2010R1031 — EN — 27.02.2014 — 005.001

This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents

►B COMMISSION REGULATION (EU) No 1031/2010 of 12 November 2010 on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances pursuant to Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowances trading within the Community (Text with EEA relevance) (OJ L 302, 18.11.2010, p.1)

Amended by:









▼B

COMMISSION REGULATION (EU) No 1031/2010

of 12 November 2010

on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances pursuant to Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowances trading within the Community

(Text with EEA relevance)







THE EUROPEAN COMMISSION, Having regard to the Treaty on the Functioning of the European Union, Having regard to Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC ( 1 ), and in particular Articles 3d(3) and 10(4) thereof, Whereas: (1) Directive 2003/87/EC was revised and amended by Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community ( 2 ) and Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community ( 3 ). One of the improvements determined in the revision of Directive 2003/87/EC was that auctioning should be the basic principle for allocation, as it is the simplest and generally considered to be the most economically efficient means of doing so. The efficiency of the emissions trading scheme relies on a clear carbon price signal to achieve abatement of greenhouse gas emissions at least cost. Auctioning should support and strengthen such a carbon price signal. (2) Article 10(1) of Directive 2003/87/EC requires Member States to auction allowances covered by Chapter III of that Directive not allocated free of charge. Thus, Member States must auction allowances not allocated free of charge. They may not use any other means of allocation, nor could they withhold or cancel allowances not allocated for free instead of auctioning them. (3) Article 10(4) of Directive 2003/87/EC lays down various objectives for the auctioning process. It should be predictable, in particular as regards the timing and sequencing of auctions and the estimated volumes of allowances to be made available. Auctions should be designed to ensure that small and medium-sized enterprises covered by the emissions trading scheme have full, fair and equitable access, that small emitters are granted access, that participants have access to information at the same time, that participants do not undermine the operation of the auctions, and that the organisation of and participation in the auctions is cost-efficient avoiding undue administrative costs. (4) These objectives should be read in the context of the overarching aims of the revision of Directive 2003/87/EC, which include, inter alia, more harmonisation, avoidance of distortions of competition and greater predictability, all of which should reinforce the carbon price signal to achieve abatement of emissions at least cost. Indeed, the increased emissions reduction effort requires the highest possible degree of economic efficiency on the basis of fully harmonised conditions of allocation within the Union. (5) Article 3d(1) of Directive 2003/87/EC provides for the auctioning of 15 % of allowances covered by Chapter II of that Directive in the period from 1 January 2012 to 31 December 2012 whilst Article 3d(2) provides for the auctioning of the same percentage of allowances covered by Chapter II of Directive 2003/87/EC in the period from 1 January 2013 onwards. Article 3d(3) requires the adoption of a regulation containing detailed provisions for the auctioning by Member States of allowances covered by Chapter II not required to be issued free of charge in accordance with Article 3d(1) and (2) or Article 3f(8) of Directive 2003/87/EC. (6) According to the majority of stakeholders involved in the consultation prior to the adoption of this Regulation, the overwhelming majority of Member States and the impact assessment carried out by the Commission, a common auctioning infrastructure where a common auction platform conducts the auctions best achieves the overarching objectives of the review of Directive 2003/87/EC. Such an approach avoids any distortions of the internal market. It allows for the highest degree of economic efficiency and permits allowances to be allocated through auctioning on the basis of fully harmonised conditions within the Union. Moreover, conducting the auctions by means of a common auction platform best strengthens the carbon price signal required for economic operators to make the investment decisions necessary to achieve abatement of greenhouse gas emissions at least cost. (7) According to the majority of stakeholders involved in the consultation prior to the adoption of this Regulation, the overwhelming majority of Member States and the impact assessment carried out by the Commission, a common auctioning infrastructure where a common auction platform conducts the auctions also best achieves the objectives in Article 10(4) of Directive 2003/87/EC. Such an approach is the most cost-effective means of auctioning allowances without an undue administrative burden that would necessarily ensue from using multiple auctioning infrastructures. It best provides for open, transparent and non-discriminatory access to the auctions, both de jure and de facto. Such a common approach would ensure the predictability of the auction calendar and best strengthens the clarity of the carbon price signal. A common auctioning infrastructure is particularly important for providing equitable access to small and medium-sized enterprises covered by the emissions trading scheme and access to small emitters. Indeed, the cost of becoming familiar and registering with, as well as participating in, more than one auction platform would be particularly burdensome for such companies. A common auction platform facilitates the widest participation from across the Union and, thereby, best mitigates the risk of participants undermining the auctions by using them as a vehicle for money laundering, terrorist financing, criminal activity or market abuse. (8) Nevertheless, to mitigate any risk of reduced competition in the carbon market, this Regulation provides for the possibility for Member States to opt-out of the common auction platform by appointing their own auction platforms subject to the listing of these opt-out platforms in an Annex to this Regulation. Such listing should be based on a notification of the opt-out platform by the appointing Member State to the Commission. However, this possibility inevitably implies less than full harmonisation of the auction process and, therefore, the arrangements put in place in this Regulation should be reviewed within an initial five-year period and in consultation with stakeholders with a view to making any changes deemed necessary in the light of the experience acquired. Following receipt of a notification in relation to an opt-out platform from a Member State, the Commission should act without undue delay in relation to the listing of that opt-out platform. (9) In addition, it should be possible for a Member State to request the auction monitor to draw up a report about the functioning of the auction platform it intends to appoint, for instance when preparing any amendment of this Regulation to list opt-out auction platforms. Moreover, the auction monitor should keep under review the compatibility of all auction platforms with this Regulation and the objectives of Article 10(4) of Directive 2003/87/EC and report thereon to the Member States, the Commission and the auction platform concerned. Such review should include the impact of the auctions on the market position of the auction platforms on the secondary market. To avoid auctioning Member States unwittingly becoming locked-into any auction platform beyond its term of appointment, any contracts appointing an auction platform should contain appropriate provisions requiring an auction platform to hand over of all tangible and intangible assets necessary for the conduct of the auctions by an auction platform’s successor. (10) The choices as regards the number of auction platforms and the type of entity that may become an auction platform underpin the provisions adopted in this Regulation for a predictable auction calendar as well as the measures on accessing the auctions, the design of the auctions, and the provisions on the management of collateral, payment and delivery and on auction supervision. Such provisions could not be adopted by the Commission in a fully harmonised regulation without knowing the number of auction platforms and the specific capabilities of the entity chosen to conduct the auctions. Therefore, the measures adopted in this Regulation are based on auctions being conducted through a common auction platform whilst providing for a procedure to ascertain the number and quality of any other auction platform a Member State may decide to use. (11) In view of the constraints outlined in recital (10), it is appropriate for the listing of an opt-out auction platform in an Annex to this Regulation to be made subject to conditions or obligations. The listing of an opt-out platform in an Annex to this Regulation is without prejudice to the powers of the Commission to propose the delisting of an auction platform in particular in the event of any breach of this Regulation or the objectives of Article 10(4) of Directive 2003/87/EC. In the absence of listing, the auctioning Member State should auction its allowances through the common auction platform. The Commission should provide in the Commission regulation adopted pursuant to Article 19(3) of Directive 2003/87/EC for measures suspending the execution of processes pertaining to the auctioning of allowances in circumstances where the opt-out platform is in breach of this Regulation or the objectives of Article 10(4) of Directive 2003/87/EC. (12) The detailed provisions pertaining to the auction process to be conducted by the opt-out auction platform should be assessed by the Commission and should be subject to consultation of the Committee referred to in Article 23(3) of Directive 2003/87/EC in accordance with the regulatory procedure with scrutiny provided for in Article 10(4) of Directive 2003/87/EC. Such an assessment is necessary to ensure that the appointment of the opt-out auction platform, conducted at national level by each opting-out Member State, is subject to a similar level of scrutiny as that to which the appointment of the common auction platform is subject under the joint action provided for in this Regulation. Member States participating in the joint procurement of the common auction platform will be doing so together with the Commission which will be involved in the entire process. Moreover, opt-out Member States will be given observer status in the joint procurement process, subject to appropriate terms and conditions agreed by the Commission and participating Member States, in the joint procurement agreement. (13) This Regulation should apply to the auctioning of allowances covered by Chapter II and Chapter III of Directive 2003/87/EC from, respectively, 1 January 2012 onwards and 1 January 2013 onwards. It should also apply to the auctioning of any allowances covered by Chapter III of Directive 2003/87/EC prior to the start of the period from 2013, if necessary to ensure an orderly functioning of the carbon and electricity markets. (14) For reasons of simplicity and accessibility, the allowances auctioned should be available for delivery within five trading days at the latest. Such short-term delivery deadlines would limit any potential negative impact on competition between the auction platforms and trading places in the secondary market for allowances. Moreover, short-term delivery deadlines are simpler, encourage wide participation thereby mitigating the risk of market abuse and better ensure accessibility for small and medium-sized enterprises covered by the scheme and small emitters. Rather than providing forwards and futures in the auctions, it is for the market to offer optimal solutions to respond to the demand for allowance derivatives. It is appropriate to provide for a choice between two-day spot and five-day futures to be made during the process for the appointment of the auction platform to assess the best solution for the optimal auctioned product to be selected. Whilst two-day spot is not a financial instrument under Union financial market legislation, five-day futures are financial instruments within the meaning of Union financial market regulation. (15) The choice of whether or not the auctioned product should be a financial instrument should be part of the procedures for selecting the auction platform and should be made on the basis of an overall assessment of the costs and benefits of the solutions offered by candidates taking part in the competitive procurement process. This assessment should concern, notably, cost efficiency, equitable access for small and medium-sized enterprises covered by the scheme and small emitters, adequate protections and market supervision. (16) For as long as the legal measures and technical means necessary to deliver allowances are not in place, it is appropriate to provide for an alternative means of auctioning allowances. To this end, this Regulation provides for the possibility of auctioning futures and forwards with delivery no later than 31 December 2013. Such futures and forwards are financial instruments which allow the auctioneer and bidders alike to benefit from protections analogous to those available to them within the context of the regulatory framework applicable to financial markets. For the purposes of this Regulation, futures differ from forwards in that whilst the former are subject to cash variation margining, the latter are variation margined through non-cash collateral. It is appropriate to provide the Member States with the option of choosing which type of product to use for the auctioning of allowances in line with which margining provisions would best meet their budgetary situation. If it were necessary to resort to such alternative means of auctioning allowances, futures and forwards would be auctioned on a provisional basis through one or two auction platforms. (17) In view of the desire for simplicity, fairness and cost-efficiency and the need to mitigate the risk of market abuse, auctions should be carried out by means of a single-round, sealed-bid and uniform-price format. Moreover, tied bids should be resolved by means of a random process, as this generates uncertainty for bidders making collusion on the price they are bidding unsustainable. The auction clearing price can be expected to be closely aligned to the prevailing secondary market price, whereas an auction clearing price significantly under the prevailing secondary market price is likely to indicate a deficiency of the auction. Allowing such an auction clearing price to prevail could distort the carbon price signal, disturb the carbon market and would not ensure that bidders pay fair value for the allowances. Therefore, in such a situation, the auction should be cancelled. (18) A relatively high frequency of the auctions is desirable to limit the impact of the auctions on the functioning of the secondary market, whilst ensuring that auctions are large enough to attract sufficient participation. A relatively high frequency reduces the risk of market abuse because it decreases the value at stake for bidders in individual auctions and increases their flexibility to make use of later auctions to adjust their trading positions. For these reasons, this Regulation should provide for a frequency of at least weekly auctions for allowances covered by Chapter III of Directive 2003/87/EC. Given the much smaller volume of allowances covered by Chapter II of the same Directive, the appropriate frequency for auctions for these allowances is at least once every two months. (19) To provide predictability to the secondary market, this Regulation should provide the following rules