Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on markets in financial instruments and amending Regulation [EMIR] on OTC derivatives, central counterparties and trade repositories
Date: 2011-10-20
Institutions: European Commission
Subjects: access to information, administrative check, consumer information, credit institution, financial instrument, financial legislation, financial transaction, investment company, provision of services

EUROPEAN COMMISSION 

Brussels, 20.10.2011 
COM(2011) 652 final 

2011/0296 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on markets in financial instruments and amending Regulation [EMIR] on OTC 
derivatives, central counterparties and trade repositories 

(Text with EEA relevance) 

 
 
  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The Markets in Financial Instruments Directive (MiFID), in force since November 2007, is a 
core pillar in EU financial market integration. Adopted in accordance with the "Lamfalussy" 
process1,  it  consists  of  a  framework  Directive  (Directive  2004/39/EC)2,  an  implementing 
Directive  (Directive  2006/73/EC)3  and  an  implementing  Regulation  (Regulation  No 
1287/2006)4.  MiFID  establishes  a  regulatory  framework  for  the  provision  of  investment 
services in financial instruments (such as brokerage, advice,  dealing,  portfolio management, 
underwriting etc.) by banks and investment firms and for the operation of regulated markets 
by  market  operators.  It  also  establishes  the  powers  and  duties  of  national  competent 
authorities in relation to these activities. 

The overarching objective is to further the integration, competitiveness, and efficiency of EU 
financial markets. In concrete terms, it abolished the possibility for Member States to require 
all trading in financial instruments to take place on specific exchanges and enabled Europe-
wide competition between traditional exchanges and alternative venues. It also granted banks 
and investment firms a strengthened "passport" for providing investment services across the 
EU  subject  to  compliance  with  both  organisational  and  reporting  requirements  as  well  as 
comprehensive rules designed to ensure investor protection. 

The  result  after  3.5  years  in  force  is  more  competition  between  venues  in  the  trading  of 
financial  instruments,  and  more  choice  for  investors  in  terms  of  service  providers  and 

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The Mifid review is based on the "Lamfalussy process" (a four-level regulatory approach recommended 
by the Committee of Wise Men on the Regulation of European Securities Markets, chaired by Baron 
Alexandre Lamfalussy and adopted by the Stockholm European Council in March 2001 aiming at more 
effective securities markets regulation) as developed further by Regulation (EU) No 1095/2010 of the 
European  Parliament  and  of  the  Council,  establishing  a  European  Supervisory  Authority  (European 
Securities  and  Markets  Authority):  at  Level  1,  the  European  Parliament  and  the  Council  adopt  a 
directive  in  co-decision  which  contains  framework  principles  and  which  empowers  the  Commission 
acting at Level 2 to adopt delegated acts (Art 290 The Treaty on the Functioning of the European Union 
C  115/47)  or  implementing  acts  (Art  291  The  Treaty  on  the  Functioning  of  the  European  Union  C 
115/47). In the preparation of the delegated acts the Commission will consult with experts appointed by 
Member States. At the request of the Commission, ESMA can advise the Commission on the technical 
details  to  be  included  in  level  2  legislation.  In  addition,  Level  1  legislation  may  empower  ESMA  to 
develop draft regulatory or implementing technical standards according to Art 10 and 15 of the ESMA 
Regulation which may be adopted by the Commission (subject to a right of objection by Council and 
Parliament  in  case  of  regulatory  technical  standards).  At  Level  3,  ESMA  also  works  on 
recommendations,  guidelines  and  compares  regulatory  practice  by  way  of  peer  review  to  ensure 
consistent  implementation  and  application  of  the  rules  adopted  at  Levels  1  and  2.  Finally,  the 
Commission checks Member States' compliance with EU legislation and may take legal action against 
non-compliant Member States. 
Directive 2004/39/EC (MiFID Framework Directive).  
Directive  2006/73/EC  (MiFID  Implementing  Directive)  implementing  Directive  2004/39/EC  (MiFID 
Framework Directive). 
Regulation  No  1287/2006  (MiFID  Implementing  Regulation)  implementing  Directive  2004/39/EC 
(MiFID Framework Directive) as regards record-keeping obligations for investment firms, transaction 
reporting, market transparency, admission of financial instruments to trading and defined terms for the 
purposes of that Directive (OJ L 241, 2.9.2006, p. 1). 

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available  financial  instruments,  progress  which  has  been  compounded  by  technological 
advances. Overall, transaction costs have decreased and integration has increased5. 

However, some problems have surfaced. First, the more competitive landscape has given rise 
to new challenges. The benefits from this increased competition have not flowed equally to all 
market  participants  and  have  not  always  been  passed  on  to  the  end  investors,  retail  or 
wholesale.  The  market  fragmentation  implied  by  competition  has  also  made  the  trading 
environment  more  complex,  especially  in  terms  of  collection  of  trade  data.  Second,  market 
and  technological  developments  have  outpaced  various  provisions  in  MiFID.  The  common 
interest in a transparent level playing-field between trading venues and investment firms risks 
being  undermined.  Third,  the  financial  crisis  has  exposed  weaknesses  in  the  regulation  of 
instruments other than shares, traded mostly between professional investors. Previously held 
assumptions  that  minimal  transparency,  oversight  and  investor  protection  in  relation  to  this 
trading is more conducive to market efficiency no longer hold. Finally, rapid innovation and 
growing  complexity  in  financial  instruments  underline  the  importance  of  up-to-date,  high 
levels  of  investor  protection.  While  largely  vindicated  amid  the  experience  of  the  financial 
crisis,  the  comprehensive  rules  of  MiFID  nonetheless  exhibit  the  need  for  targeted  but 
ambitious improvements. 

The  revision  of  MiFID  therefore  constitutes  an  integral  part  of  the  reforms  aimed  at 
establishing a safer, sounder, more transparent and more responsible financial system working 
for the economy and society as a whole in the aftermath of the financial crisis, as well as to 
ensure  a  more  integrated,  efficient  and  competitive  EU  financial  market.6  It  is  also  an 
essential  vehicle  for  delivering  on  the  G207  commitment  to  tackle  less  regulated  and  more 
opaque  parts  of  the  financial  system,  and  improve  the  organisation,  transparency  and 
oversight of various market segments, especially in those instruments traded mostly over the 
counter  (OTC)8,  complementing  the  legislative  proposal  on  OTC  derivatives,  central 
counterparties and trade repositories9.  

Targeted  improvements  are  also  required  in  order  to  improve  oversight  and  transparency  of 
commodity  derivative  markets  in  order  to  ensure  their  function  for  hedging  and  price 
discovery, as well as in light of developments in market structures and technology in order to 
ensure fair competition and efficient markets. Further, specific changes to the framework of 
investor protection are necessary, taking account of evolving practices and to support investor 
confidence.  

Finally, in line with the recommendations from the de Larosière group and the conclusions of 
the  ECOFIN  Council,10  the  EU  has  committed  to  minimise,  where  appropriate,  discretions 

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10 

Leaders' 

statement 

Monitoring Prices, Costs and Volumes of Trading and Post-trading Services, Oxera, 2011. 
See (COM (2010) 301 final) Communication From The Commission To The European Parliament, The 
Council, The European Economic And Social Committee And The European Central Bank: Regulating 
Financial Services For Sustainable Growth, June 2010. 
See  G-20 
http://www.pittsburghsummit.gov/mediacenter/129639.htm 
As  a  result,  the  Commission  issued  (COM(2009)  563  final)  Communication  by  the  Commission  on 
ensuring efficient, safe and sound derivatives markets: future policy actions, 20 October 2009. 
See  (COM  (2010)  484)  Proposal  on  Regulation  on  OTC  derivatives,  central  counterparties  and  trade 
repositories, September 2010. 
See  Report,  High-level  Group  on  Financial  Supervision  in  the  EU,  chaired  by  Jacques  de  Larosière, 
February  2009,  and  Council  conclusions  on  strengthening  EU  financial  supervision,  10862/09,  June 
2009. 

September 

Pittsburgh 

Summit, 

24-25 

2009, 

of 

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available to Member States across EU financial services directives. This is a common thread 
across all areas covered by the review of MiFID and will contribute to establishing a single 
rulebook  for  EU  financial  markets,  help  further  develop  a  level  playing  field  for  Member 
States and market participants, improve supervision and enforcement, reduce costs for market 
participants, and improve conditions of access and enhance the global competitiveness of the 
EU financial industry. 

As  a  result,  the  proposal  amending  MiFID  is  divided  in  two.  A  Regulation  sets  out 
requirements  in  relation  to  the  disclosure  of  trade  transparency  data  to  the  public  and 
transaction  data  to  competent  authorities,  removing  barriers  to  non-discriminatory  access  to 
clearing  facilities,  the  mandatory  trading  of  derivatives  on  organised  venues,  specific 
supervisory  actions  regarding  financial  instruments  and  positions  in  derivatives,  and  the 
provision  of  services  by  third-country  firms  without  a  branch.  A  Directive  amends  specific 
requirements  regarding  the  provision  of  investment  services,  the  scope  of  exemptions  from 
the  current  Directive,  organisational  and  conduct  of  business  requirements  for  investment 
firms,  organisational  requirements  for  trading  venues,  the  authorisation  and  ongoing 
obligations applicable to providers of data services, powers available to competent authorities, 
sanctions, and rules applicable to third-country firms operating via a branch. 

2. 

RESULTS  OF  CONSULTATIONS  WITH  THE  INTERESTED  PARTIES  AND 

IMPACT ASSESSMENTS 

The initiative is the result of an extensive and continuous dialogue and consultation with all 
major stakeholders, including securities regulators, all types of market participants including 
issuers  and  retail  investors.  It  takes  into  consideration  the  views  expressed  in  a  public 
consultation  from  8  December  2010  to  2  February  201111,  a  large  and  well-attended  public 
hearing  was  held  over  two  days  on  20-21  September  201012,  and  input  obtained  through 
extensive meetings with a broad range of stakeholder groups since December 2009. Finally, 
the  proposal  takes  into  consideration  the  observations  and  analysis  contained  in  the 
documents  and  technical  advice  published  by  the  Committee  of  European  Securities 
Regulators (CESR), now the European Securities and Markets Authority (ESMA)13. 

In  addition,  two  studies14  have  been  commissioned  from  external  consultants  in  order  to 
prepare the revision of MiFID. The first one, requested from PriceWaterhouseCoopers on 10 
February 2010 and received on 13 July 2010, focused on data gathering on market activities 
and other MiFID related issues. The second, from Europe Economics mandated on the 21 July 

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14 

See responses to public consultation on the review of MiFID:   
http://circa.europa.eu/Public/irc/markt/markt_consultations/library?l=/financial_services/mifid_instrum
ents&vm=detailed&sb=Title and summary in Annex 13 of the Impact Assessment Report  
The  summary  is  available  at  http://ec.europa.eu/internal_market/securities/docs/isd/10-09-21-hearing-
summary_en.pdf 
See  CESR  Technical  Advice  to  the  European  Commission  in  the  Context  of  the  MiFID  Review  and 
Responses  to  the  European  Commission  Request  for  Additional  Information,  29  July  2010 
http://www.esma.europa.eu/popup2.php?id=7003  and  CESR  second  set  of  Technical  Advice  to  the 
European  Commission  in  the  Context  of  the  MiFID  Review  and  Responses  to  the  European 
Commission Request for Additional Information, 13 October 2010 
http://www.esma.europa.eu/popup2.php?id=7279 
These  studies  have  been  completed  by  two  external  consultants  that  were  selected  according  to  the 
selection process established within the rules and regulations of the European Commission. These two 
studies do not reflect the views or opinions of the European Commission. 

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2010 after an open call for tender, received on 23 June 2011 focused on a cost benefit analysis 
of the various policy options to be considered in the context of the revision of MiFID. 

In line with its "Better Regulation" policy, the Commission conducted an impact assessment 
of policy alternatives. Policy options were assessed against different criteria: transparency of 
market operations for regulators and market participants, investor protection and confidence, 
level playing field for market venues and trading systems in the EU, and cost-effectiveness, 
i.e. the extent to which the options achieve the sought objectives and facilitate the operation of 
securities  markets  in  a  cost  effective  and  efficient  way.  Overall,  the  review  of  MiFID  is 
estimated  to  generate  one-off  compliance  costs  of  between  €512  and  €732  million  and 
ongoing  costs  of  between  €312  and  €586  million.  This  represents  one-off  and  ongoing  cost 
impacts of respectively 0.10% to 0.15% and 0.06% to 0.12% of total operating spending of 
the EU banking sector. This is far less than the costs imposed at the time of the introduction of 
MiFID. The one-off cost impacts of the introduction of MiFID were estimated at 0.56% (retail 
and savings banks) and 0.68% (investment banks) of total operating spending while ongoing 
compliance  costs  were  estimated  at  0.11%  (retail  and  savings  banks)  to  0.17%  (investment 
banks) of total operating expenditure. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

3.1. 

Legal basis 

The  proposal  is  based  on  Article  114(1)  of  the  TFEU  which  provides  a  legal  basis  for  a 
Regulation creating uniform provisions aimed at the functioning of the internal market. 

While  the  Directive  deals  mainly  with  the  access  to  economic  activity  of  businesses  and  is 
based on Article 53 TFEU, a need for a uniform set of rules on how these economic activities 
are  conducted  warrants  the  use  of  a  different  legal  basis  allowing  for  the  creation  of  a 
Regulation. 

A  Regulation  is  necessary  to  grant  specific  direct  competences  to  ESMA  in  the  areas  of 
product  intervention  and  position  management  powers.  For  the  fields  of  trade-transparency 
and  transaction  reporting  the  application  of  rules  often  depends  on  numeric  thresholds  and 
specific  identification  codes.  Any  deviation  on  the  national  level  would  lead  to  market 
distortions and regulatory arbitrage, preventing the development of a level-playing field. The 
imposition  of  a  Regulation  ensures  that  those  requirements  will  be  directly  applicable  to 
investment  firms  and  promotes  a  level-playing  field  by  preventing  diverging  national 
requirements as a result of the transposition of a Directive. 

The  proposed  Regulation  would  also  indicate  that  investment  firms  to  a  large  extent  follow 
the  same  rules  in  all  EU  markets,  stemming  from  a  uniform  legal  framework  which  will 
enhance  legal  certainty  and  ease  the  operations  of  firms  active  in  various  jurisdictions 
considerably. A Regulation would also enable the EU to implement any future changes more 
quickly, as amendments can apply almost immediately after adoption. That would enable the 
EU to meet internationally agreed deadlines for implementation and follow significant market 
developments. 

3.2. 

Subsidiarity and proportionality 

According  to  the  principle  of  subsidiarity  (Article  5.3  of  the  TFEU),  action  on  EU  level 
should  be  taken  only  when  the  aims  envisaged  cannot  be  achieved  sufficiently  by  Member 

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States  alone  and  can  therefore,  by  reason  of  the  scale  or  effects  of  the  proposed  action,  be 
better achieved by the EU. 

Most  of  the  issues  covered  by  the  revision  are  already  covered  by  the  current  legal  MiFID 
framework. Further, financial markets are inherently cross-border in nature and are becoming 
more so. The conditions according to which firms and operators can compete in this context, 
whether  it  concerns  rules  on  pre  and  post-trade  transparency,  investor  protection  or  the 
assessment and control of risks by market participants need to be common across borders and 
are all at the core of MiFID today. Action is now required at European level in order to update 
and  modify  the  regulatory  framework  laid  out  by  MiFID  in  order  to  take  into  account 
developments  in  financial  markets  since  its  implementation.  The  improvements  that  the 
directive  has  already  brought  to  the  integration  and  efficiency  of  financial  markets  and 
services  in  Europe  would  thus  be  bolstered  with  appropriate  adjustments  to  ensure  the 
objectives  of  a  robust  regulatory  framework  for  the  single  market  are  achieved.  Because  of 
this integration, isolated national intervention would be far less efficient and would lead to the 
fragmentation of the markets, resulting in regulatory arbitrage and distortion of competition. 
For  instance,  different  levels  of  market  transparency  or  investor  protection  across  Member 
States  would  fragment  markets,  compromise  liquidity  and  efficiency,  and  lead  to  harmful 
regulatory arbitrage. 

The  European  Securities  and  Markets  Authority  (ESMA)  should  also  play  a  key  role  in  the 
implementation of the new legal proposals. One of the aims of the creation of the European 
Authority is to enhance further the functioning of the single market for security markets; new 
rules at Union level are necessary to give all appropriate powers to ESMA. 

The proposal take full account of the principle of proportionality, being adequate to reach the 
objectives  and  not  going  beyond  what  is  necessary  in  doing  so.  It  is  compatible  with  the 
proportionality principle, taking into account the right balance of public interest at stake and 
the  cost-efficiency  of  the  measure.  The  requirements  imposed  on  the  different  parties  have 
been carefully calibrated. In particular, the need to balance investor protection, efficiency of 
the markets and costs for the industry has been transversal in laying out these requirements. 
For  instance,  regarding  the  new  transparency  rules  that  could  be  applied  to  bonds  and 
derivatives markets, the revision advocates for a carefully calibrated regime that will take into 
consideration the specificities of each asset class and possibly each type of derivatives. 

