sou · GUB350d2 · 2007-01-01 00:00:00 — 2.Within four weeks of the sending of the notification, both authorities shall calculate the turnover for that financial instrument in their respective markets over the period of the previous calendar year. If the results of that calculation indicate that the turnover is higher in the market of the contesting competent authority, that market shall be the most relevant market for that financial instrument. Where that financial instrument is of a type specified in Article 8(6)(a) or (b), that market shall be also be the most relevant market for any derivative contract or financial contract for differences or transferable security which is covered by Article 4(1)(18)(c) of Directive 2004/39/EC and in respect of which that financial instrument is the underlying. (Article 25(3) of Directive 2004/39/EC) List of financial instruments The relevant competent authority for one or more financial instruments shall establish and maintain an updated list of those financial instruments. That list shall be made available to the single competent authority designated as a contact point by each in accordance with Article 56 of Directive 2004/39/EC. [That list shall be made available for the first time on the first trading day in 2007. For cases falling under Article 8(9) and with the objective of establishing that list for the first time, the turnover shall be calculated on the basis of all the transactions executed on the regulated markets concerned.] (Article 25(5) of Directive 2004/39/EC) 1.The reports of transactions in financial instruments shall be made in an electronic form except under exceptional circumstances, when they may be made in a durable medium within the meaning of Article 2(2) of [the Implementing Directive] other than an electronic form, and the methods by which those reports are made shall satisfy the following conditions: (a)they must ensure the security and confidentiality of the data reported; (b)they must incorporate mechanisms for identifying and correcting errors in a transaction report; (c)they must incorporate mechanisms for authenticating the source of the transaction report; (d)they must include appropriate precautionary measures to enable the timely resumption of reporting in the case of system failure; (e)they must beare capable of reporting the information required under Article 12 in the format required by the competent authority and in accordance with this paragraph, within the time-limits set out in Article 25(3) of Directive 2004/39/EC. 2.A trade-matching or reporting system shall be approved by the competent authority for the purposes of Article 25(5) of Directive 2004/39/EC if the arrangements for reporting transactions established by that system comply with paragraph 1 of this Article and are subject to monitoring by a competent authority in respect of their continuing compliance. (Article 25(3) and (5) of Directive 2004/39/EC) Content of the transaction report 1.The reports of transactions referred to in Article 25(3) and (5) of Directive 2004/39/EC shall contain the information specified in Table 1 of to this Regulation which is relevant to the type of financial instrument in question and which the competent authority declares is not already in its possession or is not available to it by other means. 2.For the purposes of the identification of a counterparty to the transaction which is a regulated market, an MTF or other central counterparty, as specified in Table 1 of , each competent authority shall make publicly available a list of identification codes of the regulated markets and MTFs for which, in each case, it is the competent authority of the home , and of any entities which act as central counterparties for such regulated markets and MTFs. 3.Member States may require reports made in accordance with Articles 25(3) and (5) of Directive 2004/39/EC to contain information related to the transactions in question which is additional to that specified in Table 1 of where that information is necessary to enable the competent authority to monitor the activities of investment firms to ensure that they act honestly, fairly and professionally and in a that promotes the integrity of the market, and provided that one of the following criteria is met: (a)the financial instrument which is the subject of the report has characteristics which are specific to an instrument of that kind and which are not covered by the information items specified in that table; (b)trading methods which are specific to the trading venue where the transaction took place involve features which are not covered by the information items specified in that table. 4.Member States may also require a report of a transaction made in accordance with Article 25(3) and (5) of Directive 2004/39/EC to identify the clients on whose behalf the investment firm has executed that transaction. (Article 25(3) and (5) of Directive 2004/39/EC) Exchange of information on transactions 1.The competent authorities shall establish arrangements designed to ensure that the information received in accordance with Article 25(3) and (5) of Directive 2004/39/EC is made available to the following: (a)the relevant competent authority for the financial instrument in question; (b)in the case of branches, the competent authority that has authorised the investment firm providing the information, without prejudice to its right not to receive this information in accordance with Article 25(6) of Directive 2004/39/EC; (c)any other competent authority that requests the information for the proper discharge of its supervisory duties under Article 25(1) of Directive 2004/39/EC. 2.The information to be made available in accordance with paragraph 1 shall contain the information items described in Tables 1 and 2 of . 