and procedures. Firstly, it should provide for determining the volumes of any allowances to be auctioned in 2011 and 2012 as soon as practicable following the adoption of this Regulation. The volumes so determined, as well as the auctioned products through which they are to be auctioned, will be listed in an Annex to this Regulation. Secondly, it should provide clear and transparent rules that determine the volume of allowances to be auctioned in each year thereafter. Thirdly, it should contain rules and procedures to establish for each calendar year a detailed auction calendar, with all relevant information for each individual auction well before the beginning of that calendar year. Any subsequent changes to the auction calendar should only be possible in a limited number of prescribed situations. Any adjustments should be made in a manner least affecting the predictability of the auction calendar. (20) As a rule, the volume to be auctioned in each year should be equal to the volume of allowances attributed to that year. Any allowances covered by Chapter III of Directive 2003/87/EC to be auctioned in 2011 and 2012 would be an exception. Given the expected availability of allowances banked from the second into the third trading period, the expected availability of Certified Emission Reductions (CERs) and the expected volume of allowances to be sold pursuant to Article 10a(8) of Directive 2003/87/EC, it is appropriate to address the impact from any ‘early auctions’ in 2011 and 2012 by rebalancing the volume of allowances to be auctioned in 2013 and 2014. (21) In line with demand on the secondary market, the volume of allowances to be auctioned in each year should be spread evenly throughout the year. (22) Open access is required to encourage participation and, thereby, ensure a competitive auction outcome. Equally, confidence in the integrity of the auction process, in particular vis-à-vis participants seeking to distort the auctions by using them as a vehicle for money laundering, terrorist financing, criminal activity or market abuse is a pre-requisite for ensuring auction participation and a competitive auction outcome. To ensure the integrity of the auctions, access to the auctions should be subject to minimum requirements for adequate customer due diligence checks. To ensure the cost-effectiveness of such checks, eligibility to apply for admission to the auctions should be given to easily identifiable, well-defined categories of participants, notably operators of stationary installations and aircraft operators covered by the emissions trading scheme, as well as regulated financial entities such as investment firms and credit institutions. Also business groupings of operators or aircraft operators, such as partnerships, joint ventures and consortia acting as an agent on behalf of their members, should be eligible to apply for admission to bid in the auctions. Thus, it would be prudent to circumscribe eligibility to apply for admission to the auctions at the beginning without precluding the possibility of enlarging access to the auctions to further categories of participants in the light of the experience acquired through the auctions or following the Commission’s examination pursuant to Article 12(1a) of Directive 2003/87/EC of whether the market for emission allowances is sufficiently protected from market abuse. (23) In addition, for reasons of legal certainty, this Regulation should provide for relevant provisions of Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing ( 4 ) to apply to the auction platform. This is particularly important in view of the fact that the auction platform is required to provide access not only to investment firms and credit institutions but also to operators and aviation operators as well as other persons authorised to bid on their own account and on behalf of others, which are not themselves subject to Directive 2005/60/EC. (24) This Regulation should provide participants with the choice of accessing the auctions directly via either the internet or dedicated connections, through authorised and supervised financial intermediaries or other persons authorised by the Member States to bid on their own account or on behalf of clients of their main business, where their main business is not the provision of investment or banking services, subject to such other persons complying with investor protection measures and customer due diligence measures equivalent to those applicable to investment firms. (25) The addition of other persons authorised by the Member States to the list of persons eligible to apply for admission to bid is intended to give indirect access to operators and aviation operators not only through financial intermediaries but also through other intermediaries with whom they have an existing client relationship such as their power or fuel supplier who are exempt from Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC ( 5 ) pursuant to Article 2(1)(i) of that Directive. (26) In view of legal certainty and transparency, this Regulation should contain detailed provisions on other aspects of auctioning such as lot size, the possibility to withdraw or modify submitted bids, the currency used for bidding and for payment, the submission and processing of applications for admission to bid, as well as any refusal, revocation or suspension of admission. (27) Each Member State should appoint an auctioneer, who would be responsible for the auctioning of allowances on behalf of its appointing Member State. The auction platform should be responsible solely for conducting the auctions. It should be possible for the same auctioneer to be appointed by more than one Member State. The auctioneer should act separately on behalf of each appointing Member State. It should be responsible for auctioning the allowances on the auction platform and for receiving and disbursing the auction proceeds pertaining to each appointing Member State to that Member State. It is important for the agreement(s) between the Member States and their auctioneer to be compatible with the agreement(s) between the auctioneer and the auction platform, and in case of any conflict for the latter to prevail. (28) Furthermore, it is necessary for the auctioneer appointed by a Member State not participating in the common auction platform but appointing its own auction platform to be admitted not only by the auction platform appointed by the Member State concerned but also by the common auction platform. This is desirable to ensure the means for a smooth transition from the opt-out auction platform to the common auction platform should this be required notably in the absence of a listing of the auction platform in an Annex to this Regulation. (29) The requirement that the auction platform is a regulated market is founded on the desire to use the organisational infrastructure available on the secondary market for the administration of the auctions. In particular, regulated markets are bound under Directive 2004/39/EC and under Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse) ( 6 ), to provide a number of safeguards in the conduct of their operations. Those safeguards include arrangements to identify and manage the potential adverse consequences of any conflicts of interest for the operation of the regulated market or its participants; to identify and manage the risks to which they are exposed and to put in place effective measures to mitigate them; to provide for the sound management of the technical operations of their systems establishing effective contingency arrangements to cope with risks of systems disruptions; to have transparent and non-discretionary rules and procedures for fair and orderly trading and establish objective criteria for the efficient execution of orders; to facilitate the efficient and timely finalisation of the transactions executed under their systems; to have available sufficient financial resources to facilitate their orderly functioning, having regard to the nature and extent of the transactions concluded on the market and the range and degree of risks to which they are exposed. (30) The requirement that the auction platform is a regulated market has various further advantages. It allows relying on the organisational infrastructure, experience, capabilities and transparent mandatory operational rules of the market. This is relevant, inter alia, with regard to the clearing or settlement of transactions, as well as monitoring compliance with the market’s own rules and with other legal obligations such as the prohibition of market abuse and the provision of extra-judicial dispute settlement mechanisms. This is cost-effective and helps safeguard the operational integrity of the auctions. The conflict of interest rules of regulated markets would require the auctioneer to be independent of the auction platform, its owners or its market operator so as not to undermine the sound functioning of the regulated market. Moreover, many potential participants in the auctions will already be either members of, or participants, in the various regulated markets active on the secondary market. (31) Under Directive 2004/39/EC, regulated markets and their market operators are authorised and supervised by the competent national authorities in the Member State where the regulated market or its market operator are either registered or situated (i.e. the home Member State). Without prejudice to any relevant provisions of Directive 2003/6/EC, notably any criminal sanctions provided for in national legislation on market abuse, the law applicable to regulated markets is the public law of the home Member State. Thus, they are subject to the jurisdiction of the administrative courts in the home Member State, as determined under national law. This regulatory framework applies to trading, as opposed to auctioning, and only to financial instruments, not to spot products. Therefore, it is appropriate for reasons of legal certainty for this Regulation to provide for the home Member State of the regulated market being appointed as the auction platform to ensure that its national law extends the relevant parts of the aforementioned regulatory framework to the auctions, being conducted by the auction platform coming under its jurisdiction. In addition, this Regulation should require the auction platform to provide for extra-judicial dispute resolution. Furthermore, the relevant Member State should also provide for the right to appeal decisions of the extra-judicial dispute resolution mechanism, regardless of whether the auctioned product is a financial instrument or a spot contract. (32) Competition between different potential auction platforms must be ensured by the competitive procurement process for the appointment of the auction platform where required by either Union or national procurement law. The auction platform should be connected to at least one clearing system or settlement system. More than one clearing system or settlement system may connect to the auction platform. The appointment of the common auction platform should be for a limited period of maximum five years. The appointment of opt-out auction platforms should be for a limited period of maximum three years renewable for another two years during which the arrangements governing all auction platforms should be reviewed. Providing for a period of three years for the opt-out auction platform is designed to ensure a minimum term of appointment for the opt-out platform whilst allowing the appointing Member State to join the common platform if it chooses to do so after the three year period has elapsed, without prejudice to the ability of the appointing Member State to renew the appointment of the opt-out platform for a further two years pending the outcome of the review by the Commission. Upon expiry of each appointment period there should be a new competitive procurement process where a procurement process is required by either Union or national procurement law. Any impact on the secondary market resulting from the selection of a common auction platform to carry out the auctions is expected to be limited, as only allowances with delivery within five days at the latest should be auctioned. (33) The conduct of the auctions, the establishment and management of the auction calendar and various other tasks relating to the auctions, such as maintaining an up-to-date website accessible throughout the Union, require joint action by the Member States and the Commission, within the meaning of the third subparagraph of Article 91(1) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities ( 7 ) (the Financial Regulation). The need for such joint action is derived from the Union-wide ambit of the emissions trading scheme, the overarching policy objectives of the review of Directive 2003/87/EC, and the fact that the Commission is directly responsible under Directive 2003/87/EC for the detailed implementation of a number of features of the emissions trading scheme which have a direct impact in particular on the auction calendar and on the monitoring of the auctions. Therefore, this Regulation should provide for the competitive procurement process for the appointment of the common auction platform and the auction monitor to be carried out through a joint procurement by the Commission and the Member States within the meaning of Article 125c of Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities ( 8 ). Article 125c of Regulation (EC, Euratom) No 2342/2002 allows for the use of the procurement rules applicable to the Commission to a joint procurement between the Member States and the Commission. Given the Union-wide ambit of the procurement, it is appropriate to apply, to the relevant extent, the procurement rules of the Financial Regulation and Regulation (EC, Euratom) No 2342/2002 to the joint procurement process. This Regulation should specify the auctioning services to be procured by Member States and the technical support services to be procured by the Commission, in particular with respect to potential decisions on completion of incomplete Annexes to this Regulation, the appropriate frequency of the auctions, on the coordination of the auction calendars of the various auction platforms, on the imposition of a maximum bid-size, and any amendment to this Regulation, in particular as regards linkage to other schemes and services to foster a proper understanding of the auctioning rules outside the Union. It is appropriate for the Commission to procure such services from the common auction platform with the most experience in conducting auctions on behalf of more than one Member State. This does not prejudice any consultation of other auction platforms or other stakeholders. (34) The auction platforms should be procured through an open, transparent and competitive selection procedure unless the appointment of the auction platform by a Member State not participating in the joint action is not subject to procurement rules under both Union and national procurement law. In appointing the auction platforms and the clearing system or settlement system connected to them, account should be taken of the solutions offered by candidates to provide for cost-efficiency, full, fair and equitable access to bid in the auctions for small and medium-sized enterprises and access for small emitters, and robust auction supervision including the provision of an extra-judicial dispute resolution mechanism. The auction platform auctioning forwards or futures may, by way of exception, be procured on the basis that it may apply the access provisions, payment and delivery rules and market supervision rules applicable on the secondary market. The specific procedures to be followed for the procurement of the common auction platform should be specified in an agreement agreed between the Commission and Member States, in which the practical modalities for the evaluation of the requests for participation or the tenders and the award of the contract, as well as the law applicable to the contract and the competent court