This document is meant purely as documentation tool and the institutions do not assume any liability for its contents
"B COUNCIL DIRECTIVE 93/22/EEC
of 10 May 1993
on investment services in the securities field
(OJ L 141, 11.6.1993, p. 27)
Amended by:
Official Journal
No page date
"M1 European Parliament and Council Directive 95/26/EC of 29 June 1995 L 168 7 18.7.1995
"M2 Directive 97/9/EC of the European Parliament and of the Council of 3
March 1997 L 84 22 26.3.1997
Corrected by:
"C1 Corrigendum, OJ L 170, 13.7.1993, p. 32 (93/22/EEC)
"C2 Corrigendum, OJ L 194, 3.8.1993, p. 27 (93/22/EEC)1993L0022 — EN — 26.09.1998 — 002.001 — 1
COUNCIL DIRECTIVE 93/22/EEC
of 10 May 1993
on investment services in the securities field
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic Community,
and in particular Article 57 (2) thereof,
Having regard to the proposal from the Commission (1),
In cooperation with the European Parliament (2),
Having regard to the opinion of the Economic and Social Committee (3),
Whereas this Directive constitutes an instrument essential to the achievement
of the internal market, a course determined by the Single European Act and
set out in timetable form in the Commission’ s White Paper, from the point of
view both of the right of establishment and of the freedom to provide financialservices, in the field of investment firms;
Whereas firms that provide the investment services covered by this Directive
must be subject to authorization by their home Member States in order toprotect investors and the stability of the financial system;
Whereas the approach adopted is to effect only the essential harmonization
necessary and sufficient to secure the mutual recognition of authorization andof prudential supervision systems, making possible the grant of a single
authorization valid throughout the Community and the application of the
principle of home Member State supervision; whereas, by virtue of mutualrecognition, investment firms authorized in their home Member States may
carry on any or all of the services covered by this Directive for which they
have received authorization throughout the Community by establishingbranches or under the freedom to provide services;
Whereas the principles of mutual recognition and of home Member State
supervision require that the Member States’ competent authorities should notgrant or should withdraw authorization where factors such as the content ofprogrammes of operations, the geographical distribution or the activities
actually carried on indicate clearly that an investment firm has opted for the
legal system of one Member State for the purpose of evading the stricterstandards in force in another Member State within the territory of which itintends to carry on or does carry on the greater part of its activities; whereas,
for the purposes of this Directive, an investment firm which is a legal person
must be authorized in the Member State in which it has its registered office;whereas an investment firm which is not a legal person must be authorized in
the Member State in which it has its head office; whereas, in addition,
Member States must require that an investment firm’ s head office must alwaysbe situated in its home Member State and that it actually operates there;
Whereas it is necessary, for the protection of investors, to guarantee the
internal supervision of every firm, either by means of two-man managementor, where that is not required by this Directive, by other mechanisms thatensure an equivalent result;
Whereas in order to guarantee fair competition, it must be ensured that
investment firms that are not credit institutions have the same freedom to
create branches and provide services across frontiers as is provided for by the
Second Council Directive (89/646/EEC) of 15 December 1989 on thecoordination of laws, regulations and administrative provisions relating to thetaking up and pursuit of the business of credit institutions (
4);
Whereas an investment firm should not be able to invoke this Directive in
order to carry out spot or forward exchange transactions other than as servicesconnected with the provision or investment services; whereas, therefore, the
use of a branch solely for such foreign-exchange transactions would constitute
misuse of the machinery of this Directive;!B
(1) OJ No C 43, 22. 2. 1989, p. 7; and OJ No C 42, 22. 2. 1990, p. 7.
(2) OJ No C 304, 4. 12. 1989, p. 39; and OJ No C 115, 26. 4. 1993.
(3) OJ No C 298, 27. 11. 1989, p. 6.
(4) OJ No L 386, 30. 12. 1989, p. 1. Directive as last amended by Directive 92/30/EEC
(OJ No L 110, 28. 4. 1992, p. 52).1993L0022 — EN — 26.09.1998 — 002.001 — 2
Whereas an investment firm authorized in its home Member State may carry
on business throughout the Community by whatever means it deemsappropriate; whereas, to that end it may, if it deems it necessary, retain tiedagents to receive and transmit orders for its account and under its full and
unconditional responsibility; whereas, in these circumstances, such agents’
business must be regarded as that of the firm; whereas, moreover, thisDirective does not prevent a home Member State from making the status ofsuch agents subject to special requirements; whereas should the investment
firm carry on cross-border business, the host Member State must treat those
agents as being the firm itself; whereas, moreover, the door-to-door selling oftransferable securities should not be covered by this Directive and the
regulation thereof should remain a matter for national provisions;
Whereas ‘transferable securities’ means those classes of securities which are
normally dealt in on the capital market, such as government securities, shares
in companies, negotiable securities giving the right to acquire shares by
subscription or exchange, depositary receipts, bonds issued as part of a series,index warrants and securities giving the right to acquire such bonds bysubscription;
Whereas ‘money-market instruments’ means those classes of instruments
which are normally dealt in on the money market such as treasury bills,certificates of deposit and commercial paper;
Whereas the very wide definitions of transferable securities and money-
market instruments included in this Directive are valid only for this Directiveand consequently in no way affect the various definitions of financialinstruments used in national legislation for other purposes such as taxation;
whereas, furthermore, the definition of transferable securities covers
negotiable instruments only; whereas, consequently, shares and othersecurities equivalent to shares issued by bodies such as building societies
and industrial and provident societies, ownership of which cannot in practice
be transferred except by the issuing body’ s buying them back, are not coveredby this definition;
Whereas ‘instrument equivalent to a financial-futures contract’ means a
contract which is settled by a payment in cash calculated by reference tofluctuations in interest or exchange rates, the value of any instrument listed inSection B of the Annex or an index of any such instruments;
Whereas, for the purposes of this Directive, the business of the reception and
transmission of orders also includes bringing together two or more investorsthereby bringing about a transaction between those investors;
Whereas no provision in this Directive affects the Community provisions or,
failing such, the national provisions regulating public offers of the instrumentscovered by this Directive; whereas the same applies to the marketing and
distribution of such instruments;
Whereas Member States retain full responsibility for implementing their own
monetary-policy measures, without prejudice to the measures necessary tostrengthen the European Monetary System;
Whereas it is necessary to exclude insurance undertakings the activities of
which are subject to appropriate monitoring by the competent prudential-supervision authorities and which are coordinated at Community level and
undertakings carrying out reinsurance and retrocession activities;
Whereas undertakings which do not provide services for third parties but the
business of which consists in providing investment services solely for their
parent undertakings, for their subsidiaries, or for other subsidiaries of their
parent undertakings should not be covered by this Directive;
Whereas the purpose of this Directive is to cover undertakings the normal
business of which is to provide third parties with investment services on a
professional basis; whereas its scope should not therefore cover any personwith a different professional activity (e.g. a barrister or solicitor) who providesinvestment services only on an incidental basis in the course of that other
professional activity, provided that that activity is regulated and the relevant
rules do not prohibit the provision, on an incidental basis, of investmentservices; whereas it is also necessary for the same reason to exclude from thescope of this Directive persons who provide investment services only for
producers or users of commodities to the extent necessary for transactions in
such products where such transactions constitute their main business;!B1993L0022 — EN — 26.09.1998 — 002.001 — 3
Whereas firms which provide investment services consisting exclusively in
the administration of employee-participation schemes and which therefore donot provide investment services for third parties should not be covered by thisDirective;
Whereas it is necessary to exclude from the scope of this Directive central
banks and other bodies performing similar functions as well as public bodies
charged with or intervening in the management of the public debt, which
concept covers the investment thereof; whereas, in particular, this exclusiondoes not cover bodies that are partly or wholly State-owned the role of whichis commercial or linked to the acquisition of holdings;
Whereas it is necessary to exclude from the scope of this Directive any firms
or persons whose business consists only of receiving and transmitting orders
to certain counterparties and who do not hold funds or securities belonging to
their clients; whereas, therefore, they will not enjoy the right of establishmentand freedom to provide services under the conditions laid down in thisDirective, being subject, when they wish to operate in another Member State,
to the relevant provisions adopted by that State;
Whereas it is necessary to exclude from the scope of this Directive collective
investment undertakings whether or not coordinated at Community level, and
the depositaries or managers of such undertakings, since they are subject tospecific rules directly adapted to their activities;
Whereas, where associations created by a Member State’ s pension funds to
permit the management of their assets confine themselves to such manage-ment and do not provide investment services for third parties, and where the
pension funds are themselves subject to the control of the authorities charged
with monitoring insurance undertakings, it does not appear to be necessary tosubject such associations to the conditions for taking up business and foroperation imposed by this Directive;
Whereas this Directive should not apply to ‘agenti di cambio’ as defined by
Italian law since they belong to a category the authorization of which is not to
be renewed, their activities are confined to the national territory and they do
not give rise to a risk of the distortion of competition;
Whereas the rights conferred on investment firms by this Directive are
without prejudice to the right of Member States, central banks and other
national bodies performing similar functions to choose their counterparties onthe basis of objective, non-discriminatory criteria;
Whereas responsibility for supervising the financial soundness of an
