EUROPEAN COMMISSION

Brussels, 4.12.2025

COM(2025) 943 final

2025/0383(COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Regulations (EU) No 1095/2010, No 648/2012, No 600/2014, No 909/2014, 2015/2365, 2019/1156, 2021/23, 2022/858, 2023/1114, No 1060/2009, 2016/1011, 2017/2402, 2023/2631 and 2024/3005 as regards the further development of capital market integration and supervision within the Union

(Text with EEA relevance)

{SEC(2025) 943 final} - {SWD(2025) 943 final} - {SWD(2025) 944 final}

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL 

•Reasons for and objectives of the proposal

The general objective of this initiative is to integrate EU capital markets and improve the functioning of the EU single market in financial services for the benefit of investors, businesses and the wider EU economy. This contributes to the SIU’s core objective to enable access to a wider range of financial opportunities for investors and businesses and to mobilise savings for productive investment.

The initiative will contribute to achieving the general objective through the following specific objectives.

The review of specific legislative files presents an opportunity to simplify by reducing administrative burdens. The package aims to streamline regulatory requirements, making cross-border activities more cost-effective. Simplification is pursued in several ways: moving certain provisions from directives to regulations; narrowing the scope for nationally imposed ‘gold-plating’ measures; refining Level 2 empowerments; streamlining overlapping, costly and inefficient supervisory arrangements; and more generally removing barriers in EU and national frameworks for market operators and investors.

•Consistency with existing policy provisions in the policy area

•Consistency with other Union policies

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

•Legal basis

•Subsidiarity (for non-exclusive competence)

•Proportionality

•Choice of the instrument

3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENT

•Ex-post evaluations / fitness checks of existing legislation

In the innovation area, there are two main obstacles related to implementing DLT-based solutions in Europe. First, the DLT Pilot Regime Regulation places a heavy compliance burden on small businesses and start-ups, particularly due to relying on extensive requirements in the Central Securities Depository Regulation and Markets in Financial Instruments Directive, that may not be well-suited to the gradual scaling-up of operations and the specific characteristics of DLT. The DLT Pilot Regime Regulation also imposes stringent limitations on the scope and scale of the activities of participants in the pilot regime. It does so, for example, by introducing aggregate limits to the activity of an infrastructure operating under the Regulation and restricting the type and issuance size of assets that can be intermediated under the Regulation. Furthermore, market participants do not have clarity about the long-term prospects for the DLT Pilot Regime, given its experimental nature and the time limitations set out in the Regulation. Second, beyond the shortcomings of Europe’s bespoke framework for DLT, the standard (non-DLTPR) regulatory frameworks, in particular post-trade legislation do not currently provide legal certainty for those wishing to use DLT outside the DLTPR. These uncertainties increase compliance risks and costs for market participants willing to explore innovative business models.

•Stakeholder consultations

·European Commission ‘Call for evidence on the Savings and Investments Union: Fostering integration and scale and more efficient supervision in EU capital markets’, from 8 May to 5 June 2025; 

·European Commission targeted consultation on ‘Integration of EU capital markets’ from 15 April to 10 June 2025. 

Across all stakeholder groups, there was broad agreement on the need for more integrated capital markets and enhanced supervisory convergence. This was accompanied by a shared call for simplification, proportionality and legal certainty. Stakeholders widely recognised that a more integrated and efficient financial ecosystem would enhance Europe’s competitiveness, improve access to finance, and expand investment opportunities. Nonetheless, they stressed that reforms must remain balanced, transparent and inclusive, demonstrating tangible benefits for citizens and the real economy. The level of support for centralising supervision at EU level varied significantly among stakeholders. Business associations and companies tended to prefer incremental progress within the current institutional structure, while NGOs and some members of the public favoured stronger EU-level oversight to ensure consistency and accountability.

•Collection and use of expertise

•Impact assessment

•Regulatory fitness and simplification

•Fundamental rights

4.BUDGETARY IMPLICATIONS

5.OTHER ELEMENTS

•Implementation plans and monitoring, evaluation and reporting arrangements

•Explanatory documents (for directives)

•Detailed explanation of the specific provisions of the proposal

·Regulation (EU) No 1095/2010 (ESMA Regulation; Article 1); 

·Regulation (EU) No 648/2012 (EMIR; Article 2); 

·Regulation (EU) No 600/2014 (MiFIR; Article 3); 

·Regulation (EU) No 909/2014 (CSDR; Article 4); 

·Regulation (EU) 2015/2365 (SFTR; Article 5); 

·Regulation (EU) 2019/1156 (CBDR; Article 6); 

·Regulation (EU) 2021/23 (CCPRRR; Article 7); 

·Regulation (EU) 2022/858 (DLTPR; Article 8); 

·Regulation (EU) 2023/1114 (MiCA; Article 9);

·Regulation (EC) No 1060/2009 (CRA Regulation; Article 10);

·Regulation (EU) 2016/1011 (Benchmarks Regulation; Article 11);

·Regulation (EU) 2017/2402 (Securitisation Regulation; Article 12); 

·Regulation (EU) 2023/2631 (European Green Bonds Regulation; Article 13); and

·Regulation (EU) 2024/3005 (ESG Ratings Regulation; Article 14).

Article 1 – Amendments to ESMA Regulation

The proposed amendments to Regulation (EU) No 1095/2010 (the ESMA Regulation) aim to strengthen ESMA’s mandate, governance and funding to ensure more consistent, transparent and accountable supervision across the EU. This will create better conditions for market integration, generate efficiency gains and increase investors’ trust in the single market.

In terms of tasks and powers the proposed amendments adopt a twofold approach: (i) a proposal to transfer supervisory powers to ESMA for significant market infrastructure entities and CASPs; and (ii) amendments to increase the use and effectiveness of supervisory convergence tools. These changes are underpinned by a review of ESMA’s governance and funding arrangements to ensure that decision-making at EU level is simple, independent and efficient and that appropriate resources are available to implement the new objectives. 

General tasks and powers

The amendments to Articles 1, 4 and 8 aim to clarify the scope of the Regulation and provide updated definitions to reflect the new direct supervisory responsibilities. The changes also bring ESMA’s mandate into line with the objectives of promoting innovation, data driven supervision and effective enforcement. 

The new Article 8a on the duty of cooperation emphasises the importance of cooperation between ESMA and authorities. The aim is to promote greater collaboration, information-sharing, and mutual support and create a framework for structured yet flexible cooperation between ESMA and other competent or relevant authorities. In particular, this would ensure that ESMA can carry out its direct supervisory tasks smoothly, effectively, and proportionately, while safeguarding its independence. It is proposed that ESMA will establish flexible practical arrangements for cooperation, tailored to specific sectors and tasks, and guided by the principles of efficiency, proportionality and mutual trust. These arrangements may include joint supervisory teams, joint inspections, or operational coordination. They should allow for gradual adjustments over time. Arrangements for cooperation should prioritise effective and resource-efficient supervision, continuity and consistency of supervisory outcomes, and respect for the statutory responsibilities and resources of other authorities. The new Article 8a will enable ESMA and other authorities to work more effectively together, leveraging their collective expertise and resources to address the complex challenges facing the EU's financial system. This, in turn, will contribute to a more integrated, stable, and prosperous European financial market.

To ensure effective supervision, the amendments to Article 9a broaden the scope of ESMA’s power to issue "no action letters" to cater for specific circumstances where the application of a legislative act raises significant issues for market participants. The aim is to provide clarity and guidance to market participants and reduce the risk of inconsistent application of EU law. 

The amendments to Articles 10 and 15 give the Commission the power to adopt an amending delegated or implementing act even if ESMA does not provide a draft. This addresses a current gap in the procedural framework for the adoption of technical standards. The proposed amendments also establish a procedure for temporarily suspending regulatory or implementing standards (or parts of them) under specific conditions. These procedures aim to make ESMA’s regulatory powers more flexible and adaptable and should allow the Commission to improve rulemaking and increase responsiveness to new market developments, thereby ensuring the smooth functioning of the financial markets. 

The amendments to Articles 8(2), 17 and 19(4) clarify that, in accordance with the Corneli judgment 13 , ESMA must apply Union law. This includes national laws that implement EU Directives, which should be interpreted in a way that is consistent with those Directives.

Article 17aa gives ESMA a new power in the area of supervisory convergence to require a competent authority to seek its opinion in cases where a peer review or investigation has identified serious supervisory failures. Furthermore, ESMA will have the power to require prompt and effective corrective actions to be taken to address supervisory shortcomings. The aim of this new safeguard measure is to allow ESMA to act in cases where products or entities would be granted access to the EU market without adequate supervision or where supervisory arbitrage would undermine the passport system.

Article 19a introduces collaboration platforms between competent authorities, that will enhance cooperation and supervision of cross-border activities. This builds on the successful experience with similar platforms under the Solvency II Directive. These platforms will facilitate information exchange, propose solutions and promote a culture of collaboration. ESMA will have the power to resolve any disputes.

Articles 28a and 28b provide for a mechanism to be set up for the mutual recognition of administrative fines and assistance with their recovery in a cross-border context. The aim is to make it easier to enforce the rules in the single market, in contrast to the current situation, in which recovering fines in another jurisdiction is very complex or even impossible. 

Supervisory powers

To ensure effective and consistent supervision across sectors, it is proposed to insert a new Chapter IIa which consolidates ESMA's procedural powers as currently set out in sectoral legislation into a single, cross-sectoral framework. This framework streamlines the rules for information requests, investigations, on-site inspections, supervisory measures, and penalties, while safeguarding rights of defence, legal professional privilege, and judicial protection. By establishing a consistent and uniform set of procedural powers, the Regulation increases legal certainty, promotes supervisory convergence and efficiency, and helps ESMA's to exercise its direct supervisory responsibilities accountably. These powers are without prejudice to any more specific or different powers set out in other EU Acts. 

Funding

To ensure the ESMA’s supervisory activities are financed in a fair and transparent manner, the Regulation proposes to harmonise the principles governing the fees charged to financial market participants under ESMA’s supervision (Article 39n). The Regulation consolidates the principles currently scattered across sectoral legislation in order to establish a unified framework for fee calculation, scope and transparency. The proposed amendments promote legal certainty and transparency for both existing and new entities, thereby enabling them to better anticipate and plan for supervisory fees. The proposed amendments ultimately help ESMA to effectively supervise and regulate the financial sector. 

An amendment has also been made to Regulation (EU) 2015/2365 to bring it into line with the changes to the fees charged to financial market participants by ESMA.

Governance

This proposal provides for a more effective governance structure for ESMA. It replaces the current Management Board with an Executive Board with independent full-time members (Articles 44a and 46a) and adjusts the composition of the Board of Supervisors (Article 40). The proposal clarifies the respective responsibilities of these two boards (Articles 43 and 46a). The Executive Board will consist of the chairperson and 5 full-time members, with diverse supervisory experiences, and, collectively, an appropriate understanding of the sectors under ESMA’s supervision. The members will be appointed in a process involving the Commission, the European Parliament and the Council. They will be subject to strict conflict of interest rules and their mandate will be limited to 5 years with the possibility of an extension of two years. Article 46a sets out the tasks of the Executive Board, which will mainly be responsible for decisions relating to the direct supervision of financial market participants. The Executive Board will also have a range of decision-making powers, including over individual competent authorities on certain non-regulatory matters, such as dispute settlement, matters relating to a breach of EU law and independent reviews. This will contribute to more effective decision-making that ensures a good balance between national specificities and common EU interests. The Executive Board will take over the responsibilities of the Management Board for preparing ESMA’s work programmes and budget, and the activities of the Management Board will cease. All existing references to the Management Board will be replaced by references to the Executive Board. The members of the Executive Board, including the chairperson, will have one vote each and the chairperson will have a casting vote.

The Board of Supervisors remains ESMA’s main body in charge of overall guidance and decision-making on regulatory matters and supervisory convergence. The proposed amendments to Article 40 change the composition of the Board of Supervisors to include the full-time members of the Executive Board. The Board of Supervisors will be able to object to the main supervisory decisions taken by the Executive Board within 10 days, or 48 hours in urgent cases. The Executive Board can request opinions from the Board of Supervisors on supervisory matters and must report to the Board of Supervisors on its supervisory activities twice a year. In their capacity as voting members of the Board of Supervisors, the members of the Executive Board will bring their expertise to the Board of Supervisors and vote on general supervisory convergence matters. 

Article 2 – Amendments to the European Market Infrastructure Regulation

Supervision of significant CCPs

New Articles 22a to 22c are introduced to give ESMA direct supervision over significant CCPs, to specify all the details regarding the processes for a CCP to be determined as a significant CCP by ESMA, to specify the powers attributed to ESMA over significant CCPs and to introduce a provision regarding the supervisory fees charged by ESMA to CCPs it supervises. Article 12 is amended to give ESMA the power to impose penalties. A new Annex V is also introduced to provide a list of infringements for which ESMA can impose fines. Article 2 is amended to adapt the definition of ‘competent authority’ and to introduce new definitions of the terms ‘significant CCP’, ‘CCP’s competent authority’ and ‘national competent authority’. In addition, Article 22 is amended to provide Member States with the option to appoint ESMA as the CCP’s competent authority also for their less significant CCPs. To ensure that these definitions are consistent across related pieces of Regulation and to reflect ESMA’s supervisory authority over significant CCPs, amendments have also been introduced to Regulation (EU) 2021/23.

Articles 14, 17 18, 20 are adapted to abolish colleges for significant CCPs and to adjust the various procedures to account for ESMA’s new role, for example by removing the need for ESMA opinions when significant CCPs are involved and to cater for the abolition of the CCP Supervisory Committee.

In addition, Article 23 is amended to add provisions about ESMA’s collaboration with the ‘relevant authorities for significant CCPs’. This change is accompanied by the introduction of a new definition of the term ‘relevant authorities for significant CCPs’ in Article 2, and a new Article 22d to provide a detailed list of relevant authorities for such CCPs. In addition, Articles, 17c, 20, 23, and 24 are amended to take into account this new term in the related procedures and information flows.

Article 89 is amended to align the transitional provisions for CCPs which were already authorised before the entry into force of this amending Regulation.

Supervision of less significant CCPs

Article 2 is amended to introduce a definition of ‘less significant CCP’. Article 18 is amended to make ESMA the sole chair of colleges for less significant CCPs. In addition, Articles 24a, 24d and 25c are amended and Articles 24e and 90 are deleted to reflect changes to ESMA’s internal governance, notably the introduction of ESMA’s new Executive Board and the removal of the CCP Supervisory Committee.

Open access and interoperability processes

Articles 7, 8 and 54 are amended to give ESMA the right to arbitrate requests for access to a CCP and requests for access to a trading venue and to approve requests for interoperability arrangements.

Article 3 – Amendments to the Markets in Financial Infrastructure Regulation

Trading venues are currently supervised on a national basis. A key pillar of this proposal is to transfer supervisory competences for significant trading venues and Pan-European Market Operators or PEMOs (and trading venues operated by PEMOs) to ESMA. A trading venue will be deemed significant if it is important for the EU economy or if, in addition to being significant in size, it has a significant cross-border dimension. The proposal gives ESMA the necessary powers to carry out its supervisory tasks, although certain market surveillance powers remain at national level and are conferred on the national surveillance authorities.

Given the importance of proximity to the local market ecosystems, national surveillance authorities would retain responsibilities at local level to ensure the market integrity of the significant trading venues or trading venues operated by a PEMO. However, those responsibilities would be limited to supervising orderly trading and monitoring market abuse and would not extend to obligations directly imposed on trading venues.

Harmonisation of the rules applicable to trading venues

Directive 2014/65/EU (the Markets in Financial Instruments Directive II) sets out the rules for the authorisation and operation of trading venues. However, the fact that those rules were set out in a Directive has led to EU law being transposed and interpreted differently. It has also resulted in many Member States adopting additional measures in areas not strictly harmonised under the Directive, such as prudential requirements for regulated markets. Creating a truly ‘single rule book’ for trading venues is a precondition for effective supervision at EU level. The proposal therefore inserts a new Title Ia in Regulation (EU) No 600/2014 (the Markets in Financial Instruments Regulation) to further harmonise the rules for trading venues and remove national rules that hinder the functioning of the single market. A significant number of the measures have been directly transferred from the Markets in Financial Instruments Directive II, but the new Title Ia also further specifies the applicable framework in areas that were previously left to national discretion.

In addition, the proposed new Title Ia clarifies the types of cross-border activities that a regulated market may carry out on the basis of its individual licence. It therefore also clarifies that not only should regulated markets be able to provide arrangements to enable access to their venue from other Member States (through ‘trading screens’), as already provided for in the Markets in Financial Instruments Directive II, but they should also be able to provide services linked to: (i) the admission to trading of securities on their venue; and (ii) the admission of new members from other Member States. It also clarifies that regulated markets can do this either by setting up a branch or, without a branch, through the freedom to provide services across the EU single market. Multilateral trading facilities and organised trading facilities have the same rights.

Lastly, the proposal aims to make it easier to allocate resources and functions within a group. Title Ia therefore clarifies that allocating resources to an entity within the same group or relying on such an entity to perform certain functions should not be considered outsourcing for the purpose of the Markets in Financial Instruments Regulation. It also clarifies that the geographical location of an entity to which resources are allocated or which is relied upon to perform certain functions should not be relevant to the competent authority’s assessment of the compliance of the trading venue with its organisational requirements.

Creation of a ‘Pan-European Market Operator’ status

The proposal creates a new ‘Pan-European Market Operator’ (PEMO) status, which allows for the operation of several trading venues in more than one Member State on the basis of a single licence. If a PEMO takes over existing trading venues, the proposal provides for the individual authorisation(s) under which those venues operated to be deemed void once the new PEMO authorisation is issued. The new Title Ia sets out the authorisation procedure in detail and the requirements applicable to PEMOs. The proposal also clarifies that a PEMO should be responsible for ensuring that the trading venues it operates comply with the requirements applicable to regulated markets, multilateral trading facilities or organised trading facilities, as appropriate. Lastly, for areas of law that are not yet harmonised (e.g. tax law) or not yet fully harmonised (e.g. rules on transparency) under EU law, the proposal clarifies that, for each trading venue, the PEMO should apply the law of the Member State where that trading venue is deemed to be situated or operated, and that the relevant national surveillance authority should be that of the Member State where a venue operated by a PEMO is deemed to be situated or operated. In addition, it is clarified that, where a PEMO takes over the operation of a trading venue that has already been authorised, that trading venue should be deemed to be situated or operated in the Member State where it was initially authorised.

Open access

Under this proposal, the rules under which a trading venue has access to the services of a CCP (Article 35 of the Markets in Financial Instruments Regulation) and under which a CCP has access to the trade feeds of a trading venue (Article 36 of the Markets in Financial Instruments Regulation) would be streamlined to ensure that such access is not unjustifiably delayed and that access is refused only where there are significant systemic risks or risks to the orderly functioning of the markets. Furthermore, the market practice known as ‘preferred clearing’ would be prohibited where two parties choose to clear at different CCPs that have already been granted access to a given trading venue and have already put in place interoperability arrangements.

Enhancement of the consolidated tape

Under the current Markets in Financial Instruments Regulation, the consolidated tape for shares and exchange-traded funds does not provide information on the identity of the trading venue offering the best bid and offer price or on the depth of the trading book. Given the importance of this information to users of the consolidated tape, the proposal adds it to the tape. The proposal also enhances transparency on quotes by systematic internalisers for orders originating from retail clients.

Article 4 – Amendments to the Central Securities Depository Regulation

Modernisation of the regulatory framework for CSD services

Article 2 of the Central Securities Depositories Regulation is amended in order to allow for the provision of CSD services using DLT. Specifically, the existing definitions of ‘book-entry’, ‘cash’ and ‘securities accounts’ are amended and definitions of ‘distributed ledger technology’ and ‘e-money token’ are added. Similarly, Article 30 related to outsourcing is amended to cover the provision of CSD services using DLT and a new article (Article 45a) is introduced on risks related to the use of DLT outside of an outsourcing arrangement. Finally, the framework set out in Title IV for the settlement of the cash leg of a securities transaction is amended to allow settlement, under specific conditions, with certain e-money tokens authorised under the Markets in Crypto-Assets Regulation.

Supervision of significant CSDs 

Article 11 of the CSDR is amended to give ESMA direct supervisory authority over significant CSDs and a new Article 11a is added to set out the conditions and procedures for determining which EU CSDs are ‘significant’. As ESMA will become the direct supervisor of significant CSDs, Article 2 is amended to adjust the definition of ‘competent authority’, and a new definition of ‘national competent authority’ is added. Article 10 is amended to reflect ESMA’s new role as supervisor. Title V on sanctions is also amended to reflect ESMA’s new role, and a new Annex II lists the of infringements for which ESMA can impose sanctions.

Article 24a is amended to abolish colleges for significant CSDs and Articles 15, 16, 17, 19, 20, 21, 21a, 22b, 27b, 60 and 62 are amended to adjust the various procedures to account for ESMA’s new role. This includes, for example, removing the need for an opinion from ESMA where significant CSDs are involved. Article 10 also provides further details of ESMA’s oversight and supervisory powers over significant CSDs.

Given ESMA’s new powers over significant CSDs, a new Article 25a sets out the framework for the supervisory fees that can be charged by ESMA.

Integration of CSD services

Article 14 is amended to provide more detailed provisions on the cooperation between ESMA, relevant authorities, and national competent authorities.

Article 2 is amended to introduce a definition of the term ‘CSD hub’, and a new Article 48a sets out the procedure for ESMA to determine which EU CSDs are considered CSD hubs. To facilitate access to all financial instruments issued in EU CSDs, Article 48a introduces a requirement for CSD hubs to establish reciprocal links with other CSD hubs, and for CSDs that are not hubs to establish reciprocal links with a CSD hub.

To further integrate EU CSDs, Article 40 is amended to require EU CSDs that settle the cash leg of their transactions in a currency available on an EU integrated platform to directly connect to that platform and enable their participants to settle the cash leg in accounts opened on that platform.

Article 54 is amended to relax the requirements that apply when a CSD wishes to designate a credit institution to provide banking-type ancillary services, specifically when the cash leg is settled in non-EU currencies.

Article 19a is added to introduce a simplified process for outsourcing core services within a group of CSDs.

Improving the CSD passporting regime 

With the aim of lifting the remaining barriers to the passporting of CSD services in the EU, Article 23 is amended to require only an ex-post notification when an EU CSD starts offering its services to issuers established in another Member State than the Member State of authorisation of the CSD.

This proposal also amends the DLT Pilot regime (Regulation (EU) 2022/858) to increase the regime’s flexibility and proportionality, as well as its scale and scope and to address concerns around the durability of the regime by removing the time limits of the permissions granted under the pilot.

Expanding and making more flexible the scope of eligible instruments and scale of activities

Article 2 is amended to introduce new concepts. Among others, the trading infrastructure in the Pilot is now referred to as a DLT trading venue (DLT TV) to reflect that it would be possible to operate both a multilateral trading system and an organised trading facility under the Pilot. Article 3 is amended to make more flexible current limits of the pilot regime, both on the type of financial instruments that are eligible as well as on the scale of activity that can be carried out in these instruments. For the scale of activities, the proposal would maintain a total maximal aggregated market value of all the DLT financial instruments that can be admitted to trading or recorded on a DLT market infrastructure but raise it to EUR 100 billion. Finally, product-specific threshold would be removed.

Creating a simplified regime for smaller DLT market infrastructures

Article 3 is further amended and a new Article 7a is added to introduce a simplified regime for operators of smaller DLT infrastructures providing CSD services as long as they remain under threshold of no more than EUR 10 billion of total market value of recorded DLT financial instruments. The simplified regime would feature rules that are adapted to the scale of activities undertaken by smaller operators. Depending on the activities they plan to undertake, applicants to the simplified regime would be required to hold an underlying authorisation to be eligible, such as a CASP, a CSD or an investment firm licence. The entities operating under the simplified regime would be subject to a specified subset of provisions of Regulation (EU) No 909/2014 that result in a more proportionate and principles-based approach to the regulation of small-scale provision of CSD services.

Expanding scope of eligible entities

Article 4 is amended to expand the scope of entities which can operate a DLT TV and a DLT trading and settlement system (DLT TSS) to include, in addition to investment firms and CSDs, also crypto-assets services providers (CASPs) that are authorised to operate a crypto-asset trading platform. CASPs permitted to operate a DLT market infrastructure, would become subject to requirements set out in EU trading and post-trading rules (Regulation (EU) No 600/2014, Directive 2014/65/EU and Regulation (EU) No 909/2014) while benefiting from targeted and justifiable exemptions like other operators of DLT market infrastructures.

Additional exemptions regarding applicants operating a DLT TV and a DLT settlement systems (DLT SS)

New Articles 4a and 5a are introduced to offer operators of DLT market infrastructures the possibility to obtain, under certain strict conditions, exemptions from a wide range of provisions of Directive 2014/65/EU, Regulation (EU) No 600/2014 and Regulation (EU) No 909/2014 where these have been found to be incompatible or highly disproportionate with the use of DLT. Before granting exemptions from specific provisions, competent authorities must seek a non-binding opinion from ESMA.

Specific rules for operators of a DLT SS settling payments using commercial bank money and e-money tokens

Article 5 is amended to enable operators of a DLT SS to designate credit institutions for the settlement of payments in commercial bank money that satisfy the prudential and capital requirements of Regulation (EU) No 909/2014 but that will be able to engage in other activities beyond providing banking-type ancillary services of the purpose of settlement. As regards settlement of payments in e-money tokens, it is clarified that most banking ancillary services involving e-money tokens should be provided by the same type of credit institutions as those that can settle payments in commercial bank money.

Provision of individual CSD services, settlement schemes and interoperability between DLT market infrastructures 

New Articles 10a to 10f are introduced to, firstly, allow for service-specific regulation of two CSD core services, the notary and central maintenance service, and, secondly, to introduce a new model for settlement that relies on of DLT account keepers with access to central bank money. These articles also ensure comprehensive supervision of these new ways to provide CSD core services. Both the DLT notary and the DLT central maintenance services can be provided by an investment firm, a regulated market, a credit institution, a CSD, or a CASP that obtain a specific permission to provide that service, upon demonstrating compliance with applicable provisions of Regulation (EU) No 909/2014. Consequently, it will be possible to issue and record DLT financial instruments outside a CSD, however, these instruments will be required to be settled with a regulated market infrastructure. Furthermore, the settlement of DLT financial instruments will be possible between DLT account keepers having access to central bank money accounts. These DLT account keepers will have to be a part of a settlement scheme, which is a set of rules and procedures agreed between participants for settling DLT financial instruments, and which has to be previously assessed and authorised by ESMA. The settlement scheme and participating DLT account keepers will have to comply with a number of requirements ensuring robust settlement outcomes and report regularly to ESMA.

Finally, new Article 10g requires entities active in the post-trading value chain in the Pilot, and beyond, to establish technical standards that support interoperability between DLT market infrastructures, with an obligation to report on their work on ESMA. Taking into account the efforts of the industry, ESMA is required to provide the Commission with technical advice on supporting interoperability between DLT market infrastructures.

2025/0383 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Regulations (EU) No 1095/2010, No 648/2012, No 600/2014, No 909/2014, 2015/2365, 2019/1156, 2021/23, 2022/858, 2023/1114, No 1060/2009, 2016/1011, 2017/2402, 2023/2631 and 2024/3005 as regards the further development of capital market integration and supervision within the Union

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee 14 ,

Having regard to the opinion of the European Central Bank,

Having regard to the opinion of the European Data Protection Supervisor,

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1)The Savings and Investments Union (SIU) strategy is part of the Commission strategy to provide a vision of the Union as an economic powerhouse. For that purpose, it is necessary to establish a single market for financial services by addressing market inefficiencies resulting from fragmentation and to create the truly integrated European capital markets which are accessible to all citizens and businesses across the Union. It is also important that financial markets potential of the Union is unlocked by providing access to more efficient capital-market based financing and by facilitating cross-border capital flows, which in turn should support the economy of the Union, stimulate job creation and enhance competitiveness.

(2)It is necessary to foster a seamless capital market across the EU by strengthening the supervisory framework and addressing regulatory fragmentation, thereby ensuring better integration of capital markets throughout the Union. In particular, while the integration of capital markets in the Union should ultimately be a market-driven process, certain barriers stemming notably from the Union legislative framework can obstruct progress. The Union should therefore focus on removing barriers in the sectors of trading, post-trading and asset management, and barriers hindering the uptake of new technologies. As market integration deepened, it is also crucial for the Union supervisory framework to evolve in accordance with it. 

(3)In the context of the political objective of simplifying financial services legislation and delivering more effective and efficient implementation of Union policies, the Commission, after having consulted the European Supervisory Authorities, AMLA, the Council and the European Parliament, sent a letter on 1 October 2025 deprioritising empowerments non-essential for the effective functioning of the Level 1 legislations. For those deprioritised empowerments where the Commission would be legally required to act (‘shall + a date’) legal clarity for stakeholders would be enhanced when the basic act is also amended.

(4)The development of a deeper and more integrated Union capital market, as envisaged in the Savings and Investments Union Communication, requires consistent and effective supervision across Member States. Divergent national supervisory practices create legal uncertainty, increase the cost of cross-border activity and fragment the single market for financial services, thereby hindering market integration and the efficient allocation of capital. To address those challenges, it is necessary to strengthen supervisory convergence and, where appropriate, entrust the European Securities and Markets Authority (‘ESMA’) with additional tasks and powers to ensure the uniform application of Union law and the effective oversight of entities with significant cross-border relevance.

(5)For that purpose, ESMA should be given additional competences and its governance and funding framework should be reinforced to promote transparent, accountable and efficient decision-making at Union level and to ensure that ESMA has sufficient resources to fulfil its expanded responsibilities. The transfer of direct supervisory powers to ESMA in relation to significant entities in the field of market infrastructure and to crypto-asset service providers (CASPs), together with enhanced supervisory convergence tools, should contribute to a more integrated, competitive and resilient capital market that delivers better outcomes for investors, firms and the broader economy.

(6)Pursuant to Article 1(2) of Regulation (EU) No 1095/2010 of the European Parliament and of the Council( 15 ), ESMA is to act within the powers conferred on it by a range of Union legislative acts, including several Directives and Regulations listed therein. To ensure the full application of Union financial legislation, ESMA should apply national legislation transposing directives in a manner consistent with Union Law in a way that respects the primacy of Union Law,

(7)In addition, Article 1(2) of that Regulation further provides that ESMA is to act within the powers conferred by any other legally binding Union act which assigns tasks to ESMA. It is necessary to ensure that the scope of ESMA’s responsibilities and tasks automatically extends to any subsequent Union legislation conferring powers or functions on ESMA.

(8)To reflect the progressive extension of ESMA’s direct supervisory, investigatory, enforcement and other responsibilities across different sectors of the financial system, it is necessary to introduce a definition of financial market participants that are under ESMA’s supervision. That definition should encompass all financial market participants for which ESMA has been conferred powers. That definition should ensure consistency and clarity in the application of ESMA’s supervisory powers, irrespective of the legal instrument from which those powers derive, and facilitate the establishment of common procedural and organisational arrangements for supervision and enforcement.

(9)To ensure the effective exercise of its direct supervisory responsibilities, ESMA should establish structured yet flexible cooperation arrangements with other authorities. Such cooperation should capture a range of situations, corresponding to the evolving role of ESMA. Such arrangements should cater, first, for cases where national competent authorities are still responsible for certain entities or activities but will cease to be in charge of supervision of certain entities following the assumption of direct supervisory powers by ESMA, thereby requiring transitional solutions to ensure continuity and an orderly transfer of responsibilities. Second, those cooperation arrangements should cover cases where, alongside ESMA’s direct supervisory powers, other Union or national authorities, although not acting or having acted as competent authorities, hold relevant expertise or consultation rights under Union law, such as the European Central Bank in relation to central counterparties. Third, those cooperation arrangements should cover cases where tasks are not transferred to ESMA, such as market surveillance for trading venues. To address these different situations and, in particular, to ensure a smooth transition, the Authority should have the flexibility to set up cooperation arrangements adapted to the sector concerned, the nature of the tasks and the degree of involvement required. Such arrangements may range from close structural cooperation, including the establishment of joint supervisory teams or the conduct of joint inspections, to looser forms of operational coordination and, progressively, to more autonomous supervisory action by the Authority as its capacity develops. Those cooperation arrangements should also allow for their gradual adjustments over time and, where appropriate, the establishment of local presences of the Authority in Member States. Those cooperation arrangements should also promote effective and resource-efficient supervision, ensure the continuity and consistency of supervisory outcomes, and take due account of the statutory responsibilities and resources of other authorities. Cooperation should be guided by the principles of efficiency, proportionality, mutual trust and good faith, and should promote the effective use of resources while safeguarding ESMA’s independence and accountability for the performance of its tasks. To reflect the progressive build-up of ESMA’s supervisory capacity and to ensure the full and effective assumption of its supervisory tasks, the cooperation arrangements should be subject to regular review by ESMA.

(10)In certain circumstances, temporary exemptions or other transitional arrangements under Union financial services legislation may expire before the entry into force or full implementation of new or amended provisions introducing a permanent exemption, replacement framework, or new regulatory treatment. In addition, significant market developments may occur that render compliance with specific requirements under existing Union law temporarily disproportionate, operationally impracticable, or unduly burdensome in light of prevailing market conditions and the underlying regulatory objectives. To ensure legal certainty and regulatory continuity, and to avoid unnecessary market disruption, it is appropriate to provide that the no-action letter as set out in Article 9a of Regulation (EU) No 1095/2010 may also apply in cases where (i) a regulatory gap arises during the phasing-in of new requirements, or (ii) exceptional market conditions lead to disproportionate compliance burdens for market participants.

(11)To support cooperation between authorities and facilitate the new collaboration platforms, the Authority should develop a corresponding technological platform to facilitate the collection, storage, access to and processing of data and information. That data platform should contribute to high-quality data governance consistent with FAIR principles (Findable, Accessible, Interoperable, Reusable) and also include the supervisory technology and other tools to enhance analysis and monitoring capabilities of the relevant authorities. 

(12)In its capacity as processor of personal data, the Agency should implement appropriate technical and organisational measures to ensure the security, availability, maintenance and development of the software and IT infrastructure of the platform and that processing of personal data in the context of facilitating the access to and exchange of information on the platform in in line with Union law laying down the obligations to collect and exchange those data and in line with data protection laws. Where the Agency has the obligation to processes personal data pursuant other Union acts, the Agency should fulfil its obligations as controllers in regard to that information.

(13)In view of ESMA’s powers and competence over a broad category of entities and to ensure the effective, consistent exercise of its supervisory powers across sectors, it is appropriate to rationalise and consolidate in Regulation (EU) No 1095/2010 the procedural framework for the exercise of supervisory tools necessary for the Authority to carry out its tasks. Those powers, which are currently dispersed across various sectoral Union acts should be replaced, to the extent possible, by a single horizontal framework applicable to all entities under the Authority’s direct supervision. That horizontal framework should provide a coherent set of procedural rules governing ESMA’s requests for information, investigations and on-site inspections, as well as the adoption of supervisory measures, fines and periodic penalty payments. Such requests for and access to information, including during investigations and on-site inspections, may encompass personal data insofar as it is relevant and necessary for the performance of the Authority’s tasks, and any processing of such data should comply with the applicable Union rules on the protection of personal data, in particular the principles of necessity, proportionality and purpose limitation. Moreover, that horizontal framework should ensure full respect for the rights of defence and for legal professional privilege, and provide for appropriate judicial protection, including the review of ESMA’s decisions by the Court of Justice of the European Union. By setting such a procedural framework in a coherent and uniform manner and abolishing sector-specific procedural provisions, the Union should enhance legal certainty, promote supervisory convergence and efficiency, and support the effective and accountable exercise of ESMA’s direct supervisory responsibilities. To avoid regulatory overlap or inconsistency, to ensure that the Authority exercises its powers in an effective manner, to preserve the coherence of the Union acquis and respect the principle whereby specific rules take precedence over general rules, where sectoral legislation contains specific provisions tailored to the procedural powers of the Authority in particular sectors or areas, those provisions should continue to apply and, where appropriate, prevail over the general powers laid down in that Regulation.