3.3.  Compliance with Articles 290 and 291 TFEU 

On 23 September 2009, the Commission adopted proposals for Regulations establishing EBA, 
EIOPA, and ESMA. In this respect the Commission wishes to recall the Statements in relation 
to  Articles  290  and  291  TFEU  it  made  at  the  adoption  of  the  Regulations  establishing  the 
European  Supervisory  Authorities  according  to  which:  "As  regards  the  process  for  the 
adoption  of  regulatory  standards,  the  Commission  emphasises  the  unique  character  of  the 
financial services sector, following from the Lamfalussy structure and explicitly recognised in 
Declaration  39  to  the  TFEU.  However,  the  Commission  has  serious  doubts  whether  the 
restrictions  on  its  role  when  adopting  delegated  acts  and  implementing  measures  are  in  line 
with Articles 290 and 291 TFEU." 

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3.4.  Detailed explanation of the proposal 

3.4.1.  General – level-playing field 

A central aim of the proposal is to ensure that all organised trading is conducted on 
regulated  trading  venues:  regulated  markets,  multilateral  trading  facilities  (MTFs) 
and  organised  trading  facilities  (OTFs).  Identical  pre  and  post  trade  transparency 
requirements will apply to all of these venues. Likewise, the requirements in terms of 
organisational  aspects  and  market  surveillance  applicable  to  all  three  venues  are 
nearly  identical.  This  will  ensure  a  level  playing  field  where  there  are  functionally 
similar activities bringing together third-party trading interests. Importantly however, 
the  transparency  requirements  will  be  calibrated  for  different  types  of  instruments, 
notably  equity,  bonds,  and  derivatives,  and  for  different  types  of  trading,  notably 
order book and quote driven systems. 

In  all  three  venues  the  operator  of  the  platform  is  neutral.  Regulated  markets  and 
multilateral  trading  facilities  are  characterised  by  non-discretionary  execution  of 
transactions.  This  means 
to 
predetermined  rules.  They  also  compete  to  offer  access  to  a  broad  membership 
provided they meet a transparent set of criteria. 

transactions  will  be  executed  according 

that 

By contrast, the operator of an OTF has a degree of discretion over how a transaction 
will  be  executed.  Consequently,  the  operator  is  subject  to  investor  protection, 
conduct  of  business,  and  best  execution  requirements  towards  the  clients  using  the 
platform.  .  Thus,  while  both  the  rules  on  access  and  execution  methodology  of  an 
OTF have to be transparent and clear, they allow the operator to perform a service to 
clients which is qualitatively if not functionally different from the services provided 
by regulated markets and MTFs to their members and participants. Still, in order to 
ensure both the OTF operator's neutrality in relation to any transaction taking place 
and that the duties owed to clients thus brought together cannot be compromised by a 
possibility to profit at their expense, it is necessary to prohibit the OTF operator from 
trading against his own proprietary capital. 

Finally,  organised  trading  may  also  happen  by  systematic  internalisation.  A 
systematic  internaliser  (SI)  may  execute  client  transactions  against  his  own 
proprietary  capital.  However,  an  SI  may  not  bring  together  third  party  buying  and 
selling  interests  in  functionally  the  same  was  as  a  regulated  market,  MTF  or  OTF, 
and  is  therefore  not  a  trading  venue.  Best  execution  and  other  conduct  of  business 
rules  would  apply,  and  the  client  would  clearly  know  when  he  is  trading  with  the 
investment  firm  and  when  he  is  trading  against  third  parties.  Specific  pre-trade 
transparency  and  access  requirements  apply  to  SIs.  Again,  the  transparency 
requirements  will  be  calibrated  for  different  types  of  instruments,  notably  equity, 
bonds,  and  derivatives  and  apply  below  specific  thresholds.  Any  trading  on  own 
account  by  investment  firms  with  clients,  including  other  investment  firms,  is  thus 
considered  over-the  counter  (OTC).  OTC  trading  activity  which  will  not  meet  the 
definition  of  SI  activity,  to  be  made  more  inclusive  through  amendments  to 
implementing legislation, will have to be non systematic and irregular. 

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3.4.2.  Extension of transparency rules to equity like instruments and actionable indications 

of interests (Title II, Chapter 1 – Articles 3-6) 

The key rationale for transparency is to provide investors with access to information 
about  current  trading  opportunities,  to  facilitate  price  formation  and  assist  firms  to 
provide best execution to their clients.MiFID has established transparency rules, both 
pre  and  post  trade  that  apply  to  shares  admitted  to  trading  on  regulated  markets, 
including when those shares are traded on an MTF or over the counter (OTC). 

The  proposed  provisions  first  extend  the  transparency  rules  applicable  by  these 
shares to equity like instruments such as depository receipts, exchange-traded funds, 
certificates  and  other  similar  financial  instruments  issues  by  companies.  These 
instruments  are  similar  to  shares  and  should  therefore  be  submitted  to  the  same 
transparency regime. The extension of the transparency requirements will also cover 
actionable  indications  of  interests  (IOIs).  This  will  avoid  that  IOIs  can  be  used  to 
provide information to a group of market participants while excluding others. 

3.4.3.  Increased  consistency  in  the  application  of  waivers  to  pre  trade  transparency  for 

equities markets (Article 4) 

The proposed provisions aim at making the application of the pre trade transparency 
waivers more consistent and more coherent. The reasons for applying these waivers 
to the obligation to publish in real time current orders and quotes are still valid; the 
large  in  scale  operations  for  instance  deserve  special  treatment  to  avoid  having  too 
large  a  market  impact  when  executed.  However,  the  calibration,  actual  content  and 
consistent application need to be improved. Therefore, the proposed provisions will 
oblige  the  competent  authorities  to  inform  ESMA  about  the  use  of  the  waivers  in 
their  markets  and  ESMA  will  issue  an  opinion  on  the  compatibility  of  the  waiver 
with the requirements established in this Regulation and prospective delegated acts. 

3.4.4.  Extension of transparency rules to bonds, structured finance products and derivatives 

(Title II, Chapter 2 – Articles 7-10) 

The provisions extend the principles of transparency rules up to now only applicable 
to  equity  markets  to  bonds,  structured  finance  products,  emission  allowances  and 
derivatives.  This  extension  is  justified  by  the  fact  that  the  existing  level  of 
transparency  of  these  products  which  are, in  most  cases,  traded  OTC  is  not  always 
considered sufficient. 

The provisions lay out new requirements for both pre and post trade transparency on 
these  four  groups  of  instruments.  The  transparency  requirements  will  be  identical 
across the three trading venues, Regulated Market, MTF and OTF, but they will be 
calibrated according to the instruments traded. Waivers will be defined in delegated 
acts. 

For regulated markets, the transparency requirements will extend to bonds, structured 
finance products, emission allowances and derivatives admitted to trading. For MTFs 
and  OTFs  they  will  extend  to  bonds  and  structured  finance  products  admitted  to 
trading  on  a  regulated  market  or  for  which  a  prospectus  has  been  published  and  to 
emission allowances and derivatives traded on MTFs and OTFs. 

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Regarding the pre trade transparency requirements, competent authorities will first be 
able to use a waiver for specific type of instruments based on market model, liquidity 
or other relevant criteria. They will also be able to apply a set of different waivers to 
exempt some transactions from the transparency requirements. In both cases, as for 
equities, competent authorities will have to notify to ESMA the intended use of the 
waivers and ESMA will issue an opinion on the compatibility of the waiver with the 
legal requirements. The format and level of detail of the pre trade information to be 
provided as well as the exception and waivers to these requirements will be defined 
in delegated acts. 

As  for  post  trade  transparency,  the  proposed  provisions  set  the  possibility  for 
deferred publication in certain cases, depending on the  size or type of transactions. 
Similarly  to  pre  trade,  the  scope  of  the  information  as  well  as  the  conditions  for 
deferred publication will be set by delegated acts. 

3.4.5.  Increased and more efficient data consolidation (Title II, Chapter 3 – Articles 11, 12) 

The area of market data in terms of quality, format, cost and ability to consolidate is 
key  to  sustain  the  overarching  principle  of  MiFID  as  regards  transparency, 
competition  and  investor  protection.  In  this  area,  the  proposed  provisions  in  the 
Regulation and the Directive bring in a number of fundamental changes. 

In  the  Regulation,,  they  will  contribute  to  reducing  the  cost  of  data  by  requesting 
trading  venues,  that  is  regulated  markets,  MTFs  or  OTFs  to  make  post  trade 
information available free of charge 15 minutes after the execution of the transaction, 
to  offer  pre-  and  post-trade  data  separately,  and  by  giving  the  possibility  to  the 
Commission  to  clarify  by  delegated  acts  what  constitutes  a  reasonable  commercial 
basis. 

This  Regulation  also  requires  investment  firms  to  make  public  trades  executed 
outside  trading  venues  via  Approved  Publication  Arrangements  which  will 
themselves  be  regulated  in  the  Directive.  This  should  significantly  improve  the 
quality of OTC data and consequently facilitate its consolidation. 

3.4.6.  Transparency  for  investment  firms  trading  OTC  including  systematic  internalisers 

(Title III – Articles 13-20) 

In  order  to  sustain  a  level  playing-field,  support  market-wide  price  discovery,  and 
protect  retail  investors,  specific  transparency  rules  for  investment  firms  acting  as  a 
systematic  internaliser  are  proposed.  The  existing  transparency  rules  for  systematic 
internalisers  will  apply  to  shares  and  equity-like  instruments,  while  new  provisions 
would be introduced for bonds, structured finance products admitted to trading on a 
regulated market or for which a prospectus has been published, emission allowances 
and derivatives which are clearing-eligible or are admitted to trading on a regulated 
market or are traded on an MTF or an OTF. In addition, for shares and equity-like 
instruments, a minimum quote size is introduced, and two-way quotes are required. 
Post-trade  transparency  rules  identical  to  those  applicable  to  on-venue  trades  are 
proposed to apply to all shares including equity-like instruments, as well as to bonds 
and  structured  finance  products  for  which  a  prospectus  has  been  published,  to 
emission allowances and to derivatives which are admitted to trading on a regulated 

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market  or  traded  on  an  MTF  or  OTF,  as  well  as  derivatives  which  are  clearing-
eligible or are reported to a trade repository. 

3.4.7.  Transaction reporting (Title IV – Articles 21-23) 

Transaction  reporting  under  MiFID  enables  supervisors  to  monitor  the  activities  of 
investment firms and ensure compliance with MiFID and to monitor for abuses under 
the Market Abuse Directive (MAD). Transaction reporting is also useful for general 
market monitoring. The provisions which are put forward will improve the quality of 
transaction reporting in a number of aspects. 

All  transactions  in  financial  instruments  will  need  to  be  reported  to  competent 
authorities, except for transactions in financial instruments which are not traded in an 
organised  way  and  are  not  susceptible  to  market  abuse  and  cannot  be  used  for 
abusive purposes. Competent authorities will have full access to records at all stages 
in  the  order  execution  process,  from  the  initial  decision  to  trade,  through  to  its 
execution. 

First,  the  amendments  create  a  new  obligation  for  regulated  markets,  MTFs  and 
OTFs  to  store  order  data  in  a  manner  accessible  to  supervisors  for  at  least  5  years. 
This will allow competent authorities to monitor for attempted market abuse as well 
as  order  book  manipulation.  The  stored  information  will  need  to  contain  all 
information  also  required  for 
including 
the  reported 
identification  of  the  client,  and  of  the  persons  responsible  for  the  execution  of  the 
transaction, for instance the traders, or computer algorithms. 

transactions,  notably 

Second, the scope of transaction reporting which was up to now limited to financial 
instruments admitted to trading on a regulated market, including transactions in such 
instrument  executed  outside  the  market,  will  be  substantially  extended  and  thus 
aligned  with  the  scope  of  market  abuse  rules.  The  only  instruments  escaping  the 
requirement will be (i) the instruments not admitted to trading nor traded on an MTF 
or  OTF,  (ii)  the  instruments  whose  value  does  not  depend  on  that  of  a  financial 
instrument admitted to trading or traded on an MTF or OTF, (iii) the instruments the 
trading  of  which  cannot  have  an  impact  on  an  instrument  admitted  to  trading  nor 
traded on an MTF or OTF. 

Third,  the  provisions  will  improve  the  quality  of  the  reporting  by  on  the  one  hand, 
providing for better identification of the clients on whose behalf the investment firm 
has executed the transaction and the persons responsible for its execution, and on the 
other  hand,  requesting  regulated  markets,  MTFs  and  OTFs  to  report  details  of 
transactions  executed  by  firms  which  are  not  subject  to  the  general  reporting 
obligations. Furthermore, in terms of quality, the proposed provisions will require the 
reporting  to  be  done  through  reporting  mechanisms  approved,  pursuant  to  the 
Directive, by competent authorities. 

In order for transaction reports and stored order information to identify the client and 
those  responsible  for  the  transaction's  execution,  including  computer  algorithms, 
investment  firms  will  need  to  pass  this  information  on  when  sending  an  order  to 
another  firm.  They  will  also  have  the  option  to  report  an  order  as  if  it  were  a 
transaction in case they do not wish to pass this information to other firms. 

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Fourth, for cost and efficiency purposes, double reporting of trades under MiFID and 
the recently proposed reporting requirements to trade repositories (EMIR) should be 
avoided.  Therefore,  trade  repositories  will  be  required  to  transmit  reports  to  the 
competent authorities. 

Last,  if  these  changes  should  prove  to  be  insufficient  to  achieve  a  complete  and 
accurate  overview  of  trading  activity  and  individual  positions,  a  review  clause 
stipulates that 2 years after the entry into force of the regulation the Commission may 
introduce  measures  to  require  reporting  by  investment  firms  to  go  directly  to  a 
system appointed by ESMA. 

3.4.8.  Trading of derivatives (Title V - Articles 24-27) 

As part of the significant efforts underway to improve the stability, transparency and 
oversight  of  OTC  derivatives  markets,  the  G20  has  agreed  that  trading  in 
standardised  OTC  derivatives  should  move  to  exchanges  or  electronic  trading 
platforms where appropriate. 

Consistent  with  the  requirements  already  proposed  by  the  Commission  (EMIR)  to 
increase  central  clearing  of  OTC  derivatives,  the  proposed  provisions  in  this 
Regulation  will  require  trading  in  suitably  developed  derivatives  to  occur  only  on 
eligible platforms, that is regulated markets, MTFs or OTFs. This obligation will be 
imposed  on  both  financial  and  non  financial  counterparties  exceeding  the  clearing 
threshold in EMIR. The provisions leave to the Commission and to ESMA through 
technical  standards  the  task  of  defining  the  list  of  derivatives  eligible  to  such 
obligation, taking into consideration the liquidity of the specific instruments. 

3.4.9.  Non-discriminatory clearing access (Title VI – Articles 28-30) 

In  addition  to  requirements  in  Directive  2004/39/EC  that  prevent  Member  States 
from  unduly  restricting  access  to  post  trade  infrastructure  such  as  central 
counterparty (CCP) and settlement arrangements, it is necessary that this Regulation 
removes various other commercial barriers that can be used to prevent competition in 
the clearing of financial instruments. Barriers may arise from central counterparties 
not  providing  clearing  services  to  certain  trading  venues,  trading  venues  not 
providing data streams to potential new clearers or information about benchmarks or 
indices not being provided to clearers or trading venues. 

The  proposed  provisions  will  prohibit  discriminatory  practices  and  prevent  barriers 
that  may  prevent  competition  for  the  clearing  of  financial  instruments.  This  will 
increase  competition  for  clearing  of  financial  instruments  in  order  to  lower 
investment  and  borrowing  costs,  eliminate  inefficiencies  and  foster  innovation  in 
European markets. 

3.4.10. Supervision of products and positions (Title VII, Articles 31-35) 

Further  to  the  Council  conclusions  on  strengthening  EU  Financial  supervision  (10 
June  2009),  there  has  been  widespread  agreement  that  the  effectiveness  of 
supervision and enforcement needs to be increased and competent authorities need to 
be equipped with specific new powers in the wake of the crisis, especially in terms of 
being able to scrutinise products and services being offered. 

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First, the proposed amendments will greatly increase the supervision of products and 
services by introducing the possibilities on the one hand, for competent authorities to 
set permanent bans on financial products or activities or practices with coordination 
by  ESMA,  and  on  the  other  hand,  for  ESMA  to  also  temporarily  ban  products, 
practices  and  services.  The  ban  could  consist  of  a  prohibition  or  restriction  on  the 
marketing  or  sale  of  financial  instruments  or  on  a  certain  practice  or  on  persons 
engaged  in  the  specific  activity.  The  provisions  set  specific  conditions  for  the 
activation of both of these bans, which can notably happen when there are concerns 
on  investor  protection,  or  threats  to  the  orderly  functioning  of  financial  markets  or 
stability of the financial system. 

