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Document 02014R0600-20240109
Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (Text with EEA relevance)Text with EEA relevance
Consolidated text: Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (Text with EEA relevance)Text with EEA relevance
Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (Text with EEA relevance)Text with EEA relevance
02014R0600 — EN — 09.01.2024 — 006.001
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REGULATION (EU) No 600/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (OJ L 173 12.6.2014, p. 84) |
Amended by:
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Official Journal |
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No |
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date |
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REGULATION (EU) 2016/1033 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 23 June 2016 |
L 175 |
1 |
30.6.2016 |
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REGULATION (EU) 2019/2033 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 27 November 2019 |
L 314 |
1 |
5.12.2019 |
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REGULATION (EU) 2019/2175 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 18 December 2019 |
L 334 |
1 |
27.12.2019 |
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REGULATION (EU) 2021/23 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 16 December 2020 |
L 22 |
1 |
22.1.2021 |
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REGULATION (EU) 2022/858 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 30 May 2022 |
L 151 |
1 |
2.6.2022 |
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REGULATION (EU) 2023/2869 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 13 December 2023 |
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1 |
20.12.2023 |
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Corrected by:
REGULATION (EU) No 600/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
of 15 May 2014
on markets in financial instruments and amending Regulation (EU) No 648/2012
(Text with EEA relevance)
TITLE I
SUBJECT MATTER, SCOPE AND DEFINITIONS
Article 1
Subject matter and scope
This Regulation establishes uniform requirements in relation to the following:
disclosure of trade data to the public;
reporting of transactions to the competent authorities;
trading of derivatives on organised venues;
non-discriminatory access to clearing and non-discriminatory access to trading in benchmarks;
product intervention powers of competent authorities, ESMA and EBA and powers of ESMA on position management controls and position limits;
provision of investment services or activities by third-country firms following an applicable equivalence decision by the Commission with or without a branch;
the authorisation and supervision of data reporting services providers.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010.
To that end, the Commission shall, by 1 June 2015, submit a report to the European Parliament and to the Council assessing the treatment of transactions by third-country central banks which for the purposes of this paragraph includes the Bank for International Settlements. The report shall include an analysis of their statutory tasks and their trading volumes in the Union. The report shall:
identify provisions applicable in the relevant third countries regarding the regulatory disclosure of central bank transactions, including transactions undertaken by members of the ESCB in those third countries, and
assess the potential impact that regulatory disclosure requirements in the Union may have on third-country central bank transactions.
If the report concludes that the exemption provided for in paragraph 6 is necessary in respect of transactions where the counterparty is a third-country central bank carrying out monetary policy, foreign exchange and financial stability operations, the Commission shall provide that that exemption applies to that third-country central bank.
Article 2
Definitions
For the purposes of this Regulation, the following definitions apply:
‘investment firm’ means an investment firm as defined in Article 4(1)(1) of Directive 2014/65/EU;
‘investment services and activities’ means investment services and activities defined in Article 4(1)(2) of Directive 2014/65/EU;
‘ancillary services’ means ancillary services as defined in Article 4(1)(3) of Directive 2014/65/EU;
‘execution of orders on behalf of clients’ means execution on behalf of clients as defined in Article 4(1)(5) of Directive 2014/65/EU;
‘dealing on own account’ means dealing on own account as defined in Article 4(1)(6) of Directive 2014/65/EU;
‘market maker’ means a market maker as defined in Article 4(1)(7) of Directive 2014/65/EU;
‘client’ means a client as defined in Article 4(1)(9) of Directive 2014/65/EU;
‘professional client’ means a professional client as defined in Article 4(1)(10) of Directive 2014/65/EU;
‘financial instrument’ means a financial instrument as defined in Article 4(1)(15) of Directive 2014/65/EU;
‘market operator’ means a market operator as defined in Article 4(1)(18) of Directive 2014/65/EU;
‘multilateral system’ means a multilateral system as defined in Article 4(1)(19) of Directive 2014/65/EU;
‘systematic internaliser’ means a systematic internaliser as defined in Article 4(1)(20) of Directive 2014/65/EU;
‘regulated market’ means a regulated market as defined in Article 4(1)(21) of Directive 2014/65/EU;
‘multilateral trading facility’ or ‘MTF’ means a multilateral trading facility as defined in Article 4(1)(22) of Directive 2014/65/EU;
‘organised trading facility’ or ‘OTF’ means an organised trading facility as defined in Article 4(1)(23) of Directive 2014/65/EU;
‘trading venue’ means a trading venue as defined in Article 4(1)(24) of Directive 2014/65/EU;
‘liquid market’ means:
for the purposes of Articles 9, 11, and 18, a market for a financial instrument or a class of financial instruments, where there are ready and willing buyers and sellers on a continuous basis, and where the market is assessed in accordance with the following criteria, taking into consideration the specific market structures of the particular financial instrument or of the particular class of financial instruments:
the average frequency and size of transactions over a range of market conditions, having regard to the nature and life cycle of products within the class of financial instrument;
the number and type of market participants, including the ratio of market participants to traded financial instruments in a particular product;
the average size of spreads, where available;
for the purposes of Articles 4, 5 and 14, a market for a financial instrument that is traded daily where the market is assessed according to the following criteria:
the free float;
the average daily number of transactions in those financial instruments;
the average daily turnover for those financial instruments;
‘competent authority’ means a competent authority as defined in point (26) of Article 4(1) of Directive 2014/65/EU and, for the authorisation and supervision of data reporting services providers, ESMA, with the exception of those approved reporting mechanisms (ARMs) and approved publication arrangements (APAs) with a derogation in accordance with paragraph 3 of this Article;
‘credit institution’ means a credit institution as defined in Article 4(1)(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council ( 3 );
‘branch’ means a branch as defined in Article 4(1)(30) of Directive 2014/65/EU;
‘close links’ means close links as defined in Article 4(1)(35) of Directive 2014/65/EU;
‘management body’ means a management body as defined in Article 4(1)(36) of Directive 2014/65/EU;
‘senior management’ means senior management as defined in point (37) of Article 4(1) of Directive 2014/65/EU;
‘structured deposit’ means a structured deposit as defined in Article 4(1)(43) of Directive 2014/65/EU;
‘transferable securities’ means transferable securities as defined in Article 4(1)(44) of Directive 2014/65/EU;
‘depositary receipts’ means depositary receipts as defined in Article 4(1)(45) of Directive 2014/65/EU;
‘exchange-traded fund’ or ‘ETF’ means an exchange-traded fund as defined in Article 4(1)(46) of Directive 2014/65/EU;
‘certificates’ means those securities which are negotiable on the capital market and which in case of a repayment of investment by the issuer are ranked above shares but below unsecured bond instruments and other similar instruments;
‘structured finance products’ means those securities created to securitise and transfer credit risk associated with a pool of financial assets entitling the security holder to receive regular payments that depend on the cash flow from the underlying assets;
‘derivatives’ means those financial instruments defined in point (44)(c) of Article 4(1) of Directive 2014/65/EU; and referred to in Annex I, Section C (4) to (10) thereto;
‘commodity derivatives’ means those financial instruments defined in point (44)(c) of Article 4(1) of Directive 2014/65/EU; which relate to a commodity or an underlying referred to in Section C(10) of Annex I to Directive 2014/65/EU; or in points (5), (6), (7) and (10) of Section C of Annex I thereto;
‘CCP’ means a CCP within the meaning of Article 2(1) of Regulation (EU) No 648/2012;
‘exchange-traded derivative’ means a derivative that is traded on a regulated market or on a third-country market considered to be equivalent to a regulated market in accordance with Article 28 of this Regulation, and as such does not fall within the definition of an OTC derivative as defined in Article 2(7) of Regulation (EU) No 648/2012;
‘actionable indication of interest’ means a message from one member or participant to another within a trading system in relation to available trading interest that contains all necessary information to agree on a trade;
‘approved publication arrangement’ or ‘APA’ means a person authorised under this Regulation to provide the service of publishing trade reports on behalf of investment firms pursuant to Articles 20 and 21;
‘consolidated tape provider’ or ‘CTP’ means a person authorised under this Regulation to provide the service of collecting trade reports for financial instruments listed in Articles 6, 7, 10, 12 and 13, 20 and 21 from regulated markets, MTFs, OTFs and APAs and consolidating them into a continuous electronic live data stream providing price and volume data per financial instrument;
‘approved reporting mechanism’ or ‘ARM’ means a person authorised under this Regulation to provide the service of reporting details of transactions to competent authorities or to ESMA on behalf of investment firms;
‘data reporting services provider’ means a person referred to in points (34) to (36) and a person referred to in Article 27b(2);
‘home Member State’ means a home Member State as defined in Article 4(1)(55) of Directive 2014/65/EU;
‘host Member State’ means a host Member State as defined in Article 4(1)(56) of Directive 2014/65/EU;
‘benchmark’ means any rate, index or figure, made available to the public or published that is periodically or regularly determined by the application of a formula to, or on the basis of the value of one or more underlying assets or prices, including estimated prices, actual or estimated interest rates or other values, or surveys and by reference to which the amount payable under a financial instrument or the value of a financial instrument is determined.
‘interoperability arrangement’ means an interoperability arrangement as defined in Article 2(12) of Regulation (EU) No 648/2012;
‘third-country financial institution’ means an entity, the head office of which is established in a third country, that is authorised or licensed under the law of that third country to carry out any of the services or activities listed in Directive 2013/36/EU, Directive 2014/65/EU; Directive 2009/138/EC of the European Parliament and of the Council ( 4 ), Directive 2009/65/EC of the European Parliament and of the Council ( 5 ), Directive 2003/41/EC of the European Parliament and of the Council ( 6 ) or Directive 2011/61/EU of the European Parliament and of the Council ( 7 );
‘third-country firm’ means a third-country firm as defined in Article 4(1)(57) of Directive 2014/65/EU;
‘wholesale energy product’ means wholesale energy products as defined in Article 2(4) of Regulation (EU) No 1227/2011 of the European Parliament and of the Council ( 8 );
‘agricultural commodity derivatives’ means derivative contracts relating to products listed in Article 1 of, and Annex I, Parts I to XX and XXIV/1 to, Regulation (EU) No 1308/2013 of the European Parliament and of the Council ( 9 );
‘liquidity fragmentation’ means a situation in which:
participants in a trading venue are unable to conclude a transaction with one or more other participants in that venue because of the absence of clearing arrangements to which all participants have access; or
a clearing member or its clients would be forced to hold their positions in a financial instrument in more than one CCP which would limit the potential for the netting of financial exposures;
‘sovereign debt’ means sovereign debt as defined in Article 4(1)(61) of Directive 2014/65/EU;
‘portfolio compression’ means a risk reduction service in which two or more counterparties wholly or partially terminate some or all of the derivatives submitted by those counterparties for inclusion in the portfolio compression and replace the terminated derivatives with another derivative whose combined notional value is less than the combined notional value of the terminated derivatives;
‘exchange for physical’ means a transaction in a derivative contract or other financial instrument contingent on the simultaneous execution of an equivalent quantity of an underlying physical asset;
‘package order’ means an order priced as a single unit:
for the purpose of executing an exchange for physical; or
in two or more financial instruments for the purpose of executing a package transaction;
‘package transaction’ means:
an exchange for physical; or
a transaction involving the execution of two or more component transactions in financial instruments and which fulfils all of the following criteria:
the transaction is executed between two or more counterparties;
each component of the transaction bears meaningful economic or financial risk related to all the other components;
the execution of each component is simultaneous and contingent upon the execution of all the other components.
When adopting the delegated act, the Commission shall take into account one or more of the following elements:
the extent to which the services are provided to investment firms authorised in one Member State only;
the number of trade reports or transactions;
whether the ARM or APA is part of a group of financial market participants operating cross border.
Where an entity is supervised by ESMA for any services provided in its capacity as a data reporting services provider under this Regulation, none of its activities as an ARM or APA shall be excluded from ESMA supervision under any delegated act adopted pursuant to this paragraph.
TITLE II
TRANSPARENCY FOR TRADING VENUES
CHAPTER 1
Transparency for equity instruments
Article 3
Pre-trade transparency requirements for trading venues in respect of shares, depositary receipts, ETFs, certificates and other similar financial instruments
Article 4
Waivers for equity instruments
Competent authorities shall be able to waive the obligation for market operators and investment firms operating a trading venue to make public the information referred to in Article 3(1) for:
systems matching orders based on a trading methodology by which the price of the financial instrument referred to in Article 3(1) is derived from the trading venue where that financial instrument was first admitted to trading or the most relevant market in terms of liquidity, where that reference price is widely published and is regarded by market participants as a reliable reference price. The continued use of that waiver shall be subject to the conditions set out in Article 5.
systems that formalise negotiated transactions which are:
made within the current volume weighted spread reflected on the order book or the quotes of the market makers of the trading venue operating that system, subject to the conditions set out in Article 5;
in an illiquid share, depositary receipt, ETF, certificate or other similar financial instrument that does not fall within the meaning of a liquid market, and are dealt within a percentage of a suitable reference price, being a percentage and a reference price set in advance by the system operator; or
subject to conditions other than the current market price of that financial instrument;
orders that are large in scale compared with normal market size;
orders held in an order management facility of the trading venue pending disclosure.
