### the european banking authority should act with a view to improving the functioning of the internal market , including in particular by ensuring a high , effective and consistent level of regulation and supervision taking account of the varying interests of all member states , to protect depositors and investors , to ensure the integrity , efficiency and orderly functioning of financial markets , to safeguard the stability of the financial system , and to strengthen international supervisory coordination , for the benefit of the economy at large , including financial institutions and other stakeholders , consumers and employees . in order to be able to fulfil its objectives , it is necessary and appropriate that the authority should be a community body having legal personality and it should have legal , administrative and financial autonomy . ### the authority should act with a view to improving the functioning of the internal market , including in particular by ensuring a high , effective and consistent level of regulation and supervision taking account of the varying interests of all member states , to prevent regulatory arbitrage and guarantee a level playing field , to protect depositors and investors , to ensure the integrity , efficiency and orderly functioning of financial markets , to safeguard the stability of the financial system , and to strengthen international supervisory coordination , for the benefit of the economy at large , including financial institutions and other stakeholders , consumers and employees . its tasks also include promoting supervisory convergence and providing advice to the eu institutions in the areas of banking , payments , e - money regulation and supervision , and related corporate governance , auditing and financial reporting issues . in order to be able to fulfil its objectives , it is necessary and appropriate that the authority should be a community body having legal personality and it should have legal , administrative and financial autonomy .


### contribute to a consistent application of community legislation , in particular by contributing to a common supervisory culture , ensuring consistent , efficient and effective application of the legislation referred to in article 1 , preventing regulatory arbitrage , mediating and settling disagreements between competent authorities , promoting a coherent functioning of colleges of supervisors and taking actions in emergency situations ; ### contribute to a consistent application of community legislation , in particular by contributing to a common supervisory culture , ensuring consistent , efficient and effective application of the legislation referred to in article 1 , preventing regulatory arbitrage , mediating and settling disagreements between competent authorities , ensuring effective and consistent supervision of financial institutions with eu dimension and a coherent functioning of colleges of supervisors and taking actions , inter alia , in emergency situations ;


### there is a need to introduce an effective instrument to establish harmonised technical standards in financial services to ensure , also through a single rulebook , a level playing field and an adequate protection of depositors , investors and consumers across europe . as a body with highly specialised expertise , it is efficient and appropriate to entrust the authority , in areas defined by community law , with the elaboration of draft technical standards , which do not involve policy choices . the commission should endorse those draft technical standards in accordance with community law in order to give them binding legal effect . the draft technical standards have to be adopted by the commission . they would be subject to amendment if , for example , the draft technical standards were incompatible with community law , would not respect the principle of proportionality or would run counter to the fundamental principles of the internal market for financial services as reflected in the acquis of community financial services legislation . to ensure a smooth and expedited adoption process for those standards , the commission should be subject to a time limit for its decision on the endorsement . ### the commission should endorse those draft technical standards in accordance with community law in order to give them binding legal effect . it can choose to reject them in part or in whole if , for example , the draft technical standards were incompatible with european union law , do not respect the principle of proportionality or run counter to the fundamental principles of the internal market for financial services as reflected in the acquis of european union financial services legislation . to ensure a smooth and expeditious adoption process for those standards , the commission should be subject to a time limit when deciding when to endorse , partially endorse or reject them . the process for the development of technical standards in this regulation is without prejudice to the commission’s powers to adopt delegated acts in accordance with article 290 of the treaty . the matters concerned by the technical standards do not involve policy decisions , and their content is framed by the union acts adopted at level 1 . development of the draft standards by the authority ensures that they fully benefit from the specialised expertise of national supervisory authorities .


### without prejudice to the competences of the community institutions , the authority may develop contacts with supervisory authorities from third countries . it may enter into administrative arrangements with international organisations and the administrations of third countries . ### without prejudice to the competences of the union institutions and member states , the authority may develop contacts and enter into administrative arrangements with supervisory authorities , international organisations and the administrations of third countries .


### in order to guarantee its full autonomy and independence , the authority should be granted an autonomous budget with revenues mainly from obligatory contributions from national supervisory authorities and from the general budget of the european union . the community budgetary procedure should be applicable as far as the community contribution is concerned . the auditing of accounts should be undertaken by the court of auditors . ### in order to guarantee its full autonomy and independence , the authority should be granted an autonomous budget with revenues mainly from obligatory contributions from national supervisory authorities and from the general budget of the european union . union financing of the authority is subject to an agreement by the budgetary authority in accordance with point 47 of the interinstitutional agreement between the european parliament , the council and the commission of 17 may 2006 on budgetary discipline and sound financial management1 . the union budgetary procedure should be applicable . the auditing of accounts should be undertaken by the court of auditors . the overall budget is subject to the discharge procedure . 1 oj c 139 , 14 . 6 . 2006 , p . 1 .


### ' financial institutions ' means ' credit institutions ' as defined in directive 2006 / 48 / ec , ' investment firms ' as defined in directive 2006 / 49 / ec , and ' financial conglomerates ' as defined in directive 2002 / 87 / ec ; ### ' financial institutions ' means any undertaking whose main business is to take deposits , grant credits , provide insurance services or other financial services to its clients or members or engage in financial investment or trading activities on its own account , and any other undertaking or entity operating in the european union , whose business is of a similar nature , even if they have no direct dealings with the public at large ;


### the authority may develop technical standards in the areas specifically set out in the legislation referred to in article 1 . the authority shall submit its draft standards to the commission for endorsement . ### the authority shall develop technical standards in the areas specifically set out in present regulation and in the legislation referred to in article 1 or at the commission request . technical standards shall not include policy choices and shall reflect the principle of proportionality . the authority shall submit its draft standards to the commission for adoption as delegated acts or endorsement as implementing acts according to the present regulation and the legislation referred to in article 1 . the draft standards shall also be transmitted at the same time to the european parliament and the council .


### in order to ensure efficient and effective supervision and a balanced consideration of the positions of the competent authorities in different member states , the authority should be able to settle disagreements between those competent authorities with binding effect , including within colleges of supervisors . a conciliation phase should be provided for , during which the competent authorities may reach an agreement . the authority’s competence should cover disagreements on procedural obligations in the cooperation process as well as on the interpretation and application of community law in supervisory decisions . existing conciliation mechanisms provided for in sectoral legislation have to be respected . in the event of inaction by the national supervisory authorities concerned , the authority should be empowered to adopt , as a last resort , decisions directly addressed to financial institutions in areas of community law directly applicable to them . ### in order to ensure efficient and effective supervision and a balanced consideration of the positions of the competent authorities in different member states , the authority should be able to settle disagreements between those competent authorities with binding effect , including within colleges of supervisors . a conciliation phase should be provided for , during which the competent authorities may reach an agreement . the authority’s competence should cover disagreements on procedural obligations in the cooperation process as well as on the interpretation and application of european union law in supervisory decisions . existing conciliation mechanisms provided for in sectoral legislation have to be respected . in the event of inaction by the national supervisory authorities concerned , the authority should be empowered to adopt , as a last resort , decisions directly addressed to financial institutions in areas of european union law directly applicable to them . this also applies to disagreements within a college of supervisors .


### competent authorities may , by bilateral agreement , delegate tasks and responsibilities to other competent authorities supervisory . ### competent authorities may , by agreements among them , delegate tasks and responsibilities to other competent authorities .


### without prejudice to the powers of the commission under article 226 of the treaty , where a competent authority does not comply with the decision referred to in paragraph 4 of this article within the period of time specified therein , and where it is necessary to remedy in a timely manner the non compliance by the competent authority in order to maintain or restore neutral conditions of competition in the market or ensure the orderly functioning and integrity of the financial system , the authority may , where the relevant requirements of the legislation referred to in article 1 are directly applicable to financial institutions , adopt an individual decision addressed to a financial institution requiring the necessary action to comply with its obligations under community law including the cessation of any practice . ### without prejudice to the powers of the commission under article 258 of the treaty , where a competent authority does not comply with the decision referred to in paragraph 4 of this article within the period of time specified therein , and where it is necessary to remedy in a timely manner the non compliance by the competent authority in order to maintain or restore neutral conditions of competition in the market or ensure the orderly functioning and integrity of the financial system , the authority shall , pursuant to the legislation referred to in article 1 , adopt an individual decision addressed to a financial institution requiring the necessary action to comply with its obligations under union law including the cessation of any practice .