(14)Effective supervision and cooperation among competent authorities in the context of cross-border provision of financial services is essential to protect investors and foster trust and confidence in the financial system within the Union. For that purpose, ESMA should be equipped with enhanced supervisory convergence tools, including mechanisms to address supervisory failures and tools to facilitate cooperation and resolve disputes between competent authorities to ensure that financial market participants are subject to high-quality supervision.

(15)To address proven supervisory failures in the approval of financial products, services or entities operating across the Union, it is necessary to enable ESMA to require a competent authority to seek its opinion before granting approval where a peer review or an investigation reveals failures in supervision which could jeopardize the integrity of financial markets, financial stability, or investor protection. The peer review or investigation process, as set out in Article 22(4) of Regulation (EU) No 1095/2010, provides a robust and transparent framework for identifying supervisory failures and for taking corrective action. ESMA’s opinion should provide an additional layer of scrutiny and oversight, ensuring that financial products and services, and entities operating in the Union meet the highest standards of supervision. To prevent products, services or entities from entering the EU market without adequate supervision, it is necessary to enable ESMA to require in its opinion that competent authorities take corrective actions to address any shortcomings in supervision identified by ESMA.

(16)To facilitate regular and structured information exchange, propose solutions, and enhance cooperation to address common challenges and risks, and to support the overall goal of consistent and effective supervision, it is necessary to provide for collaboration platforms between competent authorities. Such platforms should be flexible, enabling ESMA to initiate or respond to requests from competent authorities, and should not prejudice the existing supervisory mandates and responsibilities of those competent authorities. Those collaboration platforms should also promote transparency, accountability, and a culture of compliance among financial market participants, with ESMA exercising its powers to resolve disputes and ensure compliance with Union law.

(17)Due to the lack of a mechanism for mutual recognition of administrative decisions, national competent authorities have significant difficulties in enforcing recovery of administrative fines in a cross-border context. To ensure effective enforcement of rules and the proper functioning of the single market in the area of financial services, it is necessary to introduce a mechanism for mutual recognition of decisions imposing an administrative fine and for assistance in executing requests to recover such a fine and such mechanism should be based on the principle of mutual trust. To that end, the grounds for a refusal to execute the request to recover an administrative fine should be limited to the minimum necessary.

(18)To ensure a consistent and transparent approach to the financing of ESMA’s supervisory activities, it is necessary to harmonise and consolidate the principles governing the levying of fees on entities under ESMA’s competence, which are currently set out separately in sectoral legislation conferring direct supervisory powers on ESMA. Establishing common principles on the scope, calculation, and transparency of such fees should promote a level playing field among entities across sectors, ensure the proportional application of supervisory costs, and provide legal certainty for both existing and new entities falling under ESMA’s competence. Those fees should cover all costs incurred by ESMA in the performance of its supervisory tasks, including, but not limited to, the costs of supervisory convergence work in the relevant sector, the development, operation and maintenance of IT tools and systems necessary for direct supervision, as well as the depreciated cost of such systems and related infrastructure. ESMA should be appropriately financed. It is therefore necessary to lay down that ESMA should be financed 50 % from Union funds and 50 % through contributions from Member States, made in accordance with the weighting of votes set out in Article 3(3) of the Protocol (No 36) on transitional provisions for the new tasks envisaged for ESMA by this Regulation that are not fee funded.

(19)In light of the future new competences of ESMA, its governance structure should be adapted accordingly. To ensure the effective and impartial functioning of ESMA it is necessary to strengthen its governance by introducing an independent Executive Board with full-time members, which should enhance its capacity to take swift and Union-oriented decisions, in particular for the supervision of financial market participants. The Executive Board, composed of the Chairperson and five independent full-time members with diverse supervisory experiences and expertise in the sectors under ESMA’s supervision, should be responsible for decisions addressed to financial market participants in supervisory matters. The Executive Board should also be responsible for decisions addressed to one or a limited number of competent authorities, including dispute settlements, breaches of Union law, and peer reviews. These decisions are attributed to the Executive Board to increase the agility and reactivity of the decision-making and to ensure that the decisions take into account a common European interest. The Executive Board should also assume the competence of the current Management Board in preparing ESMA’s work programmes and budget. This should ensure effective, impartial and EU-oriented decisions. To ensure transparency and democratic control, the full-time members of the Executive Board should be appointed by the Council, based on a shortlist drawn up by the Commission and a proposal by the Board of Supervisors, following approval by the European Parliament.

(20)To ensure a clear division of responsibilities and effective checks and balances, the Board of Supervisors should remain ESMA’s main body for regulatory decisions and supervisory convergence. To enhance the Union dimension in the decision-making process within the Board of Supervisors its composition should be adjusted to include the full-time members of the Executive Board as voting members for supervisory decisions. To ensure a balanced approach and the consideration of national perspectives the Board of Supervisors should have the power to object to major supervisory decisions taken by the Executive Board within 10 days (or 48 hours in urgent cases), while the Executive Board should be required to report to the Board of Supervisors twice a year on its supervisory activities and should be able to request opinions on supervisory matters.

(21)It is necessary to streamline and align the review clause of the Regulation (EU) No 1095/2010 with existing evaluation requirements for the agencies, as set out in the Joint Statement and Common Approach on EU decentralised  agencies from July 2012, which provide for periodic evaluations every five years instead of three years. The targeted reviews provided for in that Regulation, starting five years after the date of entry into force, replace evaluations and enable the Commission to assess the relevant aspects of ESMA's performance after an adequate period of time has elapsed. This approach is consistent with the objective of reducing regulatory burdens and promoting a more targeted and effective regulatory framework, allowing for informed decisions on potential simplifications and improvements.

(22)Central counterparties (‘CCPs’) within the Union are currently authorised and supervised by the competent authorities of the Member States in which they are established, in cooperation with ESMA and CCP colleges. Despite progress achieved so far in harmonising supervisory activity for CCPs in the Union, diverging supervisory practices for CCPs amongst those national authorities across the Union persist, creating an unlevel playing field among CCPs within the Union. This increases the complexity of the Union CCP framework and places an additional burden and additional costs on CCPs within the Union, including when compared with Tier 2 CCPs directly supervised by ESMA. With the development of deeper, more liquid Union capital markets under the Savings and Investments Union, that unlevel playing field could increase the risk of, and incentives for, supervisory arbitrage which could in turn lead to financial stability issues. Therefore, to ensure that the prudential, organisational and business conduct requirements for CCPs within the Union are applied in a uniform manner, in particular for CCPs with substantial clearing activity, CCPs with a material cross-border dimension, and CCPs that are part of a group that includes other market infrastructures that are supervised by ESMA, should be supervised by ESMA, based on its expertise and experience in the application of Regulation (EU) No 648/2012 of the European Parliament and of the Council 16 . CCPs with low clearing activity and a more domestic standing, deemed less significant, should continue to benefit from the supervision of local authorities with a greater familiarity with domestic markets. 17

(23)To determine which CCPs authorised under Regulation (EU) No 648/2012 should be deemed significant and thus subject to supervision by ESMA, it is necessary to provide clear and objective criteria, which should reflect the activities and risks of the CCPs concerned. With the aim of simplification and of avoiding unnecessary administrative burden, an existing CCP determined as significant at a later stage, should not be re-authorised.

(24)National competent authorities supervising less significant CCPs should have stronger cooperation with ESMA to ensure a consistent approach to supervision and hence ensure a level playing field for CCPs. In case they wish to do so, Member States should have the option to designate ESMA as the competent authority for less significant CCPs established in their jurisdictions. Moreover, should a previously significant CCP no longer meet the conditions to be considered as such, a sufficient transition period should be granted to the national competent authority to allow it to prepare before formally taking over supervisory responsibilities for that CCP. Alternatively, the national competent authority should be able to leave the supervision of this previously significant CCP to ESMA. In addition, to ensure consistency and a level playing field between significant and less significant CCPs, ESMA should also be the authority responsible for authorising interoperability arrangements and for chairing the colleges for less significant CCPs. The new supervisory arrangements for CCPs in the Union, in particular the role of ESMA as competent authority for significant CCPs, should be reflected in Regulation (EU) 2021/23 of the European Parliament and of the Council 18 .

(25)ESMA should closely cooperate with, and draw on the experience of, the bodies responsible for the oversight of CCPs authorised in the Union and with authorities experienced in the supervision of CCPs to benefit from the knowledge of those bodies. For that purpose, ESMA should develop comprehensive cooperation arrangements with those bodies and authorities, including the national competent authority in the Member State in which the CCP concerned is established, the European Central Bank, other central banks of issue of the most relevant Union currencies that the CCP processes, the competent authorities responsible for the supervision of the trading venues and the central securities depositories served by the CCP, and the competent authority responsible for the supervision of the most active clearing members. Those arrangements should set out the specific modalities and operational arrangements both in ongoing supervision and in exceptional circumstances, such as emergency situations.

(26)The new supervisory responsibilities granted to ESMA and the changes to ESMA’s internal organisational structure, including the removal of the CCP Supervisory Committee, whose tasks should be assigned to the newly established Executive Board, should be reflected in Regulation (EU) No 648/2012. Due to the unique status of third-country CCPs, the provisions concerning the procedures applying to them should remain in Regulation (EU) No 648/2012 rather than shifting those provisions to Regulation (EU) No 1095/2010. Furthermore, taking into account those changes, to further simplify the future organisational structure and working arrangements, and to remove unnecessary burden, significant CCPs should not be required to have a college. Similarly, given ESMA’s new supervisory responsibilities for significant CCPs, the requirements for ESMA opinions in relation to those CCPs should be removed. Supervisory arrangements for less significant CCPs should largely remain as they were as those CCPs have a more domestic scope and should benefit from the local knowledge and expertise of national authorities.

(27)Regulation (EU) 2024/791 of the European Parliament and of the Council 19 amended Regulation (EU) No 600/2014 of the European Parliament and of the Council 20  to remove obstacles to the emergence of consolidated tapes in bonds, shares and exchange-traded funds ('ETFs') and OTC derivatives. For a given share or ETF at any given timestamp, the provider of the consolidated tape is required to disseminate the European best bid and offer price (‘EBBO’) and the volume available at those prices across the Union. However, the consolidated tape would not disclose the identity of the trading venue of the EBBO, as it would not attribute the volumes that are available at the EBBO to individual trading venues, nor would it include bid and offer data beyond the EBBO and accompanying volumes. That significantly limits the value added of the consolidated tape, depriving its users of the ability to locate the volumes available at the EBBO and of a representative view of the depth of liquidity that is available for trading. Therefore, to further enhance its attractiveness, the consolidated tape for shares and ETFs should offer a more in-depth view of trading interests, covering the five best buying and selling prices, with the volumes available at those prices, and the indication of the individual trading venue on which those volumes are available.

(28)The closing price of the trading day is essential for equity markets as it provides a key reference price, typically used for the valuation of funds, ETFs and benchmarks. Most times, the closing price is derived from the closing auction that takes place on the trading venue where the securities were first admitted to trading (the ‘primary exchange’). The proportion of equity volumes traded at the closing auction has increased significantly over time. However, competition in the closing auction segment remains limited, with primary exchange closing auctions still capturing the largest share of closing auction trading. In addition, that situation raises resilience concerns, as incidents, including outages, on the primary exchanges may have a direct impact on the capacity of market participants to value their assets. To foster competition in the closing price segment and to ensure that market participants can rely on a closing price that is alternative to the closing auction price produced by the primary exchange, it is necessary to require the provider of the consolidated tape for shares and ETFs to disseminate a volume-weighted closing price resulting from all closing auctions operated by trading venues that are data contributors. ESMA should issue recommendations to specify the methodology that the consolidated tape should apply to determine the volume-weighted closing price.

(29)Directive 2014/65/EU of the European Parliament and of the Council 21 contains harmonised rules on the authorisation and operation of trading venues. However, the transposition of that Directive led to diverging national requirements. In addition, Member States complemented the transposed provisions with national requirements in instances where the Directive did not set out any requirements. That approach has resulted in an unlevel playing field, the fragmentation of the single market, and increased burden and costs for operators of trading venues located in several Member States and, eventually, the issuers and end-investors they serve. A more uniform framework is therefore necessary to level the playing field, avoid potential regulatory arbitrage, and support the development of activities across borders. It is therefore necessary to transfer requirements on the authorisation and operation of regulated markets and on the operation by an investment firm or a market operator of a multilateral trading facility (‘MTF’) or an organised trading facility (‘OTF’) from Directive 2014/65/EU to Regulation (EU) No 600/2014 and to further complement those provisions, notably to introduce harmonised rules in the areas that were previously subject to national legislation.

(30)The organisational requirements laid down in Article 19(3) and in Article 47 of Directive 2014/65/EU do not take into account whether a market operator or an investment firm operating a trading venue is part of a group. In particular, any intra-group arrangement for resource or function allocation between group entities is treated in the same way as an outsourcing arrangement entered into with entities outside the group. That approach fails to acknowledge the emergence of cross-border groups of trading venues and, as a result, limits the ability of those groups to enjoy group synergies and benefit from economies of scale, thus creating barriers to the cross-border allocation of resources and functions within a group. Additionally, allocating resources within a group, where all entities are subject to the same internal controls and procedures, carries a lower level of risk compared to outsourcing to external parties. The current approach, however, does not sufficiently distinguish between the risks associated with intragroup resource allocation and external outsourcing. Therefore, organisational requirements for trading venues should be simplified for trading venues that are part of a group and that intend to rely on the resources of or the performance of a function by another entity that is part of the same group and that is located in the Union. Such group arrangements should not be considered outsourcing for the purpose of Regulation No (EU) 600/2014, provided that certain conditions are met to ensure effective supervision. A trading venue that relies on the resources of or the performance of a function by another entity that is part of the same group should however remain fully responsible for the discharge of its obligations under Regulation No (EU) 600/2014. Given the increased supervisory risks, an intra-group arrangement that involves an entity located outside the Union should still be considered outsourcing.

(31)Article 53(6) of Directive 2014/65/EU sets out the right for a regulated market authorised in one Member State to provide appropriate arrangements on the territory of other Member States so as to facilitate access to and trading on that market by remote members or participants established in those other Member States. Directive 2014/65/EU does not expressly regulate other passporting rights for regulated markets, including the possibility to set up branches in other Member States. The absence of an explicit provision has led to diverging interpretations with respect to whether a regulated market may set up a branch in another Member State and with respect to the activities that a regulated market may perform under the passporting regime. It is important to enhance the clarity of the passporting regime for regulated markets by making it more explicit that regulated markets are able to seamlessly provide the activity, for which they have been authorised across the Union through the freedom to provide services or through the right of establishment. That includes, in addition to the provision of appropriate arrangements to facilitate access to and trading on that regulated market by remote members or participants established in other Member State, activities relating to the admission of members or participants on that regulated market and activities relating to the admission of financial instruments to trading on that regulated market. To ensure a level playing field between all trading venues, the same passporting regime should apply to market operators and investment firms operating an MTF or OTF.

(32)Directive 2014/65/EU currently requires that each regulated market in the Union is subject to an individual authorisation. It follows that market operators that intend to operate regulated markets in different Member States can only do so by seeking authorisation, for each individual regulated market that they intend to operate, from the competent authority of the home Member State, which is also responsible for the ongoing supervision of that market. That led to the situation where several Member States had introduced national laws to require, as a condition for the authorisation of a regulated market, that the market operator is a legal entity established in the Member State where a regulated market seeks authorisation. Due to that, groups operating regulated markets in several Member States cannot streamline their organisational structure and supervisory relationships, as they are obliged to maintain several supervised entities in different Member States. That significantly increases the costs and complexity of operating regulated markets across different Member States. To remove barriers and reduce operational costs for cross-border groups, it is necessary to remove the possibility for Member States to require the set-up of a separate legal entity in their territories as a condition for the authorisation of a regulated market. In addition, to further facilitate the cross-border operation of regulated markets, a new framework is introduced to allow legal persons that wish to operate more than one trading venue in more than one Member State to do so based on a single authorisation as a pan-European market operator (‘PEMO’) granted by ESMA. That new framework should not replace the existing authorisation and operation regime for regulated markets. Instead, it should apply on a voluntary basis to those entities that wish to operate under a single authorisation.

(33)The authorisation of a PEMO should list all the trading venues that the PEMO is authorised to operate. A PEMO that intends to operate additional trading venues should seek an extension of its original authorisation. To ensure that the supervisory arrangements of a PEMO are effectively simplified, the PEMO should not be required to seek individual authorisation for the trading venues that it operates in the Member States where those trading venues are situated or operated. Similarly, when a PEMO becomes the operator of an existing trading venue, the authorisation granted to that specific regulated market, or, in the case of MTFs or OTFs, to the market operator or investment firm for the purpose of operating that trading venue, should be deemed revoked upon the entry into effect of the authorisation to the PEMO or of the extended authorisation containing the amended list of the trading venues that that PEMO operates.

(34)Under Union and national laws, the territory where a trading venue is situated or operated is often used as the criterion to determine the national law that should apply to areas not directly governed by Union law, and to identify the competent authority. That includes Directive 2004/109/EC of the European Parliament and of the Council, which establishes requirements in relation to the disclosure of periodic and ongoing information about issuers whose securities are already admitted to trading on a regulated market situated or operating within a Member State, and Regulation (EU) No 596/2014 of the European Parliament and of the Council, pursuant to which national competent authorities are required to ensure that market abuse provisions are applied on their territory regarding all actions carried out in relation to instruments admitted to trading or traded on a regulated market, an MTF or an OTF operating within their territory. A PEMO will operate, whether through the freedom to provide services or by establishing a branch, trading venues in multiple Member States on the basis of a single licence that is given to the PEMO itself and not to the trading venues that it operates. In the absence of an individual authorisation for each trading venue operated by a PEMO, and considering that the PEMO will operate all venues through one legal entity established in one Member State and operating cross-border, it is necessary that the PEMO determines, for each trading venues that it operates, the Member State in the territory of which that trading venue is to be considered to be situated or operated. This determination should depend on how the PEMO chooses to market its trading venue to companies seeking admission to trading on that trading venue or to members or participants admitted on that trading venue. The national laws of that Member State should apply to all matters relating to trading not governed by directly applicable Union law, where that application is dependent on the situation or operation of a trading venue. To ensure legal predictability, in cases where a PEMO becomes the operator of a trading venue that is already authorised, it is necessary to require that such trading venue is considered to be situated or operated in the Member State where it was initially authorised.

(35)ESMA assessed the trading activity of interest rate derivatives. It appeared from the assessment that forward rate agreements and single currency interest rate basis swaps are generally illiquid. To ensure that only the most standardised and liquid interest rate derivatives are subject to the transparency requirements, it is necessary to exclude forward rate agreements and single currency interest rate basis swaps from transparency requirements.

(36)Article 14 of Regulation (EU) No 600/2014 requires systematic internalisers that deal in sizes of up to and including two times the standard market size to make public firm quotes on a regular and continuous basis during normal trading hours in respect of those shares, depositary receipts, ETFs, certificates and other similar financial instruments traded on a trading venue, for which they are systematic internalisers and for which there is a liquid market. Article 15 of Regulation (EU) No 600/2014 requires systematic internalisers to execute orders they receive from their clients in respect of those instruments at the quoted prices at the time of reception of the order. That Article also allows systematic internalisers to execute clients’ orders at a better price provided that the price falls within a public range close to market conditions. To strengthen price formation for retail orders, it is necessary to ensure that, where a systematic internaliser executes a retail client’s order, specifically flagged as such, at a price that is better than the quoted price, that systematic internaliser immediately, and in any event before execution, updates the quoted price to reflect that price improvement. In addition, systematic internalisers should be obliged to transmit to the consolidated tape for shares and ETFs the data that they publish pursuant to Article 14 of Regulation (EU) No 600/2014 to allow the consolidated tape to disseminate, for a given share or ETF, in addition to the best bids and offers for continuous order books, separately, the five best bid and offer quotes across the Union published by systematic internalisers with the indication of the individual systematic internaliser where those are offered. Those five best bid and offer quotes should correspond to the five best bid and offer quotes across all quotes for a given share or ETF published in the Union by different systematic internalisers.

(37)Article 21(1) of Regulation (EU) No 600/2014 requires investment firms which, either on own account or on behalf of clients, conclude transactions in OTC derivatives as referred to in Article 8a(2) of that Regulation, to make public the volume and price of those transactions and the time at which they were concluded through an Approved Publication Arrangement (‘APA’). To minimise burden for investment firms and to avoid the publication of misleading information, investment firms should not be required to publish through an APA the transactions in OTC derivatives that they conclude on a third-country trading venue, provided that the third-country trading venue (i) operates a multilateral system, (ii) is subject to authorisation, ongoing supervision and enforcement in accordance with the legal and supervisory framework of the third-country, and (iii) is subject to post-trade transparency provisions under which transactions concluded on that trading venue are published as soon as possible after the transaction was executed or, in clearly defined situations, after a deferral period. To ensure legal certainty and a high degree of supervisory convergence in the Union, ESMA should publish and regularly update a list of third-country trading venues that are considered to meet all criteria. Investment firms concluding transactions in OTC derivatives on third-country trading venues that do not meet all criteria should be required to make those transactions public in the Union through an APA.

(38)Articles 57 and 58 of Directive 2014/65/EU set out rules as regards the trading of commodity derivatives, emission allowances, and derivatives of emission allowances. Some of those rules are applicable to trading venues. As rules regarding the operation of trading venues are transferred from Directive 2014/65/EU to Regulation (EU) No 600/2014, it is appropriate to amend Regulation (EU) No 600/2014 to ensure that those rules are included in that Regulation.

(39)Articles 35 and 36 of Regulation (EU) No 600/2014 provide for the conditions, under which trading venues can access the services of a central counterparty (‘CCP’), and under which CCPs can access the trade feeds of a trading venue. Those criteria have proven to be inappropriately framed and thus leave grounds for unjustified rejections or delays in granting access. In addition, the systematic involvement of national competent authorities renders the procedures excessively complex and burdensome. It is therefore appropriate to review those conditions for access to ensure rejections only occur in limited cases subject to the specific and justified conditions, to ensure that delays in granting access are avoided, and that ESMA is involved only in the case of conflicts between parties. In addition, trading venues may currently preclude two market participants executing a transaction on their venue from freely choosing different CCPs, even where those CCPs have established interoperability arrangements pursuant to Regulation (EU) No 648/2012, and are therefore technically able to clear efficiently those transactions. Such market practices prevent the full exploitation of synergies that can be drawn from interoperability arrangements and increase costs of trading and clearing for market participants. In order to facilitate interoperable clearing, it is therefore necessary to prohibit trading venues from preventing access to their trade feeds for transactions involving two counterparties that have chosen to clear a transaction executed on their venue through two different CCPs that have established interoperability arrangements.

(40)Pursuant to Title VI of Directive 2014/65/EU, national competent authorities are currently responsible for the oversight of trading venues in the Union. On 20 March 2025 22 , the European Council adopted conclusions where it called for the improvement of the efficiency of supervision of Union capital markets and the reduction of their fragmentation. Furthermore, the Draghi and Letta reports 23 called for a more integrated supervision at the Union level. To reduce fragmentation and foster consistency in supervisory outcomes to support the establishment of a Savings and Investment Union, it is appropriate to confer on ESMA direct supervisory powers for significant trading venues with an important cross-border dimension. ESMA should also have direct supervisory powers over PEMOs. To determine what should be understood by ‘significant trading venues’, it is necessary to set out specific conditions. To avoid multiple supervisors for entities within the same group, it is also necessary to ensure that all entities that operate trading venues within the same group become subject to supervision by ESMA, once any entity within that group meets the conditions to be a significant trading venue. Similarly, all entities that operate trading venues in the group, in which at least one CCP or CSD is subject to supervision by ESMA, should also become subject to supervision by ESMA.

(41)For ESMA to ensure effective oversight over PEMOs and significant trading venues, ESMA should have the necessary supervisory powers, including the powers to conduct investigations and on-site inspections, to impose fines or periodic penalty payments to put an end to an infringement of Regulation (EU) No 600/2014, and to request the necessary information. To ensure that ESMA adequately performs its supervisory duties over PEMOs and significant trading venues, it is important that ESMA carries out such duties in close cooperation with national surveillance authorities. To avoid inefficient supervisory approaches resulting from double supervision, the involvement of national surveillance authorities should be limited to the powers and tasks explicitly conferred upon them by Regulation (EU) No 600/2014 and Directive 2014/65/EU.

(42)Considering the geographical proximity of national supervisors with the local ecosystems, it is necessary, for significant trading venues and PEMOs, that the responsibility for the surveillance of markets and oversight of issuers, remains with authorities that are competent at national level. Therefore, while ESMA should be in charge of enforcing the rules laid down in Regulation (EU) No 600/2014 vis-à-vis significant trading venues and PEMOs and, where relevant, the rules laid down in Directive 2014/65/EU, including with respect to the assessment of effective systems and controls aiming to prevent and detect market abuse or the assessment of parameters for halting trading, national surveillance authorities should retain some powers to enable those authorities to perform market surveillance tasks or carry out duties necessary for the preservation of market integrity. Those powers should include the receipt of transaction data, the possibility to request order book data, or the adoption of urgent measures to impose temporary trading halts in emergency situations or suspend financial instruments from trading. When exercising their powers, national surveillance authorities should cooperate closely with ESMA.

(43)To ensure equal treatment as regards supervisory oversight of operators of trading venues, ESMA should become the competent authority for all relevant trading venues, including those operated by investment firms. It follows that ESMA should be entrusted with the authorisation and supervision of investment firms in case they wish to be exclusively authorised to operate relevant MTFs or OTFs. Investment firms that simultaneously operate MTFs or OTFs, that are subject to ESMA supervision, and perform other investment activities or provide other investment services should remain under national supervision for those other investment services and activities. To ensure that those investment firms maintain one point of entry and contact with a single supervising authority when seeking authorisation, it is necessary to introduce a specific framework for the authorisation of those investment firms. Where those investment firms wish to be initially authorised to perform other investment services together with the operation of MTFs or OTFs, the national competent authority of the Member State where those applicant investment firms are based should be entrusted with the authorisation, considering that their authorisation also covers other services that are not under ESMA supervision. Nevertheless, in those cases, to ensure ESMA can perform its duties as competent authority for relevant trading venues, it should provide the national competent authority with a binding opinion on the authorisation of the trading venues. The national competent authority concerned should not authorise the applicant investment firms to operate MTFs or OTFs in case of a negative opinion by ESMA. The same approach should be followed in case an investment firm, originally authorised to provide other investment services, wishes to extend its authorisation to the operation of MTFs or OTFs that are subject to ESMA supervision. In case of a negative opinion by ESMA, the extension of the authorisation should not be granted by the national competent authority. Lastly, where an investment firm authorised by ESMA to exclusively operate MTFs or OTFs seeks to extend its authorisation to other investment services, the national competent authority of the Member State where the investment firm is based should issue to ESMA a binding opinion on the provision of the additional investment services. In case of a negative opinion, ESMA should not extend the authorisation.

(44)To ensure that trading venues are subject to the most appropriate supervisory model, it is important to put in place a process whereby trading venues deemed significant are placed under ESMA’s supervision, while introducing the possibility for trading venues that no longer meet the conditions to be ‘significant’ to revert to national supervision. In that context, ESMA should identify which trading venues meet the conditions to qualify as significant, and should regularly monitor whether trading venues continue to meet those conditions over time. To ensure that the change of a supervisory model occurs smoothly and without causing excessive burden for trading venues, it is important to establish an appropriate timeline and a supervisory transition plan, developed through a thorough collaboration between ESMA and the national supervisory authority concerned. To provide clarity to market participants, ESMA should also establish and regularly update a list of all significant trading venues under its supervision and publish it on its website.

(45)Regulation (EU) No 909/2014 of the European Parliament and of the Council 24 sets out standardised requirements for the settlement of financial instruments and rules on the organisation and conduct of central securities depositories (CSDs) to promote safe, efficient and smooth settlement.

(46)In 2025, the Commission consulted stakeholders on their views on the barriers to the integration and modernisation of post-trading infrastructures in general, and on the barriers to the provision of cross-border services in the area of post trading in particular. The feedback indicated that stakeholders support and consider relevant the objective of Regulation (EU) No 909/2014 to promote safe, efficient and smooth settlement of financial instruments, but underlined the need to adapt that Regulation to technological innovation while ensuring fair competition between providers of settlement services.

(47)The concepts used and the rules laid down, in Regulation (EU) No 909/2014, should not hinder the use of any particular technology, including distributed ledger technology (DLT). To account for innovation and the application of new technologies in the provision of CSD services, in particular where those services are provided using DLT, Regulation (EU) No 909/2014 should be amended to ensure that all definitions, concepts and requirements should be updated so that they can be applied to situations in which a CSD provides its services using DLT. It is equally necessary to ensure that certain tokenised assets, including e-money tokens can be used as a means of payment when settling securities transactions or to pay penalties for settlement fails.

(48)Regulation (EU) No 909/2014 should take into account developments in DLT in the provision of CSD services so that entities authorised under the pilot regime provided for in Regulation (EU) 2022/858 25 can fall under the scope of Regulation (EU) No 909/2014 once they have outgrown that regime. Regulation (EU) No 909/2014 should also allow CSDs established in the Union that intend, from the very beginning, to provide CSD services in relation to DLT-based securities whose value would exceed the thresholds set out in Regulation (EU) 2022/858, to seek an authorisation directly under Regulation (EU) No 909/2014. 

(49)Considering the significant volumes and values of securities transactions settled by settlement internalisers, it is important to strengthen the monitoring of the potential legal and operational risks related to that activity. The granularity of volume and value reporting requirements for settlement internalisers should therefore be increased and information on settlement fails included in reports to facilitate such risk monitoring. In addition, to ensure that market participants can compare prices of settlement services provided by settlement internalisers with prices of those services provided by CSDs, settlement internalisers should disclose their prices and fees to their clients.

(50)CSDs in the Union are authorised and supervised by the competent authorities of the Member States in which they are established, in cooperation with a college of supervisors where those CSDs offer services of substantial importance in two or more host Member States. Despite progress so far, diverging supervisory practices for CSDs amongst those national authorities persist, creating an unlevel playing field among CSDs in the Union and increasing the costs and burden for CSDs and groups of CSDs operating and seeking to operate cross-border. With the development of deeper, more liquid Union capital markets under the SIU, that unlevel playing field increases the risk of supervisory arbitrage which could lead to financial stability issues. To ensure that the prudential, organisational and business conduct requirements for CSDs established in the Union are applied in a uniform manner, in particular for CSDs with substantial settlement activity, CSDs with a material cross-border dimension, and CSDs that are part of a group that includes other market infrastructures that are supervised by ESMA, should be supervised by ESMA, based on its expertise and experience in the application of Regulation (EU) No 909/2014.

(51)To determine which CSDs authorised under Regulation (EU) No 909/2014 should be subject to supervision by ESMA, it is necessary to lay down clear and objective criteria for their identification, including criteria based on size and cross-border activity. With the aim of simplification and of avoiding unnecessary administrative burden, a CSD that has already been authorised should not be re-authorised by ESMA once it becomes significant.

(52)Given CSDs’ central role in securities markets, their connection to other financial market infrastructures and the fact that most of the volume of settlement transactions in CSDs in the Union happens in central bank money, ESMA should develop deep and comprehensive cooperation arrangements with other authorities, in particular the ECB and other central banks of issue of the most relevant Union currencies that the CSDs settle in. Such cooperation arrangements should cover the close involvement of those other authorities in the daily supervision of significant CSDs and should include arrangements for regular events, such as onsite inspections, and ad hoc events, such as emergency situations.

(53)The amendments to Regulation (EU) No 1095/2010, and in particular the changes to ESMA’s internal organisational structure and the shift in supervisory responsibilities, should be reflected in Regulation (EU) No 909/2014. In addition, taking into account the shift in supervisory responsibilities, the involvement of national competent authorities in ESMA’s governance structure, and to avoid any duplicative assignment of tasks between ESMA and the supervisory college, significant CSDs should no longer be required to have a college.

(54)As opposed to significant CSDs, less significant CSDs do not have substantial cross-border activities. They should therefore remain under the supervision of their national competent authorities. Supervisory arrangements for less significant CSDs should largely remain as they were. However, to ensure a consistent supervisory approach for those CSDs, it is necessary to provide for stronger cooperation between those national competent authorities with ESMA. In case they wish to do so, Member States should have the option to designate ESMA as the competent authority for less significant CSDs established in their jurisdictions. Moreover, should a previously significant CSD no longer meet the conditions to be considered as such, a sufficient transition period should be granted to the national competent authority to allow it to prepare before formally taking over supervisory responsibilities for that CSD. Alternatively, the national competent authority should be able to leave the supervision of this previously significant CSD to ESMA. In addition, to ensure consistency and a level playing field between significant and less significant CSDs, ESMA should also be the authority responsible for authorising interoperability arrangements such as, in the context of CSD services, interoperable links. For these purposes, ESMA should also be responsible for chairing the colleges for less significant CSDs.

(55)To modernise the exchange of information and to allow for faster procedures, ESMA should establish and maintain an electronic central database in the form of a platform. All relevant competent authorities and bodies referred to in Regulation (EU) No 909/2014 should have access to such platform for the information that is pertinent for their tasks and responsibilities. Entities subject to Regulation (EU) No 909/2014 should have access to the information and documentation they have submitted and any documentation that is addressed to them. To ensure the swift and efficient sharing of information and documentation under Regulation (EU) No 909/2014, the central database should be used to share as much information and documentation as possible.

(56)To allow groups of CSDs to benefit from their consolidation, Regulation (EU) No 909/2014 should enable CSDs that are part of a group to outsource their core services to CSDs that are part of the same group. In addition, situations where a CSD wishes to provide its core services by using a DLT solution it developed should not be considered as outsourcing but rather as an extension of the CSD’s authorisation.

(57)The requirement to ensure the integrity of securities’ issuance applies equally to conventional CSDs and CSDs using DLT. For CSDs using DLT, the rules should take into account the specific ways in which DLT works by allowing for appropriate reconciliation measures to be performed by nodes verifying that the number of securities making up a securities issue or part of a securities issue submitted to the CSD is equal to the sum of securities recorded on the securities accounts of the participants of the securities settlement system operated by the CSD.

(58)CSDs should be able to take advantage of the functionality offered by a common settlement infrastructure offering securities settlement with central bank money, in particular where such common settlement infrastructure provides for liquidity optimisation tools and promotes safe and efficient settlement, including across borders. To give to their participants the possibility to settle their securities transactions on that common settlement infrastructure, CSDs that offer settlement in currencies available on such a common settlement infrastructure should be required to directly connect to it. The requirement to connect to a common settlement infrastructure should take into account the technological developments in the area of central bank money settlement.

(59)Regulation (EU) 1114/2023 of the European Parliament and of the Council 26  sets out a framework for the safe issuance in the Union of e-money tokens. To support innovation in securities settlement, CSDs in the Union should be able to settle the payments of securities transactions in e-money tokens, subject to appropriate safeguards. That possibility should be available to both CSDs that are authorised to provide banking-type ancillary services and CSDs that are not. CSDs that are not authorised to provide banking-type ancillary services should be able to settle the payments in e-money tokens, in any currency, through accounts opened with CSDs that are authorised to provide banking-type ancillary services or through accounts opened with a credit institution, subject to the threshold determined by EBA for the settlement of payments in commercial bank money.