investment firm will rest with the competent authorities of its home MemberState pursuant to Council Directive 93/6/EEC of 15 March 1993 on the capital
adequacy of investment firms and credit institutions (
1), which coordinates the
rules applicable to market risk;
Whereas a home Member State may, as a general rule, establish rules stricter
than those laid down in this Directive, in particular as regards authorizationconditions, prudential requirements and the rules of reporting and trans-parency;
Whereas the carrying on of activities not covered by this Directive is governed
by the general provisions of the Treaty on the right of establishment and the
freedom to provide services;
Whereas in order to protect investors an investor’ s ownership and other similar
rights in respect of securities and his rights in respect of funds entrusted to a
firm should in particular be protected by being kept distinct from those of the
firm; whereas this principle does not, however, prevent a firm from doingbusiness in its name but on behalf of the investor, where that is required by the
very nature of the transaction and the investor is in agreement, for example
stock lending;
Whereas the procedures for the authorization of branches of investment firms
authorized in third countries will continue to apply to such firms; whereas
those branches will not enjoy the freedom to provide services under thesecond paragraph of Article 59 of the Treaty or the right of establishment in
Member States other than those in which they are established; whereas,
however, requests for the authorization of subsidiaries or of the acquisition ofholdings by undertakings governed by the laws of third countries are subjectto a procedure intended to ensure that Community investment firms receive
reciprocal treatment in the third countries in question;!B
(1) See page 1 of this Official Journal.1993L0022 — EN — 26.09.1998 — 002.001 — 4
Whereas the authorizations granted to investment firms by the competent
national authorities pursuant to this Directive will have Community-wide, andno longer merely nationwide application, and existing reciprocity clauses willhenceforth have no effect; whereas a flexible procedure is therefore needed to
make it possible to assess reciprocity on a Community basis; whereas the aim
of this procedure is not to close the Community’s financial markets but rather,as the Community intends to keep its financial markets open to the rest of theworld, to improve the liberalization of the global financial markets in third
countries; whereas, to that end, this Directive provides for procedures for
negotiating with third countries and, as a last resort, for the possibility oftaking measures involving the suspension of new applications for auth-
orization and the restriction of new authorizations;
Whereas one of the objectives of this Directive is to protect investors; whereas
it is therefore appropriate to take account of the different requirements forprotection of various categories of investors and of their levels of professionalexpertise;
Whereas the Member States must ensure that there are no obstacles to prevent
activities that receive mutual recognition from being carried on in the same
manner as in the home Member State, as long as they do not conflict withlaws and regulations protecting the general good in force in the host Member
State;
Whereas a Member State may not limit the right of investors habitually
resident or established in that Member State to avail themselves of anyinvestment service provided by an investment firm covered by this Directivesituated outside that Member State and acting outwith that Member State;
Whereas in certain Member States clearing and settlement functions may be
performed by bodies separate from the markets on which transactions areeffected; whereas, accordingly, any reference in this Directive to access to andmembership of regulated markets should be read as including references to
access to and membership of bodies performing clearing and settlement
functions for regulated markets;
Whereas each Member State must ensure that within its territory, treatment of
all investment firms authorized in any Member State and likewise allfinancial instruments listed on the Member States’ regulated markets is
non-discriminatory; whereas investment firms must all have the same
opportunities of joining or having access to regulated markets; whereas,regardless of the manner in which transactions are at present organized in the
Member States, it is therefore important, subject to the conditions imposed by
this Directive, to abolish the technical and legal restrictions on access to theregulated markets within the framework of this Directive;
Whereas some Member States authorize credit institutions to become
members of their regulated markets only indirectly, by setting up specialized
subsidiaries; whereas the opportunity which this Directive gives credit
institutions of becoming members of regulated markets directly withouthaving to set up specialized subsidiaries constitutes a significant reform forthose Member States and all its consequences should be reassessed in the light
of the development of the financial markets; whereas, in view of those factors,
the report which the Commission will submit to the Council on this matter nolater than 31 December 1998 will have to take account of all the factors
necessary for the Council to be able to reassess the consequences for those
Member States, and in particular the danger of conflicts of interest and thelevel of protection afforded to investors;
Whereas it is of the greatest importance that the harmonization of
compensation systems be brought into effect on the same date as this
Directive; whereas, moreover, until the date on which a Directive harmon-
izing compensation systems is brought into effect, host Member States will beable to impose application of their compensation systems on investment firms
including credit institutions authorized by other Member States, where the
home Member States have no compensation systems or where their systemsdo not offer equivalent levels of protection;
Whereas the structure of regulated markets must continue to be governed by
national law, without thereby forming an obstacle to the liberalization of
access to the regulated markets of host Member States for investment firms
authorized to provide the services concerned in their home Member States;whereas, pursuant to that principle, the law of the Federal Republic ofGermany and the law of the Netherlands govern the activities Kursmakler and
hoekmannen respectively so as to ensure that they do not exercise their
functions in parallel with other functions; whereas it should be noted that!B1993L0022 — EN — 26.09.1998 — 002.001 — 5
Kursmakler and hoekmannen may not provide services in other Member
States; whereas no one, whatever his home Member State, may claim to act asaKursmakler or a hoekman without being subject to the same rules on
incompatibility as result from the status of Kursmakler orhoekman ;
Whereas it should be noted that this Directive cannot affect the measures
taken pursuant to Council Directive 79/279/EEC of 5 March 1979
coordinating the conditions for the admission of securities to official
stock-exchange listing (
1);
Whereas the stability and sound operation of the financial system and the
protection of investors presuppose that a host Member State has the right andresponsibility both to prevent and to penalize any action within its territory by
investment firms contrary to the rules of conduct and other legal or regulatory
provisions it has adopted in the interest of the general good and to take actionin emergencies; whereas, moreover, the competent authorities of the hostMember State must, in discharging their responsibilities, be able to count on
the closest cooperation with the competent authorities of the home Member
State, particularly as regards business carried on under the freedom to provideservices; whereas the competent authorities of the home Member State areentitled to be informed by the competent authorities of the host Member State
of any measures involving penalties on an investment firm or restrictions on
its activities which the latter have taken vis-à-vis the investment firms which
the former have authorized so as to be able to perform their function of
prudential supervision efficiently; whereas to that end cooperation between
the competent authorities of home and host Member States must be ensured;
Whereas, with the two-fold aim of protecting investors and ensuring the
smooth operation of the markets in transferable securities, it is necessary toensure that transparency of transactions is achieved and that the rules laiddown for that purpose in this Directive for regulated markets apply both to
investment firms and to credit institutions when they operate on the market;
Whereas examination of the problems arising in the areas covered by the
Council Directives on investment services and securities, as regards both the
application of existing measures and the possibility of closer coordination inthe future, requires cooperation between national authorities and theCommission within a committee; whereas the establishment of such a
committee does not rule out other forms of cooperation between supervisory
authorities in this field;
Whereas technical amendments to the detailed rules laid down in this
Directive may from time to time be necessary to take account of newdevelopments in the investment-services sector; whereas the Commission will
make such amendments as are necessary, after referring the matter to the
committee to be set up in the securities-markets field,
HAS ADOPTED THIS DIRECTIVE:
TITLE I
Definitions and scope
Article 1
For the purposes of this Directive:
1. investment service shall mean any of the services listed in Section A of
the Annex relating to any of the instruments listed in Section B of the
Annex that are provided for a third party;
2. investment firm shall mean any legal person the regular occupation or
business of which is the provision of investment services for thirdparties on a professional basis.
For the purposes of this Directive, Member States may include as
investment firms undertakings which are not legal persons if:
— their legal status ensures a level of protection for third parties’
interests equivalent to that afforded by legal persons, and!B
(1) OJ No L 66, 16. 3. 1979, p. 21. Directive last amended by the Act of Accession of
Spain and Portugal.1993L0022 — EN — 26.09.1998 — 002.001 — 6
— they are subject to equivalent prudential supervision appropriate
to their legal form.
However, where such natural persons provide services involving the
holding of third parties’ funds or transferable securities, they may beconsidered as investment firms for the purposes of this Directive only if,
without prejudice to the other requirements imposed in this Directive
and in Directive 93/6/EEC, they comply with the following conditions:
— the ownership rights of third parties in instruments and funds
belonging to them must be safeguarded, especially in the event ofthe insolvency of a firm or of its proprietors, seizure, set-off or
any other action by creditors of the firm or of its proprietors,
— an investment firm must be subject to rules designed to monitor
the firm’ s solvency and that of its proprietors,
— an investment firm’ s annual accounts must be audited by one or
more persons empowered, under national law, to audit accounts,
— where a firm has only one proprietor, he must make provision for
the protection of investors in the event of the firm’ s cessation of
business following his death, his incapacity or any other such
event.
No later than 31 December 1997 the Commission shall report on
the application of the second and third subparagraphs of this point
and, if appropriate, propose their amendment or deletion.
