Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2014/65/EU on markets in financial instruments and Directive 2009/138/EC on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II)
Date: 2017-09-20
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: financial control, financial instrument, financial legislation, financial solvency, insurance company, insurance law, investment company, market supervision, provision of services

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   EUROPEAN COMMISSION  Brussels, 20.9.2017  COM(2017) 537 final 2017/0231 (COD)   Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2014/65/EU on markets in financial instruments and Directive 2009/138/EC on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (Text with EEA relevance)  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

This  proposal  forms  part  of  a  package  of  measures  with  the  purpose  of  enhancing  the 
supervision  of  EU  financial  markets  by  improving  the  operation  of  the  system  of  European 
Supervisory Authorities (ESAs) and accelerating and completing the Capital Markets Union. 
This  proposal  concerns  the  supervision  and  powers  of  the  European  Securities  and  Markets 
Authority  (ESMA)  and  provides  for  the  transfer  of  certain  supervisory  powers  currently 
vested with the national competent authorities.  

The  Markets  in  Financial  Instruments  Directive  2014/65/EU  (MiFID  II)1  introduces  a  new 
type  of  services  that  are  subject  to  authorisation  and  supervision:  Data  Reporting  Services 
(DRSs)  operated  by  Data  Reporting  Services  Providers  (DRSPs).  The  effective  circulation, 
monitoring and reconstruction of trading data was not addressed in Directive 2004/39/EC on 
markets  in  financial  instruments  (MiFID  I)2.  This  led  to  EU  trading  data  that  was  neither 
consistent  nor  of  adequate  quality  to  monitor  whether  the  objectives  of  MiFID  were  being 
properly  achieved.  In  addition,  trading  data  was  not  made  available  at  reasonable  cost 
throughout the EU by the relevant trading venues.  

Since inconsistencies in quality, formatting, reliability and cost have a detrimental effect on 
data transparency, investor protection and market efficiency, MIFID II intends to improve the 
quality  and  accessibility  of  trading data  by  setting  a  standard  format  for  trading  data  that  is 
easy  to  consolidate,  readily  understood  and  available  at  a  reasonable  cost,  and  by  imposing 
formal  organisational  requirements  on    data  reporting  services  providers  (DRSPs)  and 
requiring them to be authorised by their national authority. 

Given  the  cross-border  dimension  of  data  handling,  the  benefits  of  pooling  data-related 
competences  -  including  potential  economies  of  scale  -  and  the  adverse  impact  of  potential 
divergences  in  supervisory  practices  on  both  the  quality  of  trading  data  and  on  the  tasks  of 
data  reporting  service  providers,  it  is  appropriate  to  transfer  the  authorisation  of,  and  the 
supervision on, data reporting service providers from national authorities to ESMA. 

The  current  proposal  is  therefore  limited  to  transfer  the  powers  to  authorise  and  supervise 
those  entities  from  national  competent  authorities  to  ESMA  by  inserting  those  powers  in 
Regulation (EU) No 600/2014 on markets in financial instruments (MiFIR)3 without bringing 
any further change to the substantive rules applicable to DRSPs including the conditions for 
authorisation  and  organisational  requirements  initially  established  by  MIFID  II.  As  a 
consequence, the relevant provisions pertaining to the DRSPs set out in MiFID II are deleted.  

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Directive  2014/65/EU  on  markets  in  financial  instruments  and  amending  Directive  2002/92/EC  and 
Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349).   
Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in 
financial  instruments  amending  Council  Directives  85/611/EEC  and  93/6/EEC  and  Directive 
2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC 
(OJ L 145, 30.4.2004, p. 1). 
Regulation  (EU)  No  600/2014  of  the  European  Parliament  and  of  the  Council  of  15  May  2014  on 
markets in financial instruments and amending Regulation (EU) No 648/2012 (OJ L 173, 12.6.2014, p. 
84). 

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In  addition,  this  proposal  also  concerns  the  role  of  EIOPA  in  the  approval  processes  for 
internal models. 