The reference price referred to in paragraph 1(a) shall be established by obtaining:
the midpoint within the current bid and offer prices of the trading venue where that financial instrument was first admitted to trading or the most relevant market in terms of liquidity; or
when the price referred to in point (a) is not available, the opening or closing price of the relevant trading session.
Orders shall only reference the price referred to in point (b) outside the continuous trading phase of the relevant trading session.
Where trading venues operate systems which formalise negotiated transactions in accordance with paragraph 1(b)(i):
those transactions shall be carried out in accordance with the rules of the trading venue;
the trading venue shall ensure that arrangements, systems and procedures are in place to prevent and detect market abuse or attempted market abuse in relation to such negotiated transactions in accordance with Article 16 of Regulation (EU) No 596/2014;
the trading venue shall establish, maintain and implement systems to detect any attempt to use the waiver to circumvent other requirements of this Regulation or Directive 2014/65/EU and to report attempts to the competent authority.
Where a competent authority grants a waiver in accordance with paragraph 1(b)(i) or (iii), that competent authority shall monitor the use of the waiver by the trading venue to ensure that the conditions for use of the waiver are respected.
Competent authorities shall notify ESMA and other competent authorities of such withdrawal providing full reasons for their decision.
ESMA shall develop draft regulatory technical standards to specify the following:
the range of bid and offer prices or designated market-maker quotes, and the depth of trading interest at those prices, to be made public for each class of financial instrument concerned in accordance with Article 3(1), taking into account the necessary calibration for different types of trading systems as referred to in Article 3(2);
the most relevant market in terms of liquidity of a financial instrument in accordance with paragraph 1(a);
the specific characteristics of a negotiated transaction in relation to the different ways the member or participant of a trading venue can execute such a transaction;
the negotiated transactions that do not contribute to price formation which avail of the waiver provided for under paragraph 1(b)(iii);
the size of orders that are large in scale and the type and the minimum size of orders held in an order management facility of a trading venue pending disclosure for which pre-trade disclosure may be waived under paragraph 1 for each class of financial instrument concerned;
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 5
Volume Cap Mechanism
In order to ensure that the use of the waivers provided for in Article 4(1)(a) and 4(1)(b)(i) does not unduly harm price formation, trading under those waivers is restricted as follows:
the percentage of trading in a financial instrument carried out on a trading venue under those waivers shall be limited to 4 % of the total volume of trading in that financial instrument on all trading venues across the Union over the previous 12 months.
overall Union trading in a financial instrument carried out under those waivers shall be limited to 8 % of the total volume of trading in that financial instrument on all trading venues across the Union over the previous 12 months.
That volume cap mechanism shall not apply to negotiated transactions which are in a share, depositary receipt, ETF, certificate or other similar financial instrument for which there is not a liquid market as determined in accordance with Article 2(1)(17)(b) and are dealt within a percentage of a suitable reference price as referred to in Article 4(1)(b)(ii), or to negotiated transactions that are subject to conditions other than the current market price of that financial instrument as referred to in Article 4(1)(b)(iii).
In order to ensure a reliable basis for monitoring the trading taking place under those waivers and for determining whether the limits referred to in paragraph 1 have been exceeded, operators of trading venues shall be obligated to have in place systems and procedures to:
enable the identification of all trades which have taken place on its venue under those waivers; and
ensure it does not exceed the permitted percentage of trading allowed under those waivers as referred to in paragraph 1(a) under any circumstances.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 6
Post-trade transparency requirements for trading venues in respect of shares, depositary receipts, ETFs, certificates and other similar financial instruments
Article 7
Authorisation of deferred publication
In particular, the competent authorities may authorise the deferred publication in respect of transactions that are large in scale compared with the normal market size for that share, depositary receipt, ETF, certificate or other similar financial instrument or that class of share, depositary receipt, ETF, certificate or other similar financial instrument.
Market operators and investment firms operating a trading venue shall obtain the competent authority’s prior approval of proposed arrangements for deferred trade-publication, and shall clearly disclose those arrangements to market participants and the public. ESMA shall monitor the application of those arrangements for deferred trade-publication and shall submit an annual report to the Commission on how they are applied in practice.
Where a competent authority authorises deferred publication and a competent authority of another Member State disagrees with the deferral or disagrees with the effective application of the authorisation granted, that competent authority may refer the matter back to ESMA, which may act in accordance with the powers conferred on it under Article 19 of Regulation (EU) No 1095/2010.
ESMA shall develop draft regulatory technical standards to specify the following in such a way as to enable the publication of information required under Article 64 of Directive 2014/65/EU:
the details of transactions that investment firms, including systematic internalisers and market operators and investment firms operating a trading venue shall make available to the public for each class of financial instrument concerned in accordance with Article 6(1), including identifiers for the different types of transactions published under Article 6(1) and Article 20, distinguishing between those determined by factors linked primarily to the valuation of the financial instruments and those determined by other factors;
the time limit that would be deemed in compliance with the obligation to publish as close to real time as possible including when trades are executed outside ordinary trading hours.
the conditions for authorising investment firms, including systematic internalisers and market operators and investment firms operating a trading venue to provide for deferred publication of the details of transactions for each class of financial instruments concerned in accordance with paragraph 1 of this Article and with Article 20(1);
the criteria to be applied when deciding the transactions for which, due to their size or the type, including liquidity profile of the share, depositary receipt, ETF, certificate or other similar financial instrument involved, deferred publication is allowed for each class of financial instrument concerned.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
CHAPTER 2
Transparency for non-equity instruments
Article 8
Pre-trade transparency requirements for trading venues in respect of bonds, structured finance products, emission allowances and derivatives
Article 9
Waivers for non-equity instruments
Competent authorities shall be able to waive the obligation for market operators and investment firms operating a trading venue to make public the information referred to in Article 8(1) for:
orders that are large in scale compared with normal market size and orders held in an order management facility of the trading venue pending disclosure;
actionable indications of interest in request-for-quote and voice trading systems that are above a size specific to the financial instrument, which would expose liquidity providers to undue risk and takes into account whether the relevant market participants are retail or wholesale investors;
derivatives which are not subject to the trading obligation specified in Article 28 and other financial instruments for which there is not a liquid market;
orders for the purpose of executing an exchange for physical;
package orders that meet one of the following conditions:
at least one of its components is a financial instrument for which there is not a liquid market, unless there is a liquid market for the package order as a whole;
at least one of its components is large in scale compared with the normal market size, unless there is a liquid market for the package order as a whole;
all of its components are executed on a request-for-quote or voice system and are above the size specific to the instrument.
Competent authorities shall notify ESMA and other competent authorities of such withdrawal without delay and before it takes effect, providing full reasons for their decision.
The temporary suspension shall be valid for an initial period not exceeding three months from the date of its publication on the website of the relevant competent authority. Such a suspension may be renewed for further periods not exceeding three months at a time if the grounds for the temporary suspension continue to be applicable. Where the temporary suspension is not renewed after that three-month period, it shall automatically lapse.
Before suspending or renewing the temporary suspension under this paragraph of the obligations referred to in Article 8, the relevant competent authority shall notify ESMA of its intention and provide an explanation. ESMA shall issue an opinion to the competent authority as soon as practicable on whether in its view the suspension or the renewal of the temporary suspension is justified in accordance with the first and second subparagraphs.
ESMA shall develop draft regulatory technical standards to specify the following:
the parameters and methods for calculating the threshold of liquidity referred to in paragraph 4 in relation to the financial instrument. The parameters and methods for Member States to calculate the threshold shall be set in such a way that when the threshold is reached, it represents a significant decline in liquidity across all venues within the Union for the financial instrument concerned based on the criteria used under Article 2(1)(17);
the range of bid and offer prices or quotes and the depth of trading interests at those prices, or indicative pre-trade bid and offer prices which are close to the price of the trading interest, to be made public for each class of financial instrument concerned in accordance with Article 8(1) and (4), taking into account the necessary calibration for different types of trading systems as referred to in Article 8(2);
the size of orders that are large in scale and the type and the minimum size of orders held in an order management facility pending disclosure for which pre-trade disclosure may be waived under paragraph 1 for each class of financial instrument concerned;
the size specific to the financial instrument referred to in paragraph 1(b) and the definition of request-for-quote and voice trading systems for which pre-trade disclosure may be waived under paragraph 1;
When determining the size specific to the financial instrument that would expose liquidity providers to undue risk and takes into account whether the relevant market participants are retail or wholesale investors, in accordance with paragraph 1(b), ESMA shall take the following factors into account:
whether, at such sizes, liquidity providers would be able to hedge their risks;
where a market in the financial instrument, or a class of financial instruments, consists in part of retail investors, the average value of transactions undertaken by those investors;
the financial instruments or the classes of financial instruments for which there is not a liquid market where pre-trade disclosure may be waived under paragraph 1.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
ESMA shall submit those draft regulatory technical standards to the Commission by 28 February 2017.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 10
Post-trade transparency requirements for trading venues in respect of bonds, structured finance products, emission allowances and derivatives
Article 11
Authorisation of deferred publication
In particular, the competent authorities may authorise the deferred publication in respect of transactions that:
are large in scale compared with the normal market size for that bond, structured finance product, emission allowance or derivative traded on a trading venue, or for that class of bond, structured finance product, emission allowance or derivative traded on a trading venue; or
are related to a bond, structured finance product, emission allowance or derivative traded on a trading venue, or a class of bond, structured finance product, emission allowance or derivative traded on a trading venue for which there is not a liquid market;
are above a size specific to that bond, structured finance product, emission allowance or derivative traded on a trading venue, or that class of bond, structured finance product, emission allowance or derivative traded on a trading venue, which would expose liquidity providers to undue risk and takes into account whether the relevant market participants are retail or wholesale investors.
Market operators and investment firms operating a trading venue shall obtain the competent authority’s prior approval of proposed arrangements for deferred trade-publication, and shall clearly disclose those arrangements to market participants and the public. ESMA shall monitor the application of those arrangements for deferred trade-publication and shall submit an annual report to the Commission on how they are used in practice.
The temporary suspension shall be valid for an initial period not exceeding three months from the date of its publication on the website of the relevant competent authority. Such a suspension may be renewed for further periods not exceeding three months at a time if the grounds for the temporary suspension continue to be applicable. Where the temporary suspension is not renewed after that three-month period, it shall automatically lapse.
Before suspending or renewing the temporary suspension of the obligations referred to in Article 10, the relevant competent authority shall notify ESMA of its intention and provide an explanation. ESMA shall issue an opinion to the competent authority as soon as practicable on whether in its view the suspension or the renewal of the temporary suspension is justified in accordance with the first and second subparagraphs.
Competent authorities may, in conjunction with an authorisation of deferred publication:
request the publication of limited details of a transaction or details of several transactions in an aggregated form, or a combination thereof, during the time period of deferral;
allow the omission of the publication of the volume of an individual transaction during an extended time period of deferral;
regarding non-equity instruments that are not sovereign debt, allow the publication of several transactions in an aggregated form during an extended time period of deferral;
regarding sovereign debt instruments, allow the publication of several transactions in an aggregated form for an indefinite period of time.
In relation to sovereign debt instruments, points (b) and (d) may be used either separately or consecutively whereby once the volume omission extended period lapses, the volumes could then be published in aggregated form.
In relation to all other financial instruments, when the deferral time period lapses, the outstanding details of the transaction and all the details of the transactions on an individual basis shall be published.
ESMA shall develop draft regulatory technical standards to specify the following in such a way as to enable the publication of information required under Article 64 of Directive 2014/65/EU:
the details of transactions that investment firms, including systematic internalisers, and market operators and investment firms operating a trading venue shall make available to the public for each class of financial instrument concerned in accordance with Article 10(1), including identifiers for the different types of transactions published under Article 10(1) and Article 21(1), distinguishing between those determined by factors linked primarily to the valuation of the financial instruments and those determined by other factors;
the time limit that would be deemed in compliance with the obligation to publish as close to real time as possible including when trades are executed outside ordinary trading hours;
the conditions for authorising investment firms, including systematic internalisers, and market operators and investment firms operating a trading venue, to provide for deferred publication of the details of transactions for each class of financial instrument concerned in accordance with paragraph 1 of this Article and with Article 21(4);
the criteria to be applied when determining the size or type of a transaction for which deferred publication and publication of limited details of a transaction, or publication of details of several transactions in an aggregated form, or omission of the publication of the volume of a transaction with particular reference to allowing an extended length of time of deferral for certain financial instruments depending on their liquidity, is allowed under paragraph 3.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
CHAPTER 3
Obligation to offer trade data on a separate and reasonable commercial basis
Article 12
Obligation to make pre-trade and post-trade data available separately
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 13
Obligation to make pre-trade and post-trade data available on a reasonable commercial basis
TITLE III
TRANSPARENCY FOR SYSTEMATIC INTERNALISERS AND INVESTMENT FIRMS TRADING OTC AND TICK SIZE REGIME FOR SYSTEMATIC INTERNALISERS
Article 14
Obligation for systematic internalisers to make public firm quotes in respect of shares, depositary receipts, ETFs, certificates and other similar financial instruments
Where there is not a liquid market for the financial instruments referred to in the first subparagraph, systematic internalisers shall disclose quotes to their clients upon request.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 15
Execution of client orders
Member States shall require that firms that meet the definition of systematic internaliser notify their competent authority. Such notification shall be transmitted to ESMA. ESMA shall establish a list of all SIs in the Union.
