Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL Amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority); Regulation (EU) No 1094/2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority); Regulation (EU) No 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority); Regulation (EU) No 345/2013 on European venture capital funds; Regulation (EU) No 346/2013 on European social entrepreneurship funds; Regulation (EU) No 600/2014 on markets in financial instruments; Regulation (EU) 2015/760 on European long-term investment funds; Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds; and Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market
Date: 2017-09-20
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: EU office or agency, advertising, financial control, financial institution, financial legislation, financial market, fund (EU), market supervision, operation of the Institutions, third country

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   EUROPEAN COMMISSION  Brussels, 20.9.2017  COM(2017) 536 final 2017/0230 (COD)   Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL Amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority); Regulation (EU) No 1094/2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority); Regulation (EU) No 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority); Regulation (EU) No 345/2013 on European venture capital funds; Regulation (EU) No 346/2013 on European social entrepreneurship funds; Regulation (EU) No 600/2014 on markets in financial instruments; Regulation (EU) 2015/760 on European long-term investment funds; Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds; and Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market  (Text with EEA relevance) {SWD(2017) 308 final} {SWD(2017) 309 final}  
 
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Integrated  financial  markets  bring  significant  benefits  to  the  funding  of  the  European 
economy and for promoting jobs and growth on a sound and sustainable basis.  To promote 
financial  integration  and  market  integrity  while  safeguarding  financial  stability,  the  EU 
internal  market  for  financial  services  requires  common  rules  and  strong  supervisory 
coordination.  When the EU overhauled its financial system in response to the financial crisis, 
and  in  line  with  global  efforts,  it  therefore  introduced  a  Single  Rulebook  for  financial 
regulation in Europe and created the European Supervisory Authorities ("ESAs").  The ESAs 
constitute an institutional cornerstone of the comprehensive reform package and have played 
a key role in ensuring that the financial markets across the EU are well regulated, strong and 
stable. They contribute to the development and consistent application of the Single Rulebook, 
solve  cross-border  problems,  and  thereby  promote  both  regulatory  and  supervisory 
convergence.   

Despite the post-crisis measures, there remains significant potential to enhance regulatory and 
supervisory  convergence  in  the  internal  market.    Integrated  financial  markets  require  more 
to  function  effectively,  while  more  centralised 
integrated  supervisory  arrangements 
supervisory arrangements can, in turn, foster market integration.   

For this reason, the EU has engaged in further integration across the broader financial sector 
on  a  sound  and  stable  basis.    In  particular,  the  Capital  Markets  Union  ("CMU")  has  been 
launched so as to lay the foundations for a fully functional internal market for capital markets.  
In this context, the Five Presidents' Report on Completing Europe's Economic and Monetary 
Union  of  June  20151  highlighted  the  need  to  strengthen  the  EU  supervisory  framework, 
leading  ultimately  to  a  single  capital-markets  supervisor.    More  recently,  the  Commission 
Reflection  Paper  on  the  deepening  of  the  Economic  and  Monetary  Union2  suggests  that  a 
review  of  the  EU  supervisory  framework  –  in  particular  of  the  European  Securities  and 
Markets Authority ("ESMA") - should deliver the first steps towards such a single supervisor 
by  2019.  The  Reflection  Paper  also  called  for  completing  the  Financial  Union  -  comprising 
both a Banking Union and a Capital Markets Union– by 2019 so as to guarantee the integrity 
of  the  euro  and  improve  the  functioning  of  the  euro  area  and  the  EU  as  a  whole.  Global 
financial  markets  are  strongly  interconnected,  and  the  EU's  regulatory  framework  is  largely 
based on international standards agreed in the wake of the financial crisis notably among G20 
countries.    As  the  EU  is  striving  to  accelerate  the  completion  of  the  CMU,  it  is  therefore 
essential that EU supervisory arrangements continue to develop in a manner which allows to 
reap the full potential of internationally integrated financial markets while ensuring that cross-
border  risks  between  the  EU  and  the  rest  of  the  world  can  be  monitored  and  managed 
effectively.  The ESAs have a key role to play in this regard. 

Finally, the decision of the United Kingdom to leave the EU reinforces these challenges for 
supervisory  arrangements  within  the  remaining  EU27.    The  future  departure  of  the  EU’s 
currently largest financial centre means that EU27 capital markets need to develop further and 
supervisory  arrangements  must  be  strengthened  to  ensure  that  financial  markets  continue  to 
support the economy on an adequate and sound basis.   

The Five Presidents' Report: Completing Europe's Economic and Monetary Union June 22, 2015; 

1 
2  Reflection Paper on the Deepening of the Economic and Monetary Union, COM(2017) 291 of 31 May 2017. 

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The objective of the present proposal is to adjust and upgrade the ESAs framework to ensure 
they can assume an enhanced responsibility for financial market supervision. The ESAs must 
be adequately equipped in terms of powers, governance and funding.   

First,  where  existing  powers  of  the  ESAs  have  proven  partially  insufficient  and  unclearly 
defined, for example as regards the consistent application of EU law, the drafting of technical 
advice  or  the  provision  of  ongoing  support  to  equivalence  decisions,  they  must  be 
strengthened  and  improved.  The  current  scope  of  the  ESAs'  mandate  must  also  be 
reconsidered in light of the policy objectives of the CMU.  More common direct supervision 
in  targeted  areas  is  necessary  to  ensure  more  consistent  supervisory  practices  and 
implementation  of  EU  financial  services  rules.    The  2017  review  of  the  ESA  Regulations 
concluded that the supervision of certain activities and entities with particular importance for 
the Union as a whole or with a significant degree of cross-border business should be carried 
out by the ESAs instead of by national competent authorities. Similarly, the ESAs should be 
more involved in the authorisation and supervision of entities from non-EU countries that are 
active in the Union.  

Second,  this  proposal  aims  at  establishing  a  more  effective  governance  of  the  ESAs.    The 
incentive structure in the decision-making process of the ESAs as it stands today leads to the 
absence  of  decisions  in  particular  in  the  area  of  regulatory  convergence  and  supervisory 
convergence, or promotes decisions that are predominantly oriented towards national instead 
of  broader  EU  interests.    This  reflects,  to  some  extent,  an  inherent  tension  between  the 
European mandate of the ESAs and the national mandate of the competent authorities that are 
members  of  the  ESA  Boards.3    This  position  is  not  well  aligned  with  the  objective  of 
supervisory convergence.  A greater  role for the ESAs  in deepening financial integration  or 
strengthening the stability of the internal market will also require more effective convergence 
powers.4 

Third, the ESAs need an appropriate funding base which allows them to allocate resources in 
relation to their needs to fulfil their objective.  Current budget arrangements constrain and will 
continue  to  constrain  the  ESAs'  activities,  as  Member  States  for  different  reasons  might  be 
unwilling to increase national contributions further.   

The  present  proposal  sets  out  specific  amendments  to  the  ESA  Regulations5  and  various 
sector acts6 to reinforce the powers, governance and funding framework of the ESAs, as these 

4 

3  See  the  2013  Study  of  the  European  Parliament  "the  Review  of  the  New  European  System  of  Financial 
Supervision  ,  Part  1:  the  Work  of  the  European  Supervisory  Authorities  (EBA,  EIOPA  and  ESMA) 
(http://www.europarl.europa.eu/RegData/etudes/etudes/join/2013/507446/IPOL-
ECON_ET(2013)507446_EN.pdf) 
"A  more  integrated  supervisory  framework ensuring  common  implementation  of  the  rules  for  the  financial 
sector  and  more  centralised  supervisory  enforcement  is  key."  Reflection  Paper  on  the  Deepening  of  the 
Economic and Monetary Union, page 20, COM(2017) 291 of 31 May 2017 

5  Regulation  (EU)  No  1093/2010  establishing  a  European  Supervisory  Authority  (European  Banking 
Authority);  Regulation  (EU)  No  1094/2010  establishing  a  European  Supervisory  Authority  (European 
Insurance  and  Occupational  Pensions  Authority);  Regulation  (EU)  No  1095/2010  establishing  a  European 
Supervisory Authority (European Securities and Markets Authority).  

6  Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or 
to measure the performance of investment funds; Regulation (EU) No 345/2013 on European venture capital 
funds;  Regulation  (EU)  No  346/2013  on  European  social  entrepreneurship  funds;  Regulation  (EU)  No 
600/2014  on  markets  in  financial  instruments;  Regulation  (EU)  No  2015/760  on  European  long-term 
investment  funds;  and  Regulation  (EU)  2017/1129  on  the  prospectus  to  be  published  when  securities  are 
offered to the public or admitted to trading on a regulated market. 

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are the areas which need to be reinforced to allow the ESAs to meet the challenges outlined 
above. 

The impact assessment report accompanying this proposal considers the costs and benefits of 
these  amendments.    It  sets  out  a  number  of  options  of  measures  intended  to  enhance  the 
powers of the ESAs at EU level, improve their governance (including decision- making), and 
to  ensure  that  their  funding  framework  is  sustainable  and  commensurate  with  current  and 
future  tasks.    The  impact  assessment  provides  comprehensive  evidence  that  the  proposed 
amendments  contribute  effectively  to  reinforcing  the  ESA  framework  and  thereby  to  the 
overall  stability  of  the  EU  financial  system,  while  keeping  costs  to  the  EU  General  Budget 
and  stakeholders  at  a  minimum.    The  proposed  amendments  also  contribute  to  the  further 
development  and  deepening  of  the  CMU,  in  line  with  the  political  priorities  of  the 
Commission. 

• 

Consistency with existing policy provisions in the policy area 

This proposal is consistent with a number of other existing EU policy provisions and ongoing 
initiatives with the aim of ensuring effective and efficient EU-level supervisory arrangements. 

Since  the  start  of  the  financial  crisis,  the  EU  and  its  Member  States  have  engaged  in  a 
fundamental overhaul of financial supervision and regulation.  The EU has initiated a number 
of reforms to create a safer, sounder, more transparent and responsible financial system that 
works for the economy and society as a whole.  This has included the creation of the Single 
Supervisory Mechanism and the Single Resolution Mechanism and Single Resolution Board 
for  specific  and  discreet  responsibilities  over  supervision.    This  proposal  is  consistent  and 
complementary with the tasks and functions of these bodies. 

This proposal is also consistent with the Single Rulebook for financial legislation to which the 
ESAs  provide  a  significant  contribution  through  their  work.    The  purpose  of  the  Single 
Rulebook  is  to  set  common  rules  across  the  EU  that  ensures  financial  stability  and  a  level 
playing field, as well as a high level of consumer and investor protection.  For example, the 
proposal  is  consistent  with  the  existing  Capital  Requirements  Directive/Regulation  (banks) 
and  the  Solvency  II  Directive  (insurance  undertakings)  which  aim  at  making  the  financial 
sector more stable.  This proposal is also consistent with the existing framework for payment 
services and mortgages in relation to consumer protection.   

As regards ongoing initiatives, the Commission is also proposing today a legislative initiative 
to  reinforce  the  European  Systemic  Risk  Board  ("ESRB"),  which  together  with  the  ESAs 
form  the  European  System  of  Financial  Supervision  introduced  in  the wake  of  the  financial 
crisis. Other recent examples include: the Commission's proposal for targeted amendments to 
EMIR7  to  enhance  the  EU  level  supervision  in  relation  to  the  authorisation  of  Central 
Counterparty ("CCPs") and requirements for the recognition of third-country CCPs;  and the 
Commission's  proposal  regarding  personal  pension  products8  enhancing  EIOPA's  role  by 

7 

Proposal  for  a  Regulation  amending  Regulation  (EU)  No  1095/2010  establishing  a  European  Supervisory 
Authority  (European  Securities  and  Markets  Authority)  and  amending  Regulation  (EU)  No  648/2012  as 
regards  the  procedures  and  authorities  involved  for  the  authorisation  of  CCPs  and  requirements  for  the 
recognition of third-country CCPs, COM(2017) 331 final. 

8  Proposal for a Regulation on a pan-European Personal Pension Product COM/2017/0343 final - 2017/0143 

(COD). 

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granting it powers to authorise these new products in order to grant them a high-quality label 
at pan-european level and allow their distribution on an EU-wide basis. 

Finally,  this  proposal  is  consistent  with  existing  EU  policy  provisions  in  relation  to  the 
implementation and enforcement of third-country provisions in EU financial legislation as set 
out  in  the  Commission's  staff  working  document  on  equivalence.9  The  staff  working 
document  provides  an  overview  of  the  equivalence  process  with  third  countries  in  EU 
financial services legislation. It sets out the relevant experience and identifies certain areas for 
increased  attention  which  are  party  addressed  in  this  proposal.  In  view  of  EU  policy 
objectives,  tax  good  governance  and  anti-money  laundering  based  on  global  standards  are 
important  elements  for  further  policy  development.  To  ensure  policy  coherence  and  to 
strengthen  safeguards  against  tax  avoidance  and  money  laundering,  the  Commission  will 
continue to integrate these matters into the appropriate EU legislation, including for financial 
services, and could consider their integration into equivalence processes 

• 

Consistency with other Union policies 

This  proposal  is  consistent  with  the  Commission's  ongoing  efforts  to  further  develop  the 
CMU.  A more effective supervisory framework is a key element for more integrated capital 
markets  as  it  contributes  to  more  consistent  implementation  of  the  rules  for  the  financial 
sector.    In  this  context,  the  Five  Presidents'  Report  of  June  201510  highlights  the  need  to 
strengthen  the  EU  supervisory  framework,  leading  ultimately  to  a  single  capital-markets 
supervisor. The need to further develop and integrate the EU capital markets is stressed in the 
Communication on the CMU of September 201611 and the Communication on the mid-term 
review of the CMU12.   

This proposal is also consistent with the Commission's commitments undertaken in the CMU 
to  respond  to  two  new  challenges  in  today's  markets:  sustainable  finance  and  financial 
technology ("FinTech"). 

With regard to sustainable finance, the Commission has committed within the framework of 
the CMU initiative to strengthen the EU's leadership on sustainable investment and finance.  
New  environmental,  social  and  governance  related  risks  and  opportunities  are  changing  the 
financial  sector  and  require  adaptations  to  the  supervisory  framework  and  approach.    
Moreover, the financial sector has a key role to play to ensure the transition to a low-carbon 
more  energy-efficient  economy.    A  strong  coordination  and  convergence  of  supervisory 
attitudes  towards  sustainability  is  necessary  at  EU  level.    In  this  regard,  this  proposal  is 
consistent with the Energy Union Strategy, the EU's commitments to a Circular Economy and 
the Sustainable Development Goals. 

The  ESAs  should  also  contribute  to  harnessing  the  potential  and  opportunities  of  Financial 
Technology  ("FinTech"),  whilst  addressing  possible  risks  in  this  area,  for  example  through 
more consistent practices in the application of regulatory requirements. This implies a better 
integration  of  FinTech-related  aspects  in  the  ESA  supervisory  work.  In  this  context,  this 
proposal  is  also  consistent  with  the  Digital  Single  Market  Strategy.  New  technologies  are 

"EU equivalence decisions in financial services policy: an assessment", SWD(2017)102 final. 

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10  https://ec.europa.eu/commission/publications/five-presidents-report-completing-europes-economic-and-

monetary-union_en 
"Capital Markets Union – Accelerating Reform", COM(2016)601 final. 

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12  Communication  from  the  Commission  to  the  European  Parliament  ,  the  Council,  the  European  Economic 
and Social Committee and the Committee of the Regions on the Mid-Term Review of the Capital Markets 
Union Action Plan, COM(2017)292 final. 

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changing the financial sector. This also requires adaptations to the supervisory framework and 
approach.  National  supervisors  have  taken  various  initiatives,  which  could  harm  the  proper 
functioning of the internal market if not  properly coordinated.  A stronger coordination and 
convergence  of  supervisory  attitudes  towards  technological  innovation  is  necessary  at  EU 
level, for instance through the setting up of an EU innovation hub in the ESAs. 

The targeted changes in the current governance model are also in line with the Commission's 
efforts to make decision-making fora within the EU decentralised agencies more operational 
and independent. In the area of financial services other European agencies or institutions, such 
as  the  European  Central  Bank  or  the  Single  Resolution  Board  have  a  permanent  and 
independent preparatory body, which has its own powers and tasks, and can decide on certain 
issues or participate in the decision-making process. The establishment of Executive Boards 
for  the  ESAs  with  permanent  members  and  with  an  exclusive  mandate  is  in  line  with  the 
existing safeguards for enhancing the EU dimension in the agencies decision-making process. 

Finally,  with  regard  to  funding,  while  the  majority  of  the  EU  decentralised  agencies  are 
funded by the EU Budget, there are several EU agencies which receive mixed of fully private 
funding.  In that respect, the shift to industry contributions for the ESAs' budget is in line with 
existing EU practice. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Legal basis of all amendments is Article 114 of the Treaty on the Functioning of the European 
Union ("TFEU"). This provision is the legal basis of all Regulations covered by this proposal.   

It is proposed to adapt the ESAs founding Regulations to new developments, so as to improve 
the functioning of the ESAs in the interest of convergence in the internal market and thus a 
smoother functioning of the latter. The analysis carried out as part of the impact assessment 
report identifies the areas of the ESAs' framework that need to be amended to reinforce the 
stability  and  effectiveness  of  the  EU  supervisory  arrangements  and  hence  the  EU  financial 
system. 

Further changes to the sector legislation are necessary in order to allow the ESAs to use the 
full potential of their enhanced powers. The impact assessment report and the accompanying 
evaluation  demonstrate  that  EU  action  is  justified  and  necessary  to  address  the  problems 
identified in the area of powers available to the ESAs, their governance framework and their 
funding framework.   

• 

Subsidiarity (for non-exclusive competence)  

Because the ESAs are Union bodies their governing regulations can only be amended by the 
Union  legislator.    Moreover,  the  amendments  serve  a  more  consistent  functioning  of  the 
internal market, an objective that cannot be reached by Member States acting individually.   

In  the  case  of  funds  covered  by  the  EuVECA,  EuSEF  and  ELTIF  Regulations,  the 
establishment of ESMA as a single supervisory body ensures that uniform requirements and 
conditions  of  the  three  Regulations  are  applied  consistently  across  all  Member  States.    The 
single  supervision  will  decrease  the  amount,  and  diversity,  of  costs  and  time  spent  on 
administration and will thus allow managers to lower transaction and operational costs. It will 
streamline  administrative  processes  underpinning  authorisation/registration  of  the  EuVECA, 
EuSEF  and  ELTIF  funds  as  well  as  strengthen  the  level  playing  field  by  centralising  their 

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supervision regardless of where the funds are established. The single supervision will further 
support market integration in these sectors and enhance market funding to the EU economy 
through those funds.  

With regards to the Markets in Financial Instruments Regulation/Directive and similarly 
to  critical  benchmarks,  data  reporting  services  are  an  inherently  Union-wide  business  and 
the  resulting  regulatory  and  supervisory  problems  cannot  be  addressed  by  Member  State 
action alone. 

With respect to the new ESMA coordination function this is already defined in the ESMA 
Regulation  and  the  respective  Union  legislative  acts.  It  can  therefore  only  be  enhanced 
through changes to Union law.  

With  respect  to  the  Benchmark  Regulation,  critical  benchmarks  are  of  major  economic 
importance  as  they  are  used  in  financial  instruments  (especially  derivatives),  financial 
contracts  and by investment funds  in  the entire Union. The requirement  to  form colleges of 
supervisors  for  some  of  the  critical  benchmarks  from  at  least  the  Member  States  of  the 
benchmarks' administrators and of the benchmarks' supervised contributors already points to 
the fact that such benchmarks cannot be supervised by a single national supervisor and it is 
therefore necessary to set out the necessary arrangements at Union level.  

Having  all  administrators  of  critical  benchmarks  under  direct  supervision  by  ESMA  is 
proportionate  as  these  benchmarks  are  of  crucial  importance  for  the  Union  and  the  current 
supervisory colleges are large with the risk of not being sufficiently flexible enough in a crisis 
situation.  

Benchmarks provided in third countries can be used in the Union if they are either recognised 
or endorsed by a competent authority in the Union or the regulatory and supervisory regime of 
the  country  in  which  they  are  located  has  to  be  recognised  as  equivalent  to  the  regime 
established  by  the  Benchmark  Regulation.  While  the  equivalence  decision  is  taken  by  the 
Commission and the supervisor of the third country has to establish cooperation arrangements 
with  ESMA,  endorsement  and  recognition  are  decided  upon  by  national  competent 
authorities. This requires numerous national competent authorities to deal with such requests 
and carries the risks that benchmark administrators from third country try to select a national 
competent  authority  that  seems  to  be  more  liberal  in  its  decisions  and  in  the  resulting 
supervision of the administrator ('forum shopping'). As the administrator is located in a third 
country, the main argument for national supervision, proximity to the supervised entities, does 
not  apply.  Establishing  ESMA  as  the  competent  authority  for  third  country  benchmark 
administrators  would  increase  efficiency  and  reduce  the  risk  of  forum  shopping  and 
divergences  in  supervision  of  these  entities.  This  can,  however,  not  be  achieved  through 
Member State action alone. 