Where a person provides one of the services referred to in Section
A (1) (a) of the Annex and where that activity is carried on solely
for the account of and under the full and unconditionalresponsibility of an investment firm, that activity shall beregarded as the activity not of that person but of the investment
firm itself;
3. credit institution shall mean a credit institution as defined in the first
indent of Article 1 of Directive 77/780/EEC (
1) with the exception of the
institutions referred to in Article 2 (2) thereof;
4. transferable securities shall mean:
— shares in companies and other securities equivalent to shares in
companies,
— bonds and other forms of securitized debtwhich are negotiable on the capital market and— any other securities normally dealt in giving the right to acquire
any such transferable securities by subscription or exchange or
giving rise to a cash settlement
excluding instruments of payment;
5. money-market instruments shall mean those classes of instruments
which are normally dealt in on the money market;
6. home Member State shall mean:
(a) where the investment firm is a natural person, the Member State
in which his head office is situated;
(b) where the investment firm is a legal person, the Member State in
which its registered office is situated or, if under its national law it
has no registered office, the Member State in which its head office
is situated;
(c) in the case of a market, the Member State in which the registered
office of the body which provides trading facilities is situated or,if under its national law it has no registered office, the Member
State in which that body’ s head office is situated;
7. host Member State shall mean the Member State in which an investment
firm has a branch or provides services;
8. branch shall mean a place of business which is a part of an investment
firm, which has no legal personality and which provides investmentservices for which the investment firm has been autorized; all the places!B
(1) OJ No L 322, 17. 12. 1977, p. 30. Directive last amended by Directive 89/646/EEC
(OJ No L 386, 30. 12. 1989, p. 1).1993L0022 — EN — 26.09.1998 — 002.001 — 7
of business set up in the same Member State by an investment firm with
headquarters in another Member State shall be regarded as a singlebranch;
9. competent authorities shall mean the authorities which each Member
State designates under Article 22;
10. qualifying holding shall mean any direct or indirect holding in an
investment firm which represents 10 % or more of the capital or of the
voting rights or which makes it possible to exercise a significant
influence over the management of the investment firm in which thatholding subsists.
For the purposes of this definition, in the context of Articles 4 and 9 and
of the other levels of holding referred to in Article 9, the voting rightsreferred to in Article 7 of Directive 88/627/EEC (
1) shall be taken into
account;
11. parent undertaking shall mean a parent undertaking as defined in
Articles 1 and 2 of Directive 83/349/EEC (2);
12. subsidiary shall mean a subsidiary undertaking as defined in Articles 1
and 2 of Directive 83/349/EEC; any subsidiary of a subsidiary
undertaking shall also be regarded as a subsidiary of the parentundertaking which is the ultimate parent of those undertakings;
13. regulated market shall mean a market for the instruments listed in
Section B of the Annex which:
— appears on the list provided for in Article 16 drawn up by the
Member State which is the home Member State as defined in
Article 1 (6) (c),
— functions regularly,— is characterized by the fact that regulations issued or approved by
the competent authorities define the conditions for the operation
of the market, the conditions for access to the market and, whereDirective 79/279/EEC is applicable, the conditions governing
admission to listing imposed in that Directive and, where that
Directive is not applicable, the conditions that must be satisfied bya financial instrument before it can effectively be dealt in on themarket,
— requires compliance with all the reporting and transparency
requirements laid down pursuant to Articles 20 and 21;
14. control shall mean control as defined in Article 1 of Directive
83/349/EEC;
15. close links shall mean a situation in which two or more natural or legal
persons are linked by:
(a) participation , which shall mean the ownership, direct or by way of
control, of 20 % or more of the voting rights or capital of anundertaking or
(b) control , which shall mean the relationship between a parent
undertaking and a subsidiary, in all the cases referred to in Article
1 (1) and (2) of Directive 83/349/EEC (
3), or a similar relationship
between any natural or legal person and an undertaking; any
subsidiary undertaking of a subsidiary undertaking shall also be
considered a subsidiary of the parent undertaking which is at thehead of those undertakings.
A situation in which two or more natural or legal persons are
permanently linked to one and the same person by a control relationship
shall also be regarded as constituting a close link between such persons.!B
(1) OJ No L 348, 17. 12. 1988, p. 62.
(2) OJ No L 193, 18. 7. 1983, p. 1. Directive last amended by Directive 90/605/EEC
(OJ No L 317, 16. 11. 1990, p. 60).
(3) OJ No L 193, 18. 7. 1983, p. 1. Directive as last amended by Directive 90/605/EEC
(OJ No L 317, 16. 11. 1990, p. 60).!M11993L0022 — EN — 26.09.1998 — 002.001 — 8
Article 2
1. This Directive shall apply to all investment firms. Only paragraph 4 of
this Article and Articles 8 (2), 10, 11, 12, first paragraph, 14 (3) and (4), 15,19 and 20, however, shall apply to credit institutions the authorization ofwhich, under Directives 77/780/EEC and 89/646/EEC, covers one or more of
the investment services listed in Section A of the Annex to this Directive.
2. This Directive shall not apply to:(a) insurance undertakings as defined in Article 1 of Directive
73/239/EEC (
1) or Article 1 of Directive 79/267/EEC (2) or undertakings
carrying on the reinsurance and retrocession activities referred to inDirective 64/225/EEC (
3);
(b) firms which provide investment services exclusively for their parent
undertakings, for their subsidiaries or for other subsidiaries of theirparent undertakings;
(c) persons providing an investment service where that service is provided
in an incidental manner in the course of a professional activity and thatactivity is regulated by legal or regulatory provisions or a code of ethicsgoverning the profession which do not exclude the provision of that
service;
(d) firms that provide investment services consisting exclusively in the
administration of employee-participation schemes;
(e) firms that provide investment services that consist in providing both the
services referred to in (b) and those referred to in (d);
(f) the central banks of Member States and other national bodies
performing similar functions and other public bodies charged with or
intervening in the management of the public debt;
(g) firms
— which may not hold clients’ funds or securities and which for that
reason may not at any time place themselves in debit with their
clients, and
— which may not provide any investment service except the
reception and transmission of orders in transferable securities
and units in collective investment undertakings, and
— which in the course of providing that service may transmit orders
only to
(i) investment firms authorized in accordance with this
Directive;
(ii) credit institutions authorized in accordance with Directives
77/780/EEC and 89/646/EEC;
(iii) branches of investment firms or of credit institutions which
are authorized in a third country and which are subject to
and comply with prudential rules considered by the
competent authorities as at least as stringent as those laiddown in this Directive, in Directive 89/646/EEC or inDirective 93/6/EEC;
(iv) collective investment undertakings authorized under the law
of a Member State to market units to the public and to themanagers of such undertakings;
(v) investment companies with fixed capital, as defined in
Article 15 (4) of Directive 77/91/EEC (
4), the securities of
which are listed or dealt in on a regulated market in a
Member State;
— the activities of which are governed at national level by rules or by
a code of ethics;!B
(1) OJ No L 228, 16. 8. 1973, p. 3. Directive last amended by Directive 90/619/EEC
(OJ No L 330, 29. 11. 1990, p. 50).
(2) OJ No L 63, 13. 3. 1979, p. 1. Directive last amended by Directive 90/618/EEC (OJ
No L 330, 29. 11. 1990, p. 44).
(3) OJ No 56, 4. 4. 1964, p. 878/64.
(4) OJ No L 26, 30. 1. 1977, p. 1. Directive last amended by the Act of Accession of
Spain and Portugal.1993L0022 — EN — 26.09.1998 — 002.001 — 9
(h) collective investment undertakings whether coordinated at Community
level or not and the depositaries and managers of such undertakings;
(i) persons whose main business is trading in commodities amongst selves
or with producers or professional users of such products and who
provide investment services only for such producers and professional
users to the extent necessary for their main business;
(j) firms that provide investment services consisting exclusively in dealing
for their own account on financial-futures or options markets or which
deal for the accounts of other members of those markets or make pricesfor them and which are guaranteed by clearing members of the samemarkets. Responsibility for ensuring the performance of contracts
entered into by such firms must be assumed by clearing members of the
same markets;
(k) associations set up by Danish pension funds with the sole aim of
managing the assets of pension funds that are members of those
associations;
(l) ‘agenti di cambio’ whose activities and functions are governed by
Italian Royal Decree No 222 of 7 March 1925 and subsequent
provisions amending it, and who are authorized to carry on their
activities under Article 19 of Italian Law No 1 of 2 January 1991.
3. No later than 31 December 1998 and at regular intervals thereafter the
Commission shall report on the application of paragraph 2 in conjunction with
Section A of the Annex and shall, where appropriate, propose amendments to
the definition of the exclusions and the services covered in the light of theoperation of this Directive.
4. The rights conferred by this Directive shall not extend to the provision
of services as counterparty to the State, the central bank or other MemberState national bodies performing similar functions in the pursuit of themonetary, exchange-rate, public-debt and reserves management policies of
the Member State concerned.
TITLE II
Conditions for taking up business
Article 3
1. Each Member State shall make access to the business of investment
firms subject to authorization for investment firms of which it is the homeMember State. Such authorization shall be granted by the home MemberState’s competent authorities designated in accordance with Article 22. The
authorization shall specify the investment services referred to in Section A of
the Annex which the undertaking is authorized to provide. The authorizationmay also cover one or more of the non-core services referred to in Section C
of the Annex. Authorization within the meaning of this Directive may in no
case be granted for services covered only by Section C of the Annex.
2. Each Member State shall require that:— any investment firm which is a legal person and which, under its
national law, has a registered office shall have its head office in the
same Member State as its registered office,
— any other investment firm shall have its head office in the Member State
which issued its authorization and in which it actually carries on its
business.
3. Without prejudice to other conditions of general application laid down
by national law, the competent authorities shall not grant authorization unless:
— an investment firm has sufficient initial capital in accordance with the
rules laid down in Directive 93/6/EEC having regard to the nature of theinvestment service in question,
— the persons who effectively direct the business of an investment firm are
of sufficiently good repute and are sufficiently experienced.