The quotes shall be made public in a manner which is easily accessible to other market participants on a reasonable commercial basis.
However, in justified cases, they may execute those orders at a better price provided that the price falls within a public range close to market conditions.
Article 16
Obligations of competent authorities
The competent authorities shall check the following:
that investment firms regularly update bid and offer prices published in accordance with Article 14 and maintain prices which reflect the prevailing market conditions;
that investment firms comply with the conditions for price improvement laid down in Article 15(2).
Article 17
Access to quotes
In order to ensure the efficient valuation of shares, depositary receipts, ETFs, certificates and other similar financial instruments and maximise the possibility for investment firms to obtain the best deal for their clients, the Commission shall adopt delegated acts in accordance with Article 50 specifying:
the criteria specifying when a quote is published on a regular and continuous basis and is easily accessible as referred to in Article 15(1) as well as the means by which investment firms may comply with their obligation to make public their quotes, which shall include the following possibilities:
through the facilities of any regulated market which has admitted the financial instrument in question to trading;
through an APA;
through proprietary arrangements;
the criteria specifying those transactions where execution in several securities is part of one transaction or those orders that are subject to conditions other than current market price as referred to in Article 15(3);
the criteria specifying what can be considered as exceptional market conditions that allow for the withdrawal of quotes as well as the conditions for updating quotes as referred to in Article 15(1);
the criteria specifying when the number and/or volume of orders sought by clients considerably exceeds the norm as referred to in paragraph 2.
the criteria specifying when prices fall within a public range close to market conditions as referred to in Article 15(2).
Article 17a
Tick sizes
Systematic internalisers’ quotes, price improvements on those quotes and execution prices shall comply with tick sizes set in accordance with Article 49 of Directive 2014/65/EU.
Application of tick sizes shall not prevent systematic internalisers matching orders large in scale at mid‐point within the current bid and offer prices.
Article 18
Obligation for systematic internalisers to make public firm quotes in respect of bonds, structured finance products, emission allowances and derivatives
Investment firms shall make public firm quotes in respect of bonds, structured finance products, emission allowances and derivatives traded on a trading venue for which they are systematic internalisers and for which there is a liquid market when the following conditions are fulfilled:
they are prompted for a quote by a client of the systematic internaliser;
they agree to provide a quote.
Systematic internalisers shall not be subject to the obligation to publish a firm quote pursuant to paragraph 1 for financial instruments that fall below the threshold of liquidity determined in accordance with Article 9(4).
However, in justified cases, they may execute orders at a better price provided that the price falls within a public range close to market conditions.
Article 19
Monitoring by ESMA
Article 20
Post-trade disclosure by investment firms, including systematic internalisers, in respect of shares, depositary receipts, ETFs, certificates and other similar financial instruments
ESMA shall develop draft regulatory technical standards to specify the following:
identifiers for the different types of transactions published under this Article, distinguishing between those determined by factors linked primarily to the valuation of the financial instruments and those determined by other factors;
the application of the obligation under paragraph 1 to transactions involving the use of those financial instruments for collateral, lending or other purposes where the exchange of financial instruments is determined by factors other than the current market valuation of the financial instrument;
the party to a transaction that has to make the transaction public in accordance with paragraph 1 if both parties to the transaction are investment firms.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 21
Post-trade disclosure by investment firms, including systematic internalisers, in respect of bonds, structured finance products, emission allowances and derivatives
Where the measures adopted pursuant to Article 11 provide for deferred publication and publication of limited details or details in an aggregated form, or a combination thereof, or for omission of the publication of the volume for certain categories of transactions in bonds, structured finance products, emission allowances and derivatives traded on a trading venue, that possibility shall also apply to those transactions when undertaken outside trading venues.
ESMA shall develop draft regulatory technical standards in such a way as to enable the publication of information required under Article 64 of Directive 2014/65/EU to specify the following:
the identifiers for the different types of transactions published in accordance with this Article, distinguishing between those determined by factors linked primarily to the valuation of the financial instruments and those determined by other factors;
the application of the obligation under paragraph 1 to transactions involving the use of those financial instruments for collateral, lending or other purposes where the exchange of financial instruments is determined by factors other than the current market valuation of the financial instrument;
the party to a transaction that has to make the transaction public in accordance with paragraph 1 if both parties to the transaction are investment firms.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 22
Providing information for the purposes of transparency and other calculations
In order to carry out calculations for determining the requirements for the pre- and post-trade transparency and the trading obligation regimes referred to in Articles 3 to 11, Articles 14 to 21 and Article 32, which are applicable to financial instruments and for determining whether an investment firm is a systematic internaliser, ESMA and competent authorities may require information from:
trading venues;
APAs; and
CTPs.
Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 23
Trading obligation for investment firms
An investment firm shall ensure the trades it undertakes in shares admitted to trading on a regulated market or traded on a trading venue shall take place on a regulated market, MTF or systematic internaliser, or a third-country trading venue assessed as equivalent in accordance with Article 25(4)(a) of Directive 2014/65/EU, as appropriate, unless their characteristics include that they:
are non-systematic, ad-hoc, irregular and infrequent; or
are carried out between eligible and/or professional counterparties and do not contribute to the price discovery process.
ESMA shall develop draft regulatory technical standards to specify the particular characteristics of those transactions in shares that do not contribute to the price discovery process as referred to in paragraph 1, taking into consideration cases such as:
non-addressable liquidity trades; or
where the exchange of such financial instruments is determined by factors other than the current market valuation of the financial instrument.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 23a
Accessibility of information on the European single access point
From 10 January 2030, the information referred to in Article 14(6), Article 15(1), second subparagraph, Articles 18(4) and 27(1), Article 34, Articles 40(5), 42(5), 44(2), 45(6) and Article 48 of this Regulation, shall be made accessible on the European single access point (ESAP) established under Regulation (EU) 2023/2859 of the European Parliament and of the Council ( 10 ). The collection body as defined in Article 2, point (2), of Regulation (EU) 2023/2859 shall be ESMA.
That information shall comply with the following requirements:
be submitted in a data extractable format as defined in Article 2, point (3), of Regulation (EU) 2023/2859;
be accompanied by the following metadata:
all the names of the investment firm to which the information relates;
where available, the legal entity identifier of the investment firm, as specified pursuant to Article 7(4), point (b), of Regulation (EU) 2023/2859;
the type of information, as classified pursuant to Article 7(4), point (c), of that Regulation;
an indication of whether the information contains personal data.
TITLE IV
TRANSACTION REPORTING
Article 24
Obligation to uphold integrity of markets
Without prejudice to the allocation of responsibilities for enforcing Regulation (EU) No 596/2014, competent authorities coordinated by ESMA in accordance with Article 31 of Regulation (EU) No 1095/2010 shall monitor the activities of investment firms to ensure that they act honestly, fairly and professionally and in a manner which promotes the integrity of the market.
Article 25
Obligation to maintain records
Those draft regulatory technical standards shall include the identification code of the member or participant which transmitted the order, the identification code of the order, the date and time the order was transmitted, the characteristics of the order, including the type of order, the limit price if applicable, the validity period, any specific order instructions, details of any modification, cancellation, partial or full execution of the order, the agency or principal capacity.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 26
Obligation to report transactions
The competent authorities shall, in accordance with Article 85 of Directive 2014/65/EU, establish the necessary arrangements in order to ensure that the competent authority of the most relevant market in terms of liquidity for those financial instruments also receives that information.
The competent authorities shall without undue delay make available to ESMA any information reported in accordance with this Article.
The obligation laid down in paragraph 1 shall apply to:
financial instruments which are admitted to trading or traded on a trading venue or for which a request for admission to trading has been made;
financial instruments where the underlying is a financial instrument traded on a trading venue; and
financial instruments where the underlying is an index or a basket composed of financial instruments traded on a trading venue
The obligation shall apply to transactions in financial instruments referred to in points (a) to (c) irrespective of whether or not such transactions are carried out on the trading venue.
ESMA shall develop by 3 January 2016 guidelines in accordance with Article 16 of Regulation (EU) No 1095/2010 to ensure that the application of legal entity identifiers within the Union complies with international standards, in particular those established by the Financial Stability Board.
Investment firms shall have responsibility for the completeness, accuracy and timely submission of the reports which are submitted to the competent authority.
By way of derogation from that responsibility, where an investment firm reports details of those transactions through an ARM which is acting on its behalf or a trading venue, the investment firm shall not be responsible for failures in the completeness, accuracy or timely submission of the reports which are attributable to the ARM or trading venue. In those cases and subject to Article 66(4) of Directive 2014/65/EU the ARM or trading venue shall be responsible for those failures.
Investment firms must nevertheless take reasonable steps to verify the completeness, accuracy and timeliness of the transaction reports which were submitted on their behalf.
The home Member State shall require the trading venue, when making reports on behalf of the investment firm, to have sound security mechanisms in place designed to guarantee the security and authentication of the means of transfer of information, to minimise the risk of data corruption and unauthorised access and to prevent information leakage maintaining the confidentiality of the data at all times. The home Member State shall require the trading venue to maintain adequate resources and have back-up facilities in place in order to offer and maintain its services at all times.
Trade-matching or reporting systems, including trade repositories registered or recognised in accordance with Title VI of Regulation (EU) No 648/2012, may be approved by the competent authority as an ARM in order to transmit transaction reports to the competent authority in accordance with paragraphs 1, 3 and 9.
Where transactions have been reported to a trade repository in accordance with Article 9 of Regulation (EU) No 648/2012 which is approved as an ARM and where those reports contain the details required under paragraphs 1, 3 and 9 and are transmitted to the competent authority by the trade repository within the time limit set in paragraph 1, the obligation on the investment firm laid down in paragraph 1 shall be considered to have been complied with.
Where there are errors or omissions in the transaction reports, the ARM, investment firm or trading venue reporting the transaction shall correct the information and submit a corrected report to the competent authority.
ESMA shall develop draft regulatory technical standards to specify:
data standards and formats for the information to be reported in accordance with paragraphs 1 and 3, including the methods and arrangements for reporting financial transactions and the form and content of such reports;
the criteria for defining a relevant market in accordance with paragraph 1;
the references of the financial instruments bought or sold, the quantity, the dates and times of execution, the transaction prices, the information and details of the identity of the client, a designation to identify the clients on whose behalf the investment firm has executed that transaction, a designation to identify the persons and the computer algorithms within the investment firm responsible for the investment decision and the execution of the transaction, a designation to identify the applicable waiver under which the trade has taken place, the means of identifying the investment firms concerned, the way in which the transaction was executed, data fields necessary for the processing and analysis of the transaction reports in accordance with paragraph 3; and
the designation to identify short sales of shares and sovereign debt as referred to in paragraph 3;
the relevant categories of financial instrument to be reported in accordance with paragraph 2;
the conditions upon which legal entity identifiers are developed, attributed and maintained, by Member States in accordance with paragraph 6, and the conditions under which those legal entity identifiers are used by investment firms so as to provide, pursuant to paragraphs 3, 4 and 5, for the designation to identify the clients in the transaction reports they are required to establish pursuant to paragraph 1;
the application of transaction reporting obligations to branches of investment firms;
what constitutes a transaction and execution of a transaction for the purposes of this Article.
when an investment firm is deemed to have transmitted an order for the purposes of paragraph 4.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 27
Obligation to supply financial instrument reference data
With regard to other financial instruments covered by Article 26(2) traded on its system, each systematic internaliser shall provide ESMA with reference data relating to those financial instruments.
Identifying reference data shall be made ready for submission to ESMA in an electronic and standardised format before trading commences in the financial instrument that it refers to. The financial instrument reference data shall be updated whenever there are changes to the data with respect to a financial instrument. ESMA shall publish those reference data immediately on its website. ESMA shall give competent authorities access without undue delay to those reference data.
In order to allow competent authorities to monitor, pursuant to Article 26, the activities of investment firms to ensure that they act honestly, fairly and professionally and in a manner which promotes the integrity of the market, ESMA shall, after consulting the competent authorities, establish the necessary arrangements in order to ensure that:
ESMA effectively receives the financial instrument reference data pursuant to paragraph 1 of this Article;
the quality of the financial instrument reference data received pursuant to paragraph 1 of this Article is appropriate for the purpose of transaction reporting under Article 26;
the financial instrument reference data received pursuant to paragraph 1 of this Article is efficiently and without undue delay transmitted to the relevant competent authorities;
there are effective mechanisms in place between ESMA and the competent authorities to resolve data delivery or data quality issues.