In order to ensure that ESMA is able to directly supervise certain benchmark administrators, it 
is necessary to amend the Benchmark Regulation with a number of delegated acts to further 
specify some provisions of that Regulation. 

In relation to the Prospectus Regulation, since 2011, ESMA has invested significant time and 
effort to foster regulatory convergence amongst national competent authorities with regard to 
the  scrutiny  and  approval  of  prospectuses.    This  has  led  to  the  creation  of  "Supervisory 
Briefings"  which  sets out  commonly-agreed principles  which  national  competent  authorities 
are  invited  to  apply  when  approving  prospectuses.    ESMA  has  also  carried  out  two  peer 

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reviews  on  the  prospectus  approval  process  in  2012  and  2015,  as  evidence  emerged  of 
diverging practices among Member States.  While being very useful, those actions have not 
fully  achieved  their  objective  of  promoting  full  supervisory  convergence  and,  given  issuers' 
ability, in a certain number of cases, to choose which competent authority will approve their 
prospectus, the persistence of divergent practices amongst national competent authorities still 
leaves room for regulatory arbitrage and efficiency losses.  

The Commission has identified certain types of prospectuses which, due to the nature of the 
securities and issuers concerned, involve a cross-border dimension within the Union, a level 
of  technical  complexity  and  potential  risks  of  regulatory  arbitrage  which  are  such  that  their 
centralised supervision by ESMA would achieve more effective and efficient results than their 
supervision at national level. These are the wholesale non-equity prospectuses offered only to 
qualified investors, the prospectuses which relate to specific types of complex securities, such 
as  asset  backed  securities,  or  which  are  drawn up  by  specialist  issuers  and  the  prospectuses 
drawn up by third country issuers entities in accordance with Regulation (EU) 2017/1129. 

The  centralisation  of  their  approval,  as  well  as  all  related  supervisory  and  enforcement 
activities,  at  the  level  of  ESMA  will  enhance  the  quality,  consistency  and  efficiency  of 
supervision in the Union, create a level playing field for issuers and lead to a reduction of the 
timeline for approvals. It will eliminate the need to choose a 'home Member State' and prevent 
forum-shopping. 

• 

Proportionality 

This  proposal  makes  targeted  changes  to  strengthen  the  EU  supervisory  framework  to 
improve sustainably, stability and effectiveness of the financial system throughout the EU and 
to enhance consumer and investor protection.  For that purpose it sets out targeted and well 
calibrated changes to the EU level supervisory framework with a more effective and efficient 
governance. It recalibrates existing tasks and powers of the ESAs and grants the ESAs new 
powers to enable the ESAs to address new developments, including in the area of technology, 
but  also  to address  further  increase  in  intra-EU  cross-border  activities  and  the likely  further 
integration between EU financial markets and the rest of the world.  In addition, the proposal 
contains  an  adapted  funding  system  to  ensure  that  the  ESAs'  funding  is  sustainable, 
proportionate as well as commensurate with their task.   

As  regards  sector  specific  acts,  the  amendments  proposed  are  in  essence  confined  to 
introducing  direct  supervision  by  ESMA.  They  have  been  selected  in  relation  to  the 
specificities  of  the  sectors  concerned.    Moreover,  it  is  necessary  make  synchronise  the 
amendments  to  the  so-called  MIFIR  Regulation)  with  limited  changes  into  2009/138/EC 
(“Solvency II”). Therefore, a separate proposal amending that directive is also proposed. 

None of the elements proposed goes beyond what is necessary for attaining the objectives set. 

Moreover,  in  accordance  with  the  principle  of  proportionality  anchored  in  the  Treaty,  the 
content  and  form  of  the  ESAs'  actions  and  measures  shall  not  exceed  what  is  necessary  to 
achieve  the objectives  of  this  Regulation  and  shall  be  proportionate to  the  nature,  scale and 
complexity  of  the  risks  inherent  in  the  financial  activity  or  business  of  the  institutions  or 
undertaking that is affected by the action of the relevant ESA. 

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• 

Choice of the instrument 

This  proposal  seeks  the  amendment  of  the  current  ESA  Regulations  and  various  pieces  of 
sectoral financial legislation.13  All acts to be amended by the present proposal take the form 
of Regulations; the corresponding amendments are therefore proposed as a single (omnibus) 
amending Regulation.   

In  addition,  it  is  proposed  to  amend  the  Directive  on  Markets  in  Financial  Instrument14,. 
(mainly  to  mirror  the  amendments  to  the  so-called  MIFIR  Regulation)  and  to  introduce 
limited  changes  into  2009/138/EC  (“Solvency  II”).  For  these  two  purposes,  an  amending 
Directive is proposed separately. 

Finally, and equally through a separate document, the Commission adjusts its recent proposal 
for a Regulation amending both ESMA and EMIR.15 . 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

The impact assessment and evaluation accompanying this proposal provides an analysis of the 
existing  ESA  framework  to  see  whether  it  has  allowed  the  ESAs  to  meet  their  objective  to 
sustainably  reinforce  the  stability  and  effectiveness  of  the  financial  system  and  enhance 
consumer and investor protection.  

As  regards  effectiveness  and  efficiency  of  the  ESAs,  the  analysis  made  concludes  that  the 
ESAs  have  broadly  delivered  on  their  current  objectives.    However,  targeted  improvements 
are needed to face future challenges.  In particular the analysis concludes that: 

a. 

b. 

ESA  powers  could  be  enhanced  in  certain  areas  to  ensure  that  tasks  can  be  better 
performed.    As  a  result,  better  regulatory  and  supervisory  outcomes  for  all  market 
participants  consumers  across  the  EU,  and  effective  and  efficient  handling  of  cross 
border risk could be expected; 

the  current  ESA  governance  framework  makes  it  difficult  to  manage  conflicts 
between  EU  and  national  interests,  creating  the  risk  that  ESA  decisions  are  not 
always taken in the common interest of the EU, that decision-making is delayed or 

13  Regulation  (EU)  No  1093/2010  establishing  a  European  Supervisory  Authority  (European  Banking 
Authority);  Regulation  (EU)  No  1094/2010  establishing  a  European  Supervisory  Authority  (European 
Insurance  and Occupational  Pensions Authority);  Regulation  (EU)  No  1095/2010  establishing  a  European 
Supervisory Authority (European Securities and Markets Authority); Regulation (EU) 2016/1011 on indices 
used  as  benchmarks  in  financial  instruments  and  financial  contracts  or  to  measure  the  performance  of 
investment  funds;  Regulation  (EU)  No  345/2013  on  European  venture  capital  funds;  Regulation  (EU)  No 
346/2013 on European social entrepreneurship funds; Regulation (EU) No 600/2014 on markets in financial 
instruments; Regulation (EU) No 2015/760 on European long-term investment funds; and Regulation (EU) 
2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading 
on a regulated market.. 

14  Markets in Financial Instruments (MiFID II) - Directive 2014/65/EU 
15  Proposal  for  a  Regulation  amending  Regulation  (EU)  No  1095/2010  establishing  a  European  Supervisory 
Authority  (European  Securities  and  Markets  Authority)  and  amending  Regulation  (EU)  No  648/2012  as 
regards  the  procedures  and  authorities  involved  for  the  authorisation  of  CCPs  and  requirements  for  the 
recognition of third-country CCPs, COM(2017) 331 final. 

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that  there  is  an  inaction  bias,  notably  as  regards  non-regulatory  activities  (binding 
mediation, breach of EU law procedures, initiation of peer reviews);   

c. 

the current funding framework is  not  commensurate to the tasks the ESAs perform 
and even less so going forward and considering the tasks the ESAs will shoulder in 
the  future;  it  also  seems  to  lead  to  uneven  contributions  by  national  competent 
authorities which are not easy to justify. 

In terms of coherence, the ESAs work on regulatory issues is fully coherent with the building 
up of the broader EU supervisory framework.  It is also coherent with the completion of the 
Single  Rulebook.    However,  constraints  coming  from  the  governance  and  funding  structure 
and the effectiveness of the ESAs powers have not allowed the ESAs to focus sufficiently on 
promoting consistent application of the relevant financial services legislation adopted by the 
EU.   

In terms of relevance, the analysis concluded that the ESAs framework is relevant.   

Finally, the ESAs' framework has clearly created added value for the EU because their work 
is indispensable for promoting the Single Market for financial services. 

• 

Stakeholder consultations 

The Commission service conducted an extensive public consultation in the spring of 2017 on 
the operations of the ESAs.  The consultation attracted almost 230 responses.  Contributions 
came  from  a  wide  variety  of  respondent  groups:  26%  public  authorities  or  international 
organisations, 71% organisations or companies and 3% private individuals. 

A  number  of  comments,  position  papers  and  contributions  were  also  received  outside  the 
public consultation, including official positions provided by some governments. Even though 
they are not reflected in the statistics from EU survey, they have been taken into account in 
the analysis underlying this proposal.  

Overall,  respondents  consider  the  establishment  of  the  ESAs  a  major  improvement  and  an 
important step towards supervisory convergence in the Union. Most support a greater role for 
ESAs  in  improving  supervisory  convergence.  Many  stakeholders  acknowledge  that  the 
implementation of the CMU and the decision of UK to leave the Union create a new situation 
which requires reflections about strengthening EU-level supervision, in particular with regard 
to cross-border activities and equivalence with third countries.  

With respect to the ESAs' powers, while many respondents object to significantly increasing 
ESAs'  powers  at  this  stage,  some  recognise  their  limitations  and  would  like  to  see  targeted 
improvements.    Most  respondents  argue  the  available  tools  broadly  suffice  and  should  be 
better  and  more  fully  used.    There  is  broad  support  for  extending/clarifying  powers  on 
equivalence monitoring.  

Consumer  organisations  see  significant  shortcomings  in  the  enforcement  of  consumer 
protection  rules  which  they  see  as  either  inefficient  or  detached  from  most  detrimental 
problems at national level. They see a need for extending the ESA's fields of activity in the 
area  of  consumer  protection.    Most  respondents  argue  that  it  is  difficult  to  ensure  a  proper 
balance 
the  geographical  balance. 
Representatives  of  consumers  and  users  complain  that  they  are  outnumbered  by  the 
representatives  of  financial  institutions  and  thus  the  opinions  of  stakeholder  groups  are  not 

the  ESA  stakeholder  groups 

together  with 

in 

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balanced.  A number of organisations find that the ESAs' powers to ban products should be 
extended to those that are prone to consumer detriment.   

Respondents  to  the  ESA  public  consultation  explicitly  support  the  direct  supervision  at  EU 
level  of  central  counterparty  clearing  houses  ("CCPs")16  and  of  data  reporting  service 
providers  ("DRSPs")  which  service  the  whole  EU  rather  than  specific  national  markets.  
Many  respondents  do  not  reply  to  the  question  on  direct  supervision.  Some  reply  to  the 
question  whether  ESMA  should  be  entrusted  with  direct  supervision  of  pan-European 
collective  investment  funds  and  support  it,  but  mostly  they  do  not  distinguish  between 
different types of funds. 

Views expressed against extending direct supervision by ESMA to new areas mainly refer to 
the following arguments: national-based supervision is considered best suited to deal with the 
different  market  structures  of  Member  States.    Supervision  by  ESMA  could  conflict  with 
national  competence  for  retail  investor  protection  and  financial  stability  as  well  as  taxation, 
litigation  and  conflict  resolution.    Operational  difficulties  such  as  control  of  local 
requirements  related  to  distribution  arrangements  or  marketing  are  also  raised.    Instead, 
existing  tools  to  ensure  supervisory  convergence  should  be  better  explored  to  develop 
integrated capital markets.  

The  main  arguments  in  favour  of  direct  supervision  by  ESMA  mentioned  are:  some 
respondents recognise potential merits in ESMA supervision over entities or instruments with 
a pan-European dimension which would allow elimination of differences between supervisory 
practices,  but  would  not  prevent  different  market  structures  from  being  taken  into  account 
where relevant.  They consider that such solutions are appropriate to address the problem of 
fragmentation  due  to  diverging  application  of  the  relevant  EU  rules  and  ensuring  risks  of 
regulatory arbitrage, characterising the current regime. 

In  the  area  of  ESA's  governance  overall,  stakeholders  consider  that  the  ESAs’  boards  and 
chairpersons  have  performed  well.    About  half  of  the  respondents  see  added  value  in  the 
governance changes referred to in  the public consultation  document.   While the majority  of 
public  authorities  do  not  support  ESA  governance  changes,  some  of  these  views  may  be 
attributed to some extent to them not wanting to see their influence diminish. 

There are varying degrees of support for adding independent members with voting rights and 
specific tasks to ESA Boards.  While public sector mostly oppose it (though half do not even 
reply), private sector views are split with several pointing out inherent conflicts of interest in 
the current set-up.  With respect to empowering the Chairpersons, a majority, mainly public 
authorities oppose it, while the majority of the industry associations argue for improvements. 

As regards funding, many of the stakeholders recognise ESAs' current resource constraints as 
well as the constraints on the EU and national budgets.  A high number of respondents agree 
that the ESAs will need adequate and sustainable funding in order to meet ambitious targets 
and enhance their operations.  Many respondents note that the level of funding for the ESAs 
should depend on their responsibilities and be based on the outcome of the ESA review. 

16  A  Commission  proposal  on  CCPs  has  already  been  adopted  and  is  therefore  not  discussed  in  this  impact 
assessment. It introduces a more pan-European approach to the supervision of EU CCPs, to ensure further 
supervisory convergence and accelerate certain procedures. ESMA will be responsible for ensuring a more 
coherent  and  consistent  supervision  of  EU  CCPs  as  well  more  robust  supervision  of  CCPs  in  non-EU 
countries. 

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Roughly half of the respondents take a position on whether the ESAs should be partially or 
fully  funded  by  the  industry.  A  clear  majority  do  not  support  revising  the  current  funding 
framework  replacing  contributions  from  national  competent  authority  by  contributions  from 
the industry.  Though still in a minority, there is greater support for a partly industry funded 
system. 

• 

Impact assessment 

The Commission carried out an impact assessment of relevant policy options.  These options 
were  assessed  against  the  key  general  objective  of  sustainably  reinforcing  the  stability  and 
effectiveness of the financial system throughout the EU and to enhance consumer and investor 
protection. 

In  preparing  the  impact  assessment,  the  Commission  carried  out  an  evaluation  of  the 
operations of the ESAs which highlighted some important shortcomings.  These included: (a) 
insufficiently defined powers to ensure effective supervision to the same standards across the 
EU;  (b)  the  absence  of  powers  to  effectively  deal  with  cross-border  risks  relating  to 
interconnectedness  within  the  EU  and  between  the  EU  and  the  rest  of  the  world;  (c)  a 
governance  framework  that  leads  to  a  misalignment  of  incentives  in  the  decision-making 
processes; and (d) a funding framework that is not ensuring sufficiency in relation to the tasks 
allocated to the ESAs.   

The scope of the impact assessment covered the areas of: (1) powers; (2) governance; and (3) 
funding  of  the  ESAs,  to  meet  the  identified  shortcomings  and  new  challenges,  such  as 
regulatory  and  supervisory  convergence.    Shortcomings  for  governance  and  funding  are 
common to the three ESAs, as they share the same rules.  Changes to their powers are mainly 
targeted to specific sectors for ESMA and to supervisory convergence oversight for all ESAs.   

The options assessed were: 

In  governance:  (a)  no  policy  action;  no  modifications  to  the  current  governance  structure  is 
envisaged; (b) targeted changes to the current governance model, such as differentiation of the 
decision-making powers by their nature, enhancing the selection procedure of the Chairperson 
and  (c)  opening  up  the  Board  of  Supervisors  to  independent,  permanent  (non-voting) 
members. 

In  powers:  (a)  no  policy  action;  current  powers  in  relation  to  regulatory  and  supervisory 
convergence  tasks  remain  unchanged  as  well  as  ESMA's  direct  supervisory  responsibilities; 
(b)  an  option  to  clarify  certain  existing  powers  and  strengthen  oversight;  (c)  an  option  to 
clarify  certain  existing  powers  and  to  provide  ESMA  with  additional  direct  supervisory 
powers in targeted areas; and (d) centralise the supervision of financial services, banking and 
insurance in the three ESAs. 

In  funding: (a)  no policy action;17 (b) adjusted public funding to take into consideration the 
size  of  the  domestic  financial  sector  in  any  given  Member  State;  (c)  mixed  public-private 
funding in which contributions from domestic private sectors replace contributions from the 
national CAs; and (d) a funding system fully financed by the private sector. 

17  Direct supervision (in the case of ESMA) would have remained fully industry funded 

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The  above  options  were  then  compared  using  various  criteria18  to  identify  those  that  best 
address the shortcomings identified in the problem definition of the impact assessment and in 
the evaluation.  

Following this analysis,   

 

 

 

the preferred option as regards governance includes independent members with voting 
powers  alongside  the  national  competent  authorities  in  the  decision-making  process; 
introduces  a  new  appointment  process  and  role  for  the  Chairperson  and  replaces  the 
Management  Board  by  an  independent  Executive  Board  composed  of  full  time 
members that are externally appointed. 

the preferred option as regards powers clarifies some powers, such as giving a formal 
role to the ESAs in the ongoing monitoring of the equivalence process, improving the 
ability  for  the  ESAs  to  ensure  the  correct  application  of  Union  law,  and  transfers 
supervisory powers to the ESAs in targeted areas with predominantly third country or 
cross-border relevance. 

the  preferred  option  as  regards  funding  keeps  the  current  annual  EU  contribution  to 
ESAs' budget , but replaces the residual funding from national CAs with private sector 
funding. 

The preferred options identified were those that best ensured that the ESAs would be able to 
cope  with  the  growing  workload  and  anticipate  the  changes  to  the  supervisory  framework 
coming from sectoral legislation.  In addition, the preferred options were mostly focusing on 
targeted changes to the current regime, rather than a complete overhaul.  This was in line with 
the conclusion in the evaluation that the ESAs' framework has been working relatively well in 
relation  to  the  significant  challenges  that  they  had  to  face  and  the  available  means  to  meet 
their mandates.  

The impact assessment also reviewed the cumulative impact of the preferred options, both in 
qualitative and quantitative terms.  The analysis indicated that applying the preferred options, 
the ESAs will be better able to fulfil their existing mandates and ensure greater supervisory 
convergence in addition to the preparation of regulatory products.  

More specifically, there are three reasons for the ESAs' expected better performance: first, the 
incentive  structure  in  the  governance  of  the  ESAs  will  be  improved  by  balancing  out 
incentives  to  protect  national  interests  in  the  decision-making  process  so  that,  in  particular, 
powers  to  promote  regulatory  and  supervisory  convergence  can  be  used  more  effectively. 
Second,  the  decision  to  reduce  the  reliance  on  public  funding  from  national  competent 
authorities, to be complemented with private sector money, can ensure that the ESAs will be 
adequately  resourced  to  perform  their  existing  tasks  and  to  adapt  more  easily  to  future 
changes.  Finally, targeted amendments to certain parts of the ESAs' powers can ensure that 
the  ESAs  can  perform  their  tasks  efficiently  and  effectively  in  the  light  of  the  experience 
gathered  during  the  six  years  of  their  existence,  as  well  as  developments  in  the  various 
financial markets and in EU level legislation.  These targeted changes are also aligned with 
the  stakeholders'  view  that  a  greater  coordination  role  by  the  ESAs  is  warranted  and  that 
ESAs should make better use of their existing powers.   

18  Such  as  sustainability,  proportionality  and  sufficiency  for  funding,  appropriate  incentives  to  effectively 
apply their powers and act in the EU interest for governance, and ensure efficient and effective supervision 
with regard to cross-border activities and  entities for Powers. 

EN 

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Regarding the net impact in term of costs to the various stakeholders and with the exception 
of granting direct powers to ESMA, the preferred options is expected to have limited impact 
to the private sector since their contribution to privately funded national authorities would go 
down as the national CAs will not be any longer required to pay into the ESAs' annual budget. 
The net impact on EU budget will be neutral – although the pre-funding from the EU budget 
will be needed in the first years after adoption of the proposal, the pre-funded amounts will be 
afterwards  repaid  to  the  EU  budget  upon  entry  into  force  of  new  funding  mechanisms.  
Moreover,  the  net  impact  on  national  CAs  will  also  be  neutral  as  on  the  one  hand  national 
CAs would stop contributing to ESAs funding and on the other hand they should reduce (in a 
proportionate way) their needs for revenues to cover this expenditure. No impact, in terms of 
costs, is expected on consumers. 

