(1)

Annex II to Regulation (EC) No 1333/2008 lays down a Union list of food additives approved for use in food and their conditions of use.

(2)

Only food additives included in the Union list in Annex II to Regulation (EC) No 1333/2008 may be placed on the market as such and used in foods under the conditions of use specified therein.

(3)

Commission Regulation (EU) No 231/2012 (3) lays down specifications for food additives listed in Annexes II and III to Regulation (EC) No 1333/2008.

(4)

The Union list and the specifications may be updated in accordance with the common procedure referred to in Article 3(1) of Regulation (EC) No 1331/2008, either on the initiative of the Commission or following an application.

(5)

On 21 October 2016 an application was submitted for the authorisation of the use of low-substituted hydroxypropyl cellulose (L-HPC) as a food additive in food supplements in tablet form falling under the food category 17.1 ‘Food supplements supplied in a solid form’ in Part E of Annex II to Regulation (EC) No 1333/2008. The application was subsequently made available to the Member States pursuant to Article 4 of Regulation (EC) No 1331/2008.

(6)

The European Food Safety Authority evaluated the safety of L-HPC as a food additive and in its opinion (4) of 20 January 2018 concluded that there was no safety concern from the proposed use in food supplements in solid form (tablet), at a maximum use level of 20 000 mg/kg and a typical use level of 10 000 mg/kg.

(7)

Low-substituted hydroxypropyl cellulose (L-HPC) is water insoluble cellulose that facilitates the manufacturing of solid food supplements in tablet form due to its good compressibility and binding properties. Being insoluble in water, it absorbs water while increasing in volume. The increased volume makes the tablet disintegrating rapidly providing a fast release of the nutrients in the stomach.

(8)

It is therefore appropriate to include low-substituted hydroxypropyl cellulose (L-HPC) in the Union list of food additives and to assign E 463a as E-number to that additive to enable its authorisation as a glazing agent in food supplements in solid form (tablet) at a maximum use level of 20 000 mg/kg.

(9)

The specifications for low-substituted hydroxypropyl cellulose (L-HPC) (E 463a) should be included in Regulation (EU) No 231/2012 when it is included in the Union list of food additives laid down in Annex II to Regulation (EC) No 1333/2008 for the first time.

(10)

Regulations (EC) No 1333/2008 and (EU) No 231/2012 should therefore be amended accordingly.

(11)

The measures provided for in this Regulation are in accordance with the opinion of the Standing Committee on Plants, Animals, Food and Feed,

(1)

Commission Regulation (EU) No 231/2012 (3) lays down specifications for food additives listed in Annexes II and III to Regulation (EC) No 1333/2008.

(2)

Those specifications may be updated in accordance with the common procedure referred to in Article 3(1) of Regulation (EC) No 1331/2008, either on the initiative of the Commission or following an application.

(3)

On 14 October 2014 an application was submitted for the amendment of specifications concerning the food additives sorbitan monostearate (E 491), sorbitan tristearate (E 492) and sorbitan monopalmitate (E 495). The application was made available to the Member States pursuant to Article 4 of Regulation (EC) No 1331/2008.

(4)

The current Union specifications lay down a range of congealing temperatures (an identification parameter) for sorbitan monostearate (E 491), sorbitan tristearate (E 492) and sorbitan monopalmitate (E 495).

(5)

The applicant requests that the reference to the congealing range as an identification method of sorbitan monostearate (E 491), sorbitan tristearate (E 492) and sorbitan monopalmitate (E 495) in the Union specifications be removed as it is not an optimal method for identification due to a lack of a clear and common methodology.

(6)

In its opinion of 5 May 2017 (4) the European Food Safety Authority (‘the Authority’) concluded that the amendment to the specifications as regards the removal of the parameter ‘congealing range’ for identification of sorbitan monostearate (E 491), sorbitan tristearate (E 492) and sorbitan monopalmitate (E 495) as proposed by the applicant would not give rise to a safety concern.

(7)

The Authority also concluded that the removal of the congealing range from the Union specifications would result in less characterisation of the various sorbitan esters of saturated fatty acids, and that this identification parameter could be replaced by another one. The Authority noted that out of all analytical methods available, gas chromatography analysis appears to deliver the most accurate and reliable results and is fit for purposes of food controls.