ESMA shall develop draft regulatory technical standards to specify:
data standards and formats for the financial instrument reference data in accordance with paragraph 1, including the methods and arrangements for supplying the data and any update thereto to ESMA and transmitting it to competent authorities in accordance with paragraph 1, and the form and content of such data;
the technical measures that are necessary in relation to the arrangements to be made by ESMA and the competent authorities pursuant to paragraph 2.
Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
ESMA may suspend the reporting obligations specified in paragraph 1 for certain or all financial instruments where all of the following conditions are met:
the suspension is necessary in order to preserve the integrity and quality of the reference data subject to reporting obligation as specified in paragraph 1 which may be put at risk by any of the following:
serious incompleteness, inaccuracy or corruption of the submitted data, or
unavailability in a timely manner, disruption or damage of the functioning of systems used for the submitting, collecting, processing or storing the respective reference data by ESMA, national competent authorities, market infrastructures, clearing and settlement systems, and important market participants;
the existing Union regulatory requirements that are applicable do not address the threat;
the suspension does not have any detrimental effect on the efficiency of financial markets or investors that is disproportionate to the benefits of the action;
the suspension does not create any regulatory arbitrage.
When taking the measure referred to in the first subparagraph of this paragraph, ESMA shall take into account the extent to which the measure ensures the accuracy and completeness of the reported data for the purposes specified in paragraph 2.
Before deciding to take the measure referred to in the first subparagraph, ESMA shall notify the relevant competent authorities.
The Commission is empowered to adopt delegated acts in accordance with Article 50 in order to supplement this Regulation by specifying the conditions referred to in the first subparagraph and the circumstances under which the suspension referred to in that subparagraph ceases to apply.
TITLE IVa
DATA REPORTING SERVICES
CHAPTER 1
Authorisation of data reporting services providers
Article 27a
For the purposes of this Title, a national competent authority means a competent authority as defined in point (26) of Article 4(1) of Directive 2014/65/EU.
Article 27b
Requirement for authorisation
By way of derogation from the first subparagraph of this paragraph, an APA or ARM identified in accordance with the delegated act referred to in Article 2(3) shall be subject to prior authorisation and supervision by the relevant national competent authority in accordance with this Title.
Where ESMA, or a national competent authority where relevant, has withdrawn an authorisation in accordance with Article 27e, that withdrawal shall be published in the register for a period of five years.
Article 27c
Authorisation of data reporting services providers
Data reporting services providers shall be authorised by ESMA, or the national competent authority where relevant, for the purposes of this Title where:
the data reporting services provider is a legal person established in the Union; and
the data reporting services provider meets the requirements laid down in this Title.
Article 27d
Procedures for granting and refusing applications for authorisation
Where the application is not complete, ESMA, or the national competent authority where relevant, shall set a deadline by which the data reporting services provider is to provide additional information.
After assessing an application as complete, ESMA, or the national competent authority where relevant, shall notify the data reporting services provider accordingly.
ESMA shall develop draft regulatory technical standards to determine:
the information to be provided under paragraph 1, including the programme of operations;
the information included in the notifications under Article 27f(2).
Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Power is conferred on the Commission to adopt the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Article 27e
Withdrawal of authorisation
ESMA, or the national competent authority where relevant, may withdraw the authorisation of a data reporting services provider where the latter:
does not make use of the authorisation within 12 months, expressly renounces the authorisation or has provided no services for the preceding six months;
obtained the authorisation by making false statements or by any other irregular means;
no longer meets the conditions under which it was authorised;
has seriously and systematically infringed this Regulation.
Article 27f
Requirements for the management body of a data reporting services provider
The management body shall possess adequate collective knowledge, skills and experience to be able to understand the activities of the data reporting services provider. Each member of the management body shall act with honesty, integrity and independence of mind to effectively challenge the decisions of the senior management where necessary and to effectively oversee and monitor management decision-making where necessary.
Where a market operator seeks authorisation to operate an APA, a CTP or an ARM pursuant to Article 27d and the members of the management body of the APA, the CTP or the ARM are the same as the members of the management body of the regulated market, those persons are deemed to comply with the requirements laid down in the first subparagraph.
Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
CHAPTER 2
Conditions for APAs, CTPs and ARMs
Article 27g
Organisational requirements for APAs
The information made public by an APA in accordance with paragraph 1 shall include, at least, the following details:
the identifier of the financial instrument;
the price at which the transaction was concluded;
the volume of the transaction;
the time of the transaction;
the time the transaction was reported;
the price notation of the transaction;
the code for the trading venue the transaction was executed on, or where the transaction was executed via a systematic internaliser the code ‘SI’ or otherwise the code ‘OTC’;
if applicable, an indicator that the transaction was subject to specific conditions.
Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
ESMA shall develop draft regulatory technical standards specifying:
the means by which an APA may comply with the information obligation referred to in paragraph 1;
the content of the information published under paragraph 1, including at least the information referred to in paragraph 2 in such a way as to enable the publication of information required under this Article;
the concrete organisational requirements laid down in paragraphs 3, 4 and 5.
Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 27h
Organisational requirements for CTPs
That information shall include, at least, the following details:
the identifier of the financial instrument;
the price at which the transaction was concluded;
the volume of the transaction;
the time of the transaction;
the time the transaction was reported;
the price notation of the transaction;
the code for the trading venue the transaction was executed on, or where the transaction was executed via a systematic internaliser the code ‘SI’ or otherwise the code ‘OTC’;
where applicable, the fact that a computer algorithm within the investment firm was responsible for the investment decision and the execution of the transaction;
if applicable, an indicator that the transaction was subject to specific conditions;
if the obligation to make public the information referred to in Article 3(1) was waived in accordance with point (a) or (b) of Article 4(1), a flag to indicate which of those waivers the transaction was subject to.
The information shall be made available free of charge 15 minutes after the CTP has published it. The CTP shall be able to efficiently and consistently disseminate such information in a way that ensures fast access to the information, on a non-discriminatory basis and in formats that are easily accessible and utilisable for market participants.
A CTP shall have adequate policies and arrangements in place to collect the information made public in accordance with Article 10 and Article 21, consolidate it into a continuous electronic data stream, and make information available to the public as close to real time as is technically possible, on a reasonable commercial basis including, at least, the following details:
the identifier or identifying features of the financial instrument;
the price at which the transaction was concluded;
the volume of the transaction;
the time of the transaction;
the time the transaction was reported;
the price notation of the transaction;
the code for the trading venue the transaction was executed on, or where the transaction was executed via a systematic internaliser the code ‘SI’ or otherwise the code ‘OTC’;
if applicable, an indicator that the transaction was subject to specific conditions.
The information shall be made available free of charge 15 minutes after the CTP has published it. The CTP shall be able to efficiently and consistently disseminate such information in a way that ensures fast access to the information, on a non-discriminatory basis, and in generally accepted formats that are interoperable and easily accessible and utilisable for market participants.
Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
ESMA shall develop draft regulatory technical standards specifying:
the means by which the CTP may comply with the information obligation referred to in paragraphs 1 and 2;
the content of the information published under paragraphs 1 and 2;
the financial instruments data of which must be provided in the data stream and for non-equity instruments the trading venues and APAs which need to be included;
other means to ensure that the data published by different CTPs is consistent and allows for comprehensive mapping and cross-referencing against similar data from other sources, and is capable of being aggregated at Union level;
the concrete organisational requirements laid down in paragraphs 4 and 5.
Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 27i
Organisational requirements for ARMs
The ARM shall have systems in place to enable the ARM to detect errors or omissions caused by the ARM itself and to enable the ARM to correct and transmit, or re-transmit as the case may be, correct and complete transaction reports to the competent authority.
ESMA shall develop draft regulatory technical standards specifying:
the means by which the ARM may comply with the information obligation referred to in paragraph 1; and
the concrete organisational requirements laid down in paragraphs 2, 3 and 4.
Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
TITLE V
DERIVATIVES
Article 28
Obligation to trade on regulated markets, MTFs or OTFs
Financial counterparties as defined in Article 2(8) of Regulation (EU) No 648/2012 and non-financial counterparties that meet the conditions referred to in Article 10(1)(b) thereof shall conclude transactions which are neither intragroup transactions as defined in Article 3 of that Regulation nor transactions covered by the transitional provisions in Article 89 of that Regulation with other such financial counterparties or other such non-financial counterparties that meet the conditions referred to in Article 10(1)(b) of Regulation (EU) No 648/2012 in derivatives pertaining to a class of derivatives that has been declared subject to the trading obligation in accordance with the procedure set out in Article 32 and listed in the register referred to in Article 34 only on:
regulated markets;
MTFs;
OTFs; or
third-country trading venues, provided that the Commission has adopted a decision in accordance with paragraph 4 and provided that the third country provides for an effective equivalent system for the recognition of trading venues authorised under Directive 2014/65/EU to admit to trading or trade derivatives declared subject to a trading obligation in that third country on a non-exclusive basis.
ESMA shall regularly monitor the activity in derivatives which have not been declared subject to the trading obligation as described in paragraph 1 in order to identify cases where a particular class of contracts may pose systemic risk and to prevent regulatory arbitrage between derivative transactions subject to the trading obligation and derivative transactions which are not subject to the trading obligation.
Those decisions shall be for the sole purpose of determining eligibility as a trading venue for derivatives subject to the trading obligation.
The legal and supervisory framework of a third country is considered to have equivalent effect where that framework fulfils all the following conditions:
trading venues in that third country are subject to authorisation and to effective supervision and enforcement on an ongoing basis;
trading venues have clear and transparent rules regarding admission of financial instruments to trading so that such financial instruments are capable of being traded in a fair, orderly and efficient manner, and are freely negotiable;
issuers of financial instruments are subject to periodic and ongoing information requirements ensuring a high level of investor protection;
it ensures market transparency and integrity via rules addressing market abuse in the form of insider dealing and market manipulation;
A decision of the Commission under this paragraph may be limited to a category or categories of trading venues. In that case, a third-country trading venue is only included in paragraph 1(d) if it falls within a category covered by the Commission’s decision.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Where possible and appropriate, the regulatory technical standards referred to in this paragraph shall be identical to those adopted under Article 4(4) of Regulation (EU) No 648/2012.
Article 29
Clearing obligation for derivatives traded on regulated markets and timing of acceptance for clearing
In this paragraph, ‘cleared derivatives’ means
all derivatives which are to be cleared pursuant to the clearing obligation under paragraph 1 of this Article or pursuant to the clearing obligation under Article 4 of Regulation (EU) No 648/2012;
all derivatives which are otherwise agreed by the relevant parties to be cleared.
ESMA shall have ongoing authority to develop further regulatory technical standards to update those in force if it considers that that is required as industry standards evolve.
ESMA shall submit the draft regulatory technical standards referred to in the first subparagraph to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first and second subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 30
Indirect Clearing Arrangements
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 31
Portfolio Compression
The Commission may adopt by means of delegated acts in accordance with Article 50, measures specifying the following:
the elements of portfolio compression,
the information to be published pursuant to paragraph 2,
in such a way as to make use as far as possible of any existing record keeping, reporting or publication requirements.
Article 32
Trading obligation procedure
ESMA shall develop draft regulatory technical standards to specify the following:
which of the class of derivatives declared subject to the clearing obligation in accordance with Article 5(2) and (4) of Regulation (EU) No 648/2012 or a relevant subset thereof shall be traded on the venues referred to in Article 28(1) of this Regulation;
the date or dates from which the trading obligation takes effect, including any phase-in and the categories of counterparties to which the obligation applies where such phase-in and such categories of counterparties have been provided for in regulatory technical standards in accordance with Article 5(2)(b) of Regulation (EU) No 648/2012.
ESMA shall submit those draft regulatory technical standards to the Commission within six months after the adoption of the regulatory technical standards in accordance with Article 5(2) of Regulation (EU) No 648/2012 by the Commission.
Before submitting the draft regulatory technical standards to the Commission for adoption, ESMA shall conduct a public consultation and, where appropriate, may consult third-country competent authorities.
Power is conferred to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
In order for the trading obligation to take effect:
the class of derivatives pursuant to paragraph 1(a) or a relevant subset thereof must be admitted to trading or traded on at least one trading venue as referred to in Article 28(1), and
there must be sufficient third-party buying and selling interest in the class of derivatives or a relevant subset thereof so that such a class of derivatives is considered sufficiently liquid to trade only on the venues referred to in Article 28(1).
In developing the draft regulatory technical standards referred to in paragraph 1, ESMA shall consider the class of derivatives or a relevant subset thereof as sufficiently liquid pursuant to the following criteria:
the average frequency and size of trades over a range of market conditions, having regard to the nature and lifecycle of products within the class of derivatives;
the number and type of active market participants including the ratio of market participants to products/contracts traded in a given product market;
the average size of the spreads.