(60)Regulation (EU) No 909/2014 sets out rules for the establishment and the maintenance of link arrangements set up between CSDs. To foster the provision of cross-border services, the access to another CSD in the Union via a standard link should be facilitated and the related process simplified. In addition, with the aim of fostering further integration of Union capital markets, CSDs should be required to establish a minimum number of bilateral links. To ensure proportionality, the number of links a CSD should be required to establish should depend on the significance of the CSD. 

(61)This amending Regulation introduces targeted amendments to Regulation (EU) 2019/1156 with the aim of removing barriers to the cross-border marketing of AIFs and UCITS, harmonising rules on marketing communications and strengthening ESMA’s powers to foster a common supervisory culture and better coordinate activities across home and host national competent authorities. 

(62)The marketing of AIFs and UCITS is not always conducted by the AIFM, EuVECA or EuSEF manager, or UCITS management company directly but by one or several distributors either on behalf of those managers or on their own behalf. Arrangements whereby a distributor acts on behalf of the AIFM, EuVECA or EuSEF manager, or UCITS management company should be considered to be delegation arrangements subject to the provisions of Directive 2011/61/EU, Regulation (EU) No 345/2013, Regulation (EU) No 346/2013 and Directive 2009/65/EC regarding delegation. To ensure legal clarity, Regulation (EU) 2019/1156 is amended to clarify that where the marketing function is delegated to a third party acting on behalf of the AIFM, EuVECA or EuSEF manager, and UCITS management company, the latter remain responsible for ensuring that the marketing communications prepared and addressed to investors are compliant with the requirements of that Regulation. On the other hand, where a distributor acts on its own behalf and markets an AIF or UCITS under Directive 2014/65/EU or through life-insurance based investment products in accordance with Directive (EU) 2016/97, the provisions of Directive 2011/61/EU and Directive 2009/65/EC regarding delegation do not apply. Regulation (EU) 2019/1156 is therefore amended to clarify that in those cases where the marketing function is performed by one or several distributors acting on their own behalf, those distributors (and not the AIFM or UCITS management company) are liable to ensure that the marketing communications that they prepare and address to investors are compliant with the requirements of this Regulation. 

(63)To reduce unnecessary delays and divergent supervisory practices and to facilitate the seamless marketing of AIFs and UCITS in the Single Market, it is appropriate that Regulation (EU) 2019/1156 prohibits the competent authorities of the host Member State from requiring the notification of marketing communications as a prior condition for the marketing of AIFs and UCITS in their territory. In order to protect investors in the host Member State and improve supervisory cooperation and effectiveness, where the competent authorities of the host Member State have reasonable grounds to believe that marketing communications are not in compliance with Regulation (EU) 2019/1156 or the relevant Commission delegated acts, they retain the right to request the competent authorities of the home Member State of the AIFM, EuVECA or EuSEF manager or UCITS to take all appropriate measures to prevent or penalise further irregularities. The competent authorities of host Member States may further refer the matter to ESMA if they are not satisfied with the actions taken by the home competent authorities.

(64)In order to ensure high levels of transparency on the fees or charges levied by host competent authorities for carrying out their duties in relation to AIFs and UCITS marketed in their territory and to facilitate the recovery of those fees or charges, ESMA should publish up to date information on the amount of fees or charges levied by each host competent authority, their frequency and the modalities of their payment. To ensure consistency of the fees or charges levied by competent authorities, ESMA should, every 2 years, analyse whether such fees or charges are consistent with the overall cost relating to the performance of the functions of the competent authorities and submit a report to the Commission on that basis.

(65)To facilitate the marketing of AIFs and UCITS across the Union and to optimise the interactions and the exchange of information between home and host Member States, it is appropriate and necessary for ESMA to establish a “one-stop-shop” for the cross-border marketing of AIFs and UCITS, that would allow competent authorities to easily transmit and exchange information and documentation on marketing notifications. It is therefore essential that ESMA develops a data platform for marketing notifications and de-notifications that would be accessible to all competent authorities. UCITS and AIFMs should provide all information and documentation necessary for the marketing of AIFs and UCITS across the Union, including any amendments thereof to the competent authorities of their home Member State and the latter will in turn transmit them to ESMA through that data platform. All relevant host competent authorities should have immediate and direct access to the information and documentation in connection with the UCITS and AIFs marketed in their territory through the data platform. The data platform will simplify and expedite the passporting procedure for UCITS and AIFMs, allowing for immediate Single Market access upon their authorisation, as well as increasing transparency and cooperation among competent authorities. To fund the expenditure relating to the new passporting procedure, including the appropriate share of maintenance costs of the data platform that is utilised for that purpose, ESMA should charge UCITS and AIFMs a fee when they avail of the passporting based on authorisation procedure. The fee structure should be commensurate to the number of host Member States in which the units of UCITS or AIFs are marketed.

(66)To ensure a consistent implementation and greater harmonisation of marketing requirements and notification procedures across Member States, the provisions of Directive 2011/61/EU and Directive 2009/65/EC as regards the marketing of EU AIFs managed by EU AIFMs to professional investors and the marketing of UCITS across the Union are transferred to Regulation (EU) 2019/1156. 

(67)EU AIFMs marketing EU AIFs to professional investors, and UCITS marketing their units across the Union, are already authorised and subject to strict regulatory safeguards and prudential requirements. However, the cross-border marketing of UCITS and AIFs remains hampered by lengthy notification procedures and divergent national requirements and administrative practices, including obligations relating to translations, the appointment of local agents and differing national deadlines. Those divergences hinder the functioning of the internal market, as UCITS and AIFs must navigate a patchwork of national rules and processes when operating in several Member States. It is therefore necessary to streamline marketing notification and de-notification procedures, shorten processing times and remove national requirements that create obstacles to the cross-border marketing of investment funds. For that purpose, Regulation (EU) 2019/1156 is amended to allow UCITS and AIFMs, at the time of their authorisation, to notify their home Member State of their intention to market units or shares of UCITS or AIFs in other Member States through a simplified procedure. Once the home Member State has received the required information and documentation through the authorisation application, it should transmit it to the ESMA data platform. That information should be automatically accessible to host Member States and, from the moment of its transmission to the data platform, UCITS and AIFs should enjoy unrestricted access to the markets of those Member States.

(68)The de-notification of marketing arrangements should likewise be subject to the simplified procedure, allowing UCITS and AIFMs to notify their intention to terminate marketing activities in a host Member State to their home competent authority, who will in turn notify the relevant host Member States and ESMA through the data platform. 

(69)Although the requirement of a physical presence as a precondition for the marketing of UCITS and AIFs in a host Member State is prohibited, Member States often require, through market practice or otherwise, the appointment of a local agent to conduct certain tasks locally. Such practices undermine the functioning of the Single Market and generate unnecessary costs and complexity for funds marketed across the Union. It is therefore necessary to clarify that host Member States should not impose, through market practice or otherwise, any form of physical local presence obligation on UCITS and AIFs marketed in their territory, even where such presence is not formally a precondition for marketing but creates additional burdens or places those funds at a disadvantage compared to domestic funds. 

(70)To ensure greater harmonisation in the exercise of supervisory powers by the competent authorities of home and host Member States, the provisions of Directive 2011/61/EU and Directive 2009/65/EC concerning supervisory powers over UCITS and AIFs marketed across the Union should be transferred into Regulation (EU) 2019/1156. In order to promote effective cooperation between home and host competent authorities and to ensure that any potential disagreements are resolved efficiently and without creating obstacles to the marketing of UCITS and AIFs within the Union, it is necessary to clarify that the competent authorities of host Member States should refer to ESMA any matters of disagreement with the competent authorities of the home Member State of the UCITS or AIFM, or cases where the host Member State considers that the marketing of a UCITS or AIF should be prohibited in its territory. In such cases, ESMA should resolve the matter in accordance with its powers to address cross-border issues. 

(71)To ensure the effective functioning of the Single Market for investment funds and remove supervisory obstacles that impede the cross-border exercise of passporting rights, ESMA should be empowered to detect and address instances of divergent, duplicative, redundant or deficient supervisory practices that hinder the cross-border marketing of UCITS and AIFs or instances where the cross-border marketing of UCITS or AIFs does not comply with Union law. In those cases, ESMA should implement an escalation process, starting with engaging with competent authorities and stakeholders, fostering greater collaboration between them and, where necessary, using its convergence and intervention powers so that unjustified restrictions on cross-border activities or cases of non-compliance with EU law are remedied in a timely and effective manner. For the same reasons, it is necessary to ensure that, if those problems persist despite this escalation process, ESMA should then exercise its powers to launch breach of Union law procedures in accordance with Article 17 of Regulation (EU) No 1095/2010, to suspend the right to market UCITS or AIFs on a cross-border basis in accordance with Article 17aaa of Regulation (EU) No 1095/2010, to arrange binding mediation in accordance with Article 19 of Regulation (EU) No 1095/2010 or to organise collaboration platforms in accordance with Article 19a of Regulation (EU) No 1095/2010, where appropriate, in order to effectively remedy those problems.

(72)To ensure consistent supervision and effective cooperation between competent authorities of Member States, competent authorities should be able to refer to ESMA any disagreements on assessments, actions, or omissions in areas where Regulation (EU) 2019/1156 requires coordination, so that ESMA can intervene using the powers conferred on it under Article 19 of Regulation (EU) No 1095/2010. 

(73)It is necessary to amend Regulation (EU) 2021/23 to account for ESMA’s new role as the supervisor of significant CCPs and the abolition of colleges for those CCPs. 

(74)Whereas Regulation (EU) 2022/858 was adopted to promote the uptake of distributed ledger technology (DLT) in the financial sector, by providing for an EU pilot regime that allows market participants to experiment with the use of DLT for the trading and settlement of financial instruments. Three years after the entry into application of the Regulation, its uptake remains moderate, with a limited number of approved applicants, despite a growing interest in the market in using DLT for financial services. In line with the objective set in the priorities for achieving the Savings and Investment Union of enhancing the interoperability, interconnection and efficiency of EU trading and post-trading infrastructures, it appears justified to review the current regulatory setting of Regulation (EU) 2022/858 to ensure that the DLT Pilot Regulation is better capable of accompanying regulated firms wanting to leverage DLT for trading and post-trading. To achieve this objective, the review broadly comprises two sets of amendments: firstly, those that aim to increase the flexibility and proportionality of the framework and, secondly, those that aim to extend its scale and scope. 

(75)DLT is used, among others, for the issuance, recording and transferring of financial instruments. As such, where appropriate operational risk management is implemented by its users, it does not make the financial instruments managed through DLT inherently riskier than the instruments managed based on other, functionally analogous technologies. Therefore, the scope of eligible assets and financial instruments admitted to trading on a DLT market infrastructure, or to be recorded on a DLT market infrastructure under this Regulation should be expanded to cover all financial instruments, regardless of their type, subject to appropriate application of investor protection rules.

(76)Regulation (EU) 2022/858 lays down various limits to the scale of activities carried out under the Pilot, with limits to the issuance size and market capitalisation of assets eligible for the DLT Pilot (asset-specific caps), and an aggregate cap that limits the total value of financial instruments intermediated by a DLT market infrastructure of EUR 6 billion. Those activity thresholds have made it difficult for certain large market participants to use the Pilot framework for their activity and develop large scale business models. Therefore, all asset-specific caps should be withdrawn, whereas the aggregate cap should be raised to EUR 100 billion. To mitigate risks from increased activity, those changes should be accompanied by targeted increases in prudential requirements for those Pilot participants providing CSD services that wish to benefit from increased thresholds. At the same time, to make it easier for small innovative companies to use the DLT Pilot for their activities, a simplified regime comprising obligations that are proportionate to the risk and size of those companies should be established. The simplified regime should be open to operators of a DLT TSS or a DLT SS where the aggregate market value of all DLT financial instruments that they service does not exceed EUR 10 billion at the moment of admission to trading or initial recording of a new DLT financial instrument.

(77)Regulation (EU) 2022/858 limits the types of eligible entities that can participate in the Pilot, which have to be either trading venues authorised under Directive 2014/65 or CSDs. That approach excludes regulated financial entities that have an interest and experience in organising trading and transfers of digital assets to participate in the Pilot, namely the crypto-assets services providers (CASP) that operate trading platforms. Therefore, those CASPs should be allowed, under certain conditions and subject to their compliance with the relevant requirements set out in Directive 2014/65, Regulation (EU) No 600/2014 and Regulation (EU) No 909/2014, as applicable, to obtain a specific permission to operate a DLT trading venue (DLT TV) or a DLT trading and settlement system (DLT TSS). Accordingly, the rules laid down for entities operating DLT market infrastructure should be apply to CASPs.

(78)Regulation (EU) 2022/858 grants its participants the possibility to request exemptions from specific provisions of the sectoral legislation. However, certain provisions of sectoral legislation may be identified as incompatible with DLT only by applicants to the Pilot themselves, as they develop their business models and apply for a permission to operate a DLT market infrastructure, or after obtaining the permission. To ensure flexibility of the Pilot regime in supporting innovation, the competent authorities should be allowed to grant requests for exemptions from provisions belonging to the specified parts of sectoral legislation under certain conditions. Such requests should be based on clear justification by the DLT TV or DLT SS operators that the required exemption is incompatible or disproportionate with the use of DLT, and should be accompanied, where appropriate, with compensatory measures that can achieve the objective of the provision for which the exemption is requested. To ensure supervisory convergence between competent authorities granting the exemptions, ESMA should be closely involved in granting the requests by issuing non-binding opinions on the requests and assessments made by the competent authorities.

(79)Finding robust solutions for settlement of the cash leg in commercial bank money may be more difficult in the nascent market of DLT market infrastructures. To support operators of a DLT SS or a DLT TSS in finding efficient solutions for processing commercial bank money payments within their settlement systems, they should be able to designate credit institutions whose banking activities are not limited to CSDs but otherwise comply with Title IV of Regulation (EU) No 909/2014. Furthermore, to increase legal certainty for existing projects developed under the Pilot, settlement in commercial bank money executed by an investment firm operating a DLT TSS should be explicitly recognised, provided it sufficiently monitors the risks arising from its settlement model. 

(80)Since e-money tokens have emerged as one of the most widely used means of DLT-based settlement, further legal clarity should be provided for the use of e-money tokens in the Pilot. To recognise that Regulation (EU) 2023/1114, adopted after Regulation (EU) 2022/858, governs the services of custody of e-money tokens, it should be specified that e-money tokens cash accounts for the purpose settlement may be provided by a set of appropriately regulated financial institutions, including CASPs. However, it should be laid down that most banking type ancillary services with regards to e-money tokens, other than providing cash accounts and processing payments, may be provided only by credit institutions.  Furthermore, to promote the use of e-money tokens denominated in Union currencies and to protect the market from foreign exchange risk, settlement of payments for assets denominated in Union currencies should be carried out in e-money tokens referencing EU currencies. To support the development of euro denominated stablecoins, DLT market infrastructures should be encouraged to offer settlement in e-money tokens denominated in euro, even if the financial instrument that is settled is denominated in a non-EU currency. 

(81)It is necessary to ensure that small businesses seeking to innovate are subject to requirements of Regulation (EU) No 909/2014 that are proportionate to their size and risk. For that reason, operators of a DLT SS or a DLT TSS benefiting from the simplified regime should, with regard to the provision of CSD services, only be subject to those provisions of Regulation (EU) No 909/2014 that are essential to ensure safe and robust provision of CSD services, while not setting a burdensome compliance standard. For the same reason, and to ensure that the delegated regulations adopted pursuant to Regulation (EU) No 909/2014 are made proportionate to the risk and size of small businesses operating under the simplified regime, ESMA should be instructed to amend those delegated regulations for the needs of the simplified regime. To ensure that the requirements applicable to the Pilot participants become more stringent as businesses scale and risks increase, DLT market infrastructures wishing to transition to from the simplified to the regular regime should comply with all of the requirements of Regulation (EU) No 909/2014, as adapted and derogated from by Regulation (EU) 2022/858. Given the novelty of the simplified regime for the activities of the DLT settlement system (DLT SS) or the DLT trading and settlement system (DLT TSS) introduced in this regulation, and to ensure supervisory convergence by competent authorities, ESMA should be mandated to issue guidelines on the implementation of that simplified regime.

(82)Distributed ledgers act as platforms on which financial intermediaries may provide financial services in a synchronised manner. In order to allow market participants to leverage the platform nature of distributed ledgers, the Pilot should make it possible for eligible financial entities to obtain a specific permission to perform an individual CSD service within the territory of the Union. Therefore, a legal person who is authorised as an investment firm, a regulated market, a credit institution, a CSD, or a CASP should be allowed to perform the DLT notary service or the DLT central maintenance service under the Pilot. To ensure these services are provided in accordance with the standards laid down in Regulation (EU) No 909/2014, while taking into account the specificities of DLT, DLT notaries and DLT account keepers should be subject to the provisions of that regulation that govern the application of the notary and the central maintenance service and the additional requirements for DLT market infrastructures set out in Regulation (EU) 2022/858.

(83)DLT financial instruments issued and safeguarded by the DLT notary and DLT account keepers outside a CSD should only be settled through a DLT SS, DLT TSS or a CSD operating solely under Regulation (EU) No 909/2014.  Furthermore, given the experimental nature of this model for the distributed provision of CSD services, the market value of DLT financial instruments issued and safeguarded by DLT notaries and DLT account keepers should be limited by allowing operators of a DLT SS, DLT TSS or a CSD operating solely under Regulation (EU) No 909/2014 to admit for settlement up to EUR 10 billion of market value of such instruments, which should be increased to EUR 30 billion of market value for transferable securities issued by SMEs.

(84) To reflect the distributed nature of roles and responsibilities that is possible under the Pilot with the creation of the DLT notary and DLT account keeper function, it should be made clear that where, for a given DLT financial instrument, a DLT notary or a DLT account keeper provides CSD core services jointly with a DLT SS, TSS or a CSD operating solely under Regulation (EU) No 909/2014, the DLT SS, TSS or CSD operating solely under Regulation (EU) No 909/2014 should not be liable for compliance with those requirements laid down in Regulation (EU) No 909/2014 that are discharged by the DLT notary or a DLT account keeper.

(85)To ensure transparency on the market about joint provision of CSD services, ESMA should enter the information about each of the DLT notary and the DLT central maintenance services operated by a specific DLT SS, TSS or a CSD operating solely under Regulation (EU) No 909/2014 in the CSD register maintained under Article 21 of Regulation (EU) No 909/2014. 

(86)Additionally, because distributed ledgers allow its users to more easily synchronise and automate operations, the Pilot should allow market participants to experiment with a new business model that does not involve a single operator of a settlement system, but rather relies on regulated entities that are individually and jointly required, through the establishment of a settlement scheme, to ensure robust settlement outcomes. Given their experimental nature, these business models should be subject to the same thresholds as those applicable to DLT market infrastructures settling DLT financial instruments issued and safeguarded by DLT notaries and DLT account keepers. Additionally, to further mitigate risks stemming from this new business model, the eligible participants to settlement schemes should only be DLT account keepers, the settlement should be conducted through central bank money accounts managed by those DLT account keepers, and should be settled on a  ‘delivery versus payment’ basis. Additionally, to ensure the sound functioning of the settlement scheme, its participants should ensure safe, efficient and smooth settlement, protection of client assets and robust risk management of operations. In particular, to ensure robust management of credit and liquidity risks stemming from providing banking services to their clients, DLT account keepers participating in the scheme should comply with a set of prudential requirements on an ongoing basis. To ensure this compliance, the settlement scheme should be authorised and supervised by ESMA, in cooperation with competent authorities of the DLT account keepers participating in the scheme.

(87)To facilitate the development of DLT CSD services across Member States, DLT notaries and DLT account keepers should be allowed to provide CSD services throughout the Union, without being required to have a physical presence in the territory of a host Member State as long as they submit a list of the Member States in which they intend to provide CSD services to the competent authority of their home Member State, which is requested to then share this list with the competent authorities of the relevant host Member States and ESMA before the DLT notary or the DLT account keeper may begin to provide CSD services in those host Member States.

(88)To ensure that DLT market infrastructures do not fragment the Union’s trading and post-trading infrastructure and that they form a part of an integrated capital market DLT market infrastructures participating in the Pilot, as well as other interested parties, should form an industry group for the purpose of establishing industry standards that facilitate settlement of DLT financial instruments between DLT market infrastructures. Building on the work of that industry group, ESMA should provide technical advice to the Commission on supporting interoperability between DLT market infrastructures.

(89)Colleges of supervisors should be established to ensure the efficient supervision of the novel business models for CSD services allowed under the Pilot and the necessary cooperation and exchange of information between all the supervisors that those business models may involve. Firstly, colleges of supervisors should be established in accordance with Article 24a of Regulation (EU) No 909/2014 where a DLT SS or a DLT TSS operating under the regular regime provides CSD services and fulfils the conditions set out in that article. To ensure comprehensive involvement of all relevant authorities, competent authorities of the DLT notary or the DLT account keeper that is involved in the provision of CSD services and EBA, where e-money tokens are used for the settlement of payments, should be allowed to join the college of supervisors. Secondly, ESMA should also establish and chair a college of supervisors for settlement schemes, comprising ESMA, the competent authorities of DLT account keepers participating in the settlement scheme and the central bank in the Union of the currency that is or will be used for the settlement of cash payments in the settlement scheme. Competent authorities of DLT notaries participating in the settlement scheme should be able to participate in the college upon request.

(90)To remove any ambiguity in relation to the long-term viability of the Pilot, the time limits for the duration of the permissions granted in accordance with Regulation (EU) 2022/858 should no longer apply.

(91)Well-integrated crypto-asset markets depend on coordinated supervisory frameworks to operate efficiently, while more centralised supervision can, in turn, promote deeper market integration. Centralising supervisory powers and capacities at Union’s level, including by transferring direct supervisory responsibilities in the area of crypto-asset service providers is a critical element to further develop the mutually reinforcing dynamic between market integration and supervisory alignment.

(92)Because crypto-asset service providers are a new area of financial activity which has only recently come under supervision and because it is important to ensure supervisory consistency from the beginning, ESMA should exercise that centralised supervision, thereby guaranteeing a level playing field. Crypto-asset services is also an area dominated by increased cross-border activity carried out using electronic means and new technology. Risks should therefore be monitored and addressed in a comprehensive and consistent manner. Centralised oversight should ensure the consistent application of standards and rules, mitigate supervisory gaps across jurisdictions and address the disproportionate impact a potential failure of crypto-asset service providers could have on the Union’s crypto-asset ecosystem. Centralised supervision should mean the danger of supervisory fragmentation will not materialise.

(93)In the fight against market abuse of crypto-assets admitted to trading or of which a request for admission to trading has been made, centralised market surveillance by ESMA and investigation powers for cross border cases should achieve economies of scale, overcome the issue of fragmented access to data, reduce reliance on international cooperation and ultimately give ESMA a better view over complex strategies taking place across jurisdictions.

(94)In this respect, ESMA should be responsible for the authorisation and supervision of the crypto-asset service providers and ongoing monitoring for market abuse in the crypto-asset sector.

(95)Certain firms subject to Union legislative acts on financial services are already allowed to provide all or some crypto-asset services without being required to obtain an authorization as a crypto-asset service provider under Regulation (EU) 2023/1114. These entities should continue to be supervised for their crypto-asset activities by the competent authorities that granted them authorisation under other Union acts. However, where the provision of crypto-asset services becomes the main activity of those entities, they should be treated as crypto-asset service providers and the supervision for all their activities should be transferred to ESMA. To fulfil this duty, ESMA should establish cooperation agreements with the competent authorities that authorised those entities under other Union legislative acts on financial services. On the basis of the cooperation agreement, those competent authorities shall provide support and assistance to ESMA in the supervision of the activities that are not covered by Regulation (EU) 2023/1114.

(96)As there is already a centralized system of banking supervision in the Union in the form of the Single Supervisory Mechanism, ensuring integration and consistency in the supervision of the activities of credit institutions, there should be no transfer of supervisory powers where the entity providing crypto-asset services is a credit institution.

(97)To supervise crypto-asset service providers, ESMA should have the powers to suspend or, prohibit the provision of a crypto-asset service, to withdraw the authorisation of a crypto-asset service provider, to investigate infringements of the rules on market abuse, to request information, to carry out on-site inspections and investigations, to take supervisory measures and to impose fines. When determining the type and level of an administrative penalty or other administrative measure, ESMA should take into account all relevant circumstances, including the gravity and the duration of the infringement and whether it was committed intentionally. In order to carry out its supervisory duties, ESMA should cooperate and be assisted by other competent authorities as well as the competent authorities responsible for the supervision of [Directive (EU) 2015/849].

(98)ESMA should charge fees to crypto-asset service providers to cover its costs for supervision, including for overheads, and the cost of conducting market surveillance to prevent market abuse. The fee should be proportionate to the size of the crypto-asset service provider. To avoid disruption to existing crypto-asset service providers, it is necessary to lay down transitional provisions for crypto-asset service providers that have been authorised pursuant to Regulation (EU) 2023/1114 and for applicants whose application for a crypto-asset service provider authorisation is currently being assessed by national competent authorities. For reasons of legal certainty, it is also appropriate to establish clear transitional measures for the transmission of files and working documents from the competent authorities to ESMA.

(99)To avoid disruption to existing crypto-asset service providers, the authorisation of a crypto-asset service provider by a competent authority should remain valid throughout the Union after the transition of supervisory powers from the competent authorities to ESMA. 

(100)In order to fulfil the objectives of Regulation (EU) No 1095/2010, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of the adoption of rules of procedures for the exercise of ESMA’s power to charge fees, for the imposition of fines and a settlement procedure, including the rights of defence, disclosure and effects of settlements. In addition, in order to ensure the effectiveness of Regulation (EU) No 648/2012, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of the specification of the fees to be paid to ESMA for the supervision of significant CCPs, the matters for which those fees are due, the calculation of the amount of those fees, and the manner in which those fees are to be paid , and in respect of amending the list of infringements for which ESMA can impose supervisory measures on significant CCPs. Furthermore, to ensure the effectiveness and the consistent application of Regulation (EU) No 600/2014, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of the specification of the fees to be paid by operators of the trading venues that are subject to supervision by ESMA, in respect of the conditions and methodologies used to determine whether a trading venue should be deemed significant, and in respect of the conditions under which a trading venue or a CCP should grant access to its services. In parallel, in order to ensure the effectiveness of Regulation (EU) No 909/2014, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of the specification of the type of fees to be paid to ESMA for the supervision of significant CSDs, the matters for which those fees are due, the calculation of the amount of those fees and the manner in which they are to be paid; amending the list of infringements for which ESMA can impose supervisory measures; the further specification of the requirements applicable to the participation in a CSD, and the amendment of the conditions under which a CSD shall be subject to the obligation to establish bilateral links. In addition, in order to ensure that the activity thresholds laid down in Regulation (EU) 2022/858 can be modified in light of market developments and policy learnings from the pilot regime established by that act, the power to adopt delegated acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of the adaptation of those thresholds to, among others, market conditions and possible risks to financial stability. Furthermore, in order to ensure the effectiveness of Regulation (EU) 2023/1114, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of further specifying the type and the calculation of the amount of supervisory fees that ESMA can charge to the crypto-asset service providers. Lastly, to ensure an orderly application of provisions transferred from Directive 2014/65/EU to Regulation (EU) No 600/2014, it is appropriate to ensure that delegated acts and implementing acts that have been adopted on the basis of empowerments laid down in Directive 2014/65/EU that are to be transferred to Regulation (EU) No 600/2014, continue to apply. The Commission should be empowered to amend those delegated and implementing act in accordance with the procedures set out in Article 10(4a) or 15(4a) of Regulation (EU) No 1095/1010. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making 27 . In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(101)To ensure consistent application of the relevant provisions under Regulation (EU) No 600/2014, the Commission should be empowered to adopt, in accordance with Article 290 TFEU and Articles 10 to 14 of Regulation (EU) No 1095/2010, regulatory technical standards developed by ESMA related to the authorisation of regulated markets and PEMOs, and to the operation of trading venues. Furthermore, to ensure consistent harmonisation of standards, the Commission should be empowered to adopt, in accordance with Article 290 TFEU and with Articles 10 to 14 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council 28 and of Regulation (EU) No 1095/2010, regulatory technical standards developed by the European Banking Authority ('EBA') and by the European Securities and Markets Authority ('ESMA') with regard to the procedures for the calculation of the criteria for establishing the significance of a CSD and the set of data EU CSDs are to report to ESMA for such calculation; the measures to be put in place by CSDs and market participants to prevent settlement fails and to increase the settlement efficiency of Union capital markets; the conditions under which an outsourcing arrangement is to be considered as the outsourcing of core CSD services; the measures to be implemented by CSDs to mitigate the specific risks stemming from the provision of CSD services using DLT; and the risk management measures and prudential requirements with respect to the settlement in commercial bank money and in e-money tokens. In addition, in order to ensure consistent harmonisation in the fees to be charged by ESMA to UCITS and AIFMs in connection with the passporting procedure and the maintenance of the data platform, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of measures to specify the type, amount, frequency and the modalities governing the payment of those fees. Furthermore, in order to ensure consistent harmonisation in the marketing communications made available to investors, the power to adopt acts in accordance with Article 290 of the TFEU should be delegated to the Commission to specify the content and format of marketing communications. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts. Lastly, to identify the requirements of Regulation (EU) No 909/2014 that should apply to the providers of the DLT notary and DLT central account maintenance service, and adapt them to the use of distributed ledger technology and the specificities of business models involving DLT notaries and DLT account keepers, ESMA should develop draft regulatory technical standards to supplement the provisions of Title III of Regulation (EU) No 909/2014.

(102)In order to ensure uniform conditions for the implementation of Regulation (EU) No 909/2014, implementing powers should be conferred on the Commission to adopt implementing technical standards developed by ESMA with regard to the standard forms, templates and procedures for the disclosure of fees and prices by CSDs and by settlement internalisers. Those powers should be exercised in in accordance with Article 15 of Regulation (EU) No 1095/2010.

(103)Regulations (EU) No 1095/2010, No 648/2012, No 600/2014, No 909/2014, 2015/2365, 2019/1156, 2021/23, 2022/858, 2023/1114, No 1060/2009, 2016/1011, 2017/2402, 2023/2631 and 2024/3005 should therefore be amended accordingly. 

(104)It is necessary to provide ESMA with sufficient time to prepare for its new supervisory role, which entails changes to its governance. The amendments to Regulations (EU) 1095/2010, 2015/2365, 2019/1156, 2021/23, 2022/858, 2023/1114, (EU) No 1060/2009, 2016/1011, 2017/2402, 2023/2631, 2024/3005 should therefore start to apply from 12 months after the entry into force of this Regulation. However, to enable the Executive Board to be operational and to effectively take over the tasks assigned to it, the selection and appointment procedure for the members of the Executive Board should start to apply as from the date of entry into force of this Regulation.

(105)To ensure consistency with the amendments to Regulation (EU) No 1095/2010, the amendments to Regulation (EU) No 648/2012 should apply 12 months after the entry into force of this Regulation. However, to enable ESMA to start assessing whether a CCP is a significant CCP before the obligations on significant CCPs start to apply, the provisions that relate to that assessment should start to apply from the date of entry into force of this Regulation. To allow ESMA to gradually phase in the new supervisory responsibilities and to establish the necessary capacity and frameworks of cooperation, the amendments to Regulation (EU) No 909/2014 that relate to the supervision of significant CSDs should apply 24 months after the entry into force of this Regulation. However, to enable ESMA to start assessing whether a CSD is a significant CSD before the obligations on significant CSDs start to apply, the provisions that relate to that assessment should apply from the date of entry into force of this Regulation.

(106)To ensure legal certainty and to avoid disruptions to the establishment of the consolidated tape for shares and ETFs by the first CTP authorised in accordance with Article 27db of Regulation (EU) No 600/2014, the amendments to that Regulation that relate to the consolidated tape for shares and ETFs should apply from [OP insert date =  the day following the expiry of the first period of 5 years referred to in Article 27da of Regulation (EU) No 600/2014 with respect to the CTP for shares and ETFs]. To ensure consistency with the amendments to Regulation (EU) No 1095/2010, the amendments to Regulation (EU) No 600/2014 that relate to ESMA’s powers should start to apply 12 months after the entry into force of this Regulation. To allow for sufficient time to prepare the transfer from national competent authorities to ESMA of competences and duties with respect to the relevant trading venues, ESMA should become the competent authority for the entities concerned 24 months after the entry into force of this Regulation.

(107)The Regulation introduces binding requirements for cross-border digital public services within the meaning of Regulation (EU) 2024/903. An interoperability assessment has therefore been completed. The Digital Dimensions chapter of the Legislative Financial and Digital Statement constitutes the resulting report. This will also be published on the Interoperable Europe Portal following the Act's adoption.

(108)The European Data Protection Supervisor was consulted in accordance with Article 42(1) of Regulation (EU) 2018/1725 of the European Parliament and of the Council 29 and delivered an opinion on [XX].

HAVE ADOPTED THIS REGULATION:

Article 1
Amendments to Regulation (EU) No 1095/2010

Regulation (EU) No 1095/2010 is amended as follows:

(1)Article 1 is amended as follows:

(a)the following paragraph 3b is inserted:

‘3b. The Authority shall exercise powers over certain financial market participants, in accordance with this Regulation and other Union acts. Such powers shall include, where conferred by this Regulation and other Union acts, the registration, authorisation, recognition, ongoing supervision, investigation including the power to conduct on-site inspections, and enforcement in respect of those entities.’

(b)paragraph 5 is amended as follows:

(1)point (a) is replaced by the following:

‘(a)    improving the functioning of the internal market, including in particular a sound, effective and consistent level of regulation, supervision and enforcement,’

(2)point (c) is replaced by the following:

‘(c)    strengthening international supervisory coordination and exchange of information;'

(3)the following point (h) is added:

‘(h)    supporting market integration in the Union and innovation in the financial sector.’

(2)Article 3 is amended as follows:

(a)the following paragraphs 4a and 4b are inserted:

‘4a.    At the request of the Council, the Chairperson shall participate in a Council session on the performance of the Authority. The Chairperson shall make a statement before the Council and answer any questions from its members, whenever so requested.

