Scope of Brokerage Activities in Poland
Core brokerage activities (sensu stricto)
The Polish Act on Trading in Financial Instruments, which implements MiFID, defines core brokerage activities (sensu stricto) as:
- receiving and transmitting orders to buy or sell financial instruments,
- executing orders to buy or sell financial instruments on behalf of a client,
- buying or selling financial instruments for own account,
- managing portfolios that include one or more financial instruments,
- providing investment advice,
- offering financial instruments,
- providing services under underwriting agreements or entering into and performing similar agreements involving financial instruments,
- operating an alternative trading system (ASO),
- operating an organized trading facility (OTF).
Ancillary activities (sensu largo)
Other activities regarded as brokerage activities (sensu largo) include:
- safekeeping or registering financial instruments, including maintaining securities accounts, derivatives accounts, omnibus accounts and cash accounts, as well as keeping records of financial instruments,
- granting cash loans for transactions involving one or more financial instruments, where the transaction is executed through the same investment firm providing the loan,
- advising companies on capital structure, business strategy or related matters,
- advising and providing other services related to mergers, splits, or acquisitions of companies,
- currency exchange services when related to brokerage activity,
- preparing investment research, financial analysis and general recommendations concerning transactions involving financial instruments,
- providing additional services related to underwriting agreements,
- performing the above activities when they involve underlying assets of derivatives specified by law, and when these are connected to brokerage activity.
It is worth noting that brokerage activities sensu stricto can only be carried out by licensed entities.
By contrast, sensu largo activities may also be performed by other types of businesses, not just investment firms – but only when they are carried out by an investment firm do they qualify as “brokerage activities” in the legal sense.
Who Can Provide Brokerage Services?
In Poland, brokerage activities may be carried out in four ways:
Polish investment firms
A brokerage house (dom maklerski) or a bank authorized to conduct brokerage activities in Poland.
Brokerage houses (domy maklerskie)
Brokerage houses in Poland (domy maklerskie; only licensed entities may use this name) may operate only in specific legal forms:
- a joint-stock company,
- a limited liability company,
- a limited joint-stock partnership (with at least two general partners holding broker or investment advisor licenses),
- a limited partnership (with at least two qualified general partners),
- a partnership (with at least two licensed partners), or
- a general partnership (with at least two licensed partners).
The scope of permitted activities depends on the legal form.
A brokerage house must maintain minimum initial capital: EUR 75.000, 150.000 or 750.000 depending on its activities and must have its head office in Poland.
Licensing by Polish Financial Supervision Authority (KNF) may require consultation with foreign regulators if the applicant is linked to foreign investment firms, banks or insurers.
Banks authorized to conduct brokerage activities
A Polish bank may conduct brokerage activities only with a license from the KNF, obtained under the Banking Law.
The license application must include detailed information.
Brokerage activity must be organizationally separated from other banking activities.
EU/EEA investment firms
EU/EEA investment firms can operate in Poland without a separate Polish license, provided the activities are covered by their home authorization.
They may do so through a branch, directly across borders or via agents based either in Poland or another EU country.
The KNF must be notified by the home regulator before activities begin.
If services are offered through a branch or agent in Poland, business can start once KNF communicates the applicable conditions or automatically after two months.
All activities must follow Polish and EU regulations, and agents in Poland are treated as part of the branch structure.
EU firms may also install IT systems in Poland to provide access to their trading venues (MTFs/OTFs), with prior notice to KNF.
If such operations become significant for the Polish market or investor protection, KNF cooperates closely with the home regulator.
Oversight is shared: the home regulator supervises the firm generally, while KNF ensures compliance with rules applicable on Polish territory.
Non-EU/EEA investment firms
Non-EU/EEA firms may conduct brokerage activities in Poland only through a branch, and only if they obtain a license from the KNF.
A branch is a separate unit of the foreign firm, but without legal personality and all such units in Poland are treated as one branch.
To get licensed, the firm must provide detailed information and meet strict conditions: effective cooperation between KNF and the home regulator, compliance with capital adequacy rules, a dedicated fund for Polish operations, AML/CFT and tax transparency standards and membership in the investor compensation scheme.
The branch must be managed by fit and proper persons with sufficient knowledge and experience and remains under KNF supervision, including reporting duties.
The KNF will refuse to license a Non-EU/EEA firm’s branch in Poland if the application or documents are incorrect or incomplete, if the legal and prudential conditions are not met, if the branch’s management is not fit and proper, if the firm would not ensure lawful and safe operations protecting clients’ interests or if major shareholders could not guarantee proper conduct of brokerage activities.
Special Regimes
Reverse solicitation
No Polish license is required if the client approaches a foreign firm entirely on their own initiative.
The exemption does not apply where the firm (or related persons) offers other services or instruments than those requested or where the client’s initiative results from advertising or promotion aimed at clients in Poland.
The KNF takes a very restrictive approach to this exemption and in practice it applies only in very limited circumstances.
Representative office in Poland
EU/EEA investment firms or Non-EU/EEA investment firms may establish a representative office in Poland.
Such an office has no legal personality and may only carry out advertising and promotional activities.
The KNF must be promptly notified of its establishment.