In preparing those draft regulatory technical standards, ESMA shall take into consideration the anticipated impact that trading obligation might have on the liquidity of a class of derivatives or a relevant subset thereof and the commercial activities of end users which are not financial entities.
ESMA shall determine whether the class of derivatives or relevant subset thereof is only sufficiently liquid in transactions below a certain size.
Following the notification by ESMA referred to in the first subparagraph, the Commission may publish a call for development of proposals for the trading of those derivatives on the venues referred to in Article 28(1).
Power is conferred to the Commission to adopt regulatory technical standards referred to in this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
ESMA shall submit drafts for those regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 33
Mechanism to avoid duplicative or conflicting rules
The Commission may adopt implementing acts declaring that the legal, supervisory and enforcement arrangements of the relevant third country:
are equivalent to the requirements resulting from Articles 28 and 29;
ensure protection of professional secrecy that is equivalent to that set out in this Regulation;
are being effectively applied and enforced in an equitable and non-distortive manner so as to ensure effective supervision and enforcement in that third country.
Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 51.
Within 30 calendar days of the presentation of the report where the report reveals a significant defect or inconsistency in the application of the equivalent requirements by third-country authorities, the Commission may withdraw the recognition as equivalent of the third-country legal framework in question. Where an implementing act on equivalence is withdrawn, transactions by counterparties shall automatically be subject again to all requirements contained in Articles 28 and 29 of this Regulation.
Article 34
Register of derivatives subject to the trading obligation
ESMA shall publish and maintain on its website a register specifying, in an exhaustive and unequivocal manner, the derivatives that are subject to the obligation to trade on the venues referred to in Article 28(1), the venues where they are admitted to trading or traded, and the dates from which the obligation takes effect.
TITLE VI
NON-DISCRIMINATORY CLEARING ACCESS FOR FINANCIAL INSTRUMENTS
Article 35
Non-discriminatory access to a CCP
Without prejudice to Article 7 of Regulation (EU) No 648/2012, a CCP shall accept to clear financial instruments on a non-discriminatory and transparent basis, including as regards collateral requirements and fees relating to access, regardless of the trading venue on which a transaction is executed. This in particular shall ensure that a trading venue has the right to non-discriminatory treatment of contracts traded on that trading venue in terms of:
collateral requirements and netting of economically equivalent contracts, where the inclusion of such contracts in the close-out and other netting procedures of a CCP based on the applicable insolvency law would not endanger the smooth and orderly functioning, the validity or enforceability of such procedures; and
cross-margining with correlated contracts cleared by the same CCP under a risk model that complies with Article 41 of Regulation (EU) No 648/2012.
A CCP may require that the trading venue comply with the operational and technical requirements established by the CCP including the risk management requirements. The requirement in this paragraph does not apply to any derivative contract that is already subject to the access obligations under Article 7 of Regulation (EU) No 648/2012.
A CCP is not bound by this Article if it is connected by close links to a trading venue which has given notification under Article 36(5).
The competent authority of the CCP or that of the trading venue shall grant a trading venue access to a CCP only where such access:
would not require an interoperability arrangement, in the case of derivatives that are not OTC derivatives pursuant to Article 2(7) of Regulation (EU) No 648/2012; or
would not threaten the smooth and orderly functioning of the markets, in particular due to liquidity fragmentation, or would not adversely affect systemic risk.
Nothing in point (a) of the first subparagraph shall prevent access being granted where the request referred to in paragraph 2 requires interoperability and the trading venue and all CCPs party to the proposed interoperability arrangement have consented to the arrangement and the risks to which the incumbent CCP is exposed to arising from inter-CCP positions are collateralised at a third party.
Where the need for an interoperability arrangement is the reason or is part of the reason for denying a request, the trading venue will advise the CCP and inform ESMA which other CCPs have access to the trading venue and ESMA will publish that information so that investment firms may choose to exercise their rights under Article 37 of Directive 2014/65/EU in respect of those CCPs in order to facilitate alternative access arrangements.
If a competent authority refuses access it shall issue its decision within two months following receipt of the request referred to in paragraph 2 and provide full reasons to the other competent authority, the CCP and the trading venue including the evidence on which the decision is based.
Where such a transitional period is approved, the CCP cannot benefit from the access rights under Article 36 or this Article in respect of transferable securities and money market instruments for the duration of that transitional arrangement. The competent authority shall notify members of the college of competent authorities for the CCP and ESMA when a transitional period is approved. ESMA shall publish a list of all notifications that it receives.
Where a CCP which has been approved for the transitional arrangements under this paragraph is connected by close links to one or more trading venues, those trading venues shall not benefit from access rights under Article 36 or this Article in respect of transferable securities and money market instruments for the duration of the transitional arrangement.
A CCP which is authorised during the three year period prior to entry into force, but is formed by a merger or acquisition involving at least one CCP authorised prior to that period, shall not be permitted to apply for the transitional arrangements under this paragraph.
ESMA shall develop draft regulatory technical standards to specify:
the specific conditions under which an access request may be denied by a CCP, including the anticipated volume of transactions, the number and type of users, arrangements for managing operational risk and complexity or other factors creating significant undue risks;
the conditions under which access must be permitted by a CCP, including confidentiality of information provided regarding financial instruments during the development phase, the non-discriminatory and transparent basis as regards clearing fees, collateral requirements and operational requirements regarding margining;
the conditions under which granting access will threaten the smooth and orderly functioning of markets or would adversely affect systemic risk;
the procedure for making a notification under paragraph 5;
the conditions for non-discriminatory treatment in terms of how contracts traded on that trading venue are treated in terms of collateral requirements and netting of economically equivalent contracts and cross-margining with correlated contracts cleared by the same CCP.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 36
Non-discriminatory access to a trading venue
A trading venue is not bound by this Article if it is connected by close links to a CCP which has given notification that it is availing of the transitional arrangements under Article 35(5).
The competent authority of the trading venue or that of the CCP shall grant a CCP access to a trading venue only where such access:
would not require an interoperability arrangement, in the case of derivatives that are not OTC derivatives pursuant to Article 2(7) of Regulation (EU) No 648/2012; or
would not threaten the smooth and orderly functioning of the markets, in particular due to liquidity fragmentation and the trading venue has put in place adequate mechanisms to prevent such fragmentation, or would not adversely affect systemic risk.
Nothing in point (a) of the first subparagraph shall prevent access being granted where the request referred to in paragraph 2 requires interoperability and the trading venue and all CCPs party to the proposed interoperability arrangement have consented to the arrangement and the risks to which the incumbent CCP is exposed to arising from inter-CCP positions are collateralised at a third party.
Where the need for an interoperability arrangement is the reason or is part of the reason for denying a request, the trading venue will advise the CCP and inform ESMA which other CCPs have access to the trading venue and ESMA will publish that information so that investment firms may choose to exercise their rights under Article 37 of Directive 2014/65/EU in respect of those CCPs in order to facilitate alternative access arrangements.
If a competent authority denies access it shall issue its decision within two months following receipt of the request referred to in paragraph 2 and provide full reasons to the other competent authority, the trading venue and the CCP including the evidence on which its decision is based.
The relevant threshold for the opt-out is an annual notional amount traded of EUR 1 000 000 million. The notional amount shall be single-counted and shall include all transactions in exchange-traded derivatives concluded under the rules of the trading venue.
Where a trading venue is part of a group which is connected by close links, the threshold shall be calculated by adding the annual notional amount traded of all the trading venues in the group as a whole that are based in the Union.
Where a trading venue which has made a notification under this paragraph is connected by close links to one or more CCPs, those CCPs shall not benefit from access rights under Article 35 or this Article for exchange-traded derivatives within the relevant threshold, for the duration of the opt-out.
ESMA shall develop draft regulatory technical standards to specify:
the specific conditions under which an access request may be denied by a trading venue, including conditions based on the anticipated volume of transactions, the number of users, arrangements for managing operational risk and complexity or other factors creating significant undue risks;
the conditions under which access shall be granted, including confidentiality of information provided regarding financial instruments during the development phase and the non-discriminatory and transparent basis as regards fees related to access;
the conditions under which granting access will threaten the smooth and orderly functioning of the markets, or would adversely affect systemic risk;
the procedure for making a notification under paragraph 5, including further specifications for calculation of the notional amount and the method by which ESMA may verify the calculation of the volumes and approve the opt-out.
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 37
Non-discriminatory access to and obligation to licence benchmarks
Where the value of any financial instrument is calculated by reference to a benchmark, a person with proprietary rights to the benchmark shall ensure that CCPs and trading venues are permitted, for the purposes of trading and clearing, non-discriminatory access to:
relevant price and data feeds and information on the composition, methodology and pricing of that benchmark for the purposes of clearing and trading; and
licences.
A licence including access to information shall be granted on a fair, reasonable and non-discriminatory basis within three months following the request by a CCP or a trading venue.
Access shall be given at a reasonable commercial price taking into account the price at which access to the benchmark is granted or the intellectual property rights are licensed on equivalent terms to another CCP, trading venues or any related persons for the purposes of clearing and trading. Different prices can be charged to different CCPs, trading venues or any related persons only where objectively justified having regard to reasonable commercial grounds such as the quantity, scope or field of use demanded.
Where a new benchmark is developed after ►M1 3 January 2018 ◄ the obligation to licence starts no later than 30 months after a financial instrument referencing that benchmark commenced trading or was admitted to trading. Where a person with proprietary rights to a new benchmark owns an existing benchmark, that person shall establish that compared to any such existing benchmark the new benchmark meets the following cumulative criteria:
the new benchmark is not a mere copy or adaptation of any such existing benchmark and the methodology, including the underlying data, of the new benchmark is meaningfully different from any such existing benchmark; and
the new benchmark is not a substitute for any such existing benchmark.
This paragraph shall be without prejudice to the application of competition rules and, in particular, Article 101 and 102 TFEU.
No CCP, trading venue or related entity may enter into an agreement with any provider of a benchmark the effect of which would be either:
to prevent any other CCP or trading venue from obtaining access to such information or rights as referred to in paragraph 1; or
to prevent any other CCP or trading venue from obtaining access to such a licence, as referred to in paragraph 1.
ESMA shall develop draft regulatory technical standards to specify:
the information through licensing to be made available under paragraph 1(a) for the sole use of the CCP or trading venue;
other conditions under which access is granted, including confidentiality of information provided;
the standards guiding how a benchmark may be proven to be new in accordance with paragraph 2(a) and (b).
ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 38
Access for third-country CCPs and trading venues
CCPs and trading venues established in third countries may only request a licence and the access rights in accordance with Article 37 provided that the Commission has adopted a decision in accordance with paragraph 3 of this Article that the legal and supervisory framework of that third country is considered to provide for an effective equivalent system under which CCPs and trading venues authorised in foreign jurisdictions are permitted access on a fair reasonable and non-discriminatory basis to:
relevant price and data feeds and information of composition, methodology and pricing of benchmarks for the purposes of clearing and trading; and
licences,
from persons with proprietary rights to benchmarks established in that third country.
The legal and supervisory framework of a third country is considered equivalent where that framework fulfils all the following conditions:
trading venues in that third country are subject to authorisation and to effective supervision and enforcement on an ongoing basis;
it provides for an effective equivalent system for permitting CCPs and trading venues authorised under foreign regimes access to CCPs and trading venues established in that third country;
the legal and supervisory framework of that third country provides for an effective equivalent system under which CCPs and trading venues authorised in foreign jurisdictions are permitted access on a fair reasonable and non discriminatory basis to:
relevant price and data feeds and information of composition, methodology and pricing of benchmarks for the purposes of clearing and trading; and
licences,
from persons with proprietary rights to benchmarks established in that third country.
TITLE VIa
ESMA POWERS AND COMPETENCES
CHAPTER 1
Competences and procedures
Article 38a
Exercise of ESMA’s powers
The powers conferred on ESMA or any official of or other person authorised by ESMA by Articles 38b to 38e shall not be used to require the disclosure of information or documents which are subject to legal privilege.
Article 38b
Request for information
ESMA may by simple request or by decision require the following persons to provide all information to enable ESMA to carry out its duties under this Regulation:
an APA, a CTP, an ARM, where they are supervised by ESMA, and an investment firm or a market operator operating a trading venue to operate the data reporting services of an APA, a CTP or an ARM, and the persons that control them or are controlled by them;
the managers of the persons referred to in point (a);
the auditors and advisors of the persons referred to in point (a);
Any simple request for information referred to in paragraph 1 shall:
refer to this Article as the legal basis of that request;
state the purpose of the request;
specify the information required;
include a time limit within which the information is to be provided;
include a statement that there is no obligation on the person from whom the information is requested to provide that information but that in the event of a voluntary reply to the request, the information provided must not be incorrect or misleading;
indicate the amount of the fine to be imposed in accordance with Article 38h where the information provided is incorrect or misleading.