for hearing disputes should be set out as required by Article 125c of Regulation (EC, Euratom) No 2342/2002. (35) Subject to any applicable public procurement rules, including those concerning the avoidance of conflicts of interest and maintaining confidentiality, Member States not participating in the joint action to procure the common auction platform may be given observer status in whole or in part to the joint procurement process upon terms and conditions agreed between the Member States participating in the joint action and the Commission, as set out in the joint procurement agreement. Such access could be desirable to facilitate convergence between the opt-out auction platforms and the common auction platform with respect to aspects of the auction process that are not fully harmonised in this Regulation. (36) It is appropriate that Member States that decide not to participate in a joint action for the appointment of the common auction platform but decide to appoint their own auction platform should inform the Commission of their decision within a relatively short period following the entry into force of this Regulation. In addition, it is necessary for the Commission to assess whether Member States appointing their own auction platform take the necessary measures to ensure that the auction process satisfies the provisions of this Regulation as well as the objectives of Article 10(4) of Directive 2003/87/EC. Furthermore, it is necessary for the Commission to coordinate the detailed auction calendars proposed by auction platforms other than the common auction platform with the auction calendars proposed by the common auction platform. Once the Commission has conducted its assessment for all opt-out auction platforms, it should list such auction platforms, their appointing Member States and any applicable conditions or obligations, including any conditions or obligations relating to their respective auction calendars in an Annex to this Regulation. Such listing would not constitute endorsement by the Commission of the compliance of the appointing Member State with any procurement rules applicable to the appointment of their chosen auction platform. (37) Article 10(3) of Directive 2003/87/EC provides that Member States determine the use of revenues generated from the auctioning of allowances. For the avoidance of any doubt, this Regulation should provide for the transfer of the auction proceeds directly to the auctioneer appointed by each Member State. (38) Given that the auctioning of allowances consists of their primary issuance into the secondary market instead of allocating them directly to operators and aircraft operators free of charge, it is inappropriate for the clearing system(s) or settlement system(s) to be bound by any obligations of specific performance of the delivery of allowances to successful bidders or their successors in title in the event of any failure in delivery, outside its control. Thus, this Regulation should provide that the only remedies available to successful bidders or their successors in title in the event of any failure to deliver auctioned allowances should be to accept deferred delivery. However, it is important to allow for auctioned allowances that are not delivered due to failure of payment in full to be auctioned in forthcoming auctions organised by the same auction platform. (39) It is not appropriate for Member States to have to deposit collateral other than the allowances themselves when auctioning, since the Member States’ only commitments relate to the delivery of allowances. Thus, this Regulation should provide that the only obligations of Member States when auctioning two-day spot or five-day futures as defined in this Regulation consist of pre-depositing allowances being auctioned into an escrow account held in the Union registry by the clearing system or settlement system acting as custodian. (40) However, it is necessary for an auction platform, including any clearing system or settlement system connected to it to implement adequate collateral and any other risk management processes necessary to ensure that auctioneers receive full payment for the allowances auctioned at the auction clearing price regardless of any payment default by a successful bidder or its successor in title. (41) For cost-efficiency reasons, successful bidders should be able to trade the allowances they have been allocated in the auction already before these allowances are delivered. An exception to this requirement of tradability can only be made when the allowances are delivered within two trading days after the auction. As a corollary, this Regulation provides for the option of accepting payment from and making delivery to a successor in title of a successful bidder, instead of the successful bidder itself. However, this option should not allow for circumvention of the requirements for eligibility to apply to bid in the auctions. (42) It is appropriate for the structure and level of fees applied by auction platforms and the clearing system or settlement system connected to them to be no less favourable than comparable fees and conditions applied to transactions on the secondary market. In the interests of transparency, all fees and conditions should be comprehensible, itemised and publicly available. As a general rule, the costs of the auction process should be borne by the fees paid by the bidders as set out in the contract appointing the auction platform. However, it is important for the procurement of a cost-effective common auction platform for Member States to participate in the joint action from the outset. For this reason, it is appropriate that Member States that participating in the joint action at a later stage may be required to bear their own costs and for these amounts to be deducted from the costs otherwise borne by bidders. Such provisions should, however, not disadvantage Member States wishing to participate in the joint action following the expiry of the appointment of an opt-out platform. Neither should Member States be disadvantaged when they temporarily participate in the joint action due to the absence of listing of a notified opt-out platform. The auctioneer should pay only for access to the auction platform, if anything, but the costs of the clearing and settlement system, if any, should be borne by the bidders as provided for under the general rule. (43) Nevertheless, it is appropriate to provide for the costs of the auction monitor to be borne by the Member States and to be deducted from the auction proceeds. Furthermore, it is appropriate for the contract appointing the auction monitor to distinguish between costs of the auction monitor which vary primarily according to the number of auctions and all other costs. The determination of the precise delineation between these costs should be left to the joint procurement process. (44) An impartial auction monitor should be appointed to monitor and report on compliance of the auction process with the objectives of Article 10(4) of Directive 2003/87/EC, on the compliance with the provisions of this Regulation, and on any evidence of anti-competitive behaviour, or market abuse. The monitoring of the auctions requires joint action by Member States and the Commission, as for auctions, and, therefore, a joint procurement is appropriate. The auction platforms, the auctioneers and the competent national authorities responsible for supervising the auction platform, investment firms or credit institutions or other persons authorised to bid on behalf of others participating in the auctions or for the investigation and prosecution of market abuse, should be required to cooperate with the auction monitor in fulfilling its functions. (45) To ensure the auction monitor’s impartiality, the requirements for appointing the auction monitor should take account of candidates with the least risk of conflict of interest or market abuse having regard, in particular, to their activities on the secondary market, if any, and their internal processes and procedures to mitigate the risk of conflict of interest or market abuse, without affecting their ability to fulfil their functions, in a timely manner, in accordance with the highest professional and quality standards. (46) Anti-competitive behaviour and market abuse is incompatible with the principles of openness, transparency, harmonisation and non-discrimination which underpin this Regulation. Therefore, this Regulation should include appropriate provisions to mitigate the risk of such behaviour in auctions. A common auction platform, a simple auction design, a relatively high frequency, random resolution of tied-bids, adequate access to the auctions, equal information disclosure and transparency of rules all help to mitigate the risk of market abuse. Financial instruments as a means for auctioning allowances enable the auctioneer and bidders alike to benefit from the protections available to them within the context of the regulatory framework applicable to financial markets. This Regulation should provide rules similar to those applicable to financial instruments in order to mitigate risk of market abuse in case the auctioned product is not a financial instrument. An impartial auction monitor should assess the entire auction process, including the auctions themselves and the implementation of the rules applicable to these. (47) Moreover, it is essential to ensure the auctioneer’s integrity. Therefore, when appointing the auctioneer, Member States should take account of candidates with the least risk of conflict of interest or market abuse having regard in particular to their activities on the secondary market, if any, and their internal processes and procedures to mitigate the risk of conflict of interest or market abuse, without affecting their ability to fulfil their functions, in a timely manner, in accordance with the highest professional and quality standards. A corollary of this requirement is for Member States to be expressly prohibited from sharing any inside information regarding the auctions with their auctioneer. Contravention of this prohibition should be subject to effective, proportionate and dissuasive sanctions. (48) In addition, it is desirable to provide for the auction platform to monitor the behaviour of bidders and to notify the competent national authorities in the event of market abuse, money laundering and terrorist financing, in line with the reporting obligations laid down in Directive 2003/6/EC and by applying the reporting obligations laid down in Directive 2005/60/EC. (49) When applying the national measures transposing, to the relevant extent, Titles III and IV of Directive 2004/39/EC and Directive 2003/6/EC competent authorities of the Member States concerned should give due regard to the corresponding provisions of Union measures implementing those Directives. (50) Moreover, it is desirable for this Regulation to provide for the option of imposing a maximum limit on what a single bidder can bid for as a share of the total volume of allowances to be auctioned in individual auctions or over a given calendar year, or any other appropriate remedial measures. In view of the potential administrative burden that this option could generate, the option should only be activated after the competent national authorities have been notified of any market abuse, money laundering and terrorist financing, and have decided not to act, provided that the need for its activation and its effectiveness are demonstrated. Activation of this option should be subject to obtaining the Commission’s prior opinion thereon. Before giving its opinion, the Commission should consult the Member States and the auction monitor on the proposal made by the auction platform. The Commission’s own assessment of whether the market for emissions allowances is sufficiently protected from market abuse pursuant to Article 12(1a) of Directive 2003/87/EC will also be relevant to its opinion. (51) It is also appropriate that other persons authorised by Member States to bid on behalf of clients of their main business abide by the conduct rules provided for in this Regulation to ensure that their clients are adequately protected. (52) It is necessary for this Regulation to provide for the language regime applicable to any auction platform, in a way that ensures transparency and balances the objective of non-discriminatory access to the auctions whilst providing for the most cost-efficient language regime. Documentation not published in the Official Journal of the European Union should be published in a language customary in the sphere of international finance, namely English. The use of a language customary in the sphere of international finance has already been provided for in Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC ( 9 ). (53) Member States may provide, at their own cost, for the translation of all documentation into their national official language(s). Where a Member State chooses to do so, opt-out platforms should also translate all documentation relating to their own auction platform into the language(s) of the Member State in question, at the cost of the Member State that has appointed the opt-out platform concerned. As a corollary, the auction platforms should consequently be able to handle all oral and written communications from applicants for admission to bid, persons admitted to bid or bidders bidding in an auction, in any language where a Member State has provided for a translation at its own cost, if requested to do so by such persons. The auction platforms cannot charge such persons for the additional cost of doing so. Instead, these costs should be borne equally by all bidders on the auction platform concerned to ensure equal access to the auctions throughout the Union. (54) In view of legal certainty and transparency, this Regulation should contain detailed provisions on other aspects of auctioning such as publication, announcement and notification of the auction results, protection of confidential information, correction of errors in any payment or allowance transfers made and collateral given or released under this Regulation, right to appeal the decisions of the auction platform, and entry into force. (55) For the purposes of this Regulation, investment firms submitting bids relating to financial instruments on their own account or on behalf of clients should be considered to be performing an investment service or activity. (56) This Regulation does not prejudge the Commission’s examination pursuant to Article 12(1a) of Directive 2003/87/EC of whether the market for emission allowances is sufficiently protected from market abuse, nor any proposals the Commission may bring forward to ensure such protection. This Regulation aims at ensuring that trading conditions are fair and orderly pending the outcome of the Commission’s examination. (57) This Regulation is without prejudice to the application of Articles 107 and 108 of the Treaty, for instance in the context of arrangements for ensuring fair, full and equitable access for small and medium-sized enterprises covered by the Union’s emissions trading scheme and access to small emitters. (58) This Regulation is without prejudice to the application of any applicable internal market rules. (59) This Regulation respects the fundamental rights and observes the principles recognised, in particular, by the Charter of Fundamental Rights of the European Union, and in particular by Article 11 thereof, and Article 10 of the European Convention on Human Rights. In this regard, this Regulation does not in any way prevent Member States from applying their constitutional rules relating to freedom of the press and freedom of expression in the media. (60) In order to ensure predictable and timely auctions, this Regulation should enter into force as a matter of urgency. (61) The measures provided for in this Regulation are in accordance with the opinion of the Committee referred to in Article 23(1) of Directive 2003/87/EC, Whereas: HAS ADOPTED THIS REGULATION:







