Case C‑695/22

Fondee a.s.

v

Česká národní banka

(Request for a preliminary ruling from the Městský soud v Praze)

 Judgment of the Court (Fifth Chamber) of 16 May 2024

(Reference for a preliminary ruling – Freedom to provide services – Markets in financial instruments – Directive 2014/65/EU – Article 3 – Exemption from the application of Directive 2014/65/EU – Exempted investment intermediary – Legislation of a Member State prohibiting that intermediary from transmitting clients’ orders to an investment firm established in another Member State)

Freedom of establishment – Freedom to provide services – Markets in financial instruments – Directive 2014/65 – Optional exemptions – Investment intermediary – Legislation of a Member State prohibiting an exempted intermediary from transmitting clients’ orders to an authorised investment firm established in another Member State – Not permissible

(European Parliament and Council Directive 2014/65, Art. 3(1)(c)(i))

(see paragraphs 31, 32, operative part)

Résumé

Ruling on a request for a preliminary ruling from the Městský soud v Praze (Prague City Court, Czech Republic) in a dispute concerning the freedom of an intermediary to provide services on the markets in financial instruments, the Court of Justice confirms that it is possible for an intermediary to whom Directive 2014/65 (1) does not apply to transmit stock market orders to an investment firm established in a Member State other than its home Member State.

Fondee a.s. carries on, in the Czech Republic, the activity of investment intermediary. As such, and in accordance with the option exercised by the Czech Republic under Article 3(1) of Directive 2014/65, Fondee is exempt from the application of that directive, and therefore does not enjoy the freedom to provide investment services in accordance with Article 3(3) thereof.

In the course of its activity, Fondee transmitted, between 7 October and 27 December 2019, 407 orders for the purchase of units in exchange-traded funds, received from its clients, to a securities trader established in the Netherlands.

However, the national legislation prohibits investment intermediaries from transmitting orders to investment firms established in other Member States.

Consequently, the Czech National Bank imposed a fine on Fondee for carrying on its activities during the period in question.

After an unsuccessful complaint made to the Bank Board of the Czech National Bank, Fondee brought an action before the Prague City Court, the referring court, asking, in essence, whether investment intermediaries may rely on the right freely to provide services on the basis of Article 56 TFEU in order to transmit clients’ orders to a foreign securities trader.

Findings of the Court

In so far as Directive 2014/65 brings about full harmonisation of national legislation relating, inter alia, to the cross-border reception and transmission of orders in relation to one or more financial instruments, the Court decides, in accordance with its case-law, (2) to examine the questions referred for a preliminary ruling solely on the basis of the provisions of that directive.

Consequently, the Court considers that the question referred to it is whether, in essence, Article 3(1)(c)(i) of Directive 2014/65 must be interpreted as meaning that persons exempted by a Member State from the application of that directive are authorised to transmit, with a view to their execution, orders from clients residing or established in that Member State to authorised investment firms that are established in another Member State, and, accordingly, whether that provision precludes national legislation prohibiting such transmission.

The Court answers that question in the affirmative.

In reaching that conclusion, the Court states that Article 3(1) of Directive 2014/65 authorises Member States not to apply that directive to persons for which they are the home Member State, subject to compliance with certain conditions. Among those conditions, Article 3(1)(c)(i) of that directive expressly provides that those persons are authorised to transmit orders they receive to authorised investment firms.

That article concerns the transmission of orders to any authorised investment firm and not only to those established and authorised in the home Member State of the person exempted from the application of that directive.

1      Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ 2014 L 173, p. 349).

2      Judgment of 20 April 2023, Autorità Garante della Concorrenza e del Mercato (Municipality of Ginosa) (C‑348/22, EU:C:2023:301, paragraph 36 and the case-law cited).