The impact assessment was submitted to the Regulatory Scrutiny Board ("RSB") on June 14 
2017.  The  RSB  gave  a  negative  opinion  on  the  impact  assessment  and  made  a  number  of 
recommendations for improvements.  The document was revised accordingly and resubmitted 
on  19  July.  On  27  July  the  RSB  provided  a  positive  opinion  with  reservations  and  listed 
considerations for improvement that have been taken into account to the extent feasible.  The 
key  changes  introduced  in  the  impact  assessment  to  take  into  consideration  the  RSB's 
comments were the following: 

1.  The  analysis  of  challenges  for  the  supervisory  systems  related  to  the  likely  evolution  of 
banking, insurance and securities markets over the next years should be completed. Various 
impacts  of  the  UK's  withdrawal  from  the  EU  on  the  core  activities  of  the  ESAs  should  be 
included. 

The impact assessment has been revised to more clearly explain that the policy initiative is for 
the  sake  of  the  EU  Single  Market  and  its  integration  and  follows  on  the  commitment 
announced  in  the  5  Presidents  Report  and  the  commitment  expressed  most  recently  in  the 
reflection paper on the deepening of the EMU19, to move towards a genuine Financial Union, 
including a single supervisor for capital markets. The challenges that these documents set out 
for the EMU in general and its financial markets in particular provide the frame of reference 
for  the  impact  assessment.  A  stronger  focus  has  been  put  on  the  departure  of  the  United 
Kingdom and its consequences throughout the main chapters of the Impact Assessment.   

2. The assessment of costs and funding gaps of ESAs implied by the baseline and the various 
options should be completed. 

More discussion and quantification has been provided of the resources needed for the ESAs to 
take on additional tasks (direct and indirect powers); the impact on resources resulting from 
governance modifications and the impact on resources from changes in the funding 
methodology for indirect supervision.   

Costs between direct and indirect supervision and other activities have been differentiated and 
who is bearing the cost of preferred options has been better explained.   

The discussion on net impacts (in terms of costs) of preferred options have been further 
developed to better address the issue of funding gaps and impact of overall supervisory costs 
for the sector.  

In particular,  

19  Reflection paper on the deepening of the Economic and Monetary Union, COM(2017) 291 of 31 May 2017. 

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1. 

2. 

3. 

The overview cost table has been updated in line with the legislative financial fiche. 
We now have a very detailed estimation of costs and impact of both changes to the 
current ESAs framework and for the new direct powers. 

The  comparing  options  section  in  funding  has  been  completely  redrafted,  as 
requested, to reflect the full costs and benefits of option 3 compared to the baseline 
and option 2 in particular.  

The  collection  mechanism  section  has  been  completely  redrafted  to  meet  IA 
standards and added to the main text as this is part of the legislative proposal. 

Regarding the net impact on the individual sectors, this could not be assessed exhaustively at 
this stage as it depends on the model used to finance national CAs within a Member State. For 
example,  if  market  participants  in  a  given  Member  State  do  not  currently  pay  for  their 
supervision  (i.e.,  as  the  case  of  fully  publicly  funded  national  CAs)  then,  by  definition,  the 
allocation methodology of the preferred option would result in increased cost for these market 
participants at the benefit of taxpayers and national budgets in those Member States. At the 
same time, if market participants already pay for the ESAs via contributions to their national 
CAs'  budgets  then  the  net  impact  (incremental  cost/benefit)  would  depend  on  the  various 
methodologies  that  national  CAs  use  to  charge  fees  to  individual  entities  as  well  as  the 
weights  they  apply  to  entities  for  ESAs  funding.    In  this  case,  in  order  to  come  up  with  a 
precise,  reliable  estimate  of  the  incremental  cost/benefit  across  the  EU,  a  thorough 
comparative analysis is needed, which would require the involvement of those national CAs 
applying own methodologies on fees allocation.  In any case though, it could be reasonably 
argued  that  establishing  a  level  playing  field  across  the  Single  market  with  a  uniform  fee 
setting mechanism among financial entities would ultimately benefit all market participants. 
In  addition,  it  should  be  noted  that  the  amounts  required  to  fund  ESAs  should  not,  in 
principle, pose a threat to individual entities’ operational models.  

3.  The  comparison  of  options  should  be  improved  and  the  choice  of  the  preferred  option 
should be better supported by available evidence and analysis. 

More detailed descriptions and further additions to the description of the options and analysis 
has  been  provided  to  the  extent  feasible,  especially  in  the  parts  on  powers  and  funding  but 
also to the part on governance.  

The  discussion  on  powers  is  substantiated  by  further  information  and  argumentation  in  the 
annex to the impact assessment.  Any lack of evidence to support the preferred option in the 
power section can in some instances be explained by the fact that the policy direction is some 
cases have been motivated by a political decision.   

The  discussion  on  options  in  the  governance  section  has  been  extensively  explained  and 
substantiated with examples and anecdotal evidence as well as underpinned by the results of 
evaluations made both  by the European Parliament and the Commission.  The nature of the 
defined problem in governance makes it very difficult to obtain hard core verifiable data.  

In relation to funding, for example, the section on the preferred option 3 in funding has been 
improved to add additional assessment elements and to better clarify existing argumentation. 

4. The evaluation should be more evidenced based and substantiated. 

The evaluation has been revised to better distinguish between assessment and argumentation 
related to desktop work from opinions resulting from stakeholders consultations.  Some more 
discussion  has  been  added  and  where  feasible  more  evidence  has  been  included  to  improve 
the  evaluation.    There  are  limitations  to  the  type  of  evidence  used;  some  parts  of  the 

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evaluation rely heavily on anecdotal evidence and stakeholder experiences with the ESAs.  To 
compensate  for  that  there  has  been  an  attempt  to  provide  many  examples  from  various 
different information sources, see e.g., the governance section.  Other parts, such as funding, 
rely on more references and substantiated arguments. 

The  evaluation  is  also  a  retrospective  exercise  which  is  a  backward  looking  exercise 
comparing the past years with the baseline scenario which is one in which the ESAs do not 
exist.  The evaluation therefore by its very nature focuses less on the need for new, additional 
direct supervisory powers necessary for ESMA. 

• 

Regulatory fitness and simplification 

This proposal is not linked to a REFIT or simplification exercise.  The aim of this proposal is 
to  improve  the  ESAs  framework  and  strengthen  current  supervisory  arrangements.    The 
proposed  changes  to  the  ESAs  powers,  governance  framework  and  funding  system  should 
render EU level supervision more effective and efficient.  An enhanced ESA framework will 
improve legal and economic certainty in addition to financial stability and risk containment.  
This is in line with the Commission's Better Regulation Agenda. 

To the extent this proposal leads to the centralisation at EU level of some of the supervisory 
work with ESMA, the initiative removes the duplication of tasks among national authorities.  
This  should  create  economies  of  scale  at  EU  level  and  diminish  the  need  for  dedicated 
resources at national level.  As far as financial institutions and financial  market participants 
are concerned they should mainly benefit from a reduction in the administrative burden by the 
introduction of a single supervisor in certain areas. 

• 

Fundamental rights 

The  proposal  respects  the  fundamental  rights  and  observes  the  principles  recognised  in 
particular  by  the  Charter  of  Fundamental  Rights  of  the  European  Union.  In  particular,  it 
contributes to the objective of a high level of environmental protection in accordance with the 
principle of sustainable development as laid down in Article 37 of the Charter of Fundamental 
Rights of the European Union.20 

4. 

BUDGETARY IMPLICATIONS 

The current funding of the ESAs relies on a general contribution from the EU General Budget 
(40%)  and  contributions  from  national  competent  authorities  (60%).  For  ESMA,  this 
distribution  is  slightly  different,  as  entities  that  are  directly  supervised  by  ESMA  (such  as 
credit  rating  agencies and  trade  repositories)  also  pay  supervisory  fees  to  this  Agency.  This 
proposal will change the funding structure of the ESAs. The ESAs budget would now rely on 
three different sources of financing:  

 

 

Annual  contributions  paid  by  financial 
supervised by the ESAs;  

institutions 

that  are 

indirectly 

Supervisory fees paid by entities that are directly supervised by the ESAs. This 
is  especially  relevant  for  ESMA,  as  the  legislative  proposal  provides  for  the 
transfer of direct supervisory powers from the national competent authorities to 
ESMA  (for  some  EU  funds,  data  reporting  services  providers,  some 
benchmarks administrators and some prospectuses);  

20  OJ C 326, 26.10.2012, p. 391. 

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 

A  balancing  contribution  from  the  EU  that  would  not  exceed  40%  of  the 
overall  revenues  of  each  agency.  The  amount  of  this  balancing  contribution 
will be set in advance in the Multiannual Financial Framework (MFF).  

However, the new source of revenue for the ESAs (i.e., the annual contributions paid by the 
financial institutions indirectly supervised) will require the adoption by the Commission of a 
delegated  act  that  will  provide  for:  (i)  a  distribution  of  the  total  amount  of  the  annual 
contributions among the different categories of financial institutions; and (ii) objective criteria 
allowing  the  calculation  of  the  individual  annual  contribution  to  be  paid  by  each  financial 
institution.  During  the  transitional  period  (i.e.,  until  the  adoption  of  the  delegated  act 
determining  some  parameters  of  the  annual  contributions),  the  current  funding  structure 
relying  on  contributions  from  the  EU  (40%)  and  from  the  national  competent  authorities 
(60%) will be maintained. This will have an impact on the EU budget as well as on the budget 
of the various national competent authorities.  

The  proposed  changes  to  the  governance  structure,  the  indirect  supervisory  powers,  the 
funding  system  and  the  direct  supervisory  powers  of  the  ESAs  will  require  new  resources. 
EBA,  EIOPA  and  ESMA  will  respectively  require  29,  35  and  156  additional  full-time 
employees when the different provisions of the proposal will enter into application. It should 
be noted that for ESMA, most of those additional FTEs relate to direct supervisory tasks (97 
out of 156). The ESAs will also incur additional IT costs (estimated at EUR 10.2 million for 
the  period  2019-2020)  and  translation  costs  (estimated  at  EUR  1.8  million  for  the  period 
2019-2020). 

It  should  be  noted  that  any  budgetary  demands  from  the  ESAs  will  still  be  subject  to  all 
accountability and audit mechanisms put in place in the ESA Regulations, for the preparation, 
adoption  and  execution  of  their  annual  budgets.    Moreover,  the  annual  decision  on  the  EU 
balancing contribution to the ESAs and their establishment plans (e.g. decision on the staffing 
level) would still be authorised by the Parliament and the Council, and subject  to discharge 
from the Parliament on a recommendation from the Council. 

The financial and budgetary impact of this proposal is explained in detail in the legislative 
financial statement annexed to this proposal.  

It  should  be  noted  that  the  information  provided  in  the  legislative  financial  statement  is 
without prejudice to the post-2020 MFF proposal to be presented by May 2018. It should also 
be noted in this context that while the headcount necessary for direct supervision will depend 
over  time  on  the  development  of  the  number  and  size  of  capital  markets  participants  to  be 
supervised, the respective expenditure will in principle be funded by fees to be collected from 
those market participants. 

THE  FINANCIAL  AND  BUDGETARY  IMPACT  OF  THIS  PROPOSAL  IS  EXPLAINED  IN  DETAIL  IN 

THE LEGISLATIVE FINANCIAL STATEMENT ANNEXED TO THIS PROPOSAL. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The implementation of this Regulation will be reviewed in  two ways:  as  part  of the regular 
reviews of the ESAs every three years and as part of the reviews of the sectoral Regulations, 
in most cases two or three years after the respective date of application.  

  Detailed explanation of the specific provisions of the proposal 

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(1) 

Amendments to the ESAs Regulations21  

According to the 11th recital of the ESAs Regulations, the ESAs act with a view to improving 
the  functioning  of  the  internal  market,  in  particular  by  ensuring  a  high,  effective  and 
consistent level of regulation and supervision. 

According to Article 1(2) of the ESAs Regulations, the Authorities act within the scope of the 
acts  referred  to  therein,  i.e.,  in  a  proportionate  framework  set  and  updated  regularly  by  the 
Union legislator.   

Changes to the EBA Regulation, to the EIOPA Regulation and to the ESMA Regulation are 
dealt with in Articles 1, 2 and 3 respectively of the Regulation proposed.  

(a) Powers 

The  changes  highlighted  below  pertain  to  the  general  powers  of  ESAs  that  this  proposal 
enhances. New direct supervisory powers entrusted with ESMA are dealt with in sections 2 to 
5.  

New areas of activities and focus 

Article 1 of the ESA Regulations list acts that fall within the remit of the ESAs.  Article 1 is 
constructed  in  a  way  which  implies  that  only  acts  adopted  prior  to  the  establishment  of  the 
ESAs  and  acts  that  do  not  foresee  tasks  for  the  ESAs  need  to  be  listed.    All  acts  adopted 
subsequent  to  the  ESA  Regulations,  including  amendments  and  acts  based  on  legal 
instruments  falling  within  the  remit  of  the  ESAs,  as  well  as  acts  that  foresee  tasks  for  the 
ESAs, fall automatically within the remit of the ESAs and do not have to be listed in Article 1 
to fall within the remit of the ESAs. 

Amendments proposed in respect of Article 1 of each of the ESA Regulations are as follows: 
it is proposed to bring within the scope of the EBA Regulation the consumer credit directive 
2008/48  and  the  payment  accounts  Directive  2014/92/;  to  bring  within  the  scope  of  the 
EIOPA  Regulation  the  motor  insurance  directive  2009/103;  and  to  bring  the  Accounting 
Directive 2013/34 within the scope of the ESMA Regulation.   

Amendments to Article 4 of the EBA Regulation complement the list of definitions to be used 
for  the  purpose  of  the  application  of  the  Regulations.  More  specifically,  it  changes  the 
definition  of  "financial  institution"  to  ensure  that  all  entities  covered  by  relevant  sector 
legislation come under EBA's remit.  The new definition of "competent authorities" proposed 
ensures  that  all  relevant  supervisors  and  authorities  are  covered,  even  if  not  defined  as 
"competent authorities," in the applicable legislation. 

It is proposed to amend Article 8 of the EIOPA and ESMA Regulations to include the task to 
develop and maintain up to date a Union supervisory handbook on the supervision of financial 
institutions  in  the  Union  as  a  whole.    This  aligns  the  two  Regulations  with  the  EBA 
Regulation.  Moreover,  as  regards  the  EBA,  it  is  proposed  that  it  will  be  tasked  with 
developing  and  maintaining  up  to  date  a  Union  resolution  handbook  on  the  resolution  of 
financial institutions in the Union as a whole. 

Amendments  to  Articles  8  and  9  of  the  ESA  Regulations  specify  that  the  ESAs  should 
contribute to foster consumer protection.  All three ESAs will also be under an obligation to 

21  Regulation  (EU)  No  1093/2010  establishing  a  European  Supervisory  Authority  (European  Banking 
Authority);  Regulation  (EU)  No  1094/2010  establishing  a  European  Supervisory  Authority  (European 
Insurance  and  Occupational  Pensions  Authority);  Regulation  (EU)  No  1095/2010  establishing  a  European 
Supervisory Authority (European Securities and Markets Authority). 

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take  account  of  technological  innovation  and  environmental,  social  and  governance  related 
factors when carrying out their tasks.  In the case of EIOPA and ESMA it has moreover been 
specified  that  when  carrying  out  their  tasks,  the  Better  Regulation  principles  should  apply.  
This aligns those Regulations with that of the EBA Regulation.  Finally, it has been added that 
tasks  should  include  undertaking  in-depth  thematic  reviews  of  market  conduct,  building  a 
common  understanding  of  markets  practices,  identifying  potential  problems  and  analysing 
their  impact,  as  well  as  developing  retail  risk  indicators  for  the  timely  identification  of 
potential causes of consumer detriment.  

Technological innovation 

Article  8(1a)  explicitly  requires  the  ESAs,  when  carrying  out  their  tasks  under  the  ESA 
Regulations,  to  take  account  of  technological  innovation  while  carrying  out  their  tasks  in 
accordance  with  this  Regulation.  Technological  innovation  contributes  to  better  access  and 
more  convenience.  It  lowers  operational  costs  and  barriers  to  entry  and  such  innovations 
should be supported by the ESAs. Realising the potential of technological innovation requires 
also that integrity is assured in terms of data use, orderly and fair markets, avoiding the use of 
the financial system for illicit purposes and cybersecurity.   

Moreover, amendments to Article 29 of the ESA Regulations reinforce the coordination role 
of the ESAs regarding the entry into the market of innovative firms and services, in particular 
through the exchange of information between national supervisors and ESAs.  

Environmental, social and governance factors 

All  the  three  ESAs  will  be  under  an  obligation  to  take  account  of  risks  related  to 
environmental,  social  and  governance  factors  when  carrying  out  their  tasks.    This  will  also 
enable the ESAs to monitor how financial institutions identify, report, and address risks that 
environmental,  social  and  governance  factors  may  pose  to  financial  stability,  thereby 
rendering financial market activities more consistent with sustainable objectives.  

The ESAs can also provide guidance on how sustainability considerations can be effectively 
embodied in relevant EU financial legislation, and promote coherent implementation of these 
provisions upon adoption. 

Guidelines and Recommendations 

While  the  power  to  develop  guidelines  and  recommendations  has  proven  an  important  and 
successful tool of supervisory convergence, stakeholders have highlighted the need to remain 
within  the  remit  of  competence  of  the  ESAs  and  to  ensure  a  full  assessment  of  costs  and 
benefits  when  developing  such  instruments.  Amendments  to  Article  16  of  the  ESA 
Regulations imply that the carrying out of cost-benefit-analyses must be considered the rule.  
The amendments also aim at ensuring that if a majority of the members of the relevant ESA 
Stakeholder  Groups  consider  that  the  ESAs  have  exceeded  their  competences  when  issuing 
guidelines  or  recommendations  to  issue  an  opinion  to  the  Commission.  In  such  a  case  the 
Commission  shall  assess  the  scope  of  the  guidelines  and  may  require  the  relevant  ESA  to 
withdraw the guidelines concerned.  

In addition, the amendments in these Articles foresee the possibility for the ESAs to address 
guidelines  to  the  authorities  that  are  not  defined  as  competent  authorities  under  the  ESA 
Regulations but that are empowered to ensure the application of the legislation under ESAs' 
remit in order to establish consistent, efficient and effective supervisory practices within the 
ESFS.  

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Breach of Union law  

The Commission also proposes amendments to Article 17 of the ESA Regulations in relation 
to  breaches  of  Union  law.    For  the  power  of  the  ESAs  to  pursue  breaches  of  law  to  be 
effective, it has proven essential that the ESAs have access to all relevant information.  The 
amendments ensure that in the context of breach of EU law investigations the ESAs will be 
able  to  address  a  duly  justified  and  reasoned  request  for  information  directly  to  other 
competent  authorities  or  relevant  financial  institutions/financial  market  participants.  In  the 
event  the  ESAs  decide  to  request  information  directly  from  the  relevant  financial 
institution/financial market participant, the national competent authority shall be informed and 
assist  the  ESAs  in  collecting  the  requested  information.  Moreover,  it  should  be  emphasised 
that  the  Executive  Board  will  be  responsible  for  breaches  of  law  (see  below),  which  will 
further enhance the effectiveness of this tool.  

Settlement of disagreements 

Amendments are proposed to Article 19 of the ESA Regulations in relation to the settlement 
of disagreements between competent authorities.  The objective is to ensure that, when such 
disagreements exist, the ESAs may act and intervene decisively. The amendments clarify that 
settlements of disagreements between the competent authorities in cross-border situations can 
be  triggered  also  on  the  ESAs'  own  initiative  where  on  the  basis  of  objective  criteria  a 
disagreement  can  be  determined  between  competent  authorities.    In  the  latter  case,  a 
disagreement  shall  be  presumed  if  legislation  under  the  remit  of  the  ESA  requires  a  joint 
decision  to  be taken but such  a decision  is  not  taken within the time  limit prescribed  in  the 
relevant  legislation.  In  this  context,  the  amendments  also  introduce  an  obligation  for 
competent  authorities  to  notify  the  ESAs  when  an  agreement  has  not  been  reached.  
Moreover, the Executive Board will be responsible for dispute settlement (see below) which 
will enhance the effectiveness of this tool.  

Supervisory convergence and coordination  

Amendments to Article 29 of the EIOPA and ESMA Regulations specify that those two ESAs 
should  develop  and  maintain  an  up  to  date  supervisory  handbook  to  further  develop  a 
common  supervisory  culture  across  supervisory  authorities.  This  is  based  on  the  powers 
already  existing  for  the  EBA.    In  the  area  of  banking,  amendments  specify  that  the  EBA 
should develop a similar handbook in the area of resolution.  

Under  the  proposed  new  Article  29a  the  ESAs  are  given  increased  general  coordination 
powers to promote convergence of day-to-day supervision by all competent authorities much 
more significantly and efficiently across the EU.  The ESAs will be required to set EU-wide 
priorities  for  supervision  in  the  form  of  a  'Strategic  Supervisory  Plan'  against  which  all 
competent  authorities  will  be  assessed.  Competent  authorities  will  be  required  to  draw  up 
annual  work  programs  in  line  with  the  Strategic  Plan.    This  will  permit  all  three  ESAs  to 
ensure convergence with respect to the prudential supervision of financial institutions which 
are  primarily  active  in  Member  States  other  than  those  where  they  are  established  and 
supervised; this will be particularly important for EIOPA. 