(8)

Consequently, it is appropriate to amend the Union specifications regarding the removal of the ‘congealing range’ as an identification parameter for the food additives sorbitan monostearate (E 491), sorbitan tristearate (E 492) and sorbitan monopalmitate (E 495) and to replace it by ‘Identification test — by acid value, iodine value, gas chromatography’.

(9)

The Annex to Regulation (EU) No 231/2012 should therefore be amended accordingly.

(10)

The measures provided for in this Regulation are in accordance with the opinion of the Standing Committee on Plants, Animals, Food and Feed,

(1)

In accordance with Article 6 of Decision 2005/387/JHA, risk assessment reports on the new psychoactive substances N-phenyl-N-[1-(2-phenylethyl)piperidin-4-yl]cyclopropanecarboxamide (‘cyclopropylfentanyl’) and 2-methoxy-N-phenyl-N-[1-(2-phenylethyl)piperidin-4-yl]acetamide (‘methoxyacetylfentanyl’) were drawn up by a special session of the extended Scientific Committee of the European Monitoring Centre for Drugs and Drug Addiction on 21 March 2018, and were submitted to the Commission and to the Council on 23 March 2018.

(2)

Cyclopropylfentanyl and methoxyacetylfentanyl are synthetic opioids and are structurally related to fentanyl, a controlled substance widely used in medicine as an adjunct to general anaesthesia during surgery and for pain management. Cyclopropylfentanyl is also structurally related to butyrfentanyl, another internationally controlled substance. Methoxyacetylfentanyl is also structurally related to ocfentanil (3) and acetylfentanyl, which are both internationally controlled substances.

(3)

Cyclopropylfentanyl has been available in the Union since at least June 2017. It has been detected in six Member States, which reported 140 seizures in total between June 2017 and January 2018. In general, detections are likely to be under-reported since cyclopropylfentanyl is not routinely screened for. In most cases, cyclopropylfentanyl was seized as powder, but it has also been seized, to a lesser extent, as a liquid and as tablets. The detected quantities are relatively small. However, they should be seen within the context of the high potency that is typical of the fentanils.

(4)

77 deaths have been reported by two Member States where exposure to cyclopropylfentanyl was confirmed. The deaths occurred within a short time period, i.e. between June and December 2017. In most of the cases, other drugs were also detected with cyclopropylfentanyl. In the case of at least 74 of those deaths, cyclopropylfentanyl was the cause of death or is likely to have contributed to the death. No acute intoxications with confirmed exposure to cyclopropylfentanyl were reported. It is likely that naloxone works as an antidote to poisoning caused by cyclopropylfentanyl. Both non-fatal intoxications and deaths caused by cyclopropylfentanyl are likely to be under-detected and under-reported, as cyclopropylfentanyl is not routinely screened for. Accidental exposure to cyclopropylfentanyl may pose a risk to family and friends of the user, law enforcement, emergency personnel, medical and forensic laboratory personnel, as well as to those in custodial settings and postal services.

(5)

There is no direct evidence showing the involvement of organised crime in the manufacture, distribution, trafficking and supply of cyclopropylfentanyl within the Union. However, given the fact that it has been detected in a heroin sample and in fake medicines, the involvement of organised crime cannot be excluded. The available information suggests that cyclopropylfentanyl is produced by chemical companies based in China, but the capability to manufacture fentanils may also exist within the Union.

(6)

Cyclopropylfentanyl appears to be sold online in small and wholesale amounts, under the guise of a research chemical or as a legal replacement to illicit opioids, mainly as a powder or as a solution in ready-to-use nasal sprays. In addition, information from seizures shows that cyclopropylfentanyl has also been used to make fake tablets of popular benzodiazepine and analgesic medicines. Information from seizures suggests that cyclopropylfentanyl can have also been sold on the illicit opioid market as methoxyacetylfentanyl, as heroin and in mixtures with other opioids such as heroin. Due to this, users may not be aware that they are using a fentanil.

(7)

Methoxyacetylfentanyl has been available in the Union since at least November 2016. It has been detected in 11 Member States, which reported 44 seizures in total between June and December 2017. In general, detections are likely to be under-reported since methoxyacetylfentanylis not routinely screened for. In most cases, methoxyacetylfentanyl was seized as powder or as a liquid, but it has also been seized, to a lesser extent, as tablets. The detected quantities are relatively small. However, they should be seen within the context of the high potency that is typical of the fentanils.

