16.12.2016   

EN

Official Journal of the European Union

L 342/1

(1)

Council Directive 2014/107/EU (3), amending Directive 2011/16/EU (4), applies as of 1 January 2016 to 27 Member States and as of 1 January 2017 to Austria. That Directive implements the global Standard for Automatic Exchange of Financial Account Information in Tax Matters within the Union thereby ensuring that information on Account Holders of Financial Accounts is reported to the Member State where the Account Holder is resident.

(2)

Directive 2011/16/EU stipulates that, where the Account Holder is an intermediary structure, Financial Institutions are to look through that structure, and identify and report on its beneficial owners. That important element in the application of that Directive relies on anti-money-laundering (‘AML’) information obtained pursuant to Directive (EU) 2015/849 of the European Parliament and of the Council (5) for the identification of the beneficial owners.

(3)

To ensure effective monitoring of the application by Financial Institutions of the due diligence procedures set out in Directive 2011/16/EU, the tax authorities need access to AML information. In the absence of such access, those authorities would not be able to monitor, confirm and audit that the Financial Institutions are applying Directive 2011/16/EU properly by correctly identifying and reporting on the beneficial owners of intermediary structures.

(4)

Directive 2011/16/EU encompasses other exchanges of information and forms of administrative cooperation between Member States. Access to AML information held by entities pursuant to Directive (EU) 2015/849 within the framework of administrative cooperation in the field of taxation would ensure that tax authorities are better equipped to fulfil their obligations under Directive 2011/16/EU and to combat tax evasion and fraud more effectively.

(5)

It is therefore necessary to ensure that tax authorities are able to access the AML information, procedures, documents and mechanisms for the performance of their duties in monitoring the proper application of Directive 2011/16/EU and for the functioning of all forms of administrative cooperation provided for in that Directive.

(6)

This Directive respects the fundamental rights and observes the principles recognised by the Charter of Fundamental Rights of the European Union. Where this Directive requires that access to personal data by tax authorities be provided by law, this does not necessarily require an act of parliament, without prejudice to the constitutional order of the Member State concerned. However, such a law should be clear and precise, and its application should be clear and foreseeable to persons subject to it, in accordance with the case-law of the Court of Justice of the European Union and the European Court of Human Rights.

(7)

Since the objective of this Directive, namely efficient administrative cooperation between Member States and the effective monitoring thereof under conditions compatible with the proper functioning of the internal market, cannot be sufficiently achieved by the Member States but can rather, by reason of the uniformity and effectiveness required, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Directive does not go beyond what is necessary in order to achieve that objective.

(8)

The customer due-diligence procedures carried out by Financial Institutions under Directive 2011/16/EU have already started, and the first exchanges of information are to be finalised by September 2017. Therefore, in order to ensure that the effective monitoring of the application of that Directive is not delayed, this amending Directive should enter into force and be transposed as soon as possible and no later than 1 January 2018.

(9)

Directive 2011/16/EU should therefore be amended accordingly,

16.12.2016   

EN

Official Journal of the European Union

L 342/4

(1)

Annex III to Commission Regulation (EC) No 1235/2008 (2) sets out the list of third countries whose systems of production and control measures for organic production of agricultural products are recognised as equivalent to those laid down in Regulation (EC) No 834/2007.

(2)

The Republic of Korea informed the Commission that its competent authority has withdrawn the recognition of one control body and added three other control bodies to the list of recognised control bodies.

(3)

Annex IV to Regulation (EC) No 1235/2008 sets out the list of control authorities and control bodies competent to carry out controls and issue certificates in third countries for the purpose of equivalence.

(4)

The Commission has received and examined a request from ‘A CERT European Organization for Certification S.A.’ to be included in the list in Annex IV to Regulation (EC) No 1235/2008. Based on the information received, the Commission has concluded that it is justified to recognise ‘A CERT European Organization for Certification S.A.’ for product categories A and D in respect of Albania, Azerbaijan, Bhutan, Belarus, Chile, China, the Dominican Republic, Ecuador, Egypt, Ethiopia, Grenada, Georgia, Indonesia, Iran, Jamaica, Jordan, Kenya, Kazakhstan, Lebanon, Morocco, Moldova, the former Yugoslav Republic of Macedonia, Papua New Guinea, the Philippines, Pakistan, Serbia, Russia, Rwanda, Saudi Arabia, Thailand, Turkey, Taiwan, Tanzania, Ukraine, Uganda and South Africa.

(5)

The Commission has received and examined a request from ‘Bioagricert S.r.l.’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the geographical scope of its recognition for product category A to Indonesia and Senegal and for product categories A and D to Albania and Bangladesh and to extend the scope of its recognition to product category E in respect of Albania and Thailand.

(6)

‘Caucacert’ has informed the Commission of an error in its corporate name which should be changed into ‘Caucascert’.

(7)

The Commission has received and examined a request from ‘CCPB Srl’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the geographical scope of its recognition for product categories A, B, D, E and F to Georgia, Iran, Jordan and Saudi Arabia, for product category B to China, Iraq, Mali, the Philippines and Syria, for product category C to Morocco and Tunisia, for product category E to Tunisia and for product categories E and F to China, Egypt, Iraq, Lebanon, Morocco, Mali, the Philippines, San Marino, Syria, and Turkey.

(8)

The Commission has received and examined a request from ‘CERES Certification of Environmental Standards GmbH’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the geographical scope of its recognition for product categories A, B and D to Armenia, for product categories A and D to Belarus, Malawi, Sierra Leone, Somalia and Tajikistan and for product category B to Guatemala, Honduras, Nicaragua and El Salvador.

(9)

The Commission has received and examined a request from ‘Control Union Certifications’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the geographical scope of its recognition for product categories A, B, C, D, E and F to Burundi, Somalia and South Sudan, for product categories B and C to Angola, Belarus, Djibouti, Eritrea, Fiji, Liberia, Niger, Chad and Kosovo and for product categories B, C and D to the Democratic Republic of the Congo and Madagascar.

(10)

The Commission has received and examined a request from ‘Ecocert SA’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the geographical scope of its recognition for product category B to Mozambique and for product category C to Bangladesh, Chile, Hong Kong, Honduras, Peru and Vietnam.

(11)

Ecocert SA has informed the Commission that its subsidiary ‘ECOCERT IMO Denetim ve Belgelendirme Ltd Ști’ had ceased its certification activities in all third countries for which it was recognised. ‘ECOCERT IMO Denetim ve Belgelendirme Ltd Ști’ should therefore no longer be listed in Annex IV to Regulation (EC) No 1235/2008.

(12)

The Commission has received and examined a request from ‘Ekoagros’ to be included in the list in Annex IV to Regulation (EC) No 1235/2008. Based on the information received, the Commission has concluded that it is justified to recognise ‘Ekoagros’ for product category A in respect of Russia, for product categories A and B in respect of Belarus and Ukraine, for product categories A and D in respect of Tajikistan and for product categories A and F in respect of Kazakhstan.

(13)

The Commission has received and examined a request from ‘Florida Certified Organic Growers and Consumers, Inc. (FOG), DBA as Quality Certification Services (QCS)’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the geographical scope of its recognition for product categories A and D to Jamaica and Vietnam and for product category D to Ecuador.

(14)

The Commission has received and examined a request from ‘IMOswiss AG’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the geographical scope of its recognition for product category A to the United Arab Emirates, for product categories A and D to Burundi, for product category B to Mexico and Peru and for product category C to Brunei, China, Hong Kong, Honduras, Madagascar and the United States. In addition, ‘IMOswiss AG’ has informed the Commission that it has ceased its certification activities in Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Uzbekistan, Russia and Tajikistan. It should therefore no longer be listed for those countries in Annex IV to Regulation (EC) No 1235/2008.

(15)

The Commission has received and examined a request from ‘Kiwa BCS Öko-Garantie GmbH’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the geographical scope of its recognition for product categories A and D to Zambia, for product category B to Laos, Myanmar/Burma and Thailand, for product category C to Hong Kong, Indonesia and Sri Lanka and for product categories C and E to Bangladesh.

(16)

The Commission has received and examined a request from ‘Mayacert’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the geographical scope of its recognition for product category A to Colombia, the Dominican Republic and El Salvador, for product categories A and D to Belize and Peru and for product category B to Guatemala, Honduras and Nicaragua.

(17)

The Commission has received and examined a request from ‘OneCert International PVT Ltd’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the geographical scope of its recognition for product categories A and D to Bangladesh, China, Ghana, Cambodia, Laos, Myanmar/Burma, Oman, Russia and Saudi Arabia.

(18)

The Commission has received and examined a request from ‘Oregon Tilth’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the scope of its recognition to product category E in respect of Mexico.

(19)

The Commission has received and examined a request from ‘Organic Certifiers’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the geographical scope of its recognition for product categories A and D to Indonesia.

(20)

The Commission has received and examined a request from ‘Organska Kontrola’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the scope of its recognition to product category B for all countries.

(21)

‘QC&I GmbH’ has informed the Commission that it has ceased its certification activities in all third countries for which it was recognised. It should therefore no longer be listed in Annex IV to Regulation (EC) No 1235/2008.

(22)

The Commission has received and examined a request from ‘Suolo e Salute srl’ to amend its specifications. Based on the information received, the Commission has concluded that it is justified to extend the geographical scope of its recognition for product category A to the Dominican Republic and Egypt and to extend the scope of its recognition to product category D in respect of the Dominican Republic.

(23)

Any reference to Taiwan in Annex IV to Regulation (EC) No 1235/2008 should be understood as a reference to the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.

(24)

Annexes III and IV to Regulation (EC) No 1235/2008 should therefore be amended accordingly.

(25)

The measures provided for in this Regulation are in accordance with the opinion of the Committee on organic production,

(1)

Annex III is amended in accordance with Annex I to this Regulation;

(2)

Annex IV is amended in accordance with Annex II to this Regulation.

16.12.2016   

EN

Official Journal of the European Union

L 342/14

(1)

Lallemand SAS has submitted an application in accordance with Article 13(3) of Regulation (EC) No 1831/2003 proposing to change the name of the holder of the authorisation as regards Commission Regulations (EC) No 226/2007 (2), (EC) No 1293/2008 (3), (EC) No 910/2009 (4), (EC) No 911/2009 (5), (EU) No 1120/2010 (6), (EU) No 212/2011 (7) and Commission Implementing Regulations (EU) No 95/2013 (8) and (EU) No 413/2013 (9).

(2)

The applicant claims that Danstar Ferment AG is the legal owner of the marketing rights for the feed additives Pediococcus acidilactici CNCM MA 18/5M and Saccharomyces cerevisiae CNCM I-1077. The applicant has submitted relevant data supporting its request.

(3)

The proposed change of the authorisation holder is purely administrative in nature and does not entail a fresh assessment of the additives concerned. The European Food Safety Authority was informed of the application.

(4)

To allow Danstar Ferment AG to exploit its marketing rights it is necessary to change the terms of the respective authorisations.

(5)

Regulations (EC) No 226/2007, (EC) No 1293/2008, (EC) No 910/2009, (EC) No 911/2009, (EU) No 1120/2010, (EU) No 212/2011 and Implementing Regulations (EU) No 95/2013 and (EU) No 413/2013 should therefore be amended accordingly.

(6)

Since safety reasons do not require the immediate application of the amendments made by this Regulation to Regulations (EC) No 226/2007, (EC) No 1293/2008, (EC) No 910/2009, (EC) No 911/2009, (EU) No 1120/2010, (EU) No 212/2011 and Implementing Regulations (EU) No 95/2013 and (EU) No 413/2013, it is appropriate to provide for a transitional period during which existing stocks may be used up.

(7)

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

(1)

in the title, the term ‘Lallemand SAS’ is replaced by the term ‘Danstar Ferment AG’;

(2)

in column 2 of the Annex, the term ‘Lallemand SAS’ is replaced by the term ‘Danstar Ferment AG represented by Lallemand SAS’.

(1)

in the title, the term ‘Lallemand SAS’ is replaced by the term ‘Danstar Ferment AG’;

(2)

in column 2 of the Annex, the term ‘Lallemand SAS’ is replaced by the term ‘Danstar Ferment AG represented by Lallemand SAS’.

(1)

in the title, the term ‘Lallemand SAS’ is replaced by the term ‘Danstar Ferment AG’;

(2)

in column 2 of the Annex, the term ‘Lallemand SAS’ is replaced by the term ‘Danstar Ferment AG represented by Lallemand SAS’.

(1)

in the title, the term ‘Lallemand SAS’ is replaced by the term ‘Danstar Ferment AG’;

(2)

in column 2 of the Annex, the term ‘Lallemand SAS’ is replaced by the term ‘Danstar Ferment AG represented by Lallemand SAS’.

(1)

in the title, the term ‘Lallemand SAS’ is replaced by the term ‘Danstar Ferment AG’;

(2)

in column 2 of the Annex, the term ‘Lallemand SAS’ is replaced by the term ‘Danstar Ferment AG represented by Lallemand SAS’.

(1)

in the title, the term ‘Lallemand SAS’ is replaced by the term ‘Danstar Ferment AG’;

(2)

in column 2 of the Annex, the term ‘Lallemand SAS’ is replaced by the term ‘Danstar Ferment AG represented by Lallemand SAS’.

16.12.2016   

EN

Official Journal of the European Union

L 342/18

(1)

Regulation (EC) No 1831/2003 provides for the authorisation of additives for use in animal nutrition and for the grounds and procedures for granting such authorisation.

(2)

In accordance with Article 7 of Regulation (EC) No 1831/2003, an application was submitted for the authorisation of dicopper oxide accompanied by the particulars and documents required under Article 7(3) of Regulation (EC) No 1831/2003.

(3)

That application concerns the authorisation of dicopper oxide as a feed additive for all animal species, to be classified in the additive category ‘nutritional additives’.

