Passporting is a term for having an operational licence that is valid across the European Economic Area.

    A company or institution that wishes to benefit from EU passporting rights must notify the regulator and state responsible, whether they want to set up a new branch or solely provide services to specific states.

    With passporting rights, a firm is allowed to conduct business in the European Economic Area under a single market directive.

    Relevant directives include:

    • Markets and Financial Instruments Directive (Investment Firms)
    • Banking Directive (Credit and Financial Institutions)
    • Insurance Mediation Directive
    • Payment Services Directive
    • Electronic Money Directive

    In short: if a broker has a passporting licence and is regulated, for example under CySEC, it can also provide services to the EEA member states without being specifically regulated in those states.