(8)

13 deaths have been reported by four Member States where exposure to methoxyacetylfentanyl was confirmed. In all cases, other drugs were also detected with methoxyacetylfentanyl. In the case of at least seven of those deaths, methoxyacetylfentanyl was the cause of death or was likely to have contributed to the death. Two cases of acute intoxication with confirmed exposure to methoxyacetylfentanyl were reported. It is likely that naloxone works as an antidote to poisoning caused by methoxyacetylfentanyl. Both non-fatal intoxications and deaths caused by methoxyacetylfentanyl are likely to be under-detected and under-reported, as methoxyacetylfentanyl is not routinely screened for. Accidental exposure to methoxyacetylfentanyl may pose a risk to family and friends of users, law enforcement, emergency personnel, medical and forensic laboratory personnel, as well as to those in custodial settings and postal services.

(9)

There is no information to suggest the involvement of organised crime in the manufacture, distribution, trafficking and supply of methoxyacetylfentanyl within the Union. The available information suggests that methoxyacetylfentanyl is produced by chemical companies in China, but the capability to manufacture fentanils may also exist within the Union.

(10)

Methoxyacetylfentanyl appears to be sold online in small and wholesale amounts, under the guise of a research chemical or as a legal replacement to illicit opioids, as powder or as a solution in ready-to-use nasal sprays. Information from seizures suggests that methoxyacetylfentanyl may have also been sold on the illicit opioid market, where it is sold as or is used to make fake opioid analgesics and benzodiazepine. Due to this, users may not be aware that they are using a fentanil.

(11)

Cyclopropylfentanyl and methoxyacetylfentanyl have no recognised human or veterinary medical use in the Union nor, it appears, elsewhere. There are no indications that they may be used for any other purpose aside from as an analytical reference standard and in scientific research.

(12)

The risk assessment reports reveal that many of the questions related to cyclopropylfentanyl and methoxyacetylfentanyl that are posed by the lack of data on the risks to individual health, risks to public health, and social risks, could be answered through further research. However, the available evidence and information on the health and social risks that cyclopropylfentanyl and methoxyacetylfentanyl pose, given also their similarities with fentanyl, provide sufficient grounds for subjecting cyclopropylfentanyl and methoxyacetylfentanyl to control measures across the Union.

(13)

Cyclopropylfentanyl and methoxyacetylfentanyl are not listed for control under the 1961 United Nations Single Convention on Narcotic Drugs or under the 1971 United Nations Convention on Psychotropic Substances. They are not currently under assessment by the United Nations system.

(14)

Given that eight Member States control cyclopropylfentanyl and nine Member States control methoxyacetylfentanyl under national drug control legislation, and that five Member States control cyclopropylfentanyl and methoxyacetylfentanyl under other legislation, subjecting cyclopropylfentanyl and methoxyacetylfentanyl to control measures across the Union would help avoid the emergence of obstacles in cross-border law enforcement and judicial cooperation, and would help protect from the risks that their availability and use poses.

(15)

Decision 2005/387/JHA confers implementing powers upon the Council with a view to giving a quick and expertise-based response at Union level to the emergence of new psychoactive substances detected and reported by the Member States, by subjecting those substances to control measures across the Union. As the conditions and procedure for triggering the exercise of such implementing powers have been met, an implementing decision should be adopted in order to subject cyclopropylfentanyl and methoxyacetylfentanyl to control measures across the Union.

(16)

Denmark is bound by Decision 2005/387/JHA and is therefore taking part in the adoption and application of this Decision, which implements Decision 2005/387/JHA.

(17)

Ireland is bound by Decision 2005/387/JHA and is therefore taking part in the adoption and application of this Decision, which implements Decision 2005/387/JHA.

(18)

The United Kingdom is not bound by Decision 2005/387/JHA and is therefore not taking part in the adoption and application of this Decision and is not bound by it or subject to its application,

(1)

Council Decision (EU) 2017/37 (1) provides for the signing on behalf of the European Union of the Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part (‘the Agreement’). The Agreement was signed on 30 October 2016.