(4)

The European Food Safety Authority (‘the Authority’) concluded in its opinion of 25 May 2016 (2) that, under the proposed conditions of use, dicopper oxide does not have an adverse effect on animal or consumer health and that no safety concerns for users would arise provided that appropriate protective measures are taken.

(5)

The Authority furthermore concluded that dicopper oxide does not pose additional risks to the environment than the other copper sources and that it may be considered as an efficacious source of copper for all animal species. The Authority does not consider that there is a need for specific requirements of post-market monitoring. It also verified the report on the method of analysis of the feed additive in feed submitted by the Reference Laboratory set up by Article 21 of Regulation (EC) No 1831/2003.

(6)

The name of the additive in the application is dicopper oxide. However, the International Union of Pure and Applied Chemistry (IUPAC) name of the additive is copper(I) oxide. In line with the Authority`s recommendation in its opinion on cupric oxide (3) the additive should be named copper(I) oxide.

(7)

The assessment of copper(I) oxide shows that the conditions for authorisation, as provided for in Article 5 of Regulation (EC) No 1831/2003, are satisfied. Accordingly, the use of that substance should be authorised as specified in the Annex to this Regulation.

(8)

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

16.12.2016   

EN

Official Journal of the European Union

L 342/22

(1)

Annex I to Regulation (EC) No 881/2002 lists the persons, groups and entities covered by the freezing of funds and economic resources under that Regulation.

(2)

On 12 December 2016, the Sanctions Committee of the United Nations Security Council decided to add one natural person to the list of persons, groups and entities to whom the freezing of funds and economic resources should apply. Annex I to Regulation (EC) No 881/2002 should therefore be updated accordingly.

(3)

In order to ensure that the measures provided for in this Regulation are effective, it should enter into force immediately,

16.12.2016   

EN

Official Journal of the European Union

L 342/24

(1)

Implementing Regulation (EU) No 543/2011 lays down, pursuant to the outcome of the Uruguay Round multilateral trade negotiations, the criteria whereby the Commission fixes the standard values for imports from third countries, in respect of the products and periods stipulated in Annex XVI, Part A thereto.

(2)

The standard import value is calculated each working day, in accordance with Article 136(1) of Implementing Regulation (EU) No 543/2011, taking into account variable daily data. Therefore this Regulation should enter into force on the day of its publication in the Official Journal of the European Union,

16.12.2016   

EN

Official Journal of the European Union

L 342/26

(1)

Commission Implementing Regulation (EU) 2016/2080 (3) has opened the sale of skimmed milk powder by a tendering procedure.

(2)

In the light of the tenders received for the first partial invitation to tender, a minimum selling price should be fixed.

(3)

The measures provided for in this Regulation are in accordance with the opinion of the Committee for the Common Organisation of the Agricultural Markets,

16.12.2016   

EN

Official Journal of the European Union

L 342/28

(1)

By virtue of Decision 2007/884/EC (2), the United Kingdom was authorised, until 31 December 2010, to restrict to 50 % the right of the hirer or lessee to deduct input value added tax (‘VAT’) on charges for the hire or lease of a car where that car was not used entirely for business purposes. The United Kingdom was also authorised not to treat as supplies of services for consideration the private use of a car hired or leased by a taxable person for his business purposes. Those measures (‘the derogating measures’) removed the need for the hirer or the lessee to keep records of private mileage travelled in business cars and to account for tax on the actual private mileage of such cars.

(2)

Decision 2007/884/EC was subsequently amended by Implementing Decision 2011/37/EU (3) and by Implementing Decision 2013/681/EU (4), which extended the expiry date of the derogating measures to 31 December 2016.

(3)

By letter registered with the Commission on 14 March 2016, the United Kingdom requested authorisation to extend the derogating measures.

(4)

In accordance with the second subparagraph of Article 395(2) of Directive 2006/112/EC, the Commission informed the other Member States, by letter dated 28 June 2016, of the request made by the United Kingdom. By letter dated 28 June 2016, the Commission notified the United Kingdom that it had all the information necessary to consider the request.

(5)

In accordance with Article 3 of Decision 2007/884/EC, the United Kingdom submitted a report to the Commission covering the application of the Decision, which included a review of the percentage restriction. The information provided by the United Kingdom shows that a restriction of the right of deduction to 50 % still reflects current circumstances as regards the ratio of business to non-business use of the vehicles concerned.

(6)

The United Kingdom should therefore be authorised to continue to apply the derogating measures for a further limited period, until 31 December 2019.

(7)

Where the United Kingdom considers that a further extension beyond 2019 would be necessary, it should submit a report to the Commission, which includes a review of the percentage applied, together with an extension request by no later than 1 April 2019.

(8)

The extension of the derogating measures will have only a negligible effect on the overall amount of tax revenue collected at the stage of final consumption and will have no adverse impact on the Union's own resources accruing from VAT.

(9)

Decision 2007/884/EC should therefore be amended accordingly,

16.12.2016   

EN

Official Journal of the European Union

L 342/30

(1)

On 29 March 2016 the Netherlands sought authorisation to apply, in accordance with Article 19(1) of Directive 2003/96/EC, a reduced rate of taxation on electricity supplied to electric vehicles. At the Commission's request, the Netherlands provided additional information on 6 April, 20 June and 18 August 2016.

(2)

The reduced rate of taxation aims at promoting the use of electric vehicles by reducing the cost of the electricity used to propel those vehicles.

(3)

The use of electric vehicles avoids emissions of air pollutants originating from the combustion of petrol and diesel or other fossil fuels and therefore contributes to an improvement of air quality in cities. Furthermore, the use of electric vehicles can reduce CO2 emissions where the electricity used is produced from renewable energy sources. The measure is therefore expected to contribute to the environmental, health and climate policy objectives of the Union.

(4)

The Netherlands requested explicitly that the reduced rate of taxation be applied to electricity supplied to electric vehicles for both business and non-business use and that charging stations that are not accessible to the public also be covered.

(5)

The Netherlands asked for the reduced rate of taxation on electricity to apply only to charging stations where the electricity is used to charge an electric vehicle directly and not to apply to electricity that is provided through the exchange of batteries.

(6)

A reduced rate of taxation on electricity supplied to electric vehicles via charging stations will improve the business case for publicly accessible charging stations in the Netherlands, which should make the use of electric cars more attractive and result in improved air quality.

(7)

Considering the limited number of electric vehicles and the fact that the level of taxation on electricity supplied to electric vehicles via charging stations will be above the minimum level of taxation for business use laid down in Article 10 of Directive 2003/96/EC, the measure is unlikely to lead to distortions in competition during its lifetime and will thus not negatively affect the proper functioning of the internal market.

(8)

The level of taxation on electricity supplied to electric vehicles via charging stations that are not for business use will be above the minimum level of taxation for non-business use laid down in Article 10 of Directive 2003/96/EC.

(9)

In accordance with Article 19(2) of Directive 2003/96/EC, each authorisation granted under Article 19(1) of that Directive is to be strictly limited in time. The Netherlands requested that the authorisation be granted for 4 years to ensure that the authorisation period is sufficiently long so as not to discourage economic operators from making the necessary investments.

(10)

This Decision is without prejudice to the application of the Union rules regarding State aid,

16.12.2016   

EN

Official Journal of the European Union

L 342/32

(1)

The accounts of the European Central Bank (ECB) and of the national central banks of the Member States whose currency is the euro are to be audited by independent external auditors recommended by the Governing Council of the ECB and approved by the Council.

(2)

The mandate of the external auditors of Banc Ceannais na hÉireann/the Central Bank of Ireland expired after the audit for the financial year 2015. It is therefore necessary to appoint external auditors as from the financial year 2016.

(3)

Banc Ceannais na hÉireann/the Central Bank of Ireland has selected Mazars as its external auditors for the financial years 2016 to 2020.

(4)

The Governing Council of the ECB has recommended that Mazars should be appointed as the external auditors of Banc Ceannais na hÉireann/the Central Bank of Ireland for the financial years 2016 to 2020.

(5)

Following the recommendation of the Governing Council of the ECB, Council Decision 1999/70/EC (2) should be amended accordingly,

16.12.2016   

EN

Official Journal of the European Union

L 342/34

(1)

Commission Decisions 2007/305/EC (2), 2007/306/EC (3) and 2007/307/EC (4) lay down the rules for the withdrawal from the market of Ms1×Rf1 (ACS-BNØØ4-7×ACS-BNØØ1-4) hybrid oilseed rape, Ms1×Rf2 (ACS-BNØØ4-7×ACS-BNØØ2-5) hybrid oilseed rape and Topas 19/2 (ACS-BNØØ7-1) oilseed rape respectively, as well as their derived products (‘GM material’). Those decisions have been adopted after the authorisation holder, the company Bayer CropScience AG, indicated to the Commission that it had no intention of submitting an application for the renewal of the authorisation of that GM material in accordance with the first subparagraph of Article 8(4), Article 11, Article 20(4) and Article 23 of Regulation (EC) No 1829/2003.

(2)

All three Decisions provided for an initial transitional period of five years during which food and feed containing, consisting of or produced from this GM material were allowed to be placed on the market in a proportion no higher than 0,9 % and provided that that presence was adventitious or technically unavoidable. The purpose of that transitional period was to take into account the fact that minute traces of that GM material could sometimes be present in the food and feed chains, even after Bayer CropScience AG had decided to stop selling seeds derived from those genetically modified organisms and even if all measures were taken to avoid the presence of that GM material.

(3)

In light of experience after the withdrawal of that GM material from the market, Commission Implementing Decision 2012/69/EU (5) amended all three Decisions in order to extend the transition period until 31 December 2016. Given the very low trace levels which had been reported, that Decision reduced the tolerated presence of that GM material in food and feed to 0,1 % mass fraction.

(4)

Decisions 2007/305/EC, 2007/306/EC and 2007/307/EC also set out a series of measures that Bayer CropScience AG had to take in order to ensure the effective withdrawal from the market of this GM material and laid down reporting obligations on Bayer CropScience AG.

(5)

In December 2013 and in March 2016, Bayer CropScience AG reported that despite the measures taken to prevent the presence of those genetically modified organisms in accordance with Decisions 2007/305/EC, 2007/306/EC and 2007/307/EC, minute traces have been still detected in oilseed rape commodities in recent years. This persisting presence of traces can be explained by the biology of oilseed rapes which can remain dormant for long periods as well as by farm practices which have been employed to harvest the seeds which may have resulted in accidental spillage, the level of which was difficult to estimate at the dates of adoption of Decisions 2007/305/EC, 2007/306/EC and 2007/307/EC and Implementing Decision 2012/69/EU. The occurrence of traces has continued to follow a decreasing trend.

(6)

Against this background, it is appropriate to extend the transitional period for another three years until 31 December 2019 to allow for the complete removal of the remaining traces of Ms1×Rf1, Ms1×Rf2 and Topas 19/2 oilseed rapes in the food and feed chain.

(7)

In order to further contribute to the removal of that GM material, it is also appropriate that Bayer CropScience AG continues to implement the in-house programme required in accordance with Decisions 2007/305/EC, 2007/306/EC and 2007/307/EC and to gather data, as it previously did on a voluntary basis, on the presence of such material in oilseed rape commodities imported into the Union from Canada, the only country where those oilseed rapes were cultivated for commercial purposes. Bayer CropScience AG should report to the Commission on both aspects by 1 January 2019.

(8)

Bayer CropScience AG should ensure the continued availability of certified reference materials to enable control laboratories to perform their analysis during that transitional period.

(9)

Decisions 2007/305/EC, 2007/306/EC and 2007/307/EC should therefore be amended accordingly.

(10)

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

(1)

Article 1 is replaced by the following:

‘Article 1

The addressee shall implement an in-house program in order to ensure the effective withdrawal from the market of ACS-BNØØ4-7, ACS-BNØØ1-4 and the hybrid combination ACS-BNØØ4-7×ACS-BNØØ1-4 oilseed rape in breeding and seed production and shall gather data on the presence of those genetically modified organisms in the oilseed rape shipments to the Union from Canada.

The addressee shall report to the Commission on the implementation of this program and on the presence of those genetically modified organisms in the oilseed rape shipments to the Union from Canada by 1 January 2019.’;

(2)

Article 2 is replaced by the following:

‘Article 2

1.   The presence of material which contains, consists of or is produced from ACS-BNØØ4-7, ACS-BNØØ1-4 and the hybrid combination ACS-BNØØ4-7×ACS-BNØØ1-4 oilseed rape in food or feed products notified under point (a) of Article 8(1) and Article 20(1) of Regulation (EC) No 1829/2003 shall be tolerated until 31 December 2019, provided that this presence:

2.   The addressee shall ensure the availability of certified reference material for ACS-BNØØ4-7×ACS-BNØØ1-4 oilseed rape via the American Oil Chemists Society at https://www.aocs.org/attain-lab-services/certified-reference-materials-(crms).’;

(3)

the Annex is deleted.

(1)

Article 1 is replaced by the following:

‘Article 1

The addressee shall implement an in-house program in order to ensure the effective withdrawal from the market of ACS-BNØØ4-7, ACS-BNØØ2-5 and the hybrid combination ACS-BNØØ4-7×ACS-BNØØ2-5 oilseed rape in breeding and seed production and shall gather data on the presence of those genetically modified organisms in the oilseed rape shipments to the Union from Canada.