### contribute to developing high quality and uniform supervisory standards , including reporting standards ; ### contribute advice to the appropriate european and international bodies to help facilitate the development of high quality and uniform supervisory standards , including reporting and accounting standards ;


### the chair of the joint committee of european supervisory authorities shall be appointed on an annual rotational basis from among the chairpersons of the european banking authority , the european insurance and occupational pensions authority and the european securities and markets authority . ### the chair of the european supervisory authority shall be appointed on an annual rotational basis from among the chairpersons of the european supervisory authority , the european supervisory authority and the european supervisory authority .


### given the globalisation of financial services and the increased importance of international standards , the authority should foster the dialogue and cooperation with supervisors outside the community . it shall fully respect the existing roles and competences of the european institutions in relations with authorities outside the community and in international forums . ### given the globalisation of financial services and the increased importance of international standards , the authority should represent the european union in the dialogue and cooperation with supervisors outside the union .


### the competent authorities shall make every effort to comply with those guidelines and recommendations . ### the competent authorities and financial institutions shall make every effort to comply with those guidelines and recommendations .


### in order to ensure cross - sectoral consistency in the activities of the european supervisory authorities , those authorities should coordinate closely in a joint committee of european supervisory authorities and reach common positions where appropriate . the joint committee of european supervisory authorities should assume all of the functions of the joint committee on financial conglomerates . where relevant , acts also falling within the area of competence of the european insurance and occupational pensions authority or the european securities and markets authority should be adopted in parallel by the european supervisory authorities concerned . ### in order to ensure cross - sectoral consistency in the activities of the european supervisory authorities , those authorities should coordinate closely through the european supervisory authorities and reach common positions where appropriate . the joint committee should coordinate the functions of the three european supervisory authorities in relation to financial conglomerates . where relevant , acts also falling within the area of competence of the european supervisory authority or the european supervisory authority should be adopted in parallel by the european supervisory authorities concerned . the joint committee will be chaired on a yearly revolving basis by the chairpersons of the three european supervisory authorities . the chairperson of the joint committee should be a vice - chair of the european systemic risk board . the joint committee will have a permanent secretariat , staffed on secondment from the three european supervisory authorities , to allow for informal information sharing and the development of a common cultural approach across the three european supervisory authorities .


### where a competent authority has not correctly applied the legislation referred to in article 1 , in particular by failing to ensure that a financial institution satisfies the requirements laid down in that legislation , the authority shall have the powers set out in paragraphs 2 , 3 and 6 of this article . ### where a competent authority has not correctly applied the legislation referred to in article 1 , including the technical standards adopted in accordance with article 7 , in particular by failing to ensure that a financial institution satisfies the requirements laid down in that legislation , the authority shall have the powers set out in paragraphs 2 , 3 and 6 of this article .


### the authority should actively promote a coordinated community supervisory response , in particular where adverse developments could potentially jeopardise the orderly functioning and integrity of financial markets or the stability of the financial system in the community . in addition to its powers for action in emergency situations , it should therefore be entrusted with a general coordination function within the european system of financial supervisors . the smooth flow of all relevant information between competent authorities should be a particular focus of the authority ' s actions . ### the authority should actively promote a coordinated union supervisory response , in particular to ensure the orderly functioning and integrity of financial markets or the stability of the financial system in the union . in addition to its powers for action in emergency situations , it should therefore be entrusted with a general coordination function . the smooth flow of all relevant information between competent authorities should be a particular focus of the authority ' s actions .


### the joint committee shall be composed of the chairperson and the chairpersons of the european insurance and occupational pensions authority and the european securities and markets authority , and , where applicable , the chairperson of a sub - committee established under article 43 . ### the joint committee shall have a board composed of the chairpersons of the european supervisory authorities and , where applicable , the chairperson of a sub - committee established under article 43 .


### the chair of the joint committee of european supervisory authorities shall be appointed on an annual rotational basis from among the chairpersons of the european banking authority , the european insurance and occupational pensions authority and the european securities and markets authority . ### the chair of the joint committee shall be appointed on an annual rotational basis from among the chairpersons of the european banking authority , the european insurance and occupational pensions authority and the european securities and markets authority . the chairperson of the joint committee shall be a vice - chair of the european systemic risk board .


### the authority should actively promote a coordinated community supervisory response , in particular where adverse developments could potentially jeopardise the orderly functioning and integrity of financial markets or the stability of the financial system in the community . in addition to its powers for action in emergency situations , it should therefore be entrusted with a general coordination function within the european system of financial supervisors . the smooth flow of all relevant information between competent authorities should be a particular focus of the authority’s actions . ### the authority should actively promote a coordinated union supervisory response , in particular to ensure the orderly functioning and integrity of financial markets or the stability of the financial system in the union . in addition to its powers for action in emergency situations , it should therefore be entrusted with a general coordination function within the esfs . the smooth flow of all relevant information between competent authorities should be a particular focus of the authority’s actions .


### contribute to a consistent application of community legislation , in particular by contributing to a common supervisory culture , ensuring consistent , efficient and effective application of the legislation referred to in article 1 , preventing regulatory arbitrage , mediating and settling disagreements between competent authorities , promoting a coherent functioning of colleges of supervisors and taking actions in emergency situations ; ### contribute to a consistent application of standards and legislation , in particular by contributing to a common supervisory culture , ensuring consistent , efficient and effective application of this regulation and the legislation referred to in article 1 , preventing regulatory arbitrage , mediating and settling disagreements between competent authorities , ensuring effective and consistent supervision of financial institutions with a union dimension and a coherent functioning of colleges of supervisors and taking actions , inter alia , in emergency situations ;


### where the authority maintains its decision , the council , acting by qualified majority as defined in article 205 of the treaty , shall , within two months , decide whether the authority ' s decision is maintained or revoked . ### where the authority maintains its decision , the council shall take a decision by a majority of the votes cast , at one of its meetings at the latest two months after the authority has informed the member state as set out in the previous subparagraph , as to whether the authority ' s decision is maintained .


### within three months of receipt of the draft standards , the commission shall decide whether to endorse the draft standards . the commission may extend that period by one month . the commission may endorse the draft standards only in part or with amendments where the community interest so requires . ### within three months of receipt of the draft technical standards , the commission shall endorse the draft supervisory standards if they comply with european legislation . within the same period , the commission may adopt the draft technical standards with amendments where they were drawn up as regulatory standards . in both cases , the commission may extend that period by one month .


### the members of the management board shall act independently and objectively in the community interest , without seeking or taking any instructions from community institutions or bodies , from any government of a member state or from any other public or private body . ### the members of the management board shall act independently and objectively in the sole interest of the european union as a whole , without seeking or taking any instructions from european union institutions or bodies , from any government of a member state or from any other public or private body .


### before taking the decisions provided for in article 9 , article 10 and and article 11 and , the authority shall inform the addressee of its intention to adopt the decision , setting a time limit within which the addressee may express its views on the matter , taking full account of the urgency of the matter . ### before taking the decisions provided for in this regulation , the authority shall inform the addressee of its intention to adopt the decision , setting a time limit within which the addressee may express its views on the matter , taking full account of the urgency , complexity and potential consequences of the matter .


### the standards shall be adopted by the commission by means of regulations or decisions and published in the official journal of the european union . ### having completed the due procedure the standards shall be published in the official journal of the european union with the title eu delegated standards or eu implementing standards respectively .


### the decision of the authority shall be in conformity with the decision adopted by the commission pursuant to paragraph 4 . ### the decision of the authority shall be in conformity with the decision adopted pursuant to paragraph 4 .


### for the purposes of article 11 , the board of supervisors shall convoke a panel to facilitate the settlement of the disagreement , consisting of the chairperson and two of its members , who are not representatives of the competent authorities which are parties to the disagreement . ### for the purposes of article 11 , the board of supervisors shall convoke an independent panel to facilitate the impartial settlement of the disagreement , consisting of the chairperson and four members of the board of supervisors . the chairperson shall select the members of the panel drawn from the board of supervisors . no member of the panel from the board of supervisors shall be drawn from a national supervisory authority party to the disagreement , nor shall they have any interest in the conflict .


### joint committee of european supervisory authorities ### european supervisory authority


### the european system of financial supervisors should be a network of national and community supervisory authorities , leaving day - to - day supervision of financial institutions at the national level , and according a central role in the supervision of cross - border groups to colleges of supervisors . greater harmonisation and the coherent application of rules for financial institutions and markets across the community should also be achieved . a european banking authority should be established , along with a european insurance and occupational pensions authority and a european securities and markets authority . ### the european system of financial supervision should be an integrated network of national and european supervisory authorities , leaving ordinary day - to - day supervision of financial institutions at the competent authorities of member states , and according a central role in the supervision of cross - border groups to colleges of supervisors . greater harmonisation and consistent and coherent application of european rules and standards for financial institutions and markets across the european should also be achieved . a european supervisory authority on banking should be established , along with a european supervisory authority on insurance and occupational pensions and a european supervisory authority on securities and markets as well as a joint committee among them . the european systemic risk board , as european authority in macro supervision , completes the esfs . the authority shall evolve according to the best practices recognised at european and international level . one such approach could be the establishment of a new level of direct supervision by the authority . to avoid international distortions and to strengthen the european system of financial supervision , the introduction of direct supervision should be carefully evaluated and considered in order to add value to the supervision of large financial institutions , many of which are global in nature and operate in the eu . this applies above all to those large financial institutions with wholesale banking or other activities that could pose systemic risk to the internal market , and those systemic financial institutions defined and identified at an international level . this issue shall be further studied in the first revision of the present regulation , as set out in article 66 , which should take place not later than three years from its entry into force .


### the chair of the joint committee of european supervisory authorities shall be appointed on an annual rotational basis from among the chairpersons of the european banking authority , the european insurance and occupational pensions authority and the european securities and markets authority . ### the chair of the european supervisory authority shall be appointed on an annual rotational basis from among the chairpersons of the european supervisory authority , the european supervisory authority and the european supervisory authority .


### upon request from one or more competent authorities , from the commission or on its own initiative and after having informed the competent authority concerned , the authority may investigate the alleged incorrect application of community law . ### upon request from one or more competent authorities , the european parliament , the council , the commission or the banking stakeholder group , or on its own initiative and after having informed the competent authority concerned , the authority may investigate the alleged breach or non - application of union law .


### ' financial institutions ' means ' credit institutions ' as defined in directive 2006 / 48 / ec , ' investment firms ' as defined in directive 2006 / 49 / ec , and ' financial conglomerates ' as defined in directive 2002 / 87 / ec ; ### ' financial institutions ' means any undertaking whose main business is to take deposits , grant credits , provide insurance services or other financial services to its clients or members or engage in financial investment or trading activities on its own account , and any other undertaking or entity operating in the european union , whose business is of a similar nature , even if they have no direct dealings with the public at large ;


### serious threats to the orderly functioning and integrity of financial markets or the stability of the financial system in the community require a swift and concerted response at community level . the authority should therefore be able to require national supervisory authorities to take specific actions to remedy an emergency situation . as the determination of an emergency situation involves a significant degree of discretion , this power should be conferred on the commission . to ensure an effective response to the emergency situation , in the event of inaction by the competent national supervisory authorities , the authority should be empowered to adopt , as a last resort , decisions directly addressed to financial institutions in areas of community law directly applicable to them aimed at mitigating the effects of the crisis and restoring confidence in the markets . ### serious threats to the orderly functioning and integrity of financial markets or the stability of the financial system in the union require a swift and concerted response at union level . the authority should therefore be able to require national supervisory authorities to take specific actions to remedy an emergency situation . the european systemic risk board should establish when there is an emergency situation . to ensure an effective response to the emergency situation , in the event of inaction by the competent national supervisory authorities , the authority should be empowered to adopt , as a last resort , decisions directly addressed to financial institutions in areas of union law directly applicable to them aimed at mitigating the effects of the crisis and restoring confidence in the markets .


### the objective of the authority shall be to contribute to : improving the functioning of the internal market , including in particular a high , effective and consistent level of regulation and supervision , protecting depositors and investors , ensuring the integrity , efficiency and orderly functioning of financial markets , safeguarding the stability of the financial system , and strengthening international supervisory coordination . for this purpose , the authority shall contribute to ensuring the consistent , efficient and effective application of the community law referred to in article 1 above , fostering supervisory convergence and providing opinions to the european parliament , the council , and the commission . ### the objective of the authority shall be to contribute to : improving the functioning of the internal market , including in particular a high , effective and consistent level of regulation and supervision , protecting depositors and investors , ensuring the integrity , efficiency and orderly functioning of financial markets , safeguarding the stability of the financial system , and strengthening international supervisory coordination . for this purpose , the authority shall contribute to ensuring the consistent , efficient and effective harmonisation and application of the european union law referred to in article 1 above , fostering supervisory integration and convergence and providing opinions to the european parliament , the council , and the commission , and undertaking economic analyses of markets to promote the achievement of the authority’s objectives .


### the authority , the european insurance and occupational pensions authority and the european securities and markets authority shall ensure adequate operational and secretarial support for the board of appeal . ### the authority , the european supervisory authority and the european supervisory authority shall ensure adequate operational and secretarial support for the board of appeal through the joint committee .


### conduct peer review analysis of competent authorities , to strengthen consistency in supervisory outcomes ; ### organise and conduct peer review analysis of competent authorities , to strengthen consistency in supervisory outcomes ;


### in order to safeguard financial stability it is necessary to identify , at an early stage , trends , potential risks and vulnerabilities stemming from the micro - prudential level , across borders and across sectors . the authority should monitor and assess such developments in the area of its competence and , where necessary , inform the european parliament , the council , the commission , the other european supervisory authorities and the european systemic risk board on a regular and , as necessary , ad hoc basis . the authority should also coordinate community - wide stress tests to assess the resilience of financial institutions to adverse market developments , ensuring an as consistent as possible methodology is applied at the national level to such tests . ### in order to safeguard financial stability it is necessary to identify , at an early stage , trends , potential risks and vulnerabilities stemming from the micro - prudential level , across borders and across sectors . the authority should monitor and assess such developments in the area of its competence and , where necessary , inform the european parliament , the council , the commission , the other european supervisory authorities and the european systemic risk board on a regular and , as necessary , ad hoc basis . the authority should also coordinate community - wide stress tests to assess the resilience of financial institutions to adverse market developments , ensuring an as consistent as possible methodology is applied at the national level to such tests . in order to inform the discharge of its functions , the authority should undertake economic analysis of markets and the impact of potential market developments on them .


### the council , acting by qualified majority as defined in article 205 of the treaty , shall , within ten working days , decide whether the authority ' s decision is maintained or revoked . ### the authority shall revoke its decision or duly explain why it maintains it .


### the competent authority shall , within ten working days of receipt of the decision referred to in paragraph 4 , inform the commission and the authority of the steps it has taken or intends to take to implement the commission ' s decision . ### the competent authority shall , within ten working days of receipt of the decision referred to in paragraph 4 , inform the commission and the authority of the steps it has taken or intends to take to implement the authority ' s decision .


### facilitate the delegation of tasks and responsibilities between competent authorities ; ### stimulate and facilitate the delegation of tasks and responsibilities between competent authorities ;


### in order to ensure cross - sectoral consistency in the activities of the european supervisory authorities , those authorities should coordinate closely in a joint committee of european supervisory authorities and reach common positions where appropriate . the joint committee of european supervisory authorities should assume all of the functions of the joint committee on financial conglomerates . where relevant , acts also falling within the area of competence of the european insurance and occupational pensions authority or the european securities and markets authority should be adopted in parallel by the european supervisory authorities concerned . ### in order to ensure cross - sectoral consistency in the activities of the european supervisory authorities , those authorities should coordinate closely through the joint committee and reach common positions where appropriate . the joint committee should coordinate the functions of the three european supervisory authorities in relation to financial conglomerates . where relevant , acts also falling within the area of competence of the european supervisory authority or the european supervisory authority should be adopted in parallel by the european supervisory authorities concerned . the joint committee should be chaired for a 12 - month term on a rotating basis by the chairpersons of the three european supervisory authorities . the chairperson of the joint committee should be a vice - chair of the european systemic risk board . the joint committee should have a permanent secretariat , staffed on secondment from the three european supervisory authorities , to allow for informal information - sharing and the development of a common cultural approach across the three european supervisory authorities .


### without prejudice to the powers of the commission under article 226 of the treaty , where a competent authority does not comply with the decision referred to in paragraph 4 of this article within the period of time specified therein , and where it is necessary to remedy in a timely manner the non compliance by the competent authority in order to maintain or restore neutral conditions of competition in the market or ensure the orderly functioning and integrity of the financial system , the authority may , where the relevant requirements of the legislation referred to in article 1 are directly applicable to financial institutions , adopt an individual decision addressed to a financial institution requiring the necessary action to comply with its obligations under community law including the cessation of any practice . ### without prejudice to the powers of the commission under article 258 of the treaty on the functioning of the european union , where a competent authority does not comply with the decision referred to in paragraph 4 of this article within the period of time specified therein , and where it is necessary to remedy in a timely manner the non - compliance by the competent authority in order to maintain or restore neutral conditions of competition in the internal market or ensure the orderly functioning and integrity of the financial system in the internal market , the authority may , where the relevant requirements of the legislation referred to in article 1 are directly applicable to financial institutions , adopt an individual decision addressed to a financial institution requiring the necessary action to comply with its obligations under union law including the cessation of any practice . before adopting an individual decision , the authority shall inform the commission thereof . the commission shall ensure that the right to be heard of the addressees of the decision is respected . the authority and the competent authorities shall provide the commission with all necessary information . within two weeks of receipt of the draft decision of the authority , the commission shall decide whether to endorse the draft decision . the commission may not extend that period . the commission may endorse the draft decision only in part or with amendments where the union interest so requires . where the commission does not endorse the draft decision or endorses it in part or with amendments , it shall inform the authority without delay in the form of a formal opinion . within one week of receipt of that formal opinion , the authority shall review and adapt its decision to the commission ' s formal opinion and transmit it without delay to the commission . within one week of receipt of the amended decision of the authority , the commission shall decide whether to endorse it or reject it . if the amended decision is rejected by the commission , the decision shall be deemed not to have been adopted .


### without prejudice to the competences of the community institutions , the authority may develop contacts with supervisory authorities from third countries . it may enter into administrative arrangements with international organisations and the administrations of third countries . ### without prejudice to the competences of the union institutions and member states , the authority may develop contacts and enter into administrative arrangements with supervisory authorities , international organisations and the administrations of third countries .


### the members of the management board shall act independently and objectively in the community interest , without seeking or taking any instructions from community institutions or bodies , from any government of a member state or from any other public or private body . ### the members of the management board shall act independently and objectively in the sole interest of the european union as a whole , without seeking or taking any instructions from european union institutions or bodies , from any government of a member state or from any other public or private body .


### derivative trading and commodity trading are used together on wholesale energy markets . it is therefore important that the definitions of market abuse , which consists of insider trading and market manipulation , are compatible between derivatives and commodity markets . ### derivative trading and commodity trading are used together on wholesale energy markets . it is therefore important that the definitions of market abuse , which consists of insider trading and market manipulation , are compatible between derivatives and commodity markets . the rules will apply to all transactions concluded , whether directly or through intermediaries , on regulated markets , on multilateral trading facilities or over the counter .


### ' inside information ' means precise information which has not been made public , relating directly or indirectly to one or more wholesale energy products and which , if it were made public , could significantly affect the prices of such wholesale energy products ; ### ' inside information ' means precise information which has not been made public , relating directly or indirectly to one or more wholesale energy products and which , if it were made public , would be likely to significantly affect the prices of such wholesale energy products ;


### market participants shall publicly disclose inside information in respect of business or facilities which the participant concerned owns or controls or for which the participant is responsible for operational matters , either in whole or in part . such information shall include information relevant to the capacity of facilities for production , storage , consumption or transmission of electricity or natural gas . ### market participants shall publicly , and in a timely manner , disclose inside information in respect of business or facilities which the participant concerned owns or controls or for which the participant is responsible for operational matters , either in whole or in part . such information shall include information relevant to the capacity – including capacity reductions following maintenance operations and relevant accidents – of facilities for production , storage , consumption or transmission of electricity or natural gas .


### in order to take account of future developments on wholesale energy markets , the commission shall adopt delegated acts in accordance with article 15 and subject to conditions of articles 16 an 17 , specifying the definitions set out at article 2 to . ### in order to take account of future developments on wholesale energy markets and to ensure consistency with changing legal acts of the union on financial and energy services , the commission shall adopt delegated acts in accordance with article 15 and subject to conditions of articles 16 and 17 , specifying the definitions set out at article 2 to .


### the european parliament and the council may object to the delegated act within a period of two months from the date of notification . at the initiative of the european parliament or the council this period shall be extended by one month . ### the european parliament and the council may object to the delegated act within a period of three months from the date of notification . at the initiative of the european parliament or the council this period shall be extended by three months .


### the agency shall be provided with a record of wholesale energy market transactions , including orders to trade . the commission shall adopt delegated acts in accordance with article 15 and subject to conditions of articles 16 and 17 , laying down the timing , form and content in which this information is reported and , where appropriate , defining thresholds for the reporting of transactions as well as specifying types of contracts for which transactions shall be reported . ### the agency shall be provided with a record of wholesale energy market transactions , including orders to trade . the commission shall adopt delegated acts , within 30 days of the entry into force of this regulation , in accordance with article 15 and subject to conditions of articles 16 and 17 , laying down the timing , form and content in which this information is reported and , where appropriate , defining thresholds for the reporting of transactions as well as specifying types of contracts for which transactions shall be reported .


### the agency shall be provided with a record of wholesale energy market transactions , including orders to trade . the commission shall adopt delegated acts in accordance with article 15 and subject to conditions of articles 16 and 17 , laying down the timing , form and content in which this information is reported and , where appropriate , defining thresholds for the reporting of transactions as well as specifying types of contracts for which transactions shall be reported . ### the agency shall be provided directly and in a timely manner with a record of wholesale energy market transactions , including orders to trade . for the purpose of monitoring trading in wholesale energy markets , such collected data should enable the agency to identify market abuses and to monitor the development of conditions under which market abuses are more likely or dangerous . the commission shall adopt delegated acts in accordance with article 15 and subject to conditions of articles 16 and 17 , laying down the timing , form and content in which this information is reported and defining thresholds for the reporting of transactions as well as specifying types of contracts for which transactions shall be reported .


### national regulatory authorities should be responsible for ensuring that this regulation is enforced in the member states . to this end they should have the necessary investigatory powers to allow them to carry out this task efficiently . ### national regulatory authorities should have a duty to enforce this regulation in the member states . to this end they should have the necessary investigatory powers to allow them to carry out this task efficiently .


### ' inside information ' means precise information which has not been made public , relating directly or indirectly to one or more wholesale energy products and which , if it were made public , could significantly affect the prices of such wholesale energy products ; for the purposes of applying the first subparagraph , information a reasonable market participant would be likely to use as part of the basis of his decision to enter into a transaction relating to a wholesale energy product is information which , if it were made public , would be likely to have a significant effect on the prices of such wholesale energy products . such information includes information related to the capacity of facilities for production , storage , consumption or transmission of electricity or natural gas , as well as information which is required to be disclosed in accordance with legal or regulatory provisions at union or national level , market rules , and contracts or customs on the relevant wholesale energy market . ### ' inside information ' means information of a precise nature which has not been made public , relating directly or indirectly to one or more wholesale energy products and which , if it were made public , could significantly affect the prices of such wholesale energy products ; for the purposes of applying the first subparagraph , inside information means information which : is required to be made public in accordance with the provisions of regulation no . 714 / 2009 , regulation no . 715 / 2009 or this regulation , including guidelines , network codes or delegated acts adopted pursuant to those regulations , or in accordance with other legislative or regulatory provisions at european union level , in particular directive 2009 / 72 / ec of the european parliament and of the council of 13 july 2009 concerning common rules for the internal market in electricity1 , and directive 2009 / 73 / ec of the european parliament and of the council of 13 july 2009 concerning common rules for the internal market in natural gas2 ; or a reasonable market participant would be likely to use as part of the basis of his decision to enter into transaction relating to a wholesale energy product , and which , if it were made public , would be likely to have a significant effect on the prices of such wholesale energy products . such information includes information related to updated estimates of energy reserves , the capacity of facilities for production , storage , consumption or transmission of electricity or natural gas or lng - facility , as well as information which is routinely made available to the relevant wholesale energy market , or required to be disclosed in accordance with legal or regulatory provisions at union or national level , market rules , and contracts or customs on the relevant wholesale energy market . ______________ 1 oj l 211 , 14 . 8 . 2009 , p . 55 . 2 oj l 211 , 14 . 8 . 2009 , p . 94 .


### the agency shall monitor trading activity in wholesale energy products to detect and prevent trading based on inside information and market manipulation . it shall collect the data for assessing and monitoring wholesale energy markets as provided for in article 7 . ### the agency shall monitor trading activity in wholesale energy products , including otc transactions inter alia with major end users of energy , to detect and prevent trading based on inside information and market manipulation . it shall collect the data for assessing and monitoring wholesale energy markets as provided for in article 7 .


### persons working or who have worked for the national regulatory authorities ; ### persons working or who have worked for the national regulatory authorities or other national authorities to which cases may be referred ;


### it is important that the penalties for breaches of this regulation are proportionate and dissuasive , and reflect the gravity of the infringements and the potential gains from trading on the basis of inside information and market manipulation . recognising the interactions between trading in electricity and gas derivative products and trading in actual electricity and gas , the penalties for breaches of this regulation should be in line with the penalties adopted by the member states in implementing directive 2003 / 6 / ec . ### it is important that the penalties for breaches of this regulation are proportionate and dissuasive , and reflect the gravity of the infringements and the potential gains from trading on the basis of inside information and market manipulation . to avoid regulatory arbitrage , whereby transactions take place where regulation is more flexible or tolerant with regard to penalties , the commission should regularly review the situation . if necessary the commission should propose minimum standards for penalties , with the aim of bringing about a harmonised system of penalties throughout the european union . recognising the interactions between trading in electricity and gas derivative products and trading in actual electricity and gas , the penalties for breaches of this regulation should be in line with the penalties adopted by the member states in implementing directive 2003 / 6 / ec .


### behaviour which undermines the integrity of the energy market is currently not clearly prohibited on some of the most important energy markets . ### behaviour which undermines the integrity of the energy market and can lead to higher prices to end consumers of energy is currently not clearly prohibited on some of the most important energy markets .


### the member states shall lay down the rules on penalties applicable to infringements of the provisions of this regulation and shall take all measures necessary to ensure that they are implemented . the penalties provided for must be effective , proportionate and dissuasive . the member states shall notify those provisions to the commission by . . . at the latest and shall notify it without delay of any subsequent amendment affecting them . ### the member states shall lay down the rules on penalties applicable to infringements of the provisions of this regulation and shall take all measures necessary to ensure that they are implemented . the penalties provided for must be effective , proportionate and dissuasive . they shall reflect the gravity of the infringements and shall considerably exceed the real or potential gains from illegal operations . the member states shall notify those provisions to the commission by . . . at the latest and shall notify it without delay of any subsequent amendment affecting them . after all member states have notified to the commission their rules on penalties applicable to infringements of this regulation , the commission shall once every three years review the effectiveness of national systems of penalties and evaluate the necessity of proposing minimum standards for penalties , with the aim of bringing about a harmonised system of penalties throughout the european union . the commission shall inform the european parliament and the council of the results of that evaluation .


### national regulatory authorities shall cooperate with the agency and with each other for the purpose of carrying out their duties in accordance with this regulation . ### national regulatory authorities shall cooperate with the agency and with each other for the purpose of carrying out their duties in accordance with this regulation . that cooperation may also take the form of regional cooperation between national regulatory authorities within the structure of the agency in order to reflect market realities .


### specification of the definitions of inside information and market manipulation is necessary to account for the specificities of wholesale energy markets , which are dynamic and subject to change . the commission should be empowered to adopt delegated acts in accordance with article 290 of the treaty in respect to such detailed rules . ### specification of the definitions of inside information and market manipulation is necessary to account for the specificities of wholesale energy markets , which are dynamic and subject to change . coherence with other relevant legal acts of the union in the field of financial services , which is also dynamic and subject to change , should be ensured to avoid regulatory gaps . the commission should be empowered to adopt delegated acts in accordance with article 290 of the treaty in respect to such detailed rules . before adopting a delegated act , the commission should request comments from energy market operators and consult the energy sector authorities as well as the european supervisory authority established by regulation no 1095 / 2010 of the european parliament and of the council . the european parliament and the council should be informed of the outcome of those consultations .


### where information is not commercially sensitive , the agency should be able to make that information available to market participants and the wider public . such transparency can help build confidence in the market and help the development of knowledge about the functioning of wholesale energy markets . ### availability of price information is a vital pre - condition for transparency . such transparency can help build confidence in the market and help the development of knowledge about the functioning of wholesale energy markets .


### ' inside information ' means precise information which has not been made public , relating directly or indirectly to one or more wholesale energy products and which , if it were made public , could significantly affect the prices of such wholesale energy products ; ### ' inside information ' means information which has not been made public , relating directly or indirectly to one or more wholesale energy products and which , if it were made public , could significantly affect decisions taken by market participants concerning the setting of the prices of such wholesale energy products ;


### when drawing up the programming documents for countries in crisis , post - crisis , or fragility situations , due account shall be taken of the vulnerability , special needs and circumstances of the countries or regions concerned . proper attention should be given to conflict prevention , state and peace building , post - conflict reconciliation and reconstruction measures . where partner countries or groups of partner countries are directly involved in , or affected by , a crisis , post - crisis or fragility situation , special emphasis shall be placed on stepping up coordination between relief , rehabilitation and development to help them make the transition from an emergency situation to the development phase . programmes for countries and regions in fragility or regularly subject to natural disasters shall provide for disaster preparedness and prevention and for managing the consequences of such disasters . ### when drawing up the programming documents for countries in crisis , post - crisis , fragility situations or prone to natural disasters , due account shall be taken of the vulnerability , special needs and circumstances of the countries or regions concerned . proper attention should be given to conflict prevention , state and peace building , post - conflict reconciliation and reconstruction measures , as well as to the role of women in those processes . where partner countries or regions are directly involved in , or affected by , a crisis , post - crisis or fragility situation , special emphasis shall be placed on stepping up coordination between relief , rehabilitation and development amongst all relevant actors to help the transition from an emergency situation to the development phase . programmes for countries and regions in fragility or regularly subject to natural disasters shall provide for disaster preparedness and prevention and for managing the consequences of such disasters and shall address vulnerability to shocks and strengthen people ' s resilience .


### union assistance should focus where it has more impact , having regard to its capacity to act on a global scale and respond to global challenges such as poverty eradication , sustainable and inclusive development and worldwide promotion of democracy , good governance , human rights and the rule of law , its long - term and predictable commitment to development assistance and its role in coordinating with its member states . to ensure such impact , the principle of differentiation should be applied not only at the level of funds allocation , but also at the level of programming , to ensure that bilateral development cooperation targets partner countries most in need , including fragile states and states with high vulnerability , and with limited capacity to have access to other sources of financing for supporting their own development , having regard to the potential impact of the union assistance in partner countries . as a consequence , bilateral programming would target such countries , pursuant to the application of objective criteria based on the needs and capacities of these countries , as well as the impact of eu assistance . ### in the context of the overarching objective of the union ' s development cooperation to contribute to poverty eradication , union assistance should focus where it has more impact , having regard to its capacity to act on a global scale and respond to global challenges . in particular , the union ' s added value results from its capacity and its own experience in supporting sustainable and inclusive development , promoting democracy , good governance , human rights and the rule of law worldwide , its long - term and predictable commitment to development assistance and its role in promoting the coordination with its member states , as enshrined in article 210 tfeu . to ensure such impact , the principle of differentiation should be applied not only at the level of funds allocation , but also at the level of programming , to ensure that the union’s development cooperation targets partner countries most in need , including fragile states and states with high vulnerability , and with limited capacity to have access to other sources of financing for supporting their own development , having regard to the potential impact of the union assistance in partner countries . as a consequence , country - specific programming would target such countries , pursuant to the application of objective criteria based on the needs and capacities of these countries , as well as the impact of the assistance of the union and its member states . for countries no longer eligible for country - specific geographical programmes , it should be possible to phase out assistance through a gradual approach , and paying special attention to the needs of particularly vulnerable population groups . the union should establish a strong political dialogue with these partner countries on its possible contribution to the establishment of national policies aiming at poverty reduction .


### strategy papers are documents drawn up by the union to provide a coherent framework for development cooperation between the union and the partner country or region concerned , consistent with the overall purpose and scope , objectives , principles and policy of the union . the preparation and implementation of strategy papers shall comply with the principles of aid effectiveness : national ownership , partnership , coordination , harmonisation , alignment with recipient country or regional systems , mutual accountability and results orientation as laid down in article 3 to . to that end , strategy papers shall , in principle , be based on a dialogue between the union and the partner country or region , involving where appropriate , the relevant member states , and the partner country or region , involving civil society and regional and local authorities , so as to ensure that the country or region concerned takes sufficient ownership of the process and to encourage support for national development strategies , particularly those for reducing poverty . ### strategy papers are documents drawn up by the union to provide a coherent framework for development cooperation between the union and the partner country or region concerned , consistent with the overall purpose and scope , objectives , principles and policy of the union . the preparation and implementation of strategy papers shall comply with the principles of aid effectiveness : national ownership , partnership , coordination , harmonisation , alignment with recipient country or regional systems , mutual accountability and results orientation as laid down in article 3 to . to that end , strategy papers shall , in principle , be based on a dialogue between the union and the partner country or region , involving the relevant member states , and the partner country or region , in consultation with the national / regional parliaments and involving civil society and regional and local authorities through thorough consultation , so as to ensure that the country or region concerned takes sufficient ownership of the process and to encourage support for national development strategies , particularly those for reducing poverty . this dialogue takes place following a consultation and information phase for local and regional authorities and civil society .


### the union should promote a comprehensive approach in response to crisis and disaster and to conflict - affected and fragile situations , including those of transition . this should in particular build on the council conclusions on security and development on an eu response to situations of fragility on conflict prevention as well as any relevant subsequent conclusions . this should provide the necessary mix of approaches , responses and instruments in particular by ensuring an appropriate balance between the security - oriented , development and humanitarian approaches , and by linking short - term reaction with the long term support . ### the union should see it as one of its highest priorities to operate with a comprehensive approach in response to crisis and disaster and to conflict - affected and fragile situations , including those of transition and post - crisis . in those highly unstable situations where needs are most urgent and poverty is most difficult to eradicate , the union should contribute to strengthening the resilience of vulnerable groups in response to shocks . this should be done by providing the appropriate mix of approaches , responses and instruments in particular by ensuring that the security - oriented , humanitarian and development approaches are balanced , consistent and effectively coordinated .


### without prejudice to the provisions on suspension of aid in partnership and cooperation agreements with partner countries and regions , where a partner country fails to observe the principles referred to in article 3 , the union shall invite the partner country to hold consultations in view of finding a solution acceptable to both parties , except in cases of special urgency . where consultations with the partner country do not lead to a solution acceptable to both parties , or if consultations are refused or in cases of special urgency , the council may take appropriate measures in accordance with article 215 of the treaty on the functioning of the european union , which may include full or partial suspension of union assistance . ### without prejudice to the provisions on suspension of aid in partnership and cooperation agreements with partner countries and regions , where a partner country fails to observe the principles referred to in article 3 , the union shall invite the partner country to hold consultations in view of finding a solution acceptable to both parties , except in cases of special urgency . where consultations with the partner country do not lead to a solution acceptable to both parties , or if consultations are refused or in cases of special urgency , the council may take appropriate measures in accordance with article 215 of the treaty on the functioning of the european union , which may include full or partial suspension of union assistance . the european parliament shall be kept fully informed of the start and progress of consultations and of their outcome , which should be made public .


### the lists of partner countries under this regulation should be adapted on the basis of possible changes to their status as established by the development assistance committee of the organization for economic cooperation and development , as well as important changes in human development , aid dependency , crisis situations , vulnerability and other aspects including the dynamics of the development process . such updates , reviews of the partner countries eligible for bilateral development cooperation and modifications in the definitions of detailed areas of cooperation and activities , and adjustments of the indicative financial allocation per programme , constitute non - essential elements of this regulation . consequently , in order to adapt its scope to the rapidly evolving reality in third countries , the power to adopt acts in accordance with article 290 of the treaty of the functioning of the european union should be delegated to the commission for updating the annexes of this regulation which includes the list of partner countries and regions eligible for union financing , the definition of detailed areas of cooperation under geographic and thematic programmes and the indicative allocations per programme . it is of particular importance that the commission should carry out appropriate consultations during its preparatory work , including at expert level . the commission , when preparing and drawing up delegated acts , should further ensure a simultaneous , timely and appropriate transmission of relevant documents to the european parliament and council . ### the lists of partner countries under this regulation should be adapted on the basis of possible changes to their status as established by the development assistance committee of the organization for economic cooperation and development , as well as important changes in human development , aid dependency , crisis situations , vulnerability and other aspects including the dynamics of the development process . such updates , reviews of the partner countries eligible for bilateral development cooperation and modifications in the definitions of detailed areas of cooperation and activities , and adjustments of the indicative financial allocation per programme , constitute non - essential elements of this regulation . consequently , in order to adapt its scope to the rapidly evolving reality in third countries , the power to adopt acts in accordance with article 290 of the treaty of the functioning of the european union should be delegated to the commission for updating the annexes of this regulation which includes the list of partner countries and regions eligible for union financing , the definition of detailed areas of cooperation under geographic and thematic programmes and the indicative allocations per programme . it is of particular importance that the commission should carry out appropriate consultations during its preparatory work , including at expert level and with the full and timely engagement of civil society organisations . the commission , when preparing and drawing up delegated acts , should further ensure a simultaneous , timely and appropriate transmission of relevant documents to the european parliament and council .


### the union and the member states should improve the consistency and the complementarity of their respective policies on development cooperation , in particular by responding to partner countries ' and regions ' priorities at country and regional level . to ensure that the union ' s development cooperation policy and that of the member states complement and reinforce each other , it is appropriate to provide for joint programming procedures which should be implemented whenever possible and relevant . ### the union and the member states should improve the consistency and the complementarity of their respective policies on development cooperation , in particular by responding to partner countries ' and regions ' priorities at country and regional level . to ensure that the union ' s development cooperation policy and that of the member states complement and reinforce each other , and to ensure cost - effective aid delivery while avoiding overlap as well as omissions , it is both urgent and appropriate to provide for joint programming procedures which should be implemented whenever possible and relevant .


### transition from humanitarian aid and crisis response to long - term development cooperation . ### transition from humanitarian aid and crisis response to long - term development cooperation ; - reconstructing and rehabilitating , in the medium and long term , regions and countries affected by conflict , manmade and natural disasters , including support for demobilisation and reintegration actions , - carrying out medium - and long - term activities aimed at the self - sufficiency and integration or reintegration of uprooted people , ensuring that an integrated and consistent approach between humanitarian aid , rehabilitation , aid to uprooted people and development cooperation is pursued , - in situations of fragility , supporting the delivery of basic services and building legitimate , effective and resilient state institutions and an active and organised civil society , in partnership with the country concerned so as to maximise national ownership both at state and local levels , - contributing to a prevention approach to state fragility , conflict , natural disasters and other types of crises by assisting partner countries ' and regional organizations ' efforts to strengthen early warning systems and democratic governance and institutional capacity building , - supporting disaster preparedness and prevention and the management of the consequences of such disasters .


### strategy papers shall be approved and multiannual indicative programmes shall be adopted by the commission in accordance with the examination procedure referred to in article 15 of the common implementing regulation . this procedure shall also apply to substantial reviews which have the effect of significantly modifying the strategy or its programming . ### the commission shall be empowered to adopt delegated acts in accordance with article 18 to approve strategy papers and multiannual indicative programmes . this procedure shall also apply to substantial reviews which have the effect of significantly modifying the strategy or its programming .


### commission communication ' increasing the impact of eu development policy : an agenda for change ' envisages continued support for social inclusion and human development through at least 20% of the union ' s development aid . to contribute to that end , at least 20% of the global public goods and challenges programme should support that area of development . ### this regulation should enable the union to contribute to fulfilling the joint union commitment of providing continued support for human development to improve peoples ' lives in line with the mdgs . at least 20% of the funds under this regulation should be used for supporting the provision of basic social services , as defined by the un in the millennium development goals .


### the union shall promote effective cooperation with partner countries and regions in line with international best practice . it shall increasingly align its support with partners ' national or regional development strategies , reform policies and procedures . it shall contribute to strengthening the process of mutual accountability between partner governments and institutions and donors and promote local expertise and local employment . to that end , it shall promote : ### the union shall promote effective cooperation with partner countries and regions in line with international best practice . it shall align its support with partners ' national or regional development strategies , reform policies and procedures , where this is compatible with the objectives and political principles laid down in this regulation . it shall contribute to strengthening the process of mutual accountability between partner governments and institutions and donors and promote local expertise and local employment , and to deepening the democratic ownership of development policies and processes . to that end , it shall promote :


### commission communication ' increasing the impact of eu development policy : an agenda for change ' envisages continued support for social inclusion and human development through at least 20% of the union ' s development aid . to contribute to that end , at least 20% of the global public goods and challenges programme should support that area of development . ### commission communication ' increasing the impact of eu development policy : an agenda for change ' envisages continued support for social inclusion and human development through at least 20% of the union ' s development aid . to contribute to that end , at least 20% of the global public goods and challenges programme should support that area of development , with a focus on health and basic education .


### pursuant to the principle of mutual accountability in the pursuit and fulfilment of agreed objectives , including those referring to good governance , democracy and respect for human rights and to the rule of law , indicative allocations may be increased or decreased as a result of reviews , particularly in the light of special needs such as those resulting from a crisis , post - crisis or fragility situation , or where performance has been exceptional or unsatisfactory . ### the review of the mips should cover needs as well as the commitment and progress with regard to agreed objectives relating to development , including those referring to human rights , democracy , the rule of law and good governance . it may also include adapting the indicative allocations , priorities and aid modalities , particularly following a military , institutional or humanitarian crisis or post - crisis situation . such reviews shall be based on a dialogue as described in subparagraph 2 of paragraph - 1a , unless political circumstances or urgency require otherwise . the european parliament shall be kept fully informed about the review .


### this regulation should provide an enabling framework for programming , allowing enhanced consistency between union policies by using a joint framework document as a basis for programming . it should enable full alignment with partner countries and regions by relying , where appropriate , on national development plans or similar comprehensive development documents ; and pursue a better coordination amongst donors , in particular between the union and its member states , through joint programming . ### this regulation should allow for enhanced consistency between union policies while respecting the overall requirement of policy coherence for development . it should enable full alignment with partner countries and regions by using , where possible , national development plans or similar comprehensive development documents as the basis for the programming of the union’s action ; and pursue a better coordination amongst donors , in particular between the union and its member states , through joint programming .


### the union also aims to ensure coherence with other areas of its external action . this should be ensured when formulating the union ' s development cooperation policy and its strategic planning programming and implementation of measures . ### the union should seek the most efficient use of available resources in order to optimise the impact of its external action . this should be achieved through a comprehensive approach for each country based on complementarity , the creation of synergies and the mutual reinforcement of the programmes devised under this regulation and the other external instruments of the union . while striving for overall consistency of the union ' s external action in accordance with article 21 teu , the union should ensure policy coherence for development as required in article 208 tfeu . all union policies which are likely to affect developing countries should take into account the objectives of the union development cooperation policy .


### promoting democracy , the rule of law , good governance and respect for human rights . ### promoting democracy , the rule of law , good governance , transparency , gender equality and respect for human rights .


### the lists of partner countries under this regulation should be adapted on the basis of possible changes to their status as established by the development assistance committee of the organization for economic cooperation and development , as well as important changes in human development , aid dependency , crisis situations , vulnerability and other aspects including the dynamics of the development process . such updates , reviews of the partner countries eligible for bilateral development cooperation and modifications in the definitions of detailed areas of cooperation and activities , and adjustments of the indicative financial allocation per programme , constitute non - essential elements of this regulation . consequently , in order to adapt its scope to the rapidly evolving reality in third countries , the power to adopt acts in accordance with article 290 of the treaty of the functioning of the european union should be delegated to the commission for updating the annexes of this regulation which includes the list of partner countries and regions eligible for union financing , the definition of detailed areas of cooperation under geographic and thematic programmes and the indicative allocations per programme . it is of particular importance that the commission should carry out appropriate consultations during its preparatory work , including at expert level . the commission , when preparing and drawing up delegated acts , should further ensure a simultaneous , timely and appropriate transmission of relevant documents to the european parliament and council . ### the lists of partner countries under this regulation should be adapted on the basis of possible changes to their status as oda recipients , as established by the development assistance committee of the organization for economic cooperation and development . the lists of partner countries under this regulation should also be adapted to respond to important changes in human development , aid dependency , crisis situations , vulnerability and other aspects included in the eligibility criteria defined in this regulation for the establishment of the different categories of partner countries . for such updates , and for modifications in the definitions of areas of cooperation and activities , and adjustments of the indicative financial allocation per programme , the commission should submit legislative proposals introducing the necessary modifications to annexes i , iii , iv , v , vi and vii of this regulation .


### multiannual indicative programmes shall be drawn up for each of the countries or regions receiving an indicative allocation of union funds under this regulation except for countries or regions mentioned in paragraph 4 , these documents shall be drawn up on the basis of the strategy papers or similar documents referred to in this article . for the purpose of this regulation , where it complies with the principles and conditions established in this paragraph , including an indicative allocation of funds , and with the procedures provided for in article 14 , the joint multiannual programming document provided for in paragraph 3 may be considered as the multiannual indicative programme . multiannual indicative programmes shall set out the priority areas selected for union financing , the specific objectives , the expected results , the performance indicators and the indicative financial allocation , both overall and per priority area . where appropriate , this allocation may be given in the form of a range and / or some funds may be left unallocated . the multiannual indicative programmes should be adjusted where necessary , taking into account any mid - term or ad hoc reviews of the strategy document on which they are based . pursuant to the principle of mutual accountability in the pursuit and fulfilment of agreed objectives , including those referring to good governance , democracy and respect for human rights and to the rule of law , indicative allocations may be increased or decreased as a result of reviews , particularly in the light of special needs such as those resulting from a crisis , post - crisis or fragility situation , or where performance has been exceptional or unsatisfactory . ### multiannual indicative programmes shall be drawn up for each of the countries or regions receiving an indicative allocation of union funds under this regulation except for countries or regions mentioned in paragraph 4 , these documents shall be drawn up on the basis of the strategy papers or similar documents referred to in this article . for the purpose of this regulation , where it complies with the principles and conditions established in this paragraph , including an indicative allocation of funds , and with the procedures provided for in article 14 , the joint multiannual programming document provided for in paragraph 3 may be considered as the multiannual indicative programme . multiannual indicative programmes shall set out the priority areas selected for union financing , the specific objectives , the expected results , the performance indicators , the commitments to be fulfilled by partner countries regarding human rights and reforms towards democratisation , the indicative financial allocation , both overall and per priority area and the conditions for suspension of assistance or re - allocation of funds . where appropriate , this allocation may be given in the form of a range and / or some funds may be left unallocated . the multiannual indicative programmes should be adjusted where necessary , taking into account any mid - term or ad hoc reviews of the strategy document on which they are based . serious and systematic violations of human rights shall trigger an automatic ad hoc review of the strategy document . mid - term ad hoc reviews shall be communicated to the european parliament and the council and shall be made public and available to local stakeholders . pursuant to the principle of mutual accountability in the pursuit and fulfilment of agreed objectives , including those referring to good governance , democracy and respect for human rights and to the rule of law , indicative allocations may be increased or decreased as a result of reviews , particularly in the light of special needs such as those resulting from a crisis , post - crisis or fragility situation , or where performance has been exceptional or unsatisfactory . the review process shall allow for consultation with local and international civil society organisations . the european parliament and the council shall be kept fully informed .