Second, in complement to the powers proposed in the revised Directive that give the 
possibility to competent authorities to manage positions including setting up position 
limits,  the  proposed  provisions  in  the  Regulation  introduce  a  role  for  ESMA  to 
coordinate the measures taken at national level. It also gives ESMA specific powers 
to  manage  or  limit  positions  for  market  participants.  The  proposed  provisions  set 
precise  conditions  for  this  to  happen  notably  in  terms  of  a  threat  to  the  orderly 
functioning of markets or delivery arrangements for physical commodities, or to the 
stability of the financial system in the Union. 

3.4.11. Emission allowances (Article 1) 

Unlike  trading  in  derivatives,  spot  secondary  markets  in  EU  emission  allowances 
(EUAs)  are  largely  unregulated.  A  range  of  fraudulent  practices  have  occurred  in 
spot markets which could undermine trust in the emissions trading scheme (ETS), set 
up by the EU ETS Directive15. In parallel to measures within the EU ETS Directive 
to reinforce the system of EUA registries and conditions for opening an account to 
trade  EUAs,  the  proposal  would  render  the  entire  EUA  market  subject  to  financial 
market  regulation.  Both  spot  and  derivative  markets  would  be  under  a  single 
supervisor.  MiFID  and  the  Directive  2003/6/EC  on  market  abuse  would  apply, 
thereby  comprehensively  upgrading  the  security  of  the  market  without  interfering 
with  its  purpose,  which  remains  emissions  reduction.  Moreover,  this  will  ensure 
coherence  with  the  rules  already  applying  to  EUA  derivatives  and  lead  to  greater 
security  as  banks  and  investment  firms,  entities  obliged  to  monitor  trading  activity 
for  fraud,  abuse  or  money  laundering,  would  assume  a  bigger  role  in  vetting 
prospective spot traders. 

3.4.12. Provision of investment services by third country firms without a branch (Title VIII – 

Articles 36-39) 

The proposal creates a harmonised framework for granting access to EU markets for 
firms and market operators based in third countries in order to overcome the current 
fragmentation into national third country regimes and to ensure a level playing field 
for all financial services actors in the EU territory. The proposal introduces a regime 
based on a preliminary equivalence assessment of third country jurisdictions by the 
Commission.  Third  country  firms  from  third  countries  for  which  an  equivalence 

15 

Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the 
Community  and  amending  Council  Directive  96/61/EC,  OJ  L  275,  25.10.2003,  as  last  amended  by 
Directive 2009/29/EC, OJ L 140, p. 63.  

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decision has been adopted would be able to request to provide services in the Union. 
The  provision  of  services  to  retail  clients  would  require  the  establishment  of  a 
branch; the third country firm should be authorised in the Member State where the 
branch is  established  and  the branch would  be subject to EU requirements  in  some 
areas  (organisational  requirements,  conduct  of  business  rules,  conflicts  of  interest, 
transparency  and  others).  Services  provided  to  eligible  counterparties  would  not 
require the establishment of a branch; third country firms could provide them subject 
to  ESMA  registration.  They  would  be  supervised  in  their  country.  Appropriate 
cooperation  agreement  between  the  supervisors  in  third  countries  and  national 
competent authorities and ESMA would be necessary 

4. 

BUDGETARY IMPLICATION  

The specific budget implications of the proposal relate to task allocated to ESMA as 
specified in the legislative financial statements accompanying this proposal. Specific 
budgetary  implications  for  the  Commission  are  also  assessed  in  the  financial 
statement accompanying this proposal. 

The proposal has implications for the Community budget. 

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2011/0296 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on markets in financial instruments and amending Regulation [EMIR] on OTC 
derivatives, central counterparties and trade repositories 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

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

Having regard to the proposal from the European Commission, 

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

Having regard to the opinion of the European Economic and Social Committee16,  

Having regard to the opinion of the European Data Protection Supervisor, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

The financial crisis has exposed weaknesses in the transparency of financial markets. 
Strengthening transparency is therefore one of the shared principles to strengthen the 
financial system as confirmed by the G20 declaration in London on 2 April 2009. In 
order  to  strengthen  the  transparency  and  improve  the  functioning  of  the  internal 
market for financial instruments, a new framework establishing uniform requirements 
for the transparency of transactions in markets for financial instruments should be put 
in  place.  The  framework  should  establish  comprehensive  rules  for  a  broad  range  of 
financial  instruments.  It  should  complement  requirements  for  the  transparency  of 
orders and transactions in respect of shares established in Directive 2004/39/EC of the 
European Parliament and the Council of 21 April 2004. 

(2) 

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

16 

OJ C , , p. . 

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(3) 

(4) 

(5) 

(6) 

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

Directive  2004/39/EC  of  the  European  Parliament  and  the  Council  of  21  April  2004 
established  rules  for  making  the  trading  in  shares  admitted  to  trading  on  a  regulated 
market  pre-  and  post-trade  transparent  and  for  reporting  transactions  in  financial 
instruments  admitted  to  trading  on  a  regulated  market  to  competent  authorities;  the 
Directive needs to be recast in order to appropriately reflect developments in financial 
markets and to address weaknesses and to close loopholes that were inter alia exposed 
in the financial market crisis. 

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

Definitions  of  regulated  market  and  MTF  should  be  introduced  and  closely  aligned 
with  each  other  to  reflect  the  fact  that  they  represent  the  same  organised  trading 
functionality.  The  definitions  should  exclude  bilateral  systems  where  an  investment 
firm enters into every trade on own account, even as a riskless counterparty interposed 
between  the  buyer  and  seller.  The  term  ‘system’  encompasses  all  those  markets  that 
are  composed  of  a  set  of  rules  and  a  trading  platform  as  well  as  those  that  only 
function on the basis of a set of rules. Regulated markets and MTFs are not obliged to 
operate a ‘technical’ system for matching orders. A market which is only composed of 
a set of rules that governs aspects related to membership, admission of instruments to 
trading,  trading  between  members,  reporting  and,  where  applicable,  transparency 
obligations is a regulated market or an MTF within the meaning of this Directive and 
the transactions concluded under those rules are considered to be concluded under the 
systems of a regulated market or an MTF. The term ‘buying and selling interests’ is to 
be understood in a broad sense and includes orders, quotes and indications of interest. 
The requirement that the interests be brought together in the system by means of non-

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(7) 

(8) 

discretionary  rules  set  by  the  system  operator  means  that  they  are  brought  together 
under  the  system's  rules  or  by  means  of  the  system's  protocols  or  internal  operating 
procedures  (including  procedures  embodied  in  computer  software).  The  term  ‘non-
discretionary rules’ means that these rules leave the investment firm operating an MTF 
with  no  discretion  as  to  how  interests  may  interact.  The  definitions  require  that 
interests  be  brought  together  in  such  a  way  as  to  result  in  a  contract,  meaning  that 
execution takes place under the system's rules or by means of the system's protocols or 
internal operating procedures.  

In  order  to  make  European  markets  more  transparent  and  to  level  the  playing  field 
between  various  venues  offering  trading  services  it  is  necessary  to  introduce  a  new 
category of organised trading facility (OTF). This new category is broadly defined so 
that now and in the future it should be able to capture all types of organised execution 
and arranging of trading which do not correspond to the functionalities or regulatory 
specifications  of  existing  venues.  Consequently  appropriate  organisational 
requirements and transparency rules which support efficient price discovery need to be 
applied. The new category includes broker crossing systems, which can be described 
as internal electronic matching systems operated by an investment firm which execute 
client orders against other client orders. The new category also encompasses systems 
eligible  for  trading  clearing-eligible  and  sufficiently  liquid  derivatives.  It  shall  not 
include facilities where there is no genuine trade execution or arranging taking place in 
the  system,  such  as  bulletin  boards  used  for  advertising  buying  and  selling  interests, 
other entities aggregating or pooling potential buying or selling interests, or electronic 
post-trade confirmation services. 

This new category of organised trading facility will complement the existing types of 
trading  venues.  While  regulated  markets  and  multilateral  trading  facilities  are 
characterised  by  non-discretionary  execution  of  transactions,  the  operator  of  an 
organised  trading  facility  should  have  discretion  over  how  a  transaction  is  to  be 
executed.  Consequently,  conduct  of  business  rules,  best  execution  and  client  order 
handling  obligations  should apply to the transactions concluded on an OTF operated 
by an investment firm or a market operator. However, because an OTF constitutes a 
genuine  trading  platform,  the  platform  operator  should  be  neutral.  Therefore,  the 
operator  of  an  OTF  should  not  be  allowed  to  execute  in  the  OTF  any  transaction 
between  multiple  third-party  buying  and  selling  interests  including  client  orders 
brought together in the system against his own proprietary capital. This also excludes 
them from acting as systematic internalisers in the OTF operated by them. 

(9) 

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

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

(11)  While,  in  principle,  acknowledging  the  need  for  a  regime  of  waivers  from  pre-trade 
transparency  to  support  the  efficient  functioning  of  markets,  the  actual  waiver 

EN 

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investment  firms, 

transaction  reporting,  market 

provisions  for  shares  currently  applicable  on  the  basis  of  Directive  2004/39/EC  and 
Regulation  (EC)  No  1287/2006  of  10  August  2006  implementing  Directive 
2004/39/EC of the European Parliament and of the Council as regards record-keeping 
obligations  for 
transparency, 
admission  of  financial  instruments  to  trading,  and  defined  terms  for  the  purposes  of 
that Directive17, need to be scrutinised as to their continued appropriateness in terms of 
scope  and  conditions  applicable.  In  order  to  ensure  a  uniform  application  of  the 
waivers from pre-trade transparency in shares and eventually other similar instruments 
and non-equity products for specific market models and types and sizes of orders, the 
European Securities and Markets Authority (ESMA) should assess the compatibility of 
individual  requests  for  applying  a  waiver  with  this  Regulation  and  future  delegated 
acts.  ESMA's  assessment  should  take  the  form  of  an  opinion  in  accordance  with 
Article 29 of Regulation (EU) No 1095/2010. In addition, the already existing waivers 
for  shares  should  be  reviewed  by  ESMA  within  an  appropriate  timeframe  and  an 
assessment  be  made,  following  the  same  procedure,  whether  they  are  still  in 
compliance with the rules in this Regulation and future delegated acts. 

(12)  The  financial  crisis  exposed  specific  weaknesses  in  the  way  information  on  trading 
opportunities  and  prices  in  financial  instruments  other  than  shares  is  available  to 
market  participants,  namely  in  terms  of  timing,  granularity,  equal  access,  and 
reliability.  Pre-  and  post-trade  transparency  requirements  taking  account  of  the 
different  characteristics  and  market  structures  of  specific  types  of  instruments  other 
than  shares  should  thus  be  introduced.  In  order  to  provide  a  sound  transparency 
framework  for  all  relevant  instruments,  these  should  apply  to  bonds  and  structured 
finance  products  with  a  prospectus  or  which  are  admitted  to  trading  either  on  a 
regulated market or are traded on a multilateral trading facility (MTF) or an organised 
trading  facility  (OTF),  to  derivatives  which  are  traded  or  admitted  to  trading  on 
regulated markets, MTFs and OTFs or considered eligible for central clearing, as well 
as, in the case of post-trade transparency, to derivatives reported to trade repositories. 
Therefore  only  those  financial  instruments  traded  purely  OTC  which  are  deemed 
particularly illiquid or are bespoke in their design would  be outside the scope of the 
transparency obligations. 

(13) 

(14) 

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

In  order  to  ensure  uniform  applicable  conditions  between  trading  venues,  the  same 
pre-  and  post-trade  transparency  requirements  should  apply  to  the  different  types  of 
venues.  The  transparency  requirements  should  be  calibrated  for  different  types  of 
instruments,  including  equity,  bonds,  and  derivatives,  and  for  different  types  of 
trading,  including  order-book  and  quote-driven  systems  as  well  as  hybrid  and  voice 
broking systems, and take account of issuance, transaction size and characteristics of 
national markets. 

17 

OJ L 241, 2.9.2006, p. 1 

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(15) 

In  order  to  ensure  that  trading  carried  out  OTC  does  not  jeopardise  efficient  price 
discovery  or  a  transparent  level-playing  field  between  means  of  trading,  appropriate 
pre-trade transparency requirements should apply to investment firms dealing on own 
account  in  financial  instruments  OTC  insofar  as  it  is  carried  out  in  their  capacity  as 
systematic  internalisers  in  relation  to  shares,  depositary  receipts,  exchange-traded 
funds, certificates or other similar financial instruments, and bonds, structured finance 
products, and clearing-eligible derivatives. 

(16)  An investment firm executing client orders against own proprietary capital should be 
deemed  a  systematic  internaliser,  unless  the  transactions  are  carried  out  outside 
regulated  markets,  MTFs  and  OTFs  on  an  occasional,  ad  hoc  and  irregular  basis. 
Systematic internalisers should be defined as investment firms which, on an organised, 
frequent and systematic basis, deal on own account by executing client orders outside 
a regulated market, an MTF or an OTF. In order to ensure the objective and effective 
application of this definition to investment firms, any bilateral trading carried out with 
clients should be relevant and quantitative criteria should complement the qualitative 
criteria  for  the  identification  of  investment  firms  required  to  register  as  systematic 
internalisers,  laid  down  in  Article  21  of  Commission  Regulation  No  1287/2006 
implementing Directive 2004/39/EC. While an OTF is any system or facility in which 
multiple  third  party  buying  and  selling  interests  interact  in  the  system,  a  systematic 
internaliser  should  not  be  allowed  to  bring  together  third  party  buying  and  selling 
interests. 

(17)  Systematic internalisers may decide to give access to their quotes only to retail clients, 
only  to  professional  clients,  or  to  both.  They  should  not  be  allowed  to  discriminate 
within  those  categories  of  clients.  Systematic  internalisers  are  not  obliged  to  publish 
firm quotes in relation to transactions above standard market size. The standard market 
size for any class of financial instrument should not be significantly disproportionate 
to any financial instrument included in that class. 

(18) 

It  is  not  the  intention  of  this  Regulation  to  require  the  application  of  pre-trade 
transparency rules to transactions  carried out on an  OTC basis,  the  characteristics of 
which  include  that  they  are  ad-hoc  and  irregular  and  are  carried  out  with  wholesale 
counterparties and are part of a business relationship which  is itself characterised by 
dealings  above  standard  market  size,  and  where  the  deals  are  carried  out  outside  the 
systems  usually  used  by  the  firm  concerned  for  its  business  as  a  systematic 
internaliser. 

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

(20)  Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 
on the protection of individuals with regard to the processing of personal data and on 
the  free  movement  of  such  data18  and  Regulation  (EC)  No  45/2001  of  the  European 
Parliament and of the Council of 18 December 2000 on the protection of individuals 

18 

OJ L 281, 23.11.1995, p. 31. 

EN 

18 

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with  regard  to  the  processing  of  personal  data  by  the  Community  institutions  and 
bodies  and  on  the  free  movement  of  such  data19  should  be  fully  applicable  to  the 
exchange,  transmission  and  processing  of  personal  data  for  the  purposes  of  this 
Regulation, particularly Title IV, by Member States and ESMA. 

(21)  Considering the agreement reached by the parties to the G20 Pittsburgh summit on 25 
September  2009  to  move  trading  in  standardised  OTC  derivative  contracts  to 
exchanges  or  electronic  trading  platforms  where  appropriate,  a  formal  regulatory 
procedure  should  be  defined  for  mandating  trading  between  financial  counterparties 
and large non-financial counterparties in all derivatives which have been considered to 
be  clearing-eligible  and  which  are  sufficiently  liquid  to  take  place  on  a  range  of 
trading venues subject to comparable regulation and enabling participants to trade with 
multiple counterparties. The assessment of sufficient liquidity should take account of 
market characteristics at national level including elements such as the number and type 
of market participants in a given market, and of transaction characteristics, such as the 
size and frequency of transactions in that market.  

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

in 

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

(24)  Competent  authorities'  powers  should  be  complemented  with  an  explicit  mechanism 
for  prohibiting  or  restricting  the  marketing,  distribution  and  sale  of  any  financial 
instrument  giving  rise  to  serious  concerns  regarding  investor  protection,  orderly 
functioning and integrity of financial markets, or the stability of the whole or part of 
the  financial  system,  together  with  appropriate  coordination  and  contingency  powers 

19 

OJ L 8, 12.1.2001, p. 1 

EN 

19 

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for  ESMA.  The  exercise  of  such  powers  should  be  subject  to  the  need  to  fulfil  a 
number of specific conditions. 

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

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

(27)  The  details  of  transactions  in  financial  instruments  should  be  reported  to  competent 
authorities to enable them to detect and investigate potential cases of market abuse, to 
monitor  the  fair  and  orderly  functioning  of  markets,  as  well  as  the  activities  of 
investment  firms.  The  scope  of  this  oversight  includes  all  instruments  which  are 
admitted to trading on a regulated market, MTF or OTF, as well as all instruments the 
value  of  which  depends  on  or  influences  the  value  of  those  instruments.  In  order  to 
avoid an unnecessary administrative burden on investment firms, financial instruments 
not traded in an organised way and that are not susceptible to market abuse should be 
excluded from the reporting obligation. 