When requiring to supply information under paragraph 1 by decision, ESMA shall:
refer to this Article as the legal basis of that request;
state the purpose of the request;
specify the information required;
set a time limit within which the information is to be provided;
indicate the periodic penalty payments provided for in Article 38i where the production of the required information is incomplete;
indicate the fine provided for in Article 38h, where the answers to questions asked are incorrect or misleading;
indicate the right to appeal the decision before ESMA’s Board of Appeal and to have the decision reviewed by the Court of Justice of the European Union (Court of Justice) in accordance with Articles 60 and 61 of Regulation (EU) No 1095/2010.
Article 38c
General investigations
In order to carry out its duties under this Regulation, ESMA may conduct necessary investigations of persons referred to in Article 38b(1). To that end, the officials and other persons authorised by ESMA shall be empowered to:
examine any records, data, procedures and any other material relevant to the execution of its tasks irrespective of the medium on which they are stored;
take or obtain certified copies of or extracts from such records, data, procedures and other material;
summon and ask any person referred to in Article 38b(1) or their representatives or staff for oral or written explanations on facts or documents relating to the subject matter and purpose of the inspection and to record the answers;
interview any other natural or legal person who consents to be interviewed for the purpose of collecting information relating to the subject matter of an investigation;
request records of telephone and data traffic.
Where a national judicial authority receives an application for the authorisation of a request for records of telephone or data traffic referred to in point (e) of paragraph 1, that authority shall verify the following:
the decision adopted by ESMA referred to in paragraph 3 is authentic;
any measures to be taken are proportionate and not arbitrary or excessive.
For the purposes of point (b), the national judicial authority may ask ESMA for detailed explanations, in particular relating to the grounds ESMA has for suspecting that an infringement of this Regulation has taken place and the seriousness of the suspected infringement and the nature of the involvement of the person subject to the coercive measures. However, the national judicial authority shall not review the necessity for the investigation or demand that it be provided with the information on ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by the Court of Justice following the procedure set out in Regulation (EU) No 1095/2010.
Article 38d
On-site inspections
Where a national judicial authority receives an application for the authorisation of an on-site inspection provided for in paragraph 1 or the assistance provided for in paragraph 7, that authority shall verify the following:
the decision adopted by ESMA referred to in paragraph 5 is authentic;
any measures to be taken are proportionate and not arbitrary or excessive.
For the purposes of point (b), the national judicial authority may ask ESMA for detailed explanations, in particular relating to the grounds ESMA has for suspecting that an infringement of this Regulation has taken place and the seriousness of the suspected infringement and the nature of the involvement of the person subject to the coercive measures. However, the national judicial authority shall not review the necessity for the investigation or demand that it be provided with the information on ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by the Court of Justice following the procedure set out in Regulation (EU) No 1095/2010.
Article 38e
Exchange of information
ESMA and the competent authorities shall, without undue delay, provide each other with the information required for the purposes of carrying out their duties under this Regulation.
Article 38f
Professional secrecy
The obligation of professional secrecy referred to in Article 76 of Directive 2014/65/EU shall apply to ESMA and all persons who work or who have worked for ESMA or for any other person to whom ESMA has delegated tasks, including auditors and experts contracted by ESMA.
Article 38g
Supervisory measures by ESMA
Where ESMA finds that a person listed in point (a) of Article 38b(1) has committed one of the infringements of requirements provided for in Title IVa, it shall take one or more of the following actions:
adopt a decision requiring the person to bring the infringement to an end;
adopt a decision imposing fines or periodic penalty payments pursuant to Articles 38h and 38i;
issue public notices.
When taking the actions referred to in paragraph 1, ESMA shall take into account the nature and seriousness of the infringement, having regard to the following criteria:
the duration and frequency of the infringement;
whether financial crime has been occasioned, facilitated or otherwise attributable to the infringement;
whether the infringement has been committed intentionally or negligently;
the degree of responsibility of the person responsible for the infringement;
the financial strength of the person responsible for the infringement, as indicated by the total turnover of the responsible legal person or the annual income and net assets of the responsible natural person;
the impact of the infringement on investors’ interests;
the importance of the profits gained, losses avoided by the person responsible for the infringement or the losses for third parties derived from the infringement, insofar as they can be determined;
the level of cooperation of the person responsible for the infringement with ESMA, without prejudice to the need to ensure disgorgement of profits gained or losses avoided by that person;
previous infringements by the person responsible for the infringement;
measures taken after the infringement by the person responsible for the infringement to prevent its repetition.
The disclosure to the public referred to in the first subparagraph shall include the following:
a statement affirming the right of the person responsible for the infringement to appeal the decision;
where relevant, a statement affirming that an appeal has been lodged and specifying that such an appeal does not have suspensive effect;
a statement asserting that it is possible for ESMA’s Board of Appeal to suspend the application of the contested decision in accordance with Article 60(3) of Regulation (EU) No 1095/2010.
CHAPTER 2
Administrative sanctions and other administrative measures
Article 38h
Fines
An infringement shall be considered to have been committed intentionally if ESMA finds objective factors which demonstrate that a person acted deliberately to commit the infringement.
Article 38i
Periodic penalty payments
ESMA shall, by decision, impose periodic penalty payments in order to compel:
a person to put an end to an infringement in accordance with a decision taken pursuant to point (a) of Article 38g(1);
a person referred to in Article 38b(1):
to supply complete information which has been requested by a decision pursuant to Article 38b;
to submit to an investigation and in particular to produce complete records, data, procedures or any other material required and to complete and correct other information provided in an investigation launched by a decision pursuant to Article 38c;
to submit to an on-site inspection ordered by a decision taken pursuant to Article 38d.
Article 38j
Disclosure, nature, enforcement and allocation of fines and periodic penalty payments
Enforcement shall be governed by the rules of procedure in force in the Member State in the territory of which it is carried out.
Article 38k
Procedural rules for taking supervisory measures and imposing fines
Article 38l
Hearing of the persons concerned
The first subparagraph shall not apply if urgent action is needed in order to prevent significant and imminent damage to the financial system. In such a case ESMA may adopt an interim decision and shall give the persons concerned the opportunity to be heard as soon as possible after taking its decision.
Article 38m
Review by the Court of Justice
The Court of Justice shall have unlimited jurisdiction to review decisions whereby ESMA has imposed a fine or a periodic penalty payment. It may annul, reduce or increase the fine or periodic penalty payment imposed.
Article 38n
Authorisation and supervisory fees
Article 38o
Delegation of tasks by ESMA to competent authorities
Prior to delegation of a task, ESMA shall consult the relevant competent authority about:
the scope of the task to be delegated;
the timetable for the performance of the task; and
the transmission of necessary information by and to ESMA.
TITLE VII
SUPERVISORY MEASURES ON PRODUCT INTERVENTION AND POSITIONS
CHAPTER 1
Product monitoring and intervention
Article 39
Market monitoring
Article 40
ESMA temporary intervention powers
In accordance with Article 9(5) of Regulation (EU) No 1095/2010, ESMA may, where the conditions in paragraphs 2 and 3 are fulfilled, temporarily prohibit or restrict in the Union:
the marketing, distribution or sale of certain financial instruments or financial instruments with certain specified features; or
a type of financial activity or practice.
A prohibition or restriction may apply in circumstances, or be subject to exceptions, specified by ESMA.
ESMA shall take a decision under paragraph 1 only if all of the following conditions are fulfilled:
the proposed action addresses a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of the whole or part of the financial system in the Union;
regulatory requirements under Union law that are applicable to the relevant financial instrument or activity do not address the threat;
a competent authority or competent authorities have not taken action to address the threat or the actions that have been taken do not adequately address the threat.
Where the conditions set out in the first subparagraph are fulfilled, ESMA may impose the prohibition or restriction referred to in paragraph 1 on a precautionary basis before a financial instrument has been marketed, distributed or sold to clients.
When taking action under this Article, ESMA shall ensure that the action:
does not have a detrimental effect on the efficiency of financial markets or on investors that is disproportionate to the benefits of the action;
does not create a risk of regulatory arbitrage, and
has been taken after consulting the public bodies competent for the oversight, administration and regulation of physical agricultural markets under Regulation (EC) No 1234/2007, where the measure relates to agricultural commodities derivatives.
Where a competent authority or competent authorities have taken a measure under Article 42, ESMA may take any of the measures referred to in paragraph 1 without issuing the opinion provided for in Article 43.
Those criteria and factors shall include:
the degree of complexity of a financial instrument and the relation to the type of client to whom it is marketed and sold;
the size or the notional value of an issuance of financial instruments;
the degree of innovation of a financial instrument, an activity or a practice;
the leverage a financial instrument or practice provides.
Article 41
EBA temporary intervention powers
In accordance with Article 9(5) of Regulation (EU) No 1093/2010, EBA may where the conditions in paragraphs 2 and 3 are fulfilled, temporarily prohibit or restrict in the Union:
the marketing, distribution or sale of certain structured deposits or structured deposits with certain specified features; or
a type of financial activity or practice.
A prohibition or restriction may apply in circumstances, or be subject to exceptions, specified by EBA.
EBA shall take a decision under paragraph 1 only if all of the following conditions are fulfilled:
the proposed action addresses a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or to the stability of the whole or part of the financial system in the Union;
regulatory requirements under Union law that are applicable to the relevant structured deposit or activity do not address the threat;
a competent authority or competent authorities have not taken action to address the threat or the actions that have been taken do not adequately address the threat.
Where the conditions set out in the first subparagraph are fulfilled, EBA may impose the prohibition or restriction referred to in paragraph 1 on a precautionary basis before a structured deposit has been marketed, distributed or sold to clients.
When taking action under this Article, EBA shall ensure that the action:
does not have a detrimental effect on the efficiency of financial markets or on investors that is disproportionate to the benefits of the action; and
does not create a risk of regulatory arbitrage.
Where a competent authority or competent authorities have taken a measure under Article 42, EBA may take any of the measures referred to in paragraph 1 without issuing the opinion provided for in Article 43.
Those criteria and factors shall include:
the degree of complexity of a structured deposit and the relation to the type of client to whom it is marketed and sold;
the size or the notional value of an issuance of structured deposits;
the degree of innovation of a structured deposit, an activity or a practice;
the leverage a structured deposit or practice provides.
Article 42
Product intervention by competent authorities
A competent authority may prohibit or restrict the following in or from that Member State:
the marketing, distribution or sale of certain financial instruments or structured deposits or financial instruments or structured deposits with certain specified features; or
a type of financial activity or practice.
A competent authority may take the action referred to in paragraph 1 if it is satisfied on reasonable grounds that:
either
a financial instrument, structured deposit or activity or practice gives rise to significant investor protection concerns or poses a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of whole or part of the financial system within at least one Member State; or
a derivative has a detrimental effect on the price formation mechanism in the underlying market;
existing regulatory requirements under Union law applicable to the financial instrument, structured deposit or activity or practice do not sufficiently address the risks referred to in point (a) and the issue would not be better addressed by improved supervision or enforcement of existing requirements;
the action is proportionate taking into account the nature of the risks identified, the level of sophistication of investors or market participants concerned and the likely effect of the action on investors and market participants who may hold, use or benefit from the financial instrument, structured deposit or activity or practice;
the competent authority has properly consulted competent authorities in other Member States that may be significantly affected by the action;
the action does not have a discriminatory effect on services or activities provided from another Member State; and
it has properly consulted public bodies competent for the oversight, administration and regulation of physical agricultural markets under Regulation (EC) No 1234/2007, where a financial instrument or activity or practice poses a serious threat to the orderly functioning and integrity of the physical agricultural market.
Where the conditions set out in the first subparagraph are fulfilled, the competent authority may impose the prohibition or restriction referred to in paragraph 1 on a precautionary basis before a financial instrument or structured deposit has been marketed, distributed or sold to clients.
A prohibition or restriction may apply in circumstances, or be subject to exceptions, specified by the competent authority.
The competent authority shall not impose a prohibition or restriction under this Article unless, not less than one month before the measure is intended to take effect, it has notified all other competent authorities and ESMA in writing or through another medium agreed between the authorities the details of:
the financial instrument or activity or practice to which the proposed action relates;
the precise nature of the proposed prohibition or restriction and when it is intended to take effect; and
the evidence upon which it has based its decision and upon which it is satisfied that each of the conditions in paragraph 2 are met.
Those criteria and factors shall include:
the degree of complexity of a financial instrument or structured deposit and the relation to the type of client to whom it is marketed, distributed and sold;
the degree of innovation of a financial instrument or structured deposit, an activity or a practice;
the leverage a financial instrument or structured deposit or practice provides;
in relation to the orderly functioning and integrity of financial markets or commodity markets, the size or the notional value of an issuance of financial instruments or structured deposits.
Article 43
Coordination by ESMA and EBA
CHAPTER 2
Positions
Article 44
Coordination of national position management measures and position limits by ESMA
Article 45
Position management powers of ESMA
In accordance with Article 9(5) of Regulation (EU) No 1095/2010, ESMA shall, where both conditions in paragraph 2 are satisfied, take one or more of the following measures:
request from any person all relevant information regarding the size and purpose of a position or exposure entered into via a derivative;
after analysing the information obtained in accordance with point (a), require any such person to reduce the size of or to eliminate the position or exposure in accordance with the delegated act referred to in paragraph 10(b);
as a last resort, limit the ability of a person from entering into a commodity derivative.