This proposal also amends the current Article 30 of the ESA Regulations in relation to peer 
reviews.  To enhance the value added of these reviews and to insure impartiality the reviews 
will  no  longer  be  "peer"  reviews  but  "independent"  reviews  under  the  responsibility  of  the 
new Executive Board.  The ESAs shall produce a report setting out the results of the review 
and  the  competent  authorities  shall  make  every  effort  to  comply  with  any  guidelines  and 
recommendations that the ESAs may take as follow-up measures of the peer review.  

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This  proposal  contains  a  new  Article  31a  which  aims  at  strengthening  the  coordination 
function  of  the  ESAs  to  ensure  that  the  competent  authorities  effectively  supervise 
outsourcing,  delegation  and  risk  transfer  arrangements  in  third  countries.  Supervisory 
practices  vary  from  one  Member  States  to  another.    The  ESAs  shall  monitor  those 
arrangements both ex ante and on an on-going basis.  

Coordination role for ESMA in relation to market abuse investigations 

Where operators conduct activities that fall under ESMA's remit and that have a strong cross-
border  element,  ESMA  may  be  best  placed  to  initiate  and  coordinate  investigations.    A 
proposed  new  Article  31b  entrusts  ESMA  with  an  enhanced  coordination  role  in 
recommending  the  competent  authorities  to  initiate  investigations  and  facilitating  the 
exchange  of  information  relevant  for  those  investigations,  where  ESMA  has  reasonable 
grounds  to  suspect  that  activity  with  significant  cross-border  effects  is  taking  place  that 
threatens the orderly functioning and integrity of financial markets or the financial stability in 
the Union. For this purpose, ESMA shall maintain a data storage facility to collect from, and 
disseminate between, competent authorities, all relevant information.  

Stress testing  

Amendments to Article 32 of the ESA Regulations achieve two things.  First, they align the 
EIOPA  and  the  ESMA  Regulation  with  the  EBA  Regulation  on  stress  testing.    Second,  to 
ensure transparency on the stress tests, this proposal allows for the publication of the results 
of  the  individual  financial  institutions  or  financial  market  participants.    It  also  clarifies  that 
professional  secrecy  obligations  of  competent  authorities  shall  not  prevent  them  from 
transmitting  stress  test  outcomes  to  the  ESAs  for  the  purpose  of  publication.    The  second 
amendment  applies  to  all  three  ESAs.    In  addition,  in  order  to  contribute  to  decisions 
regarding stress tests being taken in a perspective that takes full account of the single market, 
such  decisions, including the methodologies  and approaches to  communication of outcomes 
of stress tests, are proposed to be conferred upon the new Executive Board in all three ESAs.   

Third-country equivalence 

Third country equivalence is an important tool to allow international market integration while 
ensuring effective supervision (see the Commission's staff working document on equivalence 
decisions in financial services policy22).  Amendments to Article 33 of the ESA Regulations 
confirm  that  the  ESAs  shall  assist  the  Commission  in  preparing  equivalence  decision  when 
requested by the Commission.  Once such decisions have been taken, it is important to ensure 
that they are adjusted to new developments.  The amendments therefore also entrust the ESAs 
with  the  responsibility  for  monitoring  on  an  on-going  basis  the  regulatory  and  supervisory 
developments  as  well  as  enforcement  practices  in  third  countries  on  which  the  Commission 
has  taken  an  equivalence  decision  and  submit  a  confidential  report  on  their  findings  to  the 
Commission on an annual basis.  For this purpose, the ESAs shall also develop administrative 
arrangements with third countries.  

Collection of information 

Access to all relevant information is the basis for the ESAs to carry out their activities in an 
effective way.  Information is normally provided by the national supervisory authorities which 
are closest to the financial markets and institutions but as a last resort, the ESAs can address 
requests  for  information  directly  to  a  financial  institution  or  a  market  participant.    For 
example, where a national competent authority does not or cannot provide such information in 

22 

"EU equivalence decisions in financial services policy: an assessment", SWD(2017)102 final. 

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a timely fashion.  It is appropriate to ensure that the ESAs can get access to information that it 
needs for its tasks.   Therefore this  proposal creates  a mechanism to  strengthen  the effective 
enforcement of the ESA's right to collect information (see new Articles 35 to 35h of the ESA 
Regulations).  The ESAs will have at their disposal the necessary means to ensure compliance 
with a request or decision to submit information.  The amendments entrust the ESAs with the 
power to impose fines and penalty payments of an administrative nature, under the review by 
the  Court  of  Justice,  and  subject  to  the  right  for  the  entity  to  be  heard,  when  a  financial 
institution and/or financial market participant fail to provide adequate information.  

Internal models in the insurance sector 

A  new,  proposed  Article  21a  of  the  EIOPA  Regulation  reinforces  EIOPA's  role  to  ensure 
supervisory convergence  on  internal models.  Divergence in  the  supervision  and  approval  of 
internal models may lead to inconsistencies, and creates an un-level playing field. EIOPA will 
be able to obtain in a timely way all relevant information upon its request and issue opinions 
to  the  relevant  competent  authorities.  Where  there  are  disagreements  between  competent 
authorities  with  respect  to  group  internal  models,  EIOPA  will  also  be  able  to  assist  the 
authorities in reaching an agreement under Article 19 of the Founding Regulation, either at its 
own  initiative,  on  the  request  of  one  or  more  of  the  competent  authorities,  or  in  certain 
circumstances on the request of the group concerned.  

Other provisions 

Amendments  to  Article  37  of  the  ESA  Regulations  reinforce  the  consultative  role  of  ESA's 
Stakeholder Groups whose opinions and advice are essential to the day-to-day work of ESAs. 
Where the members of the Stakeholder Group cannot reach a common opinion or advice, the 
members representing one group of stakeholders can submit a separate opinion or advice.  

Amendments to Article 39 of the ESA Regulation specify that the decisions of the ESAs, save 
for the investigatory decisions taken for failure to transmit adequate information in relation to 
a  request  for  information,  shall  be  made  public  together  with  a  summary  of  the  decision 
outlining the reasons of the decision.  

(b)  Governance 

This proposal envisages a more effective governance structure for the ESAs by introducing an 
independent  Executive  Board  with  full-time  members,  replacing  the  current  Management 
Board (Articles 45 and 47 of the ESA Regulations) and to adjust the composition of the Board 
of  Supervisor  (Articles  40  of  the  ESA  Regulations).  This  proposal  clarifies  the  respective 
competences of these two boards (Articles 43 and 47). In addition, the standing and powers of 
the Chairperson will be enhanced (Article 48).  

The Executive Board  

The  main  function  of  the  Executive  Board  will  be  to  prepare  decisions  to  be  taken  by  the 
Board  of  Supervisors.  This  should  ensure  that  the  decision  making  within  the  Board  of 
Supervisors is quicker and more streamlined.  This will also contribute to a more EU oriented 
approach  in  the  decision  making.    In  order  to  reflect  the  specific  situation  in  the  banking 
sector, where a majority of Member States participates in the Banking Union, it is explicitly 
required that the EBA Executive Board shall be balanced and proportionate and shall reflect 
the Union as a whole. 

The Executive Board will consist of the Chairperson and a number of full-time members.  The 
number will differ between ESMA on the one hand and EBA and EIOPA on the other hand as 
the  proposal  is  entrusting  ESMA  with  a  significant  number  of  additional  tasks  in  different 
areas compared to the other two ESAs.  The full-time members shall be appointed on the basis 

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of an open call for candidates organised by the Commission. The Commission will shortlist 
the candidates and submit it the European Parliament for approval. Following the approval of 
the  shortlist,  the  Council  shall  appoint  the  full  time  members  by  way  of  a  decision.  The 
procedure  of  dismissal  mirrors  the  one  on  appointment  and  leaves  the  final  decision  to  the 
Council.  One  of  the  permanent  members  will  assume  the  tasks  of  the  current  Executive 
Director whose specific position will be eliminated.   

The  Executive  Board  will  retain  the  role  of  the  Management  Board  in  relation  to  the 
preparation of the ESAs work programs and budget. 

The  Executive  Board  will  be  attributed  decision  making  powers  in  a  number  of  areas.    For 
example,  vis-a-vis  individual,  competent  authorities  in  relation  to  certain  matters  of  a  non-
regulatory nature such as in relation to, dispute settlements, breach of Union law matters and 
independent reviews.  This should ensure effective, impartial and EU-oriented decisions.  The 
Executive  Board  will  also  be  in  charge  of  setting  out  supervisory  priorities  for  competent 
authorities  in  a  new  "Strategic  Supervisory  plan".    They  will  check  the  consistency  of  the 
work  programmes  of  competent  authorities  with  EU  priorities  and  review 
their 
implementation. The Executive Board will furthermore be in charge of monitoring delegation, 
outsourcing and risk transfer arrangements to non-EU countries to ensure that inherent risks 
are addressed. It will decide on stress tests and approaches to communication on the outcomes 
of stress tests. Finally, the Executive Board will also be in charge of decisions in relation to 
requests for information.  The members of the Executive Board will have one vote each and 
the Chairperson a casting vote.  The proposed version of Article 47 sets out the tasks of the 
Executive Board. 

The  amendments  also  replace  the  reference  to  the  Management  Board  with  the  Executive 
Board.  In  addition,  the  position  of  the  Executive  Director  will  be  deleted.  His/her 
responsibilities will be assumed by one of the full time members of the Executive.  

The Board of Supervisors 

The  Board  of  Supervisors  remains  as  the  main  body  of  the  ESAs  in  charge  of  its  overall 
guidance  and  decision  making.  However,  proposed  amendments  to  Article  40  change  the 
composition  of  the  Board  of  Supervisors  to  include  the  full  time  members  of  the  Executive 
Board  but  without  voting  rights.  The  amendments  also  ensure  the  presence  of  consumer 
protection authorities where relevant.  

Each voting member in the Board of Supervisors shall have one vote. Because decisions on 
certain  tasks  of  a  non-regulatory  nature  (dispute  settlements,  breach  of  Union  law  and 
independent  reviews)  will  be  taken  by  the  Executive  Board  the  current  rules  on  decision 
making are amended.  

Despite the fact that with the future departure of the United Kingdom, the number and weight 
of Member States not participating in the Banking Union will go down, and further Member 
States may join the Banking Union, it is proposed to keep the double majority voting system 
for  measures  and  decisions  adopted  by  EBA  Board  of  Supervisors  that  was  introduced  in 
2013  as  part  of  the  "Banking  Union"  package  as  a  safeguard  to  ensure  that  EBA  decisions 
reflect  the  specific  situation  both  of  Member  States  participating  in  the  Banking  Union  and 
other Member States. The Board of Supervisor will therefore continue to take decisions on the 
basis of a qualified majority of its members, which should include at least a simple majority 
of the national competent authorities participating in the Banking Union and a simple majority 
of national competent authorities that are not participating in the Banking Union.  

However, the current system makes decision-making in the EBA excessively burdensome as 
decisions  cannot  be  taken  even  in  cases  where  no  majority  of  non-participating  Member 

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States  considers  the  vote  sufficiently  important  to  be  present.    To  ensure  that  the  EBA  can 
continue  to  take  decisions  in  an  effective  manner  while  fully  upholding  the  safeguards  for 
non-participating Member States as long as they are present in the vote, current voting rules 
should be modified to ensure that votes would not have to be postponed in case of absences.  
This will also create clear incentives for national competent authorities to be present at EBA 
meetings and thereby provide a greater legitimacy for decisions taken in the meetings.  The 
amendment  therefore  clarifies  that  a  decision  would  need  to  be  supported  by  a  simple 
majority  of  national  competent  authorities  from  non-participating  Member  States  present  at 
the vote and of national competent authorities from participating Member States present at the 
vote. 

Division of competences between the two Boards 

Amendments  to  Articles  43  and  47  of  the  ESA  Regulations  clarify  the  basic  principle  of 
division  of  competences  between  the  Board  of  Supervisors  and  the  Executive  Board.  The 
Board  of  Supervisors  is  in  charge  of  every  decision,  referred  to  in  the  Regulation,  save  as 
otherwise foreseen (see above in relation to the Executive Board).  In situations where ESMA 
will exercise powers related to direct supervision, its Board of Supervisors will only be able to 
reject a proposal for a decision from the Executive Board by a majority of thirds. In such a 
case  the  draft  must  be  reviewed  by  the  Executive  Board  (amendments  to  Article  44  of  the 
ESMA Regulation).  

The Board of Supervisors shall be released of its disciplinary authority over the Chairperson 
because the former will not be competent to appoint him (see below).   

Amendments to Article 41 and a new Article 45b allow both the Board of Supervisors and the 
Executive Board to establish internal committees for specific tasks. The setting up of panels is 
abolished.  

The Chairperson 

The  Chairperson  is  a  key  representative  of  the  ESA.    The  standing  and  powers  of  the 
Chairperson will therefore be enhanced to increase his/her statutory authority.   

Amendments to Article 48 of the ESA Regulations clarify the appointment procedure for the 
Chairperson. He/she shall be appointed on the basis of an open call for candidates organised 
by the Commission. The Commission will shortlist the candidates and submit it the European 
Parliament for approval. Following the approval of the shortlist by the European Parliament, 
the Council shall appoint the full time members with a decision taken by qualified majority. 
The procedure of dismissal mirrors the one on appointment and leaves the final decision to the 
Council. This should raise the legitimacy and authority of the Chairperson.  The Chairperson 
will also get a casting vote in the Executive Board.  

Other provisions 

The  remit  of  action  of  the  Joint  Committee  has  been  extended  to  include  consumer  and 
investor protection issues through amendments to Article 54 of the ESA Regulations. 

(c)  Financial provisions  

To ensure that the ESAs' funding system is sustainable and commensurate with the tasks they 
perform and are expected to perform in the future, and to ensure that the funding system links 
fees and contributions to the ESAs' activities in a proportionate way, it is proposed to revise 
the current funding system. The proposed system retains the public funding element currently 
provided  by  the  EU  and  combines  it  with  contributions  from  domestic  industry  and  other 
market  participants,  replacing  current  contributions  from  the  national  competent  authorities. 

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24 

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The  legal  basis  for  setting  up  the  ESAs  (Article  114  TFEU)  allows  amending  the  funding 
system and collecting contributions from the industry. 

The  current  fixed  distribution  between  contributions  from  the  EU  General  Budget  and 
contributions from national competent authorities (40%/60%) would be been eliminated.   

The  amendments  provide  that  the  revenue  of  the  ESAs  will  now  stem  from  three  main 
sources:  

The amendments to Article 62 define a balancing contribution from the Union. The proposed 
maximum EU annual contribution, as set in advance in the Multiannual Financial Framework 
(MFF), will cover up to 40% of the ESAs' annual budget.  This will respect constraints of the 
EU Budget.  This  will  also remove the currently applied fixed distribution (40%/60%)   that 
can limit the ability of the ESAs to increase their other sources of revenues. To this extent, for 
each subsequent MFF preparation, the ESAs should provide the Commission with a medium-
term projection (covering at least 5 years) of their  anticipated budgetary needs according to 
the methodologies they apply for preparing their annual budgetary proposals. 

Second, a new source of revenue from the private sector has been added: annual contributions 
from  financial  institutions.  This  source  of  revenue  will  replace  current  mandatory 
contributions  from  the  national  competent  authorities  to  the  ESAs  budget.  The  annual 
contributions  will  be  paid  by  the  financial  institutions  that  are  indirectly  supervised  by  the 
ESAs and falling into the scope of Article 1(2) of the Founding Regulations. The amendments 
provide that the amount of the annual contributions from financial institutions should be based 
on  the  estimated  workload  that  the  Authority  is  planning  to  carry  out  for  each  category  of 
market  participants  under  the  Founding  Regulations  and  the  sectoral  legislation.  The 
amendments indicate that those annual contributions will be collected by national authorities 
designated  by  Member  States.  The  amendments  also  provides  for  a  delegated  act  that  will 
establish  how  the  total  amount  of  annual  contributions  are  shared  among  the  different 
categories of financial institutions, based on the activity required by each  category of them. 
For  each  category  of  financial  institutions,  the  delegated  act  will  also  establish  appropriate 
and  objective  criteria  to  calculate  the  actual  annual  contribution  to  be  paid.  Those  criteria 
should be based on the size of the financial institutions in order to reflect their importance in 
the market. Finally, the delegated act will establish de minimis thresholds under which small 
financial institutions do not pay financial contributions or it will set minimum contributions.       

Third, the three Regulations keep unchanged the current provisions that allow the three ESAs 
to receive fees from entities that are subject to direct supervision. This provision is currently 
particularly important for ESMA.   

Under  this  new  funding  mechanism,  the  entities  will  not  be  charged  twice  for  the  same 
service. While the entities that are directly supervised by the ESAs will pay supervisory fees 
as foreseen by sectoral legislation, other financial institutions (directly supervised by national 
competent  authorities  and  indirectly  supervised  by  the  ESAs)  will  pay  a  financial 
contribution.   

The amendments also provides for two complementary sources of revenues. The amendments 
introduce  a  possibility  for  any  voluntary  financial  contributions  from  Member  States  and 
observers,  on  the  condition  that  such  a  contribution  does  not  compromise  the  independence 
and  impartiality  of  the  ESAs.  For  instance,  those  voluntary  contributions  can  finance 
delegations of tasks and responsibilities from national competent authorities to the ESAs. The 
amendments also introduce a possibility for ESAs to collect charges for publications, training 
and for any other services requested by national competent authorities. 

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(d)  General Provisions 

Amendments  to  Article  70  of  the  ESA  Regulations  extend  the  obligation  of  professional 
secrecy to non-staff of the Authorities (i.e., individuals who provide any service, directly or 
indirectly,  permanently  or  occasionally,  relating  to  the  tasks  of  the  Authority,  including 
officials and other persons authorised by the Executive Board and the Board of Supervisors or 
appointed  by  the  competent  authorities  for  that  purpose).    The  same  requirements  for 
professional secrecy shall also  apply to  observers who attend the meetings of the Executive 
Board  and  the  Board  of  Supervisors  who  take  part  in  the  activities  of  the  Authority.    This 
amendment  should  ensure  that  persons  that  are  currently  not  covered  by  the  obligations  of 
professional  secrecy  set  out  in  Article  70  of  the  ESA's  Regulations  and  that  participate  in 
board meetings, working groups, sub-committees, panels and expert networks are covered by 
rules on professional secrecy and confidentiality. 

Regulations (EC) 1093/2010, 1094/2010 and 1095/2010 as well as sectoral financial services 
legislation  require  the  ESAs  to  seek  effective  administrative  arrangements,  involving  the 
exchange of information with third-country supervisors.  The need for effective cooperation 
and  information  exchange  should  become  all  the  more  important  when,  pursuant  to  this 
amending  Regulation,  some  of  the  ESAs  assume  additional,  broader  responsibilities  in 
relation to the supervision of non-EU entities and activities. Where, in this context, the ESAs 
process personal data, including by transferring such data outside the Union, they are bound 
by  the  requirements  of  Regulation  (EU)  No  2018/XXX  (Data  Protection  Regulation  for  EU 
institutions and Bodies). In the absence of an adequacy decision or of appropriate safeguards, 
for example provided for in administrative arrangements within the meaning of Article 49(3) 
of  the  Data  Protection  Regulation  for  EU  institutions  and  Bodies,  the  ESAs  may  exchange 
personal data with third-country authorities in accordance with and under the conditions of the 
public interest derogation as set out in Article 51(1)(d) thereof, which notably applies to cases 
of international data exchange between financial supervisory authorities. 

(2) 

Article 4, Article 5 and Article 7 respectively deal with changes to Regulation (EU) 
No  345/2013  (EuVECA)  and  Regulation  (EU)  346/2013  (EuSEF)  and  Regulation 
(EU) 2015/760 (ELTIF). 

Regulation  (EU)  No  345/2013  of  the  European  Parliament  and  of  the  Council  of  17  April 
2013  on  European  venture  capital  funds23  (EuVECA)  and  Regulation  (EU)  346/2013  of  the 
the  Council  of  17  April  2013  on  European  social 
European  Parliament  and  of 
entrepreneurship funds24 (EuSEF) introduced specialised fund structures to make it easier for 
market  participants  to  raise  and  invest  capital  in  innovative  small  and  medium-sized 
enterprises ("SMEs") and social undertakings throughout Europe. Uniform requirements and 
conditions  were  laid  down  for  managers  of  collective  investment  undertakings  that  wish  to 
use the designations ‘EuVECA’ or ‘EuSEF’ in relation to the marketing of qualifying venture 
capital  or  social  entrepreneurship  funds.  Regulation  (EU)  2015/760  of  the  European 
Parliament  and  of  the  Council  of  29  April  2015  on  European  long-term  investment  funds25 
introduced another fund vehicle 'ELTIF' which targets investments in real economy, such as 
infrastructure  project,  with  an  enhanced  focus  on  longer  term  investing.  Regulation  (EU) 

23  Regulation (EU) No 345/2013 of the European Parliament and of the Council of 17 April 2013 on European 

venture capital funds (OJ L 115, 25.4.2013, p. 1). 