4b. When representing the Authority before the Council or the European Parliament according to paragraphs 4 and 4a the Chairperson may be accompanied by one or several members of the Executive Board.;’;

(b)paragraph 5 is replaced by the following:

'5. The Chairperson shall report in writing on the activities of the Authority to the European Parliament and the Council when requested and at least 15 days before making the statement referred to in paragraph 4 and 4a.’;

(3)Article 4 is amended as follows:

(a)in point (3), point (i) is replaced by the following:

‘(i)    competent authorities or supervisory authorities as defined, designated or specified in the legislation referred to in Article 1(2);’

(b)the following points (4), (5) and (6) are added:

‘(4)    financial market participant under the Authority’s supervision’ means any financial market participant for which the Authority has been conferred supervisory, investigatory, enforcement or any other powers under this Regulation and other Union acts;

(5)    ‘applicant authority’ means a competent authority of a Member State that has adopted a decision to impose an administrative fine upon a natural or legal person for a breach occurred within its jurisdiction and requests assistance of a competent authority of another Member State in recovering that fine in accordance with Articles 28a and 28b;

(6)    ‘requested authority’ means a competent authority that is requested to assist in recovering an administrative fine within its own jurisdiction from the applicant authority in accordance with Articles 28a and 28b.’;

(4)in Article 6 point (2) is replaced by the following:

‘(2) an Executive Board, which shall exercise the tasks set out in Article 46a;’;

(5)the title of Chapter II is replaced by the following:

‘GENERAL TASKS AND POWERS OF THE AUTHORITY’

(6)Article 8 is amended as follows:

(a)paragraph 1 is amended as follows:

(1)point (aa) is replaced by the following:

‘(aa)    to develop and maintain an up-to-date Union supervisory handbook on the supervision of financial market participants in the Union and enforcement of the rules regulating their activity which is to set out best practices and high-quality methodologies and processes and takes into account, inter alia, business practices and business models and the size of financial market participants and of markets;’;

(2)point (b) is replaced by the following:

‘(b)    to contribute to the consistent application of legally binding Union acts, in particular by contributing to a common supervisory and enforcement culture, ensuring consistent, efficient and effective application of the legislative acts referred to in Article 1(2), preventing regulatory arbitrage, fostering and monitoring supervisory independence, mediating and settling disagreements between competent authorities, ensuring effective and consistent supervision of financial market participants and enforcement of the rules regulating their activity, ensuring a coherent functioning of colleges of supervisors or other forms of supervisory cooperation and taking actions, inter alia, in emergency situations;’;

(3)point (e) is replaced by the following:

‘(e)    to organise and conduct peer reviews of competent authorities and, in that context, to issue guidelines and recommendations and to identify best practices, with a view to strengthening consistency in supervisory and enforcement outcomes;’

(4)point (ia) is replaced by the following:

‘(ia)    to contribute to the establishment of a common Union financial data strategy and ensure efficient exchange of information within the Union;’

(5)the following point (iaa) is inserted:

‘(iaa)    to develop in collaboration with competent authorities, the ESFS and, where relevant other European bodies, agencies or institutions, supervisory technology or other tools to enhance analysis and monitoring capabilities;’

(6)the following points point (l), (m) and (n) are added:

‘(l)    to perform its supervisory duties and exercise powers with regard to financial market participants under the Authority’s supervision in accordance with this Regulation and other Union law;

(m)    to carry out the prudential supervision of central counterparties and central securities depositories when exercising its powers under Regulation (EU) No 648/2012 and Regulation (EU) No 909/2014*, and in relation thereto, to cooperate with the European Central Bank and the other relevant central banks of issue of the Union currencies;

(n)    to assess the resilience of the financial system of the Union, as well as risks arising from cross-border activities of financial market participants under the Authority’s supervision, including risks due to interconnectedness, interlinkages or concentration risks, when carrying out supervisory duties in accordance with this Regulation or other Union acts.’;

______ 

*Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories and amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 OJ L 257, 28.8.2014, pp. 1–72 ELI: http://data.europa.eu/eli/reg/2014/909/oj

(b)paragraph 2 is amended as follows:

(1)The introductory wording is replaced by the following:

‘To achieve the tasks set out in paragraph 1, the Authority shall have the powers set out in this Regulation and shall apply all relevant Union law, and where this Union law is composed of Directives, the national legislation transposing those Directives interpreted in a manner consistent with it, in particular to:’;

(2)point (f) is replaced by the following:

‘(f)    take individual decisions addressed to financial market participants, in the specific cases referred to in Article 17(6), Article 17aaa, Article 18(4) and Article19(4);’;

(3)point (ga) is deleted; 

(4)the following points (k) and (l) are added:

‘(k)    to take individual decisions addressed to financial market participants when exercising direct supervisory tasks and adopt supervisory, investigatory and enforcement measures as referred to in Chapter IIa of this Regulation and other Union acts;’; 

(l)    undertake assessments and issue technical advice upon request;’;

(7)the following Article 8a is inserted:

‘Article 8a
Duty of cooperation

1.The Authority shall carry out its tasks in cooperation with relevant competent authorities and other national authorities, Union institutions or Union bodies that are relevant pursuant to the legislation referred to in Article 1(2) (hereinafter ‘the authorities’). The Authority shall be responsible for the effective and consistent functioning of the cooperation arrangements with the authorities while ensuring that it develops and maintains the necessary capacity to perform its tasks independently.

2.Both the Authority and the authorities shall be subject to a duty of cooperation in good faith and an obligation to exchange information to effectively exercise their tasks. When exercising its tasks, the Authority may draw from the expertise and knowledge of the authorities, including their supervisory experience and understanding of economic, organisational and cultural specificities. Where appropriate and without prejudice to the responsibility and accountability of the Authority for the tasks conferred on it by this Regulation and the legislation referred to in Article 1(2), the authorities shall be responsible for assisting the Authority, under the conditions set out in the arrangements set out in this Article. This may include support with the preparation and implementation of acts relating to the tasks referred to in Article 8(1) point (l), including assistance in verification activities or performance of specific operational tasks. The authorities shall follow the instructions given by the Authority when giving support and performing tasks under these arrangements.

3.For the purpose of carrying out tasks according to Article 8(1), point (l), and without prejudice to specific arrangements envisaged in other Union acts, the Authority shall establish, under its overall responsibility, and after consulting with the authorities the practical arrangements for cooperation.

4.The Authority shall bear any costs incurred by the authorities, in connection with the cooperation provided pursuant to this Article, unless otherwise agreed.

5.The practical arrangements for cooperation shall define the modalities of support, the procedures and processes, including time-limits, for the cooperation between the Authority and the authorities and shall be guided by the following principles:

(a)they may be tailored or adjusted to the sector concerned and the nature of the supervisory tasks and the intensity of cooperation including the organisation, functioning and participation in the cooperation;

(b)they shall allow for transitional solutions to ensure continuity and smooth transfer of responsibilities from the authorities to the Authority and from the Authority to the authorities;

(c)they shall promote efficiency in terms of both time and resources and shall take due account of resource implications and cost-efficiency;

(d)they shall be proportionate and shall take due account of their statutory responsibilities and resources of the authorities;

(e)they shall be established and followed without prejudice to the Authority’s ability to carry out effectively, autonomously and consistently the tasks conferred upon it by this Regulation and other Union acts;

(f)they shall ensure seamless and secure information flows, including confidentiality safeguards and the handling of third-party information;

(g)they shall set out operational or organisational modalities in relation to the Authority’s direct supervisory tasks, including arrangements such as joint teams, cooperation in investigations, on-site inspections or implementation activities;

(h)where appropriate, they may envisage the establishment of local presences of the Authority in Member States;

(i)they may determine the modalities for the calculation and reimbursement of any costs incurred by the authorities, taking into account differences across sectors, the nature of the activity supervised or of the tasks performed.

6.The practical arrangements for cooperation shall be approved by the Executive Board. The Executive Board shall also ensure their implementation and the authorities shall, in cases where ESMA is exercising direct supervisory tasks, follow the instructions given by the Executive Board when performing the tasks set out in the arrangements.

7.The practical arrangements for cooperation established pursuant to this Article shall be subject to periodic review by the Authority, in consultation with the authorities, to ensure their continued effectiveness, proportionality and consistency with the Authority’s evolving supervisory capacity and Union law.’

(8)Article 9a is amended as follows:

(a)paragraph 1 is amended as follows:

(1)the introductory wording is replaced by the following:

‘The Authority shall take the measures referred to in paragraph 2 of this Article only in urgent and unforeseen circumstances when it considers that the application of one of the legislative acts referred to in Article 1(2), or of any delegated or implementing acts based on those legislative acts, is liable to raise significant issues, for one of the following reasons:’;

(2)the following points (d) and (e) are added:

‘(d)    where a temporary exemption or transitional provision, measure or arrangement set out in one of the legislative acts referred to in Article 1(2) would expire prior to the entry into application of new or amended provisions establishing a permanent exemption or a new regulatory framework;

(e)    where significant market developments lead to a disproportionate burden of compliance with a specific requirement set out in one of the legislative acts referred to in Article 1(2).’;

(b)in paragraph 2, the second subparagraph is replaced by the following:

‘In the cases referred to in paragraph 1, points (a), (b), (d) and (e), the Authority shall provide the Commission with an opinion on any action it considers appropriate, in the form of a new legislative proposal or a proposal for a new delegated or implementing act, and on the urgency that, in the Authority’s judgment, is attached to the issue. The Authority shall make its opinion public.’;

(c)paragraph 4 is replaced by the following:

‘4. Where, on the basis of information received, in particular from competent authorities, the Authority considers that any of the legislative acts referred to in Article 1(2), or any delegated or implementing act based on those legislative acts, raises significant issues pertaining to market confidence, customer or investor protection, the orderly functioning and integrity of financial markets or commodity markets, or the stability of the whole or part of the financial system in the Union, it shall, without undue delay, send a detailed account in writing to the competent authorities and the Commission of the issues it considers to exist. The Authority may provide the Commission with an opinion on any action it considers appropriate, in the form of a new legislative proposal or a proposal for a new delegated or implementing act, and on the urgency of the issue. The Authority shall make its opinion public.’;

(9)Article 10 is amended as follows:

(a)paragraph 2 is replaced by the following:

‘2. Where the Authority has not submitted a draft regulatory technical standard within the time limit set out in the legislative acts referred to in Article 1(2) or the legislative acts referred to in Article 1(2) do not set out such a time limit, the Commission may request such a draft within a new time limit. The Commission shall inform the European Parliament and the Council about the new timeline. The Authority shall inform the European Parliament, the Council and the Commission, in due time, where it will not comply with the new time limit.’;

(b)in paragraph 3, the first subparagraph is replaced by the following:

‘3. Where the Authority does not submit a draft regulatory technical standard to the Commission within the time limits in accordance with paragraph 2, the Commission may adopt a regulatory technical standard by means of a delegated act without a draft from the Authority.’;

(c)the following paragraphs 5 and 6 are added:

‘5. Where the Commission is of the view that amendments to a regulatory technical standard are required, it shall send a letter to the Authority, explaining the reasons and the content of any required amendments. The letter shall contain a time limit for the submission of a draft regulatory technical standard. The Authority shall submit a revised draft regulatory technical standards to the Commission for adoption according to the procedure set out in paragraph 1. Where the Authority has not submitted a draft regulatory technical standard within the time limit set out in the letter from the Commission, the Commission may adopt amendments to the regulatory technical standard without a draft from the Authority by means of a delegated act pursuant to Article 290 TFEU.

6. Where there is the need to address an immediate threat to investor protection, to the orderly functioning and integrity of financial markets, the stability of the whole or part of the financial system in the Union, or fair competition between firms based in the Union and those based in third countries, the Commission may suspend a regulatory technical standard on its own initiative, without a draft from the Authority, by means of a delegated act pursuant to Article 290 TFEU. In the preparation of such delegated act, the Commission may consult the Authority or request its input.

The Commission may adopt the regulatory technical standards referred to in this paragraph using the urgency procedure. When using the urgency procedure, the Commission shall notify the European Parliament and the Council of the adopted regulatory technical standards, stating the reasons for the use of the urgency procedure. Those standards shall be published in the Official Journal of the European Union and shall enter into force without delay. The European Parliament or the Council may object to the adopted regulatory technical standards within a period of one month from the date of notification of the regulatory technical standard adopted by the Commission and if an objection is expressed, the Commission shall repeal the regulatory technical standards immediately following notification of the decision to object.

The suspension of provisions of a regulatory technical standard shall be temporary and limited to a maximum period of 12 months, renewable once. The Authority shall review the delegated act referred to in this paragraph and shall submit a report to the Commission on the application of the suspension at least two months before the expiration of the suspension, including an assessment of whether the suspension remains necessary.’;

(10)Article 15 is amended as follows:

(a)paragraph 2 is replaced by the following:

‘2. Where the Authority has not submitted a draft implementing technical standard within the time limit set out in the legislative acts referred to in Article 1(2) or the legislative acts referred to in Article 1(2) do not set out such a time limit, the Commission may request such a draft within a new time limit. The Authority shall inform the European Parliament, the Council and the Commission, in due time, that it will not comply with the new time limit.’;

(b)in paragraph 3, the first subparagraph is replaced by the following:

‘3. Where the Authority does not submit a draft implementing technical standard to the Commission within the time limits in accordance with paragraph 2, the Commission may adopt an implementing technical standard by means of an implementing act without a draft from the Authority.’;

(c)the following paragraphs 5 and 6 are added:

‘5. Where the Commission is of the view that amendments to an implementing technical standard are required, it shall send a letter to the Authority, explaining the reasons and, the content of any required amendments. The letter shall contain a time limit for the submission of a draft implementing technical standard. The Authority shall submit a revised draft implementing technical standards to the Commission for adoption according to the procedure set out in paragraph 1. Where the Authority has not submitted a draft implementing technical standard within the time limits set out in the letter from the Commission, the Commission may adopt an implementing technical standard without a draft from the Authority by means of an implementing act pursuant to Article 291 TFEU.

6.Where there is the need to address an immediate threat to investor protection, to the orderly functioning and integrity of financial markets, the stability of the whole or part of the financial system in the Union, or fair competition between firms based in the Union and those based in third countries, the Commission may suspend an implementing technical standard on its own initiative, without a draft from the Authority, by means of an implementing act pursuant to Article 291 TFEU. In the preparation of such implementing act, the Commission may consult the Authority or request its input.

The suspension of provisions of an implementing technical standard shall be temporary and limited to a maximum period of 12 months, renewable once. The Authority shall review the implementing act referred to in this paragraph and shall submit a report to the Commission on the application of the suspension at least two months before the expiration of the suspension, including an assessment of whether the suspension remains necessary.’;

(11)Article 16b is deleted.

(12)Article 17 is amended as follows:

(a)paragraph 2 is replaced by the following:

‘2. Upon request from one or more competent authorities, the European Parliament, the Council, the Commission, the Securities and Markets Stakeholder Group, or on its own initiative, including when this is based on well substantiated information from natural or legal persons, and after having informed the competent authority concerned, the Authority shall outline how it intends to proceed with the case and shall investigate the alleged breach or non-application of Union law, where there are reasonable grounds to believe that a breach or non-application of Union law has occurred and the competent authority concerned has not already taken adequate measures to address the alleged breach or non-application.’;

(b)in paragraph 3, the first subparagraph is replaced by the following:

‘Where the investigation concludes that the competent authority is not complying with Union law, the Authority shall, not later than 4 months from initiating its investigation, address a recommendation to the competent authority concerned setting out the action necessary to comply with Union law. The Authority shall, as soon as possible, share its recommendation with the Commission.’;

(c)paragraph 6 is replaced by the following:

‘6. Without prejudice to the powers of the Commission pursuant to Article 258 TFEU, where a competent authority does not comply with the formal opinion referred to in paragraph 4 of this Article within the period specified therein, and where it is necessary to remedy in a timely manner such non-compliance in order to maintain or restore neutral conditions of competition in the market or ensure the orderly functioning and integrity of the financial system, the Authority shall, where the relevant requirements of the legislative acts referred to in Article 1(2) of this Regulation are directly applicable to financial market participants, including requirements in national law transposing directives interpreted in a manner consistent with them, adopt an individual decision addressed to a financial market participant requiring it to take all necessary action to comply with its obligations under Union law including the cessation of any practice.

The decision of the Authority shall be in conformity with the formal opinion issued by the Commission pursuant to paragraph 4.’;

(d)the following paragraph 9 is added:

‘9. For the purpose of carrying out the Commission’s duties, and at its request, the competent authorities and the Authority shall provide the Commission with all necessary information and documents in their possession.’

(13)the following Article 17aa is inserted:

‘Article 17aa

Failure in supervision on approval of financial products, services or entities

1.Where a peer review or an inquiry under Article 22(4) reveals that a competent authority may be failing to effectively supervise market participants in the sector subject to the peer review or inquiry, and that such supervisory failure could jeopardize the integrity of financial markets, financial stability or investor protection, the Authority may require a competent authority to seek its opinion before granting approval to financial products, services, activities or entities in that sector.

Without prejudice to the powers laid down in Article 35, the competent authority shall provide the Authority with the necessary information to make a decision how the acts referred to in Article 1(2) and where that Union law is composed of Directives, the national legislation transposing those Directives interpreted in a manner consistent with it are applied in accordance with Union law. If the Authority needs additional information, it may also request it directly from other competent authorities after informing the competent authority concerned. The addressee of such a request shall provide the Authority with clear, accurate and complete information without undue delay.

2.Before requiring the competent authority concerned to seek its opinion before granting approval to financial products, services, activities or entities and where it deems it necessary and proportionate, the Authority shall engage with the competent authority concerned to address the identified supervisory shortcomings and reach a mutually agreed solution. The Authority may propose corrective actions to be taken by the competent authority in relation to existing financial products, services, activities or entities that have been affected by the identified supervisory shortcomings.

Where attempts to find such a mutually acceptable solution are not successful, the Authority shall require the competent authority to seek its opinion before granting approval to financial products, services, activities or entities. The Authority shall provide a comprehensive explanation for its decision, including a detailed analysis of the identified supervisory failures and the rationale for its requirement for an opinion. The Authority may also publish that explanation and shall record the requirement for an opinion in the register maintained by the Authority, pursuant to the legislative acts referred to Article 1(2) and where this Union law is composed of Directives, the national legislation transposing those Directives interpreted in a manner consistent with it.

3.Where a requirement to seek the Authority’s opinion before granting approval to financial products, services, activities or entities has been established, the competent authority shall submit a detailed proposal for the approval of the financial product, service, activity or entity subject to the Authority’s opinion, including a thorough justification for the proposal and all relevant supporting documentation.

Within fifteen working days, the Authority shall issue its opinion, which shall include a thorough explanation for any objection or concern it may have regarding the proposal. Should the Authority fail to issue its opinion within the specified timeframe, the competent authority may adopt the proposal without an opinion. The competent authority shall, within fifteen working days from the receipt of the opinion, inform the Authority of the steps it has taken or intends to take to implement the opinion. Where the competent authority has not taken the necessary steps to implement the opinion, the Authority shall take a decision according to paragraph 4.

4.The Authority’s decision taken pursuant to the second subparagraph of paragraph 2 may include corrective actions to be implemented by the competent authority, which may include actions in relation to existing financial products, services, activities or entities that have been affected by the identified supervisory shortcomings. If the corrective actions are not implemented within the deadline specified by the Authority, the Authority shall take a decision requiring the competent authority to revoke or amend a decision that it has adopted or to make use of the powers which it has under the relevant Union law. The Authority shall notify the decision to the relevant host competent authorities where the financial products, services or activities concerned by the decision are provided. The decision of the Authority shall be binding on the competent authority concerned and shall enable the host competent authorities to take appropriate measures to suspend the provision of such products, services or activities in their territory.’;

(14)The following Article 17aaa is inserted:

‘Article 17aaa

Suspension of rights to provide services on a cross-border basis

1.Where the Authority has reasonable grounds for considering that an entity authorised under Union law that provides the services or activities, for which it is authorised, on a cross-border basis has committed a serious infringement of the obligations set out in this Regulation or any Union act referred to in Article 1(2) or obligations set out in the provisions adopted pursuant to Union law referred to in Article 1(2) that could jeopardise the integrity of financial markets, financial stability or investor protection, it shall refer those findings to the competent authority that has granted the authorisation to that entity. The competent authority shall provide the Authority with clear, accurate and complete information that demonstrate the absence of the alleged infringement, or, where the competent authority agrees with the findings of the Authority, sets out the measures already adopted by that competent authority to stop the infringement. That information shall be provided within a reasonable timeline set by the Authority.

2.Where, despite the information provided by the competent authority pursuant to paragraph 1, the Authority continues to have reasonable grounds for considering that the infringement persists, the Authority shall, within 10 working days from the receipt of the information pursuant to paragraph 1 or from the expiry of the period referred to in that paragraph, take a decision requiring that competent authority to order the relevant entity to suspend the provision of services or activities on a cross-border basis.

3.Where the relevant competent authority does not comply with the decision referred to in paragraph 2 within 2 working days, the Authority shall adopt within 5 working days a decision requiring the relevant entity to suspend its provision of services or activities on a cross-border basis. The Authority shall simultaneously inform the competent authority referred to in paragraph 1 as well as all other competent authorities of the Member States where the entity provided its services or activities of that decision. Those competent authorities shall take all appropriate measures to ensure that the decision of the Authority is applied within their respective territories.

4.Where the relevant entity has adopted all the necessary corrective measures to stop the infringement, it shall provide to the Authority and to its competent authority the necessary information to assess the effectiveness of those measures.

5.The Authority shall within 15 working days from the receipt of the information referred to in paragraph 4 assess, in consultation with the competent authority that has granted the authorisation to the entity, the effectiveness of the corrective measures, as well as notify to the relevant entity and all relevant competent authorities whether the corrective measures are sufficient, in which case it shall revoke its earlier decision addressed to the relevant entity. Upon receipt of that notification by the Authority, the relevant entity may resume the provision of its cross-border services and activities in the Union.

6.To carry out the tasks conferred on the Authority pursuant to this Article, the Authority may address a duly justified and reasoned request for information to any financial market participant, national competent authority or any other relevant person.

7.The provisions set out in this Article shall not apply to cases where the Authority is the competent authority of an entity.’;

(15)Article 19 is amended as follows:

(a)in paragraph 1 the first subparagraph is replaced by the following:

‘In relation to the legislative acts referred to in Article 1(2) as well as in the situation set out under Article 28b(6), and without prejudice to the powers laid down in Article 17, the Authority may assist the competent authorities in reaching an agreement in accordance with the procedure set out in paragraphs 2 to 4 of this Article in either of the following circumstances:

(a)at the request of one or more of the competent authorities concerned where a competent authority disagrees with the procedure or content of an action, proposed action, or inactivity of another competent authority;

(b)on its own initiative, where on the basis of objective reasons, disagreement can be determined between competent authorities.’;

(b)paragraph 3 is replaced by the following:

‘3. Where the competent authorities concerned fail to reach an agreement within the conciliation phase referred to in paragraph 2, the Authority shall take a decision requiring those authorities to take specific action, or to refrain from certain action, in order to settle the matter, and to ensure compliance with Union law. The decision of the Authority shall be binding on the competent authorities concerned. The Authority’s decision may require competent authorities to revoke or amend a decision that they have adopted or to make use of the powers which they have under the relevant Union law.’;

(c)paragraph 4 is replaced by the following:

‘4. Without prejudice to the powers of the Commission pursuant to Article 258 TFEU, where a competent authority does not comply with the decision of the Authority, and thereby fails to ensure that a financial market participant complies with requirements directly applicable to it by virtue of the legislative acts referred to in Article 1(2) of this Regulation, and where this Union law is composed of Directives, the national legislation transposing those Directives interpreted in a manner consistent with it, the Authority may adopt an individual decision addressed to that financial market participant requiring it to take all necessary action to comply with its obligations under Union law, including the cessation of any practice.’;

(16)the following Article 19a is inserted:

‘Article 19a

Collaboration platforms

1.In the case of justified concerns about negative effects on investors, financial stability or in the case it has reasonable grounds to suspect an issue of compliance with Union law, or the existence of diverging or deficient supervisory practices related to the freedom to provide services, to pursue the activities of financial market participants or the freedom of establishment provided for in the legislative acts referred to Article 1(2), the Authority may, on its own initiative or at the request of one or more of the relevant competent authorities, set up and coordinate a collaboration platform to strengthen the exchange of information, propose solutions and to enhance collaboration between the relevant competent authorities.

If a collaboration platform is set up at the request of a competent authority, that competent authority shall notify the Authority and the other relevant competent authorities of its justified concerns referred to in paragraph 1.

2.The setting up of a collaboration platform pursuant to paragraphs 1 is without prejudice to the supervisory mandate of the competent authorities provided for in the legislative acts referred to Article 1(2).

3.Without prejudice to Article 35, at the request of the Authority or any competent authority, the relevant competent authorities shall provide all necessary information in a timely manner to allow for the proper functioning of the collaboration platform.

4.In the event of disagreement within the platform about the procedure or about the content of an action to be taken, or inaction, in relation to a market participant and where there are serious concerns about the impacts of a situation referred to in paragraph 1, the Authority may call for the competent authority to carry out an on-site inspection pursuant to the legislative acts referred to Article 1(2). The competent authority shall launch the on-site inspection without delay and shall invite the Authority and other relevant competent authorities concerned to participate in it.

5.Where two or more relevant competent authorities of a collaboration platform disagree about the content of an action to be taken, or inaction, in relation to a market participant or about information sharing pursuant to this Article, the Authority may exercise the power conferred on it under Article 19(1).’;

(17)in Article 21(2), the second subparagraph is deleted.;

(18)in Article 22(4), the second subparagraph is replaced by the following:

‘Following an inquiry conducted pursuant to the first subparagraph, the Executive Board may make appropriate recommendations for action to the competent authorities concerned.’;

(19)Article 28 is amended as follows:

(a)in paragraph 1, the first sentence is replaced by the following:

‘1. Competent authorities may, with the consent of the delegatee, delegate tasks or responsibilities to the Authority or other competent authorities subject to the conditions set out in this Article.’;

(b)the following paragraphs 1a, to 1e are inserted:

‘1a. A competent authority may delegate specific supervisory tasks or responsibilities to the Authority, where this is necessary for the proper performance of any such supervisory tasks or responsibilities.

1b. Prior to the delegation of a supervisory task or responsibility to the Authority, the competent authority shall consult the Authority. Such consultation shall concern:

(a)the scope of the task or responsibility to be delegated;

(b)the timetable for the performance of the task or responsibility to be delegated;

(c)the transmission of necessary information by and to the competent authority.

1c. The Authority shall exercise any delegated task or responsibility in accordance with the provisions set out in Chapter IIa, other relevant Union acts and subject to any conditions agreed with the competent authority.

1d. The competent authority shall reimburse the Authority for the costs incurred as a result of carrying out delegated tasks or responsibilities.

1e. The competent authority shall review the delegation referred to in paragraph 1a at appropriate intervals. A delegation of supervisory tasks or responsibilities may be revoked at any time.’;

(20)the following Articles 28a and 28b are inserted:

‘Article 28a

Mutual assistance between competent authorities

1.Competent authorities shall assist each other in recovering administrative fines imposed for the breach of any provision laid down in the acts referred to in Article 1(2), when the administrative fine must be recovered within the jurisdiction of a Member State other than the Member State where that fine was issued.

2.When the decision imposing the administrative fine on the concerned natural or legal person in the Member State of the applicant authority has become final and enforceable and the fine has not been paid, the requested authority shall, upon request of the applicant authority, assist in the recovery of the related amounts in its own jurisdiction.

3.The request referred to in paragraph 2 shall be transmitted to the requested authority by means of a digital form. which shall contain all the following elements:

(a)the name, address and other contact details of the requested authority;

(b)the name, known address of the addressee of the decision imposing the administrative fine, and any other relevant information for the identification of the addressee;

(c)a summary of the relevant facts and circumstances leading to the adoption of the decision imposing the administrative fine;

(d)a summary of the decision imposing the administrative fine and a copy thereof;

(e)information about the enforceability of the decision and the date when the decision became final and enforceable;

(f)the amount of the fine to be paid;

(g)the period within which enforcement should be carried out, such as statutory deadlines or limitation periods;

(h)information showing the reasonable efforts made by the applicant authority to enforce the decision in its own jurisdiction, including the ascertained absence of sufficient assets belonging to the concerned natural or legal person thereto to enable the enforcement of the administrative fine;

(i)information according to which the concerned natural or legal person has sufficient assets in the Member State of the requested authority to enable the enforcement of the administrative fine.

4.The applicant authority shall send the digital form to the requested authority in the official language, or in one of the official languages, of the Member State of the requested authority, unless the requested authority and the applicant authority agree that the digital form may be sent in another language.

Where required under the national law of the Member State of the requested authority, the applicant authority shall provide a translation of the decision to impose the fine into the official language, or into one of the official languages, of the Member State of the requested authority, unless the requested authority and applicant authority agree that such translation may be provided in a different language.

Article 28b

General principles applicable to the enforcement of decisions imposing administrative fines

1.The request to assist in recovering administrative fines sent in accordance with paragraphs 3 and 4 of Article 28a shall constitute the sole legal basis for the enforcement measures taken by the requested authority without any further formality, supplement or replacement being required. The requested authority shall, upon receipt, forthwith take all the necessary measures for its enforcement according to the rules and procedures laid down by its national law, unless the requested authority invokes paragraph 4. The requested authority shall inform the applicant authority with due diligence of any action it has taken on the request for recovery.

2.The amount recovered from enforcing the decision to impose the administrative fine shall accrue to the Member State of the applicant authority in its own currency, unless otherwise agreed between the Member State of the applicant authority and the Member State of the requested authority. The requested authority shall, if necessary for the recovery, convert the administrative fine into the currency of its Member State at the euro foreign exchange reference rate published by the European Central Bank applying on the date when the administrative fine was imposed.

3.The requested authority may recover the full costs incurred in relation to actions taken as referred to in paragraph 1 from the fine it has collected on behalf of the applicant authority, including translation, labour and administrative costs, irrespective of the outcome of the recovery proceedings.

4.The requested authority may refuse to enforce the decision of the applicant authority to impose an administrative fine only if it has established any of the following:

(a)the request does not fulfil all the requirements set out in paragraphs 3 and 4 of Article 28a;

(b)the decision is no longer enforceable under the law of the Member State of the requested authority due to lapse of time.

(c)the enforcement of the decision would be contrary to the principle of ne bis in idem;

(d)there are reasonable grounds showing that the execution of the request would be manifestly contrary to public policy in the Member State in which enforcement is sought.

5.Article 28b and paragraphs 1 to 4 of this Article shall not preclude the application of the Council Framework Decision 2005/214/JHA( 30 ) bilateral or multilateral agreements or arrangements between Member States in so far as such agreements or arrangements help simplify or facilitate further the procedures for the enforcement of administrative fines falling under the scope of Articles 28a.

6.The Authority shall encourage and facilitate the mutual assistance between competent authorities in enforcing administrative fines imposed outside their jurisdictions in accordance with Article 28a and this Article.

Where the requested authority refuses to assist the applicant authority in accordance with Article 28a and none of the grounds under paragraph 4 of this Article is established, Article 17 shall apply.

Where the requested authority refuses to assist the applicant authority by invoking one of the reasons under paragraph 4, letters (a) to (c) of this Article, the Authority may assist the competent authorities in reaching an agreement, if appropriate, in accordance with the procedure set out under Article 19.

7.The Authority shall develop the electronic format of the digital form referred to in paragraph 3 of Article 28a.’;

(21)Article 29 is amended as follows:

(a)the title is replaced by the following:

‘Common supervisory and enforcement culture’;

(b)paragraph 1 is amended as follows:

(1)the first sentence is replaced by the following:

‘The Authority shall play an active role in building a common Union supervisory and enforcement culture and consistent supervisory and enforcement practices, as well as in ensuring uniform procedures and consistent approaches throughout the Union.’;

(2)point (ab) is replaced by the following:

‘(ab) establishing coordination groups in accordance with Article 45b to promote supervisory and enforcement convergence and identify best practices;’

(3)point (c) is replaced by the following:

‘(c) contributing to developing high-quality and uniform supervisory and enforcement standards, including reporting standards, and international accounting standards in accordance with Article 1(3);’

(c)in paragraph 2, the second subparagraph is replaced by the following:

‘For the purpose of establishing a common supervisory culture, the Authority shall develop and maintain an up-to-date Union supervisory handbook on the supervision of financial markets participants and enforcement of the rules regulating their activities in the Union, which duly takes into account the nature, scale and complexity of risks, business practices, business models and size of financial institutions and of markets, including changes due to technological innovation, of financial market participants and markets. The Union supervisory handbook shall set out best practices and shall specify high-quality methodologies and processes. Where a competent authority decides not to comply with the Union supervisory handbook or substantial elements thereof, it shall communicate this fact to the Authority and provide its reasons for doing so.’;

(d)the following paragraph (3) is added:

‘3. The Authority shall forward questions that require the interpretation of Union law to the Commission. The Authority shall publish any answers provided by the Commission.’;

(22)Article 30 is amended as follows:

(a)paragraph 2 is replaced by the following:

‘2. For the purposes of this Article, the Authority shall establish ad hoc peer review committees, which shall be composed of staff from the Authority and members of the competent authorities. The peer review committees shall be chaired by a member of the Authority’s staff. The Chairperson, following an open call for participation, shall propose the chair and the members of a peer review committee which shall be approved by the Executive Board. The proposal shall be deemed to be approved unless, within 10 days of the Chairperson proposing it, the Executive Board adopts a decision to reject it.’;

(b)in paragraph 4, the first subparagraph is replaced by the following:

‘The Authority shall produce a report setting out the results of the peer review. That peer review report shall be prepared by the peer review committee and adopted by the Executive Board. When drafting that report, the peer review committee shall consult the Executive Board in order to maintain consistency with other peer review reports and to ensure a level playing field. The Executive Board shall assess in particular whether the methodology has been applied in the same manner. The report shall explain and indicate the follow-up measures that are deemed appropriate, proportionate and necessary as a result of the peer review. Those follow-up measures may be adopted in the form of guidelines and recommendations pursuant to Article 16 and opinions pursuant to point (a) of Article 29(1) and Article 17aa.’;

(c)paragraph 6 is replaced by the following:

‘6. The Authority shall undertake a follow-up report after two years of the publication of the peer review report. The follow-up report shall be prepared by the peer review committee and adopted by the Executive Board. When drafting that report, the peer review committee shall consult the Executive Board in order to maintain consistency with other follow up reports. The follow-up report shall include an assessment of, but shall not be limited to, the adequacy and effectiveness of the actions undertaken by the competent authorities that are subject to the peer review in response to the follow up measures of the peer review report.’;

(d)paragraph 8 is replaced by the following:

‘8. For the purposes of this Article the Executive Board shall adopt a peer review work plan for the coming two years, which shall inter alia reflect the lessons learnt from the past peer re-view processes and the discussions of coordination groups referred to in Article 45b. The peer review work plan shall constitute a separate part of the annual and multiannual working programme. It shall be made public. In case of urgency or unforeseen events, the Authority may decide to carry out additional peer reviews.’;

(23)Article 33 is amended as follows:

(a)in paragraph 1, the first subparagraph is replaced by the following:

‘1. Without prejudice to the respective competences of the Member States and the Union institutions, the Authority may develop contacts and enter into administrative arrangements with third country regulatory and supervisory authorities and international organisations for the purpose of fostering international supervisory cooperation, including through the exchange of information and/or staff.

Before entering into negotiations on any administrative arrangement referred to in the first subparagraph, the Authority shall inform the Commission in writing of its intention to do so, including the envisaged scope and objectives of such arrangement.

Under the conditions set out in administrative arrangements referred to in the first subparagraph and which shall include provisions governing professional secrecy and take due account of applicable data protection legislation, the Authority may in particular exchange information and documents to support the identification, monitoring and mitigation of cross border risks, including risks to financial stability and market integrity.

Administrative arrangements referred to in the preceding subparagraphs shall not create legal obligations in respect of the Union and its Member States nor shall they prevent Member States and their competent authorities from entering into bilateral or multilateral arrangements with those third countries.

(b)paragraph 4 is amended as follows:

(1)in the first subparagraph, the first sentence is replaced by the following:

‘Without prejudice to specific requirements set out in the legislative acts referred to in Article 1(2) and the administrative arrangements entered into pursuant to paragraph 1 of this Article, the Authority shall cooperate where possible with the relevant authorities of third countries whose regulatory and supervisory regimes have been recognised as equivalent.’;

(2)in the first subparagraph, point (b) is replaced by the following:

‘(b) to the extent necessary for the follow-up of such equivalence decisions, the procedures concerning the coordination of supervisory activities including, where necessary and provided for in other Union acts, on-site inspections.’;

(3)the last subparagraph is replaced by the following:

‘The Authority shall inform the Commission where a relevant third-country authority refuses to conclude such administrative arrangements or when it refuses to effectively cooperate.’;

(24)in Article 35, paragraph 1 is replaced by the following:

‘1. At the request of the Authority, the competent authorities shall provide the Authority, without undue delay, with all the necessary information to carry out the duties assigned to it by this Regulation and other Union acts, provided that they have legal access to the relevant information. Where a competent authority refuses to provide the requested information, it shall demonstrate that the information cannot be legally shared with the Authority.’;

(25)the following Article 35c is inserted:

‘Article 35c

Data platform

1.The Authority shall establish and maintain a data platform to facilitate the collection, storage, access to and processing of information as provided for under this Regulation or in other Union acts mandating to use of this platform.