The addressee shall report to the Commission on the implementation of this program and on the presence of those genetically modified organisms in the oilseed rape shipments to the Union from Canada by 1 January 2019.’;

(2)

Article 2 is replaced by the following:

‘Article 2

1.   The presence of material which contains, consists of or is produced from ACS-BNØØ4-7, ACS-BNØØ2-5 and the hybrid combination ACS-BNØØ4-7×ACS-BNØØ2-5 oilseed rape in food or feed products notified under point (a) of Article 8(1) and Article 20(1) of Regulation (EC) No 1829/2003 shall be tolerated until 31 December 2019, provided that this presence:

2.   The addressee shall ensure the availability of certified reference material for ACS-BNØØ4-7×ACS-BNØØ2-5 oilseed rape via the American Oil Chemists Society at https://www.aocs.org/attain-lab-services/certified-reference-materials-(crms).’;

(3)

the Annex is deleted.

16.12.2016   

EN

Official Journal of the European Union

L 342/38

(1)

The procedure for recognition of central counterparties (‘CCPs’) established in third countries set out in Article 25 of Regulation (EU) No 648/2012 aims to allow CCPs established and authorised in third countries whose regulatory standards are equivalent to those laid down in that Regulation to provide clearing services to clearing members or trading venues established in the Union. That recognition procedure and the equivalence decisions provided for therein thus contribute to the achievement of the overarching aim of Regulation (EU) No 648/2012 to reduce systemic risk by extending the use of safe and sound CCPs to clear over-the-counter (‘OTC’) derivative contracts, including where those CCPs are established and authorised in a third country.

(2)

In order for a third country legal regime to be considered equivalent to the legal regime of the Union in respect of CCPs, the substantive outcome of the applicable legal and supervisory arrangements should be equivalent to Union requirements in respect of the regulatory objectives they achieve. The purpose of this equivalence assessment is therefore to verify that the legal and supervisory arrangements of India ensure that CCPs established and authorised therein do not expose clearing members and trading venues established in the Union to a higher level of risk than the latter could be exposed to by CCPs authorised in the Union and, consequently, do not pose unacceptable levels of systemic risk in the Union. The significantly lower risks inherent in clearing activities carried out in financial markets that are smaller than the Union financial market should thereby, in particular, be taken into account.

(3)

On 1 September 2013, the Commission received the technical advice of the European Securities and Markets Authority (‘ESMA’) on the legal and supervisory arrangements applicable to CCPs authorised in India. The technical advice concludes that the legal and supervisoy arrangements applicable, at jurisdictional level, ensure that CCPs authorised in India which have adopted internal policies and procedures regarding several areas that constitute legally binding requirements comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(4)

In accordance with Article 25(6) of Regulation (EU) No 648/2012, three conditions need to be fulfilled in order to determine that the legal and supervisory arrangements of a third country regarding CCPs authorised therein are equivalent to those laid down in that Regulation.

(5)

According to the first condition, CCPs authorised in a third country must comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(6)

The legally binding requirements of India for CCPs authorised therein which clear corporate securities and financial derivatives and which are under the supervision and oversight of Securities and Exchange Board of India (SEBI) (the SEBI regime), consist of the Securities Contracts (Regulation) Act 1956 (the SCRA) and the Securities Contract (Regulation) (Stock Exchange and Clearing Corporations) Regulations 2012 (the Regulations) which were adopted in June 2012 by SEBI in the exercise of the powers conferred upon it by the SCRA and the Securities and Exchange Board of India Act (the SEBI Act). SEBI issued a Circular on 4 September 2013 (the Circular) whereby it adopted the Principles for Financial Markets Infrastructures (‘PFMIs’) issued in April 2012 by the Committee on Payment and Settlement Systems (2) and the International Organization of Securities Commissions and required financial market infrastructures including clearing corporations to adhere to them.

(7)

The SCRA and the Regulations set out an authorisation regime for clearing facilitites as recognised clearing corporations (‘RCCs’) by the Central Government and SEBI. An applicant clearing facility must comply with specific requirements aiming at ensuring a fair operation of the clearing facility and the protection of investors. The Central Government or SEBI may also impose conditions on RCCs. RCCs have to adopt internal rules and procedures which are assessed by the Central Government and SEBI prior to granting a RCC authorisation and which have to be in conformity with the conditions imposed on each RCC. Internal rules and procedures of RCCs can not be amended without prior approval by SEBI. In addition, SEBI can adopt internal rules of RCCs for specific issues or amend the existing internal rules of RCCs, where necessary or expedient. In addition, SEBI may impose penalties for contravention of the internal rules and procedures of RCCs or of any directions issued by SEBI.

(8)

The legally binding requirements applicable to CCPs authorised in India which clear government securities, money market instruments and forex instruments and which fall under the supervision of the Reserve Bank of India (RBI) (the RBI regime) consist of the Payment and Settlement Systems Act, 2007 (PSSA) and the Payment and Settlement Systems Regulations, 2008 (the PSS Regulations). RBI authorises entities to operate a clearing house provided they fulfil the required conditions (‘authorised clearing houses’). Moreover, RBI can impose specific conditions on an authorisation, which is valid as long as the specific conditions imposed are fulfilled. Under the PSSA, authorised clearing houses adopt internal rules and procedures and have the duty to operate the clearing house in accordance with them.

(9)

In addition, the PSSA empowers RBI to issue general directions or directions addressed to specific authorised clearing houses. Both types of directions have to be complied with by authorised clearing houses. The RBI published the ‘Policy Document for Regulation and Supervision of Financial Market Infrastructures’ on 26 July 2013, stating that all authorised clearing houses are required to comply with the PFMIs.

(10)

This Decision relates solely to the equivalence of the legal and supervisory arrangements for RCCs and authorised clearing houses and not to the legal and supervisory arrangements for CCPs which provide clearing services in the commodities market and are regulated and supervised by the Forward Markets Commission.

(11)

The legally binding requirements applicable to CCPs authorised in India therefore comprise a two-tiered structure. The core principles which RCCs and authorised clearing houses must comply with in order to obtain authorisation to provide clearing services in India (‘the primary rules’) are the following: (a) under the SEBI regime, the core principles for RCCs set out in the SCRA and the Regulations complemented by the Circular of 4 September 2013 which requires compliance with the PFMIs and (b) under the RBI regime, the PSSA and the PSS Regulations, together with the Policy Document for Regulation and Supervision of Financial Market Infrastructures, which requires compliance with the PFMIs. Those primary rules comprise the first tier of the legally binding requirements in India. In order to prove compliance with the primary rules, RCCs have to submit their internal rules and procedures to SEBI for approval. Under the RBI regime, authorised clearing houses have to comply with their internal rules and procedures in the operation of their authorised clearing houses. Those internal rules and procedures comprise the second tier of the legally binding requirements in India, which must provide prescriptive detail regarding the way in which RCCs and authorised clearing houses will meet those standards. Moreover, the internal rules and procedures of RCCs and authorised clearing houses contain additional provisions which complement the primary rules in certain aspects. The internal rules and procedures of RCCs and authorised clearing houses, which implement the PFMIs, are legally binding upon RCCs and authorised clearing houses.

(12)

The equivalence assessment of the legal and supervisory arrangements applicable to RCCs and authorised clearing houses established in India should also take into account the risk mitigation outcome that they ensure in terms of the level of risk to which clearing members and trading venues established in the Union are exposed when participating in those entities. The risk mitigation outcome is determined by both the level of risk inherent in the clearing activities carried out by the CCP concerned which depends on the size of the financial market in which it operates, and the appropriateness of the legal and supervisory arrangements applicable to CCPs to mitigate that level of risk. In order to achieve an equivalent risk mitigation outcome, more stringent risk mitigation requirements are necessary for CCPs carrying out their activities in larger financial markets whose inherent level of risk is higher than for CCPs carrying out their activities in smaller financial markets whose inherent level of risk is lower.

(13)

The financial market in which RCCs and authorised clearing houses authorised in India carry out their clearing activities is significantly smaller than that in which CCPs established in the Union are active. Over the past three years, the total value of derivative transactions cleared in India represented less than 1 % of the total value of derivative transactions cleared in the Union. Therefore, participation in RCCs and authorised clearing houses established in India exposes clearing members and trading venues established in the Union to significantly lower risks than their participation in CCPs authorised in the Union.

(14)

The legal and supervisory arrangements applicable to RCCs and authorised clearing houses established in India may therefore be considered as equivalent where they are appropriate to mitigate that lower level of risk. The primary rules applicable to RCCs and authorised clearing houses authorised in India, complemented by the internal rules and procedures which require compliance with the PFMIs, mitigate the lower level of risk existing in India and achieve a risk mitigation outcome equivalent to that pursued by Regulation (EU) No 648/2012.

(15)

It should therefore be concluded that the legal and supervisory arrangements of India ensure that RCCs and authorised clearing houses authorised therein comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(16)

According to the second condition under Article 25(6) of Regulation (EU) No 648/2012, the legal and supervisory arrangements of India in respect of CCPs authorised therein must provide for effective supervision and enforcement of those CCPs on an ongoing basis.

(17)

The supervision of RCCs is carried out by SEBI. SEBI can adopt internal rules of RCCs for specific issues or amend the existing internal rules of RCCs, having the same effect as if they were adopted or amended by the RCC concerned. Moreover, SEBI can issue directions to RCCs in the interest of the public, or trade or investors or the securities market. RCCs are subject to inspections, enquiries and audits by SEBI and have to provide information regarding its business to SEBI. The SCRA provides for penalties for contravention of the internal rules and procedures of RCCs or of any directions issued by SEBI. Finally, RCC authorisations can be withdrawn by the Central Government or by SEBI in the public interest or in the interest of trade.

(18)

The supervision of authorised clearing houses is carried out by RBI. RBI can request information from authorised clearing houses and has the power to inspect their premises and to make audits. Moreover, RBI can issue directions to authorised clearing houses in specific circumstances, to cease their behaviour and to perform such acts as are considered necessary to remedy the situation. Moreover, penalties are provided for in case of non-compliance with the PSSA provisions and the regulations, orders or directions issued by RBI. Finally, the authorisation to operate an authorised clearing house can be revoked by RBI in case the authorised clearing house contravenes the provisions of the PSSA, the PSS Regulations, the orders or directions issued by RBI or in case of non-compliance with the conditions to which the authorisation is subject.

(19)

It should therefore be concluded that RCCs and authorised clearing houses authorised in India are subject to effective supervision and enforcement on an ongoing basis.

(20)

According to the third condition under Article 25(6) of Regulation (EU) No 648/2012, the legal and supervisory arrangements of India must include an effective equivalent system for the recognition of CCPs authorised under third country legal regimes (‘third-country CCPs’).

(21)

Third country CCPs may apply for authorisation as an ‘authorised clearing house’ under the RBI regime, which allows third country CCPs to provide the same clearing services as CCPs established in India. Third country CCPs can be exempted from certain requirements applicable to RCCs and authorised clearing houses in India, provided they comply with the PFMIs and a cooperation arrangement is concluded between the RBI and the third country supervisor. The assessment of the application for authorisation can be based on the information provided by the third country supervisor.

(22)

It should therefore be concluded that the legal and supervisory arrangements of India provide for an effective equivalent system for the recognition of third-country CCPs.

(23)

This Decision is based on the legally binding requirements relating to RCCs and authorised clearing houses applicable in India at the time of the adoption of this Decision. The Commission, in cooperation with ESMA, should continue monitoring on a regular basis the evolution of the legal and supervisory framework for RCCs and authorised clearing houses and the fulfilment of the conditions on the basis of which this decision has been taken.

(24)

The regular review of the legal and supervisory arrangements applicable in India to CCPs authorised therein should be without prejudice to the possibility of the Commission to undertake a specific review at any time outside the general review, where relevant developments make it necessary for the Commission to re-assess the equivalence granted by this Decision. Such re-assessment could lead to the repeal of this Decision.

(25)

The measures provided for in this Decision are in accordance with the opinion of the European Securities Committee,

16.12.2016   

EN

Official Journal of the European Union

L 342/42

(1)

Regulation (EU) No 648/2012 lays down clearing and bilateral risk-management requirements for over-the-counter (‘OTC’) derivative contracts as well as reporting requirements for such contracts. Point (7) of Article 2 of Regulation (EU) No 648/2012 defines OTC derivatives as derivative contracts the execution of which does not take place on a regulated market within the meaning of point (14) of Article 4(1) of Directive 2004/39/EC of the European Parliament and the of the Council (2) or on a third country market considered as equivalent to a regulated market in accordance with Article 2a of Regulation (EU) No 648/2012. Therefore, any derivative contract the execution of which takes place on a third country market not deemed equivalent to regulated markets are classified as OTC for the purposes of Regulation (EU) No 648/2012.

(2)

In accordance with Article 2a of Regulation (EU) No 648/2012, a third-country market is considered equivalent to a regulated market where it complies with legally binding requirements which are equivalent to the requirements laid down in Title III of Directive 2004/39/EC and is subject to effective supervision and enforcement in that third country on an ongoing basis.

(3)

In order for a third country market to be considered equivalent to a regulated market within the meaning of Directive 2004/39/EC, the substantive outcome of the applicable legally binding requirements and supervisory and enforcement arrangements should be equivalent to Union requirements in respect of the regulatory objectives they achieve. The purpose of this equivalence assessment is therefore to verify that the legally binding requirements which apply to approved exchanges in Singapore are equivalent to the requirements laid down in Title III of Directive 2004/39/EC, and that those markets are subject to effective supervision and enforcement on an ongoing basis. Markets which are approved exchanges on the date of adoption of this Decision should be therefore identified as markets considered equivalent to a regulated market within the meaning of Directive 2004/39/EC.