The direction of a firm’ s business must be decided by at least two persons
meeting the above conditions. Where an appropriate arrangement ensures that
the same result will be achieved, however, particularly in the cases provided
for in the last indent of the third subparagraph of Article 1 (2), the competent!B1993L0022 — EN — 26.09.1998 — 002.001 — 10
authorities may grant authorization to investment firms which are natural
persons or, taking account of the nature and volume of their activities, toinvestment firms which are legal persons where such firms are managed bysingle natural persons in accordance with their articles of association and
national laws.
Moreover, where close links exist between the investment firm and other
natural or legal persons, the competent authorities shall grant authorization
only if those links do not prevent the effective exercise of their supervisoryfunctions.
The competent authorities shall also refuse authorization if the laws,
regulations or administrative provisions of a non-member country governing
one or more natural or legal persons with which the undertaking has closelinks, or difficulties involved in their enforcement, prevent the effectiveexercise of their supervisory functions.
The competent authorities shall require investment firms to provide them with
the information they require to monitor compliance with the conditions
referred to in this paragraph on a continuous basis.
4. Member States shall also require that every application for authorization
be accompanied by a programme of operations setting out inter alia the types
of business envisaged and the organizational structure of the investment firm
concerned.
5. An applicant shall be informed within six months of the submission of a
complete application whether or not authorization has been granted. Reasons
shall be given whenever an authorization is refused.
6. An investment firm may commence business as soon as authorization
has been granted.
7. The competent authorities may withdraw the authorization issued to an
investment firm subject to this Directive only where that investment firm:
(a) does not make use of the authorization within 12 months, expressly
renounces the authorization or ceased to provide investment services
more than six months previously unless the Member State concernedhas provided for authorization to lapse in such cases;
(b) has obtained the authorization by making false statements or by any
other irregular means;
(c) no longer fulfils the conditions under which authorization was granted;(d) no longer complies with Directive 93/6/EEC;(e) has seriously and systematically infringed the provisions adopted
pursuant to Articles 10 or 11; or
(f) falls within any of the cases where national law provides for withdrawal.
Article 4
The competent authorities shall not grant authorization to take up the business
of investment firms until they have been informed of the identities of theshareholders or members, whether direct or indirect, natural or legal persons,
that have qualifying holdings and of the amounts of those holdings.
The competent authorities shall refuse authorization if, taking into account the
need to ensure the sound and prudent management of an investment firm, theyare not satisfied as to the suitability of the aforementioned shareholders ormembers.
Article 5
In the case of branches of investment firms that have registered offices
outwith the Community and are commencing or carrying on business, theMember States shall not apply provisions that result in treatment more
favourable than that accorded to branches of investment firms that have
registered offices in Member States.!B
!M1
!B1993L0022 — EN — 26.09.1998 — 002.001 — 11
Article 6
The competent authorities of the other Member State involved shall be
consulted beforehand on the authorization of any investment firm which is:
— a subsidiary of an investment firm or credit institution authorized in
another Member State,
— a subsidiary of the parent undertaking of an investment firm or credit
institution authorized in another Member State,
or
— controlled by the same natural or legal persons as control an investment
firm or credit institution authorized in another Member State.
TITLE III
Relations with third countries
Article 7
1. The competent authorities of the Member States shall inform the
Commission:
(a) of the authorization of any firm which is the direct or indirect subsidiary
of a parent undertaking governed by the law of a third country;
(b) whenever such a parent undertaking acquires a holding in a Community
investment firm such that the latter would become its subsidiary.
In both cases the Commission shall inform the Council until such time as a
committee on transferable securities is set up by the Council acting on aproposal from the Commission.
When authorization is granted to any firm which is the direct or indirect
subsidiary of a parent undertaking governed by the law of a third country, the
competent authorities shall specify the structure of the group in the
notification which they address to the Commission.
2. The Member States shall inform the Commission of any general
difficulties which their investment firms encounter in establishing themselves
or providing investment services in any third country.
3. Initially no later than six months before this Directive is brought into
effect and thereafter periodically the Commission shall draw up a report
examining the treatment accorded to Community investment firms in thirdcountries, in the terms referred to in paragraphs 4 and 5, as regards
establishment, the carrying on of investment services activities and the
acquisition of holdings in third-country investment firms. The Commissionshall submit those reports to the Council together with any appropriateproposals.
4. Whenever it appears to the Commission, either on the basis of the
reports provided for in paragraph 3 or on the basis of other information, that a
third country does not grant Community investment firms effective marketaccess comparable to that granted by the Community to investment firmsfrom that third country, the Commission may submit proposals to the Council
for an appropriate mandate for negotiation with a view to obtaining
comparable competitive opportunities for Community investment firms.The Council shall act by a qualified majority.
5. Whenever it appears to the Commission, either on the basis of the
reports referred to in paragraph 3 or on the basis of other information, that
Community investment firms in a third country are not granted national
treatment affording the same competitive opportunities as are available todomestic investment firms and that the conditions of effective market accessare not fulfilled, the Commission may initiate negotiations in order to remedy
the situation.
In the circumstances described in the first subparagraph it may also be
decided, at any time and in addition to the initiation of negotiations, inaccordance with the procedure to be laid down in the Directive by which theCouncil will set up the committee referred to in paragraph 1, that the
competent authorities of the Member States must limit or suspend their
decisions regarding requests pending or future requests for authorization and!B1993L0022 — EN — 26.09.1998 — 002.001 — 12
the acquisition of holdings by direct or indirect parent undertakings governed
by the law of the third country in question. The duration of such measuresmay not exceed three months.
Before the end of that three-month period and in the light of the results of the
negotiations the Council may, acting on a proposal from the Commission,
decide by a qualified majority whether the measures shall be continued.
Such limitations or suspensions may not be applied to the setting up of
subsidiaries by investment firms duly authorized in the Community or by their
subsidiaries, or to the acquisition of holdings in Community investment firmsby such firms or subsidiaries.
6. Whenever it appears to the Commission that one of the situations
described in paragraphs 4 and 5 obtains, the Member States shall inform it at
its request:
(a) of any application for the authorization of any firm which is the direct
or indirect subsidiary of a parent undertaking governed by the law of thethird country in question;
(b) whenever they are informed in accordance with Article 10 that such a
parent undertaking proposes to acquire a holding in a Community
investment firm such that the latter would become its subsidiary.
This obligation to provide information shall lapse whenever agreement is
reached with the third country referred to in paragraph 4 or 5 or when themeasures referred to in the second and third subparagraphs of paragraph 5cease to apply.
7. Measures taken under this Article shall comply with the Community’s
obligations under any international agreements, bilateral or multilateral,
governing the taking up or pursuit of the business of investment firms.
TITLE IV
Operating conditions
Article 8
1. The competent authorities of the home Member States shall require that
an investment firm which they have authorized comply at all times with the
conditions imposed in Article 3 (3).
2. The competent authorities of the home Member State shall require that
an investment firm which they have authorized comply with the rules laiddown in Directive 93/6/EEC.
3. The prudential supervision of an investment firm shall be the
responsibility of the competent authorities of the home Member State
whether the investment firm establishes a branch or provides services in
another Member State or not, without prejudice to those provisions of thisDirective which give responsibility to the authorities of the host MemberState.
Article 9
1. Member States shall require any person who proposes to acquire,
directly or indirectly, a qualifying holding in an investment firm first to
inform the competent authorities, telling them of the size of his intendedholding. Such a person shall likewise inform the competent authorities if he
proposes to increase his qualifying holding so that the proportion of the voting
rights or of the capital that he holds would reach or exceed 20, 33, or 50 % orso that the investment firm would become his subsidiary.
Without prejudice to paragraph 2, the competent authorities shall have up to
three months from the date of the notification provided for in the first
subparagraph to oppose such a plan if, in view of the need to ensure sound and
prudent management of the investment firm, they are not satisfied as to thesuitability of the person referred to in the first subparagraph. If they do notoppose the plan, they may fix a deadline for its implementation.
2. If the acquirer of the holding referred to in paragraph 1 is an investment
firm authorized in another Member State or the parent undertaking of an
investment firm authorized in another Member State or a person controlling
an investment firm authorized in another Member State and if, as a result of!B1993L0022 — EN — 26.09.1998 — 002.001 — 13
that acquisition, the firm in which the acquirer proposes to acquire a holding
would become the acquirer’s subsidiary or come under his control, theassessment of the acquisition must be the subject of the prior consultationprovided for in Article 6.
3. Member States shall require any person who proposes to dispose,
directly or indirectly, of a qualifying holding in an investment firm first to
inform the competent authorities, telling them of the size of his holding. Such
a person shall likewise inform the competent authorities if he proposes toreduce his qualifying holding so that the proportion of the voting rights or ofthe capital held by him would fall below 20, 33 or 50 % or so that the
investment firm would cease to be his subsidiary.
4. On becoming aware of them, investment firms shall inform the
competent authorities of any acquisitions or disposals of holdings in their
capital that cause holdings to exceed or fall below any of the thresholdsreferred to in paragraphs 1 and 3.
At least once a year they shall also inform the competent authorities of the
names of shareholders and members possessing qualifying holdings and thesizes of such holdings as shown, for example, by the information received at
annual general meetings of shareholders and members or as a result of
compliance with the regulations applicable to companies listed on stockexchanges.
5. Member States shall require that, where the influence exercised by the
persons referred to in paragraph 1 is likely to be prejudicial to the sound andprudent management of an investment firm, the competent authorities take
appropriate measures to put an end to that situation. Such measures may
consist, for example, in injunctions, sanctions against directors and thoseresponsible for management or suspension of the exercise of the voting rightsattaching to the shares held by the shareholders or members in question.