2.The data platform shall include supervisory technology and other relevant tools to enhance analysis and monitoring capabilities and facilitate collaboration between authorities.

3.The Authority shall ensure that the platform is designed and operated in the most efficient manner and avoids where possible duplication of data collection and ensures the accuracy and interoperability of data.

4.The Authority shall ensure that the collection, storage, access to and processing of any data on the platform complies with the obligations of professional secrecy and confidentiality laid down in Article 70 of this Regulation and any other applicable Union acts.

5.The Authority shall be in particular responsible for ensuring the security, availability, maintenance and development of the software and IT infrastructure of the platform.

6.When personal data are processed in the data platform, the Authority shall process them only to the extent it is necessary to facilitate the collection, storage, access to and processing of the information submitted in accordance with the applicable Union acts referred to in paragraph 1.’; 

(26)Article 39 is amended as follows:

(a)paragraph 1 is replaced by the following:

‘1. The Authority shall act in accordance with paragraphs 2 to 6 of this Article when adopting decisions pursuant to Articles 17, 17aa, 17aaa, 18, 19 and 19a.’

(b)paragraph 6 is replaced by the following:

‘6. The decisions which the Authority takes pursuant to Article 17, 17aa, 17aaa, 18, 19 or 19a shall be made public. The publication shall disclose the identity of the competent authority or financial market participant concerned and the main content of the decision, unless such publication is in conflict with the legitimate interest of those financial market participants, or with the protection of their business secrets, or could seriously jeopardise the orderly functioning and integrity of financial markets or the stability of the whole or part of the financial system of the Union.’

(27)The following chapter IIa is inserted:

‘CHAPTER IIa

POWERS OF THE AUTHORITY OVER FINANCIAL MARKET PARTICIPANTS UNDER THE AUTHORITY’S SUPERVISION

Article 39a

Scope

1.This Chapter shall apply to all financial market participants under the Authority’s supervision unless otherwise specified in this Chapter. However, it shall not apply to central counterparties recognised under Article 25 of Regulation (EU) No 648/2012.

2.If the provisions of this Chapter conflict with a provision of another Union act governing specific aspects of procedural powers of the Authority in a specific sector or area, the provision of the other Union act shall prevail and shall apply to those specific sector or area. The powers conferred on the Authority, its officials or other persons authorised by it shall not be used to require the disclosure of information or documents which are subject to legal professional privilege.

Article 39b

Requests for information

1.For the purpose of exercising its tasks, the Authority may request financial market participants under the Authority’s supervision, persons involved in the activities of financial market participants under the Authority’s supervision or affected by them, related third parties, third parties to whom the financial market participants under the Authority’s supervision have outsourced operational functions or activities and persons otherwise closely and substantially related or connected to the financial market participants under the Authority’s supervision or their activities and any other persons as provided for in other Union acts, to provide all information necessary in order to carry out its duties under this Regulation and other Union acts.

2.When sending a simple request for information under paragraph 1, the Authority shall refer to this Article as the legal basis for the request, state the purpose of the request, specify the information required, and set a time-limit within which the information is to be provided and inform about the possible fines in case of incorrect or misleading replies.

3.When requesting the information under paragraph 1 by a decision, the Authority shall:

(a)refer to this Article as the legal basis for the request;

(b)state the purpose of the request;

(c)specify the information required;

(d)set a time-limit within which the information is to be provided;

(e)indicate possible periodic penalty payments for the provision of incomplete information;

(f)inform about the possible fines in case of incorrect or misleading replies;

(g)inform of the addressees rights of appeal under this Regulation.

4.The persons referred to in paragraph 1 or their representatives and, in the case of legal persons or associations having no legal personality, the persons authorised to represent them by law or by their constitution or mandate, shall supply the information requested.

5.The Authority shall, without delay, send a copy of the decision referred to in paragraph 3 to the relevant competent authority of the Member State where the persons referred to in paragraph 1 and who are concerned by the request for information are domiciled or established.

Article 39c

Investigations

1.For the purpose of exercising its tasks, the Authority may conduct all necessary investigations of persons referred to in Article 39b(1). Before initiating an investigation under this Article, the Authority shall adopt a decision to conduct an investigation. The decision shall specify the subject matter and purpose of the investigation, the date on which it is to begin, and the periodic penalty payments provided for under this Regulation and other Union acts where the persons concerned do not submit to the investigation, the legal remedies available under this Regulation and the right to have the decision reviewed by the Court of Justice of the European Union.

2.The Authority shall be empowered to:

(a)examine records, data, procedures and other material relevant to the execution of its tasks irrespective of the medium on which they are stored;

(b)take or obtain certified copies of, or extracts from such records, data, procedures and other material;

(c)summon and ask any person referred to in Article 39b(1) or their representatives or staff for oral or written explanations on facts or documents related to the subject matter and purpose of the inspection and to record the answers;

(d)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;

(e)request telephone and data traffic records.

3.The Authority may authorise its officials and other persons to conduct the investigations referred to in paragraph 1. They shall exercise their powers upon production of a written authorisation specifying the subject matter and purpose of the investigation. That authorisation shall also indicate the periodic penalty payments provided for in Article 39g where the production of the required records, data, procedures or any other material, or the answers to questions asked of the persons referred to in Article 39b(1) are not provided or are incomplete, and the fines provided for under this Regulation and other Union acts, where the answers to questions asked of the persons referred to in Article 39b(1) are incorrect or misleading.

4.In good time before the investigation, the Authority shall inform the relevant competent authority of the Member State where the investigation is to be carried. Officials of the competent authority concerned shall, upon the request of the Authority, assist the Authority in carrying out its duties. Officials of the competent authority concerned may also attend the investigations upon its request.

5.If a request for records of telephone or data traffic referred to in point (e) of paragraph 1 requires authorisation from a judicial authority according to national rules, such authorisation shall be applied for. Such authorisation may also be applied for as a precautionary measure.

6.Where authorisation as referred to in paragraph 5 is applied for, the national judicial authority shall verify that the decision of the Authority is authentic and assess that the coercive measures envisaged are neither arbitrary nor excessive having regard to the subject matter of the investigations. In its assessment of the proportionality of the coercive measures, the national judicial authority may ask the Authority for detailed explanations, in particular relating to the grounds the Authority has for suspecting that an infringement of this Regulation or other Union acts under its competence 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 require that it be provided with the information on the Authority 's file. The lawfulness of the Authority 's decision shall be subject to review only by the Court of Justice following the procedure set out in this Regulation.

Article 39d

On-site inspections

1.For the purpose of exercising its tasks, the Authority may conduct on-site inspections at the premises of persons referred to in Article 39b(1). Before initiating the on-site inspection, the Authority shall adopt a decision to conduct on-site inspection. The decision shall specify the subject matter and purpose of the inspection, the date on which it is to begin and the periodic penalty payments provided for under this Regulation and other Union acts for persons not submitting to the inspection, the legal remedies available under this Regulation and the right to have the decision reviewed by the Court of Justice. Where the proper conduct and efficiency of the inspection so require, the Authority may carry out the on-site inspection without prior notice to the persons subject to the inspection.

2.The officials of and other persons authorised by the Authority to conduct an on-site inspection may enter any business premises and land of the legal persons subject to an investigation decision referred to paragraph 1 and shall have all the powers stipulated in Article 39c. They shall also have the power to seal any business premises and books or records for the period of, and to the extent necessary for, the inspection.

3.The officials of and other persons authorised by the Authority to conduct an on-site inspection shall exercise their powers upon production of a written authorisation specifying the subject matter and purpose of the inspection, and the periodic penalty payments provided for in Article 39g for not submitting to the inspection.

4.In good time before the inspection the Authority shall inform the relevant competent authority of the Member State where investigation is to be conducted and financial market participants under the Authority’s supervision about the decision to conduct the on-site inspection.

5.The relevant competent authority of the Member State where the inspection is to be conducted shall, upon the request of the Authority, actively assist the Authority. To that end, the competent authority of the Member State concerned shall enjoy the powers set out in paragraph 2. The competent authority of the Member State concerned may also attend the on-site inspections upon its request.

6.The Authority may also require the relevant competent authority of the Member State to carry out specific investigatory tasks and on-site inspections as provided for in this Article and in Article 39c on its behalf. To that end, the competent authority of the Member State concerned shall enjoy the same powers as the Authority as set out in this Article and in Article 39c.

7.Where the Authority finds that the the person subject to the inspection opposes an inspection ordered pursuant to this Article, the competent authority of the Member State concerned shall provide it the necessary assistance of the Authority, requesting, where appropriate, the assistance of the police or of an equivalent enforcement authority, so as to enable it to conduct on-site inspection.

8.If the on-site inspection provided for in paragraph 1 or the assistance provided for in paragraph 7 requires authorisation by a judicial authority according to national rules, such authorisation shall be applied for. Such authorisation may also be applied for as a precautionary measure.

9.Where the authorisation referred to in paragraph 8 is applied for, the national judicial authority shall verify that the decision of the Authority is authentic and assess that the coercive measures envisaged are neither arbitrary nor excessive having regard to the subject matter of the inspection. In its assessment of the proportionality of the coercive measures, the national judicial authority may ask the Authority for detailed explanations, in particular relating to the grounds the Authority has for suspecting that an infringement of this Regulation or other Union acts under its competence 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 inspection or demand to be provided with the information on the Authority 's file. The lawfulness of the Authority’s decision shall be subject to review only by the Court of Justice following the procedure set out in this Regulation.

Article 39e

Procedural rules for supervisory measures and fines

1.Where the Authority finds that there are serious indications of the existence of facts liable to constitute one or more infringements of this Regulation or other Union acts under its competence, it shall launch an investigation in accordance with Article 39c and appoint an independent investigating officer within the Authority to investigate the matter. The investigating officer shall not be involved or shall not have been involved in the direct or indirect supervision of the financial market participant under the Authority’s supervision concerned and shall perform his functions independently from the Executive Board.

2.The investigating officer shall investigate the alleged infringements, taking into account any comments submitted by the persons subject to investigation, and shall submit a complete file with the findings to the Executive Board. In order to carry out the tasks, the investigating officer may exercise the power to request information in accordance with Article 39b and to conduct investigations and on-site inspections in accordance with Articles 39c and 39d. When using those powers, the investigating officer shall comply with Article 39a.

During the investigation, the investigating officer shall have access to all documents and information gathered by the Authority in its supervisory activities.

3.Upon completion of the investigation and before submitting the file with the findings to the Executive Board, the investigating officer shall give the persons subject to investigation the opportunity to be heard on the matters being investigated. The investigating officer shall base the findings only on facts on which the persons subject to investigation have had the opportunity to comment.

The rights of defense of the persons concerned shall be fully respected during investigations under this Article.

4.When submitting the file with the findings to the Executive Board, the investigating officer shall notify that fact to the persons subject to investigation. The persons subject to investigation shall be entitled to have access to the file, subject to the legitimate interest of other persons in the protection of their business secrets. The right of access to the file shall not extend to confidential information affecting third parties.

5.On the basis of the file containing the investigating officer's findings and, when requested by the persons concerned, after having heard the persons subject to investigation, the Executive Board shall decide if one or more of the infringements under investigation has been committed by the persons who have been subject to investigation, and in such case, take a supervisory measure in accordance with this Regulation and relevant Union acts and impose a fine in accordance with this Regulation and relevant Union acts.

6.The investigating officer shall not participate in deliberations of the Executive Board or in any other way intervene in the decision-making process of the Executive Board.

7.The Commission shall adopt by means of delegated acts in accordance with Article 75a further rules of procedure for the exercise of the power to impose fines or periodic penalty payments, including provisions on rights of defense, temporal provisions, and the collection of fines or periodic penalty payments, and shall adopt detailed rules on the limitation periods for the imposition and enforcement of penalties.

8.The Authority shall refer matters for criminal prosecution to the relevant national authorities where, in carrying out its duties under this Regulation or other Union acts, it finds that there are serious indications of the possible existence of facts liable to constitute criminal offences. In addition, the Authority shall refrain from imposing fines or periodic penalty payments where a prior final judgement in a case arising from identical facts, or from facts which are substantially the same, has been rendered as the result of criminal proceedings under national law.

Article 39f

Fines

1.Where, in accordance with Article 39e(5), the Executive Board finds that financial market participant under the Authority’s supervision has, intentionally or negligently, infringed this Regulation or other relevant Union act under the Authority’s competence, it shall adopt a decision imposing a fine in accordance with paragraph 2.

An infringement shall be considered to have been committed intentionally if the Authority finds objective factors which demonstrate that the financial market participant under the Authority’s supervision acted deliberately to commit the infringement.

2.Unless otherwise provided for in other Union acts applicable to a specific sector or area, the fine shall not exceed:

(a)in the case of a legal person, EUR 1 000 000, or, in the Member States whose currency is not the euro, the corresponding value in the national currency according to euro foreign exchange reference rate published by the European Central Bank applying on the date when the fine is imposed.

(b)or 10% of the annual turnover of the financial market participant under the Authority’s supervision subject to investigation concerned in the preceding business year whichever is higher;

(c)in the case of a natural person, EUR 500 000, or, in the Member States whose currency is not the euro, the corresponding value in the national currency according to euro foreign exchange reference rate published by the European Central Bank applying on the date when the fine was imposed.

3.When determining the level of a fine pursuant to paragraph 1, the Authority shall take into account the criteria set out in Article 39g(2).

4.Notwithstanding paragraph 3, where the legal person has directly or indirectly benefited financially from the infringement, the amount of the fine shall be at least equal to that benefit.

Article 39g

Periodic penalty payments

1.The Executive Board may by decision impose a periodic penalty payment in order to compel:

(a)financial market participants under the Authority’s supervision to put an end to an infringement, in accordance with a decision taken pursuant to point (d) of Article 39h(1);

(b)a person referred to in Article 39b(1) to supply complete information which has been required by a decision pursuant to Article 39b;

(c)a person referred to in Article 39b(1) to submit to an investigation, to produce complete records, data, procedures or any other material required or to complete and correct other information provided in an investigation launched by a decision taken pursuant to Article 39c;

(d)a person referred to in Article 39b(1) to submit to an on-site inspection ordered by a decision taken pursuant to Article 39d.

2.A periodic penalty payment shall be effective and proportionate and dissuasive. The periodic penalty payment shall be imposed on a daily basis until the financial market participant under the Authority’s supervision or person concerned complies with the relevant decision referred to in paragraph 1.

3.Notwithstanding paragraph 2, the amount of a periodic penalty payment shall be 3 % of the average daily turnover in the preceding business year or, in the case of natural persons, 2 % of the average daily income in the preceding calendar year. It shall be calculated from the date stipulated in the decision imposing the periodic penalty payment.

4.A periodic penalty payment may be imposed for a period of no more than six months following the notification of the Executive Board's decision.

Article 39h

Supervisory measures

1.Where, in accordance with Article 39e(4), the Authority finds that a financial market participant under the Authority’s supervision has committed an infringement of this Regulation or other relevant Union acts under its competence, including where listed in an Annex of other relevant Union acts under its competence, it shall adopt a decision to take one or more of the following actions as appropriate to the relevant sector or area pursuant to this Regulation or, where provided for, within the limits of its powers under the applicable Union legislation:

(a)withdraw, depending on the sector in which the financial market participant under the Authority’s supervision operates, the registration, the recognition or the authorisation of the financial market participant under the Authority’s supervision;

(b)prohibit the financial market participant under the Authority’s supervision from pursuing the activities under this Regulation or other relevant Union acts throughout the Union, until the infringement has been brought to an end;

(c)require the temporary or permanent cessation of any practice or conduct that the Authority considers to be contrary to the provisions of this Regulation and other relevant Union acts;

(d)suspend the registration, the recognition or the authorisation of financial market participant under the Authority’s supervision;

(e)require the financial market participant under the Authority’s supervision to bring the infringement to an end;

(f)impose fines pursuant to Article 39f;

(g)impose periodic penalty payments pursuant to Article 39g;

(h)issue a public notice;

(i)require the removal of a natural person from the management board of a financial market participant under the Authority’s supervision;

(j)require the freezing or the sequestration of assets, or both;

(k)require that auditors or experts carry out verifications or investigations;

(l)to adopt any type of measure to ensure that the financial market participant under the Authority’s supervision, continue to comply with legal requirements.

2.The Authority shall withdraw the registration, authorisation or the recognition of financial market participant under the Authority’s supervision in any of the following circumstances unless otherwise specified in other Union acts which shall take precedence:

(a)the financial market participant under the Authority’s supervision has expressly renounced the registration, authorisation or recognition or has not made use of the registration, authorisation or recognition within 36 months of the registration, authorisation or recognition being granted;

(b)the financial market participant under the Authority’s supervision has obtained the registration, authorisation or recognition by making false statements or by any other irregular means;

(c)the financial market participant under the Authority’s supervision no longer meets the conditions under which it was registered, authorised or recognised.

Where the Authority withdraws the registration, authorisation or recognition of the financial market participant under the Authority’s supervision, it shall provide full reasons in its decision.

The withdrawal shall have immediate effect.

For the purposes of paragraph 1, the measure shall be effective, proportionate and dissuasive and the Authority shall take into account the nature and seriousness of the infringement, having regard to the following criteria:

(a)the duration and frequency of the infringement;

(b)whether financial crime has been occasioned or facilitated by or is otherwise attributable to, the infringement;

(c)whether the infringement has been committed by intent or negligence;

(d)the degree of responsibility for the infringement;

(e)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;

(f)the impact of the infringement on the interests of investors;

(g)the importance of the profits gained or losses avoided by financial market participant under the Authority’s supervision responsible for the infringement or the losses for third parties caused by the infringement, to the extent that they can be determined;

(h)the level of cooperation with the Authority of the financial market participant under the Authority’s supervision responsible for the infringement, without prejudice to the need to ensure disgorgement of profits gained or losses avoided by that person; 

(i)previous infringements of this Regulation or other relevant Union acts by financial market participant under the Authority’s supervision responsible for the infringement;

(j)any measures taken after the infringement by the financial market participant under the Authority’s supervision responsible for the infringement to prevent its repetition.

3.Where the Authority has reasonable grounds to suspect that a financial market participant under its supervision may be engaging, or may be about to engage, in conduct that could amount to an infringement under this Regulation or other relevant Union acts under its competence, it may adopt by decision any of the measures referred to in points (b), (h), (j), (k) and (l) of paragraph 1, as appropriately adjusted for use in situations involving only suspected, not yet established, infringements.

4.Without undue delay, the Authority shall notify any action taken pursuant to paragraphs 1 and 4 to the financial market participant under the Authority’s supervision responsible for the infringement and shall communicate it to the relevant competent authorities of the Member State and to the Commission. It shall publicly disclose any such action on its website within 10 working days from the date of adoption of the decision referred to in paragraph 1 or 4.

The disclosure to the public referred to in the first subparagraph shall include the following:

(a)a statement affirming the right of the financial market participant under the Authority’s supervision responsible for the infringement to appeal the decision;

(b)where relevant, a statement affirming that an appeal has been lodged and specifying that such an appeal does not have suspensive effect;

(c)a statement asserting that it is possible for the Authority’s Board of Appeal to suspend the application of the decision in accordance with Article 60(3) of this Regulation.

Article 39i

Administrative sanctions and measures against natural persons

1.This Article shall apply to natural persons who:

(a)are members of the management body, senior managers, or key function holders of financial market participants under the Authority’s supervision in accordance with the relevant legislative acts referred to in Article 1(2);

(b)exercise significant influence over the decision-making or risk profile of such financial market participants; or

(c)are otherwise engaged in regulated activities subject to the Authority’s supervision.

2.Following the procedure set out in Article 39h, the Authority shall impose administrative sanctions or other measures on a person referred to in paragraph 1 where it is established that that person has:

(a)failed to comply with professional standards, including those relating to integrity, competence, and due diligence; or

(b)engaged in conduct that undermines the sound and prudent management of the supervised entity.

3.The sanctions and measures referred to in paragraph 2 may include:

(a)administrative fines in accordance with Article 39f;

(b)temporary or permanent prohibition from exercising management functions in financial market participants under the Authority’s supervision in accordance with the relevant legislative acts referred to in Article 1(2);

(c)suspension or withdrawal of authorisation to perform regulated activities;

(d)public statements identifying the person responsible and the nature of the breach, where this publication is deemed necessary by the Authority to protect the stability of the financial markets or to ensure the effective enforcement of this Regulation or other Union acts referred to in Article 1(2), provided that the publication is limited to what is strictly necessary to ensure those objectives and properly justified.

Article 39j

Hearing of the persons concerned

1.Before taking any decision under Articles 39k, 39h and 39i, the Executive Board shall give the financial market participant under the Authority’s supervision or the person subject to the proceedings the opportunity to be heard on the Authority's findings. The Executive Board shall base its decisions only on findings on which the financial market participant under the Authority’s supervision or the person subject to the proceedings had the opportunity to comment.

2.The first paragraph shall not apply if urgent action is needed in order to prevent significant and imminent damage to the financial system. In such case, the Executive Board may adopt an interim decision and shall give the financial market participant under the Authority’s supervision or the person concerned the opportunity to be heard as soon as possible after taking its decision.

3.The rights of defence of the financial market participant under the Authority’s supervision or persons subject to the proceedings shall be fully respected during the proceedings. They shall be entitled to have access to the Authority's file, subject to the legitimate interest of other persons in the protection of their business secrets. The right of access to the file shall not extend to confidential information or the Authority preparatory documents.

Article 39k

Disclosure, nature, enforcement and allocation of fines and periodic penalty payments

1.The Authority shall disclose to the public every fine and periodic penalty payment that has been imposed pursuant to Articles 39f 39g and 39i, unless such disclosure to the public would seriously jeopardise the financial markets or cause disproportionate damage to the parties involved. Such disclosure shall not contain personal data within the meaning of Regulation (EU) 2018/1725 of the European Parliament and of the Council.

2.Fines and periodic penalty payments imposed pursuant to Articles 39f, 39g and 39i shall be of an administrative nature.

3.Decisions on fines, periodic penalty payments imposed pursuant to Articles 39f, 39g and 39i shall be enforceable.

The enforcement shall be governed by the rules of civil procedure in force in the Member State in the territory of which the enforcement is carried out. The order for the enforcement of the decision to impose fines or periodic penalty payments shall be appended to that decision without the need for other formality than verification of the authenticity of the decision by the authority designated by each Member State for that purpose and made known to the Authority and to the Court of Justice.

When that formality has been completed, the authority designated by the Member State may proceed to enforcement in accordance with the national law, by bringing the matter directly before the competent body.

Enforcement may be suspended only by a decision of the Court of Justice. However, the courts of the Member State concerned shall have jurisdiction over complaints that enforcement is being carried out in an unlawful manner.

4.The amounts of the fines and periodic penalty payments shall be allocated to the general budget of the European Union.

Article 39l
Settlement

1.When the Authority takes a decision pursuant to Article 39e(5) may conclude enforcement proceedings by settlement with the financial market participant under the Authority’s supervision, natural or legal persons, subject to terms ensuring effectiveness, proportionality and deterrence.

2.The Commission may adopt delegated acts in accordance with Article 75a specifying the settlement procedure, including the rights of defence, publication and effects of settlements.

3.During his or her investigation, the independent investigating officer may explore the possibility of a settlement with the financial market participant under the Authority’s supervision or person subject to investigation, if the officer considers that the case may be suitable for settlement. If the financial market participant under the Authority’s supervision or person subject to investigation agrees to settle, the original fine considered to be imposed by the Authority may be reduced.

4.A financial market participant under the Authority’s supervision or any person subject to investigation may request that the possibility of a settlement be considered. Such a request shall not oblige the Authority to enter into settlement discussions or to reach a settlement. The independent investigating officer shall assess the request in light of the circumstances of the case, including the seriousness and nature of the alleged infringement, and may initiate settlement discussions where he or she considers that the case may be suitable for settlement.

Article 39m

Review by the Court of Justice of the European Union

The Court of Justice of the European Union shall have unlimited jurisdiction to review decisions whereby the Authority has imposed a fine or a periodic penalty payment according to this Regulation or other Union acts where applicable. It may annul, reduce or increase the fine or periodic penalty payment imposed.

Article 39n

Supervisory fees

1.The Authority shall charge fees to financial market participants under the Authority’s supervision for any costs that the Authority will incur in carrying out its tasks under this Regulation and the relevant Union acts referred to in Article 1(2).

2.The fees referred to in paragraph 1 shall cover the administrative costs that will be incurred by the Authority in its activities in relation to the registration, authorisation, certification, recognition, enforcement, supervision, and other supervision-related activities, in particular supervisory convergence and development and maintenance of tools, including depreciated cost, for those purposes as applicable to financial market participants under the Authority’s supervision.

3.Where the Authority has requested assistance or support in carrying out supervisory tasks to a competent authority in accordance with this Regulation and other Union acts, the fees shall also cover the reimbursement of any costs that the competent authorities may incur in carrying out those tasks.

4.Supervisory fees shall be proportionate to the annual turnover of the financial market participant under the Authority’s supervision concerned.

5.By way of derogation from paragraph 4, financial market participants under the Authority’s supervision may be exempted from the obligation to pay a fee or may be subject to a reduced, fixed, capped, or temporary fee, as appropriate.

6.The Authority shall provide each financial market participant under the Authority’s supervision with the information explaining how the fee referred to in paragraph 1 was calculated.

7.The Authority shall on an annual basis publish on its website a fee transparency report setting out the categories of financial market participants under the Authority’s supervision and the methodology applied for the allocation of cost.

8.The Commission is empowered to adopt a delegated act in accordance with Article 75a by further specifying the type of fees, the matters for which fees are due, the amount of the fees and the manner in which they are to be paid.

9.This Article shall also apply to financial market participants referred to in Article 4(1) as specified in other Union acts.’;

(28)Article 40 is amended as follows:

(a)in paragraph 1, the following point ba is inserted:

‘(ba) 5 independent members of the Executive Board;’;

(b)paragraph 3 is replaced by the following:

‘3. Each of the authorities referred to in paragraph 1 shall be responsible for nominating a high-level alternate from its authority, who may replace the member of the Board of Supervisors referred to in paragraph 1(b), where that person is prevented from attending.’;

(29)Article 41 is replaced by the following:

‘The Board of Supervisors on its own initiative or at the request of the Chairperson may establish internal committees for specific tasks attributed to it. The Board of Supervisors may provide for the delegation of certain clearly defined tasks and decisions to internal committees, to the Executive Board, the Executive Director or to the Chairperson.

Where an internal committee discusses matters in relation to a central counterparty or central securities depository, the European Central Bank and the other relevant central banks of issue of the Union currencies shall have the right to be non-voting members .’;

(30)Article 43 is amended as follows:

(a)paragraph 1 is replaced by the following:

‘1. The Board of Supervisors shall give guidance to the work of the Authority and shall be in charge of taking the decisions in accordance with Articles 9a to 16a of this Regulation. The Board of Supervisors shall adopt all decisions of the Authority, including those specifically attributed to it in the other Union acts, with the exception of the decisions that are to be taken by the Executive Board in accordance with Article 46a. If applicable, the Board of Supervisors shall adopt the opinions, recommendations, guidelines and decisions of the Authority, and issue the advice referred to in Chapter II, based on a proposal of the relevant internal committee, the Chairperson, or of the Executive Board, as applicable.’;

(b)in paragraph 4 the first subparagraph is replaced by the following:

‘The Board of Supervisors shall adopt, before 30 September of each year, on the basis of a proposal by the Executive Board, the work programme of the Authority for the coming year, and shall transmit it for information to the European Parliament, the Council and the Commission.’;

(c)paragraph 5 is replaced by the following:

‘5. The Board of Supervisors shall adopt, on the basis of a proposal by the Executive Board, the annual report on the activities of the Authority, including on the performance of the Chairperson’s duties, and shall transmit that report to the European Parliament, to the Council, to the Commission, to the Court of Auditors and to the European Economic and Social Committee by 15 June each year. The report shall be made public.’;

(31)Article 44 is amended as follows:

(a)paragraph 1 is amended as follows:

(1)the third subparagraph is replaced by the following:

‘The Chairperson and the 5 independent members of the Executive Board shall not vote on the decisions referred to in the second subparagraph.’;

(2)the fourth and fifth subparagraphs are deleted;

(3)the following subparagraph is added:

‘With regard to decisions specified in Article 44b(2) , by way of derogation of the first sub-paragraph of this paragraph, the Board of Supervisors shall decide with a two thirds majority of its voting members.’;

(b)in paragraph 4, the first subparagraph is deleted.

(32)the title of Section 2 is replaced by the following:

‘Executive Board’

(33)the following Article 44a is inserted:

‘Article 44a

Composition and appointment of the Executive Board

1.The Executive Board shall be composed of:

(a)the Chair of the Authority

(b)5 independent, full-time members

Where the Executive Board carries out the tasks referred to in Article [46a (8)], a representative of the Commission shall be entitled to participate in the debates and shall have access to the documents pertaining to those tasks.

The Executive Director and the Vice-Chair of the Authority shall participate in meetings of the Executive Board without the right to vote.

2.Where the decisions referred to in Article 8 paragraph 1, point l in relation to a directly supervised entity are deliberated upon, the member of the Board of Supervisors from the Member State where the relevant entity is established may participate in the deliberations during the relevant meetings of the Executive Board.

Where supervisory matters in relation to a central counterparty or central securities depository are discussed, a representative of the ECB shall have the right to attend the discussion.

The observers specified in subparagraphs 1 and 2 shall not be present during the vote following such deliberations.

The Executive Board may decide to admit other observers to the deliberations.

3.The Executive Board members referred to in paragraph 1, point (b), shall be selected on the basis of merit, skills, knowledge, integrity, recognised experience in the area of supervision of financial markets, and other relevant qualifications, following an open selection procedure which shall be published in the Official Journal of the European Union. The Commission shall prepare a shortlist of candidates for the position of the Executive Board members referred to in paragraph 1, point (b). The European Parliament may conduct hearings of the candidates on that shortlist.

The Board of Supervisors shall submit a proposal for the appointment of the Executive Board members referred to in paragraph 1, point (b), to the European Parliament, based on the shortlist prepared by the Commission. Following the European Parliament’s approval of that proposal, the Council shall adopt an implementing decision to appoint those Executive Board members. The Council shall act by qualified majority.

4.Throughout the appointment process, the principles of gender and geographical balance shall be taken into account to the extent possible. The Executive Board members should represent different types of supervisory experiences, including in prudential supervision, and, to the extent possible, should have collectively an appropriate understanding of the sectors in which the Authority exercises direct supervisory tasks.

5.The term of office of the Executive Board members referred to in paragraph 1, point (b), shall be five years. In the course of the 12 months preceding the end of their five-year term of office, the Board of Supervisors or a smaller committee selected among Board of Supervisors members, including a Commission representative, shall carry out an assessment of those Executive Board members. The assessment shall take into account an evaluation of each Executive Board member’s performance and the Authority’s future tasks and challenges. Based on the assessment, the Board of Supervisors may propose to the European Parliament to extend their term of office for two years. Such extension may be granted only once. Following the European Parliament’s approval of the Board’s proposal, the Council shall adopt an implementing decision to extend the term of office of the Executive Board member or members concerned.

6.No individual may serve more than seven years in which ever role of Chair, Executive Director, or independent member of the Executive Board. Prior office in one role shall count toward the term limit for another role regardless of the order of the positions held.

(34)the following Article 44b is inserted:

Article 44b

Decision-making

1.Decisions by the Executive Board shall be adopted by simple majority of its members whilst striving for consensus. Each member shall have one vote. Where votes are tied, the Chairperson shall have the casting vote.

2.Decision in accordance with Articles 17 (3) and (6), 17aa, 17aaa, 18(3) and (4), 22(4), Article 30 (4) and (8), Article 39h (a), (b, (f), (g), (i), Article 39i, and Article 65 and any decisions based on sectoral legislation referring to this paragraph, shall be deemed adopted unless the Board of Supervisors objects within a period to be defined in the rules of procedure but not exceeding a maximum period of ten working days, unless duly justified by the complexity of the decision and agreed by the two Boards. In emergency situations the aforementioned period shall not exceed 48 hours.

3.The representative of the Commission shall have the right to vote on matters referred to in Article 63. In the event that the Commission raises serious concerns on a decision proposal presented to the Executive Board on matters related to the Financial Framework Regulation and the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Union, the Executive Board shall postpone the adoption of the decision. Within 15 days, the Executive Board shall re-examine and adopt it, possibly amended, in second reading with a two-thirds majority, including the Commission representative where applicable. The Executive Board shall adopt and make public its rules of procedure.’;

(35)Article 45 and Article 45a are deleted;

(36)in Article 45b paragraphs 1, 2 and 3 are replaced by the following:

‘1. The Executive Board may set up coordination groups on its own initiative or upon the request of a competent authority on defined topics for which there may be a need to coordinate having regard to specific market developments. The Executive Board shall set up coordination groups on defined topics at the request of five members of the Board of Supervisors.

2. All relevant competent authorities shall participate in the coordination groups and shall provide, in accordance with Article 35, to the coordination groups the information necessary in order to allow the coordination groups to conduct their coordinating tasks in accordance with their mandate. The work of the coordination groups shall be based on information provided by the relevant competent authorities and any findings identified by the Authority.

3. The groups shall be chaired by a member of the Executive Board. Each year, the respective member of the Executive Board in charge of the coordination group shall report to the Board of Supervisors on the main elements of the discussions and findings and, where relevant, make a suggestion for a regulatory follow-up or a peer review in the respective area. Competent authorities shall notify the Authority as to how they have taken into account the work of coordination groups in their activities.’;

(37)the following Article 45c is inserted:

‘Article 45c

Internal committees

1.The Executive Board, on its own initiative, at the request of the Chairperson or where specified in other Union acts, may establish internal committees for specific tasks attributed to it. The Executive Board may provide for the delegation of certain clearly defined tasks and decisions to internal committees, to the Executive Director or to the Chairperson.

Where an internal committee discusses supervisory matters in relation to a central counterparty or central securities depository, the European Central Bank and the other relevant central banks of issue of the Union currencies shall have the right to be non-voting members.’;

(38)Article 46 is replaced by the following:

‘Article 46

Independence of the Executive Board

1.The members of the Executive Board shall act independently and objectively in the sole interest of the Union as a whole and shall neither seek nor take instructions from the Union institutions or bodies, from any government or from any other public or private body.

Member States, Union institutions or bodies and any other public or private body shall not seek to influence the members of the Executive Board in the performance of their tasks.

2.If an Executive Board member referred to in Article 40, paragraph 1, point (ba), no longer fulfils the conditions required for the performance of that member’s duties or has been guilty of serious misconduct, the Council may, acting on its own initiative or following a proposal by the European Parliament, adopt an implementing decision to remove that member of the Executive Board from office. The Council shall act by qualified majority.

3.During a period of 18 months after ceasing to hold office, the former Executive Board members, including the Chair of the Authority, shall be prohibited from engaging in a gainful occupational activity with:

(a)an entity directly supervised by the Authority;

(b)any other entity, where doing so would or could lead to a conflict with the legitimate interests of the Authority.

In its rules for the prevention and management of conflicts of interest in respect of its members, in accordance with Article 46a(8), point d), the Executive Board shall specify the circumstances under which such a conflict of interest exists or could be perceived to exist.’

(39)Article 46a is added:

‘Article 46a

Tasks of the Executive Board

1.The Executive Board shall be responsible for the overall planning and execution of the tasks conferred on the Authority in accordance with this Regulation.

2.The Executive Board may examine, give an opinion and make a proposal on all matters to be decided by the Board of Supervisors.

3.The Executive Board may ask the Board of Supervisors for an opinion on all supervisory matters. The Board of Supervisors shall provide its opinion at its next meeting following the request or as agreed with the Executive Board.