(28) 

In  order  to  serve  their  purpose  as  a  tool  for  market  monitoring,  transaction  reports 
should  identify  the  person  who  has  made  the  investment  decision,  as  well  as  those 
responsible  for  its  execution.  Competent  authorities  also  need  to  have  full  access  to 
records at all stages in the order execution process, from the initial decision to trade, 
through to its execution. Therefore, investment firms are required to keep records of 
all their transactions in financial instruments, and operators of platforms are required 
to keep records of all orders submitted to their systems. ESMA should coordinate the 
exchange of information among competent authorities to ensure that they have access 
to  all  records  of  transactions  and  orders,  including  those  entered  on  platforms  that 
operate outside their territory, in financial instruments under their supervision. 

(29)  Double  reporting  of  the  same  information  should  be  avoided.  Reports  submitted  to 
trade repositories registered or recognised in accordance with Regulation [EMIR] for 
the  relevant  instruments  which  contain  all  the  required  information  for  transaction 
reporting purposes should not need to be reported to competent authorities, but should 
be  transmitted  to  them  by  the  trade  repositories.  Regulation  [EMIR]  should  be 
amended to this effect. 

(30)  Any  exchange  or  transmission  of  information  by  competent  authorities  should  be  in 
accordance  with  the  rules  on  the  transfer  of  personal  data  as  laid  down  in  Directive 
95/46/EC of the European Parliament and of the Council of 24 October 1995 on the 
protection of individuals with regard to the processing of personal data and on the free 
movement  of  such  data20.  Any  exchange  or  transmission  of  information  by  ESMA 

20 

OJ L 281, 23.11.1995, p. 31. 

EN 

20 

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should be in accordance with the rules on the transfer of personal data as laid down in 
Regulation  (EC)  No  45/2001  of  the  European  Parliament  and  of  the  Council  of  18 
December  2000  on  the  protection  of  individuals  with  regard  to  the  processing  of 
personal data by the Community institutions and bodies and on the free movement of 
such data21, which should be fully applicable to the processing of personal data for the 
purposes of this Regulation. 

(31)  Regulation [EMIR] sets out the criteria according to which classes of OTC derivatives 
should be subject to the clearing obligation. It also prevents competitive distortions by 
requiring non-discriminatory access to central counterparties (CCPs) offering clearing 
of OTC derivatives to trading venues and non-discriminatory access to the trade feeds 
of trading venues to CCPs offering clearing of OTC derivatives. As OTC derivatives 
are defined as derivatives contracts whose execution does not take place on a regulated 
market, there is a need to introduce similar requirements for regulated markets under 
this  Regulation.  Provided  that  ESMA  has  declared  them  subject  to  it,  derivatives 
traded on regulated markets should also be subject to a clearing obligation. 

(32) 

In addition to requirements in Directive 2004/39/EC that prevent Member States from 
unduly  restricting  access  to  post-trade  infrastructure  such  as  CCP  and  settlement 
arrangements,  it  is  necessary  that  this  Regulation  removes  various  other  commercial 
barriers  that  can  be  used  to  prevent  competition  in  the  clearing  of  financial 
instruments.  To  avoid  any  discriminatory  practices,  CCPs  should  accept  to  clear 
transactions  executed  in  different  trading  venues,  to  the  extent  that  those  venues 
comply  with  the  operational  and  technical  requirements  established  by  the  CCP. 
Access should only be denied if certain access criteria specified in delegated acts are 
not met. 

(33)  Trading  venues  should  also  be  required  to  provide  access  including  data  feeds  on  a 
transparent  and  non-discriminatory  basis  to  CCPs  that  wish  to  clear  transactions 
executed on the trading venue. Licensing and access to information about indices and 
other benchmarks that are used to determine the value of financial instruments should 
also be provided to CCPs and other trading venues on a non-discriminatory basis. The 
removal  of  barriers  and  discriminatory  practices  is  intended  to  increase  competition 
for  clearing  and  trading  of  financial  instruments  in  order  to  lower  investment  and 
borrowing costs, eliminate inefficiencies and foster innovation in Union markets. The 
Commission  should  continue  to  closely  monitor  the  evolution  of  post-trade 
infrastructure and should, where necessary, intervene in order to prevent competitive 
distortions from occurring in the internal market. 

(34)  The  provision  of  services  by  third  country  firms  in  the  Union  is  subject  to  national 
regimes  and  requirements.  These  regimes  are  highly  differentiated  and  the  firms 
authorised in accordance with them do not enjoy the freedom to provide services and 
the  right  of  establishment  in  Member  States  other  than  the  one  where  they  are 
established.  It  is  appropriate  to  introduce  a  common  regulatory  framework  at  Union 
level.  The  regime  should  harmonize  the  existing  fragmented  framework,  ensure 
certainty and uniform treatment of third country firms accessing the Union, ensure that 
and equivalence assessment has been carried out by the Commission in relation to the 
regulatory  and  supervisory  framework  of  third  countries  and  should  provide  for  a 

21 

OJ L 8, 12.1.2001, p. 1. 

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21 

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comparable  level  of  protections  to  investors  in  the  EU  receiving  services  by  third 
country firms. 

(35)  The provision of services to retail clients should always require the establishment of a 
branch in the Union. The establishment of the branch shall be subject to authorisation 
and  supervision  in  the  Union.  Proper  cooperation  arrangements  should  be  in  place 
between  the  competent  authority  concerned  and  the  competent  authority  in  the  third 
country.  The  provision  of  services  without  branches  should  be  limited  to  eligible 
counterparties. It should be subject to registration by ESMA and to supervision in the 
third country. Proper cooperation arrangements should be in place between ESMA and 
the competent authorities in the third country. 

(36)  The provisions of this regulation regulating the provision of services by third country 
firms  in  the  Union  should  not  affect  the  possibility  for  persons  established  in  the 
Union  to  receive  investment  services  by  a  third  country  firm  at  their  own  exclusive 
initiative. When a third country firm provides services at own exclusive initiative of a 
person established in the Union, the services should not be deemed as provided in the 
territory of the Union. In case a third country firm solicits clients or potential clients in 
the  Union  or  promotes  or  advertises  investment  services  or  activities  together  with 
ancillary services in the Union, it should not be deemed as a service provided at the 
own exclusive initiative of the client. 

(37)  A range of fraudulent practices have occurred in spot secondary markets in emission 
allowances (EUA) which could undermine trust in the emissions trading schemes, set 
up by Directive 2003/87/EC, and measures are being taken to strengthen the system of 
EUA  registries  and  conditions  for  opening  an  account  to  trade  EUAs.  In  order  to 
reinforce  the  integrity  and  safeguard  the  efficient  functioning  of  those  markets, 
including  comprehensive  supervision  of  trading  activity,  it  is  appropriate  to 
complement  measures  taken  under  Directive  2003/87/EC  by  bringing  emission 
allowances  fully  into  the  scope  of  this  Directive  and  of  Directive  2003/6/EC  of  the 
European  Parliament  and  of  the  Council  of  28  January  2003  on  insider  dealing  and 
market manipulation (market abuse), by classifying them as financial instruments. 

requirements;  detailed  conditions 

(38)  The  Commission  should  be  empowered  to  adopt  delegated  acts  in  accordance  with 
Article 290 of the Treaty. In particular, the delegated acts should be adopted in respect 
of  specific  details  concerning  definitions;  the  precise  characteristics  of  trade 
transparency 
from  pre-trade 
transparency; deferred post-trade publication arrangements; criteria for the application 
of  the  pre-trade  transparency  obligations  for  systematic  internalisers,  specific  cost-
related provisions related to the availability of market data; the criteria for granting or 
refusing  access  between  trading  venues  and  CCPs;  and  the  further  determination  of 
conditions  under  which  threats  to  investor  protection,  the  orderly  functioning  and 
integrity  of  financial  markets,  or  the  stability  of  the  whole  or  part  of  the  financial 
system of the Union may warrant ESMA action. 

for  waivers 

(39)  The  implementing  powers  relating  to  the  adoption  of  the  equivalence  decision 
concerning  third  country  legal  and  supervisory  frameworks  for  the  provision  of 
services  by  third  country  firms  should  be  exercised  in  accordance  with  Regulation 
(EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 

EN 

22 

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laying  down  the  rules  and  general  principles  concerning  mechanisms  for  control  by 
Member States of the Commission's exercise of implementing powers22. 

(40)  Although  national  competent  authorities  are  better  placed  to  monitor  market 
developments,  the  overall  impact  of  the  problems  related  to  trade  transparency, 
transaction reporting, derivatives trading, and bans of products and practices can only 
be  fully  perceived  in  a  Union-wide  context.  For  this  reason,  the  objectives  of  this 
Regulation can be better achieved at the Union level; the Union may adopt measures, 
in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on 
European Union. In accordance with the principle of proportionality, as set out in that 
Article, this Regulation does not go beyond what is necessary in order to achieve those 
objectives. 

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

(42)  The  Commission  should  adopt  the  draft  regulatory  technical  standards  developed  by 
ESMA according to Article 23 regarding the content and specifications of transaction 
reports,  Article  26  regarding  the  liquidity  criteria  for  derivatives  to  be  considered 
subject  to  an  obligation  to  trade  on  organised  trading  venues,  and  Article  36 
concerning  the  information  that  the  applicant  third  country  firm  shall  provide  to 
ESMA in its application for registration by means of delegated acts pursuant to Article 
290  TFEU  and  in  accordance  with  Articles  10  to  14  of  Regulation  (EU)  No 
1093/2010. 

(43)  The  Commission  should  also  be  empowered  to  adopt  implementing  technical 
standards  by  means  of  implementing  acts  pursuant  to  Article  291  TFEU  and  in 
accordance  with  Article  15  of  Regulation  (EU)  No  1095/2010.  ESMA  should  be 
entrusted  with  drafting  implementing  technical  standards  for  submission  to  the 
Commission  with  regard  to  Article  26  specifying  whether  a  class  of  derivatives 
declared subject to the clearing obligation under Regulation [ ] (EMIR) or a relevant 
subset thereof should only be traded on organised trading venues. 

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

(45)  This Regulation respects the fundamental rights and observes the principles recognised 
in particular by the Charter of Fundamental Rights of the European Union, notably the 
right to the protection of personal data (Article 8), the freedom to conduct a business 
(Article  16),  the  right  to  consumer  protection  (Article  38),  the  right  to  an  effective 

22 

OJ L 55, 28.2.2011, p. 13. 

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23 

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remedy and to a fair trial (Article 47), and the right not to be tried or punished twice 
for the same offence (Article 50), and has to be applied in accordance with those rights 
and principles. 

HAVE ADOPTED THIS REGULATION: 

TITLE I 

SUBJECT MATTER, SCOPE AND DEFINITIONS 

Article 1 
Subject matter and scope 

This Regulation establishes uniform requirements in relation to the following: 

disclosure of trade data to the public; 

reporting of transactions to the competent authorities; 

trading of derivatives on organised venues; 

non-discriminatory  access  to  clearing  and  non-discriminatory  access  to  trading  in 

benchmarks; 

1. 

(a) 

(b) 

(c) 

(d) 

(e) 

product  intervention  powers  of  competent  authorities  and  ESMA  and  powers  of 

ESMA on position management and position limits;  

(f) 

2. 

3. 

4. 

1. 

(1) 

provision of investment services or activities without a branch by third country firms. 

This  Regulation  applies  to  investment  firms,  credit  institutions  authorised  under 
Directive  [new  MiFID]  when  providing  one  or  more  investment  services  and/or 
performing investment activities and regulated markets. 

Title  V  of  this  Regulation  also  applies  to  all  financial  counterparties  as  defined  in 
Article  [2(6)]  and  all  non-financial  counterparties  falling  under  Article  [5(1b)}  of 
Regulation [ ] (EMIR). 

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

Article 2 
Definitions 

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

‘investment  firm’  means  any  legal  person  whose  regular  occupation  or  business  is 
the  provision  of  one  or  more  investment  services  to  third  parties  and/or  the 
performance of one or more investment activities on a professional basis; 

EN 

24 

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Member States may include in the definition of investment firms undertakings which 
are not legal persons, provided that: 

(a) 

(b) 

their  legal  status  ensures  a  level  of  protection  for  third  parties'  interests 
equivalent to that afforded by legal persons, and 

they are subject to equivalent prudential supervision appropriate to their 
legal form. 

However,  where  a  natural  person  provides  services  involving  the  holding  of 
third parties'  funds  or  transferable  securities,  that  person  may  be  considered  as  an 
investment firm for the purposes of this Regulation and Directive [new MiFID] only 
if, without prejudice to the other requirements imposed in Directive [new MiFID], in 
this  Regulation  and  in  Directive [new  CRD],  he  complies  with  the  following 
conditions: 

(a) 

(b) 

(c) 

the  ownership  rights  of  third  parties  in  instruments  and  funds  must  be 
safeguarded, especially in the event of the insolvency of the firm or of its 
proprietors, seizure, set-off or any other action by creditors of the firm or 
of its proprietors; 

the firm must be subject to rules designed to monitor the firm's solvency 
and that of its proprietors; 

the  firm's  annual  accounts  must  be  audited  by  one  or  more  persons 
empowered, under national law, to audit accounts; 

(d)  where the firm has only one proprietor, he must make provision for the 
protection  of  investors  in  the  event  of  the  firm's  cessation  of  business 
following his death, his incapacity or any other such event; 

(2) 

(3) 

(4) 

(5) 

‘credit institutions’ means credit institutions as defined under Directive 2006/48/EC; 

‘systematic  internaliser’  means  an  investment  firm  which,  on  an  organised,  frequent 
and  systematic  basis,  deals  on  own  account  by  executing  client  orders  outside  a 
regulated market or an MTF or an OTF; 

‘market  operator’  means  a  person  or  persons  who  manages  and/or  operates  the 
business  of  a  regulated  market.  The  market  operator  may  be  the  regulated  market 
itself; 

‘regulated market’ means a multilateral system operated and/or managed by a market 
operator, which brings together or facilitates the bringing together of multiple third-
party  buying  and  selling  interests  in  financial  instruments  –  in  the  system  and  in 
accordance  with  its  non-discretionary  rules  –  in  a  way  that  results  in  a  contract,  in 
respect  of  the  financial  instruments  admitted  to  trading  under  its  rules  and/or 
systems, and which is authorised and functions regularly and in accordance with the 
provisions of Title III of Directive [new MiFID]; 

(6) 

‘multilateral  trading  facility  (MTF)’  means  a  multilateral  system,  operated  by  an 
investment  firm  or  a  market  operator,  which  brings  together  multiple  third-party 
buying  and  selling  interests  in  financial  instruments  –  in  the  system  and 

EN 

25 

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in accordance  with  non-discretionary  rules  –  in  a  way  that  results  in  a  contract 
in accordance with the provisions of Title II of Directive [new MiFID]; 

(7) 

‘organised  trading  facility  (OTF)’  means  any  system  or  facility,  which  is  not  a 
regulated  market  or  MTF,  operated  by  an  investment  firm  or  a  market  operator,  in 
which  multiple  third-party  buying  and  selling  interests  in  financial  instruments  are 
able to interact in the system in a way that results in a contract in accordance with the 
provisions of Title II of Directive [new MiFID]; 

(8) 

‘financial  instrument’  means  those  instruments  specified  in  Section C  of  Annex I  of 

Directive [new MiFID]; 

(9) 

‘transferable  securities’  means  those  those  classes  of  securities  which  are  negotiable 

on the capital market, with the exception of instruments of payment, such as: 

(a) 

shares  in  companies  and  other  securities  equivalent  to  shares  in  companies, 
partnerships or other entities, and depositary receipts in respect of shares; 

(b)  bonds  or  other  forms  of  securitised  debt,  including  depositary  receipts 

in respect of such securities; 

(c) 

any  other  securities  giving  the  right  to  acquire  or  sell  any  such  transferable 
securities  or  giving  rise  to  a  cash  settlement  determined  by  reference  to 
transferable securities, currencies, interest rates or yields, commodities or other 
indices or measures; 

(10) 

(11) 

(12) 

(13) 

‘depositary receipts’ means those securities which are negotiable on the capital market 
and  which  represent  ownership  of  the  securities  of  a  non-domiciled  issuer  while 
being able to be admitted to trading on a regulated market and traded independently 
of the securities of the non-domiciled issuer; 

‘exchange-traded  funds’  means  units  in  those  open-ended  collective  investment 
schemes which are freely negotiable on the capital markets and in most cases track 
the performance of an index; 

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

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

(14) 

‘derivatives’ means those financial instruments defined in paragraph 9(c) and referred 

to in Annex I Section C (4) to (10) of Directive [new MiFID]; 

(15) 

‘commodity derivatives’ means those financial instruments defined in paragraph 9(c) 
relating to a commodity or an underlying mentioned in Section C(10) of Annex I to 
Directive [new MiFID], or within points (5), (6), (7) and (10) of Section C of Annex 
I to Directive [new MiFID]; 

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(16) 

(17) 

(18) 

(19) 

(20) 

(21) 

‘actionable indication of interest’ means a message from one participants to another in 
a  trading  system  about  available  trading  interest  that  contains  all  necessary 
information to agree on a trade; 

‘competent  authority’  means  the  authority,  designated  by  each  Member  State 
in accordance with Article 48 of Directive [new MiFID], unless otherwise specified 
in that Directive; 

‘approved  publication  arrangement  (APA)’  means  a  person  authorised  under  the 
provisions established in Directive [new MiFID] to provide the service of publishing 
trade reports on behalf of investment firms pursuant to Articles [11 and 12] of this 
Regulation; 

‘consolidated  tape  provider  (CTP)’  means  a  person  authorised  under  the  provisions 
established  in  Directive  [new  MiFID]  to  provide  the  service  of  collecting  trade 
reports for financial instruments listed in Articles [5, 6, 11 and 12] of this Regulation 
from  regulated  markets,  MTFs,  OTFs  and  APAs  and  consolidating  them  into  a 
continuous electronic live data stream providing real-time price and volume data per 
financial instrument; 

‘approved  reporting  mechanism  (ARM)’  means  aperson  authorised  under  the 
provisions established in Directive [new MiFID] to provide the service of reporting 
details  of  transactions  to  competent  authorities  or  ESMA  on  behalf  of  investment 
firms; 

‘management body’ means the governing body of a data reporting services provider, 
comprising  the  supervisory  and  the  managerial  functions,  which  has  the  ultimate 
decision-making  authority  and  is  empowered  to  set  the  entity's  strategy,  objectives 
and  overall  direction.  The  management  body  shall  include  persons  who  effectively 
direct the business of the entity; 

(22) 

‘supervisory function’ means the management body acting in its supervisory function 

of overseeing and monitoring management decision-making; 

(23) 

(24) 

‘senior management’ means those individuals who exercise executive functions within 
a  data  reporting  services  provider  and  who  are  responsible  and  accountable  for  the 
day-to-day management. 