Similar measures shall apply to persons failing to comply with the obligation
to provide prior information imposed in paragraph 1. If a holding is acquired
despite the opposition of the competent authorities, the Member States shall,
regardless of any other sanctions to be adopted, provide either for exercise ofthe corresponding voting rights to be suspended, for the nullity of the votescast or for the possibility of their annulment.
Article 10
1. Each home Member State shall draw up prudential rules which
investment firms shall observe at all times. In particular, such rules shall
require that each investment firm:
— have sound administrative and accounting procedures, control and
safeguard arrangements for electronic data processing, and adequate
internal control mechanisms including, in particular, rules for personaltransactions by its employees,
— make adequate arrangements for instruments belonging to investors
with a view to safeguarding the latter’s ownership rights, especially inthe event of the
"C1investment firm’ s insolvency, and to preventing
the investment firm’ s using investors’ instruments for its own account
3except with the investors’ express consent,
— make adequate arrangements for funds belonging to investors with a
view to safeguarding the latter’s rights and, except in the case of credit
institutions, preventing the investment firm’ s using investors’ funds forits own account,
— arrange for records to be kept of transactions executed which shall at
least be sufficient to enable the home Member State’ s authorities tomonitor compliance with the prudential rules which they are responsible
for applying; such records shall be retained for periods to be laid down
by the competent authorities,
— be structured and organized in such a way as to minimize the risk of
clients’ interests being prejudiced by conflicts of interest between thefirm and its clients or between one of its clients and another.Nevertheless, where a branch is set up the organizational arrangements
may not conflict with the rules of conduct laid down by the host
Member State to cover conflicts of interest.!B1993L0022 — EN — 26.09.1998 — 002.001 — 14
Article 11
1. Member States shall draw up rules of conduct which investment firms
shall observe at all times. Such rules must implement at least the principles setout in the following indents and must be applied in such a way as to takeaccount of the professional nature of the person for whom the service is
provided. The Member States shall also apply these rules where appropriate to
the non-core services listed in Section C of the Annex. These principles shallensure that an investment firm:
— acts honestly and fairly in conducting its business activities in the best
interests of its clients and the integrity of the market,
— acts with due skill, care and diligence, in the best interests of its clients
and the integrity of the market,
— has and employs effectively the resources and procedures that are
necessary for the proper performance of its business activities,
— seeks from its clients information regarding their financial situations,
investment experience and objectives as regards the services requested,
— makes adequate disclosure of relevant material information in its
dealings with its clients,
— tries to avoid conflicts of interests and, when they cannot be avoided,
ensures that its clients are fairly treated, and
— complies with all regulatory requirements applicable to the conduct of
its business activities so as to promote the best interests of its clients andthe integrity of the market.
2. Without prejudice to any decisions to be taken in the context of the
harmonization of the rules of conduct, their implementation and thesupervision of compliance with them shall remain the responsibility of theMember State in which a service is provided.
3. Where an investment firm executes an order, for the purposes of
applying the rules referred to in paragraph 1 the professional nature of theinvestor shall be assessed with respect to the investor from whom the order
originates, regardless of whether the order was placed directly by the investor
himself or indirectly through an investment firm providing the servicereferred to in Section A (1) (a) of the Annex.
Article 13
This Directive shall not prevent investment firms authorized in other Member
States from advertising their services through all available means ofcommunication in their host Member States, subject to any rules governingthe form and the content of such advertising adopted in the interest of the
general good.
TITLE V
The right of establishment and the freedom to provide services
Article 14
1. Member States shall ensure that investment services and the other
services listed in Section C of the Annex may be provided within theirterritories in accordance with Articles 17, 18 and 19 either by theestablishment of a branch or under the freedom to provide services by any
investment firm authorized and supervised by the competent authorities of
another Member State in accordance with this Directive, provided that suchservices are covered by the authorization.!B
!M2
!B1993L0022 — EN — 26.09.1998 — 002.001 — 15
This Directive shall not affect the powers of host Member States in respect of
the units of collective investment undertakings to which Directive85/611/EEC (
1) does not apply.
2. Member States may not make the establishment of a branch or the
provision of services referred to in paragraph 1 subject to any authorizationrequirement, to any requirement to provide endowment capital or to any other
measure having equivalent effect.
3. A Member State may require that transactions relating to the services
referred to in paragraph 1 must, where they satisfy all the following criteria,
be carried out on a regulated market:
— the investor must be habitually resident or established in that Member
State,
— the investment firm must carry out such transactions through a main
establishment, through a branch situated in that Member State or underthe freedom to provide services in that Member State,
— the transaction must involve a instrument dealt in on a regulated market
in that Member State.
4. Where a Member State applies paragraph 3 it shall give investors
habitually resident or established in that Member State the right not to comply
with the obligation imposed in paragraph 3 and have the transactions referredto in paragraph 3 carried out away from a regulated market. Member Statesmay make the exercise of this right subject to express authorization, taking
into account investors’ differing needs for protection and in particular the
ability of professional and institutional investors to act in their own bestinterests. It must in any case be possible for such authorization to be given inconditions that do not jeopardize the prompt execution of investors’ orders.
5. The Commission shall report on the operation of paragraphs 3 and 4 not
later than 31 December 1998 and shall, if appropriate, propose amendments
thereto.
Article 15
1. Without prejudice to the exercise of the right of establishment or the
freedom to provide services referred to in Article 14, host Member Statesshall ensure that investment firms which are authorized by the competentauthorities of their home Member States to provide the services referred to in
Section A (1) (b) and (2) of the Annex can, either directly or indirectly,
become members of or have access to the regulated markets in their hostMember States where similar services are provided and also become membersof or have access to the clearing and settlement systems which are provided
for the members of such regulated markets there.
Member States shall abolish any national rules or laws or rules of regulated
markets which limit the number of persons allowed access thereto. If, byvirtue of its legal structure or its technical capacity, access to a regulatedmarket is limited, the Member State concerned shall ensure that its structure
and capacity are regularly adjusted.
2. Membership of or access to a regulated market shall be conditional on
investment firms’ complying with capital adequacy requirements and home
Member States’ supervising such compliance in accordance with Directive93/6/EEC.
Host Member States shall be entitled to impose additional capital
requirements only in respect of matters not covered by that Directive.
Access to a regulated market, admission to membership thereof and continued
access or membership shall be subject to compliance with the rules of the
regulated market in relation to the constitution and administration of the
regulated market and to compliance with the rules relating to transactions onthe market, with the professional standards imposed on staff operating on andin conjunction with the market, and with the rules and procedures for clearing
and settlement. The detailed arrangements for implementing these rules and
procedures may be adapted as appropriate, inter alia to ensure fulfilment of
the ensuing obligations, provided, however, that Article 28 is complied with.!B
(1) OJ No L 375, 31. 12. 1985, p. 3. Directive last amended by Directive 88/220/EEC
(OJ No L 100, 19. 4. 1988, p. 31).1993L0022 — EN — 26.09.1998 — 002.001 — 16
3. In order to meet the obligation imposed in paragraph 1, host Member
States shall offer the investment firms referred to in that paragraph the choiceof becoming members of or of having access to their regulated markets either:
— directly, by setting up branches in the host Member States, or
— indirectly, by setting up subsidiaries in the host Member States or by
acquiring firms in the host Member States that are already members of
their regulated markets or already have access thereto.
However, those Member States which, when this Directive is adopted, apply
laws which do not permit credit institutions to become members of or have
access to regulated markets unless they have specialized subsidiaries may
continue until 31 December 1996 to apply the same obligation in anon-discriminatory way to credit institutions from other Member States forpurposes of access to those regulated markets.
The Kingdom of Spain, the Hellenic Republic and the Portuguese Republic
may extend that period until 31 December 1999. One year before that date theCommission shall draw up a report, taking into account the experience
acquired in applying this Article and shall if appropriate, submit a proposal.
The Council may, acting by qualified majority on the basis of that proposal,decide to review those arrangements.
4. Subject to paragraphs 1, 2 and 3, where the regulated market of the host
Member State operates without any requirement for a physical presence theinvestment firms referred to in paragraph 1 may become members of or haveaccess to it on the same basis without having to be established in the host
Member State. In order to enable their investment firms to become members
of or have access to host Member States’ regulated markets in accordancewith this paragraph home Member States shall allow those host Member
States’ regulated markets to provide appropriate facilities within the home
Member States’ territories.
5. This Article shall not affect the Member States’ right to authorize or
prohibit the creation of new markets within their territories.
6. This Article shall have no effect:
— in the Federal Republic of Germany, on the regulation of the activities of
Kursmakler ,o r
— in the Netherlands, on the regulation of the activities of hoekmannen .
Article 16
For the purposes of mutual recognition and the application of this Directive, it
shall be for each Member State to draw up a list of the regulated markets for
which it is the home Member State and which comply with its regulations,and to forward that list for information, together with the relevant rules of
procedures and operation of those regulated markets, to the other Member
States and the Commission. A similar communication shall be effected inrespect of each change to the aforementioned list or rules. The Commissionshall publish the lists of regulated markets and updates thereto in the Official
Journal of the European Communities at least once a year.
No later than 31 December 1996 the Commission shall report on the
information thus received and, where appropriate, propose amendments to the
definition of regulated market for the purposes of this Directive.
Article 17
1. In addition to meeting the conditions imposed in Article 3, any
investment firm wishing to establish a branch within the territory of anotherMember State shall notify the competent authorities of its home Member
State.