The Solvency II Directive (Directive 2009/138/EC4) provides that in accordance with the risk-
oriented  approach  to  the  Solvency  Capital  Requirement  (SCR),  it  is  possible,  in  specific 
circumstances,  for  insurance  and  reinsurance  undertakings  and  groups, at  the level  of  either 
individual undertakings or groups, to use internal models for the SCR calculation, rather than 
the standard formula. These internal models are subject to supervisory approval. Despite the 
valuable work carried out by EIOPA on supervisory convergence as regards internal models, 
major  inconsistencies  remain  with  regard  to  the  requirements  of  competent  authorities  for 
internal models, and difficulties exist in reaching joint agreements on group internal models 
within colleges of supervisors. 

Divergence  in  the  supervision  and  approval  of  internal  models  leads  to  inconsistencies  and 
creates  an  uneven  level  playing  field  amongst  market  participants.  The  proposal  therefore 
promotes supervisory convergence by enhancing EIOPA's role with regard to internal models, 
through provisions on cooperation and information sharing, coupled with powers for EIOPA 
to  adopt  Opinions  in  this  area,  and  to  contribute  on  its  own  initiative  to  the  settlement  of 
disputes between supervisory authorities, including through binding mediation. 

• 

Consistency with existing policy provisions in the policy area 

The  current  proposal  is  consistent  with  other  pieces  of  Union  law  including  those  which 
confer direct powers to ESAs:  

• 

Consistency with other Union policies 

This proposal does not affect other Union policies.  

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  proposal  is  based  on  Article  53(1)  and  62  of  the  Treaty  on  the  Functioning  of  the 
European Union.   

• 

Subsidiarity (for non-exclusive competence)  

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

The  substantive  authorisation  and  supervision  are  already  covered  by  MiFID  II  and  hence 
substantive  has  been  conferred  to  the  Union  level.  The  only  modification  brought  about  by 
this proposal is that ESMA instead of national competent authorities will be responsible for 
the  authorisation  of  DRSPs  and  their  supervision.  In  this  regard,  financial  markets  are 
inherently cross-border in nature and are becoming more so. Financial markets data intensity 
is also growing rapidly. Enhanced efficiency of handling data relevant aspects of the MIFID II 
framework  is  called  for  to  meet  these  challenges.  By  transferring  authorisation  and 

4 

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

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supervision of data service reporting providers to ESMA, one can ensure uniform conditions 
for trading data and trade reporting channels, and at the same time allow national competent 
authorities to free up resources for supervision of the end-users of the data.  

The  principle  of  supervisory  approval  for  internal  models  is  already  contained  in  the 
Solvency II Directive .The modifications brought about by this proposal seek to enhance 
EIOPA's  role  in  order  to  achieve  greater  supervisory  convergence  in  this  area,  in 
particular for insurance groups present in several EU Member States, whilst leaving the 
power  to  approve  such  applications  with  the  supervisors  and  as  applicable,  the 
supervisory college.•  

Proportionality 

The proposal takes 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.  

• 

Choice of the instrument 

This proposal amends a Directive of the European Parliament and of the Council adopted on 
the  basis  of  Article  53(1)  of  the  TFEU  and  a  Directive  of  the  European  Parliament  and  the 
Council  adopted  on  the  basis  of  Article  53  and  62  TFEU.  A  proposal  for  a  Directive  is 
therefore required to amend both these Directives.  

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Impact assessment 

The  proposed  amendments  to  these  Directives  are  of  a  very  limited  nature  and  given  the 
recent  implementation  and  application  of  these  Directives,  the  changes  do  not  justify  the 
carrying out of any separate evaluation. 

• 

Regulatory fitness and simplification 

The one-stop shop offered for authorisation and supervision by virtue of amending MiFID II 
and  MiFIR  will  contribute  to  reduce  regulatory  burden,  including  for  smaller  DRSPs.  The 
powers and competences of competent authorities with respect to DRSPs will be transferred 
to  ESMA.  This  single  authorisation  and  oversight  framework  will  result  in  substantial 
simplification for DRSPs with cross-border presence and reduction of administrative burden. 