3.The information referred to in paragraph 1 shall be made available as soon as possible. With effect from that information shall be made available no later than the close of the next working day of the competent authority that received the request following the day on which the competent authority has received the information or the request. 4.The competent authorities shall coordinate the following: (a)the design and of arrangements for the exchange of transaction information between the competent authorities as required by Directive 2004/39/EC and this Regulation; (b)any future upgrading of the arrangements. 5.Before , the competent authorities shall report to the Commission, which shall inform , on the design of the arrangements to be established in accordance with paragraph 1. They shall also report to the Commission and, which shall inform whenever significant changes to those arrangements are proposed. (Article 58(1) of Directive 2004/39/EC) Request for cooperation and exchange of information 1.Where a competent authority wishes another competent authority to supply or exchange information in accordance with Article 58(1) of Directive 2004/39/EC, it shall submit a written request to that competent authority containing sufficient detail to enable it to provide the information requested. However, in a case of urgency, the request may be transmitted orally provided that it is confirmed in writing. The competent authority which receives a request shall acknowledge receipt as soon as practicable. 2.Where the information requested under paragraph 1 is internally available to the competent authority that receives the request, that authority shall transmit the requested information without delay to the competent authority which made the request. However, if the competent authority that receives the request does not possess or control the information requested, it shall immediately take the necessary steps to obtain that information and to comply fully with the request. authority shall also inform the competent authority that made the request of the reasons for not sending immediately the information requested. (Article 56(2) of Directive 2004/39/EC) Determination of the substantial importance of a regulated markets operations in a host Member State The operations of a regulated market in a host be considered to be of substantial importance for the functioning of the securities markets and the protection of investors in that host State where one of the following criteria is met: (a)the host has formerly been the home of the regulated market in question; (b)the regulated market in question has acquired through merger, takeover, or any other form of transfer the business of a regulated market which hashad its registered office or head office in the host . PRE-TRADE TRANSPARENCY FOR REGULATED MARKETS AND MTFS (Articles 29 and 44 of Directive 2004/39/EC) 1.An investment firm or market operator operating an MTF or a regulated market shall, in respect of each share admitted to trading on a regulated market that is traded within a system operated by it and specified in Table 1 of , make public the information set out in paragraphs 2 to 6. 2.Where one of the entities referred to in paragraph 1 operates a continuous auction order book trading system, it shall, for each share as specified in paragraph 1, make public continuously throughout its normal trading hours the aggregate number of orders and of the shares those orders represent at each price level, for the five best bid and offer price levels. 3.Where one of the entities referred to in paragraph 1 operates a quote-driven trading system, it shall, for each share as specified in paragraph 1, make public and continuously update throughout its normal trading hours the best bid and offer by price of each market maker in that share, together with the volumes attaching to those prices. The quotes made public shall be those that represent binding commitments to buy and sell the shares and which indicate the price and volume of shares in which the registered market makers are prepared to buy or sell. In exceptional market conditions, however, one-way prices may be allowed for a limited time. 4.Where one of the entities referred to in paragraph 1 operates a periodic auction trading system, it shall, for each share specified in paragraph 1, make public and continuously update throughout its normal trading hours the price at which the auction trading system that would best satisfy the systems trading algorithm and the volume that would potentially be executable at that price by participants in that system. 5.Where one of the entities referred to in paragraph 1 operates a trading system which is not covered by paragraph 2 or 3 or 4, either because it is a hybrid system falling under more than one of those paragraphs or because the price determination process is of a different nature, it shall maintain a standard of pre-trade transparency that ensures that adequate information is made public as to the price level of orders or quotes for that share, as well as the level of trading interest in that share. In particular, the five best bid and offer price levels and/or two-way quotes of each market maker in that share shall be made public, if the characteristics of the price discovery mechanism permit it. 6.A summary of the information to be made public in accordance with paragraphs 2 to 5 is specified in Table 1 of . (Articles 29(2) and 44(2) of Directive 2004/39/EC) Waivers based on market model and type of order or transaction 1.Waivers in accordance with Article 29(2) and 44(2) of Directive 2004/39/EC may be granted by the competent authorities for systems operated by an MTF or a regulated market, if those systems satisfy one of the following criteria: (a)they must be based on a trading methodology by which the price is determined in accordance with a reference price generated by another system, where that reference price is widely published and is regarded generally by market participants as a reliable reference price; (b)they formalise negotiated transactions, each of which meets one of the following criteria: (i)it is made at or within the current volume weighted spread for the size of the trade reflected on the order book or the quotes of the market makers of the regulated market or MTF operating that system or, where the share is not traded continuously, within a percentage of a suitable reference price, being a percentage and a reference price set in advance by the system operator; (ii)it is subject to conditions other than the current market price of the share. For the purposes of point (b), the other conditions specified in the rules of the regulated market or MTF for a transaction of this kind must also have been fulfilled. In the case of systems having functionality other than as described in points (a) or (b), the waiver shall not apply to that other functionality. 