(2)

Council Decision (EU) 2017/38 (2) provides for provisional application of parts of the Agreement, including the establishment of the CETA Joint Committee and specialised committees. Those parts of the Agreement have been provisionally applied since 21 September 2017.

(3)

Pursuant to Article 26.2.1(g) of the Agreement, the CETA Committee on Trade and Sustainable Development has been established.

(4)

In accordance with Articles 23.10 and 24.15 of the Agreement, the CETA Committee on Trade and Sustainable Development, during its first meeting, is to adopt a decision establishing lists of individuals willing and able to serve as panellists under Chapter Twenty-Three (Trade and Labour) and Chapter Twenty-Four (Trade and Environment) of the Agreement.

(5)

It is therefore appropriate to establish the position to be adopted on the Union's behalf in the CETA Committee on Trade and Sustainable Development on the basis of the attached draft Decision establishing lists of individuals willing to serve as panellists under Chapter Twenty-Three and Chapter Twenty-Four of the Agreement,

(1)

On 31 July 2015 the Council adopted Decision (CFSP) 2015/1333 (1).

(2)

On 21 March 2018 the Council adopted Decision (CFSP) 2018/476 (2).

(3)

In view of the continuing instability and gravity of the situation in Libya, the Council has decided that the restrictive measures concerning three persons should be extended for a further period of six months.

(4)

Decision (CFSP) 2015/1333 should therefore be amended accordingly,

1.

By Decision (EU) 2018/795 (4), the European Securities and Markets Authority (ESMA) prohibited the marketing, distribution or sale of binary options to retail clients with effect from 2 July 2018 for a period of three months.

2.

In accordance with Article 40(6) of Regulation (EU) No 600/2014, ESMA must review a temporary product intervention measure at appropriate intervals and at least every three months.

3.

ESMA's review of the prohibition on binary options has been informed by, inter alia, a survey amongst national competent authorities (5) (NCAs) on the practical application and impact of the product intervention measure as well as additional information provided by NCAs and stakeholders.

4.

NCAs detected only limited examples of non-compliance with the ESMA product intervention measures. Furthermore, no new authorisations have been provided to firms that market, distribute or sell binary options since the announcement of the agreed measures on 27 March 2018.

5.

NCAs reported a slight increase in the number of clients treated as professional clients on request over the month of July 2018 in comparison with July 2017. However, the number of professional clients on request is relatively small in comparison to the previous number of retail clients of providers of binary options. ESMA is aware that some third-country firms are actively approaching Union clients. However, without authorisation or registration in the Union, these firms are only allowed to offer services to clients established or situated in the Union at the client's own exclusive initiative. ESMA is also aware that firms are starting to provide other speculative investment products. ESMA will continue to monitor the offer of these other products to determine whether any other Union measures are appropriate.

6.

During the review period, ESMA did not obtain evidence contradicting its overall finding of a significant investor protection concern identified in Decision (EU) 2018/795. ESMA has therefore concluded that the significant investor protection concern identified in Decision (EU) 2018/795 would persist if its decision to prohibit the marketing, distribution or sale of binary options to retail clients is not renewed.

7.

Since the adoption of that Decision, the applicable existing regulatory requirements under Union law have not changed and continue not to address the threat identified by ESMA. Furthermore, NCAs have not taken action to address the threat or the actions taken do not adequately address the threat. In particular, since the adoption of the Decision, no NCA has adopted its own national product intervention measure under Article 42 of Regulation (EU) No 600/2014 (6).

8.

The renewal of the prohibition set out in Decision (EU) 2018/795 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 for the same reasons set out in that Decision.

9.

If the temporary prohibition is not renewed, ESMA considers it is likely that binary options will again be offered to retail clients and that the same or similar products will return to the market that gave rise to the consumer detriment identified in Decision (EU) 2018/795.

10.

In view of these reasons, taken together with the reasons set out in Decision (EU) 2018/795, ESMA has decided to renew the prohibition for a further three-month period to address the significant investor protection concern.

11.

In renewing the prohibition, ESMA has taken care to examine whether there is any new evidence relating to specific products within the scope of its measure that should be exempted in the renewed period of application due to their specific features not giving rise to the significant investor protection concern set out in Decision (EU) 2018/795.

12.