'benchmark'  means  any  commercial  index  or  published  figure  calculated  by  the 
application of a formula to the value of one or more underlying assets or prices by 
reference to which the amount payable under a financial instrument is determined. 

(25) 

'trading venue' means any regulated market, MTF or OTF. 

(26) 

'central  counterparty'  means  a  central  counterparty  as  defined  under  Article  2(1)  of 

Regulation [ ] (EMIR). 

(27) 

'investment services and activities' means the services and activities defined in Article 

4(1)(2) of Directive [new MiFID]. 

(28) 

'third  country  financial  institution'  means  an  entity,  the  head  office  of  which  is 
established in a third country, that is authorised or licensed under the law of that third 

EN 

27 

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country  to  carry  on  any  of  the  activities  listed  in  Directive  2006/48/EC,  Directive 
[new MiFID], Directive 2009/138/EC, Directive 2009/65/EC, Directive 2003/41/EC 
or Directive 2011/61/EU. 

(29) 

'wholesale  energy  product'  means  those  contracts  and  derivatives  defined  in  Article 

2(4) of Regulation [REMIT]. 

2. 

3. 

1. 

2. 

The definitions provided in paragraph 1 also apply to Directive [new MiFID]. 

The Commission may adopt, by means of delegated acts in accordance with Article 
41,  measures specifying  some  technical  elements  of  the  definitions  laid  down  in 
paragraph 1 to adjust them to market development. 

TITLE II 

TRANSPARENCY FOR TRADING VENUES 

Chapter 1 

Transparency for equity instruments 

Article 3 
Pre-trade transparency requirements for trading venues in respect of shares, depositary 
receipts, exchange-traded funds, certificates and other similar financial instruments  

Regulated markets and investment firms and market operators operating an MTF or 
an  OTF  shall  make  public  current  bid  and  offer  prices  and  the  depth  of  trading 
interests  at  those  prices  which  are  advertised  through  their  systems  for  shares, 
depositary  receipts,  exchange-traded  funds,  certificates  and  other  similar  financial 
instruments  admitted  to  trading  or  which  are  traded  on  an  MTF  or  an  OTF.  This 
requirement shall also apply to actionable indications of interests. Regulated markets 
and investment firms and market operators operating an MTF or an OTF shall make 
this information available to the public on a continuous basis during normal trading 
hours. 

Regulated markets and investment firms and market operators operating an MTF or 
an  OTF  shall  give  access,  on  reasonable  commercial  terms  and  on  a  non-
discriminatory  basis,  to  the  arrangements  they  employ  for  making  public  the 
information  under  the  first paragraph  to  investment  firms  which  are  obliged  to 
publish their quotes in shares, depositary receipts, exchange-traded funds, certificates 
and other similar financial instruments pursuant to Article 13. 

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Article 4 
Granting of waivers 

1. 

2. 

3. 

(a) 

Competent authorities shall be able to waive the obligation for regulated markets and 
investment firms and market operators operating an MTF or an OTF to make public 
the information referred to in Article 3(1) based on the market model or the type and 
size of orders in the cases defined in accordance with paragraph 3. In particular, the 
competent authorities shall be able to waive the obligation in respect of orders that 
are large in scale compared with normal market size for the share, depositary receipt, 
exchange-traded  fund,  certificate  or  other  similar  financial  instrument  or  type  of 
share, depositary receipt, exchange-traded fund, certificate or other similar financial 
instrument in question. 

Before granting a waiver in accordance with paragraph 1, competent authorities shall 
notify ESMA and other competent authorities of the intended use of each individual 
waiver  request  and  provide  an  explanation  regarding  their  functioning.  Notification 
of  the  intention  to  grant  a  waiver  shall  be  made  not  less  than  6  months  before  the 
waiver  is  intended  to  take  effect.  Within  3  months  following  receipt  of  the 
notification,  ESMA  shall  issue  an  opinion  to  the  competent  authority  in  question 
assessing  the  compatibility  of  each  waiver  with  the  requirements  established  in 
paragraph  1  and  specified  in  the  delegated  act  adopted  pursuant  to  paragraphs  3(b) 
and (c). Where that competent authority grants a waiver and a competent authority of 
another  Member  State  disagrees  with  this,  that  competent  authority  may  refer  the 
matter back to ESMA, which may act in accordance with the powers conferred on it 
under  Article  19  of  Regulation  (EU)  No  1095/2010.  ESMA  shall  monitor  the 
application of the waivers and  shall  submit  an  annual report to the Commission on 
how they are applied in practice. 

The Commission shall adopt, by means of delegated acts in accordance with Article 
41, measures specifying: 

the  range  of  bid  and  offers  or  designated  market-maker  quotes,  and  the  depth  of 
trading  interest  at  those  prices,  to  be  made  public  for  each  class  of  financial 
instrument concerned; 

(b) 

the  size  or  type  of  orders  for  which  pre-trade  disclosure  may  be  waived  under 

paragraph 1 for each class of financial instrument concerned; 

(c) 

4. 

the  market  model  for  which  pre-trade  disclosure  may  be  waived  under  paragraph  1, 
and in particular, the applicability  of the obligation  to trading methods operated by 
regulated  markets  which  conclude  transactions  under  their  rules  by  reference  to 
prices established outside the regulated market or by periodic auction for each class 
of financial instrument concerned. 

Waivers granted by competent authorities in accordance with Articles 29 (2) and 44 
(2) of Directive 2004/39/EC and Articles 18 to 20 of Commission Regulation (EC) 
No 1287/2006 before the date of application of this Regulation shall be reviewed by 
ESMA by [2 years following the date of application of this Regulation]. ESMA shall 
issue  an  opinion  to  the  competent  authority  in  question  assessing  the  continued 
compatibility  of  each  of  those  waivers  with  the  requirements  established  in  this 
Regulation and any delegated act based on this Regulation. 

EN 

29 

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Article 5 
Post-trade transparency requirements for trading venues in respect of shares, depositary 
receipts, exchange-traded funds, certificates and other similar financial instruments  

1. 

2. 

1. 

2. 

(a) 

(b) 

Regulated markets and investment firms and market operators operating an MTF or 
an OTF shall make public the price, volume and time of the transactions executed in 
respect  of  shares,  depositary  receipts,  exchange-traded  funds,  certificates  and  other 
similar financial instruments admitted to trading or which are traded on an MTF or 
an OTF. Regulated markets and investment firms and market operators operating an 
MTF  or  an  OTF  shall  make  details  of  all  such  transactions  public  as  close  to  real-
time as is technically possible. 

Regulated markets and investment firms and market operators operating an MTF or 
an  OTF  shall  give  access,  on  reasonable  commercial  terms  and  on  a  non-
discriminatory  basis,  to  the  arrangements  they  employ  for  making  public  the 
information under paragraph 1 to investment firms which are obliged to publish the 
details  of  their  transactions  in  shares,  depositary  receipts,  exchange-traded  funds, 
certificates and other similar financial instruments pursuant to Article 19. 

Article 6 
Authorisation of deferred publication 

Competent  authorities  shall  be  able  to  authorise  regulated  markets  to  provide  for 
deferred  publication  of  the  details  of  transactions  based  on  their  type  or  size.  In 
particular, the competent authorities may authorise the deferred publication in respect 
of transactions that are large in scale compared with the normal market size for that 
share, depositary receipt, exchange-traded fund, certificate or other similar financial 
instrument or that class of share, depositary receipt, exchange-traded fund, certificate 
or  other  similar  financial  instrument.  Regulated  markets  and  investment  firms  and 
market operators operating an MTF or an OTF shall obtain the competent authority's 
prior  approval  of  proposed  arrangements  for  deferred  trade-publication,  and  shall 
clearly  disclose  these  arrangements  to  market  participants  and  the  public.  ESMA 
shall  monitor  the  application  of  these  arrangements  for  deferred  trade-publication 
and  shall  submit  an  annual  report  to  the  Commission  on  how  they  are  applied  in 
practice. 

The Commission shall adopt, by means of delegated acts in accordance with Article 
41, measures specifying: 

the details that need to be specified by regulated markets, investment firms, including 
systematic internalisers and investment firms and regulated markets operating a MTF 
or  an  OTF  in  the  information  to  be  made  available  to  the  public  for  each  class  of 
financial instrument concerned; 

the  conditions  for  authorising  a  regulated  market,  an  investment  firm,  including  a 
systematic internaliser or an investment firm or market operator operating an MTF or 
an  OTF  for  a  deferred  publication  of  trades  and  the  criteria  to  be  applied  when 
deciding the transactions for which, due to their size or the type of share, depositary 
receipt,  exchange-traded  fund,  certificate  or  other  similar  financial  instrument 

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30 

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involved,  deferred  publication  is  allowed  for  each  class  of  financial  instrument 
concerned. 

Chapter 2 

Transparency for non-equity instruments 

Article 7 
Pre-trade transparency requirements for trading venues in respect of bonds, structured 
finance products, emission allowances and derivatives 

Regulated markets and investment firms and market operators operating an MTF or 
an OTF based on the trading system operated shall make public prices and the depth 
of  trading  interests  at  those  prices  for  orders  or  quotes  advertised  through  their 
systems for bonds and structured finance products admitted to trading on a regulated 
market  or  for  which  a  prospectus  has  been  published,  emission  allowances  and  for 
derivatives  admitted  to  trading  or  which  are  traded  on  an  MTF  or  an  OTF.  This 
requirement shall also apply to actionable indications of interests. Regulated markets 
and investment firms and market operators operating an MTF or an OTF shall make 
this information available to the public on a continuous basis during normal trading 
hours. 

Regulated markets and investment firms and market operators operating an MTF or 
an  OTF  shall  give  access,  on  reasonable  commercial  terms  and  on  a  non-
discriminatory  basis,  to  the  arrangements  they  employ  for  making  public  the 
information referred to in the first paragraph to investment firms which are obliged to 
publish their quotes in bonds, structured finance products, emission allowances and 
derivatives pursuant to Article 17. 

Article 8 
Granting of waivers 

Competent authorities shall be able to waive the obligation for regulated markets and 
investment firms and market operators operating an MTF or an OTF to make public 
the information referred to in Article 7(1) for specific sets of products based on the 
market  model,  the  specific  characteristics  of  trading  activity  in  a  product  and  the 
liquidity in the cases defined in accordance with paragraph 4. 

Competent authorities shall be able to waive the obligation for regulated markets and 
investment firms and market operators operating an MTF or an OTF to make public 
the information referred to in paragraph 1 of Article 7 based on the type and size of 
orders  and  method  of  trading  in  accordance  with  paragraph  4.  In  particular,  the 
competent authorities shall be able to waive the obligation in respect of orders that 
are large in scale compared with normal market size for the bond, structured finance 
product,  emission  allowance  or  derivative  or  type  of  bond,  structured  finance 
product, emission allowance or derivative in question. 

1. 

2. 

1. 

2. 

3. 

Before  granting  a  waiver  in  accordance  with  paragraphs  1  and  2,  competent 
authorities shall notify ESMA and other competent authorities of the intended use of 

EN 

31 

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waivers  and  provide  an  explanation  regarding  their  functioning.  Notification  of  the 
intention to grant a waiver shall be made not less than 6 months before the waiver is 
intended to take effect. Within 3 months following receipt of the notification, ESMA 
shall  issue  an  opinion  to  the  competent  authority  in  question  assessing  the 
compatibility of each individual waiver request with the requirements established in 
paragraphs 1 and 2 and specified in the delegated act adopted pursuant to paragraph 
4(b).  Where  that  competent  authority  grants  a  waiver  and  a  competent  authority  of 
another  Member  State  disagrees  with  this,  that  competent  authority  may  refer  the 
matter back to ESMA, which may act in accordance with the powers conferred on it 
under  Article  19  of  Regulation  (EU)  No  1095/2010.  ESMA  shall  monitor  the 
application of the waivers and shall submit an annual report to the Commission on 
how they are applied in practice. 

The Commission shall adopt, by means of delegated acts in accordance with Article 
41, measures specifying: 

the  range  of  orders  or  quotes,  the  prices  and  the  depth  of  trading  interest  at  those 
prices,  to  be  made  public  for  each  class  of  financial  instrument  concerned  in 
accordance with paragraph 1 of Article 7; 

the  conditions  under  which  pre-trade  disclosure  may  be  waived  for  each  class  of 
financial instrument concerned in accordance with paragraphs 1 and 2, based on the 
following: 

4. 

(a) 

(b) 

(i) 

the market model; 

(ii) 

the specific characteristics of trading activity in a product; 

(iii) 

the liquidity profile, including the number and type of market participants in a 
given market and any other relevant criteria for assessing liquidity;  

(iv) 

the  size  or  type  of  orders  and  the  size  and  type  of  an  issue  of  a  financial 
instrument. 

Waivers granted by competent authorities in accordance with Articles 29 (2) and 44 
(2) of Directive 2004/39/EC and Articles 18 to 20 of Commission Regulation (EC) 
No 1287/2006 before the date of application of this Regulation shall be reviewed by 
ESMA by [2 years following the date of application of this Regulation]. ESMA shall 
issue  an  opinion  to  the  competent  authority  in  question  assessing  the  continued 
compatibility  of  each  of  those  waivers  with  the  requirements  established  in  this 
Regulation and any delegated act based on this Regulation. 

Article 9 
Post-trade transparency requirements for trading venues in respect of bonds, structured 
finance products, emission allowances and derivatives 

Regulated markets and investment firms and market operators operating an MTF or 
an OTF shall make public the price, volume and time of the transactions executed in 
respect of bonds and structured finance products admitted to trading on a regulated 
market  or  for  which  a  prospectus  has  been  published,  emission  allowances  and  for 
derivatives admitted to trading or which are traded on an MTF or an OTF. Regulated 

5. 

1. 

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32 

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2. 

1. 

2. 

(a) 

(b) 

markets  and  investment  firms  and  market  operators  operating  an  MTF  or  an  OTF 
shall  make  details  of  all  such  transactions  public  as  close  to  real-time  as  is 
technically possible. 

Regulated markets and investment firms and market operators operating an MTF or 
an  OTF  shall  give  access,  on  reasonable  commercial  terms  and  on  a  non-
discriminatory  basis,  to  the  arrangements  they  employ  for  making  public  the 
information  under  the  first  paragraph  to  investment  firms  which  are  obliged  to 
publish  the  details  of  their  transactions  in  bonds,  structured  finance  products, 
emission allowances and derivatives pursuant to Article 20. 

Article 10 
Authorisation of deferred publication 

Competent  authorities  shall  be  able  to  authorise  regulated  markets  and  investment 
firms  and  market  operators  operating  an  MTF  or  an  OTF  to  provide  for  deferred 
publication of the details of transactions based on their type or size. In particular, the 
competent  authorities  may  authorise  the  deferred  publication  in  respect  of 
transactions  that  are  large  in  scale  compared  with  the  normal  market  size  for  that 
bond,  structured  finance  product,  emission  allowance  or  derivative  or  that  class  of 
bond, structured finance product, emission allowance or derivative. 