2. Member States shall require every investment firm wishing to establish
a branch within the territory of another Member State to provide the following
information when effecting the notification provided for in paragraph 1:
(a) the Member State within the territory of which it plans to establish a
branch;
(b) a programme of operations setting out inter alia the types of business
envisaged and the organizational structure of the branch;!B1993L0022 — EN — 26.09.1998 — 002.001 — 17
(c) the address in the host Member State from which documents may be
obtained;
(d) the names of those responsible for the management of the branch.
3. Unless the competent authorities of the home Member State have reason
to doubt the adequacy of the administrative structure or the financial situation
of an investment firm, taking into account the activities envisaged, they shall,within three months of receiving all the information referred to in paragraph2, communicate that information to the competent authorities of the host
Member State and shall inform the investment firm concerned accordingly.
They shall also communicate details of any compensation scheme intended to
protect the branch’ s investors.
Where the competent authorities of the home Member State refuse to
communicate the information referred to in paragraph 2 to the competent
authorities of the host Member State, they shall give reasons for their refusalto the investment firm concerned within three months of receiving all theinformation. That refusal or failure to reply shall be subject to the right to
apply to the courts in the home Member States.
4. Before the branch of an investment firm commences business the
competent authorities of the host Member State shall, within two months of
receiving the information referred to in paragraph 3, prepare for thesupervision of the investment firm in accordance with Article 19 and, ifnecessary, indicate the conditions, including the rules of conduct, under
which, in the interest of the general good, that business must be carried on in
the host Member State.
5. On receipt of a communication from the competent authorities of the
host Member State or on the expiry of the period provided for in paragraph 4without receipt of any communication from those authorities, the branch maybe established and commence business.
6. In the event of a change in any of the particulars communicated in
accordance with paragraph 2 (b), (c) or (d), an investment firm shall give
written notice of that change to the competent authorities of the home and
host Member States at least one month before implementing the change sothat the competent authorities of the home Member State may take a decision
on the change under paragraph 3 and the competent authorities of the host
Member State may do so under paragraph 4.
7. In the event of a change in the particulars communicated in accordance
with the second subparagraph of paragraph 3, the authorities of the homeMember State shall inform the authorities of the host Member Stateaccordingly.
Article 18
1. Any investment firm wishing to carry on business within the territory of
another Member State for the first time under the freedom to provide services
shall communicate the following information to the competent authorities of
its home Member State:
— the Member State in which it intends to operate,
— a programme of operations stating in particular the investment service
or services which it intends to provide.
2. The competent authorities of the home Member State shall, within one
month of receiving the information referred to in paragraph 1, forward it to
the competent authorities of the host Member State. The investment firm may
then start to provide the investment service or services in question in the hostMember State.
Where appropriate, the competent authorities of the host Member State shall,
on receipt of the information referred to in paragraph 1, indicate to theinvestment firm the conditions, including the rules of conduct, with which, in
the interest of the general good, the providers of the investment services in
question must comply in the host Member State.!B1993L0022 — EN — 26.09.1998 — 002.001 — 18
3. Should the content of the information communicated in accordance with
the second indent of paragraph 1 be amended, the investment firm shall givenotice of the amendment in writing to the competent authorities of the homeMember State and of the host Member State before implementing the change,
so that the competent authorities of the host Member State may, if necessary,
inform the firm of any change or addition to be made to the informationcommunicated under paragraph 2.
Article 19
1. Host Member States may, for statistical purposes, require all investment
firms with branches within their territories to report periodically on theiractivities in those host Member States to the competent authorities of those
host Member States.
In discharging their responsibilities in the conduct of monetary policy,
without prejudice to the measures necessary for the strengthening of theEuropean Monetary System, host Member States may within their territories
require all branches of investment firms originating in other Member States to
provide the same particulars as national investment firms for that purpose.
2. In discharging their responsibilities under this Directive, host Member
States may require branches of investment firms to provide the sameparticulars as national firms for that purpose.
Host Member States may require investment firms carrying on business
within their territories under the freedom to provide services to provide theinformation necessary for the monitoring of their compliance with thestandards set by the host Member State that apply to them, although those
requirements may not be more stringent than those which the same Member
State imposes on established firms for the monitoring of their compliancewith the same standards.
3. Where the competent authorities of a host Member State ascertain that
an investment firm that has a branch or provides services within its territory is
in breach of the legal or regulatory provisions adopted in that State pursuantto those provisions of this Directive which confer powers on the host MemberState’s competent authorities, those authorities shall require the investment
firm concerned to put an end to its irregular situation.
4. If the investment firm concerned fails to take the necessary steps, the
competent authorities of the host Member State shall inform the competentauthorities of the home Member State accordingly. The latter shall, at the
earliest opportunity, take all appropriate measures to ensure that the
investment firm concerned puts an end to its irregular situation. The natureof those measures shall be communicated to the competent authorities of thehost Member State.
5. If, despite the measures taken by the home Member State or because
such measures prove inadequate or are not available in the State in question,the investment firm persists in violating the legal or regulatory provisionsreferred to in paragraph 2 in force in the host Member State, the latter may,
after informing the competent authorities of the home Member State, take
appropriate measures to prevent or to penalize further irregularities and, in sofar as necessary, to prevent that investment firm from initiating any further
transactions within its territory. The Member States shall ensure that within
their territories it is possible to serve the legal documents necessary for thosemeasures on investment firms.
6. The foregoing provisions shall not affect the powers of host Member
States to take appropriate measures to prevent or to penalize irregularities
committed within their territories which are contrary to the rules of conduct
introduced pursuant to Article 11 as well as to other legal or regulatoryprovisions adopted in the interest of the general good. This shall include the
possibility of preventing offending investment firms from initiating any
further transactions within their territories.
7. Any measure adopted pursuant to paragraphs 4, 5 or 6 involving
penalties or restrictions on the activities of an investment firm must be
properly justified and communicated to the investment firm concerned. Every
such measure shall be subject to the right to apply to the courts in the MemberState which adopted it.!B1993L0022 — EN — 26.09.1998 — 002.001 — 19
8. Before following the procedure laid down in paragraphs 3, 4 or 5 the
competent authorities of the host Member State may, in emergencies, take anyprecautionary measures necessary to protect the interests of investors andothers for whom services are provided. The Commission and the competent
authorities of the other Member States concerned must be informed of such
measures at the earliest opportunity.
After consulting the competent authorities of the Member States concerned,
the Commission may decide that the Member State in question must amend orabolish those measures.
9. In the event of the withdrawal of authorization, the competent
authorities of the host Member State shall be informed and shall take
appropriate measures to prevent the investment firm concerned from initiatingany further transactions within its territory and to safeguard investors’
interests. Every two years the Commission shall submit a report on such cases
to the committee set up at a later stage in the securities field.
10. The Member States shall inform the Commission of the number and
type of cases in which there have been refusals pursuant to Article 17 ormeasures have been taken in accordance with paragraph 5. Every two years
the Commission shall submit a report on such cases to the committee set up at
a later date in the securities field.
Article 20
1. In order to ensure that the authorities responsible for the markets and for
supervision have access to the information necessary for the performance of
their duties, home Member States shall at least require:
(a) without prejudice to steps taken in implementation of Article 10, that
investment firms keep at the disposal of the authorities for at least fiveyears the relevant data on transactions relating to the services referred to
in Article 14 (1) which they have carried out in instruments dealt in on a
regulated market, whether such transactions were carried out on aregulated market or not;
(b) that investment firms report to competent authorities in their home
Member States all the transactions referred to in (a) where those
transactions cover:
— shares or other instruments giving access to capital,— bonds and other forms of securitized debt,— standardized forward contracts relating to shares or— standardized options on shares.
Such reports must be made available to the relevant authority at the earliest
opportunity. The time limit shall be fixed by that authority. It may be extendedto the end of the following working day where operational or practical reasons
so dictate but in no circumstances may it exceed that limit.
Such reports must, in particular, include details of the names and numbers of
the instruments bought or sold, the dates and times of the transactions, thetransaction prices and means of identifying the investment firms concerned.
Home Member States may provide that the obligation imposed in (b) shall, in
the case of bonds and other forms of securitized debt, apply only to
aggregated transactions in the same instrument.
2. Where an investment firm carries out a transaction on a regulated
market in its host Member State, the home Member State may waive its ownrequirements as regards reporting if the investment firm is subject toequivalent requirements to report the transaction in question to the authorities
in charge of that market.
3. Member States shall provide that the report referred to in paragraph 1
(b) shall be made either by the investment firm itself or by a trade-matchingsystem, or through stock-exchange authorities or those of another regulated
market.
4. Member States shall ensure that the information available in accordance
with this Article is also available for the proper application of Article 23.
5. Each Member State may, in a non-discriminatory manner, adopt or
maintain provisions more stringent in the field governed by this Article with!B1993L0022 — EN — 26.09.1998 — 002.001 — 20
regard to substance and form in respect of the conservation and reporting of
data relating to transactions:
— carried out on a regulated market of which it is the home Member State
or
— carried out by investment firms of which it is the home Member State.
Article 21
1. In order to enable investors to assess at any time the terms of a
transaction they are considering and to verify afterwards the conditions inwhich it has been carried out, each competent authority shall, for each of theregulated markets which it has entered on the list provided for in Article 16,
take measures to provide investors with the information referred to in
paragraph 2. In accordance with the requirements imposed in paragraph 2, thecompetent authorities shall determine the form in which and the precise time
within which the information is to be provided, as well as the means by which
it is to be made available, having regard to the nature, size and needs of themarket concerned and of the investors operating on that market.