(4)

The Singaporean legal framework for approved exchanges consists of the Securities and Futures Act (SFA), Securities and Futures (Markets) Regulations 2005, Securities and Futures (Corporate Governance of Approved Exchanges, Approved Clearing Houses and Approved Holding Companies) Regulations 2005, Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005, Securities and Futures (Licensing and Conduct of Business) Regulations 2004 and the Guidelines issued by the Monetary Authority of Singapore (MAS) pursuant to section 321 of the SFA, including the Guidelines on the Regulation of Markets No SFA 02-G01 and the Guidelines on Fit and Proper Criteria No FSG-G01. The Guidelines on the Regulation of Markets set out obligations for the approved exchanges such as the obligation to operate a fair, orderly and transparent market. Section 321(5) of the SFA sets out that failure to comply with any guidelines may, in any proceedings whether civil or criminal, be relied upon by any party seeking to establish or to negate any liability. In addition, section 334(1) and 335 empowers MAS to impose fines to the approved exchange where MAS finds out that the exchange is liable for contravention of any guidelines. Furthermore, some business and listing rules that further detail SFA requirements are described in a rulebook for each approved exchange. The business and listing rules, as well as any amendment of those rules, must be submitted to MAS prior to their implementation. The SFA provides for penalties where the business or listing rules are not compliant with the requirements set out by MAS. Under the SFA, business rules are deemed to be a binding contract for the approved exchange and its members and therefore must be observed and complied with on an ongoing basis.

(5)

The legally binding requirements applicable to approved exchanges in Singapore deliver substantive results equivalent to those of the requirements laid down in Title III of Directive 2004/39/EC in the following areas: authorisation process, definitional requirements, access to the approved exchange, organisational requirements, requirements for senior management, admission of financial instruments to trading, suspension and removal of instruments from trading, monitoring of compliance with the rules of the approved exchanges and access to clearing and settlement arrangements.

(6)

Under Directive 2004/39/EC, pre- and post-trade transparency requirements apply only to shares admitted to trading on regulated markets. Despite shares can be admitted to trading on approved exchanges in Singapore, the Commission considers that the assessment of those requirements is however not relevant for the purposes of this Decision given that its objective is to verify the equivalence of the legally binding requirements applicable to third-country markets in respect of derivatives contracts that are executed on those markets.

(7)

It should therefore be concluded that the legally binding requirements for approved exchanges in Singapore deliver results equivalent to those of the requirements laid down in Title III of Directive 2004/39/EC.

(8)

The approved exchanges in Singapore are subject to supervision by MAS, a public authority established under section 3 of the Monetary Authority of Singapore Act. MAS is the primary regulator for capital market activities in Singapore. Section 46 of the SFA empowers MAS to issue directions to the approved exchange in relation to specific matters as specified by the SFA to ensure investor protection, the functioning of fair, orderly and transparent markets, the integrity and stability of the capital markets and compliance with any condition or restriction imposed by MAS. MAS has statutory powers to issue legally-binding notices, guidelines, codes, policy statements and practice notes. MAS may impose fines and issue reprimands for the infringement of provisions of the SFA or of its secondary legislation, including notices and directions. MAS may also remove key officers where it considers that doing so is in the interest of the public. Finally, MAS supervises the approved exchange's risk management practices and controls, through on-site and off-site inspections.

(9)

It should therefore be concluded that approved exchanges are subject to effective supervision and enforcement in Singapore on an ongoing basis.

(10)

The conditions laid down in Article 2a of Regulation (EU) No 648/2012 should therefore be considered to be satisfied with respect to approved exchanges in Singapore.

(11)

This Decision is based on the legally binding requirements relating to approved exchanges in Singapore at the time of the adoption of this Decision. The Commission should continue monitoring on a regular basis the evolution of the legal and supervisory arrangements for approved exchanges and the fulfilment of the conditions on the basis of which this Decision has been taken. In particular, the Commission should review this Decision in light of the entry into application of Regulation (EU) No 600/2014 of the European Parliament and of the Council (3) and Directive 2014/65/EU of the European Parliament and of the Council (4).

(12)

The regular review of the legal and supervisory arrangements applicable to approved exchanges in Singapore is without prejudice to the possibility of the Commission to undertake a specific review at any time where relevant developments make it necessary for the Commission to reassess the equivalence granted by this Decision. Such re-assessment could lead to the repeal of this Decision.

(13)

The measures provided for in this Decision are in accordance with the opinion of the European Securities Committee,

16.12.2016   

EN

Official Journal of the European Union

L 342/45

(1)

Regulation (EU) No 648/2012 lays down clearing and bilateral risk-management requirements for over-the-counter (‘OTC’) derivative contracts as well as reporting requirements for such contracts. Point (7) of Article 2 of Regulation (EU) No 648/2012 defines OTC derivatives as derivative contracts the execution of which does not take place on a regulated market within the meaning of point (14) of Article 4(1) of Directive 2004/39/EC of the European Parliament and the of the Council (2) or on a third country market considered as equivalent to a regulated market in accordance with Article 2a of Regulation (EU) No 648/2012. Therefore, any derivative contract the execution of which takes place on a third-country market not deemed equivalent to regulated markets are classified as OTC for the purposes of Regulation (EU) No 648/2012.

(2)

In accordance with Article 2a of Regulation (EU) No 648/2012, a third-country market is considered equivalent to a regulated market where it complies with legally binding requirements which are equivalent to the requirements laid down in Title III of Directive 2004/39/EC and is subject to effective supervision and enforcement in that third country on an ongoing basis.

(3)

In order for a third-country market to be considered equivalent to a regulated market within the meaning of Directive 2004/39/EC, the substantive outcome of the applicable legally binding requirements and supervisory and enforcement arrangements should be equivalent to Union requirements in respect of the regulatory objectives they achieve. The purpose of this equivalence assessment is therefore to verify that the legally binding requirements which apply to financial instruments exchanges (FIEs) and commodity exchanges in Japan are equivalent to the requirements laid down in Title III of Directive 2004/39/EC, and that those markets are subject to effective supervision and enforcement on an ongoing basis. Markets which are authorised as FIEs or commodity exchanges on the date of adoption of this Decision should be therefore identified as markets considered equivalent to a regulated market within the meaning of Directive 2004/39/EC.

(4)

The legal framework of Japan for FIEs and commodity exchanges comprises the Financial Instruments and Exchange Act 2006 (FIEA), which establishes the regulatory framework for FIEs, and the Commodity Derivatives Act 2009 (CDA), which provides for the regulatory and supervisory framework for commodities exchanges. Derivatives contracts with a commodity as an underlying are listed on a commodity exchange and derivatives based on financial instruments are listed on the FIEs. Rules for the FIEs are further developed in the Order for Enforcement of the Financial Instruments and Exchange Act and the Cabinet Office Ordinance on Financial Instruments Exchanges whereas rules for commodities exchanges are further detailed in the Order for Enforcement of the Commodities Derivatives Act and the Ordinance for Enforcement of the Commodity Derivatives Act. In addition, both the commodities exchange and the FIEs enjoy relatively wide self-regulatory power with regard to certain requirements. The self-regulatory power of the FIE includes, in particular, business rules related to listing and delisting of financial instruments, trading arrangements and membership requirements. The operational rules must be submitted to the Prime Minister of Japan for approval (Article 81 of the FIEA). The self-regulatory power of the commodity exchange is exercised by its Self-Regulatory Committee or Self-Regulatory Department. The market rules of the commodity exchange set out trading rules and membership requirements, all which must be submitted to the Ministry of Agriculture, Forestry and Fishery (MAFF) and the Ministry of Economy, Trade and Industry (METI) for approval. The self-regulatory rules are legally binding upon exchanges.

(5)

The legally binding requirements applicable to exchanges authorised in Japan deliver results equivalent to those of the requirements laid down in Title III of Directive 2004/39/EC in the following areas: authorisation process, definitional requirements, access to the exchange, organisational requirements, requirements for senior management, admission of financial instruments to trading, suspension and removal of instruments from trading, monitoring of compliance and access to clearing and settlement arrangements.

(6)

Under Directive 2004/39/EC, pre- and post-trade transparency requirements apply only to shares admitted to trading on regulated markets. Despite shares can be admitted to trading on FIEs, the Commission considers that the assessment of those requirements is however not relevant for the purposes of this Decision given that its objective is to verify the equivalence of the legally binding requirements applicable to third-country markets in respect of derivatives contracts that are executed on those markets.

(7)

It should therefore be concluded that the legally binding requirements for FIEs and commodity exchanges in Japan deliver results equivalent to those of the requirements laid down in Title III of Directive 2004/39/EC.

(8)

The commodity exchanges operate under the supervision of the METI and the MAFF. The CDA provides a framework for supervisory powers of the METI and the MAFF. In particular, the METI and the MAFF approve the market rules, brokerage contract rules, dispute resolution rules or market transactions surveillance committee rules of a commodity exchange and any changes thereto. Furthermore, in order to ensure fair trading and investor protection, the METI and the MAFF may require a commodity exchange to change its articles of incorporation, other rules or its business methods or take any other measures to improve the operation of its business. If a commodity exchange fails to properly exercise its self-regulatory power and does not take necessary measures to ensure fair trading and investor protection, the METI and the MAFF may withdraw the licence or suspend the whole or a part of the exchange's business. The FIEs are subject to supervision of the Prime Minister of Japan, whose power is delegated to the Commissioner of the Japan Financial Services Agency (JFSA). Section 5 of Chapter V of the FIEA lays down the supervisory measures available to the JFSA. In particular, when the FIE violates laws and regulations, the JFSA may withdraw the licence or issue an order of suspension of all or part of the FIE's business. Furthermore, the JFSA may require the FIE to change its articles of incorporation, operational rules, brokerage contract rules or any other rules or trade practice or to take other necessary measures for supervision. The FIE's articles of incorporations must include sanctions for violation of its business rules by the members. If the FIE fails to perform effectively the market surveillance, the JFSA may take enforcement actions, including licence withdrawal or business suspension.

(9)

It should therefore be concluded that FIEs and commodity exchanges are subject to effective supervision and enforcement in Japan on an ongoing basis.

(10)

The conditions laid down in Article 2a of Regulation (EU) No 648/2012 should therefore be considered to be satisfied with respect to FIEs and commodity exchanges authorised in Japan.

(11)

This Decision is based on the legally binding requirements relating to FIEs and commodity exchanges applicable in Japan at the time of the adoption of this Decision. The Commission should continue monitoring on a regular basis the evolution of the legal and supervisory arrangements for these markets and the fulfilment of the conditions on the basis of which this Decision has been taken. In particular, the Commission should review this Decision in light of the entry into application of Regulation (EU) No 600/2014 of the European Parliament and of the Council (3) and Directive 2014/65/EU of the European Parliament and of the Council (4).

(12)

The regular review of the legal and supervisory arrangements applicable to FIEs and commodity exchanges in Japan is without prejudice to the possibility of the Commission to undertake a specific review at any time where relevant developments make it necessary for the Commission to reassess the equivalence granted by this Decision. Such re-assessment could lead to the repeal of this Decision.

(13)

The measures provided for in this Decision are in accordance with the opinion of the European Securities Committee,

16.12.2016   

EN

Official Journal of the European Union

L 342/48

(1)

Regulation (EU) No 648/2012 lays down clearing and bilateral risk-management requirements for over-the-counter (‘OTC’) derivative contracts as well as reporting requirements for such contracts. Point (7) of Article 2 of Regulation (EU) No 648/2012 defines OTC derivatives as derivative contracts the execution of which does not take place on a regulated market within the meaning of point (14) of Article 4(1) of Directive 2004/39/EC of the European Parliament and the of the Council (2) or on a third country market considered as equivalent to a regulated market in accordance with Article 2a of Regulation (EU) No 648/2012. Therefore, any derivative contract the execution of which takes place on a third country market not deemed equivalent to regulated markets are classified as OTC for the purposes of Regulation (EU) No 648/2012.

(2)

In accordance with Article 2a of Regulation (EU) No 648/2012, a third-country market is considered equivalent to a regulated market where it complies with legally binding requirements which are equivalent to the requirements laid down in Title III of Directive 2004/39/EC and is subject to effective supervision and enforcement in that third country on an ongoing basis.

(3)

In order for a third country market to be considered equivalent to a regulated market within the meaning of Directive 2004/39/EC, the substantive outcome of the applicable legally binding requirements and supervisory and enforcement arrangements should be equivalent to Union requirements in respect of the regulatory objectives they achieve. The purpose of this equivalence assessment is therefore to verify that the legally binding requirements which apply to financial markets in Australia are equivalent to the requirements laid down in Title III of Directive 2004/39/EC, and that those markets are subject to effective supervision and enforcement on an ongoing basis. Markets which are authorised as financial markets in Australia on the date of adoption of this Decision should be therefore identified as markets considered equivalent to a regulated market within the meaning of Directive 2004/39/EC.

(4)

The Corporations Act 2001 (Corporations Act) is the primary legislation which establishes legally enforceable regimes for financial markets under the Australian market licencing (AML) regime and the Market Integrity Rules (MIRs) regime. The operation of a financial market in Australia requires a licence. The Corporations Act establishes a rule-making regime allowing the Australian Securities and Investments Commission (ASIC) to adopt MIRs which apply to market operators, market participants, other prescribed entities and financial products traded on financial markets. Further requirements are specified in secondary or delegated instruments adopted under the Corporations Act including the Corporations Regulations 2001 (Corporations Regulations). Finally, ASIC issues regulatory guidance, which further explains how licensees may comply with the relevant provisions of the Corporations Act, including obligations for AML holders to maintain adequate arrangements for operating the markets, to ensure a fair, orderly and transparent market, and other requirements that are amongst the criteria to be assessed. Failure to comply with regulatory guidance leads to an enforcement action carried out by ASIC.

(5)

The legally binding requirements set out in legislation, MIRs and regulatory guidance of financial markets authorised in Australia deliver results equivalent to those of the requirements laid down in Title III of Directive 2004/39/EC in the following areas: authorisation process, definitional requirements, access to the recognised exchange, organisational requirements, requirements for senior management, admission of financial instruments to trading, suspension and removal of instruments from trading, monitoring of compliance with the rules of the financial market and access to clearing and settlement arrangements.