As  regards  Solvency  II,  supervisory  convergence  contributes  to  streamlined  application 
processes and requirements across the Union, reducing an unlevel playing field, in particular 
for insurance groups. 

• 

Fundamental rights 

The right of due process and right of defence have been safeguarded notably through a clear 
procedural  framework  and  judicial  control  of  investigatory  measures  where  required  by 
national judge, and of final decisions under this Regulation by the Court of Justice.  

4. 

BUDGETARY IMPLICATIONS 

This  is  covered  by  the  amendments  to  MiFIR  and  the  amendments  to  the  EIOPA  founding 
Regulation. 

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5. 

• 

OTHER ELEMENTS 

Detailed explanation of the specific provisions of the proposal 

Article  1  of  the  proposal  sets  out  amendments  that  are  required  for  the  transfer  of  current 
powers  and  competences  vested  in  the  competent  authorities  to  ESMA,  which  will  be 
responsible  for  the  authorisation  and  supervision  of  firms  that  intend  to  carry  out  data 
reporting services. 

These amendments comprise the modification and the deletion of several sections of MiFID 
II, including Title V pertaining to the DRSPs, Section D of Annex I and powers of competent 
authorities to impose sanctions on DRSPs.  

Article  2  of  this  proposal  includes  the  amendments  to  the  Solvency  II-Directive  to  give 
EIOPA a greater role to contribute to supervisory convergence in the area of internal model 
application, and comprises changes with respect to information sharing regarding such model 
applications, the possibility for EIOPA to issue Opinions in relation to that matter, as well as 
for  EIOPA  to  assist  in  the  settlement  of  disputes  between  supervisory  authorities,  either  at 
their  request,  on  its  own  initiative  or,  in  certain  circumstances,  at  the  request  of  concerned 
undertakings. 

The amendments also provide that EIOPA should prepare annual reports on this matter. This 
will allow close monitoring of the situation regarding internal model applications, including 
bringing  to  light  any  outstanding  concerns  with  regard  to  supervisory  convergence  in  this 
area. 

This Article also aligns some parts of Solvency II (Article 231(3) and 237(3)) with changes to 
the EIOPA founding Regulation contained in the Commission's proposal for that Regulation 
on  binding  mediation.  In  addition,  this  Article  applies  the  necessary  amendments  to  Article 
248(4)  of  Solvency  II  on  binding  mediation,  removing  references  to  a  previous  dispute 
settlement procedure with CEIOPS (the Committee of European Insurance and Occupational 
Pensions Supervisors), which has been superseded by EIOPA. 

Articles 3 and 4 set out transposition and entry into force provisions. 

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2017/0231 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Directive 2014/65/EU on markets in financial instruments and Directive 
2009/138/EC on the taking-up and pursuit of the business of Insurance and Reinsurance 
(Solvency II) 

(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 53(1) and 62 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Central Bank,5 
Having regard to the opinion of the European Economic and Social Committee6,  

Acting in accordance with the ordinary legislative procedure, 

Whereas:  

(1) 

(2) 

Directive  2014/65/EU  creates  a  regulatory  framework  for  data  reporting  services 
providers and requires post-trade data reporting services to be authorised as approved 
publication arrangements (APAs). In addition, consolidated tape providers (CTP) are 
required to offer consolidated trading data covering all trades in both equity and non-
equity  instruments  throughout  the  Union,  in  accordance  with  Directive  2014/65/EU. 
Directive 2014/65/EU also formalises transaction reporting channels to the competent 
authorities by requiring third parties that report on behalf of firms to be authorised as 
approved reporting mechanisms (ARMs). 

