France, credit institutions must obtain a license from the ACP or the AMF. if its main activity remains portfolio management for the account of third parties. Before that, IB shall obtain the approval of the AMF on its activities of portfolio management for the account of third parties and investment advice.
Finally a decree of the State Council shall determine the modalities of application of the article L532-1
2. Prudential provisions submitted by the ACP In Europe:
According to the Article L511-27, every credit institution wishing to establish a branch in another Member State must notify the project to the ACP, by adding it some information determined by the Minister of Economy.
Unless ACP doubts the adequacy of the administrative structures or the financial situation of the credit institution, it provides information in 3 months as from their reception, to the competent authority of the Member State Home and informs the concerned institution.
What are the...