Regulated markets and investment firms and market operators operating an MTF or 
an  OTF  shall  obtain  the  competent  authority's  prior  approval  of  proposed 
arrangements  for  deferred  trade-publication,  and  shall  clearly  disclose  these 
arrangements  to  market  participants  and  the  investing  public.  ESMA  shall  monitor 
the application of these arrangements for deferred trade-publication and shall submit 
an annual report to the Commission on how they are used in practice. 

The Commission shall adopt, by means of delegated acts in accordance with Article 
41, measures specifying: 

the details that need to be specified by regulated markets, investment firms, including 
systematic internalisers and investment firms and regulated markets operating a MTF 
or  an  OTF  in  the  information  to  be  made  available  to  the  public  for  each  class  of 
financial instrument concerned; 

the  conditions  for  authorising  for  each  class  of  financial  instrument  concerned  a 
deferred publication of trades for a regulated market, an investment firm, including a 
systematic internaliser or an investment firm or market operator operating an MTF or 
an OTF and the criteria to be applied when deciding the transactions for which, due 
to their size or the type of  bond,  structured  finance  product,  emission  allowance  or 
derivative  involved,  deferred  publication  and/or  the  omission  of  the  volume  of  the 
transaction is allowed. 

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Chapter 3 

Obligation to offer trade data on a separate and reasonable 
commercial basis 

Article 11 
Obligation to make pre- and post-trade data available separately  

Regulated markets and market operators and investment firms operating MTFs and 
OTFs  shall  make  the  information  published  in  accordance  with  Articles  3  to  10 
available to the public by offering pre- and post-trade transparency data separately. 

The Commission may adopt, by means of delegated acts in accordance with Article 
41, measures specifying the offering pre- and post-trade transparency data, including 
the level of disaggregation of the data to be made available to the public as referred 
to in paragraph 1. 

Article 12 
Obligation to make pre- and post-trade data available on a reasonable commercial basis 

Regulated  markets,  MTFs  and  OTFs  shall  make  the  information  published  in 
accordance with Articles 3 to 10 available to the public on a reasonable commercial 
basis.  The  information  shall  be  made  available  free  of  charge  15  minutes  after  the 
publication of a transaction. 

The Commission may adopt, by means of delegated acts in accordance with Article 
41,  measures clarifying  what  constitutes  a  reasonable  commercial  basis  to  make 
information public as referred to in paragraph 1. 

TITLE III 

TRANSPARENCY FOR INVESTMENT FIRMS TRADING OTC INCLUDING 
SYSTEMATIC INTERNALISERS 

Article 13 
Obligation for investment firms to make public firm quotes 

Systematic  internalisers  in  shares,  depositary  receipts,  exchange-traded  funds, 
certificates and other similar financial instruments shall publish a firm quote in those 
shares,  depositary  receipts,  exchange-traded  funds,  certificates  and  other  similar 
financial instruments admitted to trading on a regulated market or traded on an MTF 
or an OTF for which they are systematic internalisers and for which there is a liquid 
market. In the case of shares, depositary receipts, exchange-traded funds, certificates 

1. 

2. 

1. 

2. 

1. 

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34 

   EN 

 
2. 

3. 

4. 

5. 

6. 

7. 

and  other  similar  financial  instruments  for  which  there  is  not  a  liquid  market, 
systematic internalisers shall disclose quotes to their clients on request. 

This Article and Articles 14, 15 and 16 shall apply to systematic internalisers when 
dealing for sizes up to standard market size. Systematic internalisers that only deal in 
sizes above standard market size shall not be subject to the provisions of this Article. 

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

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

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

The competent authority of the most relevant market in terms of liquidity as defined 
in Article 23 for each share, depositary receipt, exchange-traded fund, certificate and 
other  similar  financial  instrument  shall  determine  at  least  annually,  on  the  basis  of 
the arithmetic average value of the orders executed in the market in respect of that 
financial  instrument,  the  class  to  which  it  belongs.  This  information  shall  be  made 
public to all market participants. 

In  order  to  ensure  the  efficient  valuation  of  shares,  depositary  receipts,  exchange-
traded funds, certificates and other similar financial  instruments  and  maximises the 
possibility  of  investment  firms  of  obtaining  the  best  deal  for  their  clients  the 
Commission shall adopt, by means of delegated acts in accordance with Article 41, 
measures  specifying  the  elements  related  to  the  publication  of  a  firm  quote  as 
referred to in paragraph 1 and to the standard market size as referred to in paragraph 
2. 

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35 

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1. 

2. 

3. 

4. 

5. 

6. 

Article 14 
Execution of client orders 

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

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

Systematic  internalisers  shall,  while  complying  with  the  provisions  set  down  in 
Article 27  of  Directive  [new  MiFID],  execute  the  orders  they  receive  from  their 
clients  in  relation  to  the  shares,  depositary  receipts,  exchange-traded  funds, 
certificates  and  other  similar  financial  instruments  for  which  they  are  systematic 
internalisers at the quoted prices at the time of reception of the order. 

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

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

Where  a  systematic  internaliser  quoting  only  one  quote  or  whose  highest  quote  is 
lower than the standard market size receives an order from a client of a size bigger 
than  its  quotation  size,  but  lower  than  the  standard  market  size,  it  may  decide  to 
execute  that  part  of  the  order  which  exceeds  its  quotation  size,  provided  that  it  is 
executed at the quoted price, except where otherwise permitted under the conditions 
of  the  previous  two  paragraphs.  Where  the  systematic  internaliser  is  quoting  in 
different  sizes  and  receives  an  order  between  those  sizes,  which  it  chooses  to 
execute, it shall execute the order at one of the quoted prices in compliance with the 
provisions of Article 28 of Directive [new MiFID], except where otherwise permitted 
under the conditions of the previous two subparagraphs. 

In  order  to  ensure  the  efficient  valuation  of  shares,  depositary  receipts,  exchange-
traded funds, certificates and other similar financial  instruments  and  maximises the 
possibility  of  investment  firms  of  obtaining  the  best  deal  for  their  clients  the 
Commission shall adopt, by means of delegated acts in accordance with Article 41, 
measures  specifying  the  criteria  specifying  when  prices  fall  within  a  public  range 
close to market conditions as referred to in paragraph 2. 

The Commission may adopt, by means of delegated acts in accordance with Article 
41,  measures clarifying  what  constitutes  a  reasonable  commercial  basis  to  make 
quotes public as referred to in paragraph 1. 

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Article 15 
Obligations of competent authorities 

The competent authorities shall check the following: 

(a) 

that investment firms regularly update bid and offer prices published in accordance 
with Article 13 and maintain prices which reflect the prevailing market conditions; 

(b) 

that investment firms comply with the conditions for price improvement laid down in 

Article 14(2). 

Article 16 
Access to quotes 

1. 

2. 

3. 

(a) 

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

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

In  order  to  ensure  the  efficient  valuation  of  shares,  depositary  receipts,  exchange-
traded funds, certificates  and other similar financial  instruments  and  maximises the 
possibility  of  investment  firms  of  obtaining  the  best  deal  for  their  clients  the 
Commission shall adopt, by means of delegated acts in accordance with Article 41, 
measures specifying: 

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

(i) through the facilities of any regulated market which has admitted the instrument 

in question to trading; 

(ii) through an approved publication arrangement; 

(iii) through proprietary arrangements; 

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(b) 

(c) 

(d) 

(e) 

the criteria specifying those transactions where execution in several securities is part 
of one transaction or orders that are subject to conditions other than current market 
price; 

the  criteria  specifying  what  can  be  considered  as  exceptional  market  circumstances 
that allow for the withdrawal of quotes as well as conditions for updating quotes; 

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

the  criteria  specifying  when  prices  fall  within  a  public  range  close  to  market 
conditions as referred to in Article 14(2). 

Article 17 
Obligation to publish firm quotes in bonds, structured finance products, emission allowance 
and derivatives 

1. 

Systematic  internalisers  shall  provide  firm  quotes  in  bonds  and  structured  finance 
products  admitted  to  trading  on  a  regulated  market  or  for  which  a  prospectus  has 
been  published,  emission  allowances  and  derivatives  which  are  clearing-eligible  or 
are  admitted  to  trading  on  a  regulated  market  or  are  traded  on  an  MTF  or  an  OTF 
when the following conditions are fulfilled: 

(a) 

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

(b) 

they agree to provide a quote. 

2. 

3. 

4. 

5. 

6. 

Systematic internalisers shall make the firm quotes provided pursuant to paragraph 1 
available  to  other  clients  of  the  investment  firm  in  an  objective  non-discriminatory 
way on the basis of their commercial policy. 

They  shall  undertake  to  enter  into  transactions  with  any  other  client  to  whom  the 
quote is made available under the published conditions when the quoted size is at or 
below a size specific to the instrument. 

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

The  quotes  made  pursuant  to  paragraph  1  and  at  or  below  the  size  mentioned  in 
paragraph  3  shall  be  made  public  in  a  manner  which  is  easily  accessible  to  other 
market participants on a reasonable commercial basis. 

The  quotes  shall  be  such  as  to  ensure  that  the  firm  complies  with  its  obligations 
under  Article  27  of  Directive  [new  MiFID],  and  shall  reflect  prevailing  market 
conditions in relation to prices at which transactions are concluded for the same or 
similar instruments on regulated markets, MTFs or OTFs. 

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Article 18 
Monitoring by ESMA 

1. 

2. 

3. 

Competent  authorities  and  ESMA  shall  monitor  the  application  of  this  Article 
regarding  the  sizes  at  which  quotes  are  made  available  to  clients  of  the  investment 
firm and made available to other market participants relative to other trading activity 
of the firm, and the degree to which the quotes reflect prevailing market conditions in 
relation to transactions in the same or similar instruments taking place on regulated 
markets,  MTFs,  or  OTFs.  Within  2  years  from  the  date  of  entry  into  force,  ESMA 
shall  report  to  the  Commission  on  the  application  of  this  Article.  In  case  of 
significant  quoting  and  trading  activity  just  beyond  the  threshold  mentioned  in 
paragraph 3 of Article 17 or outside prevailing market conditions, they shall report to 
the Commission before this deadline. 

The Commission shall adopt, by means of delegated acts in accordance with Article 
41,  measures  specifying  the  sizes  mentioned  in  Article  17(3)  at  which  firm  shall 
enter into transactions with any other client to whom the quote is made available. 

The Commission may adopt, by means of delegated acts in accordance with Article 
41,  measures clarifying  what  constitutes  a  reasonable  commercial  basis  to  make 
quotes public as referred to in Article 17(5). 

Article 19 
Post-trade disclosure by investment firms, including systematic internalisers, in respect of 
shares, depositary receipts, exchange-traded funds, certificates and other similar financial 
instruments 

1. 

2. 

3. 

(a) 

(b) 

Investment  firms  which,  either  on  own  account  or  on  behalf  of  clients,  conclude 
transactions  in  shares,  depositary  receipts,  exchange-traded  funds,  certificates  or 
other  similar  financial  instruments  admitted  to  trading  on  a  regulated  market  or 
which are traded on an MTF or an OTF, shall make public the volume and price of 
those transactions and the time at which they were concluded. This information shall 
be made public through an APA. 

The information which is made public in accordance with paragraph 1 and the time-
limits  within  which  it  is  published  shall  comply  with  the  requirements  adopted 
pursuant to Article 6. Where the measures adopted pursuant to Article 6 provide for 
deferred reporting for certain categories of transaction in shares, depositary receipts, 
exchange-traded  funds,  certificates  or  other  similar  financial  instruments,  this 
possibility shall also apply to those transactions when undertaken outside regulated 
markets, MTFs or OTFs. 

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

identifiers  for 
this  Article, 
distinguishing between those determined by factors linked primarily to the valuation 
of the instruments and those determined by other factors; 

trades  published  under 

the  different 

types  of 

elements of the obligation under paragraph 1 to transactions involving the use of those 
financial instruments for collateral, lending or other purposes where the exchange of 

EN 

39 

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financial instruments is determined by factors other than the current market valuation 
of the instrument. 

Article 20 
Post-trade disclosure by investment firms, including systematic internalisers, in respect of 
bonds, structured finance products, emission allowances and derivatives 

1. 

2. 

3. 

(a) 

(b) 

Investment  firms  which,  either  on  own  account  or  on  behalf  of  clients,  conclude 
transactions  in  bonds  and  structured  finance  products  admitted  to  trading  on  a 
regulated market or for which a prospectus has been published, emission allowances 
and  derivatives  which  are  clearing-eligible  or  are  reported  to  trade  repositories  in 
accordance  with  Article  [6]  of  Regulation  [EMIR]  or  are  admitted  to  trading  on  a 
regulated market or are traded on an MTF or an OTF shall make public the volume 
and  price  of  those  transactions  and  the  time  at  which  they  were  concluded.  This 
information shall be made public through an APA. 

The information which is made public in accordance with paragraph 1 and the time-
limits  within  which  it  is  published  shall  comply  with  the  requirements  adopted 
pursuant  to  Article 10.  Where  the  measures  adopted  pursuant  to  Article 10  provide 
for  deferred  reporting  for  certain  categories  of  transaction  in  bonds,  structured 
finance products, emission allowances or derivatives, this possibility shall also apply 
to those transactions when undertaken outside regulated markets, MTFs or OTFs. 

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

this  Article, 
identifiers  for 
distinguishing between those determined by factors linked primarily to the valuation 
of the instruments and those determined by other factors; 

trades  published  under 

the  different 

types  of 

the  criteria  specifying  the  obligation  under  paragraph 1  to  transactions  involving  the 
use of those financial instruments for collateral, lending or other purposes where the 
exchange  of  financial  instruments  is  determined  by  factors  other  than  the  current 
market valuation of the instrument. 

TITLE IV 

TRANSACTION REPORTING 

Article 21 
Obligation to uphold integrity of markets 

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

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Article 22 
Obligation to maintain records 

Investment firms shall keep at the disposal of the competent authority, for at least 5 
years, the relevant data relating to all transactions in financial instruments which they 
have  carried  out,  whether  on  own  account  or  on  behalf  of  a  client.  In  the  case  of 
transactions  carried  out  on  behalf  of  clients,  the  records  shall  contain  all  the 
information  and  details  of  the  identity  of  the  client,  and  the  information  required 
under  Directive  2005/60/EC23.  ESMA  may  request  access  to  that  information  in 
accordance  with  the  procedure  and  under  the  conditions  set  out  in  Article  35  of 
Regulation (EU) No 1095/2010. 

The  operator  of  a  regulated  market,  MTF  or  OTF  shall  keep  at  the  disposal  of  the 
competent authority, for at least five years, the relevant data relating to all orders in 
financial  instruments  which  are  advertised  through  their  systems.  The  records  shall 
contain all the details required for the purposes of Article 23(1) and (2). ESMA shall 
perform  a  facilitation  and  coordination  role  in  relation  to  competent  authorities' 
accessing information under the provisions of this paragraph. 

Article 23 
Obligation to report transactions 

Investment  firms  which  execute  transactions  in  financial  instruments  shall  report 
details of such transactions to the competent authority as quickly as possible, and no 
later than the close of the following working day. The competent authorities shall, in 
accordance  with  Article 89  of  Directive  [new  MiFID],  establish  the  necessary 
arrangements  in  order  to  ensure  that  the  competent  authority  of  the  most  relevant 
market  in  terms  of  liquidity  for  those  financial  instruments  also  receives  this 
information. 

The  obligation  laid  down  in  paragraph  1  shall  not  apply  to  financial  instruments 
which  are  not  admitted  to  trading  or  traded  on  an  MTF  or  an  OTF,  to  financial 
instruments whose value does not depend on that of a financial instrument admitted 
to trading or traded on an MTF or an OTF, nor to financial instruments which do not 
or  are  not  likely  to  have  an  effect  on  a  financial  instrument  admitted  to  trading  or 
traded on an MTF or an OTF. 

The  reports  shall,  in  particular,  include  details  of  the  names  and  numbers  of  the 
instruments  bought  or  sold,  the  quantity,  the  dates  and  times  of  execution,  the 
transaction  prices,  a  designation  to  identify  the  clients  on  whose  behalf  the 
investment  firm  has  executed  that  transaction,  a  designation  to  identify  the  persons 
and  the  computer  algorithms  within  the  investment  firm  responsible  for  the 
investment  decision  and  the  execution  of  the  transaction,  and  means  of  identifying 
the  investment  firms  concerned.  For  transactions  not  carried  out  on  a  regulated 
market,  MTF  or  OTF,  the  reports  shall  also  include  a  designation  identifying  the 

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

1. 

2. 

1. 

2. 

3. 

23 

EN 

41 

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4. 

5. 

6. 

7. 

8. 