(6)

Under Directive 2004/39/EC, pre- and post-trade transparency requirements apply only to shares admitted to trading on regulated markets. Despite shares can be admitted to trading on financial markets in Australia, the Commission considers that the assessment of those requirements is however not relevant for the purposes of this Decision given that its objective is to verify the equivalence of the legally binding requirements applicable to third-country markets in respect of derivatives contracts that are executed on those markets.

(7)

It should therefore be concluded that the legally binding requirements for financial markets authorised in Australia deliver substantive results equivalent to those of the requirements laid down in Title III of Directive 2004/39/EC.

(8)

ASIC is a public authority established under the Australian Securities and Investments Commission Act 2001 (the ASIC Act) and is responsible for administering and enforcing the law concerning Australian financial markets. The regulatory and enforcement powers of ASIC include investigation of suspected breaches of the law, issuance of infringement notices, seeking civil penalties from the courts and commencing prosecutions. Furthermore, ASIC has the power to inspect financial markets without prior notice. This includes the power to inspect registers, records and documents. Furthermore, the Minister for Financial Services may give written directions to a financial market operator to take specified measures to ensure compliance with its obligations as a financial market licensee where the Minister is of the opinion that those obligations are not being met (s. 794A of the Corporations Act). If the financial market does not comply with that direction, ASIC may apply to the court for an order requiring compliance (s. 794A of the Corporations Act). ASIC also has the power to give a direction to an entity (including market operators and participants of licensed markets), where it is of the opinion that it is necessary, or in the public interest, to protect people dealing in a financial product or classes of financial products (s. 798J of the Corporations Act). In addition, ASIC may seek orders and refer matters for proceedings to enforce its regulatory and investigative measures. ASIC may apply to a court for an order requiring compliance with ASIC's measures taken on the basis of its regulatory and investigatory powers (s. 70 of the ASIC Act). Furthermore, where an entity fails to comply with a direction issued under the Corporations Act, ASIC may make an application to the court for an order requiring compliance with that direction. Finally, ASIC has entered into protocols for cooperation and the sharing of information with each relevant market operator in order to facilitate the supervision of the market and participants under the MIRs.

(9)

It should therefore be concluded that financial markets are subject to effective supervision and enforcement in Australia on an ongoing basis.

(10)

The conditions laid down in Article 2a of Regulation (EU) No 648/2012 should therefore be considered to be satisfied with respect to financial markets authorised in Australia.

(11)

This Decision is based on the legally binding requirements relating to financial markets in Australia at the time of the adoption of this Decision. The Commission should continue monitoring on a regular basis the evolution of the legal and supervisory arrangements for financial markets and the fulfilment of the conditions on the basis of which this Decision has been taken. In particular, the Commission should review this Decision in light of the entry into application of Regulation (EU) No 600/2014 of the European Parliament and of the Council (3) and Directive 2014/65/EU of the European Parliament and of the Council (4).

(12)

The regular review of the legal and supervisory arrangements applicable to financial markets in Australia is without prejudice to the possibility of the Commission to undertake a specific review at any time where relevant developments make it necessary for the Commission to reassess the equivalence granted by this Decision. Such re-assessment could lead to the repeal of this Decision.

(13)

The measures provided for in this Decision are in accordance with the opinion of the European Securities Committee,

16.12.2016   

EN

Official Journal of the European Union

L 342/51

(1)

Regulation (EU) No 648/2012 lays down clearing and bilateral risk-management requirements for over-the-counter (‘OTC’) derivative contracts as well as reporting requirements for such contracts. Point (7) of Article 2 of Regulation (EU) No 648/2012 defines OTC derivatives as derivative contracts the execution of which does not take place on a regulated market within the meaning of point (14) of Article 4(1) of Directive 2004/39/EC of the European Parliament and of the Council (2) or on a third-country market considered as equivalent to a regulated market in accordance with Article 2a of Regulation (EU) No 648/2012. Therefore, any derivative contract the execution of which takes place on a third-country market not deemed equivalent to regulated markets are classified as OTC for the purposes of Regulation (EU) No 648/2012.

(2)

In accordance with Article 2a of Regulation (EU) No 648/2012, a third-country market is considered equivalent to a regulated market where it complies with legally binding requirements which are equivalent to the requirements laid down in Title III of Directive 2004/39/EC and is subject to effective supervision and enforcement in that third country on an ongoing basis.

(3)

In order for a third-country market to be considered equivalent to a regulated market within the meaning of Directive 2004/39/EC, the substantive outcome of the applicable legally binding requirements and supervisory and enforcement arrangements should be equivalent to Union requirements in respect of the regulatory objectives they achieve. The purpose of this equivalence assessment is therefore to verify that the legally binding requirements which apply to recognised exchanges in Canada are equivalent to the requirements laid down in Title III of Directive 2004/39/EC, and that those markets are subject to effective supervision and enforcement on an ongoing basis. Markets which are authorised as recognised exchanges on the date of adoption of this Decision should be therefore identified as markets considered equivalent to a regulated market within the meaning of Directive 2004/39/EC.

(4)

The legally binding requirements for recognised exchanges authorised in Canada comprise a three-tiered structure. The first tier consists of provincial and territorial legal legislation which provides for the general requirements that trading venues operators must comply with if they wish to carry on activities in a province or in a territory. More specific and detailed requirements applicable to the recognised exchanges are laid down in National Instruments (NIs), which constitute the second tier. NIs are adopted by the Securities Regulatory Authorities (SRAs) of each province and territory and cover areas such as fair access and transparency, clearing and settlement, reporting and disclosure obligations. Recognition orders constitute the third tier. They are issued for each recognised exchange by the relevant SRA and set out the operational terms and conditions imposed on each recognised exchange. Recognition orders issued by any SRA have the force of law and any breach of the terms and conditions set out there in is a breach of securities law or commodity futures law.

(5)

The legally binding requirements applicable to recognised exchanges in Canada deliver substantive results equivalent to those of the requirements laid down in Title III of Directive 2004/39/EC in the following areas: authorisation process, definitional requirements, access to the recognised exchange, organisational requirements, requirements for senior management, admission of financial instruments to trading, suspension and removal of instruments from trading, monitoring of compliance with the rules of the recognised exchange and access to clearing and settlement arrangements.

(6)

Under Directive 2004/39/EC, pre- and post-trade transparency requirements apply only to shares admitted to trading on regulated markets. Although shares can be admitted to trading on recognised exchanges authorised in Canada, the Commission considers that the assessment of those requirements is however not relevant for the purposes of this Decision given that its objective is to verify the equivalence of the legally binding requirements applicable to third-country markets in respect of derivatives contracts that are executed on those markets.

(7)

It should therefore be concluded that the legally binding requirements for recognised exchanges authorised in Canada deliver results equivalent to those of the requirements laid down in Title III of Directive 2004/39/EC.

(8)

SRAs are responsible for the regulation and supervision of recognised exchanges authorised within their jurisdiction. Their oversight powers include, inter alia, the authority to make a decision with respect to the trading and manner in which the recognised exchanges carry on their business. In addition, recognised exchanges are required by the terms of their Recognition Order to report suspected breaches of securities law by participants and their clients to the SRAs, and are also required to regularly report on the status of their investigations and disciplinary action to the SRAs. To carry out their supervisory duties, recognised exchanges have dedicated investigation and enforcement staff to monitor trading on an ongoing basis and to perform on-site trade desk reviews of participants. SRAs have also the power to impose sanctions on recognised exchanges for infringements of securities laws (legislative acts, national instruments, rules and recognition orders). The sanctions include fines, reprimands, the revocation of the recognition order or suspension of registration, or the addition of terms and conditions that recognised exchanges have to fulfil in order to comply with securities laws.

(9)

It should therefore be concluded that those financial markets are considered to be subject to effective supervision and enforcement in Canada on an ongoing basis.

(10)

The conditions laid down in Article 2a of Regulation (EU) No 648/2012 should therefore be considered to be satisfied with respect to recognised exchanges authorised in Canada.

(11)

This Decision is based on the legally binding requirements relating to recognised exchanges applicable in Canada at the time of the adoption of this Decision. The Commission should continue to monitor on a regular basis the evolution of the legal and supervisory arrangements for recognised exchanges and the fulfilment of the conditions on the basis of which this Decision has been taken. In particular, the Commission should review this Decision in light of the entry into application of Regulation (EU) No 600/2014 of the European Parliament and of the Council (3) and Directive 2014/65/EU of the European Parliament and of the Council (4).

(12)

The regular review of the legal and supervisory arrangements applicable to recognised exchanges in Canada is without prejudice to the possibility of the Commission to undertake a specific review at any time where relevant developments make it necessary for the Commission to reassess the equivalence granted by this Decision. Such re-assessment could lead to the repeal of this Decision.

(13)

The measures provided for in this Decision are in accordance with the opinion of the European Securities Committee,

16.12.2016   

EN

Official Journal of the European Union

L 342/54

(1)

The procedure for recognition of central counterparties (‘CCPs’) established in third countries set out in Article 25 of Regulation (EU) No 648/2012 aims to allow CCPs established and authorised in third countries whose regulatory standards are equivalent to those laid down in that Regulation to provide clearing services to clearing members or trading venues established in the Union. That recognition procedure and the equivalence decisions provided for therein thus contribute to the achievement of the overarching aim of Regulation (EU) No 648/2012 to reduce systemic risk by extending the use of safe and sound CCPs to clear over-the-counter (‘OTC’) derivative contracts, including where those CCPs are established and authorised in a third country.

(2)

In order for a third-country legal regime to be considered equivalent to the legal regime of the Union in respect of CCPs, the substantive outcome of the applicable legal and supervisory arrangements should be equivalent to Union requirements in respect of the regulatory objectives they achieve. The purpose of this equivalence assessment is therefore to verify that the legal and supervisory arrangements of New Zealand ensure that CCPs established and authorised therein do not expose clearing members and trading venues established in the Union to a higher level of risk than the latter could be exposed to by CCPs authorised in the Union and, consequently, do not pose unacceptable levels of systemic risk in the Union. The significantly lower risks inherent in clearing activities carried out in financial markets that are smaller than the Union financial market should thereby, in particular, be taken into account.

(3)

In accordance with Article 25(6) of Regulation (EU) No 648/2012, three conditions need to be fulfilled in order to determine that the legal and supervisory arrangements of a third country regarding CCPs authorised therein are equivalent to those laid down in that Regulation.

(4)

According to the first condition, CCPs authorised in a third country must comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(5)

The legally binding requirements of New Zealand for CCPs authorised therein consist of Part 5C of the Reserve Bank of New Zealand Act 1989 (‘the primary rules’) and the orders by which CCPs are authorised as a designated settlement system (‘designation orders’). The primary rules and the designation orders set out the requirements that CCPs have to comply with on an ongoing basis to be able to provide clearing services in New Zealand. CCPs established in New Zealand can be authorised as a designated settlement system by the Governor-General, on advice of both the Minister of Finance and the Minister of Commerce and in accordance with a joint recommendation of the Bank of New Zealand and the Financial Markets Authority (together, ‘the joint regulators’). Conditions may be imposed for authorising a CCP as a designated settlement system. The designation orders approve the specific internal rules and procedures of the designated settlement system which contain the requirements that designated settlement systems must comply with, and which are consistent with the joint regulators' high-level policy published by the joint regulators. Pursuant to the Reserve Bank of New Zealand Act 1989, designated settlement systems must comply with relevant international standards concerning clearing and settlement systems, including the Principles for Financial Markets Infrastructures (‘PFMIs’) issued in April 2012 by the Committee on Payment and Settlement Systems (2) and the International Organization of Securities Commissions (‘IOSCO’). The joint regulators issued a policy statement ‘The Designation and Oversight of Designated Settlement Systems’ requiring designated settlement systems to comply with the PFMIs.

(6)

The legally binding requirements applicable to CCPs authorised in New Zealand therefore comprise a two-tiered structure. The core principles contained in the primary rules lay down the high-level standards with which designated settlement systems must comply in order to obtain authorisation to provide clearing services in New Zealand. Those primary rules comprise the first tier of the legally binding requirements in New Zealand. In order to prove compliance with the primary rules, designated settlement systems must submit their internal rules and procedures to the approval of the joint regulators. Those internal rules and procedures, together with the designation orders through which they are approved, comprise the second tier of the legally binding requirements in New Zealand, which must provide prescriptive detail regarding the way in which the designated settlement system will meet those standards and the PFMIs. The joint regulators assess compliance by the designated settlement system with those standards and with the PFMIs. Once the system has been authorised as a designated settlement system, the internal rules and procedures, become legally binding upon it and cannot be amended if the joint regulators object to the intended amendments.

(7)

The equivalence assessment of the legal and supervisory arrangements applicable to designated settlement systems established in New Zealand should also take into account the risk mitigation outcome that they ensure in terms of the level of risk to which clearing members and trading venues established in the Union are exposed when participating in those entities. The risk mitigation outcome is determined by both the level of risk inherent in the clearing activities carried out by the CCP concerned which depends on the size of the financial market in which it operates, and the appropriateness of the legal and supervisory arrangements applicable to CCPs to mitigate that level of risk. In order to achieve an equivalent risk mitigation outcome, more stringent risk mitigation requirements are necessary for CCPs carrying out their activities in larger financial markets whose inherent level of risk is higher than for CCPs carrying out their activities in smaller financial markets whose inherent level of risk is lower.

(8)

The financial market in which designated settlement systems authorised in New Zealand carry out their clearing activities is significantly smaller than that in which CCPs established in the Union are active. Over the past 3 years, the total value of derivative transactions cleared in New Zealand represented less than 1 % of the total value of derivative transactions cleared in the Union. Therefore, participation in designated settlement systems established in New Zealand exposes clearing members and trading venues established in the Union to significantly lower risks than their participation in CCPs authorised in the Union.