4.The Executive Board shall adopt decisions in accordance with Chapter IIa and carry out supervisory tasks in relation to individual financial market participants under the Authority’s supervision pursuant to this Regulation and other Union acts.

5.The Executive Board shall adopt the decisions pursuant to Article 9(5), Article 17(3) and (6), Article 17aa, Article 17aaa, Article18(3) and (4), Article19, Article 19a (1) and (4), Article 22(4), and Article 30. In addition, the Executive Board shall carry out tasks or take measures in relation to individual national competent authorities and individual financial market participants which are not under the Authority’s supervision, where specified in this Regulation or other Union acts. .

By derogation to the first sub-paragraph in cases set out in Regulation (EU) 2021/23 the decisions based on Article 19 shall be taken by the Board of Supervisors.

6.The Executive Board shall adopt the working arrangements in accordance with Article 8a(4).

7.The Executive Board shall present to the Board of Supervisors a biannual briefing on supervisory matters.

8.In addition, the Executive Board shall have the following tasks:

(a)    the Executive Board shall propose, for adoption by the Board of Supervisors, an annual and multi-annual work programme;

(b)the Executive Board shall exercise its budgetary powers in accordance with Articles 63 and 64;

(c)the Executive Board shall adopt the Authority’s staff policy plan and, pursuant to Article 68(2), the necessary implementing measures of the Staff Regulations of Officials of the European Communities (hereinafter the Staff Regulations’);

(d)the Executive Board shall adopt rules for the prevention and management of conflicts of interest in respect of its members;

(e)the Executive Board shall adopt the special provisions on right of access to the documents of the Authority, in accordance with Article 72;

(f)    the Executive Board shall adopt and make public its rules of procedure;

(g)the Executive Board shall appoint and remove the members of the Board of Appeal in accordance with Article 58(3) and (5), taking duly into account a proposal by the Board of Supervisors.

9.The members of the Executive Board shall make public all meetings held and any hospitality received. Expenses shall be recorded publicly in accordance with the Staff Regulations.’;

(40)Article 47 is deleted;

(41)Article 48 is amended as follows:

(a)in paragraph 1, the third and fourth subparagraphs are replaced by the following:

‘The Chairperson shall be responsible for setting the agenda of the Executive Board, to be adopted by the Executive Board, and shall chair the meetings of the Executive Board.

The Chairperson may invite the Executive Board to consider setting up a coordination group in accordance with Article 45b.’

(b)in paragraph 2, the third subparagraph is replaced by the following:

‘The Executive Board shall also elect, from among its members, a Vice-Chairperson who shall carry out the functions of the Chairperson in the absence of the Chairperson.’

(c)paragraph 3 is replaced by the following:

‘3. The Chairperson’s term of office shall be 5 years and may be extended once for two years.’;

(d)in paragraph 4 the last sentence is replaced by the following:

‘The Council, acting on a proposal from the Board of Supervisors and with the assistance of the Commission, and taking into account the evaluation referred to in the first subparagraph, may extend the term of office of the Chairperson once for two years.’;

(e)the following paragraph 6 is added:

‘6. No individual may serve more than 7 years in which ever role of Chair, Executive Director, or independent member of the Executive Board. Prior office in one role shall count toward the term limit for another role regardless of the order of the positions held.’

(42)Article 51 is amended as follows:

(a)paragraph 3 is replaced by the following:

‘The Executive Director’s term of office shall be 5 years and may be extended once for two years.’;

(b)in paragraph 4 the last sentence is replaced by the following:

‘The Board of Supervisors, taking into account the evaluation referred to in the first subparagraph, may extend the term of office of the Executive Director once for two years.’,

(c)the following paragraph 6 is added:

‘6. No individual may serve more than 7 years in which ever role of Chair, Executive Director, or independent member of the Executive Board. Prior office in one role shall count toward the term limit for another role regardless of the order of the positions held.’;

(43)in Article 52, the first subparagraph is replaced by the following:

‘Without prejudice to the respective roles of the Executive Board and the Board of Supervisors in relation to the tasks of the Executive Director, the Executive Director shall neither seek nor take instructions from the Union institutions or bodies, from any government of a Member State or from any other public or private body.’;

(44)in Article 53, paragraphs 1 and 2 are replaced by the following:

‘1. The Executive Director shall be in charge of overseeing day-to-day operations of the Authority and ensuring its objectives and decisions are duly implemented. It shall assist the Executive Board and the Board of Supervisors in setting the strategic direction for the Authority. The Executive Director shall prepare the work of the Executive Board on matters specified in Article 46a(7).

2. The Executive Director shall be responsible for implementing the annual work programme of the Authority under the guidance of the Board of Supervisors and under the control of the Executive Board.’

(45)in Article 57, paragraph 3 is replaced by the following:

‘3. Each sub-committee shall have a chairperson. Unless otherwise provided for in other Union acts, the chairperson shall be one of the individuals referred to in Article 55(1) or one of the representatives of the relevant competent authorities, who shall also be an observer in the Joint Committee.’;

(46)Article 58 is amended as follows:

(a)in paragraph 3, the first subparagraph is replaced by the following:

‘Two members of the Board of Appeal and two alternates shall be appointed by the Executive Board of the Authority from a shortlist proposed by the Commission, following a public call for expressions of interest published in the Official Journal of the European Union, and after consultation of the Board of Supervisors.’;

(b)paragraph 5 is replaced by the following:

‘5. A member of the Board of Appeal appointed by the Executive Board of the Authority shall not be removed during his term of office, unless he has been found guilty of serious misconduct and the Executive Board takes a decision to that effect after consulting the Board of Supervisors.’

(47)in Article 59 the paragraph 1 is replaced by the following:

‘1. The members of the Board of Appeal shall be independent in making their decisions. They shall not be bound by any instructions. They shall not perform any other duties in relation to the Authority, its Executive Board or its Board of Supervisors.’;

(48)in Article 60 the paragraph 1 is replaced by the following:

‘1. Any natural or legal person, including competent authorities, may appeal against any decision taken by the Authority in accordance with this Regulation or other Union acts referred to in Article 1(2) which is addressed to that person, or against a decision which, although in the form of a decision addressed to another person, is of direct and individual concern to that person.’;

(49)in Article 62 paragraph 1 is amended as follows: 

(a)point (c) is replaced by the following:

‘(c) any fees paid to the Authority in the cases specified in this Regulation and relevant instruments of Union law;’;

(b)the following point (f) is added:

‘(f) possible Union funding in the form of contribution agreements or ad hoc grants in accordance with the Authority’s financial rules referred to in Article 65 and with the provisions of the relevant instruments supporting the policies of the Union.’;

(50)Article 63 is amended as follows:

(a)paragraphs 1, 2 and 3 are replaced by the following:

‘1. Each year, the Executive Director shall draw up a provisional draft single programming document of the Authority for the three following financial years setting out the estimated revenue and expenditure, as well as information on staff, from its annual and multi-annual programming and shall forward it to the Executive Board and the Board of Supervisors, together with the establishment plan.

2. The Board of Supervisors shall, on the basis of the draft which has been approved by the Executive Board, adopt the draft single programming document for the three following financial years.

3. The single programming document shall be transmitted by the Executive Board to the Commission, the European Parliament and the Council and to the European Court of Auditors by 31 January.’;

(b)paragraph 7 is replaced by the following:

‘7. The Executive Board shall, without undue delay, notify the European Parliament and the Council of its intention to implement any project which may have significant financial implications for the funding of its budget, in particular any project relating to property, such as the rental or purchase of buildings.’

(51)in Article 64 paragraph 8 is replaced by the following:

‘8. The Executive Director shall send the Court of Auditors a reply to the latter’s observations by 30 September and shall also send a copy of that reply to the Board of Supervisors, the Executive Board and to the Commission.’;

(52)in Article 65 the first sentence is replaced by the following:

‘The financial rules applicable to the Authority shall be adopted by the Executive Board after consulting the Commission.’;

(53)Article 68 is amended as follows:

(a)paragraph 1 is replaced by the following:

‘1. The Staff Regulations, the Conditions of Employment of Other Servants and the rules adopted jointly by the Union institutions for the purpose of applying them shall apply to the staff of the Authority, including its Executive Director, its Chairperson and the members of the Executive Board.’;

(b)paragraph 2 is replaced by the following:

‘2. The Executive Board, in agreement with the Commission, shall adopt the necessary implementing measures, in accordance with the arrangements provided for in Article 110 of the Staff Regulations.’;

(c)paragraph 4 is replaced by the following:

‘4. The Executive Board shall adopt provisions to allow national experts from Member States to be seconded to the Authority.’;

(54)in Article 70 paragraph 2a is replaced by the following:

‘2a. The Executive Board and the Board of Supervisors shall ensure that individuals who provide any service, directly or indirectly, permanently or occasionally, relating to the tasks of the Authority, including officials and other persons authorised by the Executive Board and the Board of Supervisors or appointed by the competent authorities for that purpose, are subject to the requirements of professional secrecy equivalent to those in paragraphs 1 and 2.

The same requirements for professional secrecy shall also apply to observers who attend the meetings of the Executive Board, and the Board of Supervisors and who take part in the activities of the Authority.’;

(55)in Article 72 paragraph 2 is replaced by the following:

‘2. The Executive Board shall adopt practical measures for applying Regulation (EC) No 1049/2001.’;

(56)in Article 73 paragraph 2 is replaced by the following:

‘2. The Executive Board shall decide on the internal language arrangements for the Authority.’;

(57)in Article 74 the first subparagraph is replaced by the following:

‘The necessary arrangements concerning the accommodation to be provided for the Authority in the Member State where its seat is located and the facilities to be made available by that Member State, as well as the specific rules applicable in that Member State to the staff of the Authority and members of their families, shall be laid down in a Headquarters Agreement between the Authority and that Member State which they concluded after obtaining the approval of the Executive Board.’

(58)The following chapter VIIa is inserted:

‘CHAPTER VIIa

DELEGATED ACTS

Article 75a

Exercise of delegation

1.The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article.

2.The power to adopt delegated acts referred to in Articles 39e and 39n of this Regulation shall be conferred on the Commission for an indeterminate period of time from [date of entry into force of the basic legislative act].

3.The delegation of power referred to in this Regulation may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

4.Before adopting a delegated act, the Commission shall consult experts designated by each Member State in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making.

5.As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.

6.A delegated act adopted pursuant to this Regulation shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or of the Council.’;

(59)Article 81 is amended as follows:

(a)paragraph 1 is replaced by the following:

‘1. By [OP please insert the date: 5 years after date of entry into force], and every five years thereafter, the Commission shall publish a report on the experience acquired as a result of the operation of the Authority and the procedures and tasks laid down in this Regulation. That report shall evaluate, inter alia:

(a)the level of accountability and transparency of the Authority including on the use of its resources;

(b)the effectiveness and convergence in supervisory practices;

(c)the allocation of responsibilities in the area of direct supervision including the appropriateness of entrusting the Authority with further supervisory responsibilities;

(d)the governance model;

(e)whether the resources of the Authority to carry out its responsibilities are adequate;

(f)the functioning of the Joint Committee;

(g)the application of the safeguard clause established in Article 38;

(h)the role of the Authority as regards systemic risk;

(i)whether it is appropriate to simplify and reinforce the architecture of the ESFS in order to increase the coherence between the macro and the micro levels and between the ESAs.

The report and any accompanying proposals, as appropriate, shall be forwarded to the European Parliament and to the Council.’;

(b)paragraphs 2 to 3 are deleted.

Article 2
Amendments to Regulation (EU) No 648/2012

Regulation (EU) No 648/2012 is amended as follows:

(1)Article 2 is amended as follows:

(a)the following points (1a) and (1b) are inserted:

‘(1a) ‘significant CCP’ means a CCP authorised under Article 14 that qualifies as significant pursuant to Article 22a(1);

(1b) ‘less significant CCP’ means a CCP authorised under Article 14 that is not a significant CCP;’;

(b)point (13) is replaced by the following:

‘(13) ‘competent authority’ means the competent authority referred to in the legislation referred to in point (8) of this Article, the competent authority referred to in Article 10(5), the national competent authority or, the CCP’s competent authority;’;

(c)the following points (13a), (13b) and (13c) are inserted:

‘(13a) ‘CCP’s competent authority’ means the national competent authority for less significant CCPs or ESMA for significant CCPs;

(13b) ‘national competent authority’ means the national authority of the Member State in which a CCP is established, designated pursuant to Article 22(1);

(13c) ‘relevant authority’ means any authority referred to in Article 22d;’;

(d)point (31) is replaced by the following:

‘(31) ‘covered bond entity’ means the covered bond issuer or cover pool of a covered bond;’,

(e)the following point (32) is added:

‘(32) central database’ means the central database established by ESMA pursuant to Article 17c.’;

(f)the following subparagraph is added:

For the purpose of Article 5(1), Article 6(1) point (f), Article 14(4), Article 17(3a), Article 17(3b), third subparagraph, (4) and (5), Article 21(3), first subparagraph, (4) third subparagraph, (4a) and (5), Article 27(3), Article 28 (1), (4) and (5), Article 29 (1) and (3), Article 30 (1) to (5), Article 31(1) to (8), Article 32(1) except for the last two references in the third subparagraph, Article 32(2) to (6), Article 32(7) except for the second to last reference, Article 35(1), (2) and (3), Article 37(1a) and (2), Article 38(1), (3) and (5), Article 41(2), Article 45a(1) and (2), Article 48 (3), Article 49(1), (1d) and (1g), the term “competent authority” shall be read as “CCP’s competent authority”.’;

(2)Article 6a is amended as follows:

(a)in paragraph 1, the second subparagraph is replaced by the following:

‘For the purposes of point (c) of the first subparagraph, before the request referred to in the first subparagraph, ESMA shall consult the ESRB and the CCP’s competent authorities.’;

(b)in paragraph 2, first subparagraph, the first sentence is replaced by the following:

‘Under the conditions set out in paragraph 1 of this Article, the competent authorities responsible for the supervision of clearing members and the CCP’s competent authorities may request that ESMA submit a request for a suspension of the clearing obligation to the Commission.’;

(c)in paragraph 8, third subparagraph, the second sentence is replaced by the following:

‘For the purposes of point (c) of the first subparagraph of paragraph 1 of this Article, ESMA shall consult the ESRB and the CCP’s competent authorities.’;

(3)in Article 6b(1), first subparagraph, the introductory wording is replaced by the following:

‘Where a CCP meets the conditions laid down in Article 22 of Regulation (EU) 2021/23 of the European Parliament and of the Council 31 , the resolution authority of the CCP designated under Article 3(1) of that Regulation or the CCP’s competent authority may, on their own initiative or at the request of a competent authority responsible for the supervision of a clearing member of the CCP under resolution, request that the Commission suspend the clearing obligation referred to in Article 4(1) of this Regulation for specific classes of OTC derivatives or for a specific type of counterparty where the following conditions are met:’;

(4)Article 7 is amended as follows:

(a)in paragraph 1, the first sentence is replaced by the following:

‘1. 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 initial connectivity and access fees, regardless of the trading venue on which a transaction is executed.’;

(b)paragraphs 2 to 6 are replaced by the following: 

‘2. A trading venue seeking to access a CCP’s service related to the clearing of OTC derivative contracts shall submit its request to the CCP. The request shall specify the OTC derivative contracts for which the clearing is requested. The trading venue shall inform ESMA, the CCP’s competent authority and the competent authority of the trading venue of such a request.

3. The CCP shall provide a written response to the trading venue within three months of the receipt of the request referred to in paragraph 2, either permitting or denying access.

4. The CCP may deny a request for access only where such access would affect the smooth and orderly functioning of the markets or cause systemic risk, based on a comprehensive risk assessment subject to the conditions laid down in paragraph 7.

The CCP shall not deny a request on a possible loss of revenue in respect of itself or another entity belonging to the same group.

Where the CCP fails to provide a written response to the trading venue within the time limit referred to in paragraph 3, ESMA may notify the CCP and request additional information from the CCP.

Where there is no indication that the conditions for denial of request as referred to in paragraph 7 are met, ESMA may issue a decision requiring that CCP to grant access to its services within one month of the notification of that decision.

Where the CCP denies access to the trading venue, the written response shall provide a detailed explanation of the reasons for denied access, based on the comprehensive risk assessment referred to in the first subparagraph. The CCP shall immediately after providing the written response to the trading venue, and in writing, inform ESMA and the competent authorities referred to in paragraph 2 of that decision.

5. Where the CCP has denied access, the trading venue may submit a complaint to ESMA.

ESMA shall assess the reasons for denied access and, within one month of the date of the complaint, provide the trading venue with a reasoned reply. ESMA may consult the competent authorities referred to in paragraph 2. Where ESMA concludes that the refusal by the CCP to grant access is unjustified, where there is no indication that the conditions for denial of request as referred to in paragraph 7 are met, ESMA shall issue a decision requiring the CCP to grant access to its services within one month of the notification of that decision.

6. A CCP that grants access to the trading venue shall ensure that such access is fully operational within three months of the date of the positive response to the request for access.’;

(c)the following paragraph 7 is added:

‘7. The conditions laid down in paragraph 1 regarding 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, and the specific risks to be taken into account by CCPs when carrying out a comprehensive risk assessment as referred to in paragraph 4, shall be further specified by the delegated acts adopted pursuant to Article 36(6) of Regulation (EU) No 600/2014.

When carrying out a comprehensive risk assessment as referred to in paragraph 4 and 5 of this Article, the CCP and ESMA, respectively, shall take account of the relevant conditions set out by the delegated acts adopted pursuant to Article 36(4) of Regulation (EU) No 600/2014.’;

(5)Article 8 is replaced by the following:

Article 8

Access to a trading venue

‘1. A trading venue shall, upon request, provide trade feeds on a non-discriminatory and transparent basis to any CCP that has been authorised to clear OTC derivative contracts traded on that trading venue, including as regards initial connectivity and access fees.’;

2. A CCP that intends to access the service of a trading venue related to the OTC derivative contracts shall formally submit its request to the trading venue. The CCP shall inform ESMA, the competent authorities of the trading venue and the CCP’s competent authority of such request.

3. The trading venue shall provide a written response to the CCP within three months of the receipt of the request referred to in paragraph 2, either permitting or denying access.

4. The trading venue may deny a request for access only where such access would affect the smooth and orderly functioning of the markets or cause systemic risk, based on a comprehensive risk assessment subject to the conditions laid down in paragraph 7.

The trading venue shall not deny a request on a possible loss of revenue in respect of itself or another entity belonging to the same group.

The trading venue shall not restrict access to specific trade feeds on the ground that the counterparties to a specific transaction have not chosen the same CCP, where the CCPs of their choice have already entered into an interoperability arrangement pursuant to Article 51.

Where the trading venue fails to provide a written response to the CCP within the time limit referred to in paragraph 3, ESMA may notify the trading venue and request additional information.

Where there is no indication that the conditions for denial of request as referred to in paragraph 7 are met, ESMA may issue a decision requiring that trading venue to grant access to its services within one month of the notification of the decision.

Where the trading venue denies access, the written response shall provide a detailed explanation of the reasons for denied access, based on the comprehensive risk assessment referred to in the first subparagraph. The trading venue shall immediately after providing the written response to the CCP, and in writing, inform ESMA and the competent authorities referred to in paragraph 2 of that decision.

5. Where the trading venue has denied access, the CCP may submit a complaint to ESMA.

ESMA shall assess the reasons for denied access and, within one month from the date of the complaint, provide the CCP with a reasoned reply. ESMA may consult the competent authorities referred to in paragraph 2 when preparing its reply. Where ESMA concludes that the trading venue’s refusal to grant access is unjustified, where there is no indication that the conditions for denial of request as referred to in paragraph 7 are met, ESMA shall issue a decision requiring the trading venue to grant access to its trade feeds within one month of the date of the notification of that decision.

6. A trading venue that grants access to the CCP shall ensure that the access is fully operational within three months of the receipt of the positive response to the request for access.

7. When carrying out a comprehensive risk assessment as referred to in paragraph 4 and 5 of this Article, the trading venue and ESMA, respectively, shall take into account the relevant conditions set out by the delegated acts adopted pursuant to Article 36(6) of Regulation (EU) No 600/2014.’;

(6)in Article 12, the following paragraph 1b is inserted:

‘1b. ESMA shall have the power to impose fines and periodic penalty payments applicable to significant CCPs that infringed the rules under this Title in accordance with Chapter IIa of Regulation (EU) No 1095/2010 and shall take all measures necessary to ensure that those rules are implemented. In addition, ESMA shall, impose fines or periodic penalty payments on the significant CCPs subject to the reporting obligation pursuant to Article 9 where the details reported repeatedly contain systematic manifest errors.’;

(7)in Article 14, paragraph 1 is replaced by the following:

‘1. Where a legal person established in the Union intends to provide clearing services as a CCP, it shall apply for authorisation to the CCP’s competent authority, in accordance with the procedure set out in Article 17.’;

(8)Article 17 is amended as follows:

(a)in paragraph 1, first subparagraph, the first sentence is replaced by the following:

‘Without prejudice to Article 22a(6), the applicant CCP shall submit an application for authorisation as referred to in Article 14(1) or an application for an extension of an existing authorisation as referred to in Article 15(1).’;

(b)in paragraph 3c, third subparagraph, the first sentence is replaced by the following:

‘Where the CCP’s competent authority does not comply or does not intend to comply with an opinion of ESMA or with any conditions or recommendations included therein, the Executive Board shall inform the Board of Supervisors.’;

(9)Article 17b is amended as follows: 

(a)in paragraph 1, the first subparagraph is replaced by the following:

‘A CCP’s competent authority shall submit a request for an opinion:

(a) by ESMA, pursuant to Article 23a(2), where the CCP’s competent authority intends to adopt a decision, report or other measure in relation to Articles 7, 8, 20, 21, 29 to 33, 35, 36, 37 and 41;

(b) by the college referred to in Article 18, pursuant to Article 19, where the CCP’s competent authority intends to adopt a decision, report or other measure in relation to Articles 20, 21, 30, 31, 32, 35, 37, 41, 49 and 51.’;

(b)in paragraph 3, point (b) is replaced by the following:

‘(b) ESMA may, with respect to Articles 7, 8, 29 to 33, 35, 36 and 41, adopt an opinion in accordance with Article 23a and Article 24a(7), first subparagraph, point (bc), on that draft decision, report or other measure where such opinion is necessary to promote a consistent and coherent application of a relevant article; and’;

(c)in paragraph 4, third subparagraph, the first sentence is replaced by the following:

‘For the purpose of paragraph 3, first subparagraph, points (a) and (b), of this Article, where the CCP’s competent authority does not comply or does not intend to comply with the opinion of ESMA or with any conditions or recommendations included therein, the Executive Board shall inform the Board of Supervisors.’;

(10)Article 17c is amended as follows:

(a)in paragraph 1, the first subparagraph is replaced by the following:

‘ESMA shall establish and maintain a central database in accordance with Article 35c of Regulation (EU) No 1095/2010. Separately for each CCP, the CCP’s competent authority, the relevant authorities of the CCP and ESMA as well as the members of the CCP’s college referred to in Article 18, where required under a relevant article (‘registered recipients’), shall have access to all information and documents referred to in paragraph 2 registered within the central database for that CCP where relevant or necessary for the performance of their duties. A CCP shall have access to the central database as regards the information and documents it submitted to that central database or the documents transmitted to it through that central database by any of the registered recipients. Other recipients shall also submit and have access to certain specific documents or information, where specified under this Regulation, that is registered in the central database. ESMA shall ensure that the central database performs the functions under this Article. ESMA shall make available the information shared via the central database under this Regulation to any authority relevant for the purpose of Regulation (EU) No 909/2014 and Regulation (EU) […/… on settlement finality], where relevant or necessary for the performance of their duties.’;

(b)paragraph 2 is replaced by the following:

‘CCPs and registered recipients shall upload to the central database, in electronic format, all information and documents, including applications, decisions, recommendations, information, requests, questions, answers and notifications, referred to in this Regulation, unless stated otherwise.

An acknowledgement of receipt shall be sent via the central database within two working days of submission of information or documents.

ESMA shall ensure the database enables DLT recorded data, including on-chain data reading and access to such data.’;

(c) paragraphs 3, 4, 5 and 7 are deleted;

(11)Article 18 is amended as follows:

(a)paragraph 1 is replaced by the following:

‘1. Without prejudice to Article 22a(6), within 30 calendar days of the submission of the notification referred to in Article 17(2), second subparagraph, point (a), or before the end of the adaptation period as referred to in Article 22a(7), the CCP’s competent authority shall establish a college to facilitate the exercise of the tasks referred to in Articles 15, 17, 17a, 20, 21, 30, 31, 32, 35, 37, 41, 49 and 51. That college shall be chaired and managed by ESMA (the ‘chair’).’;

(b)in paragraph 2, point (a) is replaced by the following:

‘(a) ESMA’;

(c)in paragraph 4, the second subparagraph is replaced by the following:

‘The chair shall decide the dates of the college meetings and establish the agenda of such meetings.’;

(d)in paragraph 5, third subparagraph, the last sentence is deleted;

(12)in Article 20, paragraphs 3 and 4 are replaced by the following:

‘3. Before the CCP’s competent authority takes a decision to withdraw the authorisation of the CCP in full or in part, including for one or more clearing services or activities in one or more classes of derivatives, securities, other financial instruments or non-financial instruments under paragraph 1, it shall take one of the following steps:

(a)for a less significant CCP, it shall, in accordance with Article 17b, request the opinion of ESMA and of the college referred to in Article 18 on the necessity of withdrawing the authorisation, in full or in part, of the CCP;

(b)for a significant CCP, it shall consult the relevant authorities of that CCP on the necessity of withdrawing the CCP’s authorisation, in full or in part.

The first subparagraph shall not apply where a decision is required urgently.

4. For less significant CCPs, ESMA, or any member of the college referred to in Article 18, and for significant CCPs, any of the relevant authorities, may, at any time, request that the CCP’s competent authority examine whether the CCP remains in compliance with the conditions under which the authorisation was granted.’;

(13)in Article 21(1), the introductory wording is replaced by the following:

‘The CCP’s competent authority shall do at least all of the following in relation to a CCP:’;

(14)Article 22 is amended as follows:

(a)the title is replaced by the following:

‘Competent authorities designated by the Member States’;

(b)paragraph 1 is replaced by the following:

‘1. Each Member State shall designate one or more national competent authorities to carry out the tasks and duties laid down under this Regulation for the authorisation and supervision of less significant CCPs established or to be established in its territory and the support and assistance functions referred to in Article 23(3). Each Member State shall inform the Commission and ESMA thereof.

Where a Member State designates more than one national competent authority in accordance with the first subparagraph, it shall determine the respective roles and shall designate a single authority to be responsible for coordinating cooperation and the exchange of information with the Commission, ESMA, other Member States’ competent authorities, EBA and the relevant members of the ESCB, where specifically referred to in this Regulation.’;

(c) the following paragraph 1a is inserted:

‘1a. Without prejudice to Article 22a(1), a Member State may designate ESMA as the competent authority for one or more less significant CCPs established in its territory. Where it exercises this option, the Member State shall notify the Commission, ESMA and the national competent authority thereof via the central database.’;

(d)paragraph 2 is replaced by the following:

‘2. Each Member State shall ensure that the national competent authority has the supervisory and investigatory powers necessary for the exercise of its functions.’;

(e) paragraph 4 is replaced by the following:

‘4. ESMA shall publish on its website a list of the CCP’s competent authorities for each CCP, designated in accordance with this Article or identified in accordance with Article 22a(1).’;

(15)the following Articles 22a to 22e are inserted:

‘Article 22a

Competent authority of significant CCPs

1.ESMA shall be the CCP’s competent authority of significant CCPs and carry out the supervisory tasks and duties laid down in this Regulation for their authorisation and supervision.

2.A CCP shall be considered significant where it fulfils at least one of the following conditions:

(a)the average open interest of securities transactions, including securities financing transactions, exchange traded derivatives or non-financial instruments cleared by the CCP over a period of one year prior to the assessment is more than EUR 100 billion;

(b)the average gross notional outstanding of OTC derivatives transactions cleared by the CCP over a period of one year prior to the assessment is more than EUR 500 billion;

(c)the average aggregated initial margin requirement and default fund contributions for accounts held by the CCP’s clearing members, calculated on a net basis at clearing member account level, over a period of one year prior to the assessment, is more than EUR 25 billion;

(d)it belongs to the same group as any of the following:

(i) a CCP authorised under Article 14 or a Tier 2 CCP;

(ii) a CSD or a trading venue for which ESMA is the competent authority.

(e)the Member State where the CCP is established has designated ESMA as the CCP’s competent authority in accordance with paragraph 1a of Article 22, where this designation applies to that CCP.

ESMA shall determine whether a CCP meets the conditions for qualifying as significant in accordance with this Article.

3.ESMA shall assess, at least every 12 months, whether any authorised CCP fulfils at least one of the conditions set out in paragraph 2.

4.Where ESMA has determined that a CCP authorised under Article 14 of this Regulation fulfils at least one of the conditions laid down in paragraph 2 of this Article, that CCP shall qualify as significant CCP. Where the CCP is not yet supervised by ESMA, ESMA may set a potential adaptation period that shall not exceed 6 months, after which the CCP shall become supervised by ESMA.

5.ESMA shall notify the CCP concerned, its national competent authority, the relevant authorities, the ECB, where a CCP clears financial and non-financial instruments denominated in euro, and the central banks of issue of the most relevant other Union currencies, where a CCP clears financial and non-financial instruments denominated in a currency other than euro, of the outcome of the determination and any adaptation period referred to in paragraph 4 within 2 working days of the date of that determination.

6.Before a legal person established in the Union applies for authorisation in accordance with Article 17, it shall request ESMA via the central database to determine whether it fulfils any of the conditions laid down in paragraph 2 of this Article.

ESMA may request further information from that legal person for that purpose. The legal person shall provide the requested information within the deadline set by ESMA. ESMA shall, within 20 working days from the receipt of all the relevant information, determine whether such legal person fulfils any of the conditions referred in the first subparagraph.

Where ESMA has determined that the legal person fulfils at least one of the conditions laid down in paragraph 2 of this Article, that legal person shall qualify as significant and shall be supervised by ESMA, which shall be responsible for the authorisation of this entity in accordance with Article 17.

Where ESMA has determined that the legal person does not fulfil any of the conditions laid down in paragraph 2 of this Article, it shall qualify as less significant and shall be supervised by the national competent authorities of the Member State, as referred to in Article 22(1), where the legal person is established. Those national competent authorities shall be responsible for the authorisation of the CCP in accordance with Article 17. ESMA shall inform, via the central database, the legal person, the national competent authority of the Member State in which the legal person is established and the ECB where the legal entity intends to clear financial and non-financial instruments denominated in euro, or the central banks of issue of the most relevant Union currencies, other than euro, of the financial and non-financial instruments that the legal person intends to clear, of the outcome of its determination within 2 working days from the date of that determination.

7.Where ESMA determines that a CCP that was previously determined to be significant has not fulfilled any of the conditions set out in paragraph 2 for the past 36 months, it shall determine that the CCP shall no longer qualify as a significant CCP. ESMA shall immediately notify the CCP concerned, its national competent authorities, the ECB, where a CCP clears financial and non-financial instruments denominated in euro, and the central banks of issue of the most relevant other Union currencies, where a CCP clears financial and non-financial instruments denominated in a currency other than euro, of that determination. That determination shall take effect after an adaptation period to be determined by ESMA, which shall not exceed 24 months. The national competent authority shall establish a college pursuant to Article 18 before the end of the adaptation period.

8.ESMA shall, without undue delay, establish and publish on its website the list of significant CCPs and keep it updated.

9.ESMA shall charge fees to significant CCPs for performing its supervisory tasks and duties laid  down in this Regulation for the authorisation and supervision of significant CCPs and in accordance with the delegated act adopted pursuant to paragraph 10.

10.The Commission shall be empowered to adopt a delegated act in accordance with Article 82 in order to supplement this Regulation by specifying the fees referred to in paragraph 9, by setting out:

(a)the types of fees;

(b)the matters for which fees are due;

(c)the method of calculation of the fees; and

(d)the manner in which fees are to be paid.

Article 22b

Specific provisions for significant CCPs

1.By way of derogation from Article 18, no college shall be established for significant CCPs. Where for a CCP that becomes significant, a college had been established pursuant to Article 18, such college shall be dissolved at the latest within a year after the CCP qualified as a significant CCP.

In relation to a significant CCP, the procedures referred to in Articles 7e, 15a, 17, 17a, 17c, 20, 21, 24, 30, 31, 32, 35, 37, 41 and 49 shall apply without including the college.

2.By way of derogation from Articles 6a, 6b, 17, 17a, 17c, 20, 21, 24, 28, 29, 31, 32, 35, 38, 41, 48, 49 and 49a, any requirement for a CCP or a CCP’s competent authority to interact with ESMA or ESMA to interact with a CCP or a CCP’s competent authority referred to in those articles shall not apply with respect to significant CCPs.

3.Article 17b shall not apply with respect to significant CCPs.

Article 22c

Powers of ESMA over significant CCPs under this Regulation

1.ESMA shall be responsible for carrying out its duties under this Regulation for the authorisation and supervision of significant CCPs.

2.ESMA shall ensure on an ongoing basis the compliance by significant CCPs with Articles 7, Article 7e, Article 8, Articles 14 to 17c, Article 20, Article 21, and Article 24 and Titles IV and V.

3.ESMA shall be conferred with the powers necessary for the exercise of its functions over significant CCPs under this Regulation and under Regulation (EU) No 1095/2010.

ESMA shall use these powers, over significant CCPs and where specified under this Regulation, over related parties, including to:

(a)supervise the significant CCPs’ compliance with the requirements laid down in this Regulation;

(b)adopt decisions and conduct supervisory assessments and take measures in relation to Articles 7, Article 7e, Article 8, Articles 14 to 17c, Article 20, Article 21, Article 24 and Titles IV and V;

(c)request significant CCPs, and related third parties to whom those CCPs have outsourced operational functions or activities, to provide, within the time limit provided for in the request, all relevant information or data to enable ESMA to monitor those CCPs’ provision of clearing services and activities and to carry out ESMA’s tasks and duties under this Regulation. The recipient of such a request shall provide ESMA, with all the information requested by ESMA within the provided time limit. The information request may be of a periodic or one-off nature;

(d)require the auditors of significant CCPs to provide information or data;

(e)adopt a decision imposing fines, where a significant CCP has, intentionally or negligently, committed one of the infringements listed in Annex V. Such fines shall be up to twice the amount of the profits gained or losses avoided because of the breach where those can be determined, or up to 10% of the total annual turnover, of a legal person in the preceding business year and can take into account aggravating or mitigation factors in accordance with the relevant coefficients set out in Annex IV;

(f)adopt a decision requiring a significant CCP to bring an infringement listed in Annex V to an end. 

4.In addition, for the purpose of carrying out its tasks regarding significant CCPs, ESMA shall have the powers to take the temporary measures set out in the second subparagraph in any of the following circumstances:

(a)ESMA has obtained evidence suggesting that the entity infringes, or is likely to infringe the requirements governing its operations within the next three months;

(b)ESMA has evidence that the arrangements, strategies, processes and mechanisms implemented by the entity do not ensure a sound management and coverage of its risks.

For the purposes of the first subparagraph, ESMA shall have, in particular, the powers to take the following temporary measures:

(a)require that the entity’s arrangements, processes, mechanisms and strategies are properly adjusted to ensure the sound management and coverage of its risks;

(b)require the significant CCP to convene a meeting of its shareholders or, if the significant CCP fails to comply with that requirement, convene the meeting itself. In both cases ESMA shall set the agenda, including the decisions to be considered for adoption by the shareholders;

(c)require entities to present a plan to restore compliance with supervisory requirements and set a deadline for its implementation, including improvements to the scope and deadline of that plan;

(d)restrict or limit the business, operations or network of the entity, or request the divestment of activities that pose excessive risks to its soundness;

(e)require the CCP to mitigate the risk related to the infringement or likely infringement of the requirements under this Regulation and the inherent related risks in the activities, products and systems of the entity;

(f)impose additional or more frequent reporting requirements;

(g)require additional disclosures;

(h)require the suspension of members from the management body of entities who do not fulfil the requirements governing their operations set out in this Regulation.