The quality of trading data and of the processing and provision of those data, including 
cross-border data processing and provision, is of paramount importance for achieving 
the main objective of Regulation (EU) No 600/2014 of the European Parliament and 
of the Council, which is to strengthen the transparency of financial markets. Accurate 
data provide users with an overview of trading activity across Union financial markets 
and  competent  authorities  with  accurate  and  comprehensive  information  on  relevant 
transactions.  Given  the  cross-border  dimension  of  data  handling,  the  benefits  of 
pooling  data-related  competences    including  potential  economies  of  scale  -  and  the 
adverse impact of potential divergences in supervisory practices on both the quality of 
trading  data  and  on  the  tasks  of  data  reporting  service  providers,  it  is  therefore 
appropriate  to  transfer  the  authorisation  of,  and  the  supervision  of  data  reporting 
service  providers,  as  well  as  data  gathering  powers,  from  competent  authorities  to 
ESMA  

5 
6 

OJ C , , p. . 
OJ C , , p. . 

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(3) 

(4) 

(5) 

(6) 

(7) 

To achieve a consistent  transfer of such powers it is appropriate to delete respective 
provisions pertaining to the operational requirements for DRSPs and competences of 
competent  authorities  with  respect  to  data  reporting  service  providers  set  out  in 
Directive 2014/65/EU, and to introduce the respective provisions in Regulation (EU) 
No 600/2014 of the European Parliament and of the Council7.  

The transfer of the authorisation and supervision of data reporting service providers to 
ESMA  is  congruent  with  ESMA's  tasks.  More  specifically,  the  conferral  of  data 
gathering powers, authorisation and oversight from competent authorities to ESMA  is 
instrumental to other tasks ESMA is performing under Regulation (EU) No 600/2014, 
such  as  market  monitoring,  ESMA  temporary  intervention  powers  and  position 
management  powers,  as  well  as    ensuring  consistent  compliance  with  pre-trade  and 
post-trade  transparency  requirements.  Directive  2014/65/EU  should  therefore  be 
amended accordingly, 
Directive 2009/138/EC of the European Parliament and of the Council8 (Solvency II) 
provides  that  in  accordance  with  the  risk-oriented  approach  to  the  Solvency  Capital 
Requirement,  it  is  possible,  in  specific  circumstances,  for  insurance  and  reinsurance 
undertakings and groups to use internal models for the calculation of that requirement, 
instead of using the standard formula.  

In  order  to  provide  policy  holders  and  beneficiaries  with  an  equivalent  level  of 
protection, such internal models should be subject to prior supervisory approval on the 
basis of harmonised processes and standards. 

In  order  to  ensure  a  high  degree  of  convergence  in  the  area  of  supervision  and 
approval  of  internal  models,  EIOPA  should  be  able  to  issue  Opinions  on  issues 
relating to such internal models. 

(8)  With a view to promoting supervisory convergence, EIOPA should be able, either on 
its own initiative or at the request of supervisory authorities, to assist them in reaching 
an agreement. In specific circumstances, where supervisory authorities fail to reach a,n 
agreement on the approval of a group internal model, and before the group supervisor 
adopts its final decision, an undertaking should be able to request EIOPA to mediate 
and assist the supervisory authorities in finding an agreement. Supervisory authorities 
should  cooperate  and  exchange  all  relevant  information  with  EIOPA  to  ensure  that 
EIOPA can participate fully in the approval process of group internal models. 

(9) 

In  order  to  take  account  of  the  new  set-up  of  panels  under  Regulation  (EU)  No 
1094/2010, relevant provisions in Solvency II referring to panels should be amended 
to align them with the new procedure for binding mediation under that Regulation.  

(10)  To  take  account  of  the  replacement  of  the  Committee  of  European  Insurance  and 
Occupational Pensions Supervisors (CEIOPS) by EIOPA, references in Solvency II to 
CEIOPS should be deleted. 

(11)  Directive 2009/138/EC should therefore be amended accordingly, 

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8 

Regulation  (EU)  No  600/2014  of  the  European  Parliament  and  of  the  Council  of  15  May  2014  on 
markets in financial instruments and amending Regulation (EU) No 648/2012 (OJ L 173, 12.6.2014, p. 
84). 
Directive  2009/138/EC  of  the  European  Parliament  and  of  the  Council  of  25  November  2009  on  the 
taking-up  and  pursuit  of  the  business  of  Insurance  and  Reinsurance  (Solvency  II)  (OJ  L  335, 
17.12.2009, p.1). 