(9)

The legal and supervisory arrangements applicable to designated settlement systems established in New Zealand may therefore be considered as equivalent where they are appropriate to mitigate that lower level of risk. The primary rules applicable to designated settlement systems authorised in New Zealand, complemented by the internal rules and procedures, which implement the PFMIs, mitigate the lower level of risk existing in New Zealand and achieve a risk mitigation outcome equivalent to that pursued by Regulation (EU) No 648/2012.

(10)

It should therefore be concluded that the legal and supervisory arrangements of New Zealand ensure that designated settlement systems authorised therein comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(11)

According to the second condition under Article 25(6) of Regulation (EU) No 648/2012, the legal and supervisory arrangements of New Zealand in respect of CCPs authorised therein must provide for effective supervision and enforcement of those CCPs on an ongoing basis.

(12)

The supervision of designated settlement systems authorised in New Zealand is carried out by the joint regulators. The joint regulators may request information from designated settlement systems and their participants and may impose penalties if they refuse to reply. The joint regulators can revoke the authorisation of a designated settlement system. The joint regulators monitor compliance by designated settlement systems with the conditions to which authorisation as a designated settlement system is subject. These conditions can include requirements to notify the joint regulators of material events (such as non-compliance with, or changes to, the system's risk management framework or financial resources policy), regular reports to the joint regulators and to publish information, including a self-assessment against relevant international standards (PFMIs). The joint regulators meet regularly with the senior management of the designated settlement systems and may review the authorisation and subject it to additional conditions or revoke it if the applicable requirements are not complied with.

(13)

It should therefore be concluded that designated settlement systems authorised in New Zealand are subject to effective supervision and enforcement on an ongoing basis.

(14)

According to the third condition under Article 25(6) of Regulation (EU) No 648/2012, the legal and supervisory arrangements of New Zealand must include an effective equivalent system for the recognition of CCPs authorised under third-country legal regimes (‘third-country CCPs’).

(15)

Third-country CCPs can operate in New Zealand provided that the legal and supervisory arrangements applicable to them and to their participants are legally robust. Moreover, third-country CCPs must be subject to effective supervision ensuring compliance with the applicable legal and supervisory arrangements. A memorandum of understanding between the Bank of New Zealand and the competent third-country supervisory authority of the CCP may be concluded.

(16)

It should therefore be concluded that the legal and supervisory arrangements of New Zealand provide for an effective equivalent system for the recognition of third-country CCPs.

(17)

This Decision is based on the legally binding requirements relating to designated settlement systems applicable in New Zealand at the time of the adoption of this Decision. The Commission, in cooperation with ESMA, should continue monitoring on a regular basis the evolution of the legal and supervisory framework for designated settlement systems in New Zealand and the fulfilment of the conditions on the basis of which this Decision has been taken.

(18)

The regular review of the legal and supervisory arrangements applicable in New Zealand to CCPs authorised therein should be without prejudice to the possibility of the Commission to undertake a specific review at any time outside the general review, where relevant developments make it necessary for the Commission to re-assess the equivalence granted by this Decision. Such re-assessment could lead to the repeal of this Decision.

(19)

The measures provided for in this Decision are in accordance with the opinion of the European Securities Committee,

16.12.2016   

EN

Official Journal of the European Union

L 342/57

(1)

The procedure for recognition of central counterparties (‘CCPs’) established in third countries set out in Article 25 of Regulation (EU) No 648/2012 aims to allow CCPs established and authorised in third countries whose regulatory standards are equivalent to those laid down in that Regulation to provide clearing services to clearing members or trading venues established in the Union. That recognition procedure and the equivalence decision provided for therein thus contribute to the achievement of the overarching aim of Regulation (EU) No 648/2012 to reduce systemic risk by extending the use of safe and sound CCPs to clear over-the-counter (‘OTC’) derivative contracts, including where those CCPs are established and authorised in a third country.

(2)

In order for a third country legal regime to be considered equivalent to the legal regime of the Union in respect of CCPs, the substantive outcome of the applicable legal and supervisory arrangements should be equivalent to Union requirements in respect of the regulatory objectives they achieve. The purpose of this equivalence assessment is therefore to verify that the legal and supervisory arrangements of Japan ensure that CCPs established and authorised therein do not expose clearing members and trading venues established in the Union to a higher level of risk than the latter could be exposed to by CCPs authorised in the Union and, consequently, do not pose unacceptable levels of systemic risk in the Union. The significantly lower risks inherent in clearing activities carried out in financial markets that are smaller than the Union financial market should thereby, in particular, be taken into account.

(3)

In accordance with Article 25(6) of Regulation (EU) No 648/2012, three conditions need to be fulfilled in order to determine that the legal and supervisory arrangements of a third country regarding CCPs authorised therein are equivalent to those laid down in that Regulation.

(4)

According to the first condition, CCPs authorised in a third country must comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(5)

The legally binding requirements of Japan for CCPs authorised therein consist of the Financial Instruments and Exchange Act 2006 (‘FIEA’), which establishes the supervisory framework for organisations clearing securities and financial derivatives, and the Commodity Derivatives Act 2009 (‘CDA’), which provides the supervisory framework for organisations clearing commodities. The present decision only covers the regime set out in the CDA for commodity transaction clearing organisations (‘CTCOs’). The CDA sets out the requirements that CTCOs must comply with on an ongoing basis to be able to provide clearing services in Japan. CTCOs must be authorised by the competent minister. The competent minister may establish conditions for granting a CTCO license. The minister of the Ministry of Agriculture, Forestry and Fisheries (‘MAFF’) is the competent minister for CTCOs that perform clearing services only for commodity markets that concern MAFF. The minister of the Ministry of Economy, Trade and Industry (‘METI’) is the competent minister for CTCOs that perform clearing services only for commodity markets that concern METI. For other CTCOs, both the minsters of METI and MAFF are the competent ministers.

(6)

Moreover, in November 2014, METI and the MAFF published the ‘Basic Guidelines on Supervision of Commodity Clearing Organisations’ (‘the Guidelines’), which detail the supervisory framework with regard to CTCOs in consideration of the Principles for Financial Markets Infrastructures (‘PFMIs’) issued in April 2012 by the Committee on Payment and Settlement Systems (2) and the International Organization of Securities Commissions, and in particular the way in which the CDA must be complied with by the CTCOs. The Guidelines are implemented in the internal rules and procedures of CTCOs.

(7)

Pursuant to the primary rules, CTCOs must adopt internal business rules — the internal rules and procedures of the CTCO — which conform to the applicable laws and regulations and allow the derivatives transactions to be performed properly and securely. Internal business rules also ensure that the financial standing of CTCOs is sufficient for undertaking the clearing of commodities; that the expected income and expenditure pertaining to the business of CTCOs are favorable; that the CTCOs' staff has sufficient knowledge and experience for conducting the clearing of commodities appropriately and with certainty; and that the structure and system of CTCOs are adequately developed so that settlement can function adequately. Those internal rules and procedures need to be approved by the competent minister and cannot be amended if the competent minister objects to them.

(8)

The legally binding requirements applicable to CTCOs authorised in Japan therefore comprise a two-tiered structure. The core principles for CTCOs contained in the primary rules lay down the high-level standards with which CTCOs must comply in order to obtain a license to provide clearing services in Japan (together, the ‘primary rules’). Those primary rules comprise the first tier of the legally binding requirements in Japan applicable to CTCOs. In order to prove compliance with the primary rules, CTCOs must submit their internal rules and procedures to the competent minister for approval. Those internal rules and procedures comprise the second tier of the legally binding requirements in Japan applicable to CTCOs, which must provide prescriptive detail regarding the way in which the applicant CTCO will meet those standards in accordance with the Guidelines. Moreover, the internal rules and procedures of CTCOs contain additional provisions which complement the primary rules. METI and MAFF assess compliance by the CTCO with those standards and with the PFMIs. Once approved by competent minister, those internal rules and procedures become legally binding upon the CTCO.

(9)

The equivalence assessment of the legal and supervisory arrangements applicable to CTCOs established in Japan should also take into account the risk mitigation outcome that they ensure in terms of the level of risk to which clearing members and trading venues established in the Union are exposed when participating in those entities. The risk mitigation outcome is determined by both the level of risk inherent in the clearing activities carried out by the CCP concerned which depends on the size of the financial market in which it operates, and the appropriateness of the legal and supervisory arrangements applicable to CCPs to mitigate that level of risk. In order to achieve an equivalent risk mitigation outcome, more stringent risk mitigation requirements are necessary for CCPs carrying out their activities in larger financial markets whose inherent level of risk is higher than for CCPs carrying out their activities in smaller financial markets whose inherent level of risk is lower.

(10)

The financial market in which CTCOs authorised in Japan carry out their clearing activities is significantly smaller than that in which CCPs established in the Union are active. Over the past three years, the total value of derivative transactions cleared in Japan represented less than 2 % of the total value of derivative transactions cleared in the Union. Therefore, participation in CTCOs established in Japan exposes clearing members and trading venues established in the Union to significantly lower risks than their participation in CCPs authorised in the Union.

(11)

The legal and supervisory arrangements applicable to CTCOs established in Japan may therefore be considered as equivalent where they are appropriate to mitigate that lower level of risk. The primary rules applicable to CTCOs authorised in Japan, complemented by the internal rules and procedures, which implement the PFMIs, mitigate the lower level of risk existing in Japan and achieve a risk mitigation outcome equivalent to that pursued by Regulation (EU) No 648/2012.

(12)

It should therefore be concluded that the legal and supervisory arrangements of Japan ensure that CTCOs authorised therein comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(13)

According to the second condition under Article 25(6) of Regulation (EU) No 648/2012, the legal and supervisory arrangements of Japan in respect of CCPs authorised therein must provide for effective supervision and enforcement of those CCPs on an ongoing basis.

(14)

The supervision of CTCOs authorised in Japan is carried out by the METI and MAFF, within their respective competencies, within each Ministry's scope of powers. METI and MAFF may order CTCOs and their clearing members to submit reports or materials regarding their assets or business. METI and MAFF may also conduct inspections of CTCOs and their clearing members, including examining their books and documents or any other element related to their business. METI and MAFF may, where they consider it to be necessary and appropriate for the proper and reliable performance of clearing services, order CTCOs to amend their articles of incorporation, their business rules and other rules, to change their business methods or to take the necessary measures to improve their business operations or the state of their assets. METI and MAFF may also impose disciplinary actions, as well as fines, to CTCOs for failure to comply with the applicable provisions.

(15)

It should therefore be concluded that CTCOs authorised in Japan are subject to effective supervision and enforcement on an ongoing basis.

(16)

According to the third condition under Article 25(6) of Regulation (EU) No 648/2012, the legal and supervisory arrangements of Japan must include an effective equivalent system for the recognition of CCPs authorised under third country legal regimes (‘third-country CCPs’).

(17)

Third-country CCPs may apply for authorisation as a CTCO to provide the same services in Japan as they are authorised to provide in that third country. The Japan Financial Services Agency (‘JFSA’) has the power to designate commodities, through consultation with the minister which has jurisdiction over a commodity market, that can be traded on a Financial Instruments Market (‘FIM’) under Japan's Financial Instruments and Exchange Act (‘FIEA’). Where third-country CCPs clear such designated contracts traded on a FIM, the CCP can apply for a ‘Foreign CCP’ license from the JFSA, enabling them to provide the same services in Japan as they are authorised to provide in the third country. The criteria applied to a third country CCP applying for a license are similar to the criteria applied to Japanese clearing organisations, but third country CCPs are exempted from certain requirements applicable to domestic CCPs authorised in Japan where they have been granted an equivalent license from the relevant third country authority with which the JFSA has concluded a cooperative arrangement. Third-country CCPs that clear contracts not designated to be traded on a FIM need to apply for a license from METI and MAFF under Japan's Commodity Derivative Act. In considering an application for a license, MET and MAFF would consider the CCP's authorisation status in the third country.

(18)

It should therefore be concluded that the legal and supervisory arrangements of Japan provide for an effective equivalent system for the recognition of third-country CCPs.

(19)

This Decision is based on the legally binding requirements relating to CTCOs applicable in Japan at the time of the adoption of this Decision. The Commission should continue monitoring the evolution of the Japanese legal and supervisory framework for CTCOs and the fulfilment of the conditions on the basis of which this decision has been taken.

(20)

The regular review of the legal and supervisory arrangements applicable in Japan to CCPs authorised therein should be without prejudice to the possibility of the Commission, in cooperation with the European Securities Markets Authority, to undertake a specific review at any time outside the general review, where relevant developments make it necessary for the Commission to re-assess the equivalence granted by this Decision. Such re-assessment could lead to the repeal of this Decision.

(21)

The measures provided for in this Decision are in accordance with the opinion of the European Securities Committee,

16.12.2016   

EN

Official Journal of the European Union

L 342/61

(1)

The procedure for recognition of central counterparties (‘CCPs’) established in third countries set out in Article 25 of Regulation (EU) No 648/2012 aims to allow CCPs established and authorised in third countries whose regulatory standards are equivalent to those laid down in that Regulation to provide clearing services to clearing members or trading venues established in the Union. That recognition procedure and the equivalence decisions provided for therein thus contribute to the achievement of the overarching aim of Regulation (EU) No 648/2012 to reduce systemic risk by extending the use of safe and sound CCPs to clear over-the-counter (‘OTC’) derivative contracts, including where those CCPs are established and authorised in a third country.