The decisions of ESMA shall state the reasons on which they are based.

5.ESMA shall refuse or subsequently withdraw the appointment of the person or persons referred to in Article 27 if it is not satisfied that the person is of sufficiently good repute, or if there are objective and demonstrable grounds for believing that the appointment or proposed changes would pose a threat to the sound and prudent management of the entity, the adequate consideration of the clients’ interest and integrity of the market.

6.The Commission shall be empowered to adopt delegated acts in accordance with Article 82 to amend the list of infringements under Annex V where needed to take account of amendments to the requirements on CCPs under this Regulation and in particular as laid down in Article 7, Article 9, Article 16 and Titles IV and V or where needed to ensure that the infringements under Annex III correspond to the requirements under this Regulation and in particular as laid down in Article 7, Article 9, Article 16 and Titles IV and V.

Article 22d

Relevant authorities for significant CCPs

The following entities shall be involved in the authorisation and supervision carried out by the CCP’s competent authority of a significant CCP and be referred to as relevant authorities for such CCP:

(a)the national competent authority of the Member State in which the significant CCP is established;

(b)the competent authorities responsible for the supervision of the clearing members, of the significant CCP, which are established in the three Member States with the largest contributions to the default fund referred to in Article 42 of this Regulation on an aggregate basis over a one-year period, including, where relevant, the ECB in the framework of the tasks concerning the prudential supervision of credit institutions within the single supervisory mechanism conferred upon it in accordance with Council Regulation (EU) No 1024/2013;

(c)the competent authorities responsible for the supervision of trading venues served by the significant CCP;

(d)the competent authorities supervising central securities depositories to which the significant CCP is linked;

(e)the ECB where the significant CCP clears or intends to clear financial and non-financial instruments denominated in euro;

(f)the central banks of issue of the most relevant Union currencies other than euro, of the financial and non-financial instruments cleared or to be cleared by the significant CCP.

Article 22e

Consultation of central banks of issue regarding significant CCPs

1.With regard to supervisory assessments conducted in relation to, and decisions to be taken pursuant to, Articles 41, 44, 46, 49, 50 and 54 in relation to significant CCPs, the Executive Board shall consult the central banks of issue referred to in Article 22d, points (e) and (f), before finalising its assessment. Each central bank of issue may respond. Where the central bank of issue decides to respond, it shall do so within 10 working days of receipt of the draft decision. In emergency situations, that period shall not exceed 24 hours. Where a central bank of issue proposes amendments or objects to assessments related to, or draft decisions pursuant to Articles 41, 44, 46, 49, 50 and 54, it shall provide full and detailed reasons, in writing. Upon conclusion of the period for consultation, the Executive Board shall duly consider the response and any amendments proposed by the central banks of issue and provide its assessment to the central bank of issue.

2.Where the Executive Board does not reflect in its decision the amendments proposed by a central bank of issue, the Executive Board shall inform that central bank of issue in writing stating its full reasons for not taking into account the amendments proposed by that central bank of issue, providing an explanation for any deviations from those amendments.’;

(16)in Article 23, the following paragraph 3 is added:

‘3. For each significant CCP, ESMA and the relevant authorities shall establish cooperation arrangements as laid down in Article 8a of Regulation (EU) No 1095/2010, including in relation to ESMA’s direct supervision of the CCP. Such arrangements shall reflect the distribution of competences and responsibilities pursuant to this Regulation and frame practical cooperation modalities in view of ESMA exercising its competencies and responsibilities with regard to significant CCPs. In particular, such arrangements may cover support and assistance by the relevant authorities, as relevant, in respect of all of the following:

(a)the carrying out of supervisory tasks over a significant CCP, including investigations and on-site inspections;

(b)the preparation of decisions, reports or other measures under this Regulation in relation to the significant CCP, including where specified under Articles 14, 15, 17, 17a, 20, 21, 24, 30, 31, 32, 35, 37, 41, 49, 49a and 51;

(c)any supervisory task to ensure the financial stability and monitor the operational resilience and market conduct of the significant CCP, including stress-testing;

(d)addressing emergency situations in relation to the significant CCP.’;

(17)Article 23a is amended as follows:

(a)the title is replaced by the following:

‘Supervisory cooperation between national competent authorities and ESMA with regards to less significant CCPs’;

(b)paragraph 2 is replaced by the following:

‘2. Competent authorities shall submit their draft decisions, reports or other measures to ESMA for its opinion before adopting any act or measure pursuant to Articles 7, 8 and 14, Article 15(1), second subparagraph, Article 21, Articles 29 to 33, and Articles 35, 36, 37, 41 and, except where a decision is required urgently, pursuant to Article 20.

Competent authorities may also submit draft decisions to ESMA for its opinion before adopting any other act or measure in accordance with their duties under Article 22(1). Any opinion, decision, input, validations or other measure by ESMA shall be taken in accordance with Article 46a of Regulation (EU) No 1095/2010.’;

(18)Article 24 is amended as follows:

(a)in paragraph 1, the introductory wording is replaced by the following:

‘Any authority referred to in this Regulation which becomes aware of any emergency situation relating to a CCP shall inform the CCP’s competent authority, ESMA, the college referred to in Article 18, the relevant members of the ESCB, the Commission and, the relevant authorities of the significant CCPs without undue delay of the emergency situation, including:’;

(b)paragraphs 2 to 4 are replaced by the following:

‘2. In an emergency situation, information shall be provided and updated without undue delay to enable the members of the college referred to in Article 18 or the relevant authorities of the significant CCPs, as applicable, to analyse the impact of that emergency situation in particular on their clearing members and their clients. The members of the college referred to in Article 18 or the relevant authorities of the significant CCPs, as applicable, may forward the information to the public bodies responsible for the financial stability of their markets, subject to the obligation of professional secrecy set out in Article 83. The obligation of professional secrecy in accordance with Article 83 shall apply to those bodies receiving that information.

3. In the event of an emergency situation at one or more CCPs that has or is likely to have destabilising effects on cross-border markets, the Executive Board shall coordinate competent authorities, the resolution authorities designated pursuant to Article 3(1) of Regulation (EU) 2021/23 and the colleges referred to in Article 18 of this Regulation or the relevant authorities of the significant CCPs, as applicable, to build a coordinated response to emergency situations relating to a CCP and ensure effective information sharing among competent authorities, the colleges referred to in Article 18 of this Regulation and resolution authorities.

4. In an emergency situation, except where a resolution authority is taking or has taken a resolution action in relation to a CCP pursuant to Article 21 of Regulation (EU) 2021/23, the following ad hoc meetings, may be convened to coordinate the responses of competent authorities:

(a)ad hoc meetings of the Executive Board, convened by its Chair at his or her own initiative or at the request of two members of the Executive Board or the Board of Supervisors;

(b)ad hoc meetings with the relevant authorities for significant CCPs, convened by the Executive Board.;’

(c)paragraph 5 is amended as follows:

(i)point (f) is replaced by the following:

‘(f) any member of the college referred to in Article 18 that is not already covered by points (a) to (d) of this paragraph;’

(ii)the following point (g) is added:

‘any of the relevant authorities of significant CCPs, that is not already covered by points (a) to (e).’;

(c) paragraph 6 is replaced by the following:

‘6. Where an ad hoc meeting is convened pursuant to paragraph 4, the Executive Board shall inform EBA, EIOPA, the ESRB, the Single Resolution Board established under Regulation (EU) No 806/2014 of the European Parliament and of the Council and the Commission thereof who shall also be invited to participate in that meeting upon their request.

Where a meeting is held following an emergency situation as specified in paragraph 1, point (c), the Executive Board shall invite the relevant central banks of issue to participate in that meeting.’;

(d) paragraph 8 is replaced by the following:

‘8. ESMA may issue recommendations pursuant to Article 16 of Regulation (EU) No 1095/2010 addressed to one or more competent authorities recommending them to adopt temporary or permanent supervisory decisions in line with the requirements set out in Article 16 and in Titles IV and V of this Regulation to avoid or mitigate significant adverse effects on the financial stability of the Union. ESMA may issue such recommendations only where more than one CCP authorised in accordance with Article 14 is affected or where Union-wide events are destabilising cross-border cleared markets.’;

(19)in Chapter 3A, the title is replaced by the following:

‘Supervisory tasks in relation to CCPs’;

(20)Article 24a is amended as follows: 

(a)the title is replaced by the following:

‘Supervisory tasks in relation to CCPs’;

(b)paragraph 1 is replaced by the following:

‘1. ESMA in accordance with Article 46a of Regulation (EU) No 1095/2010 shall take any decision and carry out any task entrusted to it under this Regulation, and in particular as set out in paragraphs 10 and 11 of this Article.’;

(c)paragraphs 2 to 6 are deleted; 

(d)paragraph 7 is amended as follows:

(i) the introductory wording is replaced by the following;

‘In relation to CCPs, ESMA shall:’;

(ii) points (a), (b), (ba) are deleted;

(iii) point (bc) is replaced by the following:

‘(bc) in relation to less significant CCPs, adopt opinions in accordance with Articles 17 and 17b, undertake validations in accordance with Article 49 and adopt decisions in accordance with Article 49a and, in relation to significant CCPs, take any decision or other measure in accordance with Article 22c;’;

(iv) point (be) is deleted;

(e)paragraphs 8 and 9 are deleted;

(f)paragraphs 10 and 11 are replaced by the following:

‘10. The Executive Board shall, in relation to third-country CCPs, take decisions and carry out the tasks entrusted to ESMA in Articles 25, 25a, 25b, 25f to 25q and 85(6).

11. The Executive Board shall, in relation to third-country CCPs, share with the third-country CCP college referred to in Article 25c the agendas of its meetings before those meetings take place, the minutes of its meetings, the complete draft decisions it plans to adopt and the final decisions it has adopted’;

(g)paragraphs 12 and 13 are deleted;

(21)in Article 24b, paragraphs 2 and 3 are replaced by the following:

‘2. Where the Executive Board does not reflect in its decision the amendments proposed by a central bank of issue, the Executive Board shall inform that central bank of issue in writing stating its full reasons for not taking into account the amendments proposed by that central bank of issue, providing an explanation for any deviations from those amendments.

3. With regard to decisions to be taken pursuant to Articles 25(2c) and 85(6), the Executive Board shall seek the agreement of the central banks of issue referred to in Article 25(3), point (f), for matters relating to the currencies they issue. The agreement of each central bank of issue shall be deemed to be given, unless the central bank of issue proposes amendments or objects within 10 working days of the transmission of the draft decision. Where a central bank of issue proposes amendments or objects to a draft decision, it shall provide full and detailed reasons, in writing. Where a central bank of issue proposes amendments with respect to matters relating to the currency it issues, the decision shall be amended with respect to those matters. Where a central bank of issue objects with respect to matters relating to the currency it issues, those matters shall not be included in the decision.’;

(22)Article 24c is deleted;

(23)Article 24d is replaced by the following:

‘Article 24d

Decision making within the Executive Board in relation to third-country CCPs

Where the Executive Board takes decisions or other measures pursuant to Articles 25(2), 25(2a), 25(2b), 25(2c), 25(5), 25p, 85(6), 89(3b) and, for Tier 2 CCPs, also in accordance with Articles 25a, 25b, 25f to 25o, 25q, 41, 44, 46, 50 and 54, the Executive Board shall take such decisions and measures within 10 working days.

Where the Executive Board takes decisions or undertakes other measures pursuant to Articles other than those referred to in the first subparagraph, including Article 22c, it shall take such decisions and measures within three working days.’;

(24)Article 24e is deleted;

(25)Article 25c is amended as follows:

(a)in paragraph 2, point (a) is replaced by the following:

‘(a) the Chair of the Executive Board, who shall chair the college’;

(b)in paragraph 2, point (b) is deleted;

(c)paragraph 3 is replaced by the following;

‘3. The college members may request that the Executive Board discusses specific matters in relation to a CCP established in a third country. Such request shall be made in writing and shall include detailed reasoning for the request. The Executive Board shall duly consider such requests and provide an appropriate response.’;

(26)Article 54 is amended as follows:

(a)paragraphs 1, 2 and 3 are replaced by the following:

‘1. An interoperability arrangement, or any material change to an approved interoperability arrangement under Title V shall be subject to the prior approval of ESMA.

2. ESMA shall grant approval of the interoperability arrangement only where the CCPs involved have been authorised to clear under Article 17 or recognised under Article 25 or authorised under a pre-existing national authorisation regime for a period of at least three years, the requirements laid down in Article 52 are met and the technical conditions for clearing transactions under the terms of the arrangement allow for a smooth and orderly functioning of financial markets and the arrangement does not undermine the effectiveness of supervision.

3. Where ESMA considers that the requirements laid down in paragraph 2 are not met, it shall provide explanations in writing regarding its risk considerations to the other competent authorities and the CCPs involved.’;

(b)paragraph 4 is deleted;

(c)in paragraph 5, the first subparagraph is replaced by the following:

‘ESMA, after consulting the members of the ESCB and the ESRB, shall develop draft regulatory technical standards to further specify the requirements for CCPs to adequately manage the risks arising from interoperability arrangements. For that purpose, ESMA shall assess whether the provisions included therein are appropriate in the case of interoperability arrangements covering all types of products or contracts, including derivative contracts and non-financial instruments.’;

(27)Articles 60 to 63 are deleted;

(28)Article 64 is replaced by the following:

‘Article 64

Supervisory measures

Where, in carrying out its duties under this Regulation, ESMA finds that there are serious indications of the possible existence of facts liable to constitute one or more of the infringements listed in Annex I, ESMA shall, take actions in accordance with Article 39e of Regulation (EU) No 1095/2010.’;

(29)in Article 65, paragraph 1 is replaced by the following:

‘1. Where ESMA finds that a trade repository has, intentionally or negligently, committed one of the infringements listed in Annex I, it shall take actions in accordance with Article 39f of Regulation (EU) No 1095/2010 by adopting a decision imposing a fine in accordance with paragraph 2 of this Article and with Regulation (EU) No 1095/2010.’;

(30)Articles 66 to 69 are deleted;

(31)in Article 72, paragraphs 1 and 2 are replaced by the following:

‘1. ESMA shall charge fees to the trade repositories in accordance with this Regulation, with Article 39n of Regulation (EU) No 1095/2010 and in accordance with the delegated acts adopted pursuant to paragraph 3.

2. The amount of any fee charged to a trade repository shall be proportionate to the turnover of the trade repository concerned and the type of registration and supervision exercised by ESMA.’;

(32)Article 73 is replaced by the following:

‘Article 73

Supervisory measures by ESMA

Where ESMA finds that a trade repository has committed one of the infringements listed in Annex I, it shall take one or more of the decisions mentioned in Article 39h of Regulation (EU) No 1095/2010.’;

(33)in Article 74(1), the second sentence is replaced by the following:

‘Such specific supervisory tasks may, in particular, include the power to carry out requests for information and to conduct investigations and on-site inspections in accordance with Articles 39b to 39d of Regulation (EU) No 1095/2010.’;

(34)Article 82 is amended as follows:

(a)the following paragraph 2a is inserted:

‘2a. The power to adopt delegated acts referred to in Article 22a(10) and Article 22c(6) shall be conferred on the Commission for an indeterminate period of time from [OP insert date = date of entry into force of this amending Regulation].’;

(b)paragraph 3 is replaced by the following:

‘3. The delegation of power referred to in Article 1(6), Article 3(5), Article 4(3a), Article 7a(7), Article 11(3a), Article 11(12a), Article 22a(10), Article 22c(6), Article 25(2a), Article 25(6a), Article 25a(3), Article 25d(3), Article 25i(7), Article 25o, Article 70 and Article 72(3) may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.’;

(c)paragraph 6 is replaced by the following:

‘6. A delegated act adopted pursuant to Article 1(6), Article 3(5), Article 4(3a), Article 7a(7), Article 11(3a), Article 11(12a), Article 22a(10), Article 22c(6), Article 25(2a), Article 25(6a), Article 25a(3), Article 25d(3), Article 25i(7), Article 25o, Article 70 or Article 72(3) shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of three months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by three months at the initiative of the European Parliament or of the Council.’;

(35)in Article 84, paragraphs 1 and 2 are replaced by the following:

‘1. Competent authorities, ESMA, and other appropriate authorities shall, without undue delay, provide one another with the information required for the purposes of carrying out their duties.

2. Competent authorities, ESMA, other authorities and other bodies or natural and legal persons receiving confidential information in the exercise of their duties under this Regulation shall use it only in the course of their duties.’;

(36)in Article 88(1), point (c) is replaced by the following:

‘(c) CCPs authorised to offer services or activities in the Union that are established in the Union, and the services or activities which they are authorised to provide or perform, including the classes of financial instruments or non-financial instruments covered by their authorisation;’;

(37)in Article 89, the following paragraph 14 is added:

‘14. Following the entry into force of the amendments to Article 24a, the Chair of the CCP Supervisory Committee and the independent members appointed in accordance with Regulation (EU) 2019/2099 shall continue to contribute to ESMA’s work related to CCP supervision and regulation until the end of their term in office or until they decide to step down voluntarily, whichever date is earlier.’;

(38)Article 90 is deleted;

(39)Annex IV to Regulation (EU) No 648/2012 is amended in accordance with Annex II to this Regulation;

(40)Annex V to Regulation (EU) No 648/2012 is replaced by Annex III to this Regulation.

Article 3
Amendments to Regulation (EU) No 600/2014

Regulation (EU) No 600/2014 is amended as follows:

(1)Article 1 is amended as follows:

(a)in paragraph 1, the following points (h) to (j) are added:

‘(h)    the authorisation, operation and supervision of trading venues, including significant trading venues;

(i)    the authorisation and supervision of Pan-European Market Operators (‘PEMO’);

(j)    position management controls and position reporting for trading venues.’;

(b)paragraph 2 is replaced by the following:

‘2. This Regulation applies to investment firms, authorised under Directive 2014/65/EU and credit institutions authorised under Directive 2013/36/EU of the European Parliament and of the Council* when providing investment services and/or performing investment activities, to market operators and to PEMOs, including any trading venues they operate.’;

(c)paragraph 4 is replaced by the following:

‘4. Title VI of this Regulation also applies to CSDs, CCPs, other clearing facilities and persons with proprietary rights to benchmarks.’;

(d)paragraph 5b is replaced by the following:

‘5b. All multilateral systems shall operate either in accordance with the provisions of Title Ia, Chapter 1, of this Regulation concerning regulated markets or in accordance with the provisions of Title Ia, Chapter 2, of this Regulation concerning MTFs or OTFs.

_______________________________

*    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. ELI:  http://data.europa.eu/eli/dir/2013/36/oj ).’;

(2)Article 2 is amended as follows:

(a)paragraph 1 is amended as follows:

(i)point (8a) is replaced by the following:

‘(8a)SME growth market’ means an MTF that is registered as an SME growth market in accordance with Article 2y;’;

(ii)the following point (8b) is inserted:

‘(8b) ‘small and medium-sized enterprises’ or ‘SME’ means companies that had an average market capitalisation of less than EUR 200 000 000 on the basis of end-year quotes for the previous three calendar years;’;

(iii)point (10) is replaced by the following:

‘(10)    ‘market operator’ means a person or persons who manages and/or operates the business of a regulated market;’;

(iv)the following point (10a) is inserted:

‘(10a)    ‘pan-European market operator’ or ‘PEMO’ means a person or persons who manages and/or operates more than one trading venue in more than one Member State, and which is authorised and functions in accordance with Chapter 3 of Title Ia of this Regulation;’;

(v)points (13) to (16) are replaced by the following:

‘(13)    ‘regulated market’ means a multilateral system operated and/or managed by a market operator or a PEMO, which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments – in the system and in accordance with its non-discretionary rules – in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems;

(14)    ‘multilateral trading facility’ or ‘MTF’ means a multilateral system, operated by an investment firm or a market operator or a PEMO, which brings together multiple third-party buying and selling interests in financial instruments – in the system and in accordance with non-discretionary rules – in a way that results in a contract;

(15)    ‘organised trading facility’ or ‘OTF’ means a multilateral system which is not a regulated market or an MTF and in which multiple third-party buying and selling interests in bonds, structured finance products, emission allowances or derivatives are able to interact in the system in a way that results in a contract;

(16)    ‘trading venue’ means a regulated market, an MTF or an OTF;’;

(vi)the following points (16b) to (16d) are inserted:

‘(16b)    ‘significant trading venue’ means a trading venue considered significant in accordance with Article 38fa;

(16c)    ‘group’ means a group as defined in point (34) of Article 4(1) of Directive 2014/65/EU;

(16d)    ‘direct electronic access’ means direct electronic access as defined in point (41) of Article 4(1) of Directive 2014/65/EU;’;

(vii)point (18) is replaced by the following:

‘(18)    ‘competent authority’ means any of the following:

(a)    a competent authority as defined in Article 4(1), point (26), of Directive 2014/65/EU;

(b)    ESMA, in the cases set out in Article 38fa and in Articles 2q(1), 2r(1), and 2t(1);

(c)    ESMA, for the authorisation and supervision of data reporting services providers, 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;’;

(viii)the following point (18a) is inserted:

‘(18a)    ‘national surveillance authority’ means the authority designated pursuant to Article 67 of Directive 2014/65/EU of the Member State where a trading venue is situated or operated, and where ESMA is the competent authority pursuant to Article 38fa;’;

(ix)point (20) is replaced by the following:

‘(20) ‘branch’ means a place of business other than the head office which is a part of an investment firm or a regulated market, which has no legal personality and which provides the services or activity for which the investment firm or regulated market has been authorised; all the places of business set up in the same Member State by an investment firm or a regulated market with headquarters in another Member State shall be regarded as a single branch;’;

(x)the following point (20a) is inserted:

‘(20a)    ‘qualifying holding’ means a direct or indirect holding in a market operator which represents 10 % or more of the capital or of the voting rights, as set out in Articles 9 and 10 of Directive 2004/109/EC of the European Parliament and of the Council*, taking into account the conditions regarding aggregation thereof laid down in Article 12(4) and (5) of that Directive, or which makes it possible to exercise a significant influence over the management of the market operator in which that holding subsists;’;

(xi)point (31) is replaced by the following:

‘(31)    ‘CCP’ means a CCP as defined in of Article 2, point (1), of Regulation (EU) No 648/2012;’;

(xii)the following point (31a) is inserted:

‘(31a)    ‘central securities depository’ or ‘CSD’ means a central securities depository as defined of Article 2(1), point (1), of Regulation (EU) No 909/2014;’;

(xiii)point (36b) is replaced by the following:

‘(36b)    ‘core market data’ means:

(a)    all of the following data on a given share or ETF at any given timestamp:

(i)    for continuous order books, the five best bids and offers with their corresponding volume;

(ii)    for auction trading systems, the price at which the trading algorithm would be best satisfied and the volume potentially executed at that price by participants in that system;

(iia)    for systematic internalisers, the five best bid and offer quotes published pursuant to Article 14 with their corresponding volume;

(iii)    the transaction price and volume executed at that price;

(iiia)    the volume-weighted closing price resulting from all closing auctions operated by trading venues that are data contributors; 

(iv)    for transactions, the type of trading system and the applicable waivers and deferrals;

(v)    the market identifier code uniquely identifying the trading venue and, for other execution venues, the identifier code identifying the type of execution venue;

(vi)    the standardised instrument identifier that applies across execution venues;

(vii)    the timestamp information on the following, as applicable:

(1)    the execution of the transaction and any amendment thereto;

(2)    the entry of the five best bids and offers into the order book;

(3)    the indication, in an auction trading system, of the prices or volumes,

(4)    the publication by the trading venues of the elements listed in points (1), (2) and (3);

(5)    the entry of the five best bid and offer quotes by the systematic internaliser;

(6)    the dissemination of core market data;

(b)    all of the following data on a given bond or OTC derivative at any given timestamp:

(i)     the transaction price and quantity or size executed at that price;

(ii)     the market identifier code uniquely identifying the trading venue and, for other execution venues, the identifier code identifying the type of execution venue;

(iii)     for bonds, the standardised instrument identifier that applies across execution venues;

(iv)     for OTC derivatives, the identifying reference data as referred to in Article 27(1), second subparagraph;

(v)     the timestamp information on the following:

(1)    the execution of the transaction and any amendment thereto;

(2)     the publication of the transaction by the trading venues;

(3)     the dissemination of core market data;

(vi)    the type of trading system and the applicable waivers and deferrals;’;

(xiv)the following points (51) to (54) are added:

‘(51)    ‘outsourcing’ means an arrangement of any form between an entity that is an investment firm, a market operator or a PEMO operating a trading venue and a service provider by which that service provider performs a process, a service or an activity in relation to that trading venue that would otherwise be undertaken by that entity itself;

(52)    ‘matched principal trading’ means a transaction where the facilitator interposes itself between the buyer and the seller to the transaction in such a way that it is never exposed to market risk throughout the execution of the transaction, with both sides executed simultaneously, and where the transaction is concluded at a price where the facilitator makes no profit or loss, other than a previously disclosed commission, fee or charge for the transaction;

(53)    ‘algorithmic trading’ means algorithmic trading as defined in Article 4(1), point (39), of Directive 2014/65/EU;

(54)    ‘high-frequency algorithmic trading’ means high-frequency algorithmic trading as defined in Article 4(1), point (40), of Directive 2014/65/EU.’;

(b)the following paragraph 4 is added:

‘4. ESMA shall issue recommendations to specify the methodology to calculate the volume-weighted closing price as referred to in paragraph 1, point 36b(a)(iiia), in accordance with the procedure laid down in Article 16 of Regulation (EU) No 1095/2010.

_________________________________________

*    Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38, ELI: http://data.europa.eu/eli/dir/2004/109/oj ).’;

(3)the following Title Ia is inserted:

‘TITLE Ia
TRADING VENUES

CHAPTER 1

Requirements for regulated markets

Article 2a
Authorisation of a regulated market and applicable law

1. Any system that falls within the definition of regulated market shall obtain an authorisation before commencing its activities from the competent authority of the Member State where it is situated or operated, or ESMA in the cases referred to in Article 38fa.

2. A regulated market shall be authorised by the competent authority where:

(a)both the market operator and the regulated market that the market operator intends to operate comply with the requirements laid down in this Chapter;

(b)the market operator is a legal person established in the Union.

3. The market operator shall perform tasks relating to the organisation and operation of the regulated market under the supervision of the competent authority of the Member State where the regulated market is situated or operated, or ESMA in the cases referred to in Article 38fa, and, where expressly provided for by this Regulation, of the national surveillance authority. The market operator may perform ancillary activities that are linked to the operation of a regulated market.

Member States shall not impose any additional requirements on the authorisation and operation of regulated markets than those set out in this Regulation.

4. The market operator shall be responsible for ensuring that it and the regulated market that it operates comply at all times with the requirements laid down in this Regulation.

5. The market operator shall be entitled to exercise the rights that correspond to the regulated market that it operates by virtue of this Regulation.

6. A market operator shall, without undue delay, inform the competent authority of any substantive changes affecting the compliance with the conditions for authorisation laid down in this Chapter.

7. Without prejudice to any relevant provisions of Regulation (EU) No 596/2014 or of Directive 2014/57/EU, the public law governing the trading conducted under the systems of the regulated market shall be that of the Member State where the regulated market is situated or operated.

Article 2b
Procedures for granting and refusing applications for authorisation of regulated markets

1. The applicant market operator shall submit an application providing all information necessary to enable the competent authority to confirm that the market operator has put in place, at the time of initial authorisation of the regulated market, all the necessary arrangements to ensure that both the market operator and the systems of the regulated market that the market operator intends to operate meet the requirements laid down in this Chapter, including a programme of operations setting out, inter alia, the types of services envisaged and the organisational structure.

2. The competent authority shall assess whether the application for authorisation is complete within 20 working days of receipt of the application.

Where the application is not complete, the competent authority shall inform in writing the applicant of the additional information to be provided and set a deadline by which the market operator is to provide additional information.

After assessing the application as complete, the competent authority shall notify the market operator accordingly.

3. The competent authority shall, within six months of receipt of a complete application, assess the compliance with this Chapter of the market operator and of the systems of the regulated market that the market operator intends to operate. It shall adopt a reasoned decision granting or refusing authorisation and shall notify the applicant market operator accordingly within five working days of adoption. It shall also notify the national surveillance authority.

Article 2c
Withdrawal of authorisation

1. The competent authority may withdraw the authorisation issued to a regulated market, where it:

(a)does not make use of the authorisation within 12 months, expressly renounces the authorisation or has not operated for the preceding six months;

(a)has obtained the authorisation by making false statements or by any other irregular means;

(b)no longer meets the conditions under which authorisation was granted;

(c)has seriously and systematically infringed this Regulation.

2. Where ESMA is the competent authority, it shall, without undue delay, notify the national surveillance authority of a decision to withdraw the authorisation of a regulated market.

Article 2d
Requirements for the management body of a market operator

1. All members of the management body of a market operator shall at all times be of sufficiently good repute, possess sufficient knowledge, skills and experience to perform their duties. The overall composition of the management body shall reflect an adequately broad range of experience.

2. Members of the management body shall fulfil the following requirements:

(a)all members of the management body shall commit sufficient time to perform their functions in the market operator. The number of directorships a member of the management body can hold, in any legal entity, at the same time shall take into account individual circumstances and the nature, scale and complexity of the market operator’s activities.

Unless representing the Member State in which the market operator is established, members of the management body of market operators that are significant in terms of their size, internal organisation and the nature, the scope and the complexity of their activities shall not at the same time hold positions exceeding more than one of the following combinations:

(i)one executive directorship with two non-executive directorships;

(ii)four non-executive directorships.

Executive or non-executive directorships held within the same group or undertakings where the market operator owns a qualifying holding shall be considered to be one single directorship.

The competent authority may authorise members of the management body to hold one additional non-executive directorship. Where ESMA is not the competent authority, competent authorities shall regularly inform ESMA of such authorisations.

Directorships in organisations which do not pursue predominantly commercial objectives shall be exempt from the limitation on the number of directorships a member of a management body can hold.

(b)The management body shall possess adequate collective knowledge, skills and experience to be able to understand the market operator’s activities, including the main risks.

(c)Each member of the management body shall act with honesty, integrity and independence of mind to effectively assess and challenge the decisions of the senior management where necessary and to effectively oversee and monitor decision-making.

3. Market operators shall devote adequate human and financial resources to the induction and training of members of the management body.

4. Where, under national law, the management body has competence in the process of selection and appointment of any of its members, the competent authority shall assess whether, taking into account the size and the internal organisation of the market operator, as well as the nature, scope and complexity of its activities, the market operator shall establish a nomination committee composed of members of the management body who do not perform any executive function in the market operator concerned.

Where established, the nomination committee shall carry out the following:

(a)identify and recommend, for the approval of the management body or for approval of the general meeting, candidates to fill management body vacancies. In doing so, the nomination committee shall evaluate the balance of knowledge, skills, diversity and experience of the management body. Further, the committee shall prepare a description of the roles and capabilities for a particular appointment, and assess the time commitment expected. Furthermore, the nomination committee shall decide on a target for the representation of the underrepresented gender in the management body and prepare a policy on how to increase the number of the underrepresented gender in the management body in order to meet that target;

(b)periodically, and at least annually, assess the structure, size, composition and performance of the management body, and make recommendations to the management body with regard to any changes;

(c)periodically, and at least annually, assess the knowledge, skills and experience of individual members of the management body and of the management body collectively, and report to the management body accordingly;

(d)periodically review the policy of the management body for selection and appointment of senior management and make recommendations to the management body.

In performing its duties, the nomination committee shall, to the extent possible and on an ongoing basis, take account of the need to ensure that the management body’s decision making is not dominated by any one individual or small group of individuals in a manner that is detrimental to the interests of the market operator as a whole.

In performing its duties, the nomination committee shall be able to use any forms of resources it deems appropriate, including external advice.

5. Market operators and their respective nomination committees shall engage a broad set of qualities and competences when recruiting members to the management body and, for that purpose, shall put in place a policy promoting diversity on the management body.

6. The management body of a market operator shall define and oversee the implementation of the governance arrangements that ensure effective and prudent management of an organisation, including the segregation of duties in the organisation and the prevention of conflicts of interest, and in a manner that promotes the integrity of the market.

The management body shall monitor and periodically assess the effectiveness of the market operator’s governance arrangements and take appropriate steps to address any deficiencies.

Members of the management body shall have adequate access to information and documents which are needed to oversee and monitor management decision-making.

7. The competent authority shall refuse authorisation where it is not satisfied that the members of the management body of the market operator are of sufficiently good repute, possess sufficient knowledge, skills and experience and commit sufficient time to perform their functions, or where there are objective and demonstrable grounds for believing that the management body of the market operator may pose a threat to its effective, sound and prudent management and to the adequate consideration of the integrity of the market.

In the process of authorisation of a regulated market, the person or persons who effectively direct the business and the operations of another regulated market already authorised in the Union are deemed to comply with the requirements laid down in paragraph 1.

Where the conduct of a member of the management body of a market operator is likely to be prejudicial to its effective, sound and prudent management and to the adequate consideration of the integrity of the market, the competent authority shall take appropriate measures, which may include removing that member from the management body.

8. A market operator shall notify the competent authority of the names of all members of its management body and of any changes to its membership, along with all information needed to assess whether the market operator complies with paragraphs 1 to 6.

9. ESMA shall issue guidelines on the following:

(a)the notion of sufficient time commitment of a member of the management body to perform that member’s functions, in relation to the individual circumstances and the nature, scale and complexity of activities of the market operator;

(b)the notion of adequate collective knowledge, skills and experience of the management body as referred to in paragraph 2, point (b);

(c)the notions of honesty, integrity and independence of mind of a member of the management body as referred to in paragraph 2, point (c);

(d)the notion of adequate human and financial resources devoted to the induction and training of members of the management body as referred to in paragraph 3;

(e)the notion of diversity to be taken into account for the selection of members of the management body as referred to in paragraph 5.

Article 2e

Requirements relating to persons exercising significant influence over the management of the regulated market

1. The persons who are in a position to exercise, directly or indirectly, significant influence over the management of the regulated market shall be suitable.

2. The market operator of the regulated market shall:

(a)provide the competent authority with, and make public, information regarding the ownership of market operator, and, where relevant, for regulated markets authorised pursuant to Directive 2014/65/EU as applicable before [OP: please insert date of entry into application of this Regulation], the ownership of the regulated market, and in particular, the identity and scale of interests of any parties in a position to exercise significant influence over the management;

(b)inform the competent authority of and make public any transfer of ownership which gives rise to a change in the identity of the persons exercising significant influence over the operation of the regulated market.

3. The competent authority shall refuse to approve proposed changes to the controlling interests of the market operator and, where relevant, of the regulated market, where there are objective and demonstrable grounds for believing that they would pose a threat to the sound and prudent management of the regulated market.

If changes to the controlling interests of the market operator and, where relevant, of the regulated market, take place despite the opposition of the competent authority, that competent authority shall be able to order the annulment of the corresponding votes cast.

4. Where the persons referred to in paragraph 1 exercise an influence which is likely to be prejudicial to the sound and prudent management of a regulated market, the competent authority shall take appropriate measures to put an end to that situation. Such measures may include applications for judicial orders, the imposition of sanctions against directors and those responsible for management, and the suspension of the exercise of the voting rights attached to the shares held by the shareholders or members in question.

5. Member States shall not impose any additional requirements for transfers of ownership which give rise to changes to the controlling interests of the market operator and, where relevant, of the regulated market.