CHAPTER I

GENERAL PROVISIONS

Article 1

Subject matter

This Regulation provides for rules on the timing, administration and other aspects of the auctioning of allowances under Directive 2003/87/EC.

Article 2

Scope

This Regulation shall apply to the allocation through auctions of allowances under Chapter II (aviation) of Directive 2003/87/EC and to the allocation through auctions of allowances under Chapter III (stationary installations) of that Directive valid for surrendering in trading periods from 1 January 2013.

Article 3

Definitions

For the purposes of this Regulation, the following definitions shall apply:

1. ‘futures’ means allowances auctioned as financial instruments, pursuant to Article 38(3) of Commission Regulation (EC) No 1287/2006 ( 10 ), for delivery at an agreed future date at the auction clearing price determined pursuant to Article 7(2) of this Regulation and upon which variation margin calls to reflect price movements are payable in cash;

2. ‘forwards’ means allowances auctioned as financial instruments, pursuant to Article 38(3) of Regulation (EC) No 1287/2006, for delivery at an agreed forward date at the auction clearing price determined pursuant to Article 7(2) of this Regulation and upon which variation margin calls to reflect price movements may be secured, either through non-cash collateral or by means of an agreed government guarantee, at the option of the central counterparty;

3. ‘two-day spot’ means allowances auctioned for delivery at an agreed date no later than the second trading day from the day of the auction, pursuant to Article 38(2)(a) of Regulation (EC) No 1287/2006;

4. ‘five-day futures’ means allowances auctioned as financial instruments, pursuant to Article 38(3) of Regulation (EC) No 1287/2006, for delivery at an agreed date no later than the fifth trading day from the day of the auction;

5. ‘bid’ means an offer in an auction to acquire a given volume of allowances at a specified price;

6. ‘bidding window’ means the time period during which bids may be submitted;

7. ‘trading day’ means any day during which an auction platform and the clearing system or settlement system connected to it are open for trading;

8. ‘investment firm’ means the same as in point (1) of Article 4(1) of Directive 2004/39/EC;

9. ‘credit institution’ means the same as in Article 4(1) of Directive 2006/48/EC of the European Parliament and of the Council ( 11 );

10. ‘financial instrument’ means the same as in point (17) of Article 4(1) of Directive 2004/39/EC unless otherwise stated in this Regulation;

11. ‘secondary market’ means the market in which persons buy or sell allowances either before or after they are allocated either free of charge or through auctioning;

12. ‘parent undertaking’ means the same as in Articles 1 and 2 of Council Directive 83/349/EEC ( 12 );

13. ‘subsidiary undertaking’ means the same as in Articles 1 and 2 of Directive 83/349/EEC;

14. ‘affiliate undertaking’ means an undertaking linked to a parent or subsidiary undertaking by a relationship within the meaning of Article 12(1) of Directive 83/349/EEC;