ESMA shall take a decision under paragraph 1 only if both of the following conditions are fulfilled:
the measures listed in paragraph 1 address a threat to the orderly functioning and integrity of financial markets, including commodity derivative markets in accordance with the objectives listed in Article 57(1) of Directive 2014/65/EU and including in relation to delivery arrangements for physical commodities, or to the stability of the whole or part of the financial system in the Union;
a competent authority or competent authorities have not taken measures to address the threat or the measures taken do not sufficiently address the threat;
ESMA shall perform its assessment of the fulfilment of the conditions referred to in points (a) and (b) of the first subparagraph of this paragraph in accordance with the criteria and factors provided for in the delegated act referred to in paragraph 10(a) of this Article.
When taking measures referred to in paragraph 1 ESMA shall ensure that the measure:
significantly addresses the threat to the orderly functioning and integrity of financial markets, including commodity derivative markets in accordance with the objectives listed in Article 57(1) of Directive 2014/65/EU and including in relation to delivery arrangements for physical commodities, or to the stability of the whole or part of the financial system in the Union or significantly improve the ability of competent authorities to monitor the threat as measured in accordance with the criteria and factors provided for in the delegated act referred to in paragraph 10(a) of this Article;
does not create a risk of regulatory arbitrage as measured in accordance with paragraph 10(c) of this Article;
does not have any of the following detrimental effects on the efficiency of financial markets that is disproportionate to the benefits of the measure: reducing liquidity in those markets, restraining the conditions for reducing risks directly related to the commercial activity of a non-financial counterparty, or creating uncertainty for market participants.
ESMA shall consult the Agency for the Cooperation of Energy Regulators established under Regulation (EC) No 713/2009 of the European Parliament and of the Council ( 14 ) before taking any measures related to wholesale energy products.
ESMA shall consult the public bodies competent for the oversight, administration and regulation of physical agricultural markets under Regulation (EC) No 1234/2007, before taking any measure related to agricultural commodity derivatives.
The Commission shall adopt in accordance with Article 50 delegated acts to specify criteria and factors to determine:
the existence of a threat to the orderly functioning and integrity of financial markets, including commodity derivative markets in accordance with the objectives listed in Article 57(1) of Directive 2014/65/EU and including in relation to delivery arrangements for physical commodities, or to the stability of the whole or part of the financial system in the Union as referred to in paragraph 2(a) taking account of the degree to which positions are used to hedge positions in physical commodities or commodity contracts and the degree to which prices in underlying markets are set by reference to the prices of commodity derivatives;
the appropriate reduction of a position or exposure entered into via a derivative referred to in paragraph 1(b) of this Article;
the situations where a risk of regulatory arbitrage as referred to in paragraph 3(b) of this Article could arise.
Those criteria and factors shall take into account the regulatory technical standards referred to in Article 57(3) of Directive 2014/65/EU and shall differentiate between situations where ESMA takes action because a competent authority has failed to act and those where ESMA addresses an additional risk which the competent authority is not able to sufficiently address pursuant to Article 69(2)(j) or (o) of Directive 2014/65/EU.
TITLE VIII
PROVISION OF SERVICES AND PERFORMANCE OF ACTIVITIES BY THIRD-COUNTRY FIRMS FOLLOWING AN EQUIVALENCE DECISION WITH OR WITHOUT A BRANCH
Article 46
General provisions
ESMA shall register a third-country firm that has applied for the provision of investment services or performance of activities throughout the Union in accordance with paragraph 1 only where the following conditions are met:
the Commission has adopted a decision in accordance with Article 47(1);
the firm is authorised in the jurisdiction where its head office is established to provide the investment services or activities to be provided in the Union and it is subject to effective supervision and enforcement ensuring a full compliance with the requirements applicable in that third country;
cooperation arrangements have been established pursuant to Article 47(2);
the firm has established the necessary arrangements and procedures to report the information set out in paragraph 6a.
The applicant third-country firm shall provide ESMA with all information necessary for its registration. Within 30 working days of receipt of the application, ESMA shall assess whether the application is complete. If the application is not complete, ESMA shall set a deadline by which the applicant third-country firm is to provide additional information.
The registration decision shall be based on the conditions set out in paragraph 2.
Within 180 working days of the submission of a complete application, ESMA shall inform the applicant third-country firm in writing with a fully reasoned explanation whether the registration has been granted or refused.
Member States may allow third‐country firms to provide investment services to, or to perform investment activities together with ancillary services for, eligible counterparties and professional clients within the meaning of Section I of Annex II to Directive 2014/65/EU in their territories in accordance with national regimes where no Commission decision in accordance with Article 47(1) has been adopted or where such a decision has been adopted but either is no longer in effect or does not cover the services or activities concerned.
The information in the first subparagraph shall be provided in writing and in a prominent way.
Member States shall ensure that where an eligible counterparty or professional client within the meaning of Section I of Annex II to Directive 2014/65/EU established or situated in the Union initiates at its own exclusive initiative the provision of an investment service or activity by a third‐country firm, this Article does not apply to the provision of that service or activity by the third‐country firm to that person, including a relationship specifically related to the provision of that service or activity. Without prejudice to intragroup relationships, where a third‐country firm, including through an entity acting on its behalf or having close links with such third‐country firm or any other person acting on behalf of such entity, solicits clients or potential clients in the Union, it shall not be deemed to be a service provided at the own exclusive initiative of the client. An initiative by such clients shall not entitle the third‐country firm to market new categories of investment products or investment services to that individual.
the scale and scope of the services and activities carried out by the firms in the Union, including the geographical distribution across Member States;
for firms performing the activity referred to in point (3) of Section A of Annex I to Directive 2014/65/EU, their monthly minimum, average and maximum exposure to EU counterparties;
for firms providing services referred to in point (6) of Section A of Annex I to Directive 2014/65/EU, the total value of financial instruments originating from EU counterparties underwritten or placed on a firm commitment basis over the previous 12 months;
the turnover and the aggregated value of the assets corresponding to the services and activities referred to in point (a);
whether investor protection arrangements have been taken, and a detailed description thereof;
the risk management policy and arrangements applied by the firm to the carrying out of the services and activities referred to in point (a);
the governance arrangements, including key function holders for the activities of the firm in the Union;
any other information necessary to enable ESMA or the competent authorities to carry out their tasks in accordance with this Regulation.
ESMA shall communicate the information received in accordance with this paragraph to the competent authorities of the Member States where a third‐country firm provides investment services or performs investment activities in accordance with this Article.
Where necessary for the accomplishment of the tasks of ESMA or the competent authorities in accordance with this Regulation, ESMA may, including upon the request of the competent authority of the Member States where a third‐country firm provides investment services or performs investment activities in accordance with this Article, ask third‐country firms providing services or performing activities in accordance with this Article to provide any further information in respect of their operations.
Upon the request of the competent authority of a Member State, where a third‐country firm provides investment services or performs investment activities in accordance with this Article, ESMA shall access the relevant data kept at its disposal in accordance with the first subparagraph and shall make that data available to the requesting competent authority.
ESMA shall submit those draft regulatory technical standards to the Commission by 26 September 2020.
Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
ESMA shall submit those draft implementing technical standards to the Commission by 26 September 2020.
Power is conferred on the Commission to supplement this Regulation by adopting the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.
Article 47
Equivalence decision
The Commission may adopt a decision in accordance with the examination procedure referred to in Article 51(2) in relation to a third country stating that the legal and supervisory arrangements of that third country ensure all of the following:
that firms authorised in that third country comply with legally binding prudential, organisational and business conduct requirements which have equivalent effect to the requirements set out in this Regulation, in Regulation (EU) No 575/2013 and Regulation (EU) 2019/2033 of the European Parliament and of the Council ( 15 ), in Directive 2013/36/EU, Directive 2014/65/EU and Directive (EU) 2019/2034 of the European Parliament and of the Council ( 16 ), and in the implementing measures adopted under those legislative acts;
that firms authorised in that third country are subject to effective supervision and enforcement ensuring compliance with the applicable legally binding prudential, organisational and business conduct requirements; and
that the legal framework of that third country provides for an effective equivalent system for the recognition of investment firms authorised under third‐country legal regimes.
Where the scale and scope of the services provided and the activities performed by third‐country firms in the Union following the adoption of the decision referred to in the first subparagraph are likely to be of systemic importance for the Union, the legally binding prudential, organisational and business conduct requirements referred to in the first subparagraph may only be considered to have equivalent effect to the requirements set out in the acts referred to in that subparagraph after a detailed and granular assessment. To that end, the Commission shall also assess and take into account the supervisory convergence between the third country concerned and the Union.
The Commission is empowered to adopt delegated acts in accordance with Article 50 to supplement this Regulation by further specifying the circumstances under which the scale and scope of the services provided and activities performed by third‐country firms in the Union following the adoption of an equivalence decision referred to in the paragraph 1 are likely to be of systemic importance to the Union.
Where the scale and scope of the services provided and activities performed by third‐country firms are likely to be of systemic importance for the Union, the Commission may attach specific operational conditions to equivalence decisions to ensure that ESMA and national competent authorities have the necessary tools to prevent regulatory arbitrage and monitor the activities of third‐country investment firms registered in accordance with Article 46(2) in respect of services provided and activities performed in the Union by ensuring that those firms comply with:
requirements which have an equivalent effect to the requirements referred to in Articles 20 and 21;
reporting requirements which have an equivalent effect to the requirements referred to in Article 26, where such information cannot be obtained directly and on an ongoing basis through a Memorandum of Understanding with the third‐country competent authority;
requirements that have an equivalent effect to the trading obligation referred to in Articles 23 and 28, where applicable.
When adopting the decision referred to in paragraph 1 of this Article, the Commission shall take into account whether the third country is identified as a non‐cooperative jurisdiction for tax purposes under the relevant Union policy or as a high‐risk third country pursuant to Article 9(2) of Directive (EU) 2015/849.
The prudential, organisational and business conduct framework of a third country may be considered to have equivalent effect where that framework fulfils all of the following conditions:
firms providing investment services or performing investment activities in that third country are subject to authorisation and to effective supervision and enforcement on an ongoing basis;
firms providing investment services or performing investment activities in that third country are subject to sufficient capital requirements and, in particular, firms providing services or carrying out the activities referred to in point (3) or (6) of Section A of Annex I to Directive 2014/65/EU are subject to comparable capital requirements to those they would apply if they were established in the Union;
firms providing investment services or performing investment activities in that third country are subject to appropriate requirements applicable to shareholders and members of their management body;
firms providing investment services or performing investment activities are subject to adequate business conduct and organisational requirements;
market transparency and integrity is ensured by preventing market abuse in the form of insider dealing and market manipulation.
For the purposes of paragraph 1a of this Article, when assessing the equivalence of third-country rules as regards the trading obligation set out in Articles 23 and 28, the Commission shall also assess whether the third country’s legal framework provides for criteria for the designation of trading venues as eligible for compliance with the trading obligation which have a similar effect to those set out under this Regulation or under Directive 2014/65/EU.
ESMA shall establish cooperation arrangements with the relevant competent authorities of third countries whose legal and supervisory frameworks have been recognised as effectively equivalent in accordance with paragraph 1. Such arrangements shall specify at least:
the mechanism for the exchange of information between ESMA and the competent authorities of third countries concerned, including access to all information regarding the non‐Union firms authorised in third countries that is requested by ESMA, and, where relevant, the arrangements for the onward sharing by ESMA of such information with competent authorities of the Member States;
the mechanism for prompt notification to ESMA where a third-country competent authority deems that a third-country firm that it is supervising and ESMA has registered in the register provided for in Article 48 infringes the conditions of its authorisation or other law to which it is obliged to adhere;
the procedures concerning the coordination of supervisory activities including investigations and on‐site inspections which ESMA may carry out, in cooperation with the competent authorities of the Member States where the third‐country firm provides investment services or performs investment activities in accordance with Article 46, where it is necessary for the accomplishment of the tasks of ESMA or the competent authorities in accordance with this Regulation, having duly informed the competent authority of the third country thereof.
the procedures concerning a request for information pursuant to Article 46(6a) and (6b) that ESMA may submit to a third‐country firm registered in accordance with Article 46(2).
The branch shall remain subject to the supervision of the Member State where the branch is established in accordance with Article 39 of Directive 2014/65/EU. However, and without prejudice to the obligations to cooperate laid down in Directive 2014/65/EU, the competent authority of the Member State where the branch is established and the competent authority of the host Member State may establish proportionate cooperation agreements in order to ensure that the branch of the third-country firm providing investment services within the Union delivers the appropriate level of investor protection.
ESMA shall monitor the regulatory and supervisory developments, the enforcement practices and other relevant market developments in third countries for which equivalence decisions have been adopted by the Commission pursuant to paragraph 1 in order to verify that the conditions on the basis of which those decisions have been taken are still fulfilled. ESMA shall submit a confidential report on its findings to the Commission on an annual basis. Where considered appropriate by ESMA, ESMA may consult EBA with regard to the report.