(a) 

(b) 

(c) 

types  of  transactions  in  accordance  with  the  measures  to  be  adopted  pursuant  to 
Article 19(3)(a) and Article 20(3)(a). 

Investment firms which transmit orders shall include in the transmission of that order 
all the details required for the purposes of paragraphs 1 and 3. Instead of including a 
designation  to  identify  the  clients  on  whose  behalf  the  investment  firm  has 
transmitted  that  order  or  a  designation  to  identify  the  persons  and  the  computer 
algorithms within the investment firm responsible for the investment decision and the 
execution  of  the  transaction,  an  investment  firm  may  also  choose  to  report  the 
transmitted order in accordance with the requirements under paragraph 1. 

The operator of a regulated market, MTF or OTF shall report details of transactions 
in instruments traded on their platform which are executed through their systems by a 
firm which is not subject to this Regulation in accordance with paragraphs 1 and 3. 

The reports shall be made to the competent authority either by the investment firm 
itself,  an  ARM  acting  on  its  behalf  or  by  the  regulated  market  or  MTF  or  OTF 
through whose systems the transaction was completed. Trade-matching or reporting 
systems,  including  trade  repositories  registered  or  recognised  in  accordance  with 
Title VI of Regulation [ ] (EMIR), may be approved by the competent authority as an 
ARM. In cases where transactions are reported directly to the competent authority by 
a regulated market, an MTF, an OTF or an ARM, the obligation on the investment 
firm laid down in paragraph 1 may be waived. In cases where transactions have been 
reported to a trade repository in accordance with article [7] of Regulation [ ] (EMIR) 
and  where  these  reports  contain  the  details  required  under  paragraphs  1  and  3,  the 
obligation  on  the  investment  firm  laid  down  in  paragraph 1  shall  be  considered  to 
have been complied with. 

When, in accordance with Article 37(8) of Directive [new MiFID], reports provided 
for under this Article are transmitted to the competent authority of the host Member 
State,  it  shall  transmit  this  information  to  the  competent  authorities  of  the  home 
Member  State  of  the  investment  firm,  unless  they  decide  that  they  do  not  want  to 
receive this information. 

ESMA shall develop draft regulatory technical standards to determine: 

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

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

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

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42 

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9. 

1. 

ESMA shall submit those draft regulatory technical standards to the Commission by 
[…]. 

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

Two  years  after  entry  into  force  of  this  Regulation,  ESMA  shall  report  to  the 
Commission  on  the  functioning  of  this  Article,  including  whether  the  content  and 
format of transaction reports received and exchanged between competent authorities 
comprehensively enable to monitor the activities of investment firms in accordance 
with Article 21. The Commission may take steps to propose any changes, including 
providing for transactions to be transmitted to a system appointed by ESMA instead 
of to competent authorities, which allows relevant competent authorities to access all 
the information reported pursuant to this Article. 

TITLE V 

DERIVATIVES 

Article 24 
Obligation to trade on regulated markets, MTFs or OTFs 

Financial  counterparties  as  defined  in  Article  2(6)  and  non  financial  counterparties 
that meet the conditions referred to in Article [5(1b)] of Regulation [ ] (EMIR) shall 
conclude transactions which are not intragroup transactions as defined in Article [2a] 
of  Regulation  [  ]  (EMIR)  with  other  financial  counterparties  as  defined  in  Article 
2(6)  or  non  financial  counterparties  that  meet  the  conditions  referred  to  in  Article 
[5(1b)}  of  Regulation  [  ]  (EMIR)  in  derivatives  pertaining  to  a  class  of  derivatives 
that  has  been  declared  subject  to  the  trading  obligation  in  accordance  with  the 
procedure set out in Article 26 and listed in the register referred to in Article 27 only 
on: 

(a) 

regulated markets; 

(b)  MTFs; 

(c) 

OTFs; or 

(d) 

2. 

third country trading venues, provided that the Commission has adopted a decision in 
accordance  with  paragraph  4  and  provided  that  the  third  country  provides  an 
equivalent reciprocal recognition of trading venues authorised under Directive [new 
MiFID]  to  admit  to  trading  or  trade  derivatives  declared  subject  to  a  trading 
obligation in that third country on a non-exclusive basis. 

The  trading  obligation  shall  also  apply  to  counterparties  referred  to  in  paragraph  1 
which enter into derivatives transactions pertaining to derivatives declared subject to 
the trading obligation with third country financial institutions or other third country 
entities that would be subject to the clearing obligation if they were established in the 

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

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

The  Commission  may,  in  accordance  with  the  procedure  referred  to  in  Article  42, 
adopt  decisions  determining  that  the  legal  and  supervisory  framework  of  a  third 
country  ensures  that  a  trading  venue  authorised  in  that  third  country  complies  with 
legally binding requirements which are equivalent to the requirements for the trading 
venues  referred  to  in  subparagraphs  (a)  to  (c)  of  paragraph  1  resulting  from  this 
Regulation,  Directive  [new  MiFID],  and  Regulation  [new  MAR],  and  which  are 
subject to effective supervision and enforcement in that third country. 

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

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

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

3. 

4. 

(a) 

(b) 

(c) 

issuers  of  financial  instruments  are  subject  to  periodic  and  ongoing  information 

requirements ensuring a high level of investor protection; 

(d) 

it ensures market transparency and integrity by preventing market abuse in the form of 

insider dealing and market manipulation. 

5. 

The Commission shall adopt by means of delegated acts in accordance with Article 
41 measures specifying the types of contracts referred to in paragraph 2 which have a 
direct,  substantial  and  foreseeable  effect  within  the  Union  and  the  cases  where  the 
trading obligation is necessary or appropriate to prevent the evasion of any provision 
of this Regulation. 

Article 25 
Clearing obligation for derivatives traded on regulated markets 

The operator of a regulated market shall ensure that all transactions in derivatives pertaining 
to a class of derivatives declared subject to the clearing obligation pursuant to Article 4(3) of 
Regulation [EMIR] that are concluded on the regulated market are cleared by a CCP. 

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Article 26 
Trading obligation procedure 

1. 

(a) 

ESMA  shall  develop  draft  implementing  technical  standards  to  determine  the 
following: 

which  of  the  class  of  derivatives  declared  subject  to  the  clearing  obligation  in 
accordance with Article 4 paragraphs 2 and 4 of Regulation [ ] (EMIR) or a relevant 
subset thereof shall be traded on the venues referred to in Article 24(1); 

(b) 

the date from which the trading obligation takes effect. 

ESMA shall submit the draft implementing technical standards referred to in the first 
subparagraph  to  the  Commission  within  three  months  after  the  implementing 
technical  standards  in  accordance  with  Article  4(3)  of  Regulation  [  ]  (EMIR)  are 
adopted by the Commission. 

Power is conferred to the Commission to adopt the implementing technical standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Article  15  of  Regulation 
1095/2010. 

2. 

(a) 

In order for the trading obligation to take effect: 

the class of derivatives or a relevant subset thereof has to be admitted to trading or 
traded on at least one regulated market, MTF or OTF referred to in Article 24(1), and 

(b) 

the class of derivatives or a relevant subset thereof are considered sufficiently liquid to 

trade only on the venues referred to in Article 24(1). 

3. 

In developing the draft implementing technical standards, ESMA shall consider the 
class of derivatives or a relevant subset thereof as sufficiently liquid pursuant to the 
following criteria: 

(a) 

the average frequency of trades; 

(b) 

the average size of trades; 

(c) 

the number and type of active market participants; 

Before submitting the draft implementing technical standards to the Commission for 
adoption,  ESMA  shall  conduct  a  public  consultation  and,  where  appropriate,  may 
consult with the competent authorities of third countries. 

4. 

ESMA shall, on its own initiative, in accordance with the criteria set out in paragraph 
2 and after conducting a public consultation, identify and notify to the Commission 
the classes of derivatives or individual derivative contracts that should be subject to 
the  obligation  to  trade  on  the  venues  referred  to  in  Article  24(1),  but  for  which  no 
CCP  has  yet  received  authorisation  under  Article  10  or  11  of  Regulation  ----/---- 
(EMIR) or which is not admitted to trading or traded on a venue referred to in Article 
24(1). 

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5. 

6. 

Following  a  notification  by  ESMA,  the  Commission  may  publish  a  call  for 
development of proposals for the trading of those derivatives on the venues referred 
to in Article 24(1). 

technical  standards 

ESMA  shall  in  accordance  with  paragraph  1,  submit  to  the  Commission  new  draft 
implementing 
revoke  existing 
implementing technical standards whenever there is a material change in the criteria 
set out in paragraph 2. Before doing so, ESMA may consult, where appropriate, the 
competent  authorities  of  third  countries.  Power  is  conferred  to  the  Commission 
toamend,  suspend  and  revoke  the  existing  implementing  technical  standards  in 
accordance with Article 15 of Regulation (EU) No 1095/2010. 

to  amend,  suspend  or 

Powers  are  delegated  to  the  Commission  to  adopt  regulatory  technical  standards 
specifying the criteria referred to in paragraph 2(b), to be adopted in accordance with 
Articles 10 to 14 of Regulation EU 1095/2010. ESMA shall submit drafts for those 
regulatory technical standards to the Commission by --/--/--. 

Article 27 
Register of derivatives subject to the trading obligation 

ESMA  shall  publish  and  maintain  on  its  website  a  register  specifying, in  an  exhaustive  and 
unequivocal manner, the derivatives that are subject to the obligation to trade on the venues 
referred to in Article 24(1), the venues where they are admitted to trading or traded, and the 
dates from which the obligation takes effect. 

TITLE VI 

NON-DISCRIMINATORY CLEARING ACCESS FOR FINANCIAL INSTRUMENTS 

Article 28 
Non-discriminatory access to a CCP 

1. 

Without prejudice to Article 8 of Regulation [ ] (EMIR), a CCP shall accept to clear 
financial  instruments  on  a  non-discriminatory  and  transparent  basis,  including  as 
regards  collateral  requirements  and  fees  related  to  access,  regardless  of  the  trading 
venue  on  which  a  transaction  is  executed.  This  in  particular  should  ensure  that  a 
trading venue has the right to non-discriminatory treatment in terms of how contracts 
traded on its platforms are treated in terms of collateral requirements and netting of 
economically  equivalent  contracts  and  cross-margining  with  correlated  contracts 
cleared by the same CCP. A CCP may require that the trading venue comply with the 
reasonable  operational  and  technical  requirements  established  by  the  CCP.  This 
requirement  does  not  apply  to  any  derivative  contract  that  is  already  subject  to  the 
access obligations under Article 8 of Regulation [EMIR]. 

2. 

A  request  to  access  a  central  counterparty  shall  be  formally  submitted  to  a  central 
counterparty and its relevant competent authority by a trading venue. 

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3. 

4. 

5. 

6. 

(a) 

(b) 

1. 

2. 

3. 

The CCP shall provide a written response to the trading venue within three months 
either  permitting  access,  under  the  condition  that  the  relevant  competent  authority 
has not denied access pursuant to paragraph 4, or denying access. The CCP may only 
deny  a  request  for  access  under  the  conditions  specified  in  paragraph  6.  If  a  CCP 
refuses access it shall provide full reasons in its response and inform its competent 
authority in writing of the decision. The CCP shall make access possible within three 
months of providing a positive response to the access request. 

The competent authority of the CCP may only deny a trading venue access to a CCP 
where  such  access  would  threaten  the  smooth  or  orderly  functioning  of  financial 
markets. If a competent authority denies access on that basis it shall issue its decision 
within  two  months  following  receipt  of  the  request  referred  to  in  paragraph  2  and 
provide  full  reasons  to  the  CCP  and  the  trading  venue  including  the  evidence  on 
which the decision is based. 

A  trading  venue  established  in  a  third  country  may  request  access  to  a  CCP 
established  in  the  Union  only  if  the  Commission  has  adopted  a  decision  in 
accordance  with  Article  24(4)  relating  to  that  third  country  and  provided  that  the 
legal framework of that third country provides for an effective equivalent recognition 
of trading venues authorised under Directive [new MiFID] to request access to CCPs 
established in that third country. 

The Commission shall adopt by means of delegated acts in accordance with Article 
41, measures specifying: 

the  conditions  under  which  access  could  be  denied  by  a  CCP,  including  conditions 
based  on  the  volume  of  transactions,  the  number  and  type  of  users  or  other  factors 
creating undue risks. 

the conditions under which access is granted, including confidentiality of information 
provided  regarding  financial  instruments  during  the  development  phase,  the  non-
discriminatory and transparent basis as regards clearing fees, collateral requirements 
and operational requirements regarding margining. 

Article 29 
Non-discriminatory access to a trading venue 

Without  prejudice  to  Article  8a  of  Regulation  [  ]  (EMIR),  a  trading  venue  shall 
provide  trade  feeds  on  a  non-discriminatory  and  transparent  basis,  including  as 
regards  fees  related  to  access,  on  request  to  any  CCP  authorised  or  recognised  by 
Regulation  [  ]  (EMIR)  that  wishes  to  clear  financial  transactions  executed  on  that 
trading  venue.  This  requirement  does  not  apply  to  any  derivative  contract  that  is 
already subject to the access obligations under Article 8a of Regulation [EMIR]. 

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

The trading venue shall provide a written response to the CCP within three months 
either  permitting  access,  under  the  condition  that  the  relevant  competent  authority 
has not denied access pursuant to paragraph 4, or denying access. The trading venue 
may only deny access under the conditions specified under paragraph 6. When access 

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is refused the trading venue shall provide full reasons in its response to the trading 
venue  and  inform  its  competent  authority  in  writing  of  the  decision.  The  trading 
venue  shall  make  access  possible  within  three  months  of  providing  a  positive 
response to the access request. 

The  competent  authority  of  the  trading  venue  may  only  deny  a  CCP  access  to  a 
trading venue where such access would threaten the smooth or orderly functioning of 
markets. If a competent authority denies access on that basis it shall issue its decision 
within  two  months  following  receipt  of  the  request  referred  to  in  paragraph  2  and 
provide  full  reasons  to  the  trading  venue  and  the  CCP  including  the  evidence  on 
which its decision is based. 

A  CCP  established  in  a  third  country  may  request  access  to  a  trading  venue  in  the 
Union subject to that CCP being recognised under Article 23 of Regulation [EMIR] 
and provided that the legal framework of that third country provides for an effective 
equivalent  recognition  of  a  CCP  authorised  under  Regulation  [EMIR]  to  trading 
venues established in that third country. 

The Commission shall adopt by means of delegated acts in accordance with Article 
41, measures specifying: 

the  conditions  under  which  access  could  be  denied  by  a  trading  venue,  including 
conditions based on the volume of transactions, the number of users or other factors 
creating undue risks. 

the conditions under which access is granted, including confidentiality of information 
provided regarding financial instruments during the development phase and the non-
discriminatory and transparent basis as regards fees related to access. 

Article 30 
Non-discriminatory access to and obligation to licence benchmarks 

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

4. 

5. 

6. 

(a) 

(b) 

1. 

(a) 

relevant price and data feeds and information on the composition, methodology and 
pricing of that benchmark; and to 

(b) 

licences. 

Access to that information shall be granted on a reasonable commercial basis within 
three months following the request by a CCP or a trading venue, and in any event at 
a price no higher than the lowest price at which access to the benchmark is granted or 
the  intellectual  property  rights  are  licensed  to  another  CCP,  trading  venue  or  any 
related person for clearing and trading purposes. 

2. 

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

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(a) 

(b) 

3. 

(a) 

(b) 

1. 

(a) 

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

to prevent any other CCP or trading venue from obtaining access to such information 
or rights on terms any less advantageous than those conferred on that CCP or trading 
venue. 

The Commission shall adopt by means of delegated acts in accordance with Article 
41, measures specifying: 

the information to be made available under paragraph 1(a);  

the conditions under which access is granted, including confidentiality of information 

provided. 

TITLE VII 

SUPERVISORY MEASURES ON PRODUCT INTERVENTION AND POSITIONS 

Chapter 1 

Product Intervention 

Article 31 
ESMA powers to temporarily intervene 

In  accordance  with  Article  9(5)  of  Regulation  (EU)  No  1095/2010,  ESMA  may 
where it is satisfied on reasonable grounds that the conditions in paragraphs 2 and 3 
are fulfilled, temporarily prohibit or restrict in the Union: 

the  marketing,  distribution  or  sale  of  certain  financial  instruments  or  financial 
instruments with certain features; or 

(b) 

a type of financial activity or practice. 

2. 

(a) 

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

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

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

(b) 

regulatory  requirements  under  Union  legislation  that  are  applicable  to  the  relevant 

financial instrument or activity do not address the threat; 

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(c) 

a  competent  authority  or  competent  authorities  have  not  taken  action  to  address  the 

threat or actions that have been taken do not adequately address the threat. 

3. 

(a) 

When  taking  action  under  this  Article  ESMA  shall  take  into  account  the  extent  to 
which the action: 

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

(b) 

does not create a risk of regulatory arbitrage. 