15. ‘control’ means the same as in Article 3(2) and (3) of Council Regulation No 139/2004 ( 13 ) as applied in the Commission’s Consolidated Jurisdictional Notice ( 14 ). Recital (22) of that Regulation and paragraphs 52 and 53 of that Notice shall apply for determining the notion of control for state-owned undertakings;

16. ‘auction process’ means the process encompassing the setting of the auction calendar, the procedures for admission to bid, the procedures for submission of bids, the conduct of the auction, the calculation and announcement of the auction results, the arrangements for payment of the price due, delivery of the allowances and management of the collateral needed to cover any transaction risks, as well as the surveillance and monitoring of the proper conduct of the auctions by an auction platform;

17. ‘money laundering’ means the same as in Article 1(2) of Directive 2005/60/EC having regard to Article 1(3) and (5) of that Directive;

18. ‘terrorist financing’ means the same as in Article 1(4) of Directive 2005/60/EC having regard to Article 1(5) of that Directive;

19. ‘criminal activity’ means the same as in Article 3(4) of Directive 2005/60/EC;

20. ‘auctioneer’ means any public or private entity appointed by a Member State, to auction allowances on its behalf;

21. ‘nominated holding account’ means one or more type of holding account provided for in the applicable Commission regulation adopted pursuant to Article 19(3) of Directive 2003/87/EC for the purposes of participating in or conducting the auction process including the holding of allowances in escrow, pending their delivery under this Regulation;

22. ‘nominated bank account’ means a bank account designated by an auctioneer, a bidder or its successor in title for the receipt of payments due under this Regulation;

23. ‘customer due diligence measure’ means the same as in Article 8(1) of Directive 2005/60/EC having regard to Article 8(2) of that Directive;

24. ‘beneficial owner’ means the same as in Article 3(6) of Directive 2005/60/EC;

25. ‘duly certified copy’ means an authentic copy of an original document that is certified as being a true copy of the original by a qualified lawyer, accountant, notary public or similar professional who is recognised under the national law of the Member State concerned to attest officially as to whether a copy is in fact a true copy of its original;

26. ‘politically exposed persons’ means the same as in Article 3(8) of Directive 2005/60/EC;

27. ‘market abuse’ means either insider dealing as defined in point (28) of this Article or prohibited in Article 38 or market manipulation as defined in point (30) of this Article or in Article 37(b), or both;

28. ‘insider dealing’ means the use of inside information as prohibited pursuant to Articles 2, 3 and 4 of Directive 2003/6/EC in relation to a financial instrument within the meaning of Article 1(3) of Directive 2003/6/EC referred to in Article 9 of that Directive unless otherwise stated in this Regulation;

29. ‘inside information’ means the same as in Article 1(1) of Directive 2003/6/EC in relation to a financial instrument within the meaning of Article 1(3) of Directive 2003/6/EC referred to in Article 9 of that Directive unless otherwise stated in this Regulation;

30. ‘market manipulation’ means the same as in Article 1(2) of Directive 2003/6/EC in relation to a financial instrument within the meaning of Article 1(3) of Directive 2003/6/EC referred to in Article 9 of that Directive unless otherwise stated in this Regulation;

31. ‘clearing system’ means one or more infrastructure connected to the auction platform that can provide clearing, margining, netting, management of collateral, settlement and delivery, and any other services, carried out by a central counterparty, accessed either directly or indirectly through members of the central counterparty who act as intermediaries between their clients and the central counterparty;

32. ‘clearing’ means all processes preceding the opening of the bidding window, during the bidding window and following the closing of the bidding window until settlement, involving the management of any risks arising during that interval, including margining, netting, or novation, or any other services, carried out possibly by a clearing or settlement system;

33. ‘margining’ means the process by which collateral is to be pledged by an auctioneer or a bidder, or one or more intermediaries acting on their behalf, to cover a given financial position, encompassing the entire process of measuring, calculating and administering the collateral put up to cover such financial positions, intended to ensure that all payment commitments of a bidder and all delivery commitments of an auctioneer or one or more intermediaries acting on their behalf can be met within a very short period of time;

34. ‘settlement’ means payment by a successful bidder, or its successor in title, or a central counterparty, or a settlement agent of the sum due for allowances to be delivered to that bidder or its successor in title, or a central counterparty, or a settlement agent, and delivery of the allowances to the successful bidder or its successor in title, or a central counterparty or a settlement agent;

35. ‘central counterparty’ means an entity which interposes either directly between an auctioneer and a bidder or its successor in title, or between intermediaries representing them, that acts as the exclusive counterparty to each of them guaranteeing the payment of the auction proceeds to the auctioneer or an intermediary representing it or the delivery of the auctioned allowances to the bidder or an intermediary representing it, subject to Article 48;

36. ‘settlement system’ means any infrastructure whether or not connected to the auction platform that can provide settlement services, which may include clearing, netting, management of collateral, or any other services, which ultimately enable the delivery of allowances on behalf of an auctioneer to a successful bidder or its successor in title, and the payment of the sum due by a successful bidder or its successor in title to an auctioneer, carried out through either of the following: (a) the banking system and the Union registry; (b) one or more settlement agents acting on behalf of an auctioneer and a bidder or its successor in title, accessing the settlement agent either directly or indirectly through members of the settlement agent who act as intermediaries between their clients and the settlement agent;

37. ‘settlement agent’ means an entity acting as an agent providing accounts to the auction platform, through which accounts instructions for the transfer of the auctioned allowances given by the auctioneer or an intermediary representing it and the payment of the auction clearing price by a successful bidder, its successor in title, or an intermediary representing them are safely executed either simultaneously or nearly simultaneously in a guaranteed manner;

38. ‘collateral’ means the forms of collateral security referred to in Article 2(m) of Directive 98/26/EC of the European Parliament and of the Council ( 15 ), including any allowances accepted as security by the clearing system or settlement system;

39. ‘regulated market’ means the same as in point (14) of Article 4(1) of Directive 2004/39/EC;

40. ‘SMEs’ means operators or aircraft operators that are small and medium-sized enterprises within the meaning of Commission Recommendation 2003/361/EC ( 16 );

41. ‘small emitters’ means operators or aircraft operators that emitted 25 000 tonnes of carbon dioxide equivalent emissions or less on average in the three calendar years preceding the year in which they participate in an auction, as determined by their verified emissions;

42. ‘market operator’ means the same as in point (13) of Article 4(1) of Directive 2004/39/EC;

43. ‘establishment’ means any of the following: (a) place of residence or permanent address within the Union for the purposes of the third subparagraph of Article 6(3); (b) the same as in point 20(a) of Article 4(1) of Directive 2004/39/EC taking into account the requirements of Article 5(4) of that Directive for the purposes of Article 18(2) of this Regulation; (c) the same as in point 20(a) of Article 4(1) of Directive 2004/39/EC taking into account the requirements of Article 5(4) of that Directive for the purposes of Article 18(3) of this Regulation, in the case of persons referred to in point (b) of Article 18(1) of this Regulation; (d) the same as in point (7) of Article 4 of Directive 2006/48/EC for the purposes of Article 18(3) of this Regulation, in the case of persons referred to in point (c) of Article 18(1) of this Regulation; (e) the same as in point 20(a) of Article 4(1) of Directive 2004/39/EC for the purposes of Article 19(2) of this Regulation in the case of business grouping referred to in point (d) of Article 18(1) of this Regulation; ▼M1 (f) the same as in point 20(b) of Article 4(1) of Directive 2004/39/EC for the purposes of Article 28(4) and (5), Article 35(4), (5) and (6) and Article 42(1) of this Regulation;

▼M2

44. ‘exit strategy’ means one or more documents determined in accordance with the contracts appointing the auction monitor or the auction platform concerned, setting out detailed measures planned to ensure the following: (a) the transfer of all tangible and intangible assets necessary for the uninterrupted continuation of the auctions and the smooth operation of the auction process by an auction platform’s successor; (b) the provision to the contracting authorities or the auction monitor, or both, of all information relating to the auction process, that is necessary for the procurement procedure for the appointment of the auction platform’s successor; (c) the provision to the contracting authorities, or the auction monitor or the auction platform’s successor, or any combination of these, of the technical assistance that enables the contracting authorities, or the auction monitor or the auction platform’s successor, or any combination of these, to understand, access or use the relevant information provided pursuant to points (a) and (b).

▼B







CHAPTER II

THE DESIGN OF THE AUCTIONS

Article 4

Auctioned products

▼M4

1. Allowances shall be offered for sale on an auction platform by means of standardised electronic contracts (‘the auctioned product’).

▼M1

2. Each Member State shall auction allowances in the form of either two-day spot or five-day futures.

▼M1 —————

▼B

Article 5

Auction format

Auctions shall be carried out through an auction format whereby bidders shall submit their bids during one given bidding window without seeing bids submitted by other bidders. Each successful bidder shall pay the same auction clearing price as referred to in Article 7 for each allowance regardless of the price bid.

Article 6

Submission and withdrawal of bids

1. The minimum volume bid for shall be one lot.

▼M1

One lot auctioned by an auction platform appointed pursuant to Article 26(1) or Article 30(1) shall be 500 allowances.

One lot auctioned by an auction platform appointed pursuant to Article 26(2) or Article 30(2) shall be 500 or 1 000 allowances.