2.Waivers in accordance with Article 29(2) and 44(2) of Directive 2004/39/EC based on the type of orders may be granted only in relation to orders partially held in an order management facility maintained by the regulated market or the MTF pending their being disclosed to the market. (Articles 29(2) and 44(2) of Directive 2004/39/EC) References to negotiated transaction For the purpose of Article 17(1)(b) a negotiated transaction shall mean a transaction involving members or participants of a regulated market or an MTF which is negotiated privately but executed within the regulated market or MTF and where that member or participant in doing so undertakes one of the following tasks: (a)dealing on own account with another member or participant who acts for the account of a client; (b)dealing with another member or participant, where both are executing orders on own account; (c)acting for the account of both the buyer and seller; (d)acting for the account of the buyer, where another member or participant acts for the account of the seller; (e)trading for own account against a client order. (Articles 29(2) and 44(2), and fifth subparagraph of Article 27(1) of Directive 2004/39/EC) Waivers in relation to transactions which are large in scale An order shall be considered to be large in scale compared with normal market size if it is equal to or larger than the minimum size of order specified in Table 2 in . For the purposes of determining whether an order is large in scale compared to normal market size, all shares admitted to trading on a regulated market shall be classified in accordance with their average daily turnover, which shall be calculated in accordance with the procedure set out in Article 32. PRE-TRADE TRANSPARENCY FOR SYSTEMATIC INTERNALISERS (Article 4(1)(7) of Directive 2004/39/EC) Criteria for determining whether an investment firm is a systematic internaliser 1.Where an investment firm deals on own account by executing client orders outside a regulated market or an MTF, it shall be treated as a systematic internaliser if it meets the following criteria indicating that it onperforms that activity on an organised, frequent and systematic basis: (a)the activity has a material commercial role for the firm, and is carried on in accordance with non-discretionary rules and procedures; (b)the activity is carried on by personnel, or by means of an automated technical system, assigned to that purpose, irrespective of whether those personnel or that system are used exclusively for that purpose; (c)the activity is available to clients on a regular or continuous basis. 2.An investment firm shall cease to be a systematic internaliser in one or more shares if it ceases to carry on the activity specified in paragraph 1 in respect of those shares, provided that it has announced in advance that it intends to cease that activity using the same publication channels for that announcement as it uses to publish its quotes or, where that is not possible, using a channel which is equally accessible to its clients and other market participants. 3.The activity of dealing on own account by executing client orders shall not be treated as performed carried on on an organised, frequent and systematic basis where the following conditions apply: (a)the activity is carried onperformed on an ad hoc and irregular bilateral basis with wholesale counterparties as part of business relationships which itself are themselves characterised by dealings above standard market size; (b)the transactions are carried out otherwise than by the personnel or outside the systems habitually used by the firm concerned for any business that it out in the capacity of a systematic internaliser. 4.Each competent authority shall ensure the maintenance and publication of a list of all systematic internalisers, in respect of shares consideredadmitted to have trading on a liquidregulated market, hereinafter, liquid shares , which it has authorised as investment firms. It shall ensure that the list is current by reviewing it at least annually. The list shall be considered as published when it is submitted for publication to published by the Committee of Regulators in accordance with Article 33(5). (Article 27 of Directive 2004/39/EC) Determination of liquid shares 1.A share admitted to trading on a regulated market shall be considered to have a liquid market if the share is traded daily, with a free float not less than million, and one of the following conditions is satisfied: (a)the average daily number of transactions in the share is not less than 500; (b)the average daily turnover for the share is not less than million. However, a may, in respect of shares for which it is the most relevant market, specify by notice that both of those conditions are to apply. That notice shall be made public. 2.A may specify the minimum number of liquid shares for that . The minimum number shall be no greater than 5. The specification shall be made public. 