24  Regulation (EU) No 346/2013 of the European Parliament and of the Council of 17 April 2013 on European 

social entrepreneurship funds (OJ L 115, 25.4.2013, p. 18). 

25  Regulation  (EU)  2015/760  of  the  European  Parliament  and  of  the  Council  of  29  April  2015  on  European 

long-term investment funds (OJ L 123, 19.5.2015, p. 98–121). 

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2015/760 lays down uniform requirements that long-term funds must comply with in order to 
be authorised as an ‘ELTIF’.  

EuVECA,  EuSEF  and  ELTIF  are  harmonised  collective  investment  funds.  Regulation  (EU) 
No  345/2013,  Regulation  (EU)  346/2013  and  Regulation  (EU)  2015/760  govern  qualifying 
investments, qualifying portfolio undertakings, concentration rules, and eligible investors. The 
rules  define  also  the  supervisory  powers,  including  requirements  for  registrations  and 
authorizations, ongoing supervision and withdrawals of registrations or authorisations.  

The  main  objectives  of  Regulation  (EU)  No  345/2013,  Regulation  (EU)  No  346/2013  and 
Regulation  (EU)  2015/760  are  boosting  jobs  and  growth,  SME  financing,  social  and  long-
term investments, as well as promoting an EU investment culture. However, the divergent use 
by national competent authorities of their discretion, their divergent administrative practices, 
and the differences in supervisory cultures and performance remain despite the harmonisation 
achieved by the three Regulations. Those divergences hinder the necessary level playing field 
among managers of qualifying venture capital funds, qualifying social entrepreneurship funds 
and long-term investment funds in different Member States increasing, at the same time, the 
transaction  and  operational  costs  of  those  managers.    The  appointment  of  a  single  EU 
supervisor  will  support  the  objectives  of  those  Regulations  as  it  will  further  facilitate  the 
integration, the development and marketing of such fund structures across borders. 

the  administrative  process  governing 
This  proposal  aims  at  further  streamlining 
authorisation/registration of these EU label funds in the Union as well as to strengthen level 
playing  field  by  centralising  their  supervision  regardless  of  where  a  fund  is  established  or 
marketed.  A uniform application of the rules would allow managers to lower transaction and 
operational costs and strengthen investor choice. 

ESMA  is  entrusted  with  the  functions  of  authorisation/registration  and  supervision  of  these 
EU  funds  and  their  managers,  thus  increasing  efficiency  of  these  administrative  processes. 
Managers  of  such  funds  will  be  required  to  apply  for  authorisation/registration  to  a  single 
competent authority – ESMA – which will also be responsible for ensuring that the rules laid 
down  in  those  Regulations  are  consistently  applied.  Therefore,  targeted  changes  are 
introduced to transfer the powers of the national competent authorities to ESMA. 

These  EU  funds  are  governed  by  directly  applicable  regulations  that  already  offer  a  set  of 
rules that ESMA will enforce.  

As  regards  EuVECA  and  EuSEF  funds  which  exceed  thresholds  referred  to  in  point  (b)  of 
Article  3(2)  of  the  AIFMD  Directive  2011/61/EU  and  are  therefore  managed  by  alternative 
investment fund managers authorised under this Directive, ESMA will also be the competent 
authority. ESMA will ensure that these managers comply, next to sector specific provisions of 
the EuVECA or EuSEF Regulations enumerated in their Articles 2(2), with the national law 
implementing the AIFMD in the Member State of the managers' establishment. This approach 
aims  at  ensuring  supervisory  consistency  and  at  alleviating  the  administrative  burden  that 
would  result  if  those  entities  were  to  be  supervised  simultaneously  by  ESMA  and  national 
competent authorities with respect to the same fund. 

This  proposal,  where  necessary, 
the 
requirements under the three Regulations, so that the content of certain legal obligations and 
the scope of ESMA's discretion are sufficiently precise to ensure the degree of harmonisation 
sought. 

lays  down  several  empowerments  specifying 

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Regulation (EU) No 345/2013 and Regulation (EU) 346/2013 have been recently reviewed26 
with respect to, in particular, specific fund rules, changes to the scope or eligible investments. 
Supervisory aspects were not subject to that review. The proposal for a Regulation amending 
the  two  Regulations  was  agreed  by  the  co-legislators  and  approved  by  the  European 
Parliament27. While the final adoption of that Proposal by the Council and its publication in 
the Official Journal of the European Union are still pending, it is appropriate to take the texts 
of the two Regulations with the amendments agreed by the co-legislators as a reference point 
for the purposes of this Proposal. Should any changes to the agreed amendments to the two 
Regulations occur in the course of the adoption process due to be finalised over the coming 
days, the Commission stands ready to modify this Proposal to ensure its alignment with such 
changes.  

In  accordance  with  Article  11,  Articles  4  to  6  enter  into  application  36  months  after  the 
Regulation's entry into force so that there is sufficient time to develop and adopt the delegated 
and implementing acts envisaged therein. The proposal also lays down transitional measures 
for the transfer of competencies and duties from national competent authorities to ESMA.  

(3) 

Amendments  to  Regulation  (EU)  No  600/2014  (MIFIR  –  data  reporting  service 
providers) 

Article 6 introduces the following amendments: 

 

 

 

 

 

 

 

adds  the  authorisation  and  supervision  of  data  reporting  service  providers  to  the 
scope of Regulation (EU) No 600/2014 (MiFIR) together with direct data gathering 
powers for the purposes of reporting and transparency calculations; 

add the three different types of data reporting service providers to the definitions in 
MiFIR; 

empowers ESMA to request information it requires for its supervisory tasks; 

establishes ESMA as the supervisor of data reporting service providers; 

defines  the  powers  and  competences  ESMA  should  have  in  exercising  its  role  as 
competent authority; 

imposes  reporting  requirements  for  the  Commission  on  the  functioning  of  the 
consolidated tape; 

specifies the transfer of competences from national competent authorities to ESMA.   

This Proposal also makes it explicit that MiFIR intervention powers also cover the managers 
of  UCITS28    and  Alternative  Investment  Funds  (AIFs)29  where  that  activity  is  carried  out 
directly by their managers. 

26  Proposal  for  a  Regulation  the  European  Parliament  and  of  the  Council  amending  Regulation  (EU)  No 
345/2013  on  European  venture  capital  funds  and  Regulation  (EU)  No  346/2013  on  European  social 
entrepreneurship funds, COM/2016/0461 final. 

27  Regulation (EU) 2017/...of the European Parliament and of the Council of amending Regulation (EU) No 
345/2013  on  European  venture  capital  funds  and  Regulation  (EU)  No  346/2013  on  European  social 
entrepreneurship 
June 
2017,2016/0221/COD. 

funds,  as  provisionally  agreed  with 

the  European  Parliament,  27 

28 

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

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28 

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More  specifically,  Article  40  of  MiFIR  already  grants  ESMA  with  temporary  intervention 
powers, which allow ESMA under certain conditions, to temporarily prohibit or restrict in the 
Union  the  marketing,  distribution  or  sale  of  certain  financial  instruments  or  financial 
instruments  with  certain  specified  features,  or  a  type  of  financial  activity  or  practice.  These 
product  intervention  powers  apply  to  investment  firms  and  credit  institutions  involved  in 
marketing,  distribution  or  sale  of  financial  instruments,  including  units  in  collective 
investment  undertakings.  Since  units  in  collective  investment  undertakings  may  also  be 
directly  marketed,  distributed  or  sold  by  management  companies  of  undertakings  for 
collective  investment  in  transferable  securities  (UCITS)  and  UCITS  investment  companies 
authorised in accordance with Directive 2009/65/EC and managers of alternative investment 
funds (AIFMs) authorised in accordance with Directive 2011/61/EU, it is necessary to make it 
explicit  that  the  above-mentioned  product  intervention  powers  under  MiFIR  also  apply  to 
management  companies  of  UCITS  and  UCITS  investment  companies,  as  well  as  to  AIFMs 
under specific circumstances.  

A proposal for a Directive amending Directive 2014/65/EU (MiFID II) aims to eliminate data 
reporting service providers from the scope of Directive 2014/65/EU. 

(4) 

Amendments to Regulation (EU) 2016/1011 (Benchmarks). 

Article  8  of  this  Regulation  amends  Regulation  (EU)  2016/1011  (BMR).  Paragraph  11 
establishes ESMA as competent authority for administrators of critical benchmarks and of all 
benchmarks that are used in the Union but administered outside. Paragraphs 4, 5, 12, 13, 14, 
15,  16,  17  and  19  are  technical  adjustments  reflecting  this  designation,  with  paragraph  4 
providing for the Commission to designate benchmarks which serve as reference for a volume 
over  EUR  500  billion  as  critical.  Paragraph  18  defines  the  powers  and  competences  ESMA 
should have in exercising its role as competent authority.  

Paragraph 10 determines that ESMA should authorise administrators of critical benchmarks. 
Paragraph  16  abolishes  the  colleges  of  supervisors  for  critical  benchmarks  as  ESMA  as  the 
new supervisor for these benchmarks will have a Union-wide perspective in the assessment of 
risks etc.  

Paragraphs  8  and  9  establish  ESMA  as  the  competent  authority  for  the  recognition  and  the 
approval of endorsements of third country administrators and benchmarks, respectively.  

Paragraphs  1,  2,  3  and  6  empower  the  Commission  to  further  specify  certain  provisions  of 
Regulation (EU) 2016/1011 to ensure that ESMA can directly apply the respective provisions.  

Finally,  the  amendments  to  Article  30  of  the  Regulation  (EU)  2016/1011  ensure  that 
equivalence with Regulation (EU) 2016/1011 by third countries is monitored on an ongoing 
basis.  For  the  purpose  of  appropriate  exchange  of  information  and  cooperation  in  the 
supervision  of  benchmark  administrators  in  third-countries,  ESMA  will  need  to  conclude 
cooperation  agreements  with  third  country  supervisors.  However,  where  a  third  country  is 
included on the list of jurisdictions which are declared as having strategic deficiencies in their 
national  anti-money  laundering  and  countering  the  financing  of  terrorism  regimes  that  pose 
significant  threats  to  the  financial  system  of  the  Union,  ESMA  will  not  be  permitted  to 
conclude such a cooperation agreement with the supervisors of that third country.  

29  Directive  2011/61/EU  of  the  European  Parliament  and  of  the  Council  of  8  June  2011  on  Alternative 
Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 
1060/2009 and (EU) No 1095/2010 

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(5) 

Amendments to Regulation (EU) 2017/1129 (Prospectus) 

Article  9  of  this  Regulation  amends  Regulation  (EU)  2017/1129  so  that  the  supervision  of 
certain types of prospectuses is transferred to ESMA.  

The  key  amendment  is  featured  in  Paragraph  10  which  confers  on  ESMA  the  role  of 
"competent  authority  of  the  home  Member  State"  for  four  categories  of  prospectuses.  For 
these prospectuses, the tasks of scrutiny and approval, as  well as the processing of passport 
notifications, are conferred on ESMA. A "reading rule" is established to apply the provisions 
of  the  Prospectus  Regulation  to  the  situations  where  ESMA  assumes  direct  supervision. 
Paragraph 1 introduces a number of definitions as regards specialist issuers. Paragraph 4 also 
transfers  to  ESMA  the  power  to  supervise  the  advertisements  related  to  those  prospectuses 
subject to its approval, in lieu of the competent authorities of host Member States. While the 
actual  exercise by ESMA of a control over the compliance of those advertisements remains 
optional, it will become mandatory should a competent authority formally request ESMA to 
make use of such controlling power when prospectuses approved by ESMA are used for an 
offer or admission to trading in its jurisdiction. 

Paragraphs 2, 3, 4, 6, 8, 11 and 12 introduce drafting clarifications to account for the new role 
of ESMA, in those situations where the "reading rule" of Paragraph 10 might be insufficient 
to achieve legal clarity (language regime, cooperation agreements, notifications).  

Paragraph 7 clarifies and enhances the functioning of the equivalence regime for prospectuses 
drawn  up  according  to  the  national  rules  of  a  third  country.  Where  such  rules  are  declared 
equivalent by the Commission in an implementing decision, a third country prospectus which 
is already approved by the third country supervisor will only be filed with ESMA and ESMA 
will send a certificate of filing (instead of a certificate of approval, cf. point (b) of paragraph 
5)  to  the  competent  authority  of  each  host  Member  State  where  such  "equivalent"  third 
country prospectus is notified. For the purpose of supervising prospectuses from third-country 
issuers, ESMA will need to conclude cooperation agreements with third country supervisors. 
However, where a third country is included in the list of jurisdictions which are declared as 
having  strategic  deficiencies  in  their  national  anti-money  laundering  and  countering  the 
financing  of  terrorism  regimes  that  pose  significant  threats  to  the  financial  system  of  the 
Union,  ESMA  will  not  be  permitted  to  conclude  such  a  cooperation  agreement  with  the 
supervisors  of  that  third  country  (cf.  point  (a)  of  paragraph  9).    Point  (a)  of  paragraph  5 
corrects an omission in Article 25(4) of Regulation (EU) 2017/1129 by clarifying that ESMA 
must  also  be  communicated  electronically  by  competent  authorities  all  final  terms  of  base 
prospectuses after those final terms are filed, even where the base prospectus concerned is not 
passported  to  any  host  Member  State,  in  line  with  what  was  required  under  Directive 
2003/71/EC.  

Paragraph 13 corrects an error in Regulation (EU) 2017/1129 by aligning the date by which 
Member States are required to notify their sanctioning rules to the Commission and to ESMA, 
with the date, set out in Article 49(3) of the Regulation, by which they are required to comply 
with Chapter VIII of the Regulation 

Paragraph  14  introduces  a  new  chapter  setting  out  the  powers  and  competences  of  ESMA 
which  are  necessary  for  the  supervision  and  enforcement  of  the  Prospectus  Regulation, 
including powers to impose pecuniary fines and periodic penalty payments  

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2017/0230 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

Amending Regulation (EU) No 1093/2010 establishing a European Supervisory 
Authority (European Banking Authority); Regulation (EU) No 1094/2010 establishing a 
European Supervisory Authority (European Insurance and Occupational Pensions 
Authority); Regulation (EU) No 1095/2010 establishing a European Supervisory 
Authority (European Securities and Markets Authority); Regulation (EU) No 345/2013 
on European venture capital funds; Regulation (EU) No 346/2013 on European social 
entrepreneurship funds; Regulation (EU) No 600/2014 on markets in financial 
instruments; Regulation (EU) 2015/760 on European long-term investment funds; 
Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and 
financial contracts or to measure the performance of investment funds; and Regulation 
(EU) 2017/1129 on the prospectus to be published when securities are offered to the 
public or admitted to trading on a regulated market  

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

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

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Central Bank30,  
Having regard to the opinion of the European Economic and Social Committee31, 
Acting in accordance with the ordinary legislative procedure32, 

Whereas: 

(1) 

Following  the  financial  crisis  and  the  recommendations  of  a  group  of  high  level 
experts  led by Jacques  de Larosière, the the Union has  made  important progress in 
creating not only stronger, but also more harmonised rules for the financial markets 
in the form of the Single Rule Book. The Union has also set up the European System 
of  Financial  Supervision  ("ESFS"),  built  on  a  two-pillar  system  which  combines 
micro-prudential  supervision,  coordinated  by  European  Supervisory  Authorities 
("ESAs"),  and  macro-prudential  supervision  through  the  establishment  of  the 
European  Systemic  Risk  Board  ("ESRB").  The  three  ESAs  namely  the  European 
Banking  Authority  ("EBA"),  created  by  Regulation  (EU)  No  1093/2010  of  the 

30 
31 
32 

OJ C , , p. . 
OJ C , , p. . 
Position of the European Parliament of …(OJ…) and decision of the Council of … 

EN 

31 

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European Parliament and of the Council33, the European Insurance and Occupational 
Pensions  Authority  ("EIOPA"),  created  by  Regulation  (EU)  No  1094/2010  of  the 
European Parliament and of the Council , and the European Securities and Markets 
Authority  (ESMA),  created  by  Regulation  (EU)  No  1095/2010  of  the  European 
Parliament  and  of  the  Council34  (collectively  "the  founding  regulations")  –  became 
operational  in  January  2011.  The  overall  objective  of  the  ESAs  is  to  sustainably 
reinforce the stability and effectiveness of the financial system throughout the Union 
and to enhance consumer and investor protection. 

The ESAs have made a crucial contribution to the harmonisaton of the rules of the 
financial  markets  in  the  Union  by  providing  the  Commission  with  input  for  its 
initiatives  for  regulations  and  directives  adopted  by  Council  and  Parliament.  The 
ESA's  have  also  provided  the  Commission  with  drafts  of  detailed  technical  rules 
which have been adopted as delegated and implementing acts.  

The  ESAs  have  also  contributed  to  the  convergence  in  financial  supervision.  And 
supervisory  practise  in  the  Union  by  means  of  guidelines  directed  at  competant 
authorities  and  by  coordinating  reviews  of  supervisory  practices.  However,  the 
decision  making  processes  enshrined  in  their  founding  regulations,  in  addition  to 
constraints on resources and the nature of those instruments, which the ESAs have at 
their disposal, have prevented them from fully achieving their overall objectives. 

After seven years of operation and following evaluations and the public consultations 
undertaken by the Commission it appears that the ESAs are increasingly constrained 
in  their  capacity  to  meet  their  objectives  of  the  further  integration  of  financial 
markets  and  services  and  the  enhancement  of  consumer  protection,  within  the 
existing  legislative  framework,  both  in  the  Union  and  between  the  Union  and  third 
countries. 

Any  enhanced  powers  to  be  afforded  to  the  ESAs,  to  enable  them  to  meet  those 
objectives,  would  also  require  both  appropriate  governance  and  sufficient  funding. 
Enhanced  powers  alone  would  not  be  sufficient  to  achieve  the  ESAs'  objectives 
where  they  do  not  have  sufficient  funding  or  where  they  are  not  governed  in  an 
effective and efficient manner.   

In the Commission's Communication of 8 June 2017 on the  mid-term review of the 
Capital  Markets  Union  Action  Plan,  it  was  emphasised  that  a  more  effective  and 
consistent supervision of financial markets and services is pivotal for the elimination 
of  regulatory  arbitrage  between  Member  States,  when  exercising  their  supervisory 
tasks, for the acceleration of market integration and for the creation of single market 
opportunities for financial entities and investors. 

Further  progress  in  supervisory  integration  is  therefore  particularly  urgent  to 
complete the Capital Markets Union. Ten years after the onset of the financial crisis 
and  the  establishment  of  the  new  supervisory  system,  financial  services  and  the 

Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 
establishing  a  European  Supervisory  Authority  (European  Banking  Authority),  amending  Decision 
No 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ L 331, 15.12.2010, p. 12). 
Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 
establishing a European Supervisory Authority (European Securities and Markets Authority), amending 
Decision  No  716/2009/EC  and  repealing  Commission  Decision  2009/77/EC  (OJ  L  331,  15.12.2010, 
p. 84). 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

33 

34 

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32 

   EN 

 
                                                 
 
(8) 

(9) 

(10) 

(11) 

(12) 

(13) 

(14) 

Capital  Markets  Union  will  be  increasingly  driven  by  two  major  developments: 
sustainable  finance  and  technological  innovation.  Both  have  the  potential  to 
transform  financial  services  and  our  system  of  financial  supervision  should  be 
equiped for them.  

It is therefore crucial  that the financial system  plays its full  part in meeting critical 
sustainability  challenges.  This  will  require  a  deep  re-engineering  of  the  financial 
system to which the ESAs should make an active contribution starting with reforms 
to  create  the  right  regulatory  and  supervisory  framework  to  mobilise  and  orient 
private capital flows towards sustainable investments. 

The  ESAs  should  play  an  important  role  in  identifying  and  reporting  risks  that 
environmental,  social  and  governance  factors  pose  to  financial  stability,  and  in 
rendering  financial  markets  activity  more  consistent  with  sustainability  objectives. 
The  ESAs  should  provide  guidance  on  how  sustainability  considerations  can  be 
effectively  embodied  in  relevant  EU  financial  legislation,  and  promote  coherent 
implementation of these provisions upon adoption. 

Technological  innovation  has  had  an  increasing  impact  on  the  financial  sector  and 
competent  authorities  have  therefore  taken  various  initiatives  to  deal  with  those 
technological developments. In order to promote better supervisory convergence and 
to exchange best practices between relevant authorities on the one hand, and between 
relevant authorities and financial institutions or financial market participants on the 
other  hand,  the  role  of  the  ESAs  with  regard  to  their  oversight  function  and 
supervisory coordination should be strengthened.. 