▼B

2. Each bid shall state the following:

(a) the identity of the bidder and whether the bidder is bidding on its own account or on behalf of a client;

(b) where the bidder is bidding on behalf of a client, the identity of the client;

(c) the volume bid as a number of allowances in integral multiples of lots of 500 or 1 000 allowances;

(d) the price bid in euros for each allowance specified to two decimal points.

3. Each bid may only be submitted, modified or withdrawn during a given bidding window.

Bids submitted may be modified or withdrawn by a given deadline before the close of the bidding window. Such deadline shall be set by the auction platform concerned and published on that auction platform’s website at least five trading days prior to the opening of the bidding window.

Only a natural person established in the Union appointed pursuant to Article 19(2)(d) and authorised to bind a bidder for all purposes relating to the auctions including the submission of a bid (the ‘bidder’s representative’) is entitled to submit, modify or withdraw a bid on behalf of a bidder.

Once submitted, each bid shall be binding, unless it is withdrawn or modified pursuant to this paragraph or withdrawn pursuant to paragraph 4.

4. Where the relevant auction platform is satisfied that a genuine mistake has been made in the submission of a bid, it may, upon request of the bidder’s representative, treat the mistakenly submitted bid as withdrawn after the close of the bidding window, but before the auction clearing price has been determined.

5. The reception, transmission and submission of a bid by an investment firm or credit institution on any auction platform shall be deemed to constitute an investment service within the meaning of point 2 of Article 4(1) of Directive 2004/39/EC where the auctioned product is a financial instrument.

Article 7

Auction clearing price and resolution of tied bids

1. The auction clearing price shall be determined upon closure of the bidding window.

2. An auction platform shall sort bids submitted to it in the order of the price bid. Where the price of several bids is the same, these bids shall be sorted through a random selection according to an algorithm determined by the auction platform before the auction.

The volumes bid shall be added up, starting with the highest bid price. The price of the bid at which the sum of the volumes bid matches or exceeds the volume of allowances auctioned shall be the auction clearing price.

3. All bids making up the sum of the volumes bid determined pursuant to paragraph 2 shall be allocated at the auction clearing price.

4. Where the total volume of successful bids determined pursuant to paragraph 2 exceeds the volume of auctioned allowances, the remaining volume of the auctioned allowances shall be allocated to the bidder that has submitted the last bid making up the sum of the volumes bid.

5. Where the total volume of bids sorted pursuant to paragraph 2 falls short of the volume of auctioned allowances, the auction platform shall cancel the auction.

6. Where the auction clearing price is significantly under the price on the secondary market prevailing during and immediately before the bidding window when taking into account the short term volatility of the price of allowances over a defined period preceding the auction, the auction platform shall cancel the auction.

▼M4

7. Before an auction is started, the auction platform shall determine the methodology for the application of paragraph 6, after consulting the auction monitor, if appointed, and notifying the competent national authorities referred to in Article 56.

In between two bidding windows on the same auction platform, the auction platform concerned may modify the methodology. It shall notify the auction monitor, if appointed, and the competent national authorities referred to in Article 56 without delay.

The auction platform concerned shall take the utmost account of the auction monitor’s opinion, where provided.

8. Where one or more auctions are cancelled pursuant to paragraph 5 or 6 consecutively, the combined volume of allowances of those auctions shall be distributed evenly over the following auctions scheduled on the same auction platform.

In the case of allowances covered by Chapter III of Directive 2003/87/EC the number of auctions over which the combined volume to be auctioned must be distributed shall equal four times the number of auctions that were cancelled.

In the case of allowances covered by Chapter II of Directive 2003/87/EC the number of auctions over which the combined volume to be auctioned must be distributed shall equal two times the number of auctions that were cancelled.

▼B







CHAPTER III

AUCTION CALENDAR

Article 8

Timing and frequency

1. An auction platform shall conduct auctions separately through its own regularly recurring bidding window. The bidding window shall be opened and closed on the same trading day. The bidding window shall be kept open for no less than two hours. The bidding windows of any two or more auction platforms may not overlap and there shall be at least a two-hour delay between two consecutive bidding windows.

2. The auction platform shall determine the dates and times of the auctions taking account of public holidays that affect international financial markets and any other relevant events or circumstances that, in view of the auction platform, might affect the proper conduct of the auctions necessitating changes. No auctions shall be held in the two weeks over Christmas and New Year of each year.

▼M4

3. In exceptional circumstances, any auction platform may, after consulting the auction monitor, if appointed, change the times of any bidding window, by giving notice to all persons likely to be affected. The auction platform concerned shall take the utmost account of the auction monitor’s opinion, where delivered.

▼M1

4. As from the sixth auction or earlier, the auction platform appointed pursuant to Article 26(1) or (2) shall conduct auctions of allowances covered by Chapter III of Directive 2003/87/EC at least on a weekly basis and auctions of allowances covered by Chapter II of Directive 2003/87/EC at least on a two-monthly basis, except that during 2012, the said auction platforms shall conduct auctions of allowances covered by Chapter III of that Directive on a monthly basis at least.

▼B

No other auction platform shall conduct an auction on any of a maximum of two days a week during which an auction platform appointed pursuant to Article 26(1) or (2) conducts an auction. Where the auction platform appointed pursuant to Article 26(1) or (2) conducts auctions on more than two days a week, it shall determine and publish on which two days no other auctions may take place. It shall do so no later than when it makes the determination and publication referred to in Article 11(1).

▼M4

5. The volume of allowances covered by Chapter III of Directive 2003/87/EC to be auctioned on the auction platform appointed pursuant to Article 26(1) or (2) shall be distributed evenly over the auctions held in a given year, except that volumes auctioned in August of each year shall be half of the volume auctioned in auctions held in other months of the year.

The volume of allowances covered by Chapter II of Directive 2003/87/EC to be auctioned on the auction platform appointed pursuant to Article 26(1) or (2) shall in principle be distributed evenly over the auctions held in a given year, except that volumes auctioned in August of each year shall be half of the volume auctioned in auctions held in other months of the year.

▼B

6. Additional provisions on the timing and frequency of the auctions conducted by any auction platform other than the auction platforms appointed pursuant to Article 26(1) and (2) are set out in Article 32.

▼M4

Article 9

Circumstances preventing the conduct of auctions

Without prejudice to the application of the rules referred in Article 58 where appropriate, an auction platform may cancel an auction where the proper conduct of that auction is disrupted or is likely to be disrupted. Where one or more auctions are cancelled consecutively, the combined volume of allowances of those auctions shall be distributed evenly over the following auctions scheduled on the same auction platform.

In the case of allowances covered by Chapter III of Directive 2003/87/EC the number of auctions over which the combined volume to be auctioned must be distributed shall equal four times the number of auctions that were cancelled consecutively.

In the case of allowances covered by Chapter II of Directive 2003/87/EC the number of auctions over which the combined volume to be auctioned must be distributed shall equal two times the number of auctions that were cancelled consecutively.

▼B

Article 10

Annual volumes of the auctioned allowances covered by Chapter III of Directive 2003/87/EC

▼M1

1. For each Member State, Annex I to this Regulation sets out the volume of any allowances covered by Chapter III of Directive 2003/87/EC to be auctioned in 2012.

▼B

2. The volume of allowances covered by Chapter III of Directive 2003/87/EC to be auctioned in 2013 and 2014 shall be the quantity of allowances determined pursuant to Articles 9 and 9a of that Directive for the calendar year concerned, less the allocation free of charge provided for in Articles 10a(7) and 11(2) of that Directive, less half of the total volume of any allowances auctioned in 2011 and 2012.

The volume of allowances covered by Chapter III of Directive 2003/87/EC to be auctioned each calendar year as from 2015 onwards shall be the quantity of allowances determined pursuant to Articles 9 and 9a of that Directive for the calendar year concerned, less the allocation free of charge provided for in Articles 10a(7) and 11(2) of that Directive.

▼M5

The volume of allowances to be auctioned in a given year determined pursuant to the first or second subparagraphs of this paragraph in 2014-16 shall be reduced by the quantity of allowances for the respective year set out in the second column of the table in Annex IV to this Regulation.

Where in 2014 the volume of reduction set out in Annex IV cannot be spread over a period of more than 9 months it shall be decreased by 100 million allowances and thereafter by the same amount for each quarter of the year. In that case, the volumes of reduction for 2015 and 2016 shall be adjusted in equal instalments accordingly.

The volume of allowances to be auctioned in a given year determined pursuant to the first or second subparagraphs of this paragraph in 2019-20 shall be increased by the quantity of allowances for the respective year set out in the third column of the table in Annex IV to this Regulation.

In respect of Member States applying Article 10c of the Directive and without prejudice to the first sentence of Article 10c(2) of the Directive, the total quantity of allowances to be auctioned in a given year following the adjustment set out in the second column of the table in Annex IV to this Regulation shall not be lower than the quantity of allowances to be transitionally allocated free of charge to installations for electricity production in that same year.

If necessary, the total quantity of allowances to be auctioned in a given year in the period 2014-16 by a Member State applying Article 10c of the Directive shall be increased accordingly. To the extent that the total quantity of allowances to be auctioned is increased in accordance with the previous sentence, it shall subsequently be reduced to ensure that the distribution pursuant to the first subparagraph of this paragraph is complied with. The volumes of allowances to be auctioned referred to in the second and third column of the table in Annex IV to this Regulation shall be adjusted to reflect any such increase and reduction.