2. The competent authorities shall require for each instrument at least:
(a) publication at the start of each day’ s trading on the market of the
weighted average price, the highest and the lowest prices and thevolume dealt in on the regulated market in question for the whole of the
preceding day’ s trading;
(b) in addition, for continuous order-driven and quote-driven markets,
publication:
— at the end of each hour’ s trading on the market, of the weighted
average price and the volume dealt in on the regulated market in
question for a six-hour trading period ending so as to leave twohours’ trading on the market before publication, and
— every 20 minutes, of the weighted average price and the highest
and lowest prices on the regulated market in question for atwo-hour trading period ending so as to leave one hour’ s tradingon the market before publication.
Where investors have prior access to information on the prices and quantities
for which transactions may be undertaken:
(i) such information shall be available at all times during market trading
hours;
(ii) the terms announced for a given price and quantity shall be terms on
which it is possible for an investor to carry out such a transaction.
The competent authorities may delay or suspend publication where that proves
to be justified by exceptional market conditions or, in the case of smallmarkets, to preserve the anonymity of firms and investors. The competentauthorities may apply special provisions in the case of exceptional
transactions that are very large in scale compared with average transactions
in the security in question on that market and in the case of highly illiquidsecurities defined by means of objective criteria and made public. Thecompetent authorities may also apply more flexible provisions, particularly as
regards publication deadlines, for transactions concerning bonds and other
forms of securitized debt.
3. In the field governed by this Article each Member State may adopt or
maintain more stringent provisions or additional provisions with regard the
substance and form in which information must be made available to investorsconcerning transactions carried out on regulated markets of which it is thehome Member State, provided that those provisions apply regardless of the
Member State in which the issuer of the financial instrument is located or of
the Member State on the regulated market of which the instrument was listedfor the first time.
4. The Commission shall report on the application of this Article no later
than 31 December 1997; the Council may, on a proposal from theCommission, decide by a qualified majority to amend this Article.!B1993L0022 — EN — 26.09.1998 — 002.001 — 21
TITLE VI
Authorities responsible for authorization and supervision
Article 22
1. Member States shall designate the competent authorities which are to
carry out the duties provided for in this Directive. They shall inform the
Commission thereof, indicating any division of those duties.
2. The authorities referred to in paragraph 1 must be either public
authorities, bodies recognized by national law or bodies recognized by public
authorities expressly empowered for that purpose by national law.
3. The authorities concerned must have all the powers necessary for the
performance of their functions.
Article 23
1. Where there are two or more competent authorities in the same Member
State, they shall collaborate closely in supervising the activities of investment
firms operating in that Member State.
2. Member States shall ensure that such collaboration takes place between
such competent authorities and the public authorities responsible for thesupervision of financial markets, credit and other financial institutions andinsurance undertakings, as regards the entities which those authorities
supervise.
3. Where, through the provision of services or by the establishment of
branches, an investment firm operates in one or more Member States otherthan its home Member State the competent authorities of all the MemberStates concerned shall collaborate closely in order more effectively to
discharge their respective responsibilities in the area covered by this
Directive.
They shall supply one another on request with all the information concerning
the management and ownership of such investment firms that is likely tofacilitate their supervision and all information likely to facilitate the
monitoring of such firms. In particular, the authorities of the home Member
State shall cooperate to ensure that the authorities of the host Member Statecollect the particulars referred to in Article 19 (2).
In so far as it is necessary for the purpose of exercising their powers of
supervision, the competent authorities of the home Member State shall be
informed by the competent authorities of the host Member State of any
measures taken by the host Member State pursuant to Article 19 (6) whichinvolve penalties imposed on an investment firm or restrictions on aninvestment firm’ s activities.
Article 24
1. Each host Member State shall ensure that, where an investment firm
authorized in another Member State carries on business within its territory
through a branch, the competent authorities of the home Member State may,after informing the competent authorities of the host Member State,
themselves or through the intermediary of persons they instruct for the
purpose carry out on-the-spot verification of the information referred to inArticle 23 (3).
2. The competent authorities of the home Member State may also ask the
competent authorities of the host Member State to have such verification
carried out. Authorities which receive such requests must, within the
framework of their powers, act upon them by carrying out the verificationsthemselves, by allowing the authorities who have requested them to carrythem out or by allowing auditors or experts to do so.
3. This Article shall not affect the right of the competent authorities of a
host Member State, in discharging their responsibilities under this Directive,
to carry out on-the-spot verifications of branches established within theirterritory.!B1993L0022 — EN — 26.09.1998 — 002.001 — 22
Article 25
1. Member States shall provide that all persons who work or who have
worked for the competent authorities, as well as auditors and experts
instructed by the competent authorities, shall be bound by the obligation of
professional secrecy. Accordingly no confidential information which theymay receive in the course of their duties may be divulged to any person or
authority whatsoever, save in summary or aggregate form such that individual
investment firms cannot be identified, without prejudice to cases covered bycriminal law.
Nevertheless, where an investment firm has been declared bankrupt or is
being compulsorily wound up, confidential information which does not
concern third parties involved in attempts to rescue that investment firm may
be divulged in civil or commercial proceedings.
2. Paragraph 1 shall not prevent the competent authorities of different
Member States from exchanging information in accordance with thisDirective or other Directives applicable to investment firms. That informationshall be subject to the conditions of professional secrecy imposed in
paragraph 1.
3. Member States may conclude cooperation agreements providing for
exchanges of information with the competent authorities of third countriesonly if the information disclosed is covered by guarantees of professionalsecrecy at least equivalent to those provided for in this Article.
4. Competent authorities receiving confidential information under para-
graph 1 or 2 may use it only in the course of their duties:
— to check that the conditions governing the taking up of the business of
investment firms are met and to facilitate the monitoring, on a
non-consolidated or consolidated basis, of the conduct of that business,especially with regard to the capital adequacy requirements imposed in
Directive 93/6/EEC, administrative and accounting procedures and
internal-control mechanisms,
— to impose sanctions,— in administrative appeals against decisions by the competent authorities,
or
— in court proceedings initiated under Article 26.5. Paragraphs 1 and 4 shall not preclude the exchange of information:(a) within a Member State, where there are two or more competent
authorities, or
(b) within a Member State or between Member States, between competent
authorities and
— authorities responsible for the supervision of credit institutions,
other financial organizations and insurance undertakings and theauthorities responsible for the supervision of financial markets,
— bodies responsible for the liquidation and bankruptcy of invest-
ment firms and other similar procedures and
— persons responsible for carrying out statutory audits of the
accounts of investment firms and other financial institutions,
in the performance of their supervisory functions, or the disclosure to
bodies which administer compensation schemes of information necess-ary for the performance of their functions. Such information shall besubject to the conditions of professional secrecy imposed in paragraph
1.
5a. Notwithstanding paragraphs 1 to 4, Member States may authorize
exchanges of information between, the competent authorities and:
— the authorities responsible for overseeing the bodies involved in the
liquidation and bankruptcy of investment firms and other similar
procedures, or
— the authorities responsible for overseeing persons charged with carrying
out statutory audits of the accounts of insurance undertakings, creditinstitutions, investment firms and other financial institutions.!B
!M11993L0022 — EN — 26.09.1998 — 002.001 — 23
Member States which have recourse to the option provided for in the first
subparagraph shall require at least that the following conditions are met:
— the information shall be for the purpose of performing the task of
overseeing referred to in the first subparagraph,
— information received in this context shall be subject to the conditions of
professional secrecy imposed in paragraph 1,
— where the information originates in another Member State, it may not be
disclosed without the express agreement of the competent authoritieswhich have disclosed it and, where appropriate, solely for the purposesfor which those authorities gave their agreement.
Member States shall communicate to the Commission and to the other
Member States the names of the authorities which may receive informationpursuant to this paragraph.
5b. Notwithstanding paragraphs 1 to 4, Member States may, with the aim of
strengthening the stability, including integrity, of the financial system,authorize the exchange of information between the competent authorities and
the authorities or bodies responsible under the law for the detection and
investigation of breaches of company law.
Member States which have recourse to the option provided for in the first
subparagraph shall require at least that the following conditons are met:
— the information shall be for the purpose of performing the task referred
to in the first subparagraph,
— information received in this context shall be subject to the conditions of
professional secrecy imposed in paragraph 1,
— where the information originates in another Member State, it may not be
disclosed without the express agreement of the competent authorities
which have disclosed it and, where appropriate, solely for the purposes
for which those authorities gave their agreement.
Where, in a Member State, the authorities or bodies referred to in the first
subparagraph perform their task of detection or investigation with the aid, in
view of their specific competence, of persons appointed for that purpose andnot employed in the public sector, the possibility of exchanging informationprovided for in the first subparagraph may be extended to such persons under
the conditions stipulated in the second subparagraph.
In order to implement the final indent of the second subparagraph, the
authorities or bodies referred to in the first subparagraph shall communicate
to the competent authorities which have disclosed the information, the names
and precise responsibilities of the persons to whom it is to be sent.
Member States shall communicate to the Commission and to the other
Member States the names of the authorities or bodies which may receive
information pursuant to this paragraph.
Before 31 December 2000, the Commission shall draw up a report on the
application of the provisions of this paragraph.
