A significant part of the UK's financial services industry relies on the passport under the Markets in Financial Instruments Directive (MiFID) to provide its services in other Member States of the European Economic Area (EEA). The loss of the passport would therefore have a profound effect on financial institutions based in the UK.
Unless the UK becomes a member of the EEA along the lines of Norway or otherwise retains access to the single market, post-Brexit financial services firms operating out of the UK will find themselves in a similar position to non-EEA based financial institutions. MiFID II does however, contemplate granting financial institutions in non-EEA states the right to use a modified version of the MiFID passport to offer their services in the EEA provided that their home jurisdiction is deemed MiFID equivalent. Depending on the final timing and terms of Brexit, financial institutions in the UK may therefore ultimately find themselves able to use the MiFID passport. In the attached overview we discuss the future of the MiFID passport post-Brexit.