▼B

Any quantity to be auctioned pursuant to Article 24 of Directive 2003/87/EC shall be added to the volume of allowances to be auctioned in a given calendar year, determined pursuant to the first or second subparagraphs of this paragraph.

The volume of allowances covered by Chapter III of Directive 2003/87/EC to be auctioned in the final year of each trading period shall take account of any cessation of operations of an installation pursuant to Article 10a(19) of that Directive, any adaptation of the level of free allocation pursuant to Article 10a(20) of that Directive and of allowances remaining in the reserve for new entrants provided for in Article 10a(7) of that Directive.

▼M1

3. The volume of allowances covered by Chapter III of Directive 2003/87/EC to be auctioned each calendar year as from 2013 shall be based on Annex I and on the Commission’s determination and publication pursuant to Article 10(1) of that Directive of the estimated amount of allowances to be auctioned or on the most recent amendment of the Commission’s original estimate as published by 31 January of the preceding year, taking into account to the extent possible any transitional free allocations deducted or to be deducted from the quantity of allowances that a given Member State would otherwise auction pursuant to Article 10(2) of Directive 2003/87/EC as provided for in Article 10c(2) of that Directive.

▼B

Any subsequent change to the volume of allowances to be auctioned in a given calendar year shall be accounted for in the volume of allowances to be auctioned in the subsequent calendar year.

4. Without prejudice to Article 10a(7) of Directive 2003/87/EC, for any given calendar year each Member State’s share of allowances to be auctioned covered by Chapter III of that Directive shall be the share determined pursuant to Article 10(2) of the same Directive, less any transitional free allocation made by that Member State pursuant to Article 10c of Directive 2003/87/EC in that calendar year, plus any allowances to be auctioned by that Member State in the same calendar year pursuant to Article 24 of that Directive.

Article 11

Calendar for individual auctions of allowances covered by Chapter III of Directive 2003/87/EC auctioned by auction platforms appointed pursuant to Article 26(1) or (2) of this Regulation

▼M4

1. The auction platforms appointed pursuant to Article 26(1) or (2) of this Regulation shall determine and publish the bidding windows, individual volumes, auction dates as well as the auctioned product, payment and delivery dates of the allowances covered by Chapter III of Directive 2003/87/EC to be auctioned in individual auctions each calendar year, by 30 September of the previous year, or as soon as practicable thereafter, having previously consulted the Commission and obtained its opinion thereon. The auction platforms concerned shall take the utmost account of the Commission’s opinion.

▼M1

2. The auction platforms appointed pursuant to Article 26(1) or (2) of this Regulation shall make their determinations and publications as provided in paragraph 1 of this Article in accordance with Annex I and the Commission’s determination and publication of the estimated amount of allowances to be auctioned or the most recent amendment of the Commission’s original estimate, including any adjustment, referred to in Article 10(3).

▼B

3. The bidding windows, individual volumes and auction dates of the allowances covered by Chapter III of Directive 2003/87/EC to be auctioned in individual auctions for the final year of each trading period, may be adjusted by the auction platform concerned to take account of any cessation of operations of an installation pursuant to Article 10a(19) of that Directive, any adaptation of the level of free allocation pursuant to Article 10a(20) of that Directive or allowances remaining in the reserve for new entrants provided for in Article 10a(7) of that Directive.

▼M4

4. The calendar for individual auctions of allowances covered by Chapter III of Directive 2003/87/EC conducted by an auction platform other than the auction platforms appointed pursuant to Article 26(1) or (2) of this Regulation shall be determined and published pursuant to Article 32 of this Regulation.

Article 32 shall also apply with respect to the auctions conducted pursuant to the second subparagraph of Article 30(7) by the auction platform appointed pursuant to Article 26(1) or (2).

Article 12

Annual volumes of auctioned allowances covered by Chapter II of Directive 2003/87/EC

1. The volume of allowances covered by Chapter II of Directive 2003/87/EC to be auctioned each year shall be 15 % of the expected volume of those allowances in circulation for that year. Where the auctioned volume in a given year is more or less than 15 % of the volume actually put in circulation for that year, the volume to be auctioned in the subsequent year shall correct for the difference. Any allowances that remain to be auctioned after the last year of a trading period shall be auctioned in the first four months of the subsequent year.

The volume of allowances to be auctioned in the final year of each trading period shall take account of allowances remaining in the special reserve referred to in Article 3f of Directive 2003/87/EC.

2. For each calendar year in a given trading period, each Member State’s share of allowances to be auctioned covered by Chapter II of Directive 2003/87/EC shall be determined in accordance with Article 3d(3) of that Directive.

▼B

Article 13

Calendar for individual auctions of allowances covered by Chapter II of Directive 2003/87/EC auctioned by auction platforms appointed pursuant to Article 26(1) or (2) of this Regulation

1. The auction platforms appointed pursuant to Article 26(1) or (2) of this Regulation shall determine and publish the bidding windows, individual volumes and auction dates of the allowances covered by Chapter II of Directive 2003/87/EC to be auctioned in individual auctions for 2012, by 30 September 2011, or as soon as practicable thereafter, having previously consulted the Commission and obtained its opinion thereon. The auction platforms concerned shall take the utmost account of the Commission’s opinion.

▼M4

2. As from 2013, the auction platforms appointed pursuant to Article 26(1) or (2) of this Regulation shall in principle determine and publish the bidding windows, individual volumes, auction dates as well as the auctioned product, payment and delivery dates of the allowances covered by Chapter II of Directive 2003/87/EC to be auctioned in individual auctions for each calendar year by 30 September of the previous year, or as soon as practicable thereafter, having previously consulted the Commission and obtained its opinion thereon. The auction platforms concerned shall take the utmost account of the Commission’s opinion.

▼B

The bidding windows, individual volumes, auction dates as well as the auctioned product, payment and delivery dates of the allowances covered by Chapter II of Directive 2003/87/EC to be auctioned in individual auctions for the final year of each trading period, may be adjusted by the auction platform concerned to take account of allowances remaining in the special reserve referred to in Article 3f of that Directive.

3. The auction platforms appointed pursuant to Article 26(1) or (2) of this Regulation shall base their determinations and publications under paragraphs 1 and 2 on the Commission’s decision adopted pursuant to Article 3e(3) of Directive 2003/87/EC.

4. The provisions on the calendar for individual auctions of allowances covered by Chapter II of Directive 2003/87/EC conducted by an auction platform other than the auction platforms appointed pursuant to Article 26(1) or (2) of this Regulation shall be determined and published pursuant to Article 32 of this Regulation.

▼M4

Article 32 shall also apply with respect to the auctions conducted pursuant to the second subparagraph of Article 30(7) by the auction platform appointed pursuant to Article 26(1) or (2).

▼B

Article 14

Adjustments of the auction calendar

1. The determinations and publications of the annual volumes to be auctioned and of the bidding windows, volumes, dates, auctioned product, payment and delivery dates in connection with individual auctions pursuant to Articles 10 to 13 and Article 32(4) shall not be modified except for adjustments due to any of the following:

(a) the cancellation of an auction pursuant to Article 7(5) and (6), Article 9 and Article 32(5);

(b) any suspension of an auction platform other than the auction platforms appointed pursuant to Article 26(1) or (2) of this Regulation provided for in the Commission regulation adopted pursuant to Article 19(3) of Directive 2003/87/EC;

(c) any decision by a Member State made pursuant to Article 30(8);

(d) any settlement failure referred to in Article 45(5);

(e) any allowances remaining in the special reserve referred to in Article 3f of Directive 2003/87/EC;

(f) the cessation of operations of an installation pursuant to Article 10a(19) of Directive 2003/87/EC, any adaptation of the level of free allocation pursuant to Article 10a(20) of that Directive or allowances remaining in the reserve for new entrants provided for in Article 10a(7) of that Directive;

(g) any unilateral inclusion of additional activities and gases pursuant to Article 24 of Directive 2003/87/EC;

(h) any measures adopted pursuant to Article 29a of Directive 2003/87/EC;

(i) the entry into force of amendments to this Regulation or to Directive 2003/87/EC;

▼M1

(j) any withholding of allowances from the auctions pursuant to Article 22(5) or the second subparagraph of Article 24(1);

(k) the necessity for an auction platform to avoid conducting an auction in breach of this Regulation or Directive 2003/87/EC.

▼B

2. Where the manner in which a modification is to be implemented is not provided for in this Regulation, the auction platform concerned shall not implement that modification until it has previously consulted the Commission and obtained its opinion thereon. The auction platform concerned shall take the utmost account of the Commission’s opinion.







CHAPTER IV

ACCESS TO THE AUCTIONS

Article 15

Persons who may submit bids directly in an auction

Without prejudice to Article 28(3), only a person who is eligible to apply for admission to bid pursuant to Article 18 and is admitted to bid pursuant to Articles 19 and 20 may submit bids directly in an auction.

Article 16

Means of access

1. An auction platform shall provide for the means to access its auctions on a non-discriminatory basis.

▼M4

1a. Admission to the auctions shall not be dependent on becoming a member of or a participant in the secondary market organised by the auction platform or any other trading place operated by the auction platform or by any third party.

▼M1

2. An auction platform appointed pursuant to Article 26(1) or 30(1) shall ensure that its auctions can be accessed remotely by means of an electronic interface accessible securely and reliably through the Internet.