(2)

In order for a third-country legal regime to be considered equivalent to the legal regime of the Union in respect of CCPs, the substantive outcome of the applicable legal and supervisory arrangements should be equivalent to Union requirements in respect of the regulatory objectives they achieve. The purpose of this equivalence assessment is therefore to verify that the legal and supervisory arrangements of Brazil ensure that CCPs established and authorised therein do not expose clearing members and trading venues established in the Union to a higher level of risk than the latter could be exposed to by CCPs authorised in the Union and, consequently, do not pose unacceptable levels of systemic risk in the Union. The significantly lower risks inherent in clearing activities carried out in financial markets that are smaller than the Union financial market should thereby, in particular, be taken into account.

(3)

In accordance with Article 25(6) of Regulation (EU) No 648/2012, three conditions need to be fulfilled in order to determine that the legal and supervisory arrangements of a third country regarding CCPs authorised therein are equivalent to those laid down in that Regulation.

(4)

According to the first condition, CCPs authorised in a third country must comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(5)

The legally binding requirements of Brazil for CCPs authorised therein consist of Law 10214 of 27 March 2001 and Resolutions issued by the National Monetary Council (CMN), Circulars issued by the Central Bank of Brazil (BCB) and Instructions issued by the Brazilian Securities and Exchange Commission (CVM) adopted pursuant to it. In particular, Resolution 2882, as amended by Resolution 3081, regulates the activities of clearing houses and of clearing services providers, sets out the principles applicable to the functioning of clearing houses and clearing services providers and empower the BCB to regulate, authorise and supervise clearing houses and clearing services providers.

(6)

Clearing houses and clearing services providers established in Brazil have to be authorised by the BCB to provide clearing services. When considering authorisation as a clearing house or as a provider of clearing services, the BCB must take into account the soundness, the normal functioning and the improvement of the Brazilian payments system. The BCB may also specify ‘such conditions as it considers appropriate’ before granting such authorisation or afterwards, based on financial system stability, risk and efficiency of clearing houses and clearing service providers. Clearing houses that operate a systemically important system creating risks to the strength and to the smooth functioning of the Brazilian financial system, which is to be determined by the BCB depending on the clearing systems' volume and nature, may be subject to different rules than the rest of clearing houses and clearing service providers.

(7)

The BCB has adopted different measures in order to implement Resolution 2882 and to ensure compliance by clearing houses and clearing services providers with the values, principles and rules applicable to the payment system. In particular, Circular 3057 contains the detailed regulation for the functioning of clearing houses and clearing service providers and sets out several requirements that they must comply with, including capital requirements, transparency standards, risk control measures and operational requirements. The BCB issued Policy Statement No 25097 on the adoption of the Principles for Financial Markets Infrastructures (‘PFMIs’) issued in April 2012 by the Committee on Payment and Settlement Systems (2) (‘CPSS’) and the International Organization of Securities Commissions (‘IOSCO’), by which the BCB applies the PFMIs in its supervision and oversight of clearing houses and clearing services providers.

(8)

Pursuant to Circular 3057, clearing houses and clearing service providers must adopt internal rules and procedures ensuring compliance with all relevant requirements and containing all the relevant aspects related to its function, including the safeguards to manage credit, liquidity and operational risk. Those internal rules and procedures are submitted to, and firstly assessed by, the BCB in the authorisation procedure. In addition, material changes to the internal rules and procedures have to also be approved by the BCB. Any other non-material changes to internal rules and procedures must be communicated to the BCB before 30 days after the changes have been made, and the BCB can oppose them.

(9)

The legally binding requirements applicable to CCPs authorised in Brazil therefore comprise a two-tiered structure. The core principles contained in Law 10214, and the Resolutions, Circulars and Instructions adopted pursuant to it set out the high-level standards with which clearing houses and clearing service providers must comply in order to obtain authorisation to provide clearing services in Brazil (together, the ‘primary rules’). Those primary rules comprise the first tier of the legally binding requirements in Brazil. In order to prove compliance with the primary rules, clearing houses and clearing service providers must submit their internal rules and procedures to BCB for approval or non-objection. Those internal rules and procedures comprise the second tier of the legally binding requirements in Brazil, which must provide prescriptive detail regarding the way in which the clearing houses and clearing service providers will meet those standards. BCB will assess compliance by clearing houses and clearing service providers with those standards and with the PFMIs. Once approved by BCB, the internal rules and procedures become legally binding upon the clearing houses and clearing service providers.

(10)

The equivalence assessment of the legal and supervisory arrangements applicable to clearing houses and clearing services providers in Brazil should also take into account the risk mitigation outcome that they ensure in terms of the level of risk to which clearing members and trading venues established in the Union are exposed when participating in those entities. The risk mitigation outcome is determined by both the level of risk inherent in the clearing activities carried out by the CCP concerned which depends on the size of the financial market in which it operates, and the appropriateness of the legal and supervisory arrangements applicable to CCPs to mitigate that level of risk. In order to achieve an equivalent risk mitigation outcome, more stringent risk mitigation requirements are necessary for CCPs carrying out their activities in larger financial markets whose inherent level of risk is higher than for CCPs carrying out their activities in smaller financial markets whose inherent level of risk is lower.

(11)

The financial market in which clearing houses and clearing services providers established in Brazil carry out their clearing activities is significantly smaller than that in which CCPs established in the Union are active. Over the past 3 years, the total value of derivative transactions cleared in Brazil represented less than 3 % of the total value of derivative transactions cleared in the Union. Therefore, participation in clearing houses and clearing services providers exposes clearing members and trading venues established in the Union to significantly lower risks than their participation in CCPs authorised in the Union.

(12)

The legal and supervisory arrangements applicable to clearing houses and clearing services providers established in Brazil may therefore be considered as equivalent where they are appropriate to mitigate that lower level of risk. The primary rules applicable to clearing houses and clearing services providers complemented by their internal rules and procedures which require compliance with the PFMIs, mitigate the lower level of risk existing in Brazil and achieve a risk mitigation outcome equivalent to that pursued by Regulation (EU) No 648/2012.

(13)

It should therefore be concluded that the legal and supervisory arrangements of Brazil ensure that clearing houses and clearing service providers authorised therein comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(14)

According to the second condition under Article 25(6) of Regulation (EU) No 648/2012, the legal and supervisory arrangements of Brazil in respect of CCPs authorised therein must provide for effective supervision and enforcement of those CCPs on an ongoing basis.

(15)

The BCB conducts ongoing monitoring of clearing houses' and clearing service providers' compliance with the legally binding requirements applicable to them. The BCB has, in addition, several means to ensure such compliance. In particular, BCB has the power to request information from clearing houses and clearing services providers, issue warning notices to them and request them to make certain amendments to their rules as deemed necessary. In addition, the BCB may also impose fines for any infringement by clearing houses or clearing services providers of the legally binding requirements applicable to them and has the power to even withdraw their authorisations.

(16)

It should therefore be concluded that clearing houses and clearing service providers authorised in Brazil are subject to effective supervision and enforcement on an ongoing basis.

(17)

According to the third condition under Article 25(6) of Regulation (EU) No 648/2012, the legal and supervisory arrangements of Brazil must include an effective equivalent system for the recognition of CCPs authorised under third-country legal regimes (‘third-country CCPs’).

(18)

CCPs authorised in a third country in which the legal and supervisory arrangements ensure similar outcomes to those ensured by the legal and supervisory arrangements applicable in Brazil and which comply with the PFMIs, which have equivalent regulation on anti-money laundering, and in which CCPs are subject to effective supervision may provide services in Brazil. The conclusion of cooperation arrangements between BCB and the competent third-country authority of the applicant CCP is also required for recognition to be granted.

(19)

It should therefore be concluded that the legal and supervisory arrangements of Brazil provide for an effective equivalent system for the recognition of third-country CCPs.

(20)

This Decision is based on the legally binding requirements relating to clearing houses and clearing services providers applicable in Brazil at the time of the adoption of this Decision. The Commission should continue monitoring on a regular basis the evolution of the legal and supervisory framework for clearing houses and clearing services providers and the fulfilment of the conditions on the basis of which this decision has been taken.

(21)

The regular review of the legal and supervisory arrangements applicable in Brazil to CCPs authorised therein should be without prejudice to the possibility of the Commission to undertake a specific review at any time outside the general review, where relevant developments make it necessary for the Commission to re-assess the equivalence granted by this Decision. Such re-assessment could lead to the repeal of this Decision.

(22)

The measures provided for in this Decision are in accordance with the opinion of the European Securities Committee,

16.12.2016   

EN

Official Journal of the European Union

L 342/65

(1)

The procedure for recognition of central counterparties (‘CCPs’) established in third countries set out in Article 25 of Regulation (EU) No 648/2012 aims to allow CCPs established and authorised in third countries whose regulatory standards are equivalent to those laid down in that Regulation to provide clearing services to clearing members or trading venues established in the Union. That recognition procedure and the equivalence Decision provided for therein thus contribute to the achievement of the overarching aim of Regulation (EU) No 648/2012 to reduce systemic risk by extending the use of safe and sound CCPs to clear over-the-counter (‘OTC’) derivative contracts, including where those CCPs are established and authorised in a third country.

(2)

In order for a third-country legal regime to be considered equivalent to the legal regime of the Union in respect of CCPs, the substantive outcome of the applicable legal and supervisory arrangements should be equivalent to Union requirements in respect of the regulatory objectives they achieve. The purpose of this equivalence assessment is therefore to verify that the legal and supervisory arrangements of the Dubai International Financial Centre (hereafter ‘the DIFC’) ensure that CCPs established and authorised therein do not expose clearing members and trading venues established in the Union to a higher level of risk than the latter could be exposed to by CCPs authorised in the Union and, consequently, do not pose unacceptable levels of systemic risk in the Union. The significantly lower risks inherent in clearing activities carried out in financial markets that are smaller than the Union financial market should thereby, in particular, be taken into account.

(3)

In accordance with Article 25(6) of Regulation (EU) No 648/2012, three conditions need to be fulfilled in order to determine that the legal and supervisory arrangements of a third country regarding CCPs authorised therein are equivalent to those laid down in that Regulation.

(4)

According to the first condition, CCPs authorised in a third country must comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(5)

The legally binding requirements of the DIFC for CCPs authorised therein consist of the Regulatory Law 2004 and the Markets Law 2012 (the DIFC Regulations). These are supplemented by the Dubai Financial Services Authority (‘DFSA’) Rulebook which contains a Module on Authorised Market Institutions (‘AMIs’).

(6)

CCPs established in the DIFC must be authorised by the DFSA as AMIs. The present Decision only relates to the regime applicable to AMIs that carry out the authorised financial service of operating a clearing house in the DIFC. To be granted an authorisation for clearing, AMIs have to fulfil specific requirements set out by the DFSA and in the DFSA Rulebook. AMIs must operate clearing facilities safely and effectively and to manage prudently the risks associated with their business and operations. They also have to have sufficient financial, human and system resources.

(7)

The DIFC Regulations fully implement the international standards set out under the Principles for Financial Market Infrastructures (‘PFMIs’) issued in April 2012 by the Committee on Payment and Settlement Systems (2) (‘CPSS’) and the International Organization of Securities Commissions (‘IOSCO’).

(8)

The DIFC Regulations also require AMIs to adopt internal rules and procedures ensuring compliance with all relevant requirements and that are necessary for the proper regulation of its clearing and settlement facilities. AMI Rule 5.6 requires AMIs' internal rules and procedures to contain specific provisions including default rules. Those internal rules and procedures, as well as any amendments, have to be submitted to DFSA prior to their implementation. DFSA can reject or require amendments to the proposed rules. Under the DIFC Regulations, internal rules of AMIs are legally binding and enforceable against members and other participants.

(9)

The legally binding requirements applicable to AMIs authorised in the DIFC therefore comprise a two-tiered structure. The core principles contained in the DFSA Rulebook and the DIFC Regulations set out the high-level standards which AMIs must comply with in order to obtain authorisation to provide clearing services in the DIFC (together, the ‘primary rules’). Those primary rules comprise the first tier of the legally binding requirements in the DIFC. In order to prove compliance with the primary rules, AMI Rule 5.6 on ‘Business Rules’ requires AMIs to establish and submit their internal rules and procedures to the DFSA for approval prior to their implementation and DFSA can prevent or disallow them. Those internal rules and procedures comprise the second tier of requirements in the DIFC.

(10)

The equivalence assessment of the legal and supervisory arrangements applicable to AMIs in the DIFC should also take into account the risk mitigation outcome that they ensure in terms of the level of risk to which clearing members and trading venues established in the Union are exposed when participating in those entities. The risk mitigation outcome is determined by both the level of risk inherent in the clearing activities carried out by the CCP concerned which depends on the size of financial market in which it operates, and the appropriateness of the legal and supervisory arrangements applicable to CCPs to mitigate that level of risk. In order to achieve an equivalent risk mitigation outcome, more stringent risk mitigation requirements are necessary for CCPs carrying out their activities in larger financial markets whose inherent level of risk is higher than for CCPs carrying out their activities in smaller financial markets whose inherent level of risk is lower.

(11)

The financial market in which AMIs authorised in the DIFC carry out their clearing activities is significantly smaller than that in which CCPs established in the Union are active. Since 2011 there has been minimal trading or clearing in derivatives. Therefore, participation in CCPs authorised in the DIFC exposes clearing members and trading venues established in the Union to significantly lower risks than their participation in CCPs authorised in the Union.

(12)

The legal and supervisory arrangements applicable to CCPs authorised in the DIFC may therefore be considered as equivalent where they are appropriate to mitigate that lower level of risk. The primary rules applicable to those CCPs, complemented by their internal rules and procedures which require compliance with the PFMIs, mitigate the lower level of risk existing in the DIFC and achieve a risk mitigation outcome equivalent to that pursued by Regulation (EU) No 648/2012.