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HAVE ADOPTED THIS DIRECTIVE: 

Article 1 

Amendments to Directive 2014/65/EU 

Directive 2014/65/EU is amended as follows: 

(1) Article 1 is amended as follows: 

(a) 

paragraph 1 is replaced by the following: 

'1. 
This  Directive  shall  apply  to  investment  firms,  market  operators  and  third-
country  firms  providing  investment  services  or  performing  investment  activities 
through the establishment of a branch in the Union.'; 

(b) in  paragraph 2, point (d) is deleted; 

(2) in Article 4, paragraph 1 is amended as follows:  

(a) points (36)  and (37) are replaced by the following: 

'(36) 
‘management body’ means the body or bodies of an investment firm or market 
operator which are appointed in accordance with national law, which are empowered 
to  set  the  entity’s  strategy,  objectives  and  overall  direction,  and  which  oversee  and 
monitor management decision-making and include persons who effectively direct the 
business of the entity.  

Where this Directive refers to the management body and, pursuant to national law, the 
managerial  and  supervisory  functions  of  the  management  body  are  assigned  to 
different  bodies  or  different  members  within  one  body,  the  Member  State  shall 
identify  the  bodies  or  members  of  the  management  body  responsible  in  accordance 
with its national law, unless otherwise specified by this Directive;  

(37) 
‘senior management’ means natural persons who exercise executive functions 
within  an  investment  firm  or  a  market  operator,  and  who  are  responsible  and 
accountable  to  the  management  body  for  the  day-to-day  management  of  the  entity, 
including for the implementation of the policies concerning the distribution of services 
and products to clients by the firm and its personnel;'; 

(c) points (52), (53), (54) and (55)(c) are deleted;  

(3) Title V is deleted; 

(4) Article 70 is amended as follows: 

(a) in point (a) of paragraph 3, sub points (xxxvii) to (xxxx) are deleted;  

(b) in paragraph 4, point (a) is replaced by the following: 

'(a) Article 5 or Article 6(2) or Articles 34, 35, 39 or 44 of this Directive; or'; 

(c)  in paragraph 6, point (c) is replaced by the following: 

'(c) in the case of an investment firm, a market operator authorised to operate an MTF 
or  OTF,  or  a  regulated  market,  withdrawal  or  suspension  of  the  authorisation  of  the 
institution in accordance with Article 8, and Article 43;'; 

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(5) in Article 71, paragraph 6 is replaced by the following: 

'6.      Where  a  published  criminal  or  administrative  sanction  relates  to  an  investment  firm, 
market operator, credit institution in relation to investment services and activities or ancillary 
services,  or  a  branch  of  third-country  firms  authorised  in  accordance  with  this  Directive, 
ESMA shall add a reference to the published sanction in the relevant register.'; 

(6)  in  Article  77,  in  the  first  subparagraph  of  paragraph  1,  the  introductory  sentence  is 
replaced by the following: 

‘Member  States  shall  provide,  at  least,  that  any  person  authorised  within  the  meaning  of 
Directive  2006/43/EC  of  the  European  Parliament  and  of  the  Council*,  performing  in  an 
investment  firm  or  a  regulated  market  the  task  described  in  Article  34  of  Directive 
2013/34/EU or Article 73 of Directive 2009/65/EC or any other task prescribed by law, shall 
have  a duty  to  report promptly to  the competent authorities any fact or  decision  concerning 
that  undertaking  of  which  that  person  has  become  aware  while  carrying  out  that  task  and 
which is liable to:  

* Directive 2006/43/EC of the European Parliament and of the Council of 17 May  2006 on 
statutory audits of annual accounts and consolidated accounts, amending Council Directives 
78/660/EEC  and  83/349/EEC  and  repealing  Council  Directive  84/253/EEC  (OJ  L  157, 
9.6.2006, p. 87).';  