In addition, an auction platform appointed pursuant to Article 26(1) or 30(1) shall offer bidders the option of accessing its auctions through dedicated connections to the electronic interface.

▼M4

3. An auction platform may offer, and Member States may require an auction platform to offer, one or more alternative means of accessing its auctions, should the main means of access be inaccessible for whatever reason, provided that such alternative means of access are secure and reliable and their use does not lead to any discrimination between bidders.

▼M1

Article 17

Training and helpline

An auction platform appointed pursuant to Article 26(1) or 30(1) shall offer a practical web-based training module on the auction process it is conducting, including guidance on how to complete and submit any forms and a simulation of how to bid in an auction. It shall also make available a helpline service accessible by telephone, facsimile and electronic mail at least during the working hours of each trading day.

▼B

Article 18

Persons eligible to apply for admission to bid

1. The following persons shall be eligible to apply for admission to bid directly in auctions:

▼M4

(a) an operator or an aircraft operator having an operator holding account or an aircraft operator holding account, bidding on its own account, including any parent undertaking, subsidiary undertaking or affiliate undertaking forming part of the same group of undertakings as the operator or the aircraft operator;

▼B

(b) investment firms authorised under Directive 2004/39/EC bidding on their own account or on behalf of their clients;

(c) credit institutions authorised under Directive 2006/48/EC bidding on their own account or on behalf of their clients;

(d) business groupings of persons listed in point (a) bidding on their own account and acting as an agent on behalf of their members;

(e) public bodies or state-owned entities of the Member States that control any of the persons listed in point (a).

2. Without prejudice to the exemption in Article 2(1)(i) of Directive 2004/39/EC, persons covered by this exemption and authorised pursuant to Article 59 of this Regulation shall be eligible to apply for admission to bid directly in the auctions either on their own account or on behalf of clients of their main business provided that a Member State where they are established has enacted legislation enabling the relevant competent national authority in that Member State to authorise them to bid on their own account or on behalf of clients of their main business.

▼M1

3. Persons referred to in paragraph 1(b) or (c) shall be eligible to apply for admission to bid directly in the auctions on behalf of their clients when bidding for auctioned products that are not financial instruments provided that a Member State in which they are established has enacted legislation enabling the relevant competent national authority in that Member State to authorise them to bid on behalf of their clients.

▼B

4. Where the persons referred to in paragraph 1(b) and (c) and paragraph 2 bid on behalf of their clients, they shall ensure that those clients are themselves eligible to apply for admission to bid directly under paragraphs 1 or 2.

Where the clients of the persons referred to in the first subparagraph are themselves bidding on behalf of their own clients, they shall ensure that those clients are also eligible to apply for admission to bid directly under paragraphs 1 or 2. The same shall apply to all further clients down the chain bidding indirectly in the auctions.

5. The following persons shall not be eligible to apply for admission to bid directly in auctions nor may they participate in auctions through one or more persons admitted to bid pursuant to Articles 19 and 20, whether for their own account or on behalf of any other person, where they fulfil their role with respect to the auctions in question:

(a) the auctioneer;

(b) the auction platform including any clearing system and any settlement system connected to it;

(c) persons who are in a position to exercise, directly or indirectly, significant influence over the management of the persons under points (a) and (b);

(d) persons working for persons under points (a) and (b).

6. The auction monitor may not participate in any auction directly or indirectly through one or more persons admitted to bid pursuant to Articles 19 and 20 whether for its own account or on behalf of any other person.

Persons who are in a position to exercise, directly or indirectly, significant influence over the management of the auction monitor may not participate in any auction directly or indirectly, through one or more persons admitted to bid pursuant to Articles 19 and 20, whether for their own account or on behalf of any other person.

Persons working for the auction monitor in connection with the auctions may not participate in any auction directly or indirectly, through one or more persons admitted to bid pursuant to Articles 19 and 20, whether for their own account or on behalf of any other person.

7. The option made available pursuant to Articles 44 to 50 for an auction platform, including any clearing system or settlement system connected to it, to accept payment, make delivery or take collateral, from a successor in title to a successful bidder shall not undermine the application of Articles 17 to 20.

Article 19

Requirements for admission to bid

▼M1

1. When an auction platform organises a secondary market, members or participants of the secondary market organised by an auction platform appointed pursuant to Article 26(1) or 30(1) that are eligible persons pursuant to Article 18(1) or (2) shall be admitted to bid directly in the auctions conducted by that auction platform without any further admission requirements, provided that all of the following conditions are fulfilled:

(a) the requirements for admission of the member or participant to trade allowances through the secondary market organised by the auction platform appointed pursuant to Article 26(1) or 30(1) are no less stringent than those listed under paragraph 2 of this Article;

(b) the auction platform appointed pursuant to Article 26(1) or 30(1) receives any additional information necessary to verify the fulfilment of any requirements referred to in paragraph 2 of this Article that have not been previously verified.

2. Persons, who are not members or participants of the secondary market organised by an auction platform appointed pursuant to Article 26(1) or 30(1), and that are eligible persons pursuant to Article 18(1) or (2) shall be admitted to bid directly in the auctions conducted by that auction platform provided that they:

(a) are established in the Union, an operator or an aircraft operator;

(b) hold a nominated holding account;

(c) hold a nominated bank account;

(d) appoint at least one bidder’s representative as defined in the third subparagraph of Article 6(3);

(e) satisfy the auction platform concerned in line with applicable customer due diligence measures as to their identity, the identity of their beneficial owners, integrity, business and trading profile having regard to the means of establishing the relationship with the bidder, the type of bidder, the nature of the auctioned product, the size of prospective bids, and the means of payment and delivery;

(f) satisfy the auction platform concerned of their financial standing, in particular, that they are able to meet their financial commitments and current liabilities as they fall due;

(g) have in place or are able to put in place when requested, the internal processes, procedures and contractual agreements necessary to give effect to a maximum bid-size imposed pursuant to Article 57;

(h) fulfil the requirements of Article 49(1).

When an auction platform appointed pursuant to Article 26(1) or 30(1) does not organise a secondary market, persons who are eligible persons pursuant to Article 18(1) or (2) shall be admitted to bid directly in the auctions conducted by that auction platform provided that they satisfy the conditions set out in subparagraphs (a) to (h) of this paragraph.

▼B

3. Persons falling under the scope of Article 18(1)(b) and (c) or Article 18(2) submitting bids on behalf of their clients shall be responsible for ensuring that all of the following conditions are fulfilled:

(a) their clients are eligible persons pursuant to Article 18(1) or (2);

(b) they have or will have in good time before the opening of the bidding window adequate internal processes, procedures and contractual agreements necessary to: (i) enable them to process bids from their clients including the submission of bids, collection of payment and transfer of allowances; (ii) prevent the disclosure of confidential information from that part of their business responsible for receiving, preparing and submitting bids on behalf of their clients to that part of their business responsible for preparing and submitting bids on their own account; (iii) ensure that their clients who themselves are acting on behalf of clients bidding in the auctions apply the requirements set out in paragraph 2 of this Article and in this paragraph and that they require the same of their clients and of the clients of their clients as provided for in Article 18(4). The auction platform concerned may rely on reliable checks carried out by the persons referred to in the first subparagraph of this paragraph, their clients, or the clients of their clients as provided for in Article 18(4). Persons referred to in the first subparagraph of this paragraph shall be responsible for ensuring that they are able to demonstrate to the auction platform whenever requested to do so by the auction platform pursuant to Article 20(5)(d) that the conditions in points (a) and (b) of the first subparagraph of this paragraph are fulfilled.

Article 20

Submission and processing of applications for admission to bid

▼M1

1. Before submitting their first bid directly through any auction platform appointed pursuant to Article 26(1) or 30(1), persons eligible under Article 18(1) or (2) shall apply to the auction platform concerned for admission to bid.

When an auction platform organises a secondary market, members of or participants in the secondary market organised by the auction platform concerned fulfilling the requirements of Article 19(1) shall be admitted to bid without applying under the first subparagraph of this paragraph.

▼M4

2. An application for admission to bid made under paragraph 1 shall be made by submitting a completed application form to the auction platform. The application form and its access through the internet shall be provided and maintained by the auction platform concerned.

▼B

3. An application for admission to bid shall be supported by duly certified copies of all supporting documents required by the auction platform to show that the applicant satisfies the requirements of Article 19(2) and (3). An application for admission to bid shall at least include the elements listed in Annex II.

4. An application for admission to bid, including any supporting documents, shall upon request be made available for inspection by the auction monitor, the competent national law enforcement authorities of a Member State conducting an investigation, referred to in Article 62(3)(e) and any competent Union bodies involved in investigations conducted on a cross-border basis.

▼M1

5. An auction platform appointed pursuant to Article 26(1) or 30(1) may refuse admission to bid in its auctions if the applicant refuses any of the following:

(a) to comply with requests made by the auction platform for additional information or clarification or substantiation of information provided;

(b) to attend an invitation made by the auction platform to interview any officers of the applicant including at its business premises or elsewhere;

(c) to allow investigations or verifications, requested by the auction platform including on-site visits or spot-checks at the applicant’s business premises;

(d) to comply with requests made by the auction platform for any information required from an applicant, the clients of an applicant or the clients of their clients as provided for in Article 18(4) to check compliance with the requirements of Article 19(3);

(e) to comply with requests made by the auction platform for any information required to check compliance with the requirements of Article 19(2).

6. An