In this respect, ESMA obtained new information relating to binary options that are sufficiently long-term, are accompanied by a prospectus and are fully hedged by the provider or another entity in the provider's group, are unlikely to give rise to the significant investor protection concern identified in Decision (EU) 2018/795. An example of this kind of binary option is an inline warrant that cumulatively meets these conditions.

13.

While the degree of complexity of this specific type of binary option is comparable to that of binary options generally, the minimum term requirement ameliorates the negative effects of complexity and opacity for investors. Investors can more reasonably take an informed view of the market over a period of 90 days or longer from the date when the product was first issued than over the very brief terms characteristic of the wider binary options market that existed prior to the application of Decision (EU) 2018/795. A term of 90 days or longer reduces the scope for frequently-repeated speculative trades that worsen losses and are associated with addictive behaviour.

14.

A particular feature of binary options acting as a significant driver of potential detrimental consequences and exacerbating the disparity between returns for investors and the risk of loss is the conflict of interest that exists between many providers of binary options and their clients. However, some firms provide binary options that are fully hedged against market risk throughout their terms. Where such hedging activity relates to the provision of a binary option and is carried out by the provider or by another entity in the provider's group, and if no profit or loss is made on the binary option by any of the group entities other than previously disclosed commissions, transaction fees and related charges, the conflict of interest between the provider and client is significantly reduced. In particular, the net profit derived from the binary option is not substantially determined by whether it pays out or not. Hedged providers are not incentivised to misreport underlying prices or to speculate against the client.

15.

Evidence received by ESMA suggests that hedged business models are consistent with binary options offerings with sufficiently long terms, in contrast to unhedged business models characterised by short term offerings. NCAs (7) supervising markets in which long term securitised binary options are provided by hedged providers have confirmed that in respect of such products they have identified no reported cases of significant detriment to individual retail clients. Furthermore, BaFIN has not received any investor complaints in relation to inline warrants.

16.

Additionally, and in this context, the requirement that binary options made available to retail investors must be accompanied by a prospectus approved in accordance with Directive 2003/71/EC of the European Parliament and the Council (8) is intended to ensure a minimum level of transparency around these longer-term products. It ensures that in relation to the marketing, distribution or sale of these products to retail clients, prescribed information on the provider, including its business model and financial statements, and the risks and characteristics of the product, is made available to investors. Furthermore, the prospectus is subject to the scrutiny of the relevant NCA.

17.

There is also no product-specific evidence that the marketing and distribution activities in relation to sufficiently long-term binary options with a prospectus and fully hedged by the provider or another entity in the provider's group consist of aggressive marketing practices and misleading communications techniques.

18.

While the existence of any one of the criteria alone would not be sufficient to tackle the risk of investor detriment, ESMA has received new evidence during the renewal period that a binary option that benefits from the cumulative effect of an approved prospectus, a sufficiently long term and full hedging by the provider or its group entity is unlikely to give rise to the significant investor protection concern identified in Decision (EU) 2018/795. Accordingly, binary options that fulfill all these three criteria should be explicitly excluded from the scope of the renewal of ESMA's temporary product intervention measure.

19.

ESMA will continue to keep these products under review and will act as necessary. In particular, ESMA has considered the risk that the exclusion may be used by a binary option provider to offer products with comparable features to those that raise significant investor protection concerns, for example, by issuing products that incentivise short duration trading behavior by setting the barrier close to the underlying market price at issuance. ESMA and NCAs will monitor whether any new distribution trends develop and will pay particular attention to products that, despite their long terms, are designed to incentivise such short duration trading behavior.

20.

During its review, ESMA also obtained information on existing products that at the end of the term have one of two predetermined pay-outs, neither of which is less than the initial investment. The pay-out for this type of binary option could be the higher or the lower one, but in both circumstances the investor would not lose money compared to its total investment in the product. Decision (EU) 2018/795 targets products with the risk that investors face substantial losses in relation to their total investment in the product. Therefore, for reasons of legal certainty, this renewal should explicitly exclude products whose payoff structure does not put the investor's capital at risk.

21.

As the proposed measures may, to a limited extent, relate to agricultural commodities derivatives, ESMA has consulted the public bodies competent for the oversight, administration and regulation of physical agricultural markets under Council Regulation (EC) No 1234/2007 (9). None of those bodies has raised any objections to the proposed renewal of the measures.

22.

ESMA has notified NCAs of the proposed renewal Decision,