6. This Article shall not prevent a competent authority from transmitting:— to central banks and other bodies with a similar function in their
capacity as monetary authorities,
— where appropriate, to other public authorities responsible for overseeing
payment systems,
information intended for the performance of their task, nor shall it prevent
such authorities or bodies from communicating to the competent authoritiessuch information as they may need for the purposes of paragraph 4.Information received in this context shall be subject to the conditions of
professional secrecy imposed in this Article.
7. This Article shall not prevent the competent authorities from
communicating the information referred to in paragraphs 1 to 4 to a clearing
house or other similar body recognized under national law for the provision of
clearing or settlement services for one of their Member State’ s markets if theyconsider that it is necessary to communicate the information in order toensure the proper functioning of those bodies in relation to defaults or
potential defaults by market participants. The information received shall be
subject to the conditions of professional secrecy imposed in paragraph 1. The!M1
!B1993L0022 — EN — 26.09.1998 — 002.001 — 24
Member States shall, however, ensure that information received under
paragraph 2 may not be disclosed in the circumstances referred to in thisparagraph without the express consent of the competent authorities whichdisclosed it.
8. In addition, notwithstanding the provisions referred to in paragraphs 1
and 4, Member States may, by virtue of provisions laid down by law, authorize
the disclosure of certain information to other departments of their centralgovernment administrations responsible for legislation on the supervision ofcredit institutions, financial institutions, investment firms and insurance
undertakings and to inspectors instructed by those departments.
Such disclosures may, however, be made only where necessary for reasons of
prudential control.
Member States shall, however, provide that information received under
paragraphs 2 and 5 and that obtained by means of the on-the-spot verificationsreferred to in Article 24 may never be disclosed in the cases referred to in this
paragraph except with the express consent of the competent authorities which
disclosed the information or of the competent authorities of the Member Statein which the on-the-spot verification was carried out.
9. If, at the time of the adoption of this Directive, a Member State provides
for the exchange of information between authorities in order to check
compliance with the laws on prudential supervision, on the organization,operation and conduct of commercial companies and on the regulation offinancial markets, that Member State may continue to authorize the
forwarding of such information pending coordination of all the provisions
governing the exchange of information between authorities for the entirefinancial sector but not in any case after 1 July 1996.
Member States shall, however, ensure that, where information comes from
another Member State, it may not be disclosed in the circumstances referred
to in the first subparagraph without the express consent of the competent
authorities which disclosed it and it may be used only for the purposes forwhich those authorities gave their agreement.
The Council shall effect the coordination referred to in the first subparagraph
on the basis of a Commission proposal. The Council notes the Commission’ s
statement to the effect that it will submit proposals by 31 July 1993 at the
latest. The Council will act on those proposals within the shortest possibletime with the intention of bringing the rules proposed into effect on the samedate as this Directive.
Article 25a
1. Member States shall provide at least that:
(a) any person authorized within the meaning of Directive 84/253/EEC (
1),
performing in an investment firm the task described in Article 51 of
Directive 78/660/EEC (2), Article 37 of Directive 83/349/EEC or Article
31 of Directive 85/611/EEC or any other statutory task, shall have aduty to report promptly to the competent authorities any fact or decisionconcerning that undertaking of which he has become aware while
carrying out that task which is liable to:
— constitute a material breach of the laws, regulations or adminis-
trative provisions which lay down the conditions governingauthorization or which specifically govern pursuit of the activities
of investment firms, or
— affect the continuous functioning of the investment firm, or
— lead to refusal to certify the accounts or to the expression of
reservations;
(b) that person shall likewise have a duty to report any facts and decisions
of which he becomes aware in the course of carrying out a task asdescribed in (a) in an undertaking having close links resulting from a
control relationship with the investment firm within which he is
carrying out the abovementioned task.!B
(1) OJ No L 126, 12. 5. 1984, p. 20.
(2) OJ No L 222, 14. 8. 1978, p. 11. Directive as last amended by Directive
90/605/EEC (OJ No L 317, 16. 11. 1990, p. 60).!M11993L0022 — EN — 26.09.1998 — 002.001 — 25
2. The disclosure in good faith to the competent authorities, by persons
authorized within the meaning of Directive 84/253/EEC, of any fact ordecision referred to in paragraph 1 shall not constitute a breach of anyrestriction on disclosure of information imposed by contract of by any
legislative, regulatory or administrative provision and shall not involce such
persons in liability of any kind.
Article 26
Member States shall ensure that decisions taken in respect of an investment
firm under laws, regulations and administrative provisions adopted in
accordance with this Directive are subject to the right to apply to the courts;the same shall apply where no decision is taken within six months of itssubmission in respect of an application for authorization which provides all
the information required under the provisions in force.
Article 27
Without prejudice to the procedures for the withdrawal of authorization or to
the provisions of criminal law, Member States shall provide that theirrespective competent authorities may, with regard to investment firms or thosewho effectively control the business of such firms that infringe laws,
regulations or administrative provisions concerning the supervision or
carrying on of their activities, adopt or impose in respect of them measuresor penalties aimed specifically at ending observed breaches or the causes ofsuch breaches.
Article 28
Member States shall ensure that this Directive is implemented without
discrimination.
TITLE VII
Final provisions
Article 29
Pending the adoption of a further Directive laying down provisions adapting
this Directive to technical progress in the areas specified below, the Councilshall, in accordance with Decision 87/373/EEC (
1),20acting by a qualified
majority on a proposal from the Commission, adopt any adaptations which
may be necessary, as follows:
— expansion of the list in Section C of the Annex,— adaptation of the terminology of the lists in the Annex to take account of
developments on financial markets,
— the areas in which the competent authorities must exchange information
as listed in Article 23;
— clarification of the definitions in order to ensure uniform application of
this Directive in the Community,
— clarification of the definitions in order to take account in the
implementation of this Directive of developments on financial markets,
— the alignment of terminology and the framing of definitions in
accordance with subsequent measures on investment firms and related
matters,
— the other tasks provided for in Article 7 (5).!M1
(1) OJ No L 197, 18. 7. 1987, p. 33.!B1993L0022 — EN — 26.09.1998 — 002.001 — 26
Article 30
1. Investment firms already authorized in their home Member States to
provide investment services before 31 December 1995 shall be deemed to be
so authorized for the purpose of this Directive, if the laws of those Member
States provide that to take up such activities they must comply with conditionsequivalent to those imposed in Articles 3 (3) and 4.
2. Investment firms which are already carrying on business on 31
December 1995 and are not included among those referred to in paragraph1 may continue their activities profided that, no later than 31 December 1996
and pursuant to the provisions of their home Member States, they obtain
authorization to continue such activities in accordance with the provisionsadopted in implementation of this Directive.
Only the grant of such authorization shall enable such firms to qualify under
the provisions of this Directive on the right of establishment and the freedom
to provide services.
3. Where before the date of the adoption of this Directive investment firms
have commenced business in other Member States either through branches or
under the freedom to provide services, the authorities of each home MemberState shall, between 1 July and 31 December 1995, communicate, for thepurposes of Articles 17 (1) and (2) and 18, to the authorities of each of the
other Member States concerned the list of firms that comply with this
Directive and operate in those States, indicating the business carried on.
4. Natural persons authorized in a Member State on the date of the
adoption of this Directive to offer investment services shall be deemed to beauthorized under this Directive, provided that they fulfil the requirements
imposed in Article 1 (2), second subparagraph, second indent, and third
subparagraph, all four indents.
Article 31
No later than 1 July 1995 Member States shall adopt the laws, regulations and
administrative provisions necessary for them to comply with this Directive.
These provisions shall enter into force no later than 31 December 1995. The
Member States shall forthwith inform the Commission thereof.
When Member States adopt the provisions referred to in the first paragraph
they shall include a reference to this Directive or accompany them with such areference on the occasion of their official publication. The manner in which
such references are to be made shall be laid down by the Member States.
Article 32
This Directive is addressed to the Member States.!B1993L0022 — EN — 26.09.1998 — 002.001 — 27
ANNEX
SECTION A
Services
1. (a) Reception and transmission, on behalf of investors, of orders in relation
to one or more of the instruments listed in Section B.
(b) Execution of such orders other than for own account.
2. Dealing in any of the instruments listed in Section B for own account.3. "
C2Managing portfolios of investments in accordance with mandates given
by investors on a discretionary, 3client-by-client basis where such portfolios
include one or more of the instruments listed in Section B.
4. Underwriting in respect of issues of any of the instruments listed in Section B
and/or the placing of such issues.
SECTION B
Instruments
1. (a) Transferable securities.
(b) Units in collective investment undertakings.
2. Money-market instruments.3. Financial-futures contracts, including equivalent cash-settled instruments.
4. Forward interest-rate agreements (FRAs).
5. Interest-rate, currency and equity swaps.6. Options to acquire or dispose of any instruments falling within this section of
the Annex, including equivalent cash-settled instruments. This categoryincludes in particular options on currency and on interest rates.
SECTION C
Non-core services
1. Safekeeping and administration in relation to one or more of the instruments
listed in Section B.
2. Safe custody services.
3. Granting credits or loans to an investor to allow him to carry out a transaction in
one or more of the instruments listed in Section B, where the firm granting thecredit or loan is involved in the transaction.
4. Advice to undertakings on capital structure, industrial strategy and related
matters and advice and service relating to mergers and the purchase ofundertakings.
5. Services related to underwriting.6. Investment advice concerning one or more of the instruments listed in Section
B.
7. Foreign-exchange service where these are connected with the provision of
investment services.!
B1993L0022 — EN — 26.09.1998 — 002.001 — 28