(7) Article 89 is amended as follows: 

(a) paragraph 2 is replaced by the following: 

'2. The delegation of power referred to in Article 2(3), second subparagraph of Article 
4(1)(2),  Article  4(2),  Article  13(1),  Article  16(12),  Article  23(4),  Article  24(13), 
Article 25(8), Article 27(9), Article 28(3), Article 30(5), Article 31(4), Article 32(4), 
Article  33(8),  Article  52(4),  Article  54(4),  Article  58(6),  and  Article  79(8)  shall  be 
conferred on the Commission for an indeterminate period of time from 2 July 2014.'; 

(b) paragraph 3 is replaced by the following:   

'3.  The  delegation  of  powers  referred  to  in  Article  2(3),  second  subparagraph  of 
Article  4(1)(2),  Article  4(2),  Article  13(1),  Article  16(12),  Article  23(4),  Article 
24(13), Article 25(8), Article 27(9), Article 28(3), Article 30(5), Article 31(4), Article 
32(4), Article 33(8), Article 52(4) Article 54(4), Article 58(6), and Article 79(8) may 
be revoked at any time by the European Parliament or by the Council. A decision to 
revoke  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.'; 

(c) paragraph 5 is replaced by the following: 

'5.  A  delegated  act  adopted  pursuant  to  Article  2(3),  second  subparagraph  of  Article 
4(1)(2),  Article  4(2),  Article  13(1),  Article  16(12),  Article  23(4),  Article  24(13), 
Article 25(8), Article 27(9), Article 28(3), Article 30(5), Article 31(4), Article 32(4), 
Article 33(8), Article 52(4), Article 54(4), Article 58(6) and Article 79(8) shall enter 
into force only if no objection has been expressed either by the European Parliament 
or  the  Council  within  a  period  of  three  months  of  notification  of  that  act  to  the 

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European  Parliament  and  the  Council  or  if,  before  the  expiry  of  that  period,  the 
European  Parliament  and  the  Council  have  both  informed  the  Commission  that  they 
will not object. That period shall be extended by three months at the initiative of the 
European Parliament or the Council.'; 

(8) in Article 90, paragraphs 2 and 3 are deleted;  

(9) in paragraph 1 of Article 93, the second subparagraph is replaced by the following: 

'Member States shall apply those measures from 3 January 2018.'; 

(10) in Annex I, Section D is deleted. 

Article 2 

Amendments to Directive 2009/138/EC 

Directive 2009/138/EC is amended as follows: 

(1) 

In Article 112(4), the following sub-paragraphs are added: 

'Once  the  application  is  deemed  complete  by  the  supervisory  authorities,  they  shall 
inform EIOPA of the application.  

Upon request by EIOPA, the supervisory authorities shall provide EIOPA with all the 
documentation submitted by the undertaking in its application. 

EIOPA may issue an Opinion to the supervisory authorities concerned in accordance 
with Article 21a(1)(a) and 29(1)(a) of Regulation (EU) No 1094/2010 within 4 months 
of receipt by the supervisory authority of the complete application. 

Where such an Opinion is issued, the supervisory authority shall take its decision as 
referred  to  in  the  first  subparagraph  in  conformity  with  that  Opinion,  or  provide 
reasons in writing to EIOPA and to the applicant where the decision was not taken in 
conformity with that Opinion.'; 

(2) 

Article 231 is amended as follows: 

(a)  paragraph 1 is amended as follows: 

(i) the first sub-paragraph is replaced by the following: 

insurance  and 

'1.  In  the  case  of  an  application  for  permission  to  calculate  the 
consolidated  group  Solvency  Capital  Requirement,  as  well  as  the 
reinsurance 
Solvency  Capital  Requirement  of 
undertakings in the group, on the basis of an internal model, submitted 
by an insurance or reinsurance undertaking and its related undertakings, 
or jointly by the related undertakings of an insurance holding company, 
the  supervisory  authorities  concerned  shall  cooperate  with  each  other 
and with EIOPA, to decide whether or not to grant that permission and 
to determine the terms and conditions, if any, to which such permission 
is subject.'; 