(13)

It should therefore be concluded that the legal and supervisory arrangements of the DIFC ensure that AMIs authorised therein comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(14)

According to the second condition under Article 25(6) of Regulation (EU) No 648/2012, the legal and supervisory arrangements of the DIFC in respect of CCPs authorised therein must provide for effective supervision and enforcement of those CCPs on an ongoing basis.

(15)

The DFSA, as the supervisor of AMIs, monitors AMIs in the DIFC to ensure compliance with applicable rules. The DFSA has the comprehensive power to authorise and penalise them including, among other things, the power to cancel the license of AMIs and the power to impose sanctions on them. Day-to-day supervision is conducted by the DFSA. The DFSA adopts a continuous risk management cycle comprising the identification, assessment, prioritisation and mitigation of risks. The Regulatory Law 2004 gives the DFSA strong powers to enforce its laws and rules. The DFSA is empowered to conduct investigations into suspected contraventions of its rules, and has powers to conduct inspections, compulsorily obtain books and records, or require individuals to participate in interviews under oath or affirmation. The DFSA is able to, among other things, impose financial penalties, issue public censures, and ban persons from undertaking activities on the DIFC.

(16)

It should therefore be concluded that AMIs authorised in the DIFC are subject to effective supervision and enforcement on an ongoing basis.

(17)

According to the third condition under Article 25(6) of Regulation (EU) No 648/2012, the legal and supervisory arrangements of the DIFC must include an effective equivalent system for the recognition of CCPs authorised under third-country legal regimes (‘third-country CCPs’).

(18)

Third-country CCPs which want to clear derivatives in the DIFC have to apply to the DFSA for recognition. The Recognition Module sets out the criteria and the process for recognition.

(19)

In order for recognition to be granted, the jurisdiction in which the CCP is established must have a sufficiently robust regulatory regime similar to the legal and supervisory arrangements applicable in the DIFC. The conclusion of cooperative arrangements between DIFC and competent third-country authorities is also required before the third-country CCP application is approved.

(20)

It should therefore be concluded that the legal and supervisory arrangements of the DIFC provide for an effective equivalent system for the recognition of third-country CCPs.

(21)

This Decision is based on the legally binding requirements relating to AMIs applicable in the DIFC at the time of the adoption of this Decision. The Commission, in cooperation with ESMA, should continue monitoring on a regular basis the evolution of the legal and supervisory framework for AMIs and the fulfilment of the conditions on the basis of which this decision has been taken.

(22)

The regular review of the legal and supervisory arrangements applicable in the DIFC to CCPs authorised therein should be without prejudice to the possibility of the Commission to undertake a specific review at any time outside the general review, where relevant developments make it necessary for the Commission to re-assess the equivalence granted by this Decision. Such re-assessment could lead to the repeal of this Decision.

(23)

The measures provided for in this Decision are in accordance with the opinion of the European Securities Committee,

16.12.2016   

EN

Official Journal of the European Union

L 342/68

(1)

The procedure for recognition of central counterparties (‘CCPs’) established in third countries set out in Article 25 of Regulation (EU) No 648/2012 aims to allow CCPs established and authorised in third countries whose regulatory standards are equivalent to those laid down in that Regulation to provide clearing services to clearing members or trading venues established in the Union. That recognition procedure and the equivalence decisions provided for therein thus contribute to the achievement of the overarching aim of Regulation (EU) No 648/2012 to reduce systemic risk by extending the use of safe and sound CCPs to clear over-the-counter (‘OTC’) derivative contracts, including where those CCPs are established and authorised in a third country.

(2)

In order for a third-country legal regime to be considered equivalent to the legal regime of the Union in respect of CCPs, the substantive outcome of the applicable legal and supervisory arrangements should be equivalent to Union requirements in respect of the regulatory objectives they achieve. The purpose of this equivalence assessment is therefore to verify that the legal and supervisory arrangements of the United Arab Emirates (‘UAE’) ensure that CCPs established and authorised therein do not expose clearing members and trading venues established in the Union to a higher level of risk than the latter could be exposed to by CCPs authorised in the Union and, consequently, do not pose unacceptable levels of systemic risk in the Union. The significantly lower risks inherent in clearing activities carried out in financial markets that are smaller than the Union financial market should thereby, in particular, be taken into account.

(3)

In accordance with Article 25(6) of Regulation (EU) No 648/2012, three conditions need to be fulfilled in order to determine that the legal and supervisory arrangements of a third country regarding CCPs authorised therein are equivalent to those laid down in that Regulation.

(4)

According to the first condition, CCPs authorised in a third country must comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(5)

The legally binding requirements of the UAE for CCPs authorised therein consist of the Regulations (‘the regulations’) issued by the UAE Securities and Commodities Authority (SCA). The regulations set out the requirements that CCPs have to comply with on an ongoing basis to be able to provide clearing services in the UAE. These comprise of Decision No 157\R of 2005 which defines a Clearing Agency and the SCA Board Decision No 11 of 2015 which set out requirements for CCPs. CCPs established in the UAE have to be authorised by the SCA.

(6)

The SCA has issued a regulation (SCA Board Decision No 11 of 2015) requiring CCPs authorised in the UAE to comply with the Principles for Financial Markets Infrastructures (‘PFMIs’) issued in April 2012 by the Committee on Payment and Settlement Systems (2) and the International Organization of Securities Commissions.

(7)

Pursuant to the regulations, CCPs must adopt internal rules and procedures ensuring compliance with all relevant requirements and containing all the relevant aspects related to its function, including the safeguards to manage credit, liquidity and operational risk. Those internal rules and procedures need to be approved by the SCA. Moreover, those internal rules and procedures cannot be amended if the SCA objects to the intended amendments. Moreover, the methodologies for the calculation of the financial resources and the stress test scenarios that a CCP uses are subject to the approval of the SCA.

(8)

The legally binding requirements applicable to CCPs authorised in the UAE therefore comprise a two-tiered structure. The core principles contained in the regulations, particularly SCA Board Decision No 11 of 2015, lay down the high-level standards with which CCPs must comply in order to obtain authorisation to provide clearing services in the UAE. Those regulations comprise the first tier of the legally binding requirements in the UAE. The internal rules and procedures of the CCP comprise the second tier of the legally binding requirements in the UAE. The SCA assesses compliance by the CCP with the regulations and with the PFMIs. Once approved by the SCA, the internal rules and procedures become legally binding upon the CCP.

(9)

The equivalence assessment of the legal and supervisory arrangements applicable to CCPs established in the UAE should also take into account the risk mitigation outcome that they ensure in terms of the level of risk to which clearing members and trading venues established in the Union are exposed when participating in those entities. The risk mitigation outcome is determined by both the level of risk inherent in the clearing activities carried out by the CCP concerned which depends on the size of the financial market in which it operates, and the appropriateness of the legal and supervisory arrangements applicable to CCPs to mitigate that level of risk. In order to achieve an equivalent risk mitigation outcome, more stringent risk mitigation requirements are necessary for CCPs carrying out their activities in larger financial markets whose inherent level of risk is higher than for CCPs carrying out their activities in smaller financial markets whose inherent level of risk is lower.

(10)

The financial market in which CCPs authorised in the UAE carry out their clearing activities is significantly smaller than that in which CCPs established in the Union are active. Over the past 3 years, the total value of derivative transactions cleared in the UAE represented less than 1 % of the total value of derivative transactions cleared in the Union. Therefore, participation in CCPs established in the UAE exposes clearing members and trading venues established in the Union to significantly lower risks than their participation in CCPs authorised in the Union.

(11)

The legal and supervisory arrangements applicable to CCPs established in the UAE may therefore be considered as equivalent where they are appropriate to mitigate that lower level of risk. The regulations applicable to CCPs authorised in the UAE, complemented by the internal rules and procedures, which implement the PFMIs, mitigate the lower level of risk existing in the UAE and achieve a risk mitigation outcome equivalent to that pursued by Regulation (EU) No 648/2012.

(12)

It should therefore be concluded that the legal and supervisory arrangements of the UAE ensure that CCPs authorised therein comply with legally binding requirements which are equivalent to the requirements laid down in Title IV of Regulation (EU) No 648/2012.

(13)

According to the second condition under Article 25(6) of Regulation (EU) No 648/2012, the legal and supervisory arrangements of the UAE in respect of CCPs authorised therein must provide for effective supervision and enforcement of those CCPs on an ongoing basis.

(14)

The supervision of CCPs authorised in the UAE is carried out by the SCA. The SCA is empowered to conduct ongoing monitoring of CCPs' compliance with the legally binding requirements applicable to them. In this sense, the SCA may request information from CCPs, carry out on-site inspections, issue instructions to remedy infringements or potential infringements of the prudential requirements or practices which are against the well-functioning of the financial markets and order CCPs to set up internal control and risk control measures. The SCA can also remove the management, some members of specific committees and other staff of the CCP. Further, the SCA is empowered to revoke the CCP's authorisation. The SCA may also impose disciplinary actions, as well as fines, to CCPs for failure to comply with the legally binding requirements applicable to them.

(15)

It should therefore be concluded that CCPs authorised in the UAE are subject to effective supervision and enforcement on an ongoing basis.

(16)

According to the third condition under Article 25(6) of Regulation (EU) No 648/2012, the legal and supervisory arrangements of the UAE must include an effective equivalent system for the recognition of CCPs authorised under third-country legal regimes (‘third-country CCPs’).

(17)

The SCA may recognise CCPs which are authorised in third countries in which the legal and supervisory arrangements ensure similar outcomes to those ensured by the legal and supervisory arrangements applicable in the UAE. Moreover, third-country CCPs must be subject to effective supervision ensuring compliance with the applicable legal and supervisory arrangements. The conclusion of a memorandum of understanding between the UAE and the competent third-country supervisory authority of the applicant CCP is also required for recognition to be granted.

(18)

It should therefore be concluded that the legal and supervisory arrangements of the UAE provide for an effective equivalent system for the recognition of third-country CCPs.

(19)

This Decision is based on the legally binding requirements relating to CCPs applicable in the UAE at the time of the adoption of this Decision. The Commission, in cooperation with ESMA, should continue monitoring on a regular basis the evolution of the legal and supervisory framework for CCPs in the UAE and the fulfilment of the conditions on the basis of which this decision has been taken.

(20)

The regular review of the legal and supervisory arrangements applicable in the UAE to CCPs authorised therein should be without prejudice to the possibility of the Commission to undertake a specific review at any time outside the general review, where relevant developments make it necessary for the Commission to re-assess the equivalence granted by this Decision. Such re-assessment could lead to the repeal of this Decision.

(21)

The measures provided for in this Decision are in accordance with the opinion of the European Securities Committee,

16.12.2016   

EN

Official Journal of the European Union

L 342/71

(1)

Commission Implementing Decision (EU) 2016/2122 (3) was adopted following outbreaks of highly pathogenic avian influenza of subtype H5N8 in holdings in Denmark, Germany, Hungary, the Netherlands, Austria and Sweden (‘the concerned Member States’) and the establishment of protection and surveillance zones by the competent authority of the concerned Member States in accordance with Council Directive 2005/94/EC (4).

(2)

Implementing Decision (EU) 2016/2122 provides that the protection and surveillance zones established by the concerned Member States in accordance with Directive 2005/94/EC are to comprise at least the areas listed as protection and surveillance zones in the Annex to that Implementing Decision.

(3)

Following further outbreaks of avian influenza of subtype H5N8 in Germany, Hungary and the Netherlands, as well as outbreaks of that disease in France and Poland, the Annex to Implementing Decision (EU) 2016/2122 was amended by Commission Implementing Decision (EU) 2016/2219 (5) in order to amend the areas listed in the Annex to Implementing Decision (EU) 2016/2122 to take account of the new epidemiological situation in the Union and the establishment of new protection and surveillance zones by the competent authorities of those Member States in accordance with Directive 2005/94/EC.

(4)

Since the date of the amendments made to Implementing Decision (EU) 2016/2122 by Implementing Decision (EU) 2016/2219, Germany has notified the Commission of an outbreak of avian influenza of subtype H5N8 in a holding where captive birds are kept outside the areas currently listed in the Annex to Implementing Decision (EU) 2016/2122 where poultry or other captive birds are kept and it has taken the necessary measures required in accordance with Directive 2005/94/EC, including the establishment of protection and surveillance zones around that outbreak.

(5)

In addition, since the date of the amendments made to Implementing Decision (EU) 2016/2122 by Implementing Decision (EU) 2016/2219, France has notified the Commission of further outbreaks of avian influenza of subtype H5N8 in holdings outside the areas currently listed in the Annex to Implementing Decision (EU) 2016/2122 where poultry are kept and it has taken the necessary measures required in accordance with Directive 2005/94/EC, including the establishment of protection and surveillance zones around those outbreaks.

(6)

Furthermore, since the date of the amendments made to Implementing Decision (EU) 2016/2122 by Implementing Decision (EU) 2016/2219, Hungary has also notified the Commission of further outbreaks of highly pathogenic avian influenza of subtype H5N8 on its territory. Taking into account further development of the epidemiological situation in Hungary, it is necessary to extend the areas that that Member State has currently established as protection and surveillance zones in accordance with Directive 2005/94/EC.

(7)

In all cases, the Commission has examined the measures taken by the Germany, France and Hungary in accordance with Directive 2005/94/EC and has satisfied itself that the boundaries of the protection and surveillance zones, established by the competent authorities of those Member States, are at a sufficient distance to any holding where an outbreak of highly pathogenic avian influenza of subtype H5N8 has been confirmed.

(8)

In order to prevent any unnecessary disturbance to trade within the Union and to avoid unjustified barriers to trade being imposed by third countries, it is necessary to rapidly describe at Union level, in collaboration with Germany, France and Hungary, the new protection and surveillance zones established in those Member States in accordance with Directive 2005/94/EC. Therefore, the areas currently listed for those Member States in the Annex to Implementing Decision (EU) 2016/2122 should be amended.