The report shall also reflect the trends observed on the basis of the data collected under Article 46(6a), in particular as regards firms providing services or performing the activities referred to in points (3) and (6) of Section A of Annex I to Directive 2014/65/EU.
The Commission shall, on the basis of the report referred to in paragraph 5, submit a report to the European Parliament and to the Council at least on an annual basis. The report shall include a list of the equivalence decisions taken or withdrawn by the Commission in the reporting year, as well as any measures taken by ESMA pursuant to Article 49, and provide the rationale for those decisions and measures.
The Commission report shall include information on the monitoring of the regulatory and supervisory developments, the enforcement practices and other relevant market developments in third countries for which equivalence decisions have been adopted. It shall also take stock of how the cross‐border provision of investment services by third‐country firms has evolved in general and in particular as regards the services and activities referred to in points (3) and (6) of Section A of Annex I to Directive 2014/65/EU. In due course, the report shall also include information concerning ongoing equivalence assessments that the Commission is undertaking in relation to a third country.
Article 48
Register
ESMA shall keep a register of the third-country firms allowed to provide investment services or perform investment activities in the Union in accordance with Article 46. The register shall be publicly accessible on the website of ESMA and shall contain information on the services or activities which the third-country firms are permitted to provide or perform and the reference of the competent authority responsible for their supervision in the third country.
Article 49
Measures to be taken by ESMA
Without prejudice to paragraph 1, ESMA shall withdraw the registration of a third‐country firm in the register established in accordance with Article 48 where ESMA has referred the matter to the competent authority of the third country, and that competent authority has not taken the appropriate measures needed to protect investors or the proper functioning of the markets in the Union, or has failed to demonstrate that the third‐country firm concerned complies with the requirements applicable to it in the third country or with the conditions under which a decision in accordance with Article 47(1) has been adopted, and one of the following applies:
ESMA has well‐founded reasons, based on documented evidence, including but not limited to the annual information provided in accordance with Article 46(6a), to believe that, in the provision of investment services and activities in the Union, the third‐country firm is acting in a manner which is clearly prejudicial to the interests of investors or the orderly functioning of markets;
ESMA has well‐founded reasons, based on documented evidence, including but not limited to the annual information provided in accordance with Article 46(6a), to believe that, in the provision of investment services and activities in the Union, the third‐country firm has seriously infringed the provisions applicable to it in the third country and on the basis of which the Commission has adopted the Decision in accordance with Article 47(1).
ESMA shall inform the third‐country competent authority of its intention to take action in accordance with paragraph 1 or 2 in due course.
In deciding the appropriate action to take under this Article, ESMA shall take into account the nature and seriousness of the risk posed to investors and the proper functioning of the markets in the Union, having regard to the following criteria:
the duration and frequency of the risk arising;
whether the risk has revealed serious or systemic weaknesses in the third‐country firm’s procedures;
whether financial crime has been occasioned, facilitated or otherwise attributable to the risk;
whether the risk has arisen intentionally or negligently.
ESMA shall inform the Commission and the third‐country firm concerned of any measure adopted in accordance with paragraph 1 or 2 without delay and shall publish its decision on its website.
The Commission shall assess whether the conditions under which a decision in accordance with Article 47(1) was adopted continue to persist in relation to the third country concerned.
TITLE IX
DELEGATED AND IMPLEMENTING ACTS
CHAPTER 1
Delegated acts
Article 50
Exercise of the delegation
CHAPTER 2
Implementing acts
Article 51
Committee procedure
TITLE X
FINAL PROVISIONS
Article 52
Reports and review
The report referred to in paragraph 1 shall include the impact on European equity markets of the use of the waiver under Article 4(1)(a) and (b)(i) and the volume cap mechanism under Article 5, with particular reference to:
the level and trend of non-lit order book trading within the Union since the introduction of this Regulation;
the impact on the pre-trade transparent quoted spreads;
the impact on the depth of liquidity on lit order books;
the impact on competition and on investors within the Union;
the impact on trading of shares of small and mid-cap companies;
developments at international level and discussions with third countries and international organisations.
By ►M1 3 July 2022 ◄ , the Commission shall, after consulting ESMA, submit a report to the European Parliament and to the Council on the application of Article 37.
Subject to the conclusions of that report, the Commission may adopt a delegated act in accordance with Article 50 to extend the transitional period in accordance with Article 35(5) by a maximum of 30 months.
Subject to the conclusions of that report, the Commission may adopt a delegated act in accordance with Article 50 to exclude exchange-traded derivatives from the scope of Articles 35 and 36 for up to thirty months following ►M1 3 January 2018 ◄ .
The reports referred to in the first subparagraph shall assess the functioning of the consolidated tape against the following criteria:
the availability and timeliness of post trade information in a consolidated format capturing all transactions irrespective of whether they are carried out on trading venues or not;
the availability and timeliness of full and partial post trade information that is of a high quality, in formats that are easily accessible and usable for market participants and available on a reasonable commercial basis.
Where the Commission concludes that the CTPs have failed to provide information in a way that meets the criteria set out in the second subparagraph, the Commission shall attach a request to its report for ESMA to launch a negotiated procedure for the appointment though a public procurement process run by ESMA of a commercial entity operating a consolidated tape. ESMA shall launch the procedure after receiving the request from the Commission on the conditions specified in the Commission’s request and in accordance with Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council ( 18 ).
Where the procedure outlined in paragraph 14 of this Article has been initiated, the Commission is empowered to adopt delegated acts in accordance with Article 50 in order to supplement this Regulation, by specifying measures in order to:
provide for the contract duration of the commercial entity operating a consolidated tape and the process and conditions for renewing the contract and the launching of new public procurement;
provide that the commercial entity operating a consolidated tape shall do so on an exclusive basis and that no other entity shall be authorised as a CTP in accordance with Article 27b;
empower ESMA to ensure adherence with tender conditions by the commercial entity operating a consolidated tape appointed through a public procurement;
ensure that the post-trade information provided by the commercial entity operating a consolidated tape is of a high quality, in formats that are easily accessible and usable for market participants and in a consolidated format capturing the entire market;
ensure that the post trade information is provided on a reasonable commercial basis, on both a consolidated and unconsolidated basis, and meets the needs of the users of that information across the Union;
ensure that trading venues and APAs shall make their trade data available to the commercial entity operating a consolidated tape appointed through a public procurement process run by ESMA at a reasonable cost;
specify arrangements applicable where the commercial entity operating a consolidated tape appointed through a public procurement fails to fulfil the tender conditions;
specify arrangements under which CTPs authorised under Article 27b may continue to operate a consolidated tape where the empowerment provided for in point (b) of this paragraph is not used or, where no entity is appointed through the public procurement, until such time as a new public procurement is completed and a commercial entity is appointed to operate a consolidated tape.
Article 53
Amendment of Regulation (EU) No 648/2012
Regulation (EU) No 648/2012 is amended as follows:
in Article 5(2), the following subparagraph is added:
‘In the developing of the draft regulatory technical standards under this paragraph ESMA shall not prejudice the transitional provision relating to C6 energy derivative contracts as laid down in Article 95 of Directive 2014/65/EU ( 19 ).
Article 7 is amended as follows:
paragraph 1 is replaced by the following:
A CCP that has been authorised to clear OTC derivative contracts shall accept clearing such contracts on a non-discriminatory and transparent basis, including as regards collateral requirements and fees related to access, regardless of the trading venue. This in particular shall ensure that a trading venue has the right to non-discriminatory treatment in terms of how contracts traded on that trading venue are treated in terms of:
collateral requirements and netting of economically equivalent contracts, where the inclusion of such contracts in the close-out and other netting procedures of a CCP based on the applicable insolvency law would not endanger the smooth and orderly functioning, the validity or enforceability of such procedures; and
cross-margining with correlated contracts cleared by the same CCP under a risk model that complies with Article 41.
A CCP may require that a trading venue comply with the operational and technical requirements established by the CCP, including the risk-management requirements.’;
the following paragraph is added:
In Article 81(3), the following subparagraph is added:
‘A trade repository shall transmit data to competent authorities in accordance with the requirements under Article 26 of Regulation (EU) No 600/2014 (*1) ’.
Article 54
Transitional provisions
Where a CCP which has been approved for the transitional arrangements, is connected by close links to one or more trading venues, those trading venues shall not benefit from access rights under Article 35 or 36 for exchange-traded derivatives for the duration of that transitional period.
Where a trading venue, which has been approved for the transitional arrangements, is connected by close links to one or more CCPs, those CCPs shall not benefit from access rights under Article 35 or 36 for exchange-traded derivatives for the duration of that transitional period.
Article 54a
Transitional measures related to ESMA
However, an application for authorisation that has been received by competent authorities before 1 October 2021 shall not be transferred to ESMA, and the decision to register or refuse registration shall be taken by the relevant competent authority.
Article 54b
Relations with auditors
Any person authorised within the meaning of Directive 2006/43/EC of the European Parliament and of the Council ( 20 ), performing in a data reporting services provider the task described in Article 34 of Directive 2013/34/EU of the European Parliament and of the Council ( 21 ) or Article 73 of Directive 2009/65/EC or any other task prescribed by law, shall have a duty to report promptly to ESMA any fact or decision concerning that data reporting services provider of which that person has become aware while carrying out that task and which is liable to:
constitute a material infringement of the laws, regulations or administrative provisions which lay down the conditions governing authorisation or which specifically govern pursuit of the activities of data reporting services provider;
affect the continuous functioning of the data reporting services provider;
lead to refusal to certify the accounts or to the expression of reservations.
That person shall also have a duty to report any facts and decisions of which the person becomes aware in the course of carrying out one of the tasks referred to in the first subparagraph in an undertaking having close links with the data reporting services provider within which he or she is carrying out that task.
Article 55
Entry into force and application
This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
This Regulation shall apply from 3 January 2018.
►C1 Notwithstanding the second paragraph, Article 1(8) and (9), Article 2(2), Article 4(6), Article 5(6) and (9), ◄ Article 7(2), Article 9(5), Article 11(4), Article 12(2), Article 13(2), Article 14(7), Article 15(5), Article 17(3), Article 19(2) and (3), Article 20(3), Article 21(5), Article 22(4), Article 23(3), Article 25(3), Article 26(9), Article 27(3), Article 28(4), Article 28(5), Article 29(3), Article 30(2), Article 31(4), Article 32(1), (5) and(6), Article 33(2), Article 35(6), Article 36(6), Article 37(4), Article 38(3), Article 40(8), Article 41(8), Article 42(7), Article 45(10), Article 46(7), Article 47(1) and (4), Article 52(10) and (12) and Article 54(1) shall apply immediately following the entry into force of this Regulation.
Notwithstanding the second paragraph, Article 37(1), (2) and (3) shall apply from 3 January 2020.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
( 1 ) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).
( 2 ) Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012 (OJ L 337, 23.12.2015, p. 1).
( 3 ) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).
( 4 ) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1).
( 5 ) Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, p. 32).
( 6 ) Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision (OJ L 235, 23.9.2003, p. 10).
( 7 ) Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, p. 1).
( 8 ) Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency (OJ L 326, 8.12.2011, p. 1).
( 9 ) Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007 (OJ L 347, 20.12.2013, p. 671).
( 10 ) Regulation (EU) 2023/2859 of the European Parliament and of the Council of 13 December 2023 establishing a European single access point providing centralised access to publicly available information of relevance to financial services, capital markets and sustainability (OJ L, 2023/2859, 20.12.2023, ELI: http://data.europa.eu/eli/reg/2023/2859/oj).
( 11 ) Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (OJ L 309, 25.11.2005, p. 15).
( 12 ) Commission Delegated Regulation (EU) No 149/2013 of 19 December 2012 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council with regard to regulatory technical standards on indirect clearing arrangements, the clearing obligation, the public register, access to a trading venue, non-financial counterparties, and risk mitigation techniques for OTC derivatives contracts not cleared by a CCP (OJ L 52, 23.2.2013, p. 11).
( 13 ) Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the protection of natural persons with regard to the processing of personal data by the Union institutions, bodies, offices and agencies and on the free movement of such data, and repealing Regulation (EC) No 45/2001 and Decision No 1247/2002/EC (OJ L 295, 21.11.2018, p. 39).
( 14 ) Regulation (EC) No 713/2009 of the European Parliament and of the Council of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators (OJ L 211, 14.8.2009, p. 1).
( 15 ) Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ 314, 5.12.2019, p. 1 ).
( 16 ) Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (OJ 314, 5.12.2019, p. 64).
( 17 ) Commission Decision 2001/528/EC of 6 June 2001 establishing the European Securities Committee (OJ L 191, 13.7.2001, p. 45).
( 18 ) Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).
( 19 ) 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 L 173, 12.6.2014, p. 349).’;
( *1 ) Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (OJ L 173, 12.6.2014, p. 84)
( 20 ) Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC (OJ L 157, 9.6.2006, p. 87).
( 21 ) Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).