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(ii) the third sub-paragraph is replaced by the following: 

'The group supervisor shall inform the other members of the college of 
supervisors of  the receipt of the application and forward the complete 
application, including the documentation submitted by the undertaking, 
to college members, including EIOPA, without delay.'; 

(b)  A new paragraph 2b is added as follows 

'2b.  Where  EIOPA  considers  that  an  application  as  referred  to  in  the  first  paragraph 
presents  particular  issues  with  respect  to  consistency  in  internal  model  application 
approvals  across  the  Union,  EIOPA  may  issue  an  Opinion  to  the  supervisory 
authorities concerned in accordance with Article 21a(1)(a) and 29(1)(a) of Regulation 
(EU)  No  1094/2010  within  4  months  of  receipt  by  the  group  supervisor  of  the 
complete application.  

Where  such  an  Opinion  is  issued,  the  supervisory  authorities  shall  take  their  joint 
decision  as  referred  to  in  the  second  paragraph  in  conformity  with  that  Opinion,  or 
provide reasons in writing  to EIOPA and the applicant where the joint decision was 
not taken in conformity with that Opinion.'; 

(c)  paragraph 3 is amended as follows: 

(i) the first subparagraph is replaced by the following: 

'If,  within  the  six-month  period  referred  to  in  paragraph  2,  any  of  the 
supervisory  authorities  concerned  has  referred  the  matter  to  EIOPA  in 
accordance  with  Article  19  of  Regulation  (EU)  No  1094/2010  or  EIOPA  is 
assisting  the  supervisory  authorities  on  its  own  initiative  in  accordance  with 
Article 19(1)(b) of that Regulation, the group supervisor shall defer its decision 
until  EIOPA  adopts  a  decision  in  accordance  with  Article  19(3)  of  that 
Regulation,  and  shall  take  its  decision  in  conformity  with  EIOPA's  adopted 
decision.  The  group  supervisor's  decision  shall  be  recognised  as  determinative 
and shall be applied by the supervisory authorities concerned. 

(ii) the first sentence of the third subparagraph is replaced by the following: 

'Where  EIOPA  does  not  adopt  a  decision  as  referred  to  in  the  second 
subparagraph  in  accordance  with  Article  19(3)  of  Regulation  (EU)  No 
1094/2010, the group supervisor shall take a final decision.'; 

(d) 

In paragraph 6, the second sub-paragraph is replaced by the following: 

'The group supervisor shall duly take into account any views and reservations of the 
other  supervisory  authorities  concerned  and  of  EIOPA  expressed  during  that  six-
month period.'; 

(e) 

In paragraph 6, the third sub-paragraph is replaced by the following: 

'The  group  supervisor  shall  provide  the  applicant,  the  other  supervisory  authorities 
concerned and EIOPA with a document setting out its fully reasoned decision.'; 

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(f)  A new paragraph 6a is added: 

'6a.  After  the  six  month  period  referred  to  in  paragraph  2  and  before  the  group 
supervisor  takes  a  decision  as  referred  to  in  paragraph  6,  the  undertaking  which 
submitted  the  application  in  accordance  with  paragraph  1  may  request  that  EIOPA  
assist the supervisory authorities in reaching an agreement, in accordance with Article 
19 of Regulation (EU) No 1094/2010. 

The  group  supervisor  shall  defer  its  decision  until  EIOPA  adopts  a  decision  in 
accordance  with  Article  19(3)  of  Regulation  (EU)  No  1094/2010  and  shall  take  its 
decision  in  conformity  with  EIOPA's  adopted  decision.  The  group  supervisor's 
decision shall be recognised as determinative and shall be applied by the supervisory 
authorities concerned. 

EIOPA shall adopt its decision within 1 month from the end of the conciliation period 
referred to in Article 19(2) of Regulation (EU) No 1094/2010.  