Technological  advancements  in  financial  markets  can  improve  financial  inclusion 
provide  access  to  finance,  enhance  market  integrity  and  operational  efficiency  and 
also lower barriers to entry in those markets. To the extent relevant for the applicable 
to 
substantive  rules, 
technological  innovation..  This  should  contribute  to  avoiding  that  Member  States 
develop divergent approaches in these matters. 

training  of  competent  authorities  should  also  extend 

A number of national authorities are not defined as competent authorities under the 
founding  regulations,  yet  they  are  empowered  to  ensure  the  application  of  Union 
legislation  in  the  area  of  financial  services  and  markets.    In  order  to  ensure 
consistent,  efficient  and  effective  supervisory  practices  within  the  ESFS,  it  is 
necessary  to  define  them  as  such.  This  would  allow  the  ESAs  notably  to  issue 
guidelines and recommendation to those national authorities.  

In  order  to  ensure  appropriate  safeguards  for  the  stakeholders'  interests  where  the 
ESAs exercise their competence to issue guidelines or recommendations, the various 
Stakeholder  Groups  should  be  able  to  issue  an  opinion  where  two  thirds  of  their 
members  consider  that  the  ESA  concerned  has  exceeded  its  competence.  In  that 
instance,  the  Commission  should  have  the  authority  to  require  the  ESA,  after  a 
proper assessment, to withdraw those guidelines or recommendations as appropriate.  

In  addition,  for  the  purpose  of  the  procedure  provided  for  in  Article  17  of  the 
founding  regulations  and  in  the  interest  of  proper  application  of  Union  law,  it  is 
appropriate  to  ease  and  speed  up  the  ESAs'  access  to  information.  They  should 
therefore be enabled to request information directly, via a duly justified and reasoned 
request, from all competent authorities concerned, financial institutions and financial 
market participants, even where those authorities, institutions or market participants 
have not themselves violated any provision of Union law. The ESAs should inform 

EN 

33 

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(15) 

(16) 

(17) 

(18) 

the  competent  authority  concerned  of  such  requests  and  that  competent  authority 
should assist the ESAs in collecting the requested information.  

A  harmonised  supervision  of  the  financial  sector  requires  a  consistent  approach 
among competent authorities. To that end, the activities of the competent authorities 
should be subject to regular and independent reviews by the ESAs, which should be 
supported by a review committee established by each of them. The ESAs should also 
develop  a  methodological  framework  for  such  reviews.  The  independent  reviews 
should  not  only  focus  on  the  convergence  of  supervisory  practices,  but  also  on  the 
capacity  of  competent  authorities  to  achieve  high  quality  supervisory  outcomes,  as 
well  as  on  the  independence  of  those  competent  authorities.  The  results  of  those 
reviews  should  be  published  to  encourage  compliance  and  increase  transparency, 
unless such publication would involve risks to financial stability. 

A  harmonised  supervision  of  the  financial  sector  also  requires  that  disagreements 
between  the  competent  authorities  of  different  Member  States  in  cross–border 
situations  are  settled  efficiently.    The  existing  rules  for  settling  such  disagreements 
are not fully satisfactory. They should therefore be adapted so as to be more easily 
applicable. 

Integral to the ESAs work on convergence of supervisory practices is the promotion 
of  a  Union  supervisory  culture.  However,  the  ESAs  are  not  equipped  with  all  the 
tools required to achieve this objective. It is necessary to enable the ESAs to set out 
the  general  supervisory  objectives  and  priorities  in  a  multiannual  Strategic 
Supervisory  Plan,  intended  to  assist  competent  authorities  in  identifying  and 
focussing on the most important areas of concern for EU-wide market integrity and 
financial stability, including with respect to prudential supervision of firms engaged 
in  cross-border  activities.  The  Strategic  Supervisory  Plan  should  be  risk-based  and 
take  into  account  general  economic  and  regulatory  orientations  for  supervisory 
actions as well as relevant micro-prudential trends, potential risks and vulnerabilities 
identified  by  the  ESAs  in  their  reviews  of  competent  authorities  and  from  Union-
wide and stress tests. The competent authorities should subsequently draw up annual 
work  programmes  to  implement  the  Strategic  Supervisory  Plan,  which  convert  the 
Union priorities and objectives into operational objectives for those authorities. The 
ESAs  should  be  empowered  to  review  the  implementation  of  the  annual  work 
programs  on  day-to-day  supervisio,n  including,  on  a  sample  basis,  supervisory 
measures taken in individual cases in order to ensure that the ESAs can achieve their 
objective of harmoising supervisory practices.   

The current supervisory practices of outsourcing, delegation and risks transfer (back-
to-back business or fronting) from one licensed entity to another entity vary from one 
Member  State  to  another.  Those  divergent  regulatory  approaches  carry  a  risk  of 
regulatory  arbitrage  across  Member  States  ("race  to  the  bottom").  Inefficient 
supervision  of  outsourced,  delegated  or  transferred  activities  exposes  the  Union  to 
financial  stability  risks.  Those  risks  are  particularly  acute  in  relation  to  supervised 
entities  outsourcing,  delegating  or  transferring  risk  to  third  countries  where 
supervisory  authorities  may  lack  the  necessary  tool  to  adequately  and  effectively 
supervise  material  activities  and  key  functions. ESAs  should  have  an  active  role  in 
promoting  supervisory  convergence  by  ensuring  a  common  understanding  and 
supervisory  practices  of  outsourcing,  risk  transfer  and  delegation  of  material 
activities and key functions in third countries, in accordance with Union law and in 
view  of  guidelines,  recommendations  and  opinions  that  the  ESAs  may  adopt.  The 
ESAs  should  therefore  have  the  necessary  powers  to  effectively  coordinate 

EN 

34 

   EN 

 
(19) 

(20) 

supervisory  actions  carried  out  by  national  supervisory  authorities  both  when 
authorising  or  registering  an  undertaking  and  as  part  of  an  ongoing  review  of 
supervisory practices. In performing this coordination role, ESAs should particularly 
focus  on  situations  that  may  lead  to  a  circumvention  of  the  rules  and  monitor 
financial institutions or financial market participants that intend to make an extensive 
use of outsourcing, delegation and risk transfer in third countries with the intention 
of  benefitting  from  the  EU  passport  while  essentially  performing  substantial 
activities or functions outside the Union  

Continued  financial  stability  requires  that  third-country  equivalence  decisions  that 
have been adopted by the Commission are monitored on an ongoing basis. The ESAs 
should therefore verify whether the criteria, on the basis of which the third-country 
equivalence  decisions  have  been  taken  and  any  conditions  set  out  therein,  are  still 
fulfilled. In  addition,  the  ESAs  should  monitor  both  the  regulatory  and supervisory 
developments and the enforcement practices in those third countries. In that context, 
the  ESAs  should  also  develop  administrative  arrangements  with  third-country 
competent  authorities  to  obtain  information  for  monitoring  purposes  and  for 
coordinating  supervisory  activities.  This  enhanced  supervisory  regime  will  ensure 
that  third  countries/  equivalence  is  more  transparent,  more  predictable  for  the  third 
countries concerned and more consistent across all sectors. 

The  collection  and  gathering  of  accurate  and  complete  information  by  the  ESAs  is 
essential  to  the  carrying  out  of  their  tasks  and  functions  and  to  achieving  their 
objectives.  In  order  to  avoid  duplication  of  reporting  obligations  for  financial 
institutions and financial market participants, that information should be provided by 
the  relevant  competent  authorities  or  national  supervisory  authorities  which  are 
closest to the financial markets and institutions. However, the ESAs should be able to 
address  a  duly  justified  and  reasoned  request  for  information  directly  to  financial 
institutions or financial market participants where a competent authority does not or 
cannot  provide  that  information  within  a  specified  period.    Furthermore,  it  is 
necessary for the purposes of ensuring the effectiveness of the ESAs' right to collect 
information  that  they  should  have  the  possibility  to  impose  periodic  penalty 
payments or fines on those financial institutions or financial market participants that 
do  not  comply  accurately,  completely  or  in  a  timely  manner  with  a  request  or 
decision  to  submit  information.  The  right  of  the  financial  institution  or  financial 
market  participant  concerned  to  be  heard  by  the  ESAs  should  be  guaranteed 
explicitly.  

(21)  Within  the  founding  regulations  of  the  ESAs  it  was  provided  that  competent 
authorities  would  play  a  key  role  within  their  governance  structure.  It  was  also 
specified  in  those  regulations  that  in  order  to  prevent  conflicts  of  interest,  the 
members  of  the  Board  of  Supervisors  and  of  the  Management  Board  would  act 
independently and in the sole interest of the Union.  The initial governance structure 
of the ESAs did not however provide sufficient safeguards to ensure that conflicts of 
interest  be  entirely  avoided  which  can  affect  the  ESAs'  ability  to  take  all  the 
decisions  necessary in  the  area  of  supervisory  convergence and  to  ensure  that  their 
decisions  take  the  broader  Union  interests  fully  into  account.  Therefore  in  order  to 
ensure the effectiveness and efficiency of the decision making process of the ESAs, 
the allocation of the decision making powers within the ESAs should be redefined. 

(22)  Moreover, the Union dimension in the decision-making process within the Board of 
Supervisors  should  be  enhanced  by  including  independent  full  time  members  as 
members of the Board, who are not subject to possible conflicts of interest. Decision-

EN 

35 

   EN 

 
making  powers  on  issues  of  a  regulatory  nature  and  on  direct  supervision  should 
remain  fully  with  the  competence  of  the  Board  of  Supervisors.  The  Management 
Board  should  be  transformed  into  an  Executive  Board  composed  of  full  time 
members and should decide on certain non-regulatory issues, including independent 
reviews  of  competent  authorities,  dispute  settlements,  breach  of  Union  law,  the 
Strategic Supervisory Plan, monitoring of outsourcing, delegation and risk transfers 
to  third  countries,  stress  tests  and  requests  for  information.  The  Executive  Board 
should  also  examine  and  prepare  all  decisions  to  be  taken  by  the  Board  of 
Supervisors. Moreover, the position and role of the Chairperson should be enhanced 
by  empowering  the  Chairperson  with  formal  tasks  and  with  a  casting  vote  in  the 
Executive Board. Finally, the Union dimension in the ESAs governance should also 
be  strengthened  by  amending  the  selection  procedure  of  the  Chairperson  and  the 
members  of  the  Executive  Board to  one  which will include  the  role  of the  Council 
and  the  European  Parliament.  The  Executive  Board  should  have  a  balanced 
composition. 

In  order  to  provide  for  an  appropriate  level  of  expertise  and  accountability,  the 
Chairperson  and  the  members  of  the  Executive  Board  should  be  appointed  on  the 
basis  of  merit,  skills,  knowledge  of  clearing,  post-trading  and  financial  matters,  as 
well as experience relevant to the financial supervision. To ensure transparency and 
democratic  control,  as  well  as  to  safeguard  the  rights  of  the  Union  institutions,  the 
Chairperson and the members of the Executive Board should be chosen on the basis 
of  an  open  selection  procedure.  The  Commission  should  establish  a  shortlist  and 
submit  that  shortlist  to  the  European  Parliament  for  approval.  Following  that 
approval,  the  Council  should  adopt  a  decision  to  appoint  the  members  of  the 
Executive Board. The Chairperson and the full time members of the Executive Board 
should  be  accountable  to  the  European  Parliament  and  to  the  Council  for  any 
decisions taken on the basis of the founding Regulations. 

To  ensure  a  more  efficient  allocation  of  operational  tasks  on  the  one  hand  and  the 
management  of  administrative  day-to-day  activities  on  the  other  hand,  the  current 
tasks of the Executive Director of each of the ESAs should be assumed by one of the 
members  of  the  Executive  Board,  who  should  be  selected  on  the  basis  of  those 
particular tasks. 

It is appropriate that financial institutions and financial market participants contribute 
to  the  financing  of  the  activities  of  the  ESAs,  because  the  overall  objective  of  the 
activities  of  the  ESAs  is  to  contribute  to  financial  stability  and,  through  the 
avoidance  of  distortions  of  competition,  the  proper  operation  of  the  single  market. 
The  activities  of  the  ESAs  benefit  all  financial  institutions  and  financial  market 
participants,  whether  or  not  they  operate  across  borders.  The  ESAs  contribute  to 
them conducting their business in a stable environment and on a level playing field. 
Financial  institutions  and  financial  market  participants  that  are  not  directly 
supervised  by  the  ESA’s  should  therefore  also  contribute  to  the  funding  of  those 
activities  of  the  ESAs  from  which  they  benefit.  In  addition,  the  ESAs  should 
however  also  receive  fees  paid  by  the  financial  institutions  and  financial  market 
participants that are directly supervised by them. 

(23) 

(24) 

(25) 

(26)  Within  each  category  of  financial  institutions  and  financial  market  participants,  the 
level  of  contributions  should  take into  account  how  much  each  financial  institution 
and  financial  market  participant  benefits  from  the  activities  of  the  ESAs. 
Accordingly,  individual  contributions  by  financial  institutions  and  financial  market 
participants should be determined by reference to  their size in  order to reflect their 

EN 

36 

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(27) 

(28) 

(29) 

(30) 

importance in the relevant market. The collection of very small contributions should 
be  subject  to  a  de  minimis  threshold,  to  ensure  that  their  collection  is  economical 
whilst  at  the  same  time  ensuring  that  larger  firms  are  not  required  to  contribute 
disproportionately. 

In  order  to  determine  how  the  annual  contributions  by  individual  financial 
institutions and financial market participants are to be calculated, power to adopt acts 
in accordance with Article 290 of the Treaty should be delegated to the Commission.  
The delegated acts will establish a methodology to allocate the estimated expenditure 
to  categories of financial  institutions or  financial  market participants and criteria to 
determine  the  level  of  individual  contributions  based  on  size.    It  is  of  particular 
importance  that  the  Commission  carry  out  appropriate  consultations  during  its 
preparatory work, including at expert level, and that those consultations be conducted 
in  accordance  with  the  principles  laid  down  in  the  Interinstitutional  Agreement  on 
Better Law-Making of 13 April 2016. In particular, to ensure equal participation in 
the  preparation  of  delegated  acts,  the  European Parliament  and  the  Council  receive 
all  documents  at  the  same  time  as  Member  States'  experts,  and  their  experts 
systematically  have  access  to  meetings  of  Commission  expert  groups  dealing  with 
the preparation of delegated acts. 

To  preserve  the  confidentiality  of  the  work  of  the  ESAs,  the  requirements  of 
professional  secrecy  should  also  apply  to  any  person  who  provides  any  service, 
directly  or  indirectly,  permanently  or  occasionally,  related  to  the  tasks  of  the  ESA 
concerned. 

Regulations (EC) 1093/2010, 1094/2010 and 1095/2010 as well as sectoral financial 
services legislation require the ESAs to  seek effective administrative  arrangements, 
involving the exchange of information with third-country supervisors.  The need for 
effective  cooperation  and  information  exchange  should  become  all  the  more 
important  when,  pursuant  to  this  amending  Regulation,  some  of  the  ESAs  assume 
additional,  broader  responsibilities  in  relation  to  the  supervision  of  non-EU  entities 
and activities. Where, in this context, the ESAs process personal data, including by 
transferring  such  data  outside  the  Union,  they  are  bound  by  the  requirements  of 
Regulation (EU) No 2018/XXX (Data Protection Regulation for EU institutions and 
Bodies).  In  the  absence  of  an  adequacy  decision  or  of  appropriate  safeguards,  for 
example provided for in administrative arrangements within the meaning of Article 
49(3)  of  the  Data  Protection  Regulation  for  EU  institutions  and  Bodies,  the  ESAs 
may  exchange  personal  data  with  third-country  authorities  in  accordance  with  and 
under  the  conditions  of  the  public  interest  derogation  as  set  out  in  Article  51(1)(d) 
thereof,  which  notably  applies  to  cases  of  international  data  exchange  between 
financial supervisory authorities. 

It  is  essential  that  the  EBA  decision  making  procedures  provide  appropriate 
safeguards  for  Member  States  not  participating  in  the  banking  union,  whilst  at  the 
same  time  enabling  the  EBA  to  continue  to  take  decisions  in  an  effective  manner 
when  the  number  of  non-participating  Member  States  reduces.  The  current  voting 
rules requiring that a majority of participating member States and a majority of non-
participating  Member  States  for  EBA  take  a  decision  should  be  maintained. 
However,  additional  safeguards  are  required  in  order  to  avoid  a  scenario  whereby 
decisions  cannot  be  taken  only  because  of  absences  of  member  State  competent 
authorities  and  in  order  to  ensure  that  as  many  national  competent  authorities  as 
possible are present when voting to end up with a strong and legitimate vote. 

EN 

37 

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(31) 

The founding regulations of the ESAs provide that the ESAs, in cooperation with the 
ESRB,  should  initiate  and  coordinate  Union-wide  stress  tests  in  order  to  assess  the 
resilience of financial institutions or financial market participants to adverse market 
developments.  It should also ensure that a consistent methodology is applied, in as 
much as possible, at national level to such tests.  To ensure a proper balance between 
competent  authorities'  supervisory  concerns  and  Union  wide  considerations,  it  is 
appropriate to transfer to the Executive Board of the ESAs the power to decide on the 
initiation and coordination of stress tests. It should also be clarified, in respect of all 
of the ESAs, that the professional secrecy obligations of competent authorities shall 
not  prevent  competent  authorities  from  transmitting  the  results  of  stress  test  to  the 
ESAs for the purpose of publication. 

(32) 

To  ensure  a  high  level  of  convergence  in  the  area  of  supervision  and  approval  of 
internal  models,  EIOPA  should  be  able  to  issue  opinions  to  remedy  potential 
inconsistencies and assist competent authorities in reaching agreement related to the 
approval  of  internal  models.  Competent  authorities  should  take  their  decisions  in 
conformity  with  these  opinions,  or  alternatively  explain  why  there  are  not 
conforming to the opinion. 

(33)  With  the  ever  increasing  cross-border  dimension  of  trading  activities  and,  in 
particular,  of  the  activities  of  certain  investment  firms  which,  by  their  systemic 
nature,  may  have  cross-border  effects  impacting  financial  stability,  ESMA  should 
have  an  enhanced  coordination  role  in  recommending  competent  authorities  to 
initiate corresponding investigations. Furthermore, it should be able to facilitate the 
exchange  of  information  relevant  for  those  investigations,  where  ESMA  has 
reasonable  grounds  to  suspect  that  activity  with  significant  cross-border  effects  is 
taking place that threatens the orderly functioning and integrity of financial markets 
or  the  financial  stability  in  the  Union.  For  this  purpose,  ESMA  should  maintain  a 
data storage facility to collect from, and disseminate between, competent authorities, 
all relevant information 

(34) 

The  main  objectives  of  Regulation  (EU)  No  345/2013  of  the  European  Parliament 
and of the Council35, Regulation (EU) No 346/2013 of the European Parliament and 
of  the  Council36  and  Regulation  (EU)  2015/760  of  the  European  Parliament  and  of 
the  Council37  is  boosting  jobs  and  growth,  SME  financing,  social  and  long-term 
investments, as well as promoting an EU investment culture. However, the divergent 
use  by  national  competent  authorities  of 
their  divergent 
administrative practices, and the differences in supervisory cultures and performance 
remain  despite  the  harmonisation  achieved  by  the  three  Regulations.  Those 
divergences  hinder  the necessary  level  playing  field  among  managers  of  qualifying 
venture  capital  funds,  qualifying  social  entrepreneurship  funds  and  long-term 
investment  funds  in  different  Member  States  increasing,  at  the  same  time,  the 
transaction and operational costs of those managers. 

their  discretion, 

(35) 

To  lower  transaction  and  operational  costs,  to  strengthen  investor  choice  and  to 
increase legal certainty, it is appropriate to transfer the supervisory powers, including 

35  Regulation (EU) No 345/2013 of the European Parliament and of the Council of 17 April 2013 on European 

venture capital funds (OJ L 115, 25.4.2013, p. 1). 

36  Regulation (EU) No 346/2013 of the European Parliament and of the Council of 17 April 2013 on European 

social entrepreneurship funds (OJ L 115, 25.4.2013, p. 18). 

37  Regulation  (EU)  2015/760  of  the  European  Parliament  and  of  the  Council  of  29  April  2015  on  European 

long-term investment funds (OJ L 123/98, 19.5.2015, p. 98). 

EN 

38 

   EN 

 
                                                 
(36) 

(37) 

(38) 

the  granting  and  withdrawal  of  registrations  and  authorisations,  for  managers  of 
qualifying venture capital funds and those funds as referred to in Regulation (EU) No 
345/2013,  managers  of  qualifying  social  entrepreneurship  funds  or  those  funds  as 
referred  to  in  Regulation  (EU)  No  346/2013  and  European  long-term  investment 
funds as referred to in Regulation (EU) 2015/760, from the competent authorities to 
ESMA. For that purpose, ESMA should be able to conduct investigations and on-site 
inspections and to impose penalties or periodic penalty payments to compel persons 
to put an end to an infringement, to supply complete and correct information required 
by ESMA or to submit to an investigation or an on-site inspection.  

Regulation (EU) 2015/760 of the European Parliament and of the Council of 29 April 
2015  on  European  long-term  investment  funds  lays  down  uniform  requirements 
which  must  be  met  by  long-term  funds  in  order  to  be  authorised  as  an  ‘ELTIF’. 
Regulation  (EU)  2015/760  lays  down  rules  on  qualifying  investments,  qualifying 
portfolio  undertakings,  concentration  rules,  and  eligible  investors.  The  rules  also 
define  the  supervisory  powers,  including  requirements  for  authorizations  and 
ongoing  supervision.  Whilst  maintaining  the  prudential  rules  in  Regulation  (EU) 
2015/760,  this  Regulation  confers  supervisory  powers,  including  authorization, 
ongoing  supervision  and  withdrawals  of  authorisations,  on  ESMA.  This  regulation 
entrusts ESMA with the drawing up of draft regulatory technical standards which do 
not  involve  policy  choices  for  submission  to  the  Commission,  so  that  the  legal 
obligations and the scope of ESMA's discretion under Regulation (EU) 2015/760 are 
sufficiently  clear.  Similar  changes  have  been  made  to  Regulations  (EU)  345/2013 
and 346/2013 to confer supervisory powers on ESMA. 

In  order  to  effectively  exercise  its  supervisory  powers  with  respect  to  qualifying 
venture  capital  funds,  qualifying  social  entrepreneurship  funds  and  European  long-
term  investment  funds  and  their  managers,  ESMA  should  be  able  to  conduct 
investigations  and  on-site  inspections.  To  support  ESMA's  oversight  capabilities, 
ESMA should be granted powers to impose penalties or periodic penalty payments to 
compel  persons  to  put  an  end  to  an  infringement,  to  supply  complete  and  correct 
information  required  by  ESMA  or  to  submit  to  an  investigation  or  an  on-site 
inspection.  This  Regulation  should  therefore  clearly  define  the  boundaries  of  such 
administrative sanctions or other administrative measures which should be effective, 
proportionate and dissuasive and ensure a common approach and a deterrent effect. 
ESMA's  investigatory  and  enforcement  activities  should  rely  on  the  support  of 
national  authorities  where  needed  and  required.  ESMA  should  be  empowered  to 
delegate  certain  of  these  functions  can  still  be  delegated  back  to  the  national 
competent authorities 

Article  40  of  Regulation  (EU)  No  600/2014  granted  ESMA  with  temporary 
intervention  powers,  which  allow  ESMA  under  certain  conditions,  to  temporarily 
prohibit or restrict in the Union the marketing, distribution or sale of certain financial 
instruments  or  financial  instruments  with  certain  specified  features,  or  a  type  of 
financial  activity  or  practice.  It  is  explicit  that  these  product  intervention  powers 
under Regulation (EU) No 600/2014 apply to investment firms and credit institutions 
involved in marketing, distribution or sale of financial instruments, including units in 
collective investment undertakings. Since units in collective investment undertakings 
may  also  be  directly  marketed,  distributed  or  sold  by  management  companies  of 
undertakings  for  collective  investment  in  transferable  securities  and  investment 
companies  authorised  in  accordance  with  Directive  2009/65/EC  of  the  European 
Parliament and of the Council and managers of alternative investment funds (AIFMs) 

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39 

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(39) 

(40) 

(41) 

(42) 

(43) 

authorised in accordance with Directive 2011/61/EU of the European Parliament and 
of the Council, in the interest of enhancing legal certainty it is necessary to make it 
explicit  that  the  above-mentioned  product  intervention  powers  under  Regulation 
(EU)  No  600/2014  also  apply  in  respect  of  management  companies  of  UCITS  and 
UCITS investment companies, as well as to AIFMs. 

In strictly defined and exceptional cases, ESMA may use its intervention powers to 
restrict or prohibit marketing, sale or distribution of units or shares in UCITS or AIFs 
also  by  their  managers.  This  would  be  appropriate  when  the  proposed  action 
addresses  a  significant  investor  protection  concern  or  a  threat  to  the  orderly 
functioning  and  integrity  of  financial  markets  or  to  the  stability  or  part  of  the 
financial  system  in  the  Union;  regulatory  requirements  under  Union  law  that  are 
applicable  to  the  relevant  financial  instrument  or  activity  do  not  address  the  threat; 
and a competent authority or competent authorities have not taken action to address 
the threat or the actions that have been taken do not adequately address the threat 

Inconsistencies in the quality, formatting, reliability and cost of trading data have a 
detrimental  effect  on  transparency,  investor  protection  and  market  efficiency.  In 
order  to  enhance  the  monitoring  and  reconstruction  of  trading  data,  to  improve  the 
consistency  and  quality  of  those  data  and  their  availability  and  accessibility  at 
reasonable  cost  throughout  the  Union  for  the  relevant  trading  venues,  Directive 
2014/65/EU introduced a new legal regime for data reporting services, including  the 
authorisation and supervision of data reporting services providers. 

The  quality  of  trading  data  and  of  the  processing  and  provisioning  those  data, 
including cross-border data procession and provisioning, is of paramount importance 
to achieve the main objective of Regulation (EU) No 600/2014 of strengthening the 
transparency of financial markets. The provision of core data services are therefore 
pivotal for users to be able to obtain the desired overview of trading activity across 
Union  financial  markets  and  for  competent  authorities  to  receive  accurate  and 
comprehensive information on relevant transactions.  

In addition, trading data is an increasingly essential tool for effective enforcement of 
requirements stemming from Regulation (EU) No 600/2014. Given the cross-border 
dimension of data handling, data quality and the necessity to achieve economies of 
scale, and to avoid the adverse impact of potential divergences on both data quality 
and  the  tasks  of  data  reporting  service  providers,  it  is  beneficial  and  justified  to 
transfer  authorisation  and  supervisory  powers  in  relation  to  data  reporting  service 
providers  from  competent  authorities  to  ESMA  and  specify  those  powers  in 
Regulation  (EU)  No  600/2014  enabling,  at  the  same  time,  the  consolidation  of  the 
benefits arising from pooling data-related competences within ESMA..  

Retail  investors  should  be  adequately  informed  about  potential  risks  when  they 
decide to invest in a financial instrument.  The legal framework of the Union aims at 
reducing  the  risk  of  misselling  where  retail  investors  are  sold  financial  products 
which do not fit their needs or expectations. To that end, Directive 2014/65/EU and 
Regulation  (EU)  No  600/2014  enhance  organisational  and  conduct  of  business 
requirements to ensure that investment firms act in the best interests of their clients. 
Those requirements include enhanced risk disclosure to clients, better assessment of 
suitability  of  products  recommended  as  well as  an  obligation  to  distribute  financial 
instruments  to  the  identified  target  market,  taking  into  account  factors  such  as  the 
solvency of issuers. ESMA should make full use of its powers to ensure supervisory 

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40 

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(44) 

(45) 

(46) 

(47) 

(48) 

convergence  and  support  national  authorities  in  achieving  a  high  level  of  investor 
protection and effective oversight of risks associated with financial products. 

It  is  important  to  ensure  effective  and  efficient  submissions,  compilation,  analysis 
and  publication  of  data  for  the  purposes  of  calculations  for  determining  the 
requirements for the pre-and post-trade transparency and trading obligation regimes, 
as well as for the purposes of reference data in accordance with Regulation (EU) No 
600/2014 and Regulation (EU) No 596/201438. ESMA should therefore be conferred 
competences to undertake direct data gathering from market participants in relation 
to  pre-  and  post-trade  transparency  requirements,  as  well  as  well  as  their 
authorisation and oversight of data reporting services providers.  

Granting those competences to ESMA allows for a centrally managed authorisation 
and  oversight,  which  would  avoid  the  current  situation  where  multiple  trading 
venues,  systematic  internalisers,  APAs  and  CTPs  are  required  to  provide  multiple 
competent  authorities  with  data  which  are  only  then  provided  to  ESMA.  Such  a 
centrally  managed  system  should  be  highly  beneficial  to  the  market  participants  in 
terms of higher data transparency, investor protection and market efficiency. 

The conferral of data gathering powers, authorisation and oversight from competent 
authorities to ESMA is  also instrumental to other tasks ESMA is performing under 
Regulation  (EU)  No  600/2014,  such  as  market  monitoring,  ESMA's  temporary 
intervention  powers  and  position  management  powers,  as  well  as  ensuring  the 
consistent compliance with pre-trade and post-trade transparency requirements.. 

For  ESMA  to  exercise  its  supervisory  powers  effectively  within  the  area  of  data 
processing and provision, ESMA should be able to conduct investigations and on-site 
inspections. ESMA should be able to impose penalties or periodic penalty payments 
to compel data reporting service providers to put an end to an infringement, to supply 
complete and correct information required by ESMA or to submit to an investigation 
or  an  on-site 
impose  administrative  sanctions  or  other 
administrative measures where it finds that a person has committed, intentionally or 
negligently, an infringement of Regulation (EU) No 600/2014. 

inspection  and 

to 

Financial  products  using  critical  benchmarks  are  available  in  all  Member  States. 
Those benchmarks are therefore of crucial importance for the functioning of financial 
markets and financial stability in the Union. The supervision of a critical benchmark 
should  therefore  take  a  holistic  view  of  potential  impacts,  not  only  in  the  Member 
State where the administrator is located and the Member States where its contributors 
are  located,  but  across  the  entire  Union.  It  is  hence  appropriate  that  critical 
benchmarks are supervised at Union level by ESMA. To avoid duplication of tasks, 
administrators of critical benchmarks should be supervised only by ESMA, including 
any non-critical benchmarks they might administer. 

(49)  Where,  however,  a  benchmark  is  of  critical  importance  only  in  one  Member  State 
closer market proximity of the competent authority of that Member State might make 
it  appropriate  for  ESMA  to  delegate,  entirely  or  in  parts,  the  supervision  of  that 
benchmark to the competent authority of the Member State where the administrator 

38  Regulation  (EU) No  600/2014  and  Regulation  (EU)  No 596/2014  of  the  European  Parliament  and of  the 
Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of 
the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC (OJ L 
173, 12.6.2014, p. 1). 

EN 

41 

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(50) 

(51) 

(52) 

is  located,  provided  that  ESMA  has  obtained  the  prior  consent  of  that  competent 
authority for that purpose. 

As  administrators  of  and  contributors  to  critical  benchmarks  are  put  under  stricter 
requirements  than  administrators  of  and  contributors  to  other  benchmarks,  the 
designation  of  benchmarks  as  critical  benchmarks  should  be  undertaken  by  the 
Commission  or  ESMA  and  should  be  codified  by  the  Commission.  As  national 
competent authorities have best access to data on and information about benchmarks 
they supervise, they should notify the Commission or ESMA of benchmarks which, 
in their opinion, fulfil the criteria identifying critical benchmarks. . 

Colleges of supervisors for critical benchmarks  were  envisaged to contribute to the 
harmonised  application  of  rules  under  Regulation  (EU)  2016/1011  and  to  the 
convergence  of  supervisory  practices.  Because  ESMA  is  in  direct  contact  with  all 
national supervisors or is made up of those supervisors, those colleges of supervisors 
will no longer be needed. 

The  procedure  to  determine  the  Member  State  of  reference  for  benchmark 
administrators  located  in  third  countries  that  apply  for  recognition  in  the  Union  is 
cumbersome  and  time-consuming  for  both  applicants  and  national  competent 
authorities.  Applicants  might  try  to  influence  that  determination  in  the  hope  of 
supervisory  arbitrage,  as  might  other  benchmark  administrators  located  in  third 
countries  that  seek  access  to  the  Union  via  the  endorsement  regime.  Those 
benchmark  administrators  might  choose  their  legal  representative  strategically  in  a 
Member  State  where  they  consider  supervision  less  strict.  A  harmonised  approach 
with  ESMA  as  competent  authority  for  third  country  benchmarks  and  their 
administrators avoids  these risks and the costs of determining the Member  State of 
reference  as  well  as  of  the  subsequent  supervision.  Furthermore,  this  role  as 
competent  authority  for  third  country  benchmarks  establishes  ESMA  as  the 
counterpart  in  the  Union  for  supervisors  in  third  countries,  making  cross-border 
cooperation more efficient and effective.  

(53)  Many if not the majority of benchmark administrators are banks or financial services 
firms  handling  client  money.  In  order  not  to  undermine  the  Union's  fight  against 
money laundering or terrorist financing it should be a precondition for the conclusion 
of  a  cooperation  arrangement  with  a  competent  authority  under  an  equivalence 
regime that the country of the competent authority is not on the list of jurisdictions 
which  have  strategic  deficiencies  in  their  national  anti-money  laundering  and 
countering  the  financing  of  terrorism  regimes  that  pose  significant  threats  to  the 
financial system of the Union. 

(54) 

(55) 

Almost  all  benchmarks  are  referenced  in  financial  products  which  are  available  in 
several  Member  States,  if  not  the  entire  Union.  To  detect  risks  related  to  the 
provision  of  benchmarks  that  might  no  longer  be  reliable  or  representative  of  the 
market or economic reality they intend to measure, competent authorities, including 
ESMA, should cooperate and assist each other where appropriate. 

Due  to  the  nature  of  the  securities  and  issuers  concerned,  certain  types  of 
prospectuses  drawn  up  according  to  Regulation  (EU)  2017/1129  involve  a  cross-
border dimension within the Union, a level of technical complexity and/or potential 
risks  of  regulatory  arbitrage  which  are  such  that  their  centralised  supervision  by 
ESMA  would  achieve  more  effective  and  efficient  results  than  their  supervision  at 
national  level.  Consolidating  at  the  level  of  ESMA  the  approval  of  such 
prospectuses, as well as related supervisory and enforcement activities at the level of 

EN 

42 

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(56) 

(57) 

(58) 

(59) 

ESMA, should reduce compliance costs and administrative barriers while enhancing 
the quality, consistency and efficiency of supervision in the Union. 

Private  placements  of  non-equity  securities  are  an  important  source  of  capital  for 
issuers  and  are  cross-border  by  nature.  While  a  private  placement  with  qualified 
investors  does  not  require  a  prospectus,  the  subsequent  admission  to  trading  of  the 
securities  on  a  regulated  market  is  subject  to  the  publication  of  a  prospectus  under 
Regulation  (EU)  2017/1129.  The  prospectus  regime  provides  issuers  with  the 
flexibility  to  choose  their  home  Member  State  where  the  denomination  by  unit  of 
non-equity  securities  is  in  excess  of  1000  EUR.  As  the  non-equity  securities 
concerned by private placements typically display a denomination by unit in excess 
of  1  000  EUR,  this  creates  a  potential  for  regulatory  forum  shopping.  Entrusting 
ESMA  with  approving  such  wholesale  non-equity  prospectuses  admitted  to  trading 
on a  regulated market or  its specific segment to  which  only qualified investors can 
have access to should achieve the double objective of ensuring a level playing field 
for  issuers  and  a  higher  degree  of  efficiency  by  significantly  streamlining  approval 
procedures.  

The  approval  of  prospectuses  relating  to  asset  backed  securities  as  well  as  the 
approval of prospectuses drawn up by specialist issuers, such as property companies, 
mineral  companies,  scientific  research  based  companies  or  shipping  companies, 
require  national  competent  authorities  to  have  highly  specialized  staff  available,  in 
most cases to deal with a fairly modest volume of prospectuses. Besides, certain non-
financial  information  to  be  disclosed  by  specialist  issuers  is  not  set  out  in  the 
delegated acts referred to in Article 13 of Regulation (EU) 2017/1129 but is left to 
the discretion of national competent authorities. This represents a potential source of 
inefficiency  and  regulatory  arbitrage.  Entrusting  ESMA  with  the  approval  of  these 
types of prospectuses should, on the one hand, ensure a level playing field in terms of 
information disclosure and eliminate the risk of regulatory arbitrage and, on the other 
hand, optimise the allocation of supervisory resources at Union level by establishing 
ESMA as the centre of expertise, thereby enhancing the efficiency of supervision of 
the prospectuses concerned. 

Third  country  issuers  which  draw  up  a  prospectus  in  accordance  with  Union  law 
enjoy  some  flexibility  as  regards  the  choice  of  their  home  Member  State  for  the 
purpose of prospectus approval, which carries the risk of creating supervisory forum 
shopping across Member States. Consolidating such approvals at the level of ESMA 
would  ensure  a  fully  harmonised  approach  vis-à-vis  third  country  issuers  and 
eliminate  the  potential  for  regulatory  arbitrage.  Third  country  issuers  will  thereby 
have ESMA as their single point of contact in the Union regardless of the Member 
State(s)  where  they  offer  their  securities  or  request  an  admission  to  trading.  This 
removes the need to determine a home Member State for such third country issuers. 

The equivalence regime for prospectuses drawn up under the national laws of third 
countries  should  be  amended  to  provide  that  the  equivalence  assessment  and  the 
subsequent  adoption  of  a  decision  by  the  Commission  are  based  not  only  on  the 
information requirements of the national laws of such third countries, but also on the 
existence of a framework for the scrutiny and approval of the prospectus by the third 
country  supervisor,  including  its  supplements,  where  applicable,  and  effective 
supervision and enforcement of the offers and admissions under such prospectus. In 
order  to  be  consistent  with  the  approach  set  out  by  the  Commission  in  its  Staff 
Working  Document  'EU  equivalence  decisions  in  financial  services  policy:  an 
assessment'  (SWD(2017)  102  final),  the  Commission  should  be  able  to  subject  its 

EN 

43 

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equivalence  decision  to  additional  conditions  with  a  view  to  protecting  market 
integrity within the Union, and promoting the internal market for financial services 
as  well  as  common  values  and  shared  regulatory  objectives  at  international  level. 
Such conditions may consist in a requirement for the third country to provide for an 
effective equivalent  system for the recognition of prospectuses  drawn up according 
to  Regulation  (EU)  No  2017/1129  or  the  ability  of  ESMA  to  cooperate  with  the 
relevant third country supervisor in order to monitor the rules of the third country on 
an ongoing basis. 

(60)  Where  the  legal  and  supervisory  arrangements  of  a  third  country  relating  to 
prospectuses drawn up in accordance with the national law of that third country have 
been declared equivalent by the Commission, and where an appropriate cooperation 
arrangement  has  been  concluded  between  ESMA  and  the  supervisory  authority  of 
that third country, any prospectus approved by the supervisory authority of that third 
country  which  is  used  in  the  Union  for  an  offer  of  securities  to  the  public  or  an 
admission to trading on a regulated market should be filed with ESMA and the rules 
for determining the home Member State should be disapplied. 

(61) 

(62) 

(63) 

As the equivalence regime provided for in Regulation (EU) 2017/1129 requires  that 
competent  authorities  and  ESMA  rely  on  third  country  supervisors  with  regard  to 
offers  and  admissions  to  trading  taking  place  in  the  Union  on  the  basis  of  a 
prospectus  drawn  up  under  third-country  rules,  those  competent  authorities  and 
ESMA also need to be confident that the prevention of the use of the financial system 
for the purposes of money laundering and terrorist financing is ensured in the third 
country concerned. For that purpose, and also in order not to undermine the Union's 
fight against money laundering and/or terrorist financing, it should be a precondition 
for  a  conclusion  by  ESMA  of  a  cooperation  arrangement  with  a  third  country 
supervisor  under  the  equivalence  regime  provided  by  Regulation  (EU)  2017/1129 
that the third country is not included on the list of jurisdictions which are declared as 
having strategic deficiencies in their national anti-money laundering and countering 
the financing of terrorism regimes that pose significant threats to the financial system 
of the Union. 

ESMA  should  be  empowered  to  impose  administrative  sanctions  or  take  other 
administrative measures for infringements of Regulation (EU) No 2017/1129 related 
to the specific types of prospectuses for which approval is conferred to ESMA. This 
Regulation  should  therefore  clearly  define  the  boundaries  of  such  administrative 
sanctions or other administrative measures which should be effective, proportionate 
and dissuasive. 

The  supervision  of  advertisements  related  to  those  prospectuses  whose  approval  is 
conferred  to  ESMA  should  also  be  transferred  to  ESMA.  ESMA  should  have  the 
option  to  exercise  control  over  the  compliance  of  those  advertisements.  However 
such control should always be performed by ESMA in relation to any advertisement 
disseminated in  a  Member State whose  competent  authority has  formally requested 
ESMA  to  make  use  of  its  controlling  power  whenever  a  prospectus  approved  by 
ESMA is used for an offer or admission in its jurisdiction. To perform such a task, 
ESMA  should  have  adequate  human  resources  with  sufficient  knowledge  of  the 
relevant national rules on consumer protection. 

