Cyprus has emerged as the primary location for firms offering cross-border investment services to retail clients in the European Union and European Economic Area, accounting for 23 percent of the total firms providing passported services. Luxembourg and Germany followed closely, representing 16 percent and 13 percent of all firms, respectively, according to an analysis conducted by European Securities and Markets Authority (Esma) and national competent authorities (NCAs).
Esma and the NCAs, which includes Luxembourg financial supervisor CSSF, on Wednesday published a comprehensive analysis of the cross-border provision of investment services in Europe throughout 2022. This report sheds light on the market for retail investors who receive investment services from credit institutions and investment firms established in other EU Member States.
The Netherlands holds the sixth place in terms of number of firms providing cross-border services. Belgium finds itself ranked 8t among the 29 countries in the EEA. Switzerland is not included in the survey.
The findings indicate that the increase in cross-border financial services has significant benefits for both consumers and firms. It fosters competition, expands the range of options available to consumers, and promotes growth in the market. However, it also underscores the need for NCAs to enhance their efforts and focus on supervising cross-border activities while prioritizing cooperation to address associated challenges.
Distribution of firms across EU/EEA member states:
Highlights
Key highlights from the data collected across 29 jurisdictions are as follows:
- A total of approximately 380 firms provided cross-border investment services to retail clients in 2022. Among these, 59% were investment firms, while 41% were credit institutions.
- Around 7.6 million clients in the EU/EEA received investment services from firms based in other EU/EEA Member States.
- Cyprus emerged as the primary location for firms offering cross-border investment services in the EU/EEA, accounting for 23% of the total firms providing passported services. Luxembourg and Germany followed closely, representing 16% and 13% of all firms, respectively.
- When considering the number of EU/EEA retail clients receiving cross-border investment services, over 75% were served by firms based in Cyprus, Germany, and Sweden. Cyprus-based firms catered to around 2.5 million cross-border retail clients, German-based firms to approximately 2 million, and Sweden-based firms to over 1 million. The remaining firms reported serving a total of around 1.8 million cross-border retail clients, comprising about a quarter of the overall retail client base.
- The average number of cross-border retail clients per firm varied significantly, ranging from 189 for the sole firm in Italy to approximately 140,000 for the eight firms in Sweden. On average, each firm served about 19,000 retail clients.
- As host Member States, Germany, Spain, France, and Italy were the primary destinations (in terms of the number of retail clients) for investment firms providing cross-border services in other Member States.
- Firms recorded approximately 5,700 complaints related to the provision of cross-border investment services to retail clients in 2022. The number of complaints was proportionate to the number of clients served by firms engaged in cross-border activities.
Number of clients by home member state
The analysis of the data highlighted that clients of cross-border investment services primarily lodged complaints concerning “terms of contract/fees/charges” and “issues pertaining to general admin/customer services.” Fewer complaints were reported regarding “investment products not appropriate/suitable for the client” and “market event-related” concerns.
The report underscores the importance of monitoring cross-border activities and promoting effective supervision to ensure the smooth operation of the European investment services market, Esma said.
Number of clients by host member state
