(1)

Commission Delegated Regulation (EU) 2017/583 (2) sets out the transparency requirements applicable to bonds, structured finance products, emission allowances and derivatives. In order to ensure a smooth implementation of those requirements, this Delegated Regulation introduced an annual phase-in of application of certain transparency thresholds over the course of four years, starting from 2019. This phase-in allows gradual broadening of the application of corresponding transparency obligations. In particular this concerns the ‘average daily number of trades’ criterion used for the determination of bonds for which there is a liquid market and the trade percentiles used for the determination of the size specific to the instrument which allows for pre-trade transparency obligations to be waived.

(2)

Under this phase-in approach, moving to the next stage is not automatic. The European Securities and Markets Authority (ESMA) is required to submit to the Commission their annual assessment of the appropriateness of the move to the next stage. ESMA’s assessment has to analyse the evolution of trading volumes for the concerned financial instruments under the current stage and to anticipate the possible impact a move to the next stage could have on both available liquidity and market participants. If warranted, ESMA is required to submit, together with its report, a revised regulatory standard to move to the next stage.

(3)

ESMA submitted their assessment and revised regulatory standards to the Commission on 23 July 2020. ESMA concludes that between 0,15 % and 0,31 % of bonds traded between the fourth quarter of 2018 and the third quarter of 2019 were considered liquid following the criteria that apply in stage S1. Moving to stage S2 means an increase of approximately 50 %. With regard to the size specific to the instrument ESMA concludes that 16 % of notional trading volume of sovereign bonds and 6 % of other bonds took place under the waiver related to size specific to the instrument in stage S1. The move to stage S2 should ensure that less bond trades are eligible to this waiver.

(4)

Taking into account the assessment undertaken by ESMA it is appropriate to move to stage S2 for determining bonds for which there is a liquid market and for the size specific to the instrument for bonds. The move to stage S2 should increase the level of transparency available in the bond market without a negative impact on liquidity. However, considering that for other non-equity instruments than bonds ESMA’s first annual transparency calculations have only been published this year, there was not enough evidence to move to stage S2 for other classes of financial instruments.

(5)

Delegated Regulation (EU) 2017/583 should therefore be amended accordingly.

(6)

This Regulation is based on the draft regulatory technical standards submitted to the Commission by ESMA.

(7)

ESMA has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the advice of the Securities and Markets Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council (3),

(a)

paragraph 1 is replaced by the following:

(b)

paragraph 3 is replaced by the following: