# Regulation (EU) No 600/2014 of the European Parliament and of the CouncilShow full title

Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments            and amending Regulation (EU) No 648/2012 (Text with EEA relevance)         

        - Previous
        - Next

U.K.

# Regulation (EU) No 600/2014 of the European Parliament and of the Council

# of 15 May 2014

# on markets in financial instruments and amending Regulation (EU) No 648/2012

# (Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

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

Having regard to the proposal from the European Commission,

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

Having regard to the opinion of the European Central Bank(1),                        

Having regard to the opinion of the European Economic and Social Committee(2),                        

Acting in accordance with the ordinary legislative procedure(3),                        

Whereas:

(1)The financial crisis has exposed weaknesses in the transparency of financial markets which can contribute to harmful socioeconomic                              effects. Strengthening transparency is one of the shared principles to strengthen the financial system as confirmed by the                              G20 Leaders’ statement in London on 2 April 2009. In order to strengthen the transparency and improve the functioning of the                              internal market for financial instruments, a new framework establishing uniform requirements for the transparency of transactions                              in markets for financial instruments should be put in place. The framework should establish comprehensive rules for a broad                              range of financial instruments. It should complement requirements for the transparency of orders and transactions in respect                              of shares established in Directive 2004/39/EC of the European Parliament and of the Council(4).

(2)The High-Level Group on Financial Supervision in the EU chaired by Jacques de Larosière invited the Union to develop a more                              harmonised set of financial regulations. In the context of the future European supervision architecture, the European Council                              of 18 and 19 June 2009 stressed the need to establish a European single rule book applicable to all financial institutions                              in the internal market.

(3)The new legislation should as a consequence consist of two different legal instruments, a Directive and this Regulation. Together,                              both legal instruments should form the legal framework governing the requirements applicable to investment firms, regulated                              markets and data reporting services providers. This Regulation should therefore be read together with the Directive. The need                              to establish a single set of rules for all institutions in respect of certain requirements and to avoid potential regulatory                              arbitrage as well as to provide more legal certainty and less regulatory complexity for market participants warrants the use                              of a legal basis allowing for the creation of a Regulation. In order to remove the remaining obstacles to trade and significant                              distortions of competition resulting from divergences between national laws and to prevent any further likely obstacles to                              trade and significant distortions of competition from arising, it is therefore necessary to adopt a Regulation establishing                              uniform rules applicable in all Member States. This directly applicable legal act aims at contributing in a determining manner                              to the smooth functioning of the internal market and should, consequently, be based on Article 114 of the Treaty on the Functioning                              of the European Union (TFEU), as interpreted in accordance with the consistent case-law of the Court of Justice of the European                              Union.

(4)Directive 2004/39/EC established rules for making the trading in shares admitted to trading on a regulated market pre-trade                              and post-trade transparent and for reporting transactions in financial instruments admitted to trading on a regulated market                              to competent authorities. The directive needs to be recast in order to appropriately reflect developments in financial markets                              and to address weaknesses and close loopholes that were, inter alia, exposed in the financial market crisis.

(5)Provisions in respect of trade and regulatory transparency requirements need to take the form of directly applicable law applied                              to all investment firms that should follow uniform rules in all Union markets, in order to provide for a uniform application                              of a single regulatory framework, to strengthen confidence in the transparency of markets across the Union, to reduce regulatory                              complexity and investment firms’ compliance costs, especially for financial institutions operating on a cross-border basis,                              and to contribute to the elimination of distortions of competition. The adoption of a regulation ensuring direct applicability                              is best suited to accomplish those regulatory goals and ensure uniform conditions by preventing diverging national requirements                              as a result of the transposition of a directive.

(6)It is important to ensure that trading in financial instruments is carried out as far as possible on organised venues and                              that all such venues are appropriately regulated. Under Directive 2004/39/EC, some trading systems developed which were not                              adequately captured by the regulatory regime. Any trading system in financial instruments, such as entities currently known                              as broker crossing networks, should in the future be properly regulated and be authorised under one of the types of multilateral                              trading venues or as a systematic internaliser under the conditions set out in this Regulation and in Directive 2014/65/EU(5).

(7)The definitions of regulated market and multilateral trading facility (MTF) should be clarified and remain closely aligned                              with each other to reflect the fact that they represent effectively the same organised trading functionality. The definitions                              should exclude bilateral systems where an investment firm enters into every trade on own account, even as a riskless counterparty                              interposed between the buyer and seller. Regulated markets and MTFs should not be allowed to execute client orders against                              proprietary capital. The term ‘system’ encompasses all those markets that are composed of a set of rules and a trading platform                              as well as those that only function on the basis of a set of rules. Regulated markets and MTFs are not obliged to operate                              a ‘technical’ system for matching orders and should be able to operate other trading protocols including systems whereby users                              are able to trade against quotes they request from multiple providers. A market which is only composed of a set of rules that                              governs aspects related to membership, admission of instruments to trading, trading between members, reporting and, where                              applicable, transparency obligations is a regulated market or an MTF within the meaning of this Regulation and the transactions                              concluded under those rules are considered to be concluded under the systems of a regulated market or an MTF. The term ‘buying                              and selling interests’ is to be understood in a broad sense and includes orders, quotes and indications of interest.One of the important requirements concerns the obligation that the interests be brought together in the system by means of                              non-discretionary rules set by the system operator. That requirement means that they are brought together under the system’s                              rules or by means of the system’s protocols or internal operating procedures, including procedures embodied in computer software.                              The term ‘non-discretionary rules’ means rules that leave the regulated market or the market operator or investment firm operating                              an MTF with no discretion as to how interests may interact. The definitions require that interests be brought together in                              such a way as to result in a contract which occurs where execution takes place under the system’s rules or by means of the                              system’s protocols or internal operating procedures.

(8)In order to make Union financial markets more transparent and efficient and to level the playing field between various venues                              offering multilateral trading services it is necessary to introduce a new trading venue category of organised trading facility                              (OTF) for bonds, structured finance products, emissions allowances and derivatives and to ensure that it is appropriately                              regulated and applies non-discriminatory rules regarding access to the facility. That new category is broadly defined so that                              now and in the future it should be able to capture all types of organised execution and arranging of trading which do not                              correspond to the functionalities or regulatory specifications of existing venues. Consequently, appropriate organisational                              requirements and transparency rules which support efficient price discovery need to be applied. The new category encompasses                              systems eligible for trading clearing-eligible and sufficiently liquid derivatives.It should not include facilities where there is no genuine trade execution or arranging taking place in the system, such as                              bulletin boards used for advertising buying and selling interests, other entities aggregating or pooling potential buying                              or selling interests, electronic post-trade confirmation services, or portfolio compression, which reduces non-market risks                              in existing derivatives portfolios without changing the market risk of the portfolios. Portfolio compression may be provided                              by a range of firms which are not regulated as such by this Regulation or by Directive 2014/65/EU, such as central counterparties                              (CCPs), trade repositories as well as by investment firms or market operators. It is appropriate to clarify that where investment                              firms and market operators carry out portfolio compression certain provisions of this Regulation and of Directive 2014/65/EU                              are not applicable in relation to portfolio compression. Since central securities depositories (CSDs) will be subject to the                              same requirements as investment firms when providing certain investment services or performing certain investment activities,                              the provisions of this Regulation and of Directive 2014/65/EU should not be applicable to firms that are not regulated thereby                              when carrying out portfolio compression.

(9)That new category OTF will complement the existing types of trading venues. While regulated markets and MTFs have non-discretionary                              rules for the execution of transactions, the operator of an OTF should carry out order execution on a discretionary basis                              subject, where applicable, to the pre-transparency requirements and best execution obligations. Consequently, conduct of business                              rules, best execution and client order handling obligations should apply to the transactions concluded on an OTF operated                              by an investment firm or a market operator. In addition, any market operator authorised to operate an OTF should comply with                              Chapter 1 of Directive 2014/65/EU regarding conditions and procedures for authorisation of investment firms. The investment                              firm or the market operator operating an OTF should be able to exercise discretion at two different levels: first when deciding                              to place an order on the OTF or to retract it again and second when deciding not to match a specific order with the orders                              available in the system at a given point in time, provided that that complies with specific instructions received from clients                              and with best execution obligations.For the system that crosses client orders the operator should be able to decide if, when and how much of two or more orders                              it wants to match within the system. In accordance with Article 20(1), (2), (4) and (5) of Directive 2014/65/EU and without                              prejudice to Article 20(3) of Directive 2014/65/EU, the firm should be able to facilitate negotiation between clients as to                              bring together two or more potentially compatible trading interests in a transaction. At both discretionary levels the OTF                              operator must have regard to its obligations under Articles 18 and 27 of Directive 2014/65/EU. The market operator or investment                              firm operating an OTF should make clear to users of the venue how they will exercise discretion. Because an OTF constitutes                              a genuine trading platform, the platform operator should be neutral. Therefore, the investment firm or market operator operating                              the OTF should be subject to requirements in relation to non-discriminatory execution and neither the investment firm or market                              operator operating the OTF nor any entity that is part of the same group or legal person as the investment firm or market                              operator should be allowed to execute client orders in an OTF against its proprietary capital.For the purpose of facilitating the execution of one or more client orders in bonds, structured finance products, emission                              allowances and derivatives that have not been declared subject to the clearing obligation in accordance with Article 5 of                              Regulation (EU) No 648/2012 of the European Parliament and of the Council(6), an OTF operator is permitted to use matched principal trading within the meaning of Directive 2014/65/EU provided the client                              has consented to that process. In relation to sovereign debt instruments for which there is not a liquid market, an investment                              firm or market operator operating an OTF should be able to engage in dealing on own account other than matched principal trading.                              When matched principal trading is used all pre-trade and post-trade transparency requirements as well as best execution obligations                              must be complied with. The OTF operator or any entity that is part of the same group or legal person as the investment firm                              or market operator should not act as systematic internaliser in the OTF operated by it. Furthermore, the operator of an OTF                              should be subject to the same obligations as an MTF in relation to the sound management of potential conflicts of interest.

(10)All organised trading should be conducted on regulated venues and be fully transparent, both pre and post trade. Appropriately                              calibrated transparency requirements therefore need to apply to all types of trading venues, and to all financial instruments                              traded thereon.

(11)In order to ensure more trading takes place on regulated trading venues and systematic internalisers, a trading obligation                              for shares admitted to trading on a regulated market or traded on a trading venue should be introduced for investment firms                              in this Regulation. That trading obligation requires investment firms to undertake all trades including trades dealt on own                              account and trades dealt when executing client orders on a regulated market, an MTF, a systematic internaliser or an equivalent                              third-country trading venue. However an exclusion from that trading obligation should be provided if there is a legitimate                              reason. Those legitimate reasons are where trades are non-systematic, ad-hoc, irregular and infrequent, or are technical trades                              such as give-up trades which do not contribute to the price discovery process. Such an exclusion from that trading obligation                              should not be used to circumvent the restrictions introduced on the use of the reference price waiver and the negotiated price                              waiver or to operate a broker crossing network or other crossing system.The option for trades to be done on a systematic internaliser is without prejudice to the systematic internaliser regime laid                              down in this Regulation. The intention is that if the investment firm itself meets the relevant criteria laid down in this                              Regulation to be deemed a systematic internaliser in that particular share, the trade may be dealt in that way; however, if                              it is not deemed a systematic internaliser in that particular share, the investment firm should still be able to undertake                              the trade on another systematic internaliser where that complies with its best execution obligations and the option is available                              to it. In addition, in order to ensure that multilateral trading with respect to shares, depositary receipts, exchange-traded                              funds (ETFs), certificates and other similar financial instruments is properly regulated, an investment firm that operates                              an internal matching system on a multilateral basis should be authorised as an MTF. It should be clarified that the best execution                              provisions set out in Directive 2014/65/EU should be applied in such a manner as not to impede the trading obligations under                              this Regulation.

(12)Trading in depositary receipts, ETFs, certificates, similar financial instruments and shares other than those admitted to                              trading on a regulated market takes place in largely the same fashion, and fulfils a nearly identical economic purpose, as                              trading in shares admitted to trading on a regulated market. Transparency provisions applicable to shares admitted to trading                              on regulated markets should thus be extended to those financial instruments.

(13)While, in principle, acknowledging the need for a regime of waivers from pre-trade transparency to support the efficient functioning                              of markets, the actual waiver provisions for shares applicable on the basis of Directive 2004/39/EC and of Commission Regulation                              (EC) No 1287/2006(7), need to be scrutinised as to their continued appropriateness in terms of scope and conditions applicable. In order to ensure                              a uniform application of the waivers from pre-trade transparency in shares and eventually other similar financial instruments                              and non-equity products for specific market models and types and sizes of orders, the European Supervisory Authority (European                              Securities and Markets Authority), established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council(8) (‘ESMA’), should assess the compatibility of individual requests for applying a waiver with rules laid down in this Regulation                              and in delegated acts provided for in this Regulation. ESMA’s assessment should take the form of an opinion in accordance                              with Article 29 of Regulation (EU) No 1095/2010. In addition, the already existing waivers for shares should be reviewed by                              ESMA within an appropriate timeframe and an assessment should be made, following the same procedure, as to whether they are                              still in compliance with the rules set out in this Regulation and in delegated acts provided for in this Regulation.

(14)The financial crisis exposed specific weaknesses in the way information on trading opportunities and prices in financial instruments                              other than shares is available to market participants, namely in terms of timing, granularity, equal access, and reliability.                              Timely pre-trade and post-trade transparency requirements taking account of the different characteristics and market structures                              of specific types of financial instruments other than shares should thus be introduced and calibrated for different types                              of trading systems, including order-book, quote-driven, hybrid, periodic auction trading and voice trading systems. In order                              to provide a sound transparency framework for all relevant financial instruments, these should apply to bonds, structured                              finance products, emission allowances and derivatives which are traded on a trading venue. Therefore, exemptions from pre-trade                              transparency and adaptations of the requirements in relation to deferred publication should be available only in certain defined                              cases.

(15)It is necessary to introduce an appropriate level of trade transparency in markets for bonds, structured finance products                              and derivatives in order to help the valuation of products as well as the efficiency of price formation. Structured finance                              products should, in particular, include asset backed securities as defined in Article 2(5) of Commission Regulation (EC) No 809/2004(9), comprising among others collateralised debt obligations.

(16)In order to ensure uniform applicable conditions between trading venues, the same pre-trade and post-trade transparency requirements                              should apply to the different types of venues. The transparency requirements should be calibrated for different types of financial                              instruments, including equities, bonds, and derivatives, taking into account the interests of investors and issuers, including                              government bond issuers, and market liquidity. The requirements should be calibrated for different types of trading, including                              order-book and quote-driven systems such as request for quote as well as hybrid and voice broking systems, and take account                              of transaction size, including turnover, and other relevant criteria.

(17)In order to avoid any negative impact on the price formation process, it is necessary to introduce an appropriate volume cap                              mechanism for orders placed in systems which are based on a trading methodology by which the price is determined in accordance                              with a reference price and for certain negotiated transactions. That mechanism should have a double cap, whereby a volume                              cap is applied to each trading venue that uses those waivers so that only a certain percentage of trading can be done on each                              trading venue, and in addition an overall volume cap is applied which if exceeded would result in the suspension of use of                              those waivers across the Union. In relation to the negotiated transactions, it should only apply to those transactions that                              are made within the current volume weighted spread reflected on the order book or the quotes of the market makers of the trading                              venue operating that system. It should exclude negotiated transactions in illiquid shares, depositary receipts, ETFs, certificates                              or other similar financial instruments, and those transactions that are subject to conditions other than the current market                              price as they do not contribute to the price formation process.

(18)In order to ensure that trading carried out OTC does not jeopardise efficient price discovery or a transparent level playing                              field between means of trading, appropriate pre-trade transparency requirements should apply to investment firms dealing on                              own account in financial instruments OTC insofar as it is carried out in their capacity as systematic internalisers in relation                              to shares, depositary receipts, ETFs, certificates or other similar financial instruments for which there is a liquid market                              and bonds, structured finance products, emission allowances and derivatives which are traded on a trading venue and for which                              there is a liquid market.

(19)An investment firm executing client orders against own proprietary capital should be deemed a systematic internaliser, unless                              the transactions are carried out outside a trading venue on an occasional, ad hoc and irregular basis. Thus, systematic internalisers                              should be defined as investment firms which, on an organised, frequent systematic and substantial basis, deal on own account                              by executing client orders outside a trading venue. The requirements for systematic internalisers in this Regulation should                              apply to an investment firm only in relation to each single financial instrument, for example on ISIN-code level, in which                              it is a systematic internaliser. In order to ensure an objective and effective application of the definition of systematic                              internaliser to investment firms, there should be a pre-determined threshold for systematic internalisation containing an                              exact specification of what is meant by frequent, systematic and substantial basis.

(20)While an OTF is any system or facility in which multiple third-party buying and selling interests interact in the system,                              a systematic internaliser should not be allowed to bring together third-party buying and selling interests. For instance,                              a so-called single-dealer platform, where trading always takes place against a single investment firm, should be considered                              a systematic internaliser, were it to comply with the requirements included in this Regulation. However, a so-called multi-dealer                              platform, with multiple dealers interacting for the same financial instrument, should not be considered a systematic internaliser.

(21)Systematic internalisers should be able to decide on the basis of their commercial policy and in an objective non-discriminatory                              way the clients to whom they give access to their quotes, distinguishing between categories of clients, and should also be                              entitled to take account of distinctions between clients, for example in relation to credit risk. Systematic internalisers                              should not be obliged to publish firm quotes, execute client orders and give access to their quotes in relation to equity                              transactions above standard market size and non-equity transactions above the size specific to the financial instrument. Systematic                              internalisers’ compliance with their obligations should be checked by and information made available to competent authorities                              to enable them to do so.

(22)It is not the intention of this Regulation to require the application of pre-trade transparency rules to transactions carried                              out on an OTC basis, other than within a systematic internaliser.

(23)Market data should be easily and readily available to users in a format as disaggregated as possible to allow investors, and                              data service providers serving their needs, to customise data solutions to the furthest possible degree. Therefore, pre-trade                              and post-trade transparency data should be made available to the public in an ‘unbundled’ fashion in order to reduce costs                              for market participants when purchasing data.

(24)Directive 95/46/EC of the European Parliament and of the Council(10) and Regulation (EC) No 45/2001 of the European Parliament and of the Council(11) should be fully applicable to the exchange, transmission and processing of personal data for the purposes of this Regulation,                              particularly Title IV, by Member States and ESMA.

(25)Considering the agreement reached by the parties to the G20 Pittsburgh summit on 25 September 2009 to move trading in standardised                              OTC derivative contracts to exchanges or electronic trading platforms where appropriate, a formal regulatory procedure should                              be defined for mandating trading between financial counterparties and large non-financial counterparties in all derivatives                              which have been considered to be clearing-eligible and which are sufficiently liquid to take place on a range of trading venues                              subject to comparable regulation and enabling participants to trade with multiple counterparties. The assessment of sufficient                              liquidity should take account of market characteristics at national level including elements such as the number and type of                              market participants in a given market, and of transaction characteristics, such as the size and frequency of transactions                              in that market.A liquid market in a product class of derivatives will be characterised by a high number of active market participants, including                              a suitable mix of liquidity providers and liquidity takers, relative to the number of traded products, which execute trades                              frequently in those products in sizes below a size that is large in scale. Such market activity should be indicated by a high                              number of resting bids and offers in the relevant derivative leading to a narrow spread for a transaction of normal market                              size. The assessment of sufficient liquidity should recognize that the liquidity of a derivative can vary significantly according                              to market conditions and its life cycle.

(26)Considering the agreement reached by the parties to the G20 in Pittsburgh on 25 September 2009 to move trading in standardised                              OTC derivative contracts to exchanges or electronic trading platforms where appropriate on the one hand, and the relatively                              lower liquidity of various OTC derivatives on the other, it is appropriate to provide for a suitable range of eligible venues                              on which trading pursuant to that commitment can take place. All eligible venues should be subject to closely aligned regulatory                              requirements in terms of organisational and operational aspects, arrangements to mitigate conflicts of interest, surveillance                              of all trading activity, pre-trade and post-trade transparency calibrated by financial instrument and types of trading system,                              and for multiple third-party trading interests to be able to interact with one another. The possibility for operators of venues                              to arrange transactions pursuant to that commitment between multiple third parties in a discretionary fashion should however                              be provided for in order to improve the conditions for execution and liquidity.

(27)The obligation to conclude transactions in derivatives pertaining to a class of derivatives that has been declared subject                              to the trading obligation on a regulated market, MTF, OTF or third country trading venue should not apply to the components                              of non-price forming post-trade risk reduction services which reduce non-market risks in derivatives portfolios including                              existing OTC derivatives portfolios in accordance with Regulation (EU) No 648/2012 without changing the market risk of the                              portfolios. In addition, while it is appropriate to make specific provision for portfolio compression, this Regulation is                              not intended to prevent the use of other post-trade risk reduction services.

(28)The trading obligation established for those derivatives should allow for efficient competition between eligible trading venues.                              Therefore those trading venues should not be able to claim exclusive rights in relation to any derivatives subject to that                              trading obligation preventing other trading venues from offering trading in those financial instruments. For effective competition                              between trading venues for derivatives, it is essential that trading venues have non-discriminatory and transparent access                              to CCPs. Non-discriminatory access to a CCP should mean that a trading venue has the right to non-discriminatory treatment                              in terms of how contracts traded on its platform are treated in terms of collateral requirements and netting of economically                              equivalent contracts and cross-margining with correlated contracts cleared by the same CCP, and non-discriminatory clearing                              fees.

(29)Competent authorities’ powers should be complemented with an explicit mechanism for prohibiting or restricting the marketing,                              distribution and sale of any financial instrument or structured deposit giving rise to serious concerns regarding investor                              protection, orderly functioning and integrity of financial markets, or commodities markets, or the stability of the whole                              or part of the financial system, together with appropriate coordination and contingency powers for ESMA or, for structured                              deposits, the European Supervisory Authority (European Banking Authority) (EBA), established by Regulation (EU) No 1093/2010                              of the European Parliament and of the Council(12). The exercise of such powers by competent authorities and, in exceptional cases, by ESMA or EBA should be subject to the                              need to fulfil a number of specific conditions. Where those conditions are met, the competent authority or, in exceptional                              cases, ESMA or EBA should be able to impose a prohibition or restriction on a precautionary basis before a financial instrument                              or structured deposit has been marketed, distributed or sold to clients.Those powers do not imply any requirement to introduce or apply a product approval or licensing by the competent authority,                              ESMA or EBA, and do not relieve investment firms of their responsibility to comply with the all relevant requirements laid                              down in this Regulation and in Directive 2014/65/EU. The orderly functioning and integrity of commodity markets should be                              included as a criterion for intervention by competent authorities in order to enable action to be taken to counteract possible                              negative externalities on commodities markets from activities on financial markets. This is true, in particular, for agricultural                              commodity markets the purpose of which is to ensure a secure supply of food for the population. In those cases, the measures                              should be coordinated with the authorities competent for the commodity markets concerned.

(30)Competent authorities should notify ESMA of the details of any of their requests to reduce a position in relation to a derivative                              contract, of any one-off limits, as well as of any *ex-ante* position limits in order to improve coordination and convergence in how those powers are applied. The essential details of                              any *ex-ante* position limits applied by a competent authority should be published on ESMA’s website.

(31)ESMA should be able to request information from any person regarding their position in relation to a derivative contract,                              to request that position to be reduced, as well as to limit the ability of persons to undertake individual transactions in                              relation to commodity derivatives. ESMA should then notify relevant competent authorities of measures it proposes to undertake                              and should publish those measures.

(32)The details of transactions in financial instruments should be reported to competent authorities to enable them to detect                              and investigate potential cases of market abuse, to monitor the fair and orderly functioning of markets, as well as the activities                              of investment firms. The scope of that oversight includes all financial instruments which are traded on a trading venue and                              financial instruments where the underlying is a financial instrument traded on a trading venue or where the underlying is                              an index or basket composed of financial instruments traded on a trading venue. The obligation should apply whether or not                              such transactions in any of those financial instruments were carried out on a trading venue. In order to avoid an unnecessary                              administrative burden on investment firms, financial instruments that are not susceptible to market abuse should be excluded                              from the reporting obligation. The reports should use a legal entity identifier in line with the G-20 commitments. ESMA should                              report to the Commission on the functioning of such reporting to the competent authorities and the Commission should take                              steps to propose any changes where appropriate.

(33)The operator of a trading venue should provide its competent authority with relevant financial instrument reference data.                              Those notifications are to be transmitted by the competent authorities without delay to ESMA, which should publish them immediately                              on its website to enable ESMA and competent authorities to use, analyse and exchange transaction reports.

(34)In order to serve their purpose as a tool for market monitoring, transaction reports should identify the person who has made                              the investment decision, as well as those responsible for its execution. In addition to the transparency regime provided for                              in Regulation (EU) No 236/2012 of the European Parliament and of the Council(13), the marking of short sales provides useful supplementary information to enable competent authorities to monitor levels of                              short selling. Competent authorities need to have full access to records at all stages in the order execution process, from                              the initial decision to trade, through to its execution. Therefore, investment firms should keep records of all their orders                              and all their transactions in financial instruments, and operators of platforms are required to keep records of all orders                              submitted to their systems. ESMA should coordinate the exchange of information among competent authorities to ensure that                              they have access to all records of transactions and orders, including those entered on platforms that operate outside their                              territory, in financial instruments under their supervision.

(35)Double reporting of the same information should be avoided. Reports submitted to trade repositories registered or recognised                              in accordance with Regulation (EU) No 648/2012 for the relevant financial instruments which contain all the required information                              for transaction reporting purposes should not need to be reported to competent authorities, but should be transmitted to them                              by the trade repositories. Regulation (EU) No 648/2012 should be amended to that effect.

(36)Any exchange or transmission of information by competent authorities should be in accordance with the rules on the transfer                              of personal data as laid down in Directive 95/46/EC. Any exchange or transmission of information by ESMA should be in accordance                              with the rules on the transfer of personal data as laid down in Regulation (EC) No 45/2001, which should be fully applicable                              to the processing of personal data for the purposes of this Regulation.

(37)Regulation (EU) No 648/2012 lays down the criteria according to which classes of OTC derivatives should be subject to the                              clearing obligation. It prevents competitive distortions by requiring non-discriminatory access to CCPs offering clearing                              of OTC derivatives to trading venues and non-discriminatory access to the trade feeds of trading venues to CCPs offering clearing                              of OTC derivatives. As OTC derivatives are defined as derivative contracts whose execution does not take place on a regulated                              market, there is a need to introduce similar requirements for regulated markets under this Regulation. Derivatives traded                              on regulated markets should also be centrally cleared.

(38)In addition to requirements in Directive 2004/39/EC and in Directive 2014/65/EU that prevent Member States from unduly restricting                              access to post-trade infrastructure such as CCP and settlement arrangements, it is necessary that this Regulation removes                              various other commercial barriers that can be used to prevent competition in the clearing of financial instruments. To avoid                              any discriminatory practices, CCPs should accept to clear transactions executed in different trading venues, to the extent                              that those venues comply with the operational and technical requirements established by the CCP, including the risk management                              requirements. Access should be granted by a CCP if certain access criteria specified in regulatory technical standards are                              met. With regard to newly established CCPs that have been authorised or recognised for a period of less than three years at                              the point of entry into force of this Regulation, with respect to transferable securities and money market instruments, there                              should be the possibility for competent authorities to approve a transitional period of up to two-and-a-half years before                              they are exposed to full non-discriminatory access in relation to transferable securities and money market instruments. However,                              if a CCP chooses to avail of the transitional arrangement it should not be able to benefit from the access rights to a trading                              venue under this Regulation for the duration of the transitional arrangement. Furthermore, no trading venue with a close link                              to that CCP should be able to benefit from the access rights to a CCP under this Regulation for the duration of the transitional                              arrangement.

(39)Regulation (EU) No 648/2012 lays down the conditions under which non-discriminatory access between CCPs and trading venues                              should be granted for OTC derivatives. Regulation (EU) No 648/2012 defines OTC derivatives as derivatives whose execution                              does not take place on a regulated market or on a third-country market considered as equivalent to a regulated market in accordance                              with Article 19(6) of Directive 2004/39/EC. In order to avoid any gaps or overlaps and to ensure consistency between Regulation                              (EU) No 648/2012 and this Regulation, the requirements set out in this Regulation on non-discriminatory access between CCPs                              and trading venues apply to derivatives traded on regulated markets or on a third-country market considered as equivalent                              to a regulated market in accordance with Directive 2014/65/EU and all non-derivative financial instruments.

(40)Trading venues should be required to provide access including data feeds on a transparent and non-discriminatory basis to                              CCPs that wish to clear transactions executed on a trading venue. However, this should not necessitate the use of interoperability                              arrangements for clearing transactions in derivatives or create liquidity fragmentation in a way that would threaten the smooth                              and orderly functioning of markets. Access should only be denied by a trading venue if certain access criteria specified in                              regulatory technical standards are not met. With regard to exchange-traded derivatives, it would be disproportionate to require                              smaller trading venues, particularly those closely linked to CCPs, to comply with non-discriminatory access requirements immediately                              if they have not yet acquired the technological capability to engage on a level playing field with the majority of the post-trade                              infrastructure market. Therefore trading venues below the relevant threshold should have the option of exempting themselves,                              and therefore their associated CCPs, from non-discriminatory access requirements in respect of exchange-traded derivatives                              for a period of 30 months with the possibility of subsequent renewals. However, if a trading venue chooses to exempt itself,                              it should not be able to benefit from the access rights to a CCP under this Regulation for the duration of the exemption.Furthermore, no CCP with a close link to that trading venue should be able to benefit from the access rights to a trading                              venue under this Regulation for the duration of the exemption. Regulation (EU) No 648/2012 identifies that where commercial                              and intellectual property rights relate to financial services related to derivative contracts, licenses should be available                              on proportionate, fair, reasonable and non-discriminatory terms. Therefore, access to licences of, and information relating                              to, benchmarks that are used to determine the value of financial instruments should be provided to CCPs and other trading                              venues on a proportionate, fair, reasonable and non-discriminatory basis and any license should be on reasonable commercial                              terms. Without prejudice to the application of competition rules, where any new benchmark is developed following the entry                              into force of this Regulation an obligation to licence should start 30 months after a financial instrument referencing that                              benchmark commenced trading or was admitted to trading. Access to licenses is critical to facilitate access between trading                              venues and CCPs under Article 35 and 36 as otherwise licensing arrangements could still prevent access between trading venues                              and CCPs that they have requested access to.The removal of barriers and discriminatory practices is intended to increase competition for clearing and trading of financial                              instruments in order to lower investment and borrowing costs, eliminate inefficiencies and foster innovation in Union markets.                              The Commission should continue to closely monitor the evolution of post-trade infrastructure and should, where necessary,                              intervene in order to prevent competitive distortions from occurring in the internal market, in particular where the refusal                              of access to infrastructure or to benchmarks contravenes Articles 101 or 102 TFEU. The licencing duties under this Regulation                              should be without prejudice to the general obligation of proprietary owners of benchmarks under Union competition law, and                              under Articles 101 and 102 TFEU in particular, concerning access to benchmarks that are indispensable to enter a new market.                              Approvals of competent authorities to not apply access rights for transitional periods are not authorisations or amendments                              of authorisations.

(41)The provision of services by third-country firms in the Union is subject to national regimes and requirements. Those regimes                              are highly differentiated and the firms authorised in accordance with them do not enjoy the freedom to provide services and                              the right of establishment in Member States other than the one where they are established. It is appropriate to introduce                              a common regulatory framework at Union level. The regime should harmonise the existing fragmented framework, ensure certainty                              and uniform treatment of third-country firms accessing the Union, ensure that an assessment of effective equivalence has been                              carried out by the Commission in relation to the prudential and business conduct framework of third countries, and should                              provide for a comparable level of protection to clients in the Union receiving services by third-country firms.In applying the regime the Commission and Member States should prioritise the areas covered by the G-20 commitments and agreements                              with the Union’s largest trading partners and should have regard to the central role that the Union plays in worldwide financial                              markets and ensure that the application of third-country requirements does not prevent Union investors and issuers from investing                              in or obtaining funding from third countries or third-country investors and issuers from investing, raising capital or obtaining                              other financial services in Union markets unless that is necessary for objective and evidence-based prudential reasons. In                              carrying out the assessments, the Commission should have regard to the International Organisation of Securities Commission’s                              (IOSCO) Objectives and Principles of Securities Regulation and its recommendations as amended and interpreted by IOSCO.Where a decision cannot be made determining effective equivalence, the provision of services by third-country firms in the                              Union remains subject to national regimes. The Commission should initiate the equivalence assessment on its own initiative.                              Member States should be able to indicate their interest that a certain third-country or certain third countries are subject                              to the equivalence assessment carried out by the Commission, without such indications being binding on the Commission to initiate                              the equivalence process. The equivalence assessment should be outcome-based; it should assess to what extent the respective                              third-country regulatory and supervisory framework achieves similar and adequate regulatory effects and to what extent it                              meets the same objectives as Union law. When initiating those equivalence assessments, the Commission should be able to prioritise                              among third-country jurisdictions taking into account the materiality of the equivalence finding to Union firms and clients,                              the existence of supervisory and cooperation agreements between the third country and the Member States, the existence of                              an effective equivalent system for the recognition of investment firms authorised under foreign regimes as well as the interest                              and willingness of the third country to engage in the equivalence assessment process. The Commission should monitor any significant                              changes to the regulatory and supervisory framework of the third country and review the equivalence decisions where appropriate.

(42)Under this Regulation, the provision of services without branches should be limited to eligible counterparties and professional                              clients per se. It should be subject to registration by ESMA and to supervision in the third country. Proper cooperation arrangements                              should be in place between ESMA and the competent authorities in the third country.

(43)The provisions of this Regulation regulating the provision of services or undertaking of activities by third-country firms                              should not affect the possibility for persons established in the Union to receive investment services by a third-country firm                              at their own exclusive initiative or for Union investment firms or credit institutions to receive investment services or activities                              from a third-country firm at their own exclusive initiative or for a client to receive investment services from a third-country                              firm at their own exclusive initiative through the mediation of such a credit institution or investment firm. Where a third-country                              firm provides services at the own exclusive initiative of a person established in the Union, the services should not be deemed                              as provided in the territory of the Union. Where a third-country firm solicits clients or potential clients in the Union or                              promotes or advertises investment services or activities together with ancillary services in the Union, it should not be deemed                              as a service provided at the own exclusive initiative of the client.

(44)With regard to the recognition of third-country firms, and in accordance with the Union’s international obligations under                              the agreement establishing the World Trade Organisation, including the General Agreement on Trade in Services, decisions determining                              third-country regulatory and supervisory frameworks as equivalent to the regulatory and supervisory framework of the Union                              should be adopted only if the legal and supervisory framework of the third country provides for an effective equivalent system                              for the recognition of investment firms authorised under foreign legal regimes in accordance with, amongst others, the general                              regulatory goals and standards set out by the G-20 in September 2009 of improving transparency in the derivatives markets,                              mitigating systemic risk, and protecting against market abuse. Such a system should be considered equivalent if it ensures                              that the substantial result of the applicable regulatory framework is similar to Union requirements and should be considered                              effective if those rules are being applied in a consistent manner.

(45)A range of fraudulent practices have occurred in spot secondary markets in emission allowances (EUA) which could undermine                              trust in the emissions trading scheme, set up by Directive 2003/87/EC of the European Parliament and of the Council(14), and measures are being taken to strengthen the system of EUA registries and conditions for opening an account to trade EUAs.                              In order to reinforce the integrity and safeguard the efficient functioning of those markets, including comprehensive supervision                              of trading activity, it is appropriate to complement measures taken under Directive 2003/87/EC by bringing emission allowances                              fully into the scope of this Regulation and Directive 2014/65/EU as well as of Regulation (EU) No 596/2014 of the European                              Parliament and the Council(15) and of Directive 2014/57/EU of the European Parliament and of the Council(16), by classifying them as financial instruments.

(46)The Commission should be empowered to adopt delegated acts in accordance with Article 290 of TFEU. In particular, the delegated                              acts should be adopted in respect of the extension of the scope of certain provisions of this Regulation to third-country                              central banks, specific details concerning definitions, specific cost-related provisions related to the availability of market                              data, access to quotes, the sizes at or below which a firm shall enter into transactions with any other client to whom a quote                              is available, portfolio compression and the further determination of when there is a significant investor protection concern                              or a threat to investor protection, the orderly functioning and integrity of financial markets or commodity markets or to                              the stability of the whole or part of the financial system of the Union may warrant ESMA, EBA or competent authorities’ action,                              position management powers of ESMA, the extension of the transitional period under Article 35(5) of this Regulation for a                              certain period of time and in respect of the exclusion of exchange-traded derivatives from the scope of certain provisions                              of this Regulation for a certain period of time. It is of particular importance that the Commission carry out appropriate                              consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated                              acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and                              to the Council.

(47)In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on                              the Commission relating to the adoption of the equivalence decision concerning the third-country legal and supervisory framework                              for the provision of services by third-country firms or third-country trading venues for the purpose of eligibility as trading                              venues for derivatives subject to the trading obligation and of access of third-country CCPs and third-country trading venues                              to trading venues and CCPs established in the Union. Those powers should be exercised in accordance with Regulation (EU) No 182/2011                              of the European Parliament and of the Council(17).

(48)Since the objectives of this Regulation, namely to establish uniform requirements relating to financial instruments in relation                              to disclosure of trade data, reporting of transactions to the competent authorities, trading of derivatives and shares on                              organised venues, non-discriminatory access to CCPs, trading venues and benchmarks, product intervention powers and powers                              on position management and position limits, provision of investment services or activities by third-country firms, cannot                              be sufficiently achieved by the Member States, because, although national competent authorities are better placed to monitor                              market developments, the overall impact of the problems related to trade transparency, transaction reporting, derivatives                              trading, and bans of products and practices can only be fully understood in a Union-wide context, but can rather, by reason                              of its scale and effects, be better achieved at the Union level, the Union may adopt measures, in accordance with the principle                              of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality,                              as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(49)No action taken by any competent authority or ESMA in the performance of their duties should directly or indirectly discriminate                              against any Member State or group of Member States as a venue for the provision of investment services and activities in any                              currency. No action taken by EBA in the performance of its duties under this Regulation should directly or indirectly discriminate                              against any Member State or group of Member States.

(50)Technical standards in financial services should ensure adequate protection of depositors, investors and consumers across                              the Union. As a body with highly specialised expertise, it would be efficient and appropriate to entrust ESMA, with the elaboration                              of draft regulatory technical standards which do not involve policy choices, for submission to the Commission.

(51)The Commission should adopt the draft regulatory technical standards developed by ESMA regarding the precise characteristics                              of trade transparency requirements, regarding the monetary, foreign exchange and financial stability policy operations and                              the types of the certain transactions relevant under this Regulation, regarding the detailed conditions for waivers from pre-trade                              transparency, regarding deferred post-trade publication arrangements, regarding the obligation to make pre-trade and post-trade                              data available separately, regarding the criteria for the application of the pre-trade transparency obligations for systematic                              internalisers, regarding post-trade disclosure by investment firms, regarding the content and frequency of data requests for                              the provision of information for the purposes of transparency and other calculations, regarding transactions that do not contribute                              to the price discovery process, regarding the order data to be retained, regarding the content and specifications of transaction                              reports, regarding the content and specification of financial instrument reference data, regarding the types of contracts                              which have a direct, substantial and foreseeable effect within the Union and the cases where the trading obligation for derivatives                              is necessary, regarding the requirements for systems and procedures to ensure that transactions in cleared derivatives are                              submitted and accepted for clearing, specifying types of indirect clearing service arrangements, regarding derivatives subject                              to an obligation to trade on organised trading venues, regarding non-discriminatory access to a CCP and to a trading venue,                              regarding non-discriminatory access to and obligation to licence benchmarks, and concerning the information that the applicant                              third-country firm should provide to ESMA in its application for registration. The Commission should adopt those draft regulatory                              technical standards by means of delegated acts pursuant to Article 290 TFEU and in accordance with Articles 10 to 14 of Regulation                              (EU) No 1093/2010.

(52)Article 95 of Directive 2014/65/EU provides for a transitional exemption for certain C6 energy derivative contracts. It is                              therefore necessary that the technical standards specifying the clearing obligation developed by ESMA in accordance with Article                              5(2)(b) of Regulation (EU) No 648/2012 take that into account and do not impose a clearing obligation on derivative contracts                              which would subsequently be subject to the transitional exemption for C6 energy derivative contracts.

(53)The application of the requirements in this Regulation should be deferred in order to align applicability with the application                              of the transposed rules of the recast Directive and to establish all essential implementing measures. The entire regulatory                              package should then be applied from the same point in time. Only the application of the empowerments for implementing measures                              should not be deferred so that the necessary steps to draft and adopt those implementing measures can start as early as possible.

(54)This Regulation respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental                              Rights of the European Union, in particular the right to the protection of personal data (Article 8), the freedom to conduct                              a business (Article 16), the right to consumer protection (Article 38), the right to an effective remedy and to a fair trial                              (Article 47), and the right not to be tried or punished twice for the same offence (Article 50), and has to be applied in                              accordance with those rights and principles.

(55)The European Data Protection Supervisor was consulted in accordance with Article 28(2) of Regulation (EC) No 45/2001 and delivered                              an opinion on 10 February 2012(18),

HAVE ADOPTED THIS REGULATION:

## TITLE IU.K.**SUBJECT MATTER, SCOPE AND DEFINITIONS**

### Article 1U.K.Subject matter and scope

1.This Regulation establishes uniform requirements in relation to the following:                  

(a)disclosure of trade data to the public;                  

(b)reporting of transactions to the competent authorities;                  

(c)trading of derivatives on organised venues;                  

(d)non-discriminatory access to clearing and non-discriminatory access to trading in benchmarks;                  

(e)product intervention powers of competent authorities, ESMA and EBA and powers of ESMA on position management controls and                        position limits;                  

(f)provision of investment services or activities by third-country firms following an applicable equivalence decision by the                        Commission with or without a branch.                  

2.This Regulation applies to investment firms, authorised under Directive 2014/65/EU and credit institutions authorised under                        Directive 2013/36/EU of the European Parliament and of the Council(19) when providing investment services and/or performing investment activities and to market operators including any trading                        venues they operate.                  

3.Title V of this Regulation also applies to all financial counterparties as defined in Article 2(8) of Regulation (EU) No 648/2012                        and to all non-financial counterparties falling under Article 10(1)(b) of that Regulation.                  

4.Title VI of this Regulation also applies to CCPs and persons with proprietary rights to benchmarks.                  

5.Title VIII of this Regulation applies to third-country firms providing investment services or activities within the Union                        following an applicable equivalence decision by the Commission with or without a branch.                  

6.Articles 8, 10, 18 and 21 shall not apply to regulated markets, market operators and investment firms in respect of a transaction                        where the counterparty is a member of the European System of Central Banks (ESCB) and where that transaction is entered into                        in performance of monetary, foreign exchange and financial stability policy which that member of the ESCB is legally empowered                        to pursue and where that member has given prior notification to its counterparty that the transaction is exempt.                  

7.Paragraph 6 shall not apply in respect of transactions entered into by any member of the ESCB in performance of their investment                        operations.                  

8.ESMA shall, in close cooperation with the ESCB, develop draft regulatory technical standards to specify the monetary, foreign                        exchange and financial stability policy operations and the types of transactions to which paragraphs 6 and 7 apply.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

9.The Commission shall be empowered to adopt delegated acts in accordance with Article 50 to extend the scope of paragraph 6                        to other central banks.                  

To that end, the Commission shall, by 1 June 2015, submit a report to the European Parliament and to the Council assessing                     the treatment of transactions by third-country central banks which for the purposes of this paragraph includes the Bank for                     International Settlements. The report shall include an analysis of their statutory tasks and their trading volumes in the                     Union. The report shall:                  

(a)identify provisions applicable in the relevant third countries regarding the regulatory disclosure of central bank transactions,                        including transactions undertaken by members of the ESCB in those third countries, and                  

(b)assess the potential impact that regulatory disclosure requirements in the Union may have on third-country central bank transactions.                  

If the report concludes that the exemption provided for in paragraph 6 is necessary in respect of transactions where the counterparty                     is a third-country central bank carrying out monetary policy, foreign exchange and financial stability operations, the Commission                     shall provide that that exemption applies to that third-country central bank.                  

### Article 2U.K.Definitions

1.For the purposes of this Regulation, the following definitions apply:                  

‘investment firm’ means an investment firm as defined in Article 4(1)(1) of Directive 2014/65/EU;

‘investment services and activities’ means investment services and activities defined in Article 4(1)(2) of Directive 2014/65/EU;

‘ancillary services’ means ancillary services as defined in Article 4(1)(3) of Directive 2014/65/EU;

‘execution of orders on behalf of clients’ means execution on behalf of clients as defined in Article 4(1)(5) of Directive                              2014/65/EU;                           

‘dealing on own account’ means dealing on own account as defined in Article 4(1)(6) of Directive 2014/65/EU;

‘market maker’ means a market maker as defined in Article 4(1)(7) of Directive 2014/65/EU;

‘client’ means a client as defined in Article 4(1)(9) of Directive 2014/65/EU;

‘professional client’ means a professional client as defined in Article 4(1)(10) of Directive 2014/65/EU;

‘financial instrument’ means a financial instrument as defined in Article 4(1)(15) of Directive 2014/65/EU;

‘market operator’ means a market operator as defined in Article 4(1)(18) of Directive 2014/65/EU;

‘multilateral system’ means a multilateral system as defined in Article 4(1)(19) of Directive 2014/65/EU;

‘systematic internaliser’ means a systematic internaliser as defined in Article 4(1)(20) of Directive 2014/65/EU;

‘regulated market’ means a regulated market as defined in Article 4(1)(21) of Directive 2014/65/EU;

‘multilateral trading facility’ or ‘MTF’ means a multilateral trading facility as defined in Article 4(1)(22) of Directive                              2014/65/EU;                           

‘organised trading facility’ or ‘OTF’ means an organised trading facility as defined in Article 4(1)(23) of Directive 2014/65/EU;

‘trading venue’ means a trading venue as defined in Article 4(1)(24) of Directive 2014/65/EU;

‘liquid market’ means:

for the purposes of Articles 9, 11, and 18, a market for a financial instrument or a class of financial instruments, where                                       there are ready and willing buyers and sellers on a continuous basis, and where the market is assessed in accordance with                                       the following criteria, taking into consideration the specific market structures of the particular financial instrument or                                       of the particular class of financial instruments:                                    

the average frequency and size of transactions over a range of market conditions, having regard to the nature and life cycle                                                of products within the class of financial instrument;                                             

the number and type of market participants, including the ratio of market participants to traded financial instruments in                                                a particular product;                                             

the average size of spreads, where available;

for the purposes of Articles 4, 5 and 14, a market for a financial instrument that is traded daily where the market is assessed                                       according to the following criteria:                                    

the free float;

the average daily number of transactions in those financial instruments;

the average daily turnover for those financial instruments;

‘competent authority’ means a competent authority as defined in Article 2(1)(26) of Directive 2014/65/EU;

‘credit institution’ means a credit institution as defined in Article 4(1)(1) of Regulation (EU) No 575/2013 of the European                              Parliament and of the Council(20);                           

‘branch’ means a branch as defined in Article 4(1)(30) of Directive 2014/65/EU;

‘close links’ means close links as defined in Article 4(1)(35) of Directive 2014/65/EU;

‘management body’ means a management body as defined in Article 4(1)(36) of Directive 2014/65/EU;

‘structured deposit’ means a structured deposit as defined in Article 4(1)(43) of Directive 2014/65/EU;

‘transferable securities’ means transferable securities as defined in Article 4(1)(44) of Directive 2014/65/EU;

‘depositary receipts’ means depositary receipts as defined in Article 4(1)(45) of Directive 2014/65/EU;

‘exchange-traded fund’ or ‘ETF’ means an exchange-traded fund as defined in Article 4(1)(46) of Directive 2014/65/EU;

‘certificates’ means those securities which are negotiable on the capital market and which in case of a repayment of investment                              by the issuer are ranked above shares but below unsecured bond instruments and other similar instruments;                           

‘structured finance products’ means those securities created to securitise and transfer credit risk associated with a pool                              of financial assets entitling the security holder to receive regular payments that depend on the cash flow from the underlying                              assets;                           

‘derivatives’ means those financial instruments defined in point (44)(c) of Article 4(1) of Directive 2014/65/EU; and referred                              to in Annex I, Section C (4) to (10) thereto;                           

‘commodity derivatives’ means those financial instruments defined in point (44)(c) of Article 4(1) of Directive 2014/65/EU;                              which relate to a commodity or an underlying referred to in Section C(10) of Annex I to Directive 2014/65/EU; or in points                              (5), (6), (7) and (10) of Section C of Annex I thereto;                           

‘CCP’ means a CCP within the meaning of Article 2(1) of Regulation (EU) No 648/2012;

‘exchange-traded derivative’ means a derivative that is traded on a regulated market or on a third-country market considered                              to be equivalent to a regulated market in accordance with Article 28 of this Regulation, and as such does not fall within                              the definition of an OTC derivative as defined in Article 2(7) of Regulation (EU) No 648/2012;                           

‘actionable indication of interest’ means a message from one member or participant to another within a trading system in relation                              to available trading interest that contains all necessary information to agree on a trade;                           

‘approved publication arrangement’ or ‘APA’ means an approved publication arrangement as defined in Article 4(1)(52) of Directive                              2014/65/EU;                           

‘consolidated tape provider’ or ‘CTP’ means a consolidated tape provider as defined in Article 4(1)(53) of Directive 2014/65/EU;

‘approved reporting mechanism’ or ‘ARM’ means an approved reporting mechanism as defined in Article 4(1)(54) of Directive                              2014/65/EU;                           

‘home Member State’ means a home Member State as defined in Article 4(1)(55) of Directive 2014/65/EU;

‘host Member State’ means a host Member State as defined in Article 4(1)(56) of Directive 2014/65/EU;

‘benchmark’ means any rate, index or figure, made available to the public or published that is periodically or regularly determined                              by the application of a formula to, or on the basis of the value of one or more underlying assets or prices, including estimated                              prices, actual or estimated interest rates or other values, or surveys and by reference to which the amount payable under                              a financial instrument or the value of a financial instrument is determined.                           

‘interoperability arrangement’ means an interoperability arrangement as defined in Article 2(12) of Regulation (EU) No 648/2012;

‘third-country financial institution’ means an entity, the head office of which is established in a third country, that is                              authorised or licensed under the law of that third country to carry out any of the services or activities listed in Directive                              2013/36/EU, Directive 2014/65/EU; Directive 2009/138/EC of the European Parliament and of the Council(21), Directive 2009/65/EC of the European Parliament and of the Council(22), Directive 2003/41/EC of the European Parliament and of the Council(23) or Directive 2011/61/EU of the European Parliament and of the Council(24);                           

‘third-country firm’ means a third-country firm as defined in Article 4(1)(57) of Directive 2014/65/EU;

‘wholesale energy product’ means wholesale energy products as defined in Article 2(4) of Regulation (EU) No 1227/2011 of the                              European Parliament and of the Council(25);                           

‘agricultural commodity derivatives’ means derivative contracts relating to products listed in Article 1 of, and Annex I,                              Parts I to XX and XXIV/1 to, Regulation (EU) No 1308/2013 of the European Parliament and of the Council(26);                           

‘liquidity fragmentation’ means a situation in which:

participants in a trading venue are unable to conclude a transaction with one or more other participants in that venue because                                       of the absence of clearing arrangements to which all participants have access; or                                    

a clearing member or its clients would be forced to hold their positions in a financial instrument in more than one CCP which                                       would limit the potential for the netting of financial exposures;                                    

‘sovereign debt’ means sovereign debt as defined in Article 4(1)(61) of Directive 2014/65/EU;

‘portfolio compression’ means a risk reduction service in which two or more counterparties wholly or partially terminate some                              or all of the derivatives submitted by those counterparties for inclusion in the portfolio compression and replace the terminated                              derivatives with another derivative whose combined notional value is less than the combined notional value of the terminated                              derivatives.                           

2.The Commission shall be empowered to adopt delegated acts in accordance with Article 50 to specify certain technical elements                        of the definitions laid down in paragraph 1 to adjust them to market developments.                  

## TITLE IIU.K.**TRANSPARENCY FOR TRADING VENUES**

### *CHAPTER 1*U.K.***Transparency for equity instruments***

#### Article 3U.K.Pre-trade transparency requirements for trading venues in respect of shares, depositary receipts, ETFs, certificates and other                        similar financial instruments

1.Market operators and investment firms operating a trading venue shall make public current bid and offer prices and the depth                        of trading interests at those prices which are advertised through their systems for shares, depositary receipts, ETFs, certificates                        and other similar financial instruments traded on a trading venue. That requirement shall also apply to actionable indication                        of interests. Market operators and investment firms operating a trading venue shall make that information available to the                        public on a continuous basis during normal trading hours.                  

2.The transparency requirements referred to in paragraph 1 shall be calibrated for different types of trading systems including                        order-book, quote-driven, hybrid and periodic auction trading systems.                  

3.Market operators and investment firms operating a trading venue shall give access, on reasonable commercial terms and on a                        non-discriminatory basis, to the arrangements they employ for making public the information referred to in paragraph 1 to                        investment firms which are obliged to publish their quotes in shares, depositary receipts, ETFs, certificates and other similar                        financial instruments pursuant to Article 14.                  

#### Article 4U.K.Waivers for equity instruments

1.Competent authorities shall be able to waive the obligation for market operators and investment firms operating a trading                        venue to make public the information referred to in Article 3(1) for:                  

(a)systems matching orders based on a trading methodology by which the price of the financial instrument referred to in Article                        3(1) is derived from the trading venue where that financial instrument was first admitted to trading or the most relevant                        market in terms of liquidity, where that reference price is widely published and is regarded by market participants as a reliable                        reference price. The continued use of that waiver shall be subject to the conditions set out in Article 5.                  

(b)systems that formalise negotiated transactions which are:                  

made within the current volume weighted spread reflected on the order book or the quotes of the market makers of the trading                              venue operating that system, subject to the conditions set out in Article 5;                           

in an illiquid share, depositary receipt, ETF, certificate or other similar financial instrument that does not fall within                              the meaning of a liquid market, and are dealt within a percentage of a suitable reference price, being a percentage and a                              reference price set in advance by the system operator; or                           

subject to conditions other than the current market price of that financial instrument;

(c)orders that are large in scale compared with normal market size;                  

(d)orders held in an order management facility of the trading venue pending disclosure.                  

2.The reference price referred to in paragraph 1(a) shall be established by obtaining:                  

(a)the midpoint within the current bid and offer prices of the trading venue where that financial instrument was first admitted                        to trading or the most relevant market in terms of liquidity; or                  

(b)when the price referred to in point (a) is not available, the opening or closing price of the relevant trading session.                  

Orders shall only reference the price referred to in point (b) outside the continuous trading phase of the relevant trading                     session.                  

3.Where trading venues operate systems which formalise negotiated transactions in accordance with paragraph 1(b)(i):                  

(a)those transactions shall be carried out in accordance with the rules of the trading venue;                  

(b)the trading venue shall ensure that arrangements, systems and procedures are in place to prevent and detect market abuse or                        attempted market abuse in relation to such negotiated transactions in accordance with Article 16 of Regulation (EU) No 596/2014;                  

(c)the trading venue shall establish, maintain and implement systems to detect any attempt to use the waiver to circumvent other                        requirements of this Regulation or Directive 2014/65/EU and to report attempts to the competent authority.                  

Where a competent authority grants a waiver in accordance with paragraph 1(b)(i) or (iii), that competent authority shall                     monitor the use of the waiver by the trading venue to ensure that the conditions for use of the waiver are respected.                  

4.Before granting a waiver in accordance with paragraph 1, competent authorities shall notify ESMA and other competent authorities                        of the intended use of each individual waiver and provide an explanation regarding its functioning, including the details                        of the trading venue where the reference price is established as referred to in paragraph 1(a). Notification of the intention                        to grant a waiver shall be made not less than four months before the waiver is intended to take effect. Within two months                        following receipt of the notification, ESMA shall issue a non-binding opinion to the competent authority in question assessing                        the compatibility of each waiver with the requirements established in paragraph 1 and specified in the regulatory technical                        standard adopted pursuant to paragraph 6. Where that competent authority grants a waiver and a competent authority of another                        Member State disagrees, that competent authority may refer the matter back to ESMA, which may act in accordance with the powers                        conferred on it under Article 19 of Regulation (EU) No 1095/2010. ESMA shall monitor the application of the waivers and shall                        submit an annual report to the Commission on how they are applied in practice.                  

5.A competent authority may, either on its own initiative or upon request by another competent authority, withdraw a waiver                        granted under paragraph 1 as specified under paragraph 6,if it observes that the waiver is being used in a way that deviates                        from its original purpose or if it believes that the waiver is being used to circumvent the requirements established in this                        Article.                  

Competent authorities shall notify ESMA and other competent authorities of such withdrawal providing full reasons for their                     decision.                  

6.ESMA shall develop draft regulatory technical standards to specify the following:                  

(a)the range of bid and offer prices or designated market-maker quotes, and the depth of trading interest at those prices, to                        be made public for each class of financial instrument concerned in accordance with Article 3(1), taking into account the necessary                        calibration for different types of trading systems as referred to in Article 3(2);                  

(b)the most relevant market in terms of liquidity of a financial instrument in accordance with paragraph 1(a);                  

(c)the specific characteristics of a negotiated transaction in relation to the different ways the member or participant of a                        trading venue can execute such a transaction;                  

(d)the negotiated transactions that do not contribute to price formation which avail of the waiver provided for under paragraph                        1(b)(iii);                  

(e)the size of orders that are large in scale and the type and the minimum size of orders held in an order management facility                        of a trading venue pending disclosure for which pre-trade disclosure may be waived under paragraph 1 for each class of financial                        instrument concerned;                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

7.Waivers granted by competent authorities in accordance with Article 29(2) and Article 44(2) of Directive 2004/39/EC and Articles                        18, 19 and 20 of Regulation (EC) No 1287/2006 before 3 January 2017 shall be reviewed by ESMA by 3 January 2019. ESMA shall                        issue an opinion to the competent authority in question assessing the continued compatibility of each of those waivers with                        the requirements established in this Regulation and any delegated act and regulatory technical standard based on this Regulation.                  

#### Article 5U.K.Volume Cap Mechanism

1.In order to ensure that the use of the waivers provided for in Article 4(1)(a) and 4(1)(b)(i) does not unduly harm price formation,                        trading under those waivers is restricted as follows:                  

(a)the percentage of trading in a financial instrument carried out on a trading venue under those waivers shall be limited to                        4 % of the total volume of trading in that financial instrument on all trading venues across the Union over the previous 12                        months.                  

(b)overall Union trading in a financial instrument carried out under those waivers shall be limited to 8 % of the total volume                        of trading in that financial instrument on all trading venues across the Union over the previous 12 months.                  

That volume cap mechanism shall not apply to negotiated transactions which are in a share, depositary receipt, ETF, certificate                     or other similar financial instrument for which there is not a liquid market as determined in accordance with Article 2(1)(17)(b)                     and are dealt within a percentage of a suitable reference price as referred to in Article 4(1)(b)(ii), or to negotiated transactions                     that are subject to conditions other than the current market price of that financial instrument as referred to in Article                     4(1)(b)(iii).                  

2.When the percentage of trading in a financial instrument carried out on a trading venue under the waivers has exceeded the                        limit referred to in paragraph 1(a), the competent authority that authorised the use of those waivers by that venue shall                        within two working days suspend their use on that venue in that financial instrument based on the data published by ESMA referred                        to in paragraph 4, for a period of six months.                  

3.When the percentage of trading in a financial instrument carried out on all trading venues across the Union under those waivers                        has exceeded the limit referred to in paragraph 1(b), all competent authorities shall within two working days suspend the                        use of those waivers across the Union for a period of six months.                  

4.ESMA shall publish within five working days of the end of each calendar month, the total volume of Union trading per financial                        instrument in the previous 12 months, the percentage of trading in a financial instrument carried out across the Union under                        those waivers and on each trading venue in the previous 12 months, and the methodology that is used to derive those percentages.                  

5.In the event that the report referred to in paragraph 4 identifies any trading venue where trading in any financial instrument                        carried out under the waivers has exceeded 3,75 % of the total trading in the Union in that financial instrument, based on                        the previous 12 months’ trading, ESMA shall publish an additional report within five working days of the 15th day of the calendar                        month in which the report referred to in paragraph 4 is published. That report shall contain the information specified in                        paragraph 4 in respect of those financial instruments where 3,75 % has been exceeded.                  

6.In the event that the report referred to in paragraph 4 identifies that overall Union trading in any financial instrument                        carried out under the waivers has exceeded 7,75 % of the total Union trading in the financial instrument, based on the previous                        12 months’ trading, ESMA shall publish an additional report within five working days of the 15th on the day of the calendar                        month in which the report referred to in paragraph 4 is published. That report shall contain the information specified in                        paragraph 4 in respect of those financial instruments where 7,75 % has been exceeded.                  

7.In order to ensure a reliable basis for monitoring the trading taking place under those waivers and for determining whether                        the limits referred to in paragraph 1 have been exceeded, operators of trading venues shall be obligated to have in place                        systems and procedures to:                  

(a)enable the identification of all trades which have taken place on its venue under those waivers; and                  

(b)ensure it does not exceed the permitted percentage of trading allowed under those waivers as referred to in paragraph 1(a)                        under any circumstances.                  

8.The period for the publication of trading data by ESMA, and for which trading in a financial instrument under those waivers                        is to be monitored shall start on 3 January 2016. Without prejudice to Article 4(5), competent authorities shall be empowered                        to suspend the use of those waivers from the date of application of this Regulation and thereafter on a monthly basis.                  

9.ESMA shall develop draft regulatory technical standards to specify the method, including the flagging of transactions, by                        which it collates, calculates and publishes the transaction data, as outlined in paragraph 4, in order to provide an accurate                        measurement of the total volume of trading per financial instrument and the percentages of trading that use those waivers                        across the Union and per trading venue.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

#### Article 6U.K.Post-trade transparency requirements for trading venues in respect of shares, depositary receipts, ETFs, certificates and                        other similar financial instruments

1.Market operators and investment firms operating a trading venue shall make public the price, volume and time of the transactions                        executed in respect of shares, depositary receipts, ETFs, certificates and other similar financial instruments traded on that                        trading venue. Market operators and investment firms operating a trading venue shall make details of all such transactions                        public as close to real-time as is technically possible.                  

2.Market operators and investment firms operating a trading venue shall give access, on reasonable commercial terms and on a                        non-discriminatory basis, to the arrangements they employ for making public the information under paragraph 1 of this Article                        to investment firms which are obliged to publish the details of their transactions in shares, depositary receipts, ETFs, certificates                        and other similar financial instruments pursuant to Article 20.                  

#### Article 7U.K.Authorisation of deferred publication

1.Competent authorities shall be able to authorise market operators and investment firms operating a trading venue to provide                        for deferred publication of the details of transactions based on their type or size.                  

In particular, the competent authorities may authorise the deferred publication in respect of transactions that are large                     in scale compared with the normal market size for that share, depositary receipt, ETF, certificate or other similar financial                     instrument or that class of share, depositary receipt, ETF, certificate or other similar financial instrument.                  

Market operators and investment firms operating a trading venue shall obtain the competent authority’s prior approval of proposed                     arrangements for deferred trade-publication, and shall clearly disclose those arrangements to market participants and the                     public. ESMA shall monitor the application of those arrangements for deferred trade-publication and shall submit an annual                     report to the Commission on how they are applied in practice.                  

Where a competent authority authorises deferred publication and a competent authority of another Member State disagrees with                     the deferral or disagrees with the effective application of the authorisation granted, that competent authority may refer                     the matter back to ESMA, which may act in accordance with the powers conferred on it under Article 19 of Regulation (EU) No 1095/2010.                  

2.ESMA shall develop draft regulatory technical standards to specify the following in such a way as to enable the publication                        of information required under Article 64 of Directive 2014/65/EU:                  

(a)the details of transactions that investment firms, including systematic internalisers and market operators and investment                        firms operating a trading venue shall make available to the public for each class of financial instrument concerned in accordance                        with Article 6(1), including identifiers for the different types of transactions published under Article 6(1) and Article                        20, distinguishing between those determined by factors linked primarily to the valuation of the financial instruments and                        those determined by other factors;                  

(b)the time limit that would be deemed in compliance with the obligation to publish as close to real time as possible including                        when trades are executed outside ordinary trading hours.                  

(c)the conditions for authorising investment firms, including systematic internalisers and market operators and investment firms                        operating a trading venue to provide for deferred publication of the details of transactions for each class of financial instruments                        concerned in accordance with paragraph 1 of this Article and with Article 20(1);                  

(d)the criteria to be applied when deciding the transactions for which, due to their size or the type, including liquidity profile                        of the share, depositary receipt, ETF, certificate or other similar financial instrument involved, deferred publication is                        allowed for each class of financial instrument concerned.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### *CHAPTER 2*U.K.***Transparency for non-equity instruments***

#### Article 8U.K.Pre-trade transparency requirements for trading venues in respect of bonds, structured finance products, emission allowances                        and derivatives

1.Market operators and investment firms operating a trading venue shall make public current bid and offer prices and the depth                        of trading interests at those prices which are advertised through their systems for bonds, and structured finance products,                        emission allowances and derivatives traded on a trading venue. That requirement shall also apply to actionable indication                        of interests. Market operators and investment firms operating a trading venue shall make that information available to the                        public on a continuous basis during normal trading hours. That publication obligation does not apply to those derivative transactions                        of non-financial counterparties which are objectively measurable as reducing risks directly relating to the commercial activity                        or treasury financing activity of the non-financial counterparty or of that group.                  

2.The transparency requirements referred to in paragraph 1 shall be calibrated for different types of trading systems, including                        order-book, quote-driven, hybrid, periodic auction trading and voice trading systems.                  

3.Market operators and investment firms operating a trading venue shall give access, on reasonable commercial terms and on a                        non-discriminatory basis, to the arrangements they employ for making public the information referred to in paragraph 1 to                        investment firms which are obliged to publish their quotes in bonds, structured finance products, emission allowances and                        derivatives pursuant to Article 18.                  

4.Market operators and investment firms operating a trading venue shall, where a waiver is granted in accordance with Article                        9(1)(b), make public at least indicative pre-trade bid and offer prices which are close to the price of the trading interests                        advertised through their systems in bonds, structured finance products, emission allowances and derivatives traded on a trading                        venue. Market operators and investment firms operating a trading venue shall make that information available to the public                        through appropriate electronic means on a continuous basis during normal trading hours. Those arrangements shall ensure that                        information is provided on reasonable commercial terms and on a non-discriminatory basis.                  

#### Article 9U.K.Waivers for non-equity instruments

1.Competent authorities shall be able to waive the obligation for market operators and investment firms operating a trading                        venue to make public the information referred to in Article 8(1) for:                  

(a)orders that are large in scale compared with normal market size and orders held in an order management facility of the trading                        venue pending disclosure;                  

(b)actionable indications of interest in request-for-quote and voice trading systems that are above a size specific to the financial                        instrument, which would expose liquidity providers to undue risk and takes into account whether the relevant market participants                        are retail or wholesale investors;                  

(c)derivatives which are not subject to the trading obligation specified in Article 28 and other financial instruments for which                        there is not a liquid market.                  

2.Before granting a waiver in accordance with paragraph 1, competent authorities shall notify ESMA and other competent authorities                        of the intended use of each individual waiver and provide an explanation regarding their functioning. Notification of the                        intention to grant a waiver shall be made not less than four months before the waiver is intended to take effect. Within two                        months following receipt of the notification, ESMA shall issue an opinion to the competent authority in question assessing                        the compatibility of the waiver with the requirements established in paragraph 1 and specified in the regulatory technical                        standards adopted pursuant to paragraph 5. Where that competent authority grants a waiver and a competent authority of another                        Member State disagrees, that competent authority may refer the matter back to ESMA, which may act in accordance with the powers                        conferred on it under Article 19 of Regulation (EU) No 1095/2010. ESMA shall monitor the application of the waivers and submit                        an annual report to the Commission on how they are applied in practice.                  

3.Competent authorities, may, either on their own initiative or upon request by other competent authorities, withdraw a waiver                        granted under paragraph 1 if they observe that the waiver is being used in a way that deviates from its original purpose or                        if they consider that the waiver is being used to circumvent the requirements established in this Article.                  

Competent authorities shall notify ESMA and other competent authorities of such withdrawal without delay and before it takes                     effect, providing full reasons for their decision.                  

4.The competent authority responsible for supervising one or more trading venues on which a class of bond, structured finance                        product, emission allowance or derivative is traded may, where the liquidity of that class of financial instrument falls below                        a specified threshold, temporarily suspend the obligations referred to in Article 8. The specified threshold shall be defined                        on the basis of objective criteria specific to the market for the financial instrument concerned. Notification of such temporary                        suspension shall be published on the website of the relevant competent authority.                  

The temporary suspension shall be valid for an initial period not exceeding three months from the date of its publication                     on the website of the relevant competent authority. Such a suspension may be renewed for further periods not exceeding three                     months at a time if the grounds for the temporary suspension continue to be applicable. Where the temporary suspension is                     not renewed after that three-month period, it shall automatically lapse.                  

Before suspending or renewing the temporary suspension under this paragraph of the obligations referred to in Article 8, the                     relevant competent authority shall notify ESMA of its intention and provide an explanation. ESMA shall issue an opinion to                     the competent authority as soon as practicable on whether in its view the suspension or the renewal of the temporary suspension                     is justified in accordance with the first and second subparagraphs.                  

5.ESMA shall develop draft regulatory technical standards to specify the following:                  

(a)the parameters and methods for calculating the threshold of liquidity referred to in paragraph 4 in relation to the financial                        instrument. The parameters and methods for Member States to calculate the threshold shall be set in such a way that when the                        threshold is reached, it represents a significant decline in liquidity across all venues within the Union for the financial                        instrument concerned based on the criteria used under Article 2(1)(17);                  

(b)the range of bid and offer prices or quotes and the depth of trading interests at those prices, or indicative pre-trade bid                        and offer prices which are close to the price of the trading interest, to be made public for each class of financial instrument                        concerned in accordance with Article 8(1) and (4), taking into account the necessary calibration for different types of trading                        systems as referred to in Article 8(2);                  

(c)the size of orders that are large in scale and the type and the minimum size of orders held in an order management facility                        pending disclosure for which pre-trade disclosure may be waived under paragraph 1 for each class of financial instrument concerned;                  

(d)the size specific to the financial instrument referred to in paragraph 1(b) and the definition of request-for-quote and voice                        trading systems for which pre-trade disclosure may be waived under paragraph 1;                  

When determining the size specific to the financial instrument that would expose liquidity providers to undue risk and takes                     into account whether the relevant market participants are retail or wholesale investors, in accordance with paragraph 1(b),                     ESMA shall take the following factors into account:                  

whether, at such sizes, liquidity providers would be able to hedge their risks;

where a market in the financial instrument, or a class of financial instruments, consists in part of retail investors, the                              average value of transactions undertaken by those investors;                           

(e)the financial instruments or the classes of financial instruments for which there is not a liquid market where pre-trade disclosure                        may be waived under paragraph 1.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

#### Article 10U.K.Post-trade transparency requirements for trading venues in respect of bonds, structured finance products, emission allowances                        and derivatives

1.Market operators and investment firms operating a trading venue shall make public the price, volume and time of the transactions                        executed in respect of bonds, structured finance products, emission allowances and derivatives traded on a trading venue.                        Market operators and investment firms operating a trading venue shall make details of all such transactions public as close                        to real-time as is technically possible.                  

2.Market operators and investment firms operating a trading venue shall give access, on reasonable commercial terms and on a                        non-discriminatory basis, to the arrangements they employ for making public the information under paragraph 1 to investment                        firms which are obliged to publish the details of their transactions in bonds, structured finance products, emission allowances                        and derivatives pursuant to Article 21.                  

#### Article 11U.K.Authorisation of deferred publication

1.Competent authorities shall be able to authorise market operators and investment firms operating a trading venue to provide                        for deferred publication of the details of transactions based on the size or type of the transaction.                  

In particular, the competent authorities may authorise the deferred publication in respect of transactions that:

(a)are large in scale compared with the normal market size for that bond, structured finance product, emission allowance or derivative                        traded on a trading venue, or for that class of bond, structured finance product, emission allowance or derivative traded                        on a trading venue; or                  

(b)are related to a bond, structured finance product, emission allowance or derivative traded on a trading venue, or a class                        of bond, structured finance product, emission allowance or derivative traded on a trading venue for which there is not a liquid                        market;                  

(c)are above a size specific to that bond, structured finance product, emission allowance or derivative traded on a trading venue,                        or that class of bond, structured finance product, emission allowance or derivative traded on a trading venue, which would                        expose liquidity providers to undue risk and takes into account whether the relevant market participants are retail or wholesale                        investors.                  

Market operators and investment firms operating a trading venue shall obtain the competent authority’s prior approval of proposed                     arrangements for deferred trade-publication, and shall clearly disclose those arrangements to market participants and the                     public. ESMA shall monitor the application of those arrangements for deferred trade-publication and shall submit an annual                     report to the Commission on how they are used in practice.                  

2.The competent authority responsible for supervising one or more trading venues on which a class of bond, structured finance                        product, emission allowance or derivative is traded may, where the liquidity of that class of financial instrument falls below                        the threshold determined in accordance with the methodology as referred to in Article 9(5)(a), temporarily suspend the obligations                        referred to in Article 10. That threshold shall be defined based on objective criteria specific to the market for the financial                        instrument concerned. Such temporary suspension shall be published on the website of the relevant competent authority.                  

The temporary suspension shall be valid for an initial period not exceeding three months from the date of its publication                     on the website of the relevant competent authority. Such a suspension may be renewed for further periods not exceeding three                     months at a time if the grounds for the temporary suspension continue to be applicable. Where the temporary suspension is                     not renewed after that three-month period, it shall automatically lapse.                  

Before suspending or renewing the temporary suspension of the obligations referred to in Article 10, the relevant competent                     authority shall notify ESMA of its intention and provide an explanation. ESMA shall issue an opinion to the competent authority                     as soon as practicable on whether in its view the suspension or the renewal of the temporary suspension is justified in accordance                     with the first and second subparagraphs.                  

3.Competent authorities may, in conjunction with an authorisation of deferred publication:                  

(a)request the publication of limited details of a transaction or details of several transactions in an aggregated form, or a                        combination thereof, during the time period of deferral;                  

(b)allow the omission of the publication of the volume of an individual transaction during an extended time period of deferral;                  

(c)regarding non-equity instruments that are not sovereign debt, allow the publication of several transactions in an aggregated                        form during an extended time period of deferral;                  

(d)regarding sovereign debt instruments, allow the publication of several transactions in an aggregated form for an indefinite                        period of time.                  

In relation to sovereign debt instruments, points (b) and (d) may be used either separately or consecutively whereby once                     the volume omission extended period lapses, the volumes could then be published in aggregated form.                  

In relation to all other financial instruments, when the deferral time period lapses, the outstanding details of the transaction                     and all the details of the transactions on an individual basis shall be published.                  

4.ESMA shall develop draft regulatory technical standards to specify the following in such a way as to enable the publication                        of information required under Article 64 of Directive 2014/65/EU:                  

(a)the details of transactions that investment firms, including systematic internalisers, and market operators and investment                        firms operating a trading venue shall make available to the public for each class of financial instrument concerned in accordance                        with Article 10(1), including identifiers for the different types of transactions published under Article 10(1) and Article                        21(1), distinguishing between those determined by factors linked primarily to the valuation of the financial instruments and                        those determined by other factors;                  

(b)the time limit that would be deemed in compliance with the obligation to publish as close to real time as possible including                        when trades are executed outside ordinary trading hours;                  

(c)the conditions for authorising investment firms, including systematic internalisers, and market operators and investment firms                        operating a trading venue, to provide for deferred publication of the details of transactions for each class of financial                        instrument concerned in accordance with paragraph 1 of this Article and with Article 21(4);                  

(d)the criteria to be applied when determining the size or type of a transaction for which deferred publication and publication                        of limited details of a transaction, or publication of details of several transactions in an aggregated form, or omission                        of the publication of the volume of a transaction with particular reference to allowing an extended length of time of deferral                        for certain financial instruments depending on their liquidity, is allowed under paragraph 3.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### *CHAPTER 3*U.K.***Obligation to offer trade data on a separate and reasonable commercial basis***

#### Article 12U.K.Obligation to make pre-trade and post-trade data available separately

1.Market operators and investment firms operating a trading venue shall make the information published in accordance with Articles                        3, 4 and 6 to 11 available to the public by offering pre-trade and post-trade transparency data separately.                  

2.ESMA shall develop draft regulatory technical standards to specify the offering of pre-trade and post-trade transparency data,                        including the level of disaggregation of the data to be made available to the public as referred to in paragraph 1.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

#### Article 13U.K.Obligation to make pre-trade and post-trade data available on a reasonable commercial basis

1.Market operators and investment firms operating a trading venue shall make the information published in accordance with Articles                        3, 4 and 6 to 11 available to the public on a reasonable commercial basis and ensure non-discriminatory access to the information.                        Such information shall be made available free of charge 15 minutes after publication.                  

2.The Commission shall adopt delegated acts in accordance with Article 50 clarifying what constitutes a reasonable commercial                        basis to make information public as referred to in paragraph 1.                  

## TITLE IIIU.K.**TRANSPARENCY FOR SYSTEMATIC INTERNALISERS AND INVESTMENT FIRMS TRADING OTC**

### Article 14U.K.Obligation for systematic internalisers to make public firm quotes in respect of shares, depositary receipts, ETFs, certificates                        and other similar financial instruments

1.Investment firms shall make public firm quotes in respect of those shares, depositary receipts, ETFs, certificates and other                        similar financial instruments traded on a trading venue for which they are systematic internalisers and for which there is                        a liquid market.                  

Where there is not a liquid market for the financial instruments referred to in the first subparagraph, systematic internalisers                     shall disclose quotes to their clients upon request.                  

2.This Article and Articles 15, 16 and 17 shall apply to systematic internalisers when they deal in sizes up to standard market                        size. Systematic internalisers shall not be subject to this Article and Articles 15, 16 and 17 when they deal in sizes above                        standard market size.                  

3.Systematic internalisers may decide the size or sizes at which they will quote. The minimum quote size shall be at least the                        equivalent of 10 % of the standard market size of a share, depositary receipt, ETF, certificate or other similar financial                        instrument traded on a trading venue. For a particular share, depositary receipt, ETF, certificate or other similar financial                        instrument traded on a trading venue each quote shall include a firm bid and offer price or prices for a size or sizes which                        could be up to standard market size for the class of shares, depositary receipts, ETFs, certificates or other similar financial                        instruments to which the financial instrument belongs. The price or prices shall reflect the prevailing market conditions                        for that share, depositary receipt, ETF, certificate or other similar financial instrument.                  

4.Shares, depositary receipts, ETFs, certificates and other similar financial instruments shall be grouped in classes on the                        basis of the arithmetic average value of the orders executed in the market for that financial instrument. The standard market                        size for each class of shares, depositary receipts, ETFs, certificates and other similar financial instruments shall be a                        size representative of the arithmetic average value of the orders executed in the market for the financial instruments included                        in each class.                  

5.The market for each share, depositary receipt, ETF, certificate or other similar financial instrument shall be comprised of                        all orders executed in the Union in respect of that financial instrument excluding those that are large in scale compared                        to normal market size.                  

6.The competent authority of the most relevant market in terms of liquidity as defined in Article 26 for each share, depositary                        receipt, ETF, certificate and other similar financial instrument shall determine at least annually, on the basis of the arithmetic                        average value of the orders executed in the market in respect of that financial instrument, the class to which it belongs.                        That information shall be made public to all market participants and communicated to ESMA which shall publish the information                        on its website.                  

7.In order to ensure the efficient valuation of shares, depositary receipts, ETFs, certificates and other similar financial                        instruments and maximise the possibility of investment firms to obtain the best deal for their clients, ESMA shall develop                        draft regulatory technical standards to specify further the arrangements for the publication of a firm quote as referred to                        in paragraph 1, the determination of whether prices reflect prevailing market conditions as referred to in paragraph 3, and                        of the standard market size as referred to in paragraphs 2 and 4.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### Article 15U.K.Execution of client orders

1.Systematic internalisers shall make public their quotes on a regular and continuous basis during normal trading hours. They                        may update their quotes at any time. They shall be allowed, under exceptional market conditions, to withdraw their quotes.                  

Member States shall require that firms that meet the definition of systematic internaliser notify their competent authority.                     Such notification shall be transmitted to ESMA. ESMA shall establish a list of all SIs in the Union.                  

The quotes shall be made public in a manner which is easily accessible to other market participants on a reasonable commercial                     basis.                  

2.Systematic internalisers shall, while complying with Article 27 of Directive 2014/65//EU, execute the orders they receive                        from their clients in relation to the shares, depositary receipts, ETFs, certificates and other similar financial instruments                        for which they are systematic internalisers at the quoted prices at the time of reception of the order.                  

However, in justified cases, they may execute those orders at a better price provided that the price falls within a public                     range close to market conditions.                  

3.Systematic internalisers may execute orders they receive from their professional clients at prices different than their quoted                        ones without having to comply with the requirements established in paragraph 2, in respect of transactions where execution                        in several securities is part of one transaction or in respect of orders that are subject to conditions other than the current                        market price.                  

4.Where a systematic internaliser quoting only one quote or whose highest quote is lower than the standard market size receives                        an order from a client of a size bigger than its quotation size, but lower than the standard market size, it may decide to                        execute that part of the order which exceeds its quotation size, provided that it is executed at the quoted price, except                        where otherwise permitted under the conditions laid down in paragraphs 2 and 3. Where the systematic internaliser is quoting                        in different sizes and receives an order between those sizes, which it chooses to execute, it shall execute the order at one                        of the quoted prices in compliance with Article 28 of Directive 2014/65/EU, except where otherwise permitted under the conditions                        of paragraphs 2 and 3 of this Article.                  

5.The Commission shall be empowered to adopt delegated acts in accordance with Article 50, clarifying what constitutes a reasonable                        commercial basis to make quotes public as referred to in paragraph 1.                  

### Article 16U.K.Obligations of competent authorities

The competent authorities shall check the following:

that investment firms regularly update bid and offer prices published in accordance with Article 14 and maintain prices which                              reflect the prevailing market conditions;                           

that investment firms comply with the conditions for price improvement laid down in Article 15(2).

### Article 17U.K.Access to quotes

1.Systematic internalisers shall be allowed to decide, on the basis of their commercial policy and in an objective non-discriminatory                        way, the clients to whom they give access to their quotes. To that end there shall be clear standards for governing access                        to their quotes. Systematic internalisers may refuse to enter into or discontinue business relationships with clients on the                        basis of commercial considerations such as the client credit status, the counterparty risk and the final settlement of the                        transaction.                  

2.In order to limit the risk of exposure to multiple transactions from the same client, systematic internalisers shall be allowed                        to limit in a non-discriminatory way the number of transactions from the same client which they undertake to enter at the                        published conditions. They may, in a non-discriminatory way and in accordance with Article 28 of Directive 2014/65//EU, limit                        the total number of transactions from different clients at the same time provided that this is allowable only where the number                        and/or volume of orders sought by clients considerably exceeds the norm.                  

3.In order to ensure the efficient valuation of shares, depositary receipts, ETFs, certificates and other similar financial                        instruments and maximise the possibility for investment firms to obtain the best deal for their clients, the Commission shall                        adopt delegated acts in accordance with Article 50 specifying:                  

(a)the criteria specifying when a quote is published on a regular and continuous basis and is easily accessible as referred to                        in Article 15(1) as well as the means by which investment firms may comply with their obligation to make public their quotes,                        which shall include the following possibilities:                  

through the facilities of any regulated market which has admitted the financial instrument in question to trading;

through an APA;

through proprietary arrangements;

(b)the criteria specifying those transactions where execution in several securities is part of one transaction or those orders                        that are subject to conditions other than current market price as referred to in Article 15(3);                  

(c)the criteria specifying what can be considered as exceptional market conditions that allow for the withdrawal of quotes as                        well as the conditions for updating quotes as referred to in Article 15(1);                  

(d)the criteria specifying when the number and/or volume of orders sought by clients considerably exceeds the norm as referred                        to in paragraph 2.                  

(e)the criteria specifying when prices fall within a public range close to market conditions as referred to in Article 15(2).                  

### Article 18U.K.Obligation for systematic internalisers to make public firm quotes in respect of bonds, structured finance products, emission                        allowances and derivatives

1.Investment firms shall make public firm quotes in respect of bonds, structured finance products, emission allowances and derivatives                        traded on a trading venue for which they are systematic internalisers and for which there is a liquid market when the following                        conditions are fulfilled:                  

(a)they are prompted for a quote by a client of the systematic internaliser;                  

(b)they agree to provide a quote.                  

2.In relation to bonds, structured finance products, emission allowances and derivatives traded on a trading venue for which                        there is not a liquid market, systematic internalisers shall disclose quotes to their clients on request if they agree to                        provide a quote. That obligation may be waived where the conditions specified in Article 9(1) are met.                  

3.Systematic internalisers may update their quotes at any time. They may withdraw their quotes under exceptional market conditions.                  

4.Member States shall require that firms that meet the definition of systematic internaliser notify their competent authority.                        Such notification shall be transmitted to ESMA. ESMA shall establish a list of all systematic internalisers in the Union.                  

5.Systematic internalisers shall make the firm quotes published in accordance with paragraph 1 available to their other clients.                        Notwithstanding, they shall be allowed to decide, on the basis of their commercial policy and in an objective non-discriminatory                        way, the clients to whom they give access to their quotes. To that end, systematic internalisers shall have in place clear                        standards for governing access to their quotes. Systematic internalisers may refuse to enter into or discontinue business                        relationships with clients on the basis of commercial considerations such as the client credit status, the counterparty risk                        and the final settlement of the transaction.                  

6.Systematic internalisers shall undertake to enter into transactions under the published conditions with any other client to                        whom the quote is made available in accordance with paragraph 5 when the quoted size is at or below the size specific to the                        financial instrument determined in accordance with Article 9(5)(d).                  

Systematic internalisers shall not be subject to the obligation to publish a firm quote pursuant to paragraph 1 for financial                     instruments that fall below the threshold of liquidity determined in accordance with Article 9(4).                  

7.Systematic internalisers shall be allowed to establish non-discriminatory and transparent limits on the number of transactions                        they undertake to enter into with clients pursuant to any given quote.                  

8.The quotes published pursuant to paragraph 1 and 5 and those at or below the size referred to in paragraph 6 shall be made                        public in a manner which is easily accessible to other market participants on a reasonable commercial basis.                  

9.The quoted price or prices shall be such as to ensure that the systematic internaliser complies with its obligations under                        Article 27 of Directive 2014/65/EU, where applicable, and shall reflect prevailing market conditions in relation to prices                        at which transactions are concluded for the same or similar financial instruments on a trading venue.                  

However, in justified cases, they may execute orders at a better price provided that the price falls within a public range                     close to market conditions.                  

10.Systematic internalisers shall not be subject to this Article when they deal in sizes above the size specific to the financial                        instrument determined in accordance with Article 9(5)(d).                  

### Article 19U.K.Monitoring by ESMA

1.Competent authorities and ESMA shall monitor the application of Article 18 regarding the sizes at which quotes are made available                        to clients of the investment firm and to other market participants relative to other trading activity of the firm, and the                        degree to which the quotes reflect prevailing market conditions in relation to transactions in the same or similar financial                        instruments on a trading venue. By 3 January 2019, ESMA shall submit a report to the Commission on the application of Article                        18. In the event of significant quoting and trading activity just beyond the threshold referred to in Article 18(6) or outside                        prevailing market conditions, ESMA shall submit a report to the Commission before that date.                  

2.The Commission shall adopt delegated acts in accordance with Article 50 specifying the sizes referred to in Article 18(6)                        at which a firm shall enter into transactions with any other client to whom the quote is made available. The size specific                        to the financial instrument shall be determined in accordance with the criteria set in Article 9(5)(d).                  

3.The Commission shall adopt delegated acts in accordance with Article 50 clarifying what constitutes a reasonable commercial                        basis to make quotes public as referred to in Article 18(8).                  

### Article 20U.K.Post-trade disclosure by investment firms, including systematic internalisers, in respect of shares, depositary receipts,                        ETFs, certificates and other similar financial instruments

1.Investment firms which, either on own account or on behalf of clients, conclude transactions in shares, depositary receipts,                        ETFs, certificates and other similar financial instruments traded on a trading venue, shall make public the volume and price                        of those transactions and the time at which they were concluded. That information shall be made public through an APA.                  

2.The information which is made public in accordance with paragraph 1 of this Article and the time-limits within which it is                        published shall comply with the requirements adopted pursuant to Article 6, including the regulatory technical standards adopted                        in accordance with Article 7(2)(a). Where the measures adopted pursuant to Article 7 provide for deferred publication for                        certain categories of transaction in shares, depositary receipts, ETFs, certificates and other similar financial instruments                        traded on a trading venue, that possibility shall also apply to those transactions when undertaken outside trading venues.                  

3.ESMA shall develop draft regulatory technical standards to specify the following:                  

(a)identifiers for the different types of transactions published under this Article, distinguishing between those determined                        by factors linked primarily to the valuation of the financial instruments and those determined by other factors;                  

(b)the application of the obligation under paragraph 1 to transactions involving the use of those financial instruments for collateral,                        lending or other purposes where the exchange of financial instruments is determined by factors other than the current market                        valuation of the financial instrument;                  

(c)the party to a transaction that has to make the transaction public in accordance with paragraph 1 if both parties to the transaction                        are investment firms.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### Article 21U.K.Post-trade disclosure by investment firms, including systematic internalisers, in respect of bonds, structured finance products,                        emission allowances and derivatives

1.Investment firms which, either on own account or on behalf of clients, conclude transactions in bonds, structured finance                        products, emission allowances and derivatives traded on a trading venue shall make public the volume and price of those transactions                        and the time at which they were concluded. That information shall be made public through an APA.                  

2.Each individual transaction shall be made public once through a single APA.                  

3.The information which is made public in accordance with paragraph 1 and the time-limits within which it is published shall                        comply with the requirements adopted pursuant to Article 10, including the regulatory technical standards adopted in accordance                        with Article 11(4)(a) and (b).                  

4.Competent authorities shall be able to authorise investment firms to provide for deferred publication, or may request the                        publication of limited details of a transaction or details of several transactions in an aggregated form, or a combination                        thereof, during the time period of the deferral or may allow the omission of the publication of the volume for individual                        transactions during an extended time period of deferral, or in the case of non-equity financial instruments that are not sovereign                        debt, may allow the publication of several transactions in an aggregated form during an extended time period of deferral,                        or in the case of sovereign debt instruments may allow the publication of several transactions in an aggregated form for an                        indefinite period of time, and may temporarily suspend the obligations referred to in paragraph 1 on the same conditions as                        laid down in Article 11.                  

Where the measures adopted pursuant to Article 11 provide for deferred publication and publication of limited details or details                     in an aggregated form, or a combination thereof, or for omission of the publication of the volume for certain categories of                     transactions in bonds, structured finance products, emission allowances and derivatives traded on a trading venue, that possibility                     shall also apply to those transactions when undertaken outside trading venues.                  

5.ESMA shall develop draft regulatory technical standards in such a way as to enable the publication of information required                        under Article 64 of Directive 2014/65/EU to specify the following:                  

(a)the identifiers for the different types of transactions published in accordance with this Article, distinguishing between                        those determined by factors linked primarily to the valuation of the financial instruments and those determined by other factors;                  

(b)the application of the obligation under paragraph 1 to transactions involving the use of those financial instruments for collateral,                        lending or other purposes where the exchange of financial instruments is determined by factors other than the current market                        valuation of the financial instrument;                  

(c)the party to a transaction that has to make the transaction public in accordance with paragraph 1 if both parties to the transaction                        are investment firms.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### Article 22U.K.Providing information for the purposes of transparency and other calculations

1.In order to carry out calculations for determining the requirements for the pre-trade and post-trade transparency and the                        trading obligation regimes imposed by Articles 3 to 11, Articles 14 to 21 and Article 32, which are applicable to financial                        instruments and for determining whether an investment firm is a systematic internaliser, competent authorities may require                        information from:                  

(a)trading venues;                  

(b)APAs; and                  

(c)CTPs.                  

2.Trading venues, APAs and CTPs shall store the necessary data for a sufficient period of time.                  

3.Competent authorities shall transmit to ESMA such information as ESMA requires to produce the reports referred to in Article                        5(4), (5) and (6).                  

4.ESMA shall develop draft regulatory technical standards to specify the content and frequency of data requests and the formats                        and the timeframe in which trading venues, APAs and CTPs must respond to such requests in accordance with paragraph 1, the                        type of data that must be stored, and the minimum period of time for which trading venues, APAs and CTPs must store data in                        order to be able to respond to such requests in accordance with paragraph 2.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in this paragraph in accordance                     with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### Article 23U.K.Trading obligation for investment firms

1.An investment firm shall ensure the trades it undertakes in shares admitted to trading on a regulated market or traded on                        a trading venue shall take place on a regulated market, MTF or systematic internaliser, or a third-country trading venue assessed                        as equivalent in accordance with Article 25(4)(a) of Directive 2014/65/EU, as appropriate, unless their characteristics include                        that they:                  

(a)are non-systematic, ad-hoc, irregular and infrequent; or                  

(b)are carried out between eligible and/or professional counterparties and do not contribute to the price discovery process.                  

2.An investment firm that operates an internal matching system which executes client orders in shares, depositary receipts,                        ETFs, certificates and other similar financial instruments on a multilateral basis must ensure it is authorised as an MTF                        under Directive 2014/65/EU and comply with all relevant provisions pertaining to such authorisations.                  

3.ESMA shall develop draft regulatory technical standards to specify the particular characteristics of those transactions in                        shares that do not contribute to the price discovery process as referred to in paragraph 1, taking into consideration cases                        such as:                  

(a)non-addressable liquidity trades; or                  

(b)where the exchange of such financial instruments is determined by factors other than the current market valuation of the financial                        instrument.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

## TITLE IVU.K.**TRANSACTION REPORTING**

### Article 24U.K.Obligation to uphold integrity of markets

Without prejudice to the allocation of responsibilities for enforcing Regulation (EU) No 596/2014, competent authorities coordinated                     by ESMA in accordance with Article 31 of Regulation (EU) No 1095/2010 shall monitor the activities of investment firms to                     ensure that they act honestly, fairly and professionally and in a manner which promotes the integrity of the market.                  

### Article 25U.K.Obligation to maintain records

1.Investment firms shall keep at the disposal of the competent authority, for five years, the relevant data relating to all                        orders and all transactions in financial instruments which they have carried out, whether on own account or on behalf of a                        client. In the case of transactions carried out on behalf of clients, the records shall contain all the information and details                        of the identity of the client, and the information required under Directive 2005/60/EC of the European Parliament and of the                        Council(27). ESMA may request access to that information in accordance with the procedure and under the conditions set out in Article                        35 of Regulation (EU) No 1095/2010.                  

2.The operator of a trading venue shall keep at the disposal of the competent authority, for at least five years, the relevant                        data relating to all orders in financial instruments which are advertised through their systems. The records shall contain                        the relevant data that constitute the characteristics of the order, including those that link an order with the executed transaction(s)                        that stems from that order and the details of which shall be reported in accordance with Article 26(1) and (3). ESMA shall                        perform a facilitation and coordination role in relation to the access by competent authorities to information under this                        paragraph.                  

3.ESMA shall develop draft regulatory technical standards to specify the details of the relevant order data required to be maintained                        under paragraph 2 of this Article that is not referred to in Article 26.                  

Those draft regulatory technical standards shall include the identification code of the member or participant which transmitted                     the order, the identification code of the order, the date and time the order was transmitted, the characteristics of the order,                     including the type of order, the limit price if applicable, the validity period, any specific order instructions, details                     of any modification, cancellation, partial or full execution of the order, the agency or principal capacity.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### Article 26U.K.Obligation to report transactions

1.Investment firms which execute transactions in financial instruments shall report complete and accurate details of such transactions                        to the competent authority as quickly as possible, and no later than the close of the following working day.                  

The competent authorities shall, in accordance with Article 85 of Directive 2014/65/EU, establish the necessary arrangements                     in order to ensure that the competent authority of the most relevant market in terms of liquidity for those financial instruments                     also receives that information.                  

The competent authorities shall make available to ESMA, upon request, any information reported in accordance with this Article.

2.The obligation laid down in paragraph 1 shall apply to:                  

(a)financial instruments which are admitted to trading or traded on a trading venue or for which a request for admission to trading                        has been made;                  

(b)financial instruments where the underlying is a financial instrument traded on a trading venue; and                  

(c)financial instruments where the underlying is an index or a basket composed of financial instruments traded on a trading venue                  

The obligation shall apply to transactions in financial instruments referred to in points (a) to (c) irrespective of whether                     or not such transactions are carried out on the trading venue.                  

3.The reports shall, in particular, include details of the names and numbers of the financial instruments bought or sold, the                        quantity, the dates and times of execution, the transaction prices, a designation to identify the clients on whose behalf                        the investment firm has executed that transaction, a designation to identify the persons and the computer algorithms within                        the investment firm responsible for the investment decision and the execution of the transaction, a designation to identify                        the applicable waiver under which the trade has taken place, means of identifying the investment firms concerned, and a designation                        to identify a short sale as defined in Article 2(1)(b) of Regulation (EU) No 236/2012 in respect of any shares and sovereign                        debt within the scope of Articles 12, 13 and 17 of that Regulation. For transactions not carried out on a trading venue, the                        reports shall include a designation identifying the types of transactions in accordance with the measures to be adopted pursuant                        to Article 20(3)(a) and Article 21(5)(a). For commodity derivatives, the reports shall indicate whether the transaction reduces                        risk in an objectively measurable way in accordance with Article 57 of Directive 2014/65/EU.                  

4.Investment firms which transmit orders shall include in the transmission of that order all the details as specified in paragraphs                        1 and 3. Instead of including the mentioned details when transmitting orders, an investment firm may choose to report the                        transmitted order, if it is executed, as a transaction in accordance with the requirements under paragraph 1. In that case,                        the transaction report by the investment firm shall state that it pertains to a transmitted order.                  

5.The operator of a trading venue shall report details of transactions in financial instruments traded on its platform which                        are executed through its systems by a firm which is not subject to this Regulation in accordance with paragraphs 1 and 3.                  

6.In reporting the designation to identify the clients as required under paragraphs 3 and 4, investment firms shall use a legal                        entity identifier established to identify clients that are legal persons.                  

ESMA shall develop by 3 January 2016 guidelines in accordance with Article 16 of Regulation (EU) No 1095/2010 to ensure that                     the application of legal entity identifiers within the Union complies with international standards, in particular those established                     by the Financial Stability Board.                  

7.The reports shall be made to the competent authority either by the investment firm itself, an ARM acting on its behalf or                        by the trading venue through whose system the transaction was completed, in accordance with paragraphs 1, 3 and 9.                  

Investment firms shall have responsibility for the completeness, accuracy and timely submission of the reports which are submitted                     to the competent authority.                  

By way of derogation from that responsibility, where an investment firm reports details of those transactions through an ARM                     which is acting on its behalf or a trading venue, the investment firm shall not be responsible for failures in the completeness,                     accuracy or timely submission of the reports which are attributable to the ARM or trading venue. In those cases and subject                     to Article 66(4) of Directive 2014/65/EU the ARM or trading venue shall be responsible for those failures.                  

Investment firms must nevertheless take reasonable steps to verify the completeness, accuracy and timeliness of the transaction                     reports which were submitted on their behalf.                  

The home Member State shall require the trading venue, when making reports on behalf of the investment firm, to have sound                     security mechanisms in place designed to guarantee the security and authentication of the means of transfer of information,                     to minimise the risk of data corruption and unauthorised access and to prevent information leakage maintaining the confidentiality                     of the data at all times. The home Member State shall require the trading venue to maintain adequate resources and have back-up                     facilities in place in order to offer and maintain its services at all times.                  

Trade-matching or reporting systems, including trade repositories registered or recognised in accordance with Title VI of                     Regulation (EU) No 648/2012, may be approved by the competent authority as an ARM in order to transmit transaction reports                     to the competent authority in accordance with paragraphs 1, 3 and 9.                  

Where transactions have been reported to a trade repository in accordance with Article 9 of Regulation (EU) No 648/2012 which                     is approved as an ARM and where those reports contain the details required under paragraphs 1, 3 and 9 and are transmitted                     to the competent authority by the trade repository within the time limit set in paragraph 1, the obligation on the investment                     firm laid down in paragraph 1 shall be considered to have been complied with.                  

Where there are errors or omissions in the transaction reports, the ARM, investment firm or trading venue reporting the transaction                     shall correct the information and submit a corrected report to the competent authority.                  

8.When, in accordance with Article 35(8) of Directive 2014/65/EU, reports provided for under this Article are transmitted to                        the competent authority of the host Member State, it shall transmit that information to the competent authorities of the home                        Member State of the investment firm, unless the competent authorities of the home Member State decide that they do not want                        to receive that information.                  

9.ESMA shall develop draft regulatory technical standards to specify:                  

(a)data standards and formats for the information to be reported in accordance with paragraphs 1 and 3, including the methods                        and arrangements for reporting financial transactions and the form and content of such reports;                  

(b)the criteria for defining a relevant market in accordance with paragraph 1;                  

(c)the references of the financial instruments bought or sold, the quantity, the dates and times of execution, the transaction                        prices, the information and details of the identity of the client, a designation to identify the clients on whose behalf the                        investment firm has executed that transaction, a designation to identify the persons and the computer algorithms within the                        investment firm responsible for the investment decision and the execution of the transaction, a designation to identify the                        applicable waiver under which the trade has taken place, the means of identifying the investment firms concerned, the way                        in which the transaction was executed, data fields necessary for the processing and analysis of the transaction reports in                        accordance with paragraph 3; and                  

(d)the designation to identify short sales of shares and sovereign debt as referred to in paragraph 3;                  

(e)the relevant categories of financial instrument to be reported in accordance with paragraph 2;                  

(f)the conditions upon which legal entity identifiers are developed, attributed and maintained, by Member States in accordance                        with paragraph 6, and the conditions under which those legal entity identifiers are used by investment firms so as to provide,                        pursuant to paragraphs 3, 4 and 5, for the designation to identify the clients in the transaction reports they are required                        to establish pursuant to paragraph 1;                  

(g)the application of transaction reporting obligations to branches of investment firms;                  

(h)what constitutes a transaction and execution of a transaction for the purposes of this Article.                  

(i)when an investment firm is deemed to have transmitted an order for the purposes of paragraph 4.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

10.By 3 January 2019, ESMA shall submit a report to the Commission on the functioning of this Article, including its interaction                        with the related reporting obligations under Regulation (EU) No 648/2012, and whether the content and format of transaction                        reports received and exchanged between competent authorities comprehensively enables monitoring of the activities of investment                        firms in accordance with Article 24 of this Regulation. The Commission may take steps to propose any changes, including providing                        for transactions to be transmitted only to a single system appointed by ESMA instead of to competent authorities. The Commission                        shall forward ESMA’s report to the European Parliament and to the Council.                  

### Article 27U.K.Obligation to supply financial instrument reference data

1.With regard to financial instruments admitted to trading on regulated markets or traded on MTFs or OTFs, trading venues shall                        provide competent authorities with identifying reference data for the purposes of transaction reporting under Article 26.                  

With regard to other financial instruments covered by Article 26(2) traded on its system, each systematic internaliser shall                     provide its competent authority with reference data relating to those financial instruments.                  

Identifying reference data shall be made ready for submission to the competent authority in an electronic and standardised                     format before trading commences in the financial instrument that it refers to. The financial instrument reference data shall                     be updated whenever there are changes to the data with respect to a financial instrument. Those notifications are to be transmitted                     by competent authorities without delay to ESMA, which shall publish them immediately on its website. ESMA shall give competent                     authorities access to those reference data.                  

2.In order to allow competent authorities to monitor, pursuant to Article 26, the activities of investment firms to ensure that                        they act honestly, fairly and professionally and in a manner which promotes the integrity of the market, ESMA and the competent                        authorities shall establish the necessary arrangements in order to ensure that:                  

(a)ESMA and the competent authorities effectively receive the financial instrument reference data pursuant to paragraph 1;                  

(b)the quality of the data so received is appropriate for the purpose of transaction reporting under Article 26;                  

(c)the financial instrument reference data received pursuant to paragraph 1 is efficiently exchanged between the relevant competent                        authorities.                  

3.ESMA shall develop draft regulatory technical standards to specify:                  

(a)data standards and formats for the financial instrument reference data in accordance with paragraph 1, including the methods                        and arrangements for supplying the data and any update thereto to competent authorities and transmitting it to ESMA in accordance                        with paragraph 1, and the form and content of such data;                  

(b)the technical measures that are necessary in relation to the arrangements to be made by ESMA and the competent authorities                        pursuant to paragraph 2.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

## TITLE VU.K.**DERIVATIVES**

### Article 28U.K.Obligation to trade on regulated markets, MTFs or OTFs

1.Financial counterparties as defined in Article 2(8) of Regulation (EU) No 648/2012 and non-financial counterparties that meet                        the conditions referred to in Article 10(1)(b) thereof shall conclude transactions which are neither intragroup transactions                        as defined in Article 3 of that Regulation nor transactions covered by the transitional provisions in Article 89 of that Regulation                        with other such financial counterparties or other such non-financial counterparties that meet the conditions referred to in                        Article 10(1)(b) of Regulation (EU) No 648/2012 in derivatives pertaining to a class of derivatives that has been declared                        subject to the trading obligation in accordance with the procedure set out in Article 32 and listed in the register referred                        to in Article 34 only on:                  

(a)regulated markets;                  

(b)MTFs;                  

(c)OTFs; or                  

(d)third-country trading venues, provided that the Commission has adopted a decision in accordance with paragraph 4 and provided                        that the third country provides for an effective equivalent system for the recognition of trading venues authorised under                        Directive 2014/65/EU to admit to trading or trade derivatives declared subject to a trading obligation in that third country                        on a non-exclusive basis.                  

2.The trading obligation shall also apply to counterparties referred to in paragraph 1 which enter into derivatives transactions                        pertaining to a class of derivatives that has been declared subject to the trading obligation with third-country financial                        institutions or other third-country entities that would be subject to the clearing obligation if they were established in                        the Union. The trading obligation shall also apply to third-country entities that would be subject to the clearing obligation                        if they were established in the Union, which enter into derivatives transactions pertaining to a class of derivatives that                        has been declared subject to the trading obligation, provided that the contract has a direct, substantial and foreseeable                        effect within the Union or where such obligation is necessary or appropriate to prevent the evasion of any provision of this                        Regulation.                  

ESMA shall regularly monitor the activity in derivatives which have not been declared subject to the trading obligation as                     described in paragraph 1 in order to identify cases where a particular class of contracts may pose systemic risk and to prevent                     regulatory arbitrage between derivative transactions subject to the trading obligation and derivative transactions which are                     not subject to the trading obligation.                  

3.Derivatives declared subject to the trading obligation pursuant to paragraph 1 shall be eligible to be admitted to trading                        on a regulated market or to trade on any trading venue as referred to in paragraph 1 on a non-exclusive and non-discriminatory                        basis.                  

4.The Commission may, in accordance with the examination procedure referred to in Article 51(2) adopt decisions determining                        that the legal and supervisory framework of a third country ensures that a trading venue authorised in that third country                        complies with legally binding requirements which are equivalent to the requirements for the trading venues referred to in                        paragraph 1(a), (b) or (c) of this Article, resulting from this Regulation, Directive 2014/65/EU, and Regulation (EU) No 596/2014,                        and which are subject to effective supervision and enforcement in that third country.                  

Those decisions shall be for the sole purpose of determining eligibility as a trading venue for derivatives subject to the                     trading obligation.                  

The legal and supervisory framework of a third country is considered to have equivalent effect where that framework fulfils                     all the following conditions:                  

(a)trading venues in that third country are subject to authorisation and to effective supervision and enforcement on an ongoing                        basis;                  

(b)trading venues have clear and transparent rules regarding admission of financial instruments to trading so that such financial                        instruments are capable of being traded in a fair, orderly and efficient manner, and are freely negotiable;                  

(c)issuers of financial instruments are subject to periodic and ongoing information requirements ensuring a high level of investor                        protection;                  

(d)it ensures market transparency and integrity via rules addressing market abuse in the form of insider dealing and market manipulation;                  

A decision of the Commission under this paragraph may be limited to a category or categories of trading venues. In that case,                     a third-country trading venue is only included in paragraph 1(d) if it falls within a category covered by the Commission’s                     decision.                  

5.In order to ensure consistent application of this Article, ESMA shall develop draft regulatory technical standards to specify                        the types of contracts referred to in paragraph 2 which have a direct, substantial and foreseeable effect within the Union                        and the cases where the trading obligation is necessary or appropriate to prevent the evasion of any provision of this Regulation.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

Where possible and appropriate, the regulatory technical standards referred to in this paragraph shall be identical to those                     adopted under Article 4(4) of Regulation (EU) No 648/2012.                  

### Article 29U.K.Clearing obligation for derivatives traded on regulated markets and timing of acceptance for clearing

1.The operator of a regulated market shall ensure that all transactions in derivatives that are concluded on that regulated                        market are cleared by a CCP.                  

2.CCPs, trading venues and investment firms which act as clearing members in accordance with Article 2(14) of Regulation (EU)                        No 648/2012 shall have in place effective systems, procedures and arrangements in relation to cleared derivatives to ensure                        that transactions in cleared derivatives are submitted and accepted for clearing as quickly as technologically practicable                        using automated systems.                  

In this paragraph, ‘cleared derivatives’ means

(a)all derivatives which are to be cleared pursuant to the clearing obligation under paragraph 1 of this Article or pursuant                        to the clearing obligation under Article 4 of Regulation (EU) No 648/2012;                  

(b)all derivatives which are otherwise agreed by the relevant parties to be cleared.                  

3.ESMA shall develop draft regulatory technical standards to specify the minimum requirements for systems, procedures and arrangements,                        including the acceptance timeframes, under this Article taking into account the need to ensure proper management of operational                        or other risks.                  

ESMA shall have ongoing authority to develop further regulatory technical standards to update those in force if it considers                     that that is required as industry standards evolve.                  

ESMA shall submit the draft regulatory technical standards referred to in the first subparagraph to the Commission by 3 July                     2015.                  

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first and second subparagraph                     in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### Article 30U.K.Indirect Clearing Arrangements

1.Indirect clearing arrangements with regard to exchange-traded derivatives are permissible provided that those arrangements                        do not increase counterparty risk and ensure that the assets and positions of the counterparty benefit from protection with                        equivalent effect to that referred to in Articles 39 and 48 of Regulation (EU) No 648/2012.                  

2.ESMA shall develop draft regulatory technical standards to specify the types of indirect clearing service arrangements, where                        established, that meet the conditions referred to in paragraph 1, ensuring consistency with provisions established for OTC                        derivatives under Chapter II of Commission Delegated Regulation (EU) No 149/2013(28).                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in this paragraph in accordance                     with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### Article 31U.K.Portfolio Compression

1.When providing portfolio compression, investment firms and market operators shall not be subject to the best execution obligation                        in Article 27 of Directive 2014/65/EU, the transparency obligations in Articles 8, 10, 18 and 21 of this Regulation and the                        obligation in Article 1(6) of Directive 2014/65/EU. The termination or replacement of the component derivatives in the portfolio                        compression shall not be subject to Article 28 of this Regulation.                  

2.Investment firms and market operators providing portfolio compression shall make public through an APA the volumes of transactions                        subject to portfolio compressions and the time they were concluded within the time limits specified in Article 10.                  

3.Investment firms and market operators providing portfolio compressions shall keep complete and accurate records of all portfolio                        compressions which they organise or participate in. Those records shall be made available promptly to the relevant competent                        authority or ESMA upon request.                  

4.The Commission may adopt by means of delegated acts in accordance with Article 50, measures specifying the following:                  

(a)the elements of portfolio compression,                  

(b)the information to be published pursuant to paragraph 2,                  

in such a way as to make use as far as possible of any existing record keeping, reporting or publication requirements.

### Article 32U.K.Trading obligation procedure

1.ESMA shall develop draft regulatory technical standards to specify the following:                  

(a)which of the class of derivatives declared subject to the clearing obligation in accordance with Article 5(2) and (4) of Regulation                        (EU) No 648/2012 or a relevant subset thereof shall be traded on the venues referred to in Article 28(1) of this Regulation;                  

(b)the date or dates from which the trading obligation takes effect, including any phase-in and the categories of counterparties                        to which the obligation applies where such phase-in and such categories of counterparties have been provided for in regulatory                        technical standards in accordance with Article 5(2)(b) of Regulation (EU) No 648/2012.                  

ESMA shall submit those draft regulatory technical standards to the Commission within six months after the adoption of the                     regulatory technical standards in accordance with Article 5(2) of Regulation (EU) No 648/2012 by the Commission.                  

Before submitting the draft regulatory technical standards to the Commission for adoption, ESMA shall conduct a public consultation                     and, where appropriate, may consult third-country competent authorities.                  

Power is conferred to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

2.In order for the trading obligation to take effect:                  

(a)the class of derivatives pursuant to paragraph 1(a) or a relevant subset thereof must be admitted to trading or traded on                        at least one trading venue as referred to in Article 28(1), and                  

(b)there must be sufficient third-party buying and selling interest in the class of derivatives or a relevant subset thereof                        so that such a class of derivatives is considered sufficiently liquid to trade only on the venues referred to in Article 28(1).                  

3.In developing the draft regulatory technical standards referred to in paragraph 1, ESMA shall consider the class of derivatives                        or a relevant subset thereof as sufficiently liquid pursuant to the following criteria:                  

(a)the average frequency and size of trades over a range of market conditions, having regard to the nature and lifecycle of products                        within the class of derivatives;                  

(b)the number and type of active market participants including the ratio of market participants to products/contracts traded                        in a given product market;                  

(c)the average size of the spreads.                  

In preparing those draft regulatory technical standards, ESMA shall take into consideration the anticipated impact that trading                     obligation might have on the liquidity of a class of derivatives or a relevant subset thereof and the commercial activities                     of end users which are not financial entities.                  

ESMA shall determine whether the class of derivatives or relevant subset thereof is only sufficiently liquid in transactions                     below a certain size.                  

4.ESMA shall, on its own initiative, in accordance with the criteria set out in paragraph 2 and after conducting a public consultation,                        identify and notify to the Commission the classes of derivatives or individual derivative contracts that should be subject                        to the obligation to trade on the venues referred to in Article 28(1), but for which no CCP has yet received authorisation                        under Article 14 or 15 of Regulation (EU) No 648/2012 or which is not admitted to trading or traded on a trading venue referred                        to in Article 28(1).                  

Following the notification by ESMA referred to in the first subparagraph, the Commission may publish a call for development                     of proposals for the trading of those derivatives on the venues referred to in Article 28(1).                  

5.ESMA shall in accordance with paragraph 1, submit to the Commission draft regulatory technical standards to amend, suspend                        or revoke existing regulatory technical standards whenever there is a material change in the criteria set out in paragraph                        2. Before doing so, ESMA may, where appropriate, consult the competent authorities of third countries.                  

Power is conferred to the Commission to adopt regulatory technical standards referred to in this paragraph in accordance with                     Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

6.ESMA shall develop draft regulatory technical standards to specify the criteria referred to in paragraph 2(b).                  

ESMA shall submit drafts for those regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### Article 33U.K.Mechanism to avoid duplicative or conflicting rules

1.The Commission shall be assisted by ESMA in monitoring and preparing reports, at least on an annual basis, to the European                        Parliament and to the Council on the international application of principles laid down in Articles 28 and 29, in particular                        with regard to potential duplicative or conflicting requirements on market participants, and recommend possible actions.                  

2.The Commission may adopt implementing acts declaring that the legal, supervisory and enforcement arrangements of the relevant                        third country:                  

(a)are equivalent to the requirements resulting from Articles 28 and 29;                  

(b)ensure protection of professional secrecy that is equivalent to that set out in this Regulation;                  

(c)are being effectively applied and enforced in an equitable and non-distortive manner so as to ensure effective supervision                        and enforcement in that third country.                  

Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 51.

3.An implementing act on equivalence as referred to in paragraph 2 shall have the effect that counterparties entering into a                        transaction subject to this Regulation shall be deemed to have fulfilled the obligation contained in Articles 28 and 29 where                        at least one of the counterparties is established in that third country and the counterparties are in compliance with those                        legal, supervisory and enforcement arrangements of the relevant third country.                  

4.The Commission shall, in cooperation with ESMA, monitor the effective implementation by third countries, for which an implementing                        act on equivalence has been adopted, of the requirements equivalent to those contained in Articles 28 and 29 and regularly                        report, at least on an annual basis, to the European Parliament and to the Council.                  

Within 30 calendar days of the presentation of the report where the report reveals a significant defect or inconsistency in                     the application of the equivalent requirements by third-country authorities, the Commission may withdraw the recognition as                     equivalent of the third-country legal framework in question. Where an implementing act on equivalence is withdrawn, transactions                     by counterparties shall automatically be subject again to all requirements contained in Articles 28 and 29 of this Regulation.                  

### Article 34U.K.Register of derivatives subject to the trading obligation

ESMA shall publish and maintain on its website a register specifying, in an exhaustive and unequivocal manner, the derivatives                     that are subject to the obligation to trade on the venues referred to in Article 28(1), the venues where they are admitted                     to trading or traded, and the dates from which the obligation takes effect.                  

## TITLE VIU.K.**NON-DISCRIMINATORY CLEARING ACCESS FOR FINANCIAL INSTRUMENTS**

### Article 35U.K.Non-discriminatory access to a CCP

1.Without prejudice to Article 7 of Regulation (EU) No 648/2012, a CCP shall accept to clear financial instruments on a non-discriminatory                        and transparent basis, including as regards collateral requirements and fees relating to access, regardless of the trading                        venue on which a transaction is executed. This in particular shall ensure that a trading venue has the right to non-discriminatory                        treatment of contracts traded on that trading venue in terms of:                  

(a)collateral requirements and netting of economically equivalent contracts, where the inclusion of such contracts in the close-out                        and other netting procedures of a CCP based on the applicable insolvency law would not endanger the smooth and orderly functioning,                        the validity or enforceability of such procedures; and                  

(b)cross-margining with correlated contracts cleared by the same CCP under a risk model that complies with Article 41 of Regulation                        (EU) No 648/2012.                  

A CCP may require that the trading venue comply with the operational and technical requirements established by the CCP including                     the risk management requirements. The requirement in this paragraph does not apply to any derivative contract that is already                     subject to the access obligations under Article 7 of Regulation (EU) No 648/2012.                  

A CCP is not bound by this Article if it is connected by close links to a trading venue which has given notification under                     Article 36(5).                  

2.A request to access a CCP by a trading venue shall be formally submitted to a CCP, its relevant competent authority and the                        competent authority of the trading venue. The request shall specify to which types of financial instruments access is requested.                  

3.The CCP shall provide a written response to the trading venue within three months in the case of transferable securities and                        money market instruments, and within six months in the case of exchange-traded derivatives, either permitting access, under                        the condition that a relevant competent authority has granted access pursuant to paragraph 4, or denying access. The CCP may                        deny a request for access only under the conditions specified in paragraph 6(a). If a CCP denies access it shall provide full                        reasons in its response and inform its competent authority in writing of the decision. Where the trading venue is established                        in a different Member State to the CCP, the CCP shall also provide such notification and reasoning to the competent authority                        of the trading venue. The CCP shall make access possible within three months of providing a positive response to the access                        request.                  

4.The competent authority of the CCP or that of the trading venue shall grant a trading venue access to a CCP only where such                        access:                  

(a)would not require an interoperability arrangement, in the case of derivatives that are not OTC derivatives pursuant to Article                        2(7) of Regulation (EU) No 648/2012; or                  

(b)would not threaten the smooth and orderly functioning of the markets, in particular due to liquidity fragmentation, or would                        not adversely affect systemic risk.                  

Nothing in point (a) of the first subparagraph shall prevent access being granted where the request referred to in paragraph                     2 requires interoperability and the trading venue and all CCPs party to the proposed interoperability arrangement have consented                     to the arrangement and the risks to which the incumbent CCP is exposed to arising from inter-CCP positions are collateralised                     at a third party.                  

Where the need for an interoperability arrangement is the reason or is part of the reason for denying a request, the trading                     venue will advise the CCP and inform ESMA which other CCPs have access to the trading venue and ESMA will publish that information                     so that investment firms may choose to exercise their rights under Article 37 of Directive 2014/65/EU in respect of those                     CCPs in order to facilitate alternative access arrangements.                  

If a competent authority refuses access it shall issue its decision within two months following receipt of the request referred                     to in paragraph 2 and provide full reasons to the other competent authority, the CCP and the trading venue including the evidence                     on which the decision is based.                  

5.As regards transferable securities and money market instruments, a CCP that has been newly established and authorised as a                        CCP as defined in Article 2(1) of Regulation (EU) No 648/2012 to clear under Article 17 of Regulation (EU) No 648/2012 or                        recognised under Article 25 of Regulation (EU) No 648/2012 or authorised under a pre-existing national authorisation regime                        for a period of less than three years on 2 July 2014 may, before 3 January 2017, apply to its competent authority for permission                        to avail itself of transitional arrangements. The competent authority may decide that this Article does not apply to the CCP                        in respect of transferable securities and money market instruments, for a transitional period until 3 July 2019.                  

Where such a transitional period is approved, the CCP cannot benefit from the access rights under Article 36 or this Article                     in respect of transferable securities and money market instruments for the duration of that transitional arrangement. The                     competent authority shall notify members of the college of competent authorities for the CCP and ESMA when a transitional                     period is approved. ESMA shall publish a list of all notifications that it receives.                  

Where a CCP which has been approved for the transitional arrangements under this paragraph is connected by close links to                     one or more trading venues, those trading venues shall not benefit from access rights under Article 36 or this Article in                     respect of transferable securities and money market instruments for the duration of the transitional arrangement.                  

A CCP which is authorised during the three year period prior to entry into force, but is formed by a merger or acquisition                     involving at least one CCP authorised prior to that period, shall not be permitted to apply for the transitional arrangements                     under this paragraph.                  

6.ESMA shall develop draft regulatory technical standards to specify:                  

(a)the specific conditions under which an access request may be denied by a CCP, including the anticipated volume of transactions,                        the number and type of users, arrangements for managing operational risk and complexity or other factors creating significant                        undue risks;                  

(b)the conditions under which access must be permitted by a CCP, including confidentiality of information provided regarding                        financial instruments during the development phase, the non-discriminatory and transparent basis as regards clearing fees,                        collateral requirements and operational requirements regarding margining;                  

(c)the conditions under which granting access will threaten the smooth and orderly functioning of markets or would adversely                        affect systemic risk;                  

(d)the procedure for making a notification under paragraph 5;                  

(e)the conditions for non-discriminatory treatment in terms of how contracts traded on that trading venue are treated in terms                        of collateral requirements and netting of economically equivalent contracts and cross-margining with correlated contracts                        cleared by the same CCP.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### Article 36U.K.Non-discriminatory access to a trading venue

1.Without prejudice to Article 8 of Regulation (EU) No 648/2012, a trading venue shall provide trade feeds on a non-discriminatory                        and transparent basis, including as regards fees related to access, upon request to any CCP authorised or recognised by Regulation                        (EU) No 648/2012 that wishes to clear transactions in financial instruments that are concluded on that trading venue. That                        requirement does not apply to any derivative contract that is already subject to the access obligations under Article 8 of                        Regulation (EU) No 648/2012.                  

A trading venue is not bound by this Article if it is connected by close links to a CCP which has given notification that                     it is availing of the transitional arrangements under Article 35(5).                  

2.A request to access a trading venue by a CCP shall be formally submitted to a trading venue, its relevant competent authority                        and the competent authority of the CCP.                  

3.The trading venue shall provide a written response to the CCP within three months in the case of transferable securities and                        money market instruments, and within six months in the case of exchange-traded derivatives, either permitting access, under                        the condition that the relevant competent authority has granted access pursuant to paragraph 4, or denying access. The trading                        venue may deny access only under the conditions specified under paragraph 6(a). When access is denied the trading venue shall                        provide full reasons in its response and inform its competent authority in writing of the decision. Where the CCP is established                        in a different Member State to the trading venue, the trading venue shall also provide such notification and reasoning to                        the competent authority of the CCP. The trading venue shall make access possible within three months of providing a positive                        response to the access request.                  

4.The competent authority of the trading venue or that of the CCP shall grant a CCP access to a trading venue only where such                        access:                  

(a)would not require an interoperability arrangement, in the case of derivatives that are not OTC derivatives pursuant to Article                        2(7) of Regulation (EU) No 648/2012; or                  

(b)would not threaten the smooth and orderly functioning of the markets, in particular due to liquidity fragmentation and the                        trading venue has put in place adequate mechanisms to prevent such fragmentation, or would not adversely affect systemic risk.                  

Nothing in point (a) of the first subparagraph shall prevent access being granted where the request referred to in paragraph                     2 requires interoperability and the trading venue and all CCPs party to the proposed interoperability arrangement have consented                     to the arrangement and the risks to which the incumbent CCP is exposed to arising from inter-CCP positions are collateralised                     at a third party.                  

Where the need for an interoperability arrangement is the reason or is part of the reason for denying a request, the trading                     venue will advise the CCP and inform ESMA which other CCPs have access to the trading venue and ESMA will publish that information                     so that investment firms may choose to exercise their rights under Article 37 of Directive 2014/65/EU in respect of those                     CCPs in order to facilitate alternative access arrangements.                  

If a competent authority denies access it shall issue its decision within two months following receipt of the request referred                     to in paragraph 2 and provide full reasons to the other competent authority, the trading venue and the CCP including the evidence                     on which its decision is based.                  

5.As regards exchange-traded derivatives, a trading venue which falls below the relevant threshold in the calendar year preceding                        the entry into application of this Regulation, may, before the entry into application of this Regulation, notify ESMA and                        its competent authority that it does not wish to be bound by this Article for exchange-traded derivatives included within                        that threshold, for a period of thirty months from the application of this Regulation. A trading venue which remains below                        the relevant threshold in every year of that, or any further, thirty month period may, at the end of the period, notify ESMA                        and its competent authority that it wishes to continue to not be bound by this Article for further thirty months. Where notification                        is given the trading venue cannot benefit from the access rights under Article 35 or this Article for exchange-traded derivatives                        included within the relevant threshold, for the duration of the opt-out. ESMA shall publish a list of all notifications that                        it receives.                  

The relevant threshold for the opt-out is an annual notional amount traded of EUR 1 000 000 million. The notional amount shall                     be single-counted and shall include all transactions in exchange-traded derivatives concluded under the rules of the trading                     venue.                  

Where a trading venue is part of a group which is connected by close links, the threshold shall be calculated by adding the                     annual notional amount traded of all the trading venues in the group as a whole that are based in the Union.                  

Where a trading venue which has made a notification under this paragraph is connected by close links to one or more CCPs,                     those CCPs shall not benefit from access rights under Article 35 or this Article for exchange-traded derivatives within the                     relevant threshold, for the duration of the opt-out.                  

6.ESMA shall develop draft regulatory technical standards to specify:                  

(a)the specific conditions under which an access request may be denied by a trading venue, including conditions based on the                        anticipated volume of transactions, the number of users, arrangements for managing operational risk and complexity or other                        factors creating significant undue risks;                  

(b)the conditions under which access shall be granted, including confidentiality of information provided regarding financial                        instruments during the development phase and the non-discriminatory and transparent basis as regards fees related to access;                  

(c)the conditions under which granting access will threaten the smooth and orderly functioning of the markets, or would adversely                        affect systemic risk;                  

(d)the procedure for making a notification under paragraph 5, including further specifications for calculation of the notional                        amount and the method by which ESMA may verify the calculation of the volumes and approve the opt-out.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### Article 37U.K.Non-discriminatory access to and obligation to licence benchmarks

1.Where the value of any financial instrument is calculated by reference to a benchmark, a person with proprietary rights to                        the benchmark shall ensure that CCPs and trading venues are permitted, for the purposes of trading and clearing, non-discriminatory                        access to:                  

(a)relevant price and data feeds and information on the composition, methodology and pricing of that benchmark for the purposes                        of clearing and trading; and                  

(b)licences.                  

A licence including access to information shall be granted on a fair, reasonable and non-discriminatory basis within three                     months following the request by a CCP or a trading venue.                  

Access shall be given at a reasonable commercial price taking into account the price at which access to the benchmark is granted                     or the intellectual property rights are licensed on equivalent terms to another CCP, trading venues or any related persons                     for the purposes of clearing and trading. Different prices can be charged to different CCPs, trading venues or any related                     persons only where objectively justified having regard to reasonable commercial grounds such as the quantity, scope or field                     of use demanded.                  

2.Where a new benchmark is developed after 3 January 2017 the obligation to licence starts no later than 30 months after a financial                        instrument referencing that benchmark commenced trading or was admitted to trading. Where a person with proprietary rights                        to a new benchmark owns an existing benchmark, that person shall establish that compared to any such existing benchmark the                        new benchmark meets the following cumulative criteria:                  

(a)the new benchmark is not a mere copy or adaptation of any such existing benchmark and the methodology, including the underlying                        data, of the new benchmark is meaningfully different from any such existing benchmark; and                  

(b)the new benchmark is not a substitute for any such existing benchmark.                  

This paragraph shall be without prejudice to the application of competition rules and, in particular, Article 101 and 102                     TFEU.                  

3.No CCP, trading venue or related entity may enter into an agreement with any provider of a benchmark the effect of which would                        be either:                  

(a)to prevent any other CCP or trading venue from obtaining access to such information or rights as referred to in paragraph                        1; or                  

(b)to prevent any other CCP or trading venue from obtaining access to such a licence, as referred to in paragraph 1.                  

4.ESMA shall develop draft regulatory technical standards to specify:                  

(a)the information through licensing to be made available under paragraph 1(a) for the sole use of the CCP or trading venue;                  

(b)other conditions under which access is granted, including confidentiality of information provided;                  

(c)the standards guiding how a benchmark may be proven to be new in accordance with paragraph 2(a) and (b).                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### Article 38U.K.Access for third-country CCPs and trading venues

1.A trading venue established in a third country may request access to a CCP established in the Union only if the Commission                        has adopted a decision in accordance with Article 28(4) relating to that third country. A CCP established in a third country                        may request access to a trading venue in the Union subject to that CCP being recognised under Article 25 of Regulation (EU)                        No 648/2012 CCPs and trading venues established in third countries shall only be permitted to make use of the access rights                        in Articles 35 to 36 provided that the Commission has adopted a decision in accordance with paragraph 3 that the legal and                        supervisory framework of the third country is considered to provide for an effective equivalent system for permitting CCPs                        and trading venues authorised under foreign regimes access to CCPs and trading venues established in that third country.                  

2.CCPs and trading venues established in third countries may only request a licence and the access rights in accordance with                        Article 37 provided that the Commission has adopted a decision in accordance with paragraph 3 of this Article that the legal                        and supervisory framework of that third country is considered to provide for an effective equivalent system under which CCPs                        and trading venues authorised in foreign jurisdictions are permitted access on a fair reasonable and non-discriminatory basis                        to:                  

(a)relevant price and data feeds and information of composition, methodology and pricing of benchmarks for the purposes of clearing                        and trading; and                  

(b)licences,                  

from persons with proprietary rights to benchmarks established in that third country.

3.The Commission may, in accordance with the examination procedure referred to in Article 51, adopt decisions determining that                        the legal and supervisory framework of a third country ensures that a trading venue and CCP authorised in that third country                        complies with legally binding requirements which are equivalent to the requirements referred to in paragraph 2 of this Article                        and which are subject to effective supervision and enforcement in that third country.                  

The legal and supervisory framework of a third country is considered equivalent where that framework fulfils all the following                     conditions:                  

(a)trading venues in that third country are subject to authorisation and to effective supervision and enforcement on an ongoing                        basis;                  

(b)it provides for an effective equivalent system for permitting CCPs and trading venues authorised under foreign regimes access                        to CCPs and trading venues established in that third country;                  

(c)the legal and supervisory framework of that third country provides for an effective equivalent system under which CCPs and                        trading venues authorised in foreign jurisdictions are permitted access on a fair reasonable and non discriminatory basis                        to:                  

relevant price and data feeds and information of composition, methodology and pricing of benchmarks for the purposes of clearing                              and trading; and                           

licences,

from persons with proprietary rights to benchmarks established in that third country.

## TITLE VIIU.K.**SUPERVISORY MEASURES ON PRODUCT INTERVENTION AND POSITIONS**

### *CHAPTER 1*U.K.***Product monitoring and intervention***

#### Article 39U.K.Market monitoring

1.In accordance with Article 9(2) of Regulation (EU) No 1095/2010, ESMA shall monitor the market for financial instruments which                        are marketed, distributed or sold in the Union.                  

2.In accordance with Article 9(2) of Regulation (EU) No 1093/2010, EBA shall monitor the market for structured deposits which                        are marketed, distributed or sold in the Union.                  

3.Competent authorities shall monitor the market for financial instruments and structured deposits which are marketed, distributed                        or sold in or from their Member State.                  

#### Article 40U.K.ESMA temporary intervention powers

1.In accordance with Article 9(5) of Regulation (EU) No 1095/2010, ESMA may, where the conditions in paragraphs 2 and 3 are                        fulfilled, temporarily prohibit or restrict in the Union:                  

(a)the marketing, distribution or sale of certain financial instruments or financial instruments with certain specified features;                        or                  

(b)a type of financial activity or practice.                  

A prohibition or restriction may apply in circumstances, or be subject to exceptions, specified by ESMA.

2.ESMA shall take a decision under paragraph 1 only if all of the following conditions are fulfilled:                  

(a)the proposed action addresses a significant investor protection concern or a threat to the orderly functioning and integrity                        of financial markets or commodity markets or to the stability of the whole or part of the financial system in the Union;                  

(b)regulatory requirements under Union law that are applicable to the relevant financial instrument or activity do not address                        the threat;                  

(c)a competent authority or competent authorities have not taken action to address the threat or the actions that have been taken                        do not adequately address the threat.                  

Where the conditions set out in the first subparagraph are fulfilled, ESMA may impose the prohibition or restriction referred                     to in paragraph 1 on a precautionary basis before a financial instrument has been marketed, distributed or sold to clients.                  

3.When taking action under this Article, ESMA shall ensure that the action:                  

(a)does not have a detrimental effect on the efficiency of financial markets or on investors that is disproportionate to the                        benefits of the action;                  

(b)does not create a risk of regulatory arbitrage, and                  

(c)has been taken after consulting the public bodies competent for the oversight, administration and regulation of physical agricultural                        markets under Regulation (EC) No 1234/2007, where the measure relates to agricultural commodities derivatives.                  

Where a competent authority or competent authorities have taken a measure under Article 42, ESMA may take any of the measures                     referred to in paragraph 1 without issuing the opinion provided for in Article 43.                  

4.Before deciding to take any action under this Article, ESMA shall notify competent authorities of the action it proposes.                  

5.ESMA shall publish on its website notice of any decision to take any action under this Article. The notice shall specify details                        of the prohibition or restriction and specify a time after the publication of the notice from which the measures will take                        effect. A prohibition or restriction shall only apply to action taken after the measures take effect.                  

6.ESMA shall review a prohibition or restriction imposed under paragraph 1 at appropriate intervals and at least every three                        months. If the prohibition or restriction is not renewed after that three-month period it shall expire.                  

7.Action adopted by ESMA under this Article shall prevail over any previous action taken by a competent authority.                  

8.The Commission shall adopt delegated acts in accordance with Article 50 specifying criteria and factors to be taken into account                        by ESMA in determining when there is a significant investor protection concern or a threat to the orderly functioning and                        integrity of financial markets or commodity markets or to the stability of the whole or part of the financial system of the                        Union referred to in paragraph 2(a).                  

Those criteria and factors shall include:

(a)the degree of complexity of a financial instrument and the relation to the type of client to whom it is marketed and sold;                  

(b)the size or the notional value of an issuance of financial instruments;                  

(c)the degree of innovation of a financial instrument, an activity or a practice;                  

(d)the leverage a financial instrument or practice provides.                  

#### Article 41U.K.EBA temporary intervention powers

1.In accordance with Article 9(5) of Regulation (EU) No 1093/2010, EBA may where the conditions in paragraphs 2 and 3 are fulfilled,                        temporarily prohibit or restrict in the Union:                  

(a)the marketing, distribution or sale of certain structured deposits or structured deposits with certain specified features;                        or                  

(b)a type of financial activity or practice.                  

A prohibition or restriction may apply in circumstances, or be subject to exceptions, specified by EBA.

2.EBA shall take a decision under paragraph 1 only if all of the following conditions are fulfilled:                  

(a)the proposed action addresses a significant investor protection concern or a threat to the orderly functioning and integrity                        of financial markets or to the stability of the whole or part of the financial system in the Union;                  

(b)regulatory requirements under Union law that are applicable to the relevant structured deposit or activity do not address                        the threat;                  

(c)a competent authority or competent authorities have not taken action to address the threat or the actions that have been taken                        do not adequately address the threat.                  

Where the conditions set out in the first subparagraph are fulfilled, EBA may impose the prohibition or restriction referred                     to in paragraph 1 on a precautionary basis before a structured deposit has been marketed, distributed or sold to clients.                  

3.When taking action under this Article, EBA shall ensure that the action:                  

(a)does not have a detrimental effect on the efficiency of financial markets or on investors that is disproportionate to the                        benefits of the action; and                  

(b)does not create a risk of regulatory arbitrage.                  

Where a competent authority or competent authorities have taken a measure under Article 42, EBA may take any of the measures                     referred to in paragraph 1 without issuing the opinion provided for in Article 43.                  

4.Before deciding to take any action under this Article, EBA shall notify competent authorities of the action it proposes.                  

5.EBA shall publish on its website notice of any decision to take any action under this Article. The notice shall specify details                        of the prohibition or restriction and specify a time after the publication of the notice from which the measures will take                        effect. A prohibition or restriction shall only apply to action taken after the measures take effect.                  

6.EBA shall review a prohibition or restriction imposed under paragraph 1 at appropriate intervals and at least every three                        months. If the prohibition or restriction is not renewed after that three-month period it shall expire.                  

7.Action adopted by EBA under this Article shall prevail over any previous action taken by a competent authority.                  

8.The Commission shall adopt delegated acts in accordance with Article 50 to specify criteria and factors to be taken into account                        by EBA in determining when there is a significant investor protection concern or a threat to the orderly functioning and integrity                        of financial markets and to the stability of the whole or part of the financial system of the Union referred to in paragraph                        2(a).                  

Those criteria and factors shall include:

(a)the degree of complexity of a structured deposit and the relation to the type of client to whom it is marketed and sold;                  

(b)the size or the notional value of an issuance of structured deposits;                  

(c)the degree of innovation of a structured deposit, an activity or a practice;                  

(d)the leverage a structured deposit or practice provides.                  

#### Article 42U.K.Product intervention by competent authorities

1.A competent authority may prohibit or restrict the following in or from that Member State:                  

(a)the marketing, distribution or sale of certain financial instruments or structured deposits or financial instruments or structured                        deposits with certain specified features; or                  

(b)a type of financial activity or practice.                  

2.A competent authority may take the action referred to in paragraph 1 if it is satisfied on reasonable grounds that:                  

(a)either                  

a financial instrument, structured deposit or activity or practice gives rise to significant investor protection concerns                              or poses a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of                              whole or part of the financial system within at least one Member State; or                           

a derivative has a detrimental effect on the price formation mechanism in the underlying market;

(b)existing regulatory requirements under Union law applicable to the financial instrument, structured deposit or activity or                        practice do not sufficiently address the risks referred to in point (a) and the issue would not be better addressed by improved                        supervision or enforcement of existing requirements;                  

(c)the action is proportionate taking into account the nature of the risks identified, the level of sophistication of investors                        or market participants concerned and the likely effect of the action on investors and market participants who may hold, use                        or benefit from the financial instrument, structured deposit or activity or practice;                  

(d)the competent authority has properly consulted competent authorities in other Member States that may be significantly affected                        by the action;                  

(e)the action does not have a discriminatory effect on services or activities provided from another Member State; and                  

(f)it has properly consulted public bodies competent for the oversight, administration and regulation of physical agricultural                        markets under Regulation (EC) No 1234/2007, where a financial instrument or activity or practice poses a serious threat to                        the orderly functioning and integrity of the physical agricultural market.                  

Where the conditions set out in the first subparagraph are fulfilled, the competent authority may impose the prohibition or                     restriction referred to in paragraph 1 on a precautionary basis before a financial instrument or structured deposit has been                     marketed, distributed or sold to clients.                  

A prohibition or restriction may apply in circumstances, or be subject to exceptions, specified by the competent authority.

3.The competent authority shall not impose a prohibition or restriction under this Article unless, not less than one month before                        the measure is intended to take effect, it has notified all other competent authorities and ESMA in writing or through another                        medium agreed between the authorities the details of:                  

(a)the financial instrument or activity or practice to which the proposed action relates;                  

(b)the precise nature of the proposed prohibition or restriction and when it is intended to take effect; and                  

(c)the evidence upon which it has based its decision and upon which it is satisfied that each of the conditions in paragraph                        2 are met.                  

4.In exceptional cases where the competent authority deems it necessary to take urgent action under this Article in order to                        prevent detriment arising from the financial instruments, structured deposits, practices or activities referred to in paragraph                        1, the competent authority may take action on a provisional basis with no less than 24 hours’ written notice, before the measure                        is intended to take effect, to all other competent authorities and ESMA or, for structured deposits, EBA, provided that all                        the criteria in this Article are met and that, in addition, it is clearly established that a one month notification period                        would not adequately address the specific concern or threat. The competent authority shall not take action on a provisional                        basis for a period exceeding three months.                  

5.The competent authority shall publish on its website notice of any decision to impose any prohibition or restriction referred                        to in paragraph 1. The notice shall specify details of the prohibition or restriction, a time after the publication of the                        notice from which the measures will take effect and the evidence upon which it is satisfied each of the conditions in paragraph                        2 are met. The prohibition or restriction shall only apply in relation to actions taken after the publication of the notice.                  

6.The competent authority shall revoke a prohibition or restriction if the conditions in paragraph 2 no longer apply.                  

7.The Commission shall adopt delegated acts in accordance with Article 50 specifying criteria and factors to be taken into account                        by competent authorities in determining when there is a significant investor protection concern or a threat to the orderly                        functioning and integrity of financial markets or commodity markets or to the stability of the of the financial system within                        at least one Member State referred to in paragraph 2(a).                  

Those criteria and factors shall include:

(a)the degree of complexity of a financial instrument or structured deposit and the relation to the type of client to whom it                        is marketed, distributed and sold;                  

(b)the degree of innovation of a financial instrument or structured deposit, an activity or a practice;                  

(c)the leverage a financial instrument or structured deposit or practice provides;                  

(d)in relation to the orderly functioning and integrity of financial markets or commodity markets, the size or the notional value                        of an issuance of financial instruments or structured deposits.                  

#### Article 43U.K.Coordination by ESMA and EBA

1.ESMA or, for structured deposits, EBA shall perform a facilitation and coordination role in relation to action taken by competent                        authorities under Article 42. In particular ESMA or, for structured deposits, EBA shall ensure that action taken by a competent                        authority is justified and proportionate and that where appropriate a consistent approach is taken by competent authorities.                  

2.After receiving notification under Article 42 of any action that is to be imposed under that Article, ESMA or, for structured                        deposits, EBA shall adopt an opinion on whether the prohibition or restriction is justified and proportionate. If ESMA or,                        for structured deposits, EBA considers that the taking of a measure by other competent authorities is necessary to address                        the risk, it shall state this in its opinion. The opinion shall be published on ESMA’s or, for structured deposits, EBA website.                  

3.Where a competent authority proposes to take, or takes, action contrary to an opinion adopted by ESMA or EBA under paragraph                        2 or declines to take action contrary to such an opinion, it shall immediately publish on its website a notice fully explaining                        its reasons for so doing.                  

### *CHAPTER 2*U.K.***Positions***

#### Article 44U.K.Coordination of national position management measures and position limits by ESMA

1.ESMA shall perform a facilitation and coordination role in relation to measures taken by competent authorities pursuant to                        Article 69(2)(o) and (p) of Directive 2014/65/EU. In particular, ESMA shall ensure that a consistent approach is taken by                        competent authorities with regard to when those powers are exercised, the nature and scope of the measures imposed, and the                        duration and follow-up of any measures.                  

2.After receiving notification of any measure under Article 79(5) of Directive 2014/65/EU, ESMA shall record the measure and                        the reasons therefor. In relation to measures taken pursuant to Article 69(2)(o) or (p) of Directive 2014/65/EU, it shall                        maintain and publish on its website a database with summaries of the measures in force including details of the person concerned,                        the applicable financial instruments, any limits on the size of positions the persons can hold at all times, any exemptions                        thereto granted in accordance with Article 57 of Directive 2014/65/EU, and the reasons therefor.                  

#### Article 45U.K.Position management powers of ESMA

1.In accordance with Article 9(5) of Regulation (EU) No 1095/2010, ESMA shall, where both conditions in paragraph 2 are satisfied,                        take one or more of the following measures:                  

(a)request from any person all relevant information regarding the size and purpose of a position or exposure entered into via                        a derivative;                  

(b)after analysing the information obtained in accordance with point (a), require any such person to reduce the size of or to                        eliminate the position or exposure in accordance with the delegated act referred to in paragraph 10(b);                  

(c)as a last resort, limit the ability of a person from entering into a commodity derivative.                  

2.ESMA shall take a decision under paragraph 1 only if both of the following conditions are fulfilled:                  

(a)the measures listed in paragraph 1 address a threat to the orderly functioning and integrity of financial markets, including                        commodity derivative markets in accordance with the objectives listed in Article 57(1) of Directive 2014/65/EU and including                        in relation to delivery arrangements for physical commodities, or to the stability of the whole or part of the financial system                        in the Union;                  

(b)a competent authority or competent authorities have not taken measures to address the threat or the measures taken do not                        sufficiently address the threat;                  

ESMA shall perform its assessment of the fulfilment of the conditions referred to in points (a) and (b) of the first subparagraph                     of this paragraph in accordance with the criteria and factors provided for in the delegated act referred to in paragraph 10(a)                     of this Article.                  

3.When taking measures referred to in paragraph 1 ESMA shall ensure that the measure:                  

(a)significantly addresses the threat to the orderly functioning and integrity of financial markets, including commodity derivative                        markets in accordance with the objectives listed in Article 57(1) of Directive 2014/65/EU and including in relation to delivery                        arrangements for physical commodities, or to the stability of the whole or part of the financial system in the Union or significantly                        improve the ability of competent authorities to monitor the threat as measured in accordance with the criteria and factors                        provided for in the delegated act referred to in paragraph 10(a) of this Article;                  

(b)does not create a risk of regulatory arbitrage as measured in accordance with paragraph 10(c) of this Article;                  

(c)does not have any of the following detrimental effects on the efficiency of financial markets that is disproportionate to                        the benefits of the measure: reducing liquidity in those markets, restraining the conditions for reducing risks directly related                        to the commercial activity of a non-financial counterparty, or creating uncertainty for market participants.                  

ESMA shall consult the Agency for the Cooperation of Energy Regulators established under Regulation (EC) No 713/2009 of the                     European Parliament and of the Council(29) before taking any measures related to wholesale energy products.                  

ESMA shall consult the public bodies competent for the oversight, administration and regulation of physical agricultural markets                     under Regulation (EC) No 1234/2007, before taking any measure related to agricultural commodity derivatives.                  

4.Before deciding to undertake or renew any measure referred to in paragraph 1, ESMA shall notify relevant competent authorities                        of the measure it proposes. In the case of a request under points (a) or (b) of paragraph 1 the notification shall include                        the identity of the person or persons to whom it was addressed and the details and reasons therefor. In the event of a measure                        under paragraph 1(c) the notification shall include details of the person concerned, the applicable financial instruments,                        the relevant quantitative measures such as the maximum size of a position the person in question can enter into, and the reasons                        therefor.                  

5.The notification shall be made not less than 24 hours before the measure is intended to take effect or to be renewed. In exceptional                        circumstances, ESMA may make the notification less than 24 hours before the measure is intended to take effect where it is                        not possible to give 24 hours notice.                  

6.ESMA shall publish on its website notice of any decision to impose or renew any measure referred to in paragraph 1(c). The                        notice shall include details on the person concerned, the applicable financial instruments, the relevant quantitative measures                        such as the maximum size of a position the person in question can enter into, and the reasons therefor.                  

7.A measure referred to in paragraph 1(c) shall take effect when the notice is published or at a time specified in the notice                        that is after its publication and shall only apply to a transaction entered into after the measure takes effect.                  

8.ESMA shall review its measures referred to in paragraph 1(c) at appropriate intervals and at least every three months. If                        a measure is not renewed after that three month period, it shall automatically expire. Paragraphs 2 to 8 shall also apply                        to a renewal of measures.                  

9.A measure adopted by ESMA under this Article shall prevail over any previous measure taken by a competent authority under                        Article 69(2)(o) or (p) of Directive 2014/65/EU.                  

10.The Commission shall adopt in accordance with Article 50 delegated acts to specify criteria and factors to determine:                  

(a)the existence of a threat to the orderly functioning and integrity of financial markets, including commodity derivative markets                        in accordance with the objectives listed in Article 57(1) of Directive 2014/65/EU and including in relation to delivery arrangements                        for physical commodities, or to the stability of the whole or part of the financial system in the Union as referred to in                        paragraph 2(a) taking account of the degree to which positions are used to hedge positions in physical commodities or commodity                        contracts and the degree to which prices in underlying markets are set by reference to the prices of commodity derivatives;                  

(b)the appropriate reduction of a position or exposure entered into via a derivative referred to in paragraph 1(b) of this Article;                  

(c)the situations where a risk of regulatory arbitrage as referred to in paragraph 3(b) of this Article could arise.                  

Those criteria and factors shall take into account the regulatory technical standards referred to in Article 57(3) of Directive                     2014/65/EU and shall differentiate between situations where ESMA takes action because a competent authority has failed to                     act and those where ESMA addresses an additional risk which the competent authority is not able to sufficiently address pursuant                     to Article 69(2)(j) or (o) of Directive 2014/65/EU.                  

## TITLE VIIIU.K.**PROVISION OF SERVICES AND PERFORMANCE OF ACTIVITIES BY THIRD-COUNTRY FIRMS FOLLOWING AN EQUIVALENCE DECISION WITH OR WITHOUT                           A BRANCH**

### Article 46U.K.General provisions

1.A third-country firm may provide investment services or perform investment activities with or without any ancillary services                        to eligible counterparties and to professional clients within the meaning of Section I of Annex II to Directive 2014/65/EU                        established throughout the Union without the establishment of a branch where it is registered in the register of third-country                        firms kept by ESMA in accordance with Article 47.                  

2.ESMA shall register a third-country firm that has applied for the provision of investment services or performance of activities                        throughout the Union in accordance with paragraph 1 only where the following conditions are met:                  

(a)the Commission has adopted a decision in accordance with Article 47(1);                  

(b)the firm is authorised in the jurisdiction where its head office is established to provide the investment services or activities                        to be provided in the Union and it is subject to effective supervision and enforcement ensuring a full compliance with the                        requirements applicable in that third country;                  

(c)cooperation arrangements have been established pursuant to Article 47(2).                  

3.Where a third-country firm is registered in accordance with this Article, Member States shall not impose any additional requirements                        on the third-country firm in respect of matters covered by this Regulation or by Directive 2014/65/EU and shall not treat                        third-country firms more favourably than Union firms.                  

4.The third-country firm referred to in paragraph 1 shall submit its application to ESMA after the adoption by the Commission                        of the decision referred to in Article 47 determining that the legal and supervisory framework of the third country in which                        the third-country firm is authorised is equivalent to the requirements described in Article 47(1).                  

The applicant third-country firm shall provide ESMA with all information necessary for its registration. Within 30 working                     days of receipt of the application, ESMA shall assess whether the application is complete. If the application is not complete,                     ESMA shall set a deadline by which the applicant third-country firm is to provide additional information.                  

The registration decision shall be based on the conditions set out in paragraph 2.

Within 180 working days of the submission of a complete application, ESMA shall inform the applicant third-country firm in                     writing with a fully reasoned explanation whether the registration has been granted or refused.                  

Member States may allow third-country firms to provide investment services or perform investment activities together with                     ancillary services to eligible counterparties and professional clients within the meaning of Section I of Annex II to Directive                     2014/65/EU in their territories in accordance with national regimes in the absence of the Commission decision in accordance                     with Article 47(1) or where such decision is no longer in effect.                  

5.Third-country firms providing services in accordance with this Article shall inform clients established in the Union, before                        the provision of any investment services, that they are not allowed to provide services to clients other than eligible counterparties                        and professional clients within the meaning of Section I of Annex II to Directive 2014/65/EU and that they are not subject                        to supervision in the Union. They shall indicate the name and the address of the competent authority responsible for supervision                        in the third country.                  

The information in the first subparagraph shall be provided in writing and in a prominent way.

Member States shall ensure that where an eligible counterparty or professional client within the meaning of Section I of Annex                     II to Directive 2014/65/EU established or situated in the Union initiates at its own exclusive initiative the provision of                     an investment service or activity by a third-country firm, this Article does not apply to the provision of that service or                     activity by the third-country firm to that person including a relationship specifically related to the provision of that service                     or activity. An initiative by such clients shall not entitle the third-country firm to market new categories of investment                     product or investment service to that individual.                  

6.Third-country firms providing services or performing activities in accordance with this Article shall, before providing any                        service or performing any activity in relation to a client established in the Union, offer to submit any disputes relating                        to those services or activities to the jurisdiction of a court or arbitral tribunal in a Member State.                  

7.ESMA shall develop draft regulatory technical standards to specify the information that the applicant third-country firm shall                        provide to ESMA in its application for registration in accordance with paragraph 4 and the format of information to be provided                        in accordance with paragraph 5.                  

ESMA shall submit those draft regulatory technical standards to the Commission by 3 July 2015.

Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in                     accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.                  

### Article 47U.K.Equivalence decision

1.The Commission may adopt a decision in accordance with the examination procedure referred to in Article 51(2) in relation                        to a third country stating that the legal and supervisory arrangements of that third country ensure that firms authorised                        in that third country comply with legally binding prudential and business conduct requirements which have equivalent effect                        to the requirements set out in this Regulation, in Directive 2013/36/EU and in Directive 2014/65/EU and in the implementing                        measures adopted under this Regulation and under those Directives and that the legal framework of that third country provides                        for an effective equivalent system for the recognition of investment firms authorised under third-country legal regimes.                  

The prudential and business conduct framework of a third country may be considered to have equivalent effect where that framework                     fulfils all the following conditions:                  

(a)firms providing investment services and activities in that third country are subject to authorisation and to effective supervision                        and enforcement on an ongoing basis;                  

(b)firms providing investment services and activities in that third country are subject to sufficient capital requirements and                        appropriate requirements applicable to shareholders and members of their management body;                  

(c)firms providing investment services and activities are subject to adequate organisational requirements in the area of internal                        control functions;                  

(d)firms providing investment services and activities are subject to appropriate conduct of business rules;                  

(e)it ensures market transparency and integrity by preventing market abuse in the form of insider dealing and market manipulation                  

2.ESMA shall establish cooperation arrangements with the relevant competent authorities of third countries whose legal and supervisory                        frameworks have been recognised as effectively equivalent in accordance with paragraph 1. Such arrangements shall specify                        at least:                  

(a)the mechanism for the exchange of information between ESMA and the competent authorities of third countries concerned, including                        access to all information regarding the non-Union firms authorised in third countries that is requested by ESMA;                  

(b)the mechanism for prompt notification to ESMA where a third-country competent authority deems that a third-country firm that                        it is supervising and ESMA has registered in the register provided for in Article 48 infringes the conditions of its authorisation                        or other law to which it is obliged to adhere;                  

(c)the procedures concerning the coordination of supervisory activities including, where appropriate, on-site inspections.                  

3.A third-country firm established in a country whose legal and supervisory framework has been recognised to be effectively                        equivalent in accordance with paragraph 1 and is authorised in accordance with Article 39 of Directive 2014/65/EU shall be                        able to provide the services and activities covered under the authorisation to eligible counterparties and professional clients                        within the meaning of Section I of Annex II to Directive 2014/65/EU in other Member States of the Union without the establishment                        of new branches. For that purpose, it shall comply with the information requirements for the cross-border provision of services                        and activities in Article 34 of Directive 2014/65/EU.                  

The branch shall remain subject to the supervision of the Member State where the branch is established in accordance with                     Article 39 of Directive 2014/65/EU. However, and without prejudice to the obligations to cooperate laid down in Directive                     2014/65/EU, the competent authority of the Member State where the branch is established and the competent authority of the                     host Member State may establish proportionate cooperation agreements in order to ensure that the branch of the third-country                     firm providing investment services within the Union delivers the appropriate level of investor protection.                  

4.A third-country firm may no longer use the rights under Article 46(1) where the Commission adopts a decision in accordance                        with the examination procedure referred to in Article 51(2) withdrawing its decision under paragraph 1 of this Article in                        relation to that third country.                  

### Article 48U.K.Register

ESMA shall keep a register of the third-country firms allowed to provide investment services or perform investment activities                     in the Union in accordance with Article 46. The register shall be publicly accessible on the website of ESMA and shall contain                     information on the services or activities which the third-country firms are permitted to provide or perform and the reference                     of the competent authority responsible for their supervision in the third country.                  

### Article 49U.K.Withdrawal of registration

1.ESMA shall withdraw the registration of a third-country firm in the register established in accordance with Article 48 where:                  

(a)ESMA has well-founded reasons based on documented evidence to believe that, in the provision of investment services and activities                        in the Union, the third-country firm is acting in a manner which is clearly prejudicial to the interests of investors or the                        orderly functioning of markets; or                  

(b)ESMA has well-founded reasons based on documented evidence to believe that, in the provision of investment services and activities                        in the Union, the third-country firm has seriously infringed the provisions applicable to it in the third country and on the                        basis of which the Commission has adopted the Decision in accordance with Article 47(1);                  

(c)ESMA has referred the matter to the competent authority of the third country and that third-country competent authority has                        not taken the appropriate measures needed to protect investors and the proper functioning of the markets in the Union or has                        failed to demonstrate that the third-country firm concerned complies with the requirements applicable to it in the third country;                        and                  

(d)ESMA has informed the third-country competent authority of its intention to withdraw the registration of the third-country                        firm at least 30 days before the withdrawal.                  

2.ESMA shall inform the Commission of any measure adopted in accordance with paragraph 1 without delay and shall publish its                        decision on its website.                  

3.The Commission shall assess whether the conditions under which a decision in accordance with Article 47(1) has been adopted                        continue to persist in relation to the third country concerned.                  

## TITLE IXU.K.**DELEGATED AND IMPLEMENTING ACTS**

### *CHAPTER 1*U.K.***Delegated acts***

#### Article 50U.K.Exercise of the delegation

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

2.The power to adopt delegated acts referred to in Article 1(9), Article 2(2), Article 13(2), Article 15(5), Article 17(3),                        Article 19(2) and (3), Article 31(4), Article 40(8), Article 41(8), Article 42(7), Article 45(10) and Article 52(10) and (12)                        shall be conferred for an indeterminate period of time from 2 July 2014.                  

3.The delegation of power referred to in Article 1(9), Article 2(2), Article 13(2), Article 15(5), Article 17(3), Article 19(2)                        and (3), Article 31(4), Article 40(8), Article 41(8), Article 42(7), Article 45(10) and Article 52(10) and (12) may be revoked                        at any time by the European Parliament or by the Council. A decision of revocation shall put an end to the delegation of the                        power specified in that decision. It shall take effect the day following the publication of the decision in the *Official Journal of the European Union* or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.                  

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

5.A delegated act adopted pursuant to Article 1(9), Article 2(2), Article 13(2), Article 15(5), Article 17(3), Article 19(2)                        and (3), Article 31(4), Article 40(8), Article 41(8), Article 42(7), Article 45(10) and Article 52(10) or (12) shall enter                        into force only if no objection has been expressed either by the European Parliament or the Council within a period of three                        months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the                        European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended                        by three months at the initiative of the European Parliament or the Council.                  

### *CHAPTER 2*U.K.***Implementing acts***

#### Article 51U.K.Committee procedure

1.The Commission shall be assisted by the European Securities Committee established by Commission Decision 2001/528/EC(30). That committee shall be a committee within the meaning of Regulation (EU) No 182/2011.                  

2.Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.                  

## TITLE XU.K.**FINAL PROVISIONS**

### Article 52U.K.Reports and review

1.By 3 March 2019, the Commission shall, after consulting ESMA, submit a report to the European Parliament and to the Council                        on the impact in practice of the transparency obligations established pursuant to Articles 3 to 13, in particular on the impact                        of the volume cap mechanism described in Article 5, including on the cost of trading for eligible counterparties and professional                        clients and on trading of shares of small and mid-cap companies, and its effectiveness in ensuring that the use of the relevant                        waivers does not harm price formation and how any appropriate mechanism for imposing sanctions for infringements of the volume                        cap might operate, and on the application and continued appropriateness of the waivers to pre-trade transparency obligations                        established pursuant to Article 4(2) and (3) and Article 9(2) to (5).                  

2.The report referred to in paragraph 1 shall include the impact on European equity markets of the use of the waiver under Article                        4(1)(a) and (b)(i) and the volume cap mechanism under Article 5, with particular reference to:                  

(a)the level and trend of non-lit order book trading within the Union since the introduction of this Regulation;                  

(b)the impact on the pre-trade transparent quoted spreads;                  

(c)the impact on the depth of liquidity on lit order books;                  

(d)the impact on competition and on investors within the Union;                  

(e)the impact on trading of shares of small and mid-cap companies;                  

(f)developments at international level and discussions with third countries and international organisations.                  

3.If the report concludes that the use of the waiver under Article 4(1)(a) and (b)(i) is harmful to price formation or to trading                        of shares of small and mid-cap companies, the Commission shall, where appropriate, make proposals, including amendments to                        this Regulation, regarding the use of those waivers. Such proposals shall include an impact assessment of the proposed amendments,                        and shall take into account the objectives of this Regulation and the effects on market disruption and competition, and potential                        impacts on investors in the Union.                  

4.By 3 March 2019, the Commission shall, after consulting ESMA, submit a report to the European Parliament and to the Council                        on the functioning of Article 26, including whether the content and format of transaction reports received and exchanged between                        competent authorities comprehensively enable to monitor the activities of investment firms in accordance with Article 26(1).                        The Commission may make any appropriate proposals, including providing for transactions to be reported to a system appointed                        by ESMA instead of to competent authorities, which allows relevant competent authorities to access all the information reported                        pursuant to this Article for the purposes of this Regulation and of Directive 2014/65/EU and the detection of insider dealing                        and market abuse in accordance with Regulation (EU) No 596/2014.                  

5.By 3 March 2019, the Commission shall, after consulting ESMA, submit a report to the European Parliament and to the Council                        on appropriate solutions to reduce information asymmetries between market participants as well as tools for regulators to                        better monitor quotation activities on trading venues. That report shall at least assess the feasibility of developing a European                        best bid and offer system for consolidated quotes to fulfil those objectives.                  

6.By 3 March 2019, the Commission shall, after consulting ESMA, submit a report to the European Parliament and to the Council                        on the progress made in moving trading in standardised OTC derivatives to exchanges or electronic trading platforms pursuant                        to Articles 25 and 28.                  

7.By 3 July 2019, the Commission shall, after consulting ESMA, submit a report to the European Parliament and to the Council                        on the development in prices for pre-trade and post-trade transparency data from regulated markets, MTFs, OTFs, APAs and CTPs.                  

8.By 3 July 2019, the Commission shall, after consulting ESMA, submit a report to the European Parliament and to the Council                        reviewing the interoperability provisions in Article 36 of this Regulation and of Article 8 of Regulation (EU) No 648/2012.                  

9.By 3 July 2019, the Commission shall, after consulting ESMA, submit a report to the European Parliament and to the Council                        on the application of Articles 35 and 36 of this Regulation and of Articles 7 and 8 of Regulation (EU) No 648/2012.                  

By 3 July 2021, the Commission shall, after consulting ESMA, submit a report to the European Parliament and to the Council                     on the application of Article 37.                  

10.By 3 July 2019, the Commission shall, after consulting ESMA, submit a report to the European Parliament and to the Council                        on the impact of Article 35 and 36 of this Regulation on newly established and authorised CCPs as referred to in Article 35(5)                        and trading venues connected to those CCPs by close links and whether the transitional arrangement provided for in Article                        35(5) shall be extended, weighing the possible benefits to consumers of improving competition and the degree of choice available                        to market participants against the possible disproportionate effect of those provisions on newly established and authorised                        CCPs and the constraints of local market participants in accessing global CCPs and the smooth functioning of the market.                  

Subject to the conclusions of that report, the Commission may adopt a delegated act in accordance with Article 50 to extend                     the transitional period in accordance with Article 35(5) by a maximum of 30 months.                  

11.By 3 July 2019, the Commission shall, after consulting ESMA, submit a report to the European Parliament and to the Council                        on whether the threshold laid down in Article 36(5) remains appropriate and whether the opt out mechanism in respect of exchange-traded                        derivatives is to remain available.                  

12.By 3 July 2016, the Commission shall, based on a risk assessment carried out by ESMA in consultation with the ESRB, submit                        a report to the European Parliament and to the Council assessing the need to temporarily exclude exchange-traded derivatives                        from the scope of Article 35 and 36. That report shall take into account risks, if any, resulting from open access provisions                        regarding exchange-traded derivatives to the overall stability and orderly functioning of the financial markets throughout                        the Union.                  

Subject to the conclusions of that report, the Commission may adopt a delegated act in accordance with Article 50 to exclude                     exchange-traded derivatives from the scope of Articles 35 and 36 for up to thirty months following 3 January 2017.                  

### Article 53U.K.Amendment of Regulation (EU) No 648/2012

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

in Article 5(2), the following subparagraph is added:

‘In the developing of the draft regulatory technical standards under this paragraph ESMA shall not prejudice the transitional                                 provision relating to C6 energy derivative contracts as laid down in Article 95 of Directive 2014/65/EU(31).’;                           

Article 7 is amended as follows:

paragraph 1 is replaced by the following:

‘1.A CCP that has been authorised to clear OTC derivative contracts shall accept clearing such contracts on a non-discriminatory                                             and transparent basis, including as regards collateral requirements and fees related to access, regardless of the trading                                             venue. This in particular shall ensure that a trading venue has the right to non-discriminatory treatment in terms of how                                             contracts traded on that trading venue are treated in terms of:                                    

(a)collateral requirements and netting of economically equivalent contracts, where the inclusion of such contracts in the close-out                                             and other netting procedures of a CCP based on the applicable insolvency law would not endanger the smooth and orderly functioning,                                             the validity or enforceability of such procedures; and                                    

(b)cross-margining with correlated contracts cleared by the same CCP under a risk model that complies with Article 41.                                    

A CCP may require that a trading venue comply with the operational and technical requirements established by the CCP, including                                          the risk-management requirements.’;                                    

the following paragraph is added:

‘6.The conditions laid down in paragraph 1 regarding non-discriminatory treatment in terms of how contracts traded on that trading                                             venue are treated in terms of collateral requirements and netting of economically equivalent contracts and cross-margining                                             with correlated contracts cleared by the same CCP shall be further specified by the technical standards adopted pursuant to                                             Article 35(6)(e) of Regulation (EU) No 600/2014(32).’;                                    

In Article 81(3), the following subparagraph is added:

‘A trade repository shall transmit data to competent authorities in accordance with the requirements under Article 26 of Regulation                                 (EU) No 600/2014(32)’.                           

### Article 54U.K.Transitional provisions

1.Third-country firms shall be able to continue to provide services and activities in Member States, in accordance with national                        regimes until three years after the adoption by the Commission of a decision in relation to the relevant third country in                        accordance with Article 47.                  

2.If the Commission assesses that there is not a need to exclude exchange-traded derivatives from the scope of Articles 35 and                        36 in accordance with Article 52(12), a CCP or a trading venue may, before the entry into application of this Regulation,                        apply to its competent authority for permission to avail itself of transitional arrangements. The competent authority, taking                        into account the risks resulting from the application of the access rights under Article 35 or 36 as regards exchange-traded                        derivatives to the orderly functioning of the relevant CCP or trading venue, may decide that Article 35 or 36 would not apply                        to the relevant CCP or trading venue, respectively, in respect of exchange-traded derivatives, for a transitional period until                        3 July 2019. Where such a transitional period is approved, the CCP or trading venue cannot benefit from the access rights                        under Article 35 or 36, as regards exchange-traded derivatives for the duration of that transitional period. The competent                        authority shall notify ESMA, and in the case of a CCP the college of competent authorities for that CCP, when a transitional                        period is approved.                  

Where a CCP which has been approved for the transitional arrangements, is connected by close links to one or more trading                     venues, those trading venues shall not benefit from access rights under Article 35 or 36 for exchange-traded derivatives for                     the duration of that transitional period.                  

Where a trading venue, which has been approved for the transitional arrangements, is connected by close links to one or more                     CCPs, those CCPs shall not benefit from access rights under Article 35 or 36 for exchange-traded derivatives for the duration                     of that transitional period.                  

### Article 55U.K.Entry into force and application

This Regulation shall enter into force on the twentieth day following that of its publication in the *Official Journal of the European Union*.                  

This Regulation shall apply from 3 January 2017.

Notwithstanding the second paragraph, Article 1(8) and (9), Article 2(2), Article 5(6) and(9), Article 7(2), Article 9(5),                     Article 11(4), Article 12(2), Article 13(2), Article 14(7), Article 15(5), Article 17(3), Article 19(2) and (3), Article 20(3),                     Article 21(5), Article 22(4), Article 23(3), Article 25(3), Article 26(9), Article 27(3), Article 28(4), Article 28(5), Article                     29(3), Article 30(2), Article 31(4), Article 32(1), (5) and(6), Article 33(2), Article 35(6), Article 36(6), Article 37(4),                     Article 38(3), Article 40(8), Article 41(8), Article 42(7), Article 45(10), Article 46(7), Article 47(1) and (4), Article                     52(10) and (12) and Article 54(1) shall apply immediately following the entry into force of this Regulation.                  

Notwithstanding the second paragraph, Article 37(1), (2) and (3) shall apply from 3 January 2019.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 15 May 2014.

*For the European Parliament*                            

*The President*                            

M. Schulz                            

*For the Council*                            

*The President*                            

D. Kourkoulas                            

1

OJ C 161, 7.6.2012, p. 3.                           

2

OJ C 143, 22.5.2012, p. 74.                           

3

Position of the European Parliament of 15 April 2014 (not yet published in the Official Journal) and decision of the Council                              of 13 May 2014.                           

4

Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending                              Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing                              Council Directive 93/22/EEC (OJ L 145, 30.4.2004, p. 1).                           

5

Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and                              amending Directive 2002/92/EC and Directive 2011/61/EU (See page 349 of this Official Journal).                           

6

Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties                              and trade repositories (OJ L 201, 27.7.2012, p. 1).                           

7

Commission Regulation (EC) No 1287/2006 of 10 August 2006 implementing Directive 2004/39/EC of the European Parliament and                              of the Council as regards record-keeping obligations for investment firms, transaction reporting, market transparency, admission                              of financial instruments to trading, and defined terms for the purposes of that Directive (OJ L 241, 2.9.2006, p. 1).                           

8

Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory                              Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision                              2009/77/EC (OJ L 331, 15.12.2010, p. 84).                           

9

Commission Regulation (EC) No 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of                              the Council as regards information contained in prospectuses as well as the format, incorporation by reference and publication                              of such prospectuses and dissemination of advertisements (OJ L 149, 30.4.2004, p. 1).                           

10

Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with                              regard to the processing of personal data and on the free movement of such data (OJ L 281, 23.11.1995, p. 31).                           

11

Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals                              with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data                              (OJ L 8, 12.1.2001, p. 1).                           

12

Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory                              Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ L 331, 15.12.2010, p. 12).                           

13

Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects                              of credit default swaps (OJ L 86, 24.3.2012, p. 1).                           

14

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse                              gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).                           

15

Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation)                              and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC                              and 2004/72/EC (See page 1 of this Official Journal).                           

16

Directive 2014/57/EU of the European Parliament and of the Council of 15 May 2014 on criminal sanctions for market abuse (market                              abuse directive) (see page 179 of this Official Journal).                           

17

Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general                              principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13).                           

18

OJ C 147, 25.5.2012, p. 1.                           

19

Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions                              and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives                              2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).                           

20

Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit                              institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).                           

21

Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the                              business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1).                           

22

Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations                              and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, p. 32).                           

23

Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions                              for occupational retirement provision (OJ L 235, 23.9.2003, p. 10).                           

24

Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers                              and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011, p. 1).                           

25

Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity                              and transparency (OJ L 326, 8.12.2011, p. 1).                           

26

Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation                              of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001                              and (EC) No 1234/2007 (OJ L 347, 20.12.2013, p. 671).                           

27

Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the                              financial system for the purpose of money laundering and terrorist financing (OJ L 309, 25.11.2005, p. 15).                           

28

Commission Delegated Regulation (EU) No 149/2013 of 19 December 2012 supplementing Regulation (EU) No 648/2012 of the European                              Parliament and of the Council with regard to regulatory technical standards on indirect clearing arrangements, the clearing                              obligation, the public register, access to a trading venue, non-financial counterparties, and risk mitigation techniques for                              OTC derivatives contracts not cleared by a CCP (OJ L 52, 23.2.2013, p. 11).                           

29

Regulation (EC) No 713/2009 of the European Parliament and of the Council of 13 July 2009 establishing an Agency for the Cooperation                              of Energy Regulators (OJ L 211, 14.8.2009, p. 1).                           

30

Commission Decision 2001/528/EC of 6 June 2001 establishing the European Securities Committee (OJ L 191, 13.7.2001, p. 45).                           

31

Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and                              amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349).’;                           

32

Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments                              and amending Regulation (EU) No 648/2012 (OJ L 173, 12.6.2014, p. 84)