Article 2f
Organisational requirements

1. Market operators shall ensure that a regulated market that they operate:

(a)has arrangements to identify clearly and manage the potential adverse consequences, for the operation of the regulated market or for its members or participants, of any conflict of interest between the interest of the regulated market, the market operator and its owners, and the sound functioning of the regulated market, and in particular where such conflicts of interest might prove prejudicial to the accomplishment of any functions delegated to the regulated market by the competent authority;

(b)is adequately equipped to manage the risks to which it is exposed, including to manage ICT risk in accordance with Chapter II of Regulation (EU) 2022/2554, to implement appropriate arrangements and systems for identifying significant risks to its operation, and to put in place effective measures to mitigate those risks;

(c)has transparent and non-discretionary rules and procedures that provide for fair and orderly trading and establish objective criteria for the efficient execution of orders;

(d)has effective arrangements to facilitate the efficient and timely finalisation of the transactions executed under its systems;

(e)has available, at the time of authorisation and on an ongoing basis, sufficient financial resources to facilitate its orderly functioning, having regard to the nature and extent of the transactions concluded on the market and the range and degree of the risks to which it is exposed;

(f)has arrangements in place to ensure that it meets data quality standards pursuant to Article 22b;

(g)has at least three materially active members or users, each having the opportunity to interact with all the others in respect of price formation.

Where, for the purposes of compliance with the requirements under the first subparagraph, points (a), (b), (d), and (f), a market operator deploys resources of or relies on the performance of functions by another entity located in the Union that belongs to the same group as that market operator, reliance on that entity shall not constitute outsourcing for the purposes of this Regulation, provided that the conditions set out in paragraph 1a are met. The location within the Union of the entity that deploys resources or performs functions for the compliance by a market operator with the requirements referred to in the first subparagraph, points (a), (b), (d), and (f), shall not be relevant in the assessment of that compliance by the competent authority.

1a. The reliance of a market operator on another entity located in the Union and that belongs to the same group as that market operator shall not constitute outsourcing pursuant to paragraph 1, provided that the following conditions are fulfilled:

(a)the market operator and another entity in the group that will deploy its resources or will perform functions for that regulated market have put in place arrangements to ensure that that entity within the same group cooperates with the competent authority and, where relevant, the national surveillance authority of the regulated market in connection with that deployment of resources or with that performance of functions;

(b)the market operator has put in place adequate mechanisms to identify clearly and manage the potential adverse consequences, for the operation of the regulated market or for its members or participants, of any conflict of interest between the regulated market, the market operator and another entity in the group that will deploy its resources or will perform functions for that regulated market.

When deploying resources of or relying on the performance of functions by another entity within the same group, market operators shall remain fully responsible for discharging all of their obligations under this Regulation and under Directive 2014/65/EU.

Member States shall not impose any additional requirements for the deployment of resources or reliance on the performance of functions, pursuant to paragraph 1, by another entity located in the Union within the same group as the market operator.

2. Market operators shall not execute client orders against proprietary capital, or engage in matched principal trading on any of the regulated markets they operate.

Article 2g
Systems resilience, circuit breakers and electronic trading

1. The market operator of a regulated market shall ensure that the regulated market establishes and maintains its operational resilience in accordance with the requirements laid down in Chapter II of Regulation (EU) 2022/2554 to ensure its trading systems are resilient, have sufficient capacity to deal with peak order and message volumes, are able to ensure orderly trading under conditions of severe market stress, are fully tested to ensure such conditions are met and are subject to effective business continuity arrangements, including ICT business continuity policy and plans and ICT response and recovery plans established in accordance with Article 11 of Regulation (EU) 2022/2554, to ensure continuity of its services if there is any failure of its trading systems.

2. The market operator of a regulated market shall ensure that the regulated market has in place:

(a)written agreements with all investment firms pursuing a market making strategy on the regulated market;

(b)schemes to ensure that a sufficient number of investment firms participate in such agreements which require them to post firm quotes at competitive prices with the result of providing liquidity to the market on a regular and predictable basis, where such a requirement is appropriate to the nature and scale of the trading on that regulated market.

3. The written agreement referred to in paragraph 2 shall at least specify:

(a)the obligations of the investment firm in relation to the provision of liquidity and where applicable any other obligation arising from participation in the scheme referred to in paragraph 2, point (b);

(b)without prejudice to Article 39a, any incentives in terms of rebates or otherwise offered by the regulated market to an investment firm so as to provide liquidity to the market on a regular and predictable basis and, where applicable, any other rights accruing to the investment firm as a result of participation in the scheme referred to in paragraph 2, point (b).

The market operator of the regulated market shall monitor and enforce compliance by investment firms with the requirements of such binding written agreements. The market operator of the regulated market shall inform the competent authority about the content of the binding written agreement and shall, upon request, provide all further information to the competent authority necessary to enable the competent authority to satisfy itself of compliance by the regulated market with this paragraph. Where ESMA is the competent authority, the national surveillance authority may request ESMA to share the content of the binding written agreements relevant to the supervisory activity of that national surveillance authority.

4. The market operator of a regulated market shall ensure that the regulated market has in place effective systems, procedures and arrangements to reject orders that exceed pre-determined volume and price thresholds or are clearly erroneous.

5. The market operator of a regulated market shall ensure that the regulated market is able to temporarily halt or constrain trading in emergency situations or in the event of a significant price movement in a financial instrument on that market or a related market during a short period and, in exceptional cases, to be able to cancel, vary or correct any transaction. The market operator of a regulated market shall ensure that the regulated market sets the parameters for halting or constraining trading that are appropriately calibrated in a way which takes into account the liquidity of different asset classes and sub-classes, the nature of the market model and the types of users, and is sufficient to avoid significant disruptions to the orderliness of trading.

The market operator of a regulated market shall ensure that the regulated market reports the parameters for halting trading and any material changes to those parameters to the competent authority in a consistent and comparable manner. Where the competent authority is not ESMA, the competent authority shall report those parameters to ESMA. Where a regulated market which is material in terms of liquidity in that financial instrument halts trading, in any Member State, the market operator of that regulated market shall ensure that the regulated market has the necessary systems and procedures in place to notify its competent authority, its national surveillance authority and ESMA, where ESMA is not its competent authority. The competent authority and, where ESMA is the competent authority, the national surveillance authority shall then notify all other competent authorities and, where relevant, national surveillance authorities in the Union in order for them to coordinate a market-wide response and determine whether it is appropriate to halt trading on other venues on which the financial instrument is traded until trading resumes on the original market.

The market operator of a regulated market shall ensure that the regulated market discloses publicly on its website information about the circumstances leading to the halting or constraining of trading and on the principles for establishing the main technical parameters used to do so.

Where a regulated market does not halt or constrain trading as referred to in the first subparagraph, despite the fact that a significant price movement in a financial instrument or related financial instruments has led to disorderly trading conditions on one or several markets, the competent authority or, where ESMA is the competent authority, the national surveillance authority shall be able to take appropriate measures to re-establish the normal functioning of the markets, including using the supervisory powers referred to in Article 69(2), points (m) to (p) of Directive 2014/65/EU. The national surveillance authority shall notify ESMA of the measures taken without undue delay.

6. The market operator of a regulated market shall ensure that the regulated market has in place effective systems, procedures and arrangements, including requiring members or participants to carry out appropriate testing of algorithms and providing environments to facilitate such testing in accordance with the requirements laid down in Chapters II and IV of Regulation (EU) 2022/2554, to ensure that algorithmic trading systems cannot create or contribute to disorderly trading conditions on the market and to manage any disorderly trading conditions which do arise from such algorithmic trading systems, including systems to limit the ratio of unexecuted orders to transactions that may be entered into the system by a member or participant, to be able to slow down the flow of orders if there is a risk of its system capacity being reached and to limit and enforce the minimum tick size that may be executed on the market.

7. The market operator of a regulated market that permits direct electronic access shall ensure that the regulated market has in place effective systems procedures and arrangements to ensure that members or participants are only permitted to provide direct electronic access if they are investment firms authorised under Directive 2014/65/EU or credit institutions authorised under Directive 2013/36/EU, that appropriate criteria are set and applied regarding the suitability of persons to whom such access may be provided and that the member or participant retains responsibility for orders and trades executed using that service in relation to the requirements of this Regulation.

The market operator of a regulated market shall ensure that the regulated market sets appropriate standards regarding risk controls and thresholds on trading through such access and shall be able to distinguish and if necessary to stop orders or trading by a person using direct electronic access separately from other orders or trading by the member or participant.

The market operator of a regulated market shall ensure that the regulated market has arrangements in place to suspend or terminate the provision of direct electronic access by a member or participant to a client in the case of non-compliance with this paragraph.

8. The market operator of a regulated market shall ensure that the rules of the regulated market on co-location services are transparent, fair and non-discriminatory.

9. The market operator of a regulated market shall ensure that the regulated market has fee structures including execution fees, ancillary fees and any rebates that are transparent, fair and non-discriminatory and that they do not create incentives to place, modify or cancel orders or to execute transactions in a way which contributes to disorderly trading conditions or market abuse. In particular, the market operator of a regulated market shall ensure that the regulated market imposes market making obligations in individual shares or a suitable basket of shares in exchange for any rebates that are granted.

A regulated market may adjust its fees for cancelled orders according to the length of time for which the order was maintained and calibrate the fees to each financial instrument to which they apply.

A regulated market may impose a higher fee for placing an order that is subsequently cancelled than an order which is executed and impose a higher fee on participants placing a high ratio of cancelled orders to executed orders and on those operating a high-frequency algorithmic trading technique in order to reflect the additional burden on system capacity.

10. The market operator of a regulated market shall ensure that the regulated market be able to identify, by means of flagging from members or participants, orders generated by algorithmic trading, the different algorithms used for the creation of orders and the relevant persons initiating those orders. That information shall be available upon request to competent authorities and, where ESMA is the competent authority, to national surveillance authorities

The market operator of a regulated market shall ensure that the regulated market makes available to the competent authority or, where ESMA is the competent authority, to the national surveillance authority data relating to the order book or give the competent authority or, where relevant to the national surveillance authority access to the order book, upon request, so that it is able to monitor trading. The national surveillance authority shall, in turn, report that data to ESMA, upon request.

Article 2h
Tick sizes

1. The market operator of a regulated market shall ensure that the regulated market adopts tick‐size regimes in shares, depositary receipts, exchange‐traded funds, certificates and other similar financial instruments and in any other financial instrument for which regulatory technical standards are developed in accordance with Article 2zg(3), point (k). The application of tick sizes shall not prevent regulated markets from matching orders large in scale at mid‐point within the current bid and offer prices.

2. The tick size regimes referred to in paragraph 1 shall:

(a)be calibrated to reflect the liquidity profile of the financial instrument in different markets and the average bid-ask spread, taking into account the desirability of enabling reasonably stable prices without unduly constraining further narrowing of spreads;

(b)adapt the tick size for each financial instrument appropriately.

In respect of shares with an International Securities Identification Number (ISIN) issued outside the European Economic Area (EEA), or shares which have an EEA ISIN and which are traded on a third-country venue in the local currency or in a non-EEA currency, as referred to in Article 23(1), point (a), for which the venue that is the most relevant market in terms of liquidity is in a third country, regulated markets may provide for the same tick size that applies on that venue.

Article 2i
Admission of financial instruments to trading

1. The market operator of a regulated market shall ensure that the regulated market has clear and transparent rules regarding the admission of financial instruments to trading.

Those rules shall ensure that any financial instruments admitted to trading on a regulated market are capable of being traded in a fair, orderly and efficient manner and, in the case of transferable securities, are freely negotiable.

Member States shall not restrict the scope of financial instruments that can be admitted to trading on a regulated market on the ground that such instruments shall not be made available to non-professional investors in their jurisdiction.

2. In the case of derivatives, the rules referred to in paragraph 1 shall ensure in particular that the design of the derivative contract allows for its orderly pricing as well as for the existence of effective settlement conditions.

3. In addition to the obligations set out in paragraphs 1 and 2, the market operator of a regulated market shall ensure that the regulated market establishes and maintains effective arrangements to verify that issuers of transferable securities that are admitted to trading on the regulated market comply with their obligations under Union law in respect of initial, ongoing or ad hoc disclosure obligations.

The market operator of a regulated market shall ensure that the regulated market establishes arrangements which facilitate their members or participants in obtaining access to information which has been made public under Union law.

4. The market operator of a regulated market shall ensure that the regulated market establishes the necessary arrangements to review regularly the compliance with the admission requirements of the financial instruments which it admits to trading.

5. A transferable security that has been admitted to trading on a regulated market can subsequently be admitted to trading on other regulated markets, even without the consent of the issuer and in compliance with the relevant provisions of Regulation (EU) 2017/1129. The issuer shall be informed by the regulated market of the fact that its securities are traded on that regulated market. The issuer shall not be subject to any obligation to provide information required under paragraph 3 directly to any regulated market which has admitted the issuer’s securities to trading without its consent.

Article 2j
Specific conditions for the admission to trading of shares

1. The market operator of a regulated market shall ensure that the regulated market requires that the foreseeable market capitalisation of the company for whose shares admission to trading is sought, or if that cannot be assessed, that company’s capital and reserves, including profit and loss, from the last financial year, shall be at least EUR 1 000 000 or an equivalent amount in a national currency other than the euro.

2. Paragraph 1 shall not apply to the admission to trading of shares fungible with shares already admitted to trading.

3. Where, as a result of an adjustment of the equivalent amount in a national currency other than the euro, the market capitalisation expressed in the national currency remains for a period of one year at least 10 % more, or at least 10 % less, than EUR 1 000 000, the market operator shall, within the 12 months following the expiry of that period, ensure that the regulated market adjusts its rules to comply with paragraph 1.

4. The market operator of a regulated market shall ensure that the regulated market requires that at least 10 % of the subscribed capital represented by the class of shares concerned by the application for admission to trading is held by the public at the time of admission to trading.

5. By way of derogation from paragraph 4, Member States may require that regulated markets establish, at the time of admission, at least one of the following requirements for an application for admission to trading of shares:

(a)a sufficient number of shares is held by the public;

(b)the shares are held by a sufficient number of shareholders;

(c)the market value of the shares held by the public represents a sufficient level of subscribed capital in the class of shares concerned.

6. Where admission to trading is sought for shares fungible with shares already admitted to trading, regulated markets shall assess, to fulfil the requirement laid down in paragraph 4, whether a sufficient number of shares has been distributed to the public in relation to all shares issued and not only in relation to the shares fungible with shares already admitted to trading.

Article 2k
Suspension and removal of financial instruments from trading on a regulated market

1. Without prejudice to the right of the competent authority or, where ESMA is the competent authority, the national surveillance authority under Article 69(2) of Directive 2014/65/EU to demand suspension or removal of a financial instrument from trading, a market operator may suspend or remove from trading a financial instrument which no longer complies with the rules of the regulated market unless such suspension or removal would be likely to cause significant damage to the investors’ interests or the orderly functioning of the market.

2. A market operator that suspends or removes from trading a financial instrument shall also suspend or remove the derivatives as referred to in points (4) to (10) of Section C of Annex I to Directive 2014/65/EC that relate or are referenced to that financial instrument where necessary to support the objectives of the suspension or removal of the underlying financial instrument. The market operator shall make public the suspension or removal of the financial instrument and of any related derivative and communicate it to its competent authority and, where ESMA is the competent authority, its national surveillance authority.

Market operators operating other regulated markets, and market operators and investment firms operating MTFs, OTFs and systematic internalisers, which trade the same financial instrument as referred to in paragraph 1 or derivatives as referred to in points (4) to (10) of Section C of Annex I to Directive 2014/65/EC that relate or are referenced to the financial instrument referred to in paragraph 1, shall upon gaining knowledge of such suspension or removal and without undue delay also suspend or remove that financial instrument or derivatives from trading, where the suspension or removal is due to suspected market abuse, a take-over bid or the non-disclosure of inside information about the issuer or financial instrument infringing Articles 7 and 17 of Regulation (EU) No. 596/2014, unless the competent authority or, where ESMA is the competent authority, the national surveillance authority deems that the suspension or removal could cause significant damage to the investors’ interests or the orderly functioning of the market.

The market operators, investment firms and systematic internalisers referred to in the previous subparagraph shall make public the suspension or removal of the financial instrument and of any related derivative. This paragraph applies also when the suspension from trading of a financial instrument or derivatives as referred to in points (4) to (10) of Section C of Annex I to Directive 2014/65/EC that relate or are referenced to that financial instrument is lifted.

This paragraph shall also apply in the case where the decision to suspend or remove from trading a financial instrument or derivatives as referred to in points (4) to (10) of Section C of Annex I to Directive 2014/65/EC that relate or are referenced to that financial instrument is taken by the competent authority or, where ESMA is the competent authority, the national surveillance authority pursuant to Article 69(2), points (m) and (n), of Directive 2014/65/EU.

Article 2l
Access to a regulated market

1. The market operator of a regulated market shall ensure that the regulated market establishes, implements and maintains transparent and non-discriminatory rules, based on objective criteria, governing access to or membership of the regulated market.

2. The rules referred to in paragraph 1 shall specify any obligations for the members or participants arising from:

(a)the constitution and administration of the regulated market;

(b)rules relating to transactions on the market;

(c)professional standards imposed on the staff of the investment firms or credit institutions that are operating on the market;

(d)the conditions established, for members or participants other than investment firms and credit institutions, under paragraph 3;

(e)the rules and procedures for the clearing and settlement of transactions concluded on the regulated market.

3. Regulated markets may admit as members or participants investment firms, credit institutions authorised under Directive 2013/36/EU, and other persons who:

(a)are of sufficient good repute;

(b)have a sufficient level of trading ability, competence and experience;

(c)have, where applicable, adequate organisational arrangements;

(d)have sufficient resources for the role they are to perform, taking into account the different financial arrangements that the regulated market may have established in order to guarantee the adequate settlement of transactions.

3a. When admitting as members or participants persons that are already members or participants of another regulated market, regulated markets shall deem that those persons comply with paragraph 3, point (a), without any further assessment. Regulated markets shall also deem that those persons comply with paragraph 2, point (c), or paragraph 3, points (b) and (c), as applicable, without any further assessment, where they request to become members or participants with respect to trading in a class of financial instruments for which they are already members or participants of another regulated market.

4. For the transactions concluded on a regulated market, members and participants are not obliged to apply to each other the obligations laid down in Articles 24, 25, 27 and 28 of Directive 2014/65/EU. However, the members or participants of the regulated market shall apply the obligations provided for in Articles 24, 25, 27 and 28 of Directive 2014/65/EU with respect to their clients when they, acting on behalf of their clients, execute their orders on a regulated market.

5. The rules on access to or membership of or participation in a regulated market shall provide for the direct or remote participation of investment firms and credit institutions. Those rules shall not discriminate between direct or remote participation or impose any additional restrictions on either form of participation.

6. Market operators shall communicate, on a regular basis, to the competent authority and, where ESMA is the competent authority, to the national surveillance authority, the list of the members or participants of the regulated markets they operate.

Article 2m
Notification of amendments to the rules of the regulated market

1. A market operator shall notify the competent authority of any amendment to the rules of the regulated market it operates at least 30 days before that amendment takes effect.

2. The competent authority shall have the power to require a market operator to amend the rules of the regulated market it operates where it finds that those rules do not comply with the requirements under this Regulation.

Article 2n 
Monitoring of compliance with the rules of the regulated market and with other legal obligations

1. The market operator of a regulated market shall ensure that the regulated market establishes and maintains effective arrangements and procedures including the necessary resources for the regular monitoring of the compliance by their members or participants with their rules. Regulated markets shall monitor orders sent including cancellations and the transactions undertaken by their members or participants under their systems in order to identify infringements of those rules, disorderly trading conditions or conduct that may indicate behaviour that is prohibited under Regulation (EU) No 596/2014 or system disruptions in relation to a financial instrument and shall deploy the resources necessary to ensure that such monitoring is effective.

2. The market operator of a regulated market shall immediately inform its competent authority and, where ESMA is the competent authority, the national surveillance authority, of significant infringements of their rules or disorderly trading conditions or conduct that may indicate behaviour that is prohibited under Regulation (EU) No 596/2014 or system disruptions in relation to a financial instrument.

The competent authority or, where ESMA is the competent authority, the national surveillance authority shall communicate the information referred to in the first subparagraph to ESMA and to the authorities designated in accordance with Article 67(1) of Directive 2014/65/EU of the other Member States.

In relation to conduct that may indicate behaviour that is prohibited under Regulation (EU) No 596/2014, the competent authority or, where ESMA is the competent authority, the national surveillance authority shall be convinced that such behaviour is being or has been carried out before it notifies the authorities designated in accordance with Article 67(1) of Directive 2014/65/EU of the other Member States.

Where ESMA is the competent authority, ESMA shall take due consideration of the information received pursuant to this paragraph, in particular when assessing a potential infringement of paragraph 1 by the regulated market. ESMA may require the national surveillance authority to submit any additional information necessary for the purpose of this assessment.

Where ESMA is the competent authority, in cases where a national surveillance authority considers that the information referred to in this paragraph has not been provided or has not been provided in a timely manner by the market operator, that authority shall inform ESMA. ESMA shall assess, within 20 working days, whether the market operator has breached its obligations under the first subparagraph, and take the appropriate measures.

3. The market operator shall supply the relevant information without undue delay to the authority competent for the investigation and prosecution of market abuse on the regulated market and provide full assistance to the latter in investigating and prosecuting market abuse occurring on or through the systems of the regulated market.

Where ESMA is the competent authority of the regulated market, in cases where an authority competent for the investigation and prosecution of market abuse on such a regulated market considers that the information or the assistance referred to in this paragraph has not been provided or has not been provided in a timely manner, that authority shall inform ESMA. ESMA shall assess, within 20 working days, whether the market operator has breached its obligations under the first subparagraph, and take the appropriate measures.

Article 2o
Cross-border activity of regulated markets

1. An authorised regulated market may freely perform its activity within the Union, through the freedom to provide services or through setting up a branch. Those activities shall include at least:

(a)the provision of appropriate arrangements so as to facilitate access to and trading on that regulated market by remote members or participants established in any Member State;

(b)activities relating to the admission of members or participants on that regulated market;

(c)activities relating to the admission of financial instruments to trading on that regulated market.

2. The market operator of an authorised regulated market, or of a regulated market that has applied for authorisation pursuant to Article 2b that intends to perform its activity within the territory of another Member State, shall ensure that the regulated market communicates to its competent authority the Member State in which it intends to perform its activity. The competent authority shall communicate that information to the authority designated pursuant to Article 67 of Directive 2014/65/EU of the Member State where the regulated market intends to perform its activity, within seven working days. Where ESMA is not the competent authority, ESMA may request access to that information in accordance with the procedure and under the conditions set out in Article 35 of Regulation (EU) No 1095/2010.

The competent authority of the regulated market shall, on the request of the authority designated pursuant to Article 67 of Directive 2014/65/EU of the Member State where the regulated market intends to perform or performs its activity, and, without undue delay, communicate the identity of the members or participants of the regulated market that are established in that Member State.

Where the regulated market sets up a branch, the information referred to in the first subparagraph shall include:

(a)the tasks that will be carried out by the branch;

(b)the organisational structure of the branch;

(c)the address in the Member State where the regulated market intends to set up a branch;

(d)the names of those responsible for the management of the branch.

3. In the event of a change in any of the particulars communicated in accordance with paragraph 2, the market operator of a regulated market shall ensure that the regulated market gives written notice of that change to its competent authority at least seven working days before implementing the change. That competent authority shall notify that change to the authority designated pursuant to Article 67 of Directive 2014/65/EU of the Member State where the regulated market performs its activity.

4. Member States shall not impose any further legal or administrative requirements in relation to the cross-border activity of regulated markets in their territory.

CHAPTER 2
Requirements for MTFs and OTFs

Article 2p
Requirement for authorisation for MTFs and OTFs operated by a market operator

A competent authority shall authorise a market operator to operate an MTF or OTF subject to the prior verification of its compliance with the provisions set out in this Chapter.

Article 2q
Authorisation, ongoing supervision and withdrawal of authorisation of investment firms to operate MTFs or OTFs

1. Where ESMA is the competent authority pursuant to Article 38fa for an investment firm or a market operator operating a significant trading venue, and where an applicant investment firm belongs to the same group as that investment firm or that market operator operating a significant trading venue, ESMA shall be empowered to authorise that applicant investment firm where it intends to exclusively perform the operation of an MTF or an OTF, or both.

2. ESMA shall keep under regular review the compliance of the investment firm authorised in accordance with paragraph 1 with the requirements set out in this Regulation and Title II of Directive 2014/65/EU.

3. ESMA may withdraw the authorisation issued to an investment firm in accordance with paragraph 1 where the conditions for withdrawal set out in Article 8 of Directive 2014/65/EU are met.

4. For the purposes of carrying out the tasks conferred on it by this Article, ESMA shall apply the national provisions transposing Directive 2014/65/EU of the home Member State of that investment firm, interpreted in a manner consistent with Union law.

5. Where ESMA is the competent authority pursuant to Article 38fa for an investment firm or a market operator operating a significant trading venue, an applicant investment firm that belongs to the same group as that investment firm or that market operator operating a significant trading venue and that seeks authorisation to provide investment services or perform investment activities, including but not limited to the operation of an MTF or an OTF, shall submit a request for authorisation to the competent authority of its home Member State.

The competent authority of the home Member State shall without undue delay transmit to ESMA that request and any information provided by the investment firm for the purpose of seeking authorisation to operate an MTF or OTF.

ESMA shall assess whether the application for authorisation to operate an MTF or OTF is complete within 10 working days of receipt of the application.

Where the application is not complete, ESMA shall set a deadline by which the investment firm is to provide additional information.

After assessing the application as complete, ESMA shall notify the investment firm accordingly.

ESMA shall, within 60 working days of receipt of the complete application, issue an opinion on the authorisation to operate an MTF or OTF and transmit that opinion without undue delay to the competent authority of the home Member State.

The competent authority of the home Member State shall adopt a reasoned decision granting or refusing the authorisation on the basis of the opinion transmitted by ESMA and shall notify the investment firm accordingly within five working days of adoption. The competent authority shall refuse the authorisation to operate an MTF or OTF where ESMA gives a negative opinion.

6. The competent authority of the home Member State may withdraw the authorisation referred to in the previous paragraph, where ESMA notifies it that any of the conditions set out in Article 8 of Directive 2014/65/EU is met in relation to the operation of an MTF or an OTF. Where the competent authority withdraws the authorisation, it shall inform the investment firm accordingly.

7. Paragraphs 1 to 6 shall also apply to an investment firm that belongs to the same group as a CCP or CSD that is subject to supervision by ESMA.

8. Paragraphs 1 to 7 shall apply as of when ESMA becomes the competent authority pursuant to Article 38fa.

Article 2r
Extension of authorisation for investment firms that already operate MTFs or OTFs

1. An investment firm authorised by ESMA pursuant to Article 2q(1) and seeking authorisation to extend its business to additional investment services or activities or ancillary services not foreseen at the time of initial authorisation shall submit a request for extension of its authorisation to ESMA.

2. Where the request referred to in paragraph 1 concerns investment services or activities other than the operation of an MTF or an OTF, ESMA shall without undue delay transmit that request and any information provided by the investment firm for that purpose to the competent authority of the home Member State of the investment firm.

The competent authority referred to in subparagraph 1 shall assess whether the application for authorisation is complete within 10 working days of receipt of the application.

Where the application is not complete, the competent authority shall set a deadline by which the investment firm is to provide additional information.

After assessing the application as complete, the competent authority shall notify the investment firm accordingly.

The competent authority shall, within 60 working days of receipt of the complete application, issue an opinion on the extension of the authorisation and transmit that opinion without undue delay to ESMA.

ESMA shall adopt a reasoned decision granting or refusing the authorisation on the basis of the opinion transmitted by the competent authority and shall notify the investment firm accordingly within five working days of adoption. ESMA shall refuse the extension of the authorisation where the competent authority gives a negative opinion.

3. Without prejudice to Article 2q(3), ESMA shall withdraw the authorisation referred to in Article 2q in relation to services or activities referred to in paragraph 1, where the competent authority of the home Member State of the investment firm provides a reasoned opinion concluding that any of the conditions set out in Article 8 of Directive 2014/65/EU is met in relation to the investment services or activities referred to in paragraph 1. Where ESMA withdraws the authorisation, it shall inform the investment firm accordingly.

4. When carrying out the tasks conferred on it by this Article, ESMA shall apply the national provisions transposing Directive 2014/65/EU of the home Member State of that investment firm, interpreted in a manner consistent with Union law.

5. Paragraphs 1 to 4 shall apply as of when ESMA becomes the competent authority pursuant to Article 38fa.

Article 2s
Extension of authorisation for investment firms that intend to operate MTFs or OTFs

1. Where ESMA is the competent authority pursuant to Article 38fa for an investment firm or a market operator operating a significant trading venue, an applicant investment firm that belongs to the same group as that investment firm or that market operator operating a significant trading venue and that seeks an extension of its authorisation for the purpose of the operation of an MTF or an OTF, shall submit a request for extension to the competent authority of its home Member State.

The competent authority of the home Member State shall without undue delay transmit to ESMA that request and any information provided by the investment firm for that purpose.

ESMA shall assess whether the application for authorisation is complete within 10 working days of receipt of the application.

Where the application is not complete, ESMA shall set a deadline by which the investment firm is to provide additional information.

After assessing the application as complete, ESMA shall notify the investment firm accordingly.

ESMA shall, within 60 working days of receipt of the complete application, issue an opinion on the extension of the authorisation and transmit that opinion without undue delay to the competent authority of the home Member State.

The competent authority of the home Member State shall adopt a reasoned decision granting or refusing the authorisation on the basis of the opinion transmitted by ESMA and shall notify the investment firm accordingly within five working days of adoption. The competent authority shall refuse the extension of the authorisation where ESMA gives a negative opinion.

2. Without prejudice to Article 8 of Directive 2014/65/EU, the competent authority of the home Member State shall withdraw the authorisation in relation to the operation of an MTF or an OTF, where ESMA provides a reasoned opinion concluding that any of the conditions set out in Article 8 of Directive 2014/65/EU is met in relation to the operation of an MTF or an OTF. Where the competent authority withdraws the authorisation, it shall inform the investment firm accordingly.

3. Paragraphs 1 and 2 shall also apply to an investment firm that belongs to the same group as a CCP or CSD that is subject to supervision by ESMA, where that investment firm seeks an extension of its authorisation for the purpose of the operation of an MTF or an OTF.

4. Paragraphs 1 to 3 shall apply as of when ESMA becomes the competent authority pursuant to Article 38fa.

Article 2t
Ongoing supervision

1. For investment firms authorised in accordance with Article 2q(5), Article 2r and Article 2s, ESMA shall keep under regular review the compliance of the investment firm with requirements set out in this Title and, for aspects that are relevant to the operation of an MTF or OTF, with the national provisions transposing Article 16 of Directive 2014/65/EU of the home Member State of that investment firm interpreted in a manner consistent with Union law.

2. For investment firms authorised in accordance with Article 2q(5), Article 2r and Article 2s, the competent authority of the home Member State of the investment firm shall keep under regular review the compliance of the investment firm with requirements set out in the national provisions adopted in the implementation of Title II of Directive 2014/65/EU by the home Member State of that investment firm.

3. For the purposes of ensuring an effective and efficient authorisation and ongoing supervision of investment firms in accordance with Article 2q(5), Article 2r, and Article 2s, ESMA and the competent authority of the home Member State of the investment firm shall set up a cooperation arrangement.

4. Paragraphs 1 to 3 shall apply as of when ESMA becomes the competent authority pursuant to Article 38fa.

Article 2u
Compliance with the rules of the MTF or the OTF and with other legal obligations

1. Investment firms and market operators operating an MTF or an OTF shall establish transparent rules and procedures for fair and orderly trading and establish objective criteria for the efficient execution of orders. They shall have arrangements for the sound management of the technical operations of the facility, including the establishment of effective contingency arrangements to cope with risks of systems disruption.

2. Investment firms and market operators operating an MTF or an OTF shall establish transparent rules regarding the criteria for determining the financial instruments that can be traded under its systems.

Where applicable, investment firms and market operators operating an MTF or an OTF shall provide, or shall be satisfied that there is access to, sufficient publicly available information to enable its users to form an investment judgement, taking into account both the nature of the users and the types of instruments traded.

3. Investment firms and market operators operating an MTF or an OTF shall comply with Article 2f(1), points (a), (f) and (g), Article 2g, Article 2h, Article 2l(1), Article 2m(1), Article 2n(1), Article 2n(2), first subparagraph, and Article 2n(3), first subparagraph, and shall have in place all the necessary effective systems, procedures and arrangements to do so.

4. Article 2m(2), Article 2n(2), second, third, fourth and fifth subparagraphs, and Article 2n(3), second subparagraph, shall apply mutatis mutandis with respect to investment firms and market operators operating an MTF or OTF.

5. Investment firms and market operators operating an MTF or an OTF shall clearly inform its members or participants of their respective responsibilities for the settlement of the transactions executed in that facility. Investment firms and market operators operating an MTF or an OTF shall put in place the necessary arrangements to facilitate the efficient settlement of the transactions concluded under the systems of that MTF or OTF.

6. Where a transferable security that has been admitted to trading on a regulated market is also traded on an MTF or an OTF without the consent of the issuer, the issuer shall not be subject to any obligation relating to initial, ongoing or ad hoc financial disclosure with regard to that MTF or OTF.

7. Any investment firm and market operator operating an MTF or an OTF shall comply immediately with any instruction from its competent authority or, where ESMA is the competent authority, its national surveillance authority pursuant to Article 69(2) of Directive 2014/65/EU to suspend or remove a financial instrument from trading.

8. Investment firms and market operators operating an MTF or an OTF shall provide the competent authority with a detailed description of the functioning of the MTF or OTF, including, without prejudice to Article 2z(1), (4) and (5), any links to or participation by a regulated market, an MTF, an OTF or a systematic internaliser owned by the same investment firm or market operator, and a list of their members, participants and/or users. Competent authorities shall make that information available to ESMA and, where ESMA is the competent authority, to national surveillance authorities on request.

Article 2v
Suspension and removal of financial instruments from trading on an MTF or an OTF

1. Without prejudice to the right of the competent authority or, where ESMA is the competent authority, the national surveillance authority to demand suspension or removal of a financial instrument from trading pursuant to Article 69(2) of Directive 2014/65/EU, an investment firm or a market operator operating an MTF or an OTF may suspend or remove from trading a financial instrument under the circumstances set out in Article 2k(1).

2. Article 2k(2) shall apply mutatis mutandis in the case where an investment firm or a market operator operating an MTF or an OTF suspends or removes from trading a financial instrument and the derivatives as referred to in points (4) to (10) of Section C of Annex I to Directive 2014/65/EC that relate or are referenced to that financial instrument.

Article 2w
Cross-border activity of MTFs and OTFs

Article 2o shall apply mutatis mutandis with respect to an investment firm or a market operator operating an MTF or an OTF.

Article 2x
Specific requirements for MTFs

1. Investment firms and market operators operating an MTF, in addition to meeting the requirements laid down in Articles 16 of Directive 2014/65/EU and of this Regulation, shall establish and implement non-discretionary rules for the execution of orders in the system.

2. When complying with Article 2l(1), investment firms and market operators operating an MTF shall ensure that the rules governing access to an MTF comply with the conditions established in Article 2l(3).

When admitting as members or participants persons that are already members or participants of another regulated market or MTF, investment firms and market operators operating an MTF shall deem that those persons comply with Article 2l(3), point (a), without any further assessment. Investment firms and market operators operating an MTF shall also deem that those persons comply with points Article 2l(3), points (b) and (c), without any further assessment, where they request to become members or participants with respect to trading in a class of financial instruments for which they are already members or participants of another regulated market or MTF.