Where  a  competent  authority  or  competent  authorities  have  taken  a  measure  under 
Article 32, ESMA may take any of the measures referred to in paragraph 1 without 
issuing the opinion provided for in Article 33. 

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

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

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

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

The Commission shall adopt by means of delegated acts in accordance with Article 
41  measures  specifying  criteria  and  factors  to  be  taken  into  account  by  ESMA  in 
determining when the threats to investor protection or to the orderly functioning and 
integrity of financial markets and to the stability of the whole or part of the financial 
system of the Union referred to in paragraph 2(a) arise. 

Article 32 
Product intervention by competent authorities  

A competent authority may prohibit or restrict in or from that Member State: 

the  marketing,  distribution  or  sale  of  certain  financial  instruments  or  financial 
instruments with certain features; or 

4. 

5. 

6. 

7. 

8. 

1. 

(a) 

(b) 

a type of financial activity or practice. 

2. 

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

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50 

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(a) 

(b) 

(c) 

a  financial  instrument  or  activity  or  practice  gives  rise  to  significant  investor 
protection concerns or poses a serious threat to the orderly functioning and integrity 
of financial markets or the stability of whole or part of the financial system; 

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

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

(d) 

it has properly consulted with competent authorities in other Member States that may 

be significantly affected by the action; and 

(e) 

the action does not have a discriminatory effect on services or activities provided from 

another Member State. 

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

The competent authority shall not take action under this Article unless, not less than 
one  month  before  it  takes  the  action,  it  has  notified  all  other  competent  authorities 
and ESMA in writing of details of: 

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

the precise nature of the proposed prohibition or restriction and when it is intended to 

take effect; and 

3. 

(a) 

(b) 

(c) 

the evidence upon which it has based its decision and upon which is satisfied that each 

of the conditions in paragraph 1 are met. 

4. 

5. 

6. 

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

The competent authority shall revoke a prohibition or restriction if the conditions in 
paragraph 1 no longer apply. 

The Commission shall adopt by means of delegated acts in accordance with Article 
41  measures  specifying  criteria  and  factors  to  be  taken  into  account  by  competent 
authorities  in  determining  when  the  threats  to  investor  protection  or  to  the  orderly 
functioning and integrity of financial markets and to the stability of the whole or part 
of the financial system of the Union referred to in paragraph 2(a) arise. 

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51 

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1. 

2. 

3. 

1. 

2. 

Article 33 
Coordination by ESMA 

ESMA shall perform a facilitation and coordination role in relation to action taken by 
competent authorities under Article 32. In particular ESMA shall ensure that action 
taken  by  a  competent  authority  is  justified  and  proportionate  and  that  where 
appropriate a consistent approach is taken by competent authorities. 

After  receiving  notification  under  Article  32  of  any  action  that  is  to  be  imposed 
under  that  Article,  ESMA  shall  adopt  an  opinion  on  whether  it  considers  the 
prohibition  or  restriction  is  justified  and  proportionate.  If  ESMA  considers  that  the 
taking of a measure by other competent authorities is necessary to address the risk, it 
shall  also  state  this  in  the  opinion.  The  opinion  shall  be  published  on  ESMA's 
website. 

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

Chapter 2 

Positions 

Article 34 
Coordination of national position management measures and position limits by ESMA 

ESMA shall perform a facilitation and coordination role in relation to measures taken 
by competent authorities pursuant to Article 71(2) subparagraph (i) and Article 72(1) 
subparagraphs (f) and (g) of Directive [new MiFID]. In particular ESMA shall ensure 
that  a  consistent  approach  is  taken  by  competent  authorities  with  regard  to  when 
these  powers are  exercised, the nature and scope of the measures imposed, and the 
duration and follow-up of any measures. 

After  receiving  notification  of  any  measure  under  Article  83(5)  of  Directive  [new 
MiFID]  ESMA  shall  record  the  measure  and  the  reasons  thereof.  In  relation  to 
measures  pursuant  to  Article  72(1)  subparagraph  (f)  and  (g)  of  Directive  [new 
MiFID], it shall maintain and publish on its website a database with summaries of the 
measures in force including details on the person or class of persons concerned, the 
applicable financial instruments, any quantitative measures or thresholds such as the 
maximum number of contracts persons can enter into before a limit is reached, any 
exemptions thereto, and the reasons thereof. 

Article 35 
Position management powers of ESMA 

1. 

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

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(a) 

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

(b) 

after  analysing  the  information  obtained,  require  any  such  person  to  take  steps  to 

reduce the size of the position or exposure; 

(c) 

limit the ability of a person from entering into a commodity derivative. 

2. 

(a) 

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

the measures listed in points (a) to (c) of paragraph 1 address a threat to the orderly 
functioning  and  integrity  of  financial  markets  including  in  relation  to  delivery 
arrangements  for  physical  commodities,  or  the  stability  of  the  whole  or  part  of  the 
financial system in the Union; 

(b) 

a competent authority or competent authorities have not taken measures to address the 

threat or measures that have been taken do not sufficiently address the threat; 

3. 

(a) 

(b) 

(c) 

4. 

Measures related to wholesale energy products shall be taken after consultation with 
the Agency for the Cooperation of Energy Regulators established under Regulation 
(EC) No 713/2009. 

When taking measures referred to in paragraph 1 ESMA shall take into account the 
extent to which the measure: 

does  significantly  address  the  threat  to  the  orderly  functioning  and  integrity  of 
financial  markets  or  of  delivery  arrangements  for  physical  commodities,  or  the 
stability  of  the  whole  or  part  of  the  financial  system  in  the  Union  or  significantly 
improve the ability of competent authorities to monitor the threat; 

does not create a risk of regulatory arbitrage; 

does  not  have  a  detrimental  effect  on  the  efficiency  of  financial  markets,  including 
reducing  liquidity  in  those  markets  or  creating  uncertainty  for  market  participants, 
that is disproportionate to the benefits of the measure. 

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

5. 

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

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6. 

7. 

8. 

9. 

10. 

1. 

2. 

(a) 

(b) 

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

A measure shall take effect when the notice is published or at a time specified in the 
notice  that  is  after  its  publication  and  shall  only  apply  in  relation  to  a  transaction 
entered into after the measure takes effect. 

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

A  measure  adopted  by  ESMA  under  this  Article  shall  prevail  over  any  previous 
measure taken by a competent authority under Section 1. 

The Commission shall adopt by means of delegated acts in accordance with Article 
41  measures  specifying  criteria  and  factors  to  be  taken  into  account  by  ESMA  in 
determining  when  a  threat  to  the  orderly  functioning  and  integrity  of  financial 
markets including in relation to delivery arrangements for physical commodities, or 
the stability of the whole or part of the financial system in the Union referred to in 
paragraph 2(a) arise. 

TITLE VIII 

PROVISION OF SERVICES WITHOUT A BRANCH BY THIRD COUNTRY FIRMS 

Article 36 
General provisions  

A third country firm may provide the services listed in Article 30 of Directive [new 
MiFID] to eligible counterparties established in the Union without the establishment 
of a branch only where it is registered in the register of third country firms kept by 
ESMA in accordance with Article 37. 

ESMA  can  register  a  third  country  firm  that  has  applied  for  the  provision  of 
investment services and activities in the Union in accordance with paragraph 1 only 
where the following conditions are met: 

the Commission has adopted a decision in accordance with Article 37, paragraph 1; 

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

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(c) 

3. 

4. 

5. 

6. 

co-operation arrangements have been established pursuant to Article 37, paragraph 2. 

The  third  country  firm  referred  to  in  paragraph  1  shall  submit  its  application  to 
ESMA after the adoption by the Commission of the decision referred to in Article 37 
determining that the legal and supervisory framework of the third country in which 
the  third  country  firm  is  authorised  is  equivalent  to  the  requirements  described  in 
Article 37 (1). 

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

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

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

Third  country  firms  providing  services  in  accordance  with  this  Article  shall  inform 
clients established in the Union, before the provision of any investment services, that 
they are not allowed to provide services to clients other than eligible counterparties 
and  that  they  are  not  subject  to  supervision  in  the  Union.  They  shall  indicate  the 
name  and  the  address  of  the  competent  authority  responsible  for  supervision  in  the 
third country. 

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

Persons established in the Union shall be allowed to receive investment services by a 
third  country  firm  not  registered  in  accordance  with  paragraph  1  only  at  their  own 
exclusive initiative. 

Any  disputes  between  the  third  country  firms  and  EU  investors  shall  be  settled  in 
accordance with the law of and subject to the jurisdiction of a Member State. 

Powers  are  delegated  to  the  Commission  to  adopt  regulatory  technical  standards 
specifying  the  information  that  the  applicant  third  country  firm  shall  provide  to 
ESMA  in  its  application  for  registration  in  accordance  with  paragraph  3  and  the 
format of information to be provided in accordance with paragraph 4. 

The  regulatory  technical  standards  referred  to  in  the  first  subparagraph  shall  be 
adopted in accordance with Article 10 to 14 of Regulation (EU) No 1095/2010. 

ESMA  shall  submit  a  draft  to  the  Commission  for  those  regulatory  technical 
standards by []. 

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1. 

(a) 

(b) 

Article 37 
Equivalence decision 

The Commission may adopt a decision in accordance with the procedure referred to 
in Article 42 in relation to a third country if the legal and supervisory arrangements 
of  that  third  country  ensure  that  firms  authorised  in  that  third  country  comply  with 
legally binding requirements which have equivalent effect to the requirements set out 
in  Directive  No  [MiFID],  in  this  Regulation  and  in  Directive  2006/49/EC  [Capital 
Adequacy  Directive]  and  in  their  implementing  measures  and  that  third  country 
provides for equivalent reciprocal recognition of the prudential framework applicable 
to investment firms authorised in accordance with this directive. 

The  prudential  framework  of  a  third  country  may  be  considered  equivalent  where 
that framework fulfils all the following conditions: 

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

firms providing investment services and activities in that third country are subject to 
to 

requirements  applicable 

requirements  and  appropriate 
sufficient  capital 
shareholders and members of their management body; 

(c) 

firms  providing 

investment  services  and  activities  are  subject 

to  adequate 

organisational requirements in the area of internal control functions; 

(d) 

firms providing investment services and activities are subject to appropriate conduct of 

business rules; 

(e) 

it ensures market transparency and integrity by preventing market abuse in the form of 

insider dealing and market manipulation. 

2. 

(a) 

(b) 

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

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

the  mechanism  for  prompt  notification  to  ESMA  where  a  third  country  competent 
authority  deems  that  a  third  country  firm  that  it  is  supervising  and  ESMA  has 
registered in the register provided for in Article 38 is in breach of the conditions of 
its authorisation or other legislation to which it is obliged to adhere; 

(c) 

the procedures concerning the coordination of supervisory activities including, where 

appropriate, on-site inspections. 

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Article 38 
Register 

ESMA shall register the non-EU firms allowed to provide investment services or activities in 
the  Union  in  accordance  with  Article  36.  The  register  shall  be  publicly  accessible  on  the 
website of ESMA and shall contain information on the services or activities which the non-
EU firms are permitted to provide and the reference of the competent authority responsible for 
their supervision in the third country. 

Article 39 
Withdrawal of registration 

1. 

(a) 

(b) 

2. 

(a) 

(b) 

3. 

4. 

ESMA shall withdraw, if the conditions in paragraph 2 are fulfilled, the registration 
of a non-EU firm in the register established in accordance with Article 38 when: 

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

ESMA has well-founded reasons based on documented evidence to believe that, in the 
provision  of  investment  services  and  activities  in  the  Union,  the  non-EU  firm  has 
seriously infringed the provisions applicable to it in the third country and on the basis 
of  which  the  Commission  has  adopted  the  Decision  in  accordance  with  Article  37, 
paragraph 1. 

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

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

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

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

The  Commission  shall  assess  whether  the  conditions  under  which  a  Decision  in 
accordance  with  Article  37,  paragraph  1,  has  been  adopted  continue  to  persist  in 
relation to the third country concerned. 

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TITLE IX 

DELEGATED AND IMPLEMENTING ACTS 

Chapter 1 

Delegated Acts 

Article 40 
Delegated acts 

The Commission shall be empowered to adopt delegated acts in accordance with Article 41 
concerning  Articles  2(3),  4(3),  6(2),  8(4),  10(2),  11(2),  12(2),  13(7),  14(5),  14(6),  16(3), 
18(2), 18(3), 19(3), 20(3), 28(6), 29(6), 30(3), 31(8), 32(6), 35(10) and 45(2). 

Article 41 
Exercise of the delegation 

1. 

2. 

3. 

4. 

5. 

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

The delegation of power shall be conferred for an indeterminate period of time from 
the date referred to in Article 41 paragraph 1. 

The delegation of powers may be revoked at any time by the European Parliament or 
by  the  Council.  A  decision  of  revocation  shall  put  an  end  to  the  delegation  of  the 
power specified in that decision. It shall take effect the day following the publication 
of  the  decision  in  the  Official  Journal  of  the  European  Union  or  at  a  later  date 
specified therein. It shall not affect the validity of any delegated acts already in force. 

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

A delegated act shall enter into force only if no objection has been expressed either 
by  the  European  Parliament  or  the  Council  within  a  period  of  2  months  of 
notification of that act to the European Parliament and the Council or if, before the 
expiry of that period, the European Parliament and the Council have both informed 
the Commission that they will not object. That period shall be extended by 2 months 
at the initiative of the European Parliament or the Council. 

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Chapter 2 

Implementing acts 

Article 42 
Committee procedure 

For the adoption of implementing acts under Articles 24, 26 and 37, the Commission 
shall be assisted by the European Securities Committee established by Commission 
Decision 2001/528/EC24. That committee shall be a committee within the meaning of 
Regulation (EU) No 182/201125. 

Where  reference  is  made  to  this  paragraph,  Article  5  of  Regulation  (EU)  No 
182/2011 shall apply, having regard to the provisions of Article 8 thereof. 

TITLE X 

FINAL PROVISIONS 

Article 43 
Reports and review 

Before  [2  years  following  application  of  MiFIR  as  specified  in  Article  41(2)],  the 
Commission  after  consulting  ESMA  shall  present  a  report  to  the  European 
Parliament  and  to  the  Council  on  the  impact  in  practice  of  the  transparency 
obligations  established  pursuant  to  Articles  3  to  6  and  9  to  12,  in  particular  on  the 
application  and  continued  appropriateness  of  the  waivers  to  pre-trade  transparency 
obligations established pursuant to Articles 3(2) and 4(2) and (3). 

Before  [2  years  following  application  of  MiFIR  as  specified  in  Article  41(2)],  the 
Commission,  after  consulting  ESMA  shall  present  a  report  to  the  Council  and  the 
Parliament  on  the  functioning  of  Article  13,  including  whether  the  content  and 
format of transaction reports received and exchanged between competent authorities 
comprehensively enable to monitor the activities of investment firms in accordance 
with Article 13(1). The Commission may make any appropriate proposals, including 
providing for transactions to be reported to a system appointed by ESMA instead of 
to  competent  authorities,  which  allows  relevant  competent  authorities  to  access  all 
the information reported pursuant to this Article. 

Before  [2  years  following  application  of  MiFIR  as  specified  in  Article  41(2)],  the 
Commission  after  consulting  ESMA  shall  present  a  report  to  the  European 
Parliament  and  to  the  Council  on  the  on  the  progress  made  in  moving  trading  in 

OJ L 191, 13.7.2001, p. 45. 
OJ L 55, 28.2.2011, p. 13. 

1. 

2. 

1. 

2. 

3. 

24 
25 

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standardised OTC derivatives to exchanges or electronic trading platforms pursuant 
to Articles 22 and 24. 

Article 44 
Amendment of EMIR 

The following subparagraph shall be added to Article 67(2) of Regulation [EMIR]: " A trade 
repository  shall  transmit  data  to  competent  authorities  in  accordance  with  the  requirements 
under Article 23 of Regulation [MiFIR]." 

Article 45 
Transitional provision 

1. 

2. 

Existing  third  country  firms  shall  be  able  to  continue  to  provide  services  and 
activities in Member States, in accordance with national regimes until [4 years after 
the entry into force of this regulation]. 

The Commission may adopt by means of delegated acts in accordance with Article 
41  measures  specifying  an  extension  to  the  period  of  application  of  paragraph  2, 
taking into account the equivalence decisions already adopted by the Commission in 
accordance  with  Article  37  and  expected  developments  in  the  regulatory  and 
supervisory framework of third countries. 

Article 46  
Entry into force and application 

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

This  Regulation  shall  apply  from  [24  months  after  the  entry  into  force  of  this  Regulation], 
except for Articles 2(3), 4(3), 6(2), 8(4), 10(2), 11(2), 12(2), 13(7), 14(5), 14(6), 16(3), 18(2,), 
18(3), 19(3), 20(3), 23(8), 24(5), 26, 28(6), 29(6), 30(3), 31, 32, 33, 34 and 35, which shall 
apply immediately following the entry into force of this Regulation. 

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

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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