Where  EIOPA  does  not  adopt  a  decision  as  referred  to  in  the  third  subparagraph  in 
accordance  with  Article  19(3)  of  Regulation  (EU)  1094/2010  of  that  Regulation,  the 
group supervisor shall take a final decision. The group supervisor's decision shall be 
recognised  as  determinative  and  shall  be  applied  by  the  supervisory  authorities 
concerned.'; 

(3) 

New Articles 231a and 231b are inserted as follows: 

'Article 231a 
Supervisory approval regarding internal models 

1. EIOPA may, at its own initiative or at the request of supervisory authorities or insurance or 
reinsurance undertakings, issue an Opinion to the supervisory authorities in accordance with 
Article  21a(1)(a)  and  29(1)(a)  of  Regulation  (EU)  No  1094/2010,  on  internal  models  and 
approvals of internal model applications as set out in Articles 112 to 127, Article 230, Article 
231 and Article 233, with a view to foster supervisory convergence.  

Where  EIOPA  issues  an  Opinion  as  referred  to  in  the  first  subparagraph,  the  supervisory 
authorities  concerned  shall  take  their  decision  or  joint  decision,  as  applicable  in  conformity 
with  that  Opinion,  or  provide  reasons  in  writing  to  EIOPA  and  the  applicant  where  the 
decision or joint decision is not taken in conformity with that Opinion. 

2.  Where  supervisory  authorities  carry  out  joint  on-site  inspections,  in  which  EIOPA  staff 
participate in accordance with Article 21 of Regulation (EU) No 1094/2010, of undertakings 
or groups applying a full or partial internal model pursuant to Articles 112 to 127, 230, 231 or 
233, EIOPA staff shall produce a specific report on the internal model. That report shall be 
submitted to the EIOPA Executive Board. 

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Article 231b 
Review 

1. EIOPA  shall, on an annual basis,  report to the European Parliament, the Council and the 
Commission  on  general  issues  supervisory  authorities  have  dealt  with  in  the  process  of 
approving  internal  models  or  changes  thereto  pursuant  to  Article  112  to  127,  230,  231  and 
233.  

Supervisory authorities shall provide EIOPA with the information EIOPA considers relevant 
to produce such a report. 

2. EIOPA shall submit to the Commission, by 1 January 2020 and after conducting a public 
consultation,  an  Opinion  on  the  application  of  Articles  112  to  127,  Article  230,  Article  231 
and  Article  233  by  supervisory  authorities,  including  delegated  acts  and  implementing 
technical standards adopted pursuant thereto. That Opinion shall also assess any divergences 
in internal models within the Union. 

3.  Based  on  the  opinion  submitted  by  EIOPA  in  accordance  with  paragraph  2,  the 
Commission  shall  submit  a  report  to  the  European  Parliament  and  the  Council  on  the 
application  of  Articles  112  to  127,  Article  230,  Article  231  and  Article  233  by  supervisory 
authorities, including  delegated  acts and  implementing  technical  standards  adopted  pursuant 
thereto, by 1 January 2021.'; 

(4) 

In Article 237, paragraph 3, the first sentence of the third subparagraph is replaced 
by the following: 

'If EIOPA does not adopt a decision as referred to in the  second subparagraph under 
Article 19(3) of Regulation (EU) No 1094/2010, the group supervisor shall take a final 
decision.'; and 

(5) 

In Article 248, the third subparagraph of paragraph 4 is deleted. 

Article 3 

Transposition  

1. 

2. 

Member States shall adopt and publish, by [12/18 months as of entry into force], the 
laws,  regulations  and  administrative  provisions  necessary  to  comply  with  this 
Directive. They shall forthwith communicate to the Commission the main provisions 
of national law which they adopt in the field covered by this Directive. 

Member States shall apply the measures with respect to Article 1 from [36 months as 
of  entry  into  force]  and  with  respect  to  Article  2  from  [the  date  of  application  of 
amendment to the EIOPA Regulation]. 

Article 4 

Entry into force 

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

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Article 5 

Addressees 

This Directive is addressed to the Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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