3.Where, pursuant to paragraph 1, a would be the most relevant market for fewer liquid shares than the minimum number specified in accordance with paragraph 2, the competent authority for that may designate one or more additional liquid shares, provided that the total number of shares which are considered in consequence to be liquid shares for which that is the most relevant market does not exceed the minimum number specified by that . The competent authority shall designate the additional liquid shares successively in decreasing order of average daily turnover from among the shares for which it is the relevant competent authority that are admitted to trading on a regulated market and are traded daily. 4.For the purposes of the first subparagraph of paragraph 1, the calculation of the free float of a share shall exclude holdings exceeding of the total voting rights of the issuer, unless such a holding is held by a collective investment undertaking or a pension fund. Voting rights shall be calculated on the basis of all the shares to which voting rights are attached, even if the exercise of such a right is suspended. 5.A share shall not be considered to have a liquid market for the purposes of Article 27 of Directive 2004/39/EC until six weeks after its first admission to trading on a regulated market, if the estimate of the total market capitalisation for that share at the start of the first days trading after that admission, provided in accordance with Article 32(3) of this Regulation, is less than million or less. 6.Each competent authority shall ensure the maintenance and publication of a list of all liquid shares for which it is the relevant competent authority. It shall ensure that the list is current by reviewing it at least annually. The list shall be considered as published when it is submitted for publication topublished by the Committee of Regulators in accordance with Article 33(5). (fourth subparagraph of Article 27(1) of Directive 2004/39/EC) In order to determine the standard market size for liquid shares, those shares shall be grouped into in terms of the average value of orders executed in accordance with Table 3 in . (Article 27(1) of Directive 2004/39/EC) Quotes reflecting prevailing market conditions A systematic internaliser shall, for each liquid share for which it is a systematic internaliser, maintain the following: (a)a quote or quotes which are close in price to comparable quotes for the same share in other trading venues; (b)a record of its quoted prices, which it shall retain for a period of 12 months or such longer period as it considers appropriate. The obligation laid down in point (b) is without prejudice to the obligation of the investment firm under Article 25(2) of Directive 2004/39/EC to keep at the disposal of the competent authority for at least 5 years the relevant data relating to all transactions it has carried out. (fifth subparagraph of Article 27(3) and Article 27(6) of Directive 2004/39/EC) Execution of orders by systematic internalisers 1.For the purposes of the fifth subparagraph of Article 27(3) of Directive 2004/39/EC, execution in several securities shall be regarded as part of one transaction if that one transaction is a portfolio trade that involves 10 or more securities. For the same purposes, an order subject to conditions other than the current market price means any order which is neither an order for the execution of a transaction in shares at the prevailing market price, nor a limit order. 2.For the purposes of Article 27(6) of Directive 2004/39/EC, the number or volume of orders shall be regarded as considerably exceeding the norm if a systematic internaliser cannot execute those orders without exposing itself to undue risk. In order to identify the number and volume of orders that it can execute without exposing itself to undue risk, a systematic internaliser shall maintain and implement as part of its risk management policy under Article [87] of [the Implementing Directive] a non-discriminatory policy which takes into account the volume of the transactions, the capital that the firm has available to cover the risk for that type of trade, and the prevailing conditions in the market in which the firm is operating. 3.Where, in accordance with Article 27(6) of Directive 2004/39/EC, an investment firm limits the number or volume of orders it undertakes to execute, it shall set out in writing, and make available to clients and potential clients, the arrangements designed to ensure that such a limitation does not result in the discriminatory treatment of clients. (fourth subparagraph Article 27(3) of Directive 2004/39/EC) For the purposes of the fourth subparagraph of Article 27(3) of Directive 2004/39/EC, an order shall be regarded as being of a size bigger than the size customarily undertaken by a retail investor if it exceeds 500. POST-TRADE TRANSPARENCY FOR REGULATED MARKETS, MTFS AND (Articles 28, 30 and 45 of Directive 2004/39/EC) 1.Investment firms, regulated markets, and investment firms and market operators operating an MTF shall, with regard to transactions in respect of shares admitted to trading on regulated markets concluded by them or, in the case of regulated markets or MTFs, within their systems, make public the following details: (a)the details specified in points 2, 3, 6, 16, 17, 18, 19 and 21 of Table 1 of ; (b)an indication that the exchange of shares is determined by factors other than the current market valuation of the share, where applicable; (c)an indication that the trade was a negotiated trade, where applicable; (d)any amendments to previously disclosed information, where applicable. Those details shall be made public either by reference to each transaction or in a form aggregating the volume and price of all transactions in the same share taking place at the same time. 2.By way of exception, a systematic internaliser shall be entitled to use the acronym SI instead of the venue identification referred to in paragraph 1(a) in respect of a transaction in a share that is executed in its capacity as a systematic internaliser in respect of that share.