### strategy papers shall be approved and multiannual indicative programmes shall be adopted by the commission in accordance with the examination procedure referred to in article 15 of the common implementing regulation . this procedure shall also apply to substantial reviews which have the effect of significantly modifying the strategy or its programming . ### strategy papers and multiannual indicative programmes shall be adopted by means of a delegated act in accordance with articles 17 and 18 of this regulation . this procedure shall also apply to mid - term reviews and other substantial reviews which have the effect of significantly modifying the strategy or its programming .


### funds may be left unallocated . subject to their subsequent allocation or re - allocation as provided for in articles 11 and 13 , the use of these funds shall be decided later in accordance with the common implementing regulation . ### funds may be left unallocated . subject to their subsequent allocation or re - allocation as provided for in articles 11 and 13 , the use of these funds shall be decided later through the adoption of delegated acts in accordance with article 18 of this regulation .


### funds may be left unallocated . subject to their subsequent allocation or re - allocation as provided for in articles 11 and 13 , the use of these funds shall be decided later in accordance with the common implementing regulation . ### in order to ensure an appropriate union response in the event of unforeseen circumstances , as well as to allow for the synchronisation with partner countries strategy cycles and the modification of indicative allocations as a result of reviews , funds may be left unallocated . in crisis , post - crisis and fragility situations , these funds shall be primarily used in support of a specific strategy to ensure a smooth transition from emergency aid to long - term development . at the level of the instrument , the part of funds left unallocated shall not exceed 5 % . within multiannual indicative programmes , the part of funds left unallocated shall not exceed 5 % , except for the purpose of synchronisation . the subsequent allocation and reallocation shall be decided later in accordance with article 11 , article 13 , and article 14 .


### the commission shall seek regular exchanges of information with civil society . ### the commission shall ensure regular exchanges of information with civil society organisations and with local authorities , and ensure that those actors are appropriately involved in the process of designing , implementing , monitoring and evaluating union support .


### the commission shall seek regular exchanges of information with civil society . ### the commission shall seek regular and timely exchanges of information with civil society and local and regional authorities .


### union assistance should focus where it has more impact , having regard to its capacity to act on a global scale and respond to global challenges such as poverty eradication , sustainable and inclusive development and worldwide promotion of democracy , good governance , human rights and the rule of law , its long - term and predictable commitment to development assistance and its role in coordinating with its member states . to ensure such impact , the principle of differentiation should be applied not only at the level of funds allocation , but also at the level of programming , to ensure that bilateral development cooperation targets partner countries most in need , including fragile states and states with high vulnerability , and with limited capacity to have access to other sources of financing for supporting their own development , having regard to the potential impact of the union assistance in partner countries . as a consequence , bilateral programming would target such countries , pursuant to the application of objective criteria based on the needs and capacities of these countries , as well as the impact of eu assistance . ### in the context of the overarching objective of the union ' s development cooperation to contribute to poverty eradication , union assistance should focus where it has more impact , having regard to its capacity to act on a global scale and respond to global challenges . in particular , the union ' s added value results from its capacity and its own experience in supporting sustainable and inclusive development , promoting democracy , good governance , human rights and the rule of law worldwide , its long - term and predictable commitment to development assistance and its role in promoting the coordination with its member states , as enshrined in article 210 tfeu . to ensure such impact , the principle of differentiation should be applied not only at the level of funds allocation , but also at the level of programming , to ensure that the union’s development cooperation targets partner countries most in need , including fragile states and states with high vulnerability , and with limited capacity to have access to other sources of financing for supporting their own development , having regard to the potential impact of the union assistance in partner countries . as a consequence , country - specific programming would target such countries , pursuant to the application of objective criteria based on the needs and capacities of these countries , as well as the impact of the assistance of the union and its member states . for countries no longer eligible for country - specific geographical programmes , it should be possible to phase out assistance through a gradual approach , and paying special attention to the needs of particularly vulnerable population groups . the union should establish a strong political dialogue with these partner countries on its possible contribution to the establishment of national policies aiming at poverty reduction .


### the following cross - cutting issues shall be mainstreamed in all programmes : the promotion of human rights , gender equality , women empowerment , non - discrimination , democracy , good governance , the rights of the child and indigenous peoples ' rights , social inclusion and the rights of persons with disabilities , environmental sustainability including addressing climate change and combating hiv / aids . ### the following cross - cutting issues shall be mainstreamed in all programmes : the promotion of human rights , gender equality , empowerment of women , non - discrimination , democracy , good governance , the rights of the child , indigenous peoples ' rights , social inclusion and decent work , the rights of persons with disabilities , environmental sustainability including addressing climate change and combating hiv / aids .


### the procedure referred to in paragraph 1 shall not apply to non - substantial modifications to strategy papers and multiannual indicative programmes , making technical adjustments , reassigning funds within the indicative allocations per priority area , or increasing or decreasing the size of the initial indicative allocation by less than 20% , provided that these modifications do not affect the priority areas and objectives set out in these documents . in such case , adjustments shall be communicated to the european parliament and to the council within one month . ### the commission , in accordance with the examination procedure referred to in article 15 of the common implementing regulation , may proceed with non - substantial modifications to strategy papers and multiannual indicative programmes , technical adjustments , reassigning funds within the indicative allocations per priority area , or increasing or decreasing the size of the initial indicative allocation by less than 20% , provided that these modifications do not affect the priority areas and objectives set out in these documents . in such case , adjustments shall be communicated to the european parliament and to the council within one month .


### the union is founded on the values of democracy , the rule of law , the universality and indivisibility of and respect for human rights and fundamental freedoms , respect for human dignity , the principles of equality and solidarity and respect for the principles of the un charter and international law . it seeks to develop and consolidate commitment to these values in partner countries and regions through dialogue and cooperation . ### the union ' s action on the international scene should be guided by the principles which have inspired its own creation , development and enlargement , and which it seeks to advance in the wider world : democracy , the rule of law , the universality and indivisibility of and respect for human rights and fundamental freedoms , respect for human dignity , the principles of equality and solidarity and respect for the principles of the un charter and international law . it seeks to develop and consolidate commitment to these principles in partner countries and regions through dialogue and cooperation . while pursuing those principles , the union , expressing the combined commitment and ambitions of the member states and thereby ensuring its unique political weight , proves its added value as an actor in development policies .


### the union should promote a comprehensive approach in response to crisis and disaster and to conflict - affected and fragile situations , including those of transition . this should in particular build on the council conclusions on security and development on an eu response to situations of fragility on conflict prevention as well as any relevant subsequent conclusions . this should provide the necessary mix of approaches , responses and instruments in particular by ensuring an appropriate balance between the security - oriented , development and humanitarian approaches , and by linking short - term reaction with the long term support . ### the union should see it as one of its highest priorities to operate with a comprehensive approach in response to crisis and disaster and to conflict - affected and fragile situations , including those of transition and post - crisis . in those highly unstable situations where needs are most urgent and poverty is most difficult to eradicate , the union should contribute to strengthening the resilience of vulnerable groups in response to shocks . this should be done by providing the appropriate mix of approaches , responses and instruments in particular by ensuring that the security - oriented , humanitarian and development approaches are balanced , consistent and effectively coordinated .


### promoting democracy , the rule of law , good governance and respect for human rights . ### consolidating and supporting democracy , the rule of law , good governance , human rights and the principles of international law .


### pursuant to the principle of mutual accountability in the pursuit and fulfilment of agreed objectives , including those referring to good governance , democracy and respect for human rights and to the rule of law , indicative allocations may be increased or decreased as a result of reviews , particularly in the light of special needs such as those resulting from a crisis , post - crisis or fragility situation , or where performance has been exceptional or unsatisfactory . ### the review of the mips should cover needs as well as the commitment and progress with regard to agreed objectives relating to development , including those referring to human rights , democracy , the rule of law and good governance . it may also include adapting the indicative allocations , priorities and aid modalities , particularly following a military , institutional or humanitarian crisis or post - crisis situation . such reviews shall be based on a dialogue as described in subparagraph 2 of paragraph - 1a , unless political circumstances or urgency require otherwise . the european parliament shall be kept fully informed about the review .


### commitments and performance . ### commitments and performance ; in particular commitment and progress in attaining agreed human rights , transparency and democratisation objectives and priorities .