(64) 

ESMA  should  scrutinise  and  approve  all  prospectuses  of  the  types  defined  by  this 
Regulation  that  are  submitted  for  approval  from  the  date  of  application  of  this 
Regulation. Prospectuses of the types defined by this Regulation that were approved 

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44 

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by  a  competent  authority  before  the  date  of  application  of  this  Regulation,  or 
submitted  for  approval  to  a  competent  authority  but  not  yet  approved  at  that  date, 
should  continue  to  be  supervised  by  that  competent  authority.  To  avoid  any 
confusion, such supervision should cover in particular the finalisation of the scrutiny 
and  approval  procedure  for  those  prospectuses  not  yet  approved,  as  well  as  all 
approval  and  notification  tasks  applying  to  related  supplements  and  final  terms, 
where applicable. 

(65) 

(66) 

It  is  appropriate  to  provide  for  a  reasonable  period  of  time  to  make  the  necessary 
arrangements  for  the  envisaged  governance  structure  and  the  delegated  and 
implementing  acts  in  order  to  enable  the  ESAs  and  the  other  parties  concerned  to 
apply the rules introduced by this Regulation. 

Regulation  (EU)  No  1093/2010);  Regulation  (EU)  No  1094/2010;  Regulation  (EU) 
No  1095/2010;  Regulation  (EU)  No  345/2013;  Regulation  (EU)  No  346/2013; 
Regulation  (EU)  No  600/2014  ;  Regulation  (EU)  No  2015/760;  Regulation  (EU) 
2016/2011; Regulation (EU) 2017/1129 should therefore be amended accordingly, 

HAVE ADOPTED THIS REGULATION: 

Article 1 
Amendments to Regulation (EU) No 1093/2010 

Regulation (EU) 1093/2010 is amended as follows: 

(1) 

Article 1 is amended as follows: 

(a)  paragraph 2 is replaced by the following: 

"2. The Authority shall act within the powers conferred by this Regulation and within 
the  scope  of  Directive  2002/87/EC,  Directive  2008/48/EC  of  the  European 
Parliament  and  of  the  Council*,  Regulation  (EU)  No  575/2013  of  the  European 
Parliament  and  of  the  Council,  Directive  2013/36/EU  of  the  European  Parliament 
and  of  the  Council,  Directive  2014/49/EU  of  the  European  Parliament  and  of  the 
Council**, Directive 2014/92/EU of the European Parliament and of the Council***, 
Regulation  (EU)  2015/847****  of  the  European  Parliament  and  the  Council*****, 
Directive  (EU)  2015/2366  of  the  European  Parliament  and  of  the  Council****** 
and,  to  the  extent  that  those  acts  apply  to  credit  and  financial  institutions  and  the 
competent  authorities  that  supervise  them,  within  the  relevant  parts  of  Directive 
2002/65/EC  and  Directive  (EU)  2015/849  of  the  European  Parliament  and  of  the 
Council*******,  including  all  directives,  regulations, and  decisions  based  on  those 
acts,  and  of  any  further  legally  binding  Union  act  which  confers  tasks  on  the 
Authority.  The Authority shall also act in accordance with Council Regulation (EU) 
No 1024/2013********. 

* Directive 2008/48/EC of the European Parliament and of the Council of 23 April 
2008  on  credit  agreements  for  consumers  and  repealing  Council  Directive 
87/102/EEC (OJ L 133, 22.5.2008, p. 66). 

**Directive 2014/49/EU of the European Parliament and of the Council of 16 April 
2014 on deposit guarantee schemes Text with EEA relevance (OJ L 173, 12.6.2014, 
p. 149). 

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45 

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***Directive 2014/92/EU of the European Parliament and of the Council of 23 July 
2014  on  the  comparability  of  fees  related  to  payment  accounts,  payment  account 
switching  and  access  to  payment  accounts  with  basic  features  Text  with  EEA 
relevance (OJ L 257, 28.8.2014, p. 214). 

****Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 
May 2015 on information accompanying transfers of funds and repealing Regulation 
(EC) No 1781/2006 (OJ L 141, 5.6.2015, p. 1). 

****Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 
November  2015  on  payment  services  in  the  internal  market,  amending  Directives 
2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and 
repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35). 

*****Directive (EU) 2015/849 of the European Parliament and of the Council of 20 
May  2015  on  the  prevention  of  the  use  of  the  financial  system  for  the  purposes  of 
money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of 
the European Parliament and of the Council, and repealing Directive 2005/60/EC of 
the European Parliament and of the Council and Commission Directive 2006/70/EC 
(OJ L 141, 5.6.2015, p. 73). 

Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring 
***** 
specific  tasks  on  the  European  Central  Bank  concerning  policies  relating  to  the 
prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63)."; 

(2) 

in Article 2 paragraph 5  the following subparagraph is inserted: 

"References in this Regulation to supervision include the activities of all competent 
authorities  to  be  carried  out  pursuant  to  the  legislative  acts  referred  to  in  Article 
1(2)."; 

(3) 

Article 4 is amended as follows: 

(a)  point (1) is replaced by the following: 

“(1)  financial  institutions’  means  any  undertaking  subject  to  regulation  and 
supervision pursuant to the Union acts referred to in Article 1(2);"; 

(b)  point (i) in point (2) is replaced by the following: 

"(i) competent authorities as defined in point (40) of Article 4(1) of Regulation 
(EU)  No  575/2013,  including  the  European  Central  Bank  with  regard  to 
matters  relating  to  the  tasks  conferred  on  it  by  Regulation  (EU)  No 
1024/2013;"; 

(c)  point (ii) of point (2) is replaced by the following: 

"(ii) with regard to Directives 2002/65/EC and (EU) 2015/849, the authorities 
and bodies competent for ensuring compliance with the requirements of those 
Directives by credit and financial institutions;"; 

(d)  point (iii) in point (2) is replaced by the following: 

"(iii)  with  regard  to  deposit  guarantee  schemes,  bodies  which  administer 
deposit guarantee schemes pursuant to Directive 2014/49/EU of the European 
Parliament and of the Council or, where the operation of the deposit guarantee 
scheme is administered by a private company, the public authority supervising 
those  schemes  pursuant  to  that  Directive,  and  relevant  administrative 
authorities as referred to in that Directive; and"; 

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(e) 

the following points (v) and (vi) of point (2) are added: 

"(v)  competent  authorities  as  referred  to  in  Directive  2014/17/EU;  in 
Regulation 2015/751, in Directive EU 2015/2366, in Directive 2009/110/EC, in 
Regulation (EC) No 924/2009 and in Regulation (EU) No 260/2012;  

(vi) bodies and authorities referred to in Article 20 of Directive 2008/48/EC."; 

(4) 

Article 6 is amended as follows: 

(a)  point (2) is replaced by the following: 

"(2) an Executive Board, which shall exercise the tasks set out in Article 47;"; 

(b)  point (4) is deleted; 

(5) 

Article 8 is amended as follows: 

(a)  paragraph 1 is amended as follows: 

(i) 

the following point (aa) is replaced: 

"(aa) to develop and maintain an up to date Union supervisory handbook 
on the supervision of financial institutions in the Union;"; 

(ii) 

the following point (ab) is inserted: 

"(ab) to develop and maintain up to date a Union resolution handbook on 
the  resolution  of  financial  institutions  in  the  Union  which  sets  out 
supervisory  best  practices  and  high  quality  methodologies  and 
processes;"; 

(iii) 

 points (e) and (f) are replaced by the following: 

"(e) to organise and conduct reviews of competent authorities and, in that 
context,  to  issue  guidelines  and  recommendations  and  to  identify  best 
practices,  with  a  view  to  strengthening  consistency  in  supervisory 
outcomes; 

(f)  to  monitor  and  assess  market  developments  in  the  area  of  its 
competence including where relevant, developments relating to trends in 
credit, in particular, to households and SMEs and in innovative financial 
services;";    

(iv)  point (h) is replaced by the following: 

"(h) to foster depositor, consumer and investor protection;"; 

(b) 

in paragraph 1a, the following point (c) is inserted: 

"(c)  take  account  of  technological  innovation,  innovative  and  sustainable  business  models, 
and the integration of environmental, social and governance related factors."; 

(c) 

in paragraph 2, the following are amended 

(i) point (ca) is inserted: 

"(ca) issue recommendations as laid down in Articles 29a and 31a;"; 

ii) point h) is replaced by the following: 

"(h)  collect  the  necessary  information  concerning  financial  institutions  as 

provided for in Article 35 and Article 35b"; 

(6) 

Article 9 is amended as follows: 

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(a)  paragraph 2 is replaced by the following: 

"2. The Authority shall monitor new and existing financial activities and may adopt 
guidelines and recommendations with a view to promoting the safety and soundness 
of markets, and convergence of regulatory and supervisory practices."; 

(b)  paragraph 4 is replaced by the following: 

"4. The Authority shall establish, as an integral part of the Authority, a Committee on 
financial  innovation,  which  brings  together  all  relevant  competent  authorities  and 
authorities  responsible  for  consumer  protection  with  a  view  to  achieving  a 
coordinated  approach  to  the  regulatory  and  supervisory  treatment  of  new  or 
innovative financial activities and providing advice for the Authority to present to the 
European  Parliament,  the  Council  and  the  Commission.  The  Authority  may  also 
include national data protection authorities as part of the Committee."; 

(7) 

Article 16 is amended as follows: 

(a) 

in paragraph 1, the following subparagraph is added: 

"The Authority may also address guidelines and recommendations to the authorities 
of Member States that are not defined as competent authorities under this Regulation 
but  that  are  empowered  to  ensure  the  application  of  the  acts  referred  to  in  Article 
1(2)."; 

(b)  paragraph 2 is replaced by the following: 

"2.  The  Authority  shall,  save  in  exceptional  circumstances,  conduct  open  public 
consultations regarding the guidelines and recommendations which it issues and shall 
analyse  the  related  potential  costs  and  benefits  of  issuing  such  guidelines  and 
recommendations. Those consultations and analyses shall be proportionate in relation 
to the scope, nature and impact of the guidelines or recommendations. The Authority 
shall,  save  in  exceptional  circumstances,  also  request  opinions  or  advice  from  the 
Banking Stakeholder Group referred to in Article 37."; 

(c) 

in paragraph 4, the following sentence is added: 

"The  report  shall  also  explain  how  the  Authority  has  justified  the  issue  of  its 
guidelines  and  recommendations  and  summarise 
the  feedback  from  public 
consultations on those guidelines and recommendations."; 

(d) 

the following paragraph 5 is added: 

"5.  Where two thirds of the members of the  Banking  Stakeholder  Group are  of the 
opinion that the Authority has exceeded its competence by issuing certain guidelines 
or recommendations, they may send a reasoned opinion to the Commission.  

The  Commission  shall  request  an  explanation  justifying  the  issuance  of  the 
guidelines  or  recommendations  concerned  from  the  Authority.  The  Commission 
shall,  on  receipt  of  the  explanation  from  the  Authority,  assess  the  scope  of  the 
guidelines  or  recommendations  in  view  of  the  Authority's  competence.  Where  the 
Commission  considers  that  the  Authority  has  exceeded  its  competence,  and  after 
having  given the Authority the opportunity  to state its views, the Commission  may 
adopt  an  implementing  decision  requiring  the  Authority  to  withdraw  the  guidelines 
or  recommendations  concerned  .The  decision  of  the  Commission  shall  be  made 
public."; 

(8) 

in paragraph 2 of Article 17 the following subparagraphs are added: 

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"Without prejudice to the powers laid down in Article 35, the Authority may address 
a  duly  justified  and  reasoned  request  for  information  directly  to  other  competent 
authorities or relevant financial institutions, whenever it is deemed necessary for the 
purpose of investigating an alleged breach or non-application of Union law. Where it 
is  addressed  to  financial  institutions,  the  reasoned  request  shall  explain  why  the 
information is necessary for the purposes of investigating an alleged breach or non-
application of Union law. 

The addressee of such a request shall provide the Authority with clear, accurate and 
complete information without undue delay.   

Where  a  request  for  information  has  been  addressed  to  a  financial  institution,  the 
Authority  shall  inform  the  relevant  competent  authorities  of  such  a  request.  The 
competent authorities shall assist the Authority in collecting the information, where 
so requested by the Authority."; 

(9) 

Article 19 is amended as follows: 

(a) 

 paragraph 1 is replaced by the following: 

"1.  In  cases  specified  in  the  Union  acts  referred  to  in  Article  1(2)  and  without 
prejudice  to  the  powers  laid  down  in  Article  17,  the  Authority  may  assist  the 
competent authorities in reaching an agreement in accordance with the procedure set 
out in paragraphs 2 to 4 in either of the following circumstances: 

(a) 
at  the  request  of  one  or  more  of  the  competent  authorities  concerned 
where  a  competent  authority  disagrees  with  the  procedure  or  content  of  an 
action, proposed action, or inactivity of another competent authority; 

on  its  own  initiative  where  on  the  basis  of  objective  criteria, 

(b) 
disagreement can be determined between competent authorities.  

In cases where the acts referred to in Article 1(2) require a joint decision to be taken 
by competent authorities, a disagreement shall be presumed in the absence of a joint 
decision being taken by those authorities within the time limits set out in those acts".; 

(b) 

the following paragraphs 1a and 1b are inserted: 

"1a.  The  competent  authorities  concerned  shall  in  the  following  cases  notify  the 
Authority without delay that an agreement has not been reached:  

(a) 
where  a  time  limit  for  reaching  an  agreement  between  competent 
authorities has been provided for in the Union acts, referred to in Article 1(2), 
and the earlier of the following occurs :  

(i) the time limit has expired; 

(ii)  one  or more  of  the  competent authorities  concerned  conclude  that a 
disagreement exists, on the basis of objective factors; 

(b) 
where  no  time  limit  for  reaching  an  agreement  between  competent 
authorities has been provided in the Union acts referred to in Article 1(2), and 
the earlier of the following occurs:  

(i) 
that a disagreement exists on the basis of objective factors; or  

one  or  more  of  the  competent  authorities  concerned  concludes 

two  months  have  elapsed  from  the  date  of  receipt  by  a 
(ii) 
competent  authority  of  a  request  from  another  competent  authority  to 
take  certain  action  in  order  to  comply  with  those  Union  acts  and  the 

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requested  authority  has  not  yet  adopted  a  decision  that  satisfies  the 
request. 

1b. The Chairperson shall assess whether the Authority should act in accordance with 
paragraph  1.  Where  the  intervention  is  at  the  Authority’s  own  initiative,  the 
Authority shall notify the competent authorities concerned of its decision regarding 
the intervention.  

Pending the Authority’s decision in accordance with the procedure set out in Article 
47(3a), in cases where the acts referred to in Article 1(2) require a joint decision to 
be  taken,  all  competent  authorities  involved  in  the  joint  decision  shall  defer  their 
individual  decisions.  Where  the  Authority  decides  to  act,  all  the    competent 
authorities  involved  in  the  joint  decision  shall  defer  their  decisions  until  the 
procedure set out in paragraphs 2 and 3 is concluded."; 

(c)  paragraph 3 is replaced by the following: 

"Where  the  competent  authorities  concerned  fail  to  reach  an  agreement  within  the 
conciliation  phase  referred  to  in  paragraph  2,  the  Authority  may  take  a  decision 
requiring those authorities to take specific action or to refrain from certain action in 
order  to  settle  the  matter,  in  order  to  ensure  compliance  with  Union  law.  The 
decision of the Authority shall be binding on the competent authorities concerned. . 
The  Authority’s  decision  may  require  competent  authorities  to  revoke  or  amend  a 
decision that they have adopted or to make use of the powers which they have under 
the relevant Union law."; 

(d) 

the following paragraph 3a is inserted: 

"3a. The Authority shall notify the competent authorities concerned of the conclusion 
of  the  procedures  under  paragraphs  2  and  3  together  with,  where  applicable  its 
decision taken under paragraph 3."; 

(e)  paragraph 4 is replaced by the following: 

"4. Without prejudice to the powers of the Commission pursuant to Article 258 of the 
Treaty,  where  a  competent  authority  does  not  comply  with  the  decision  of  the 
Authority,  and  thereby  fails  to  ensure  that  a  financial  institution  complies  with 
requirements directly applicable to it by virtue of the acts referred to in Article 1(2), 
the  Authority  may  adopt  an  individual  decision  addressed  to  a  financial  institution 
requiring  the  necessary  action  to  comply  with  its  obligations  under  Union  law, 
including the cessation of any practice."; 

(10) 

Article 22 is amended as follows 

(a) 

(b) 

, paragraph 1a is deleted; 

in paragraph 4, the second subparagraph is replaced by the following: 

"For  those  purposes,  the  Authority  may  use  the  powers  may  use  the  powers 
conferred on it under this Regulation, including Article 35 and 35b."; 

(11) 

Article 29 is amended as follows: 

(a)  paragraph 1 is amended as follows: 

(i) 

the following point (aa) is inserted: 

"(aa) issuing the Strategic Supervisory Plan in accordance with Article 29a;"; 

(ii)  point (b) is replaced by the following:  

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"(b) promoting an effective bilateral and multilateral exchange of information 
between  competent  authorities,  pertaining  to  all  relevant  issues,  including 
cyber  security  and  cyber-attacks  as  appropriate,  with  full  respect  for  the 
applicable  confidentiality  and  data  protection  provisions  provided  for  in  the 
relevant Union legislation;"; 

(iii) point (e) is replaced by the following: 

"(e)  establishing  sectoral  and  cross-sectoral  training  programmes,  including 
with respect to technological innovation, facilitating personnel exchanges and 
encouraging competent authorities to intensify the use of secondment schemes 
and other tools;"; 

(b) 

 in paragraph 2, the following subparagraph is added: 

"For  the  purpose  of establishing a common supervisory culture, the Authority shall 
develop and maintain an up-to-date Union supervisory handbook on the supervision 
of financial institutions in the Union, taking into account changing business practices 
and  business  models  of  financial  institutions.  The  Authority  shall  also  develop  and 
maintain  an  up-to-date  Union  resolution  handbook  on  the  resolution  of  financial 
institutions  in  the  Union.  Both  the  Union  supervisory  handbook  and  the  Union 
resolution  handbook  shall  set  out  supervisory  best  practices  and  shall  specify  high 
quality methodologies and processes.”; 

(12) 

the following Article 29a is inserted: 

"Article 29a 

Strategic Supervisory Plan 

1. Upon the entry into application of Regulation [XXX insert reference to amending 
Regulation] and every three years thereafter by 31 March, the Authority shall issue a 
recommendation  addressed  to  competent  authorities,  laying  down  supervisory 
strategic  objectives  and  priorities  ("Strategic  Supervisory  Plan")  and,  taking  into 
account any contributions from competent authorities,. The Authority shall transmit 
the  Strategic  Supervisory  Plan  for  information  to  the  European  Parliament,  the 
Council and the Commission and shall make it public on its website.  

The  Strategic  Supervisory  Plan  shall  identify  specific  priorities  for  supervisory 
activities in order to promote consistent, efficient and effective supervisory practices 
and  the  common,  uniform  and  consistent  application  of  Union  law  and  to  address 
relevant  micro-prudential  trends,  potential  risks  and  vulnerabilities  identified  in 
accordance with Article 32. 

2.  By  30  September  of  each  year,  each  competent  authority  shall  submit  a  draft 
annual work programme for the following year to the Authority for consideration and 
specifically  stipulate  how  that  draft  programme  is  aligned  with  the  Strategic 
Supervisory Plan.  

The draft annual work programme shall contain specific objectives and priorities for 
supervisory  activities  and  quantitative  and  qualitative  criteria  for  the  selection  of 
financial  institutions,  market  practices  and  behaviours  and  financial  markets  to  be 
examined  by  the  competent  authority  submitting  the  draft  annual  work  programme 
during the year covered by that programme. 

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3. The Authority shall assess the draft annual work programme and where there are 
material risks for not attaining the priorities set out in the Strategic Supervisory Plan, 
the  Authority  shall  issue  a  recommendation  to  the  relevant  competent  authority 
aiming  at  the  alignment  of  the  relevant  competent  authority's  annual  work 
programme with the Strategic Supervisory Plan.  

By  31  December  of  each  year,  the  competent  authorities  shall  adopt  their  annual 
work programmes taking into account any such recommendations. 

4.  By  31  March  of  each  year,  each  competent  authority  shall  transmit  to  the 
Authority a report on the implementation of the annual work programme.  

The report shall include at least the following information: 

a description of the supervisory activities and examinations of financial 
(a) 
institutions, market practices and behaviours and of financial markets, and on 
the  administrative  measures  and  sanctions 
imposed  against  financial 
institutions responsible for breaches of Union and national law; 

a  description  of  activities  that  were  carried  out  and  which  were  not 

(b) 
foreseen in the annual work programme; 

(c) 
an account of the activities provided for in the annual work programme 
that were not carried out and of the objectives of that programme that were not 
met,  as  well  as  the  reasons  for  the  failure  to  carry  out  those  activities  and  to 
reach those objectives. 

5. The Authority shall assess the implementation reports of the competent authorities. 
Where there are material risks of not attaining the priorities set out in the Strategic 
Supervisory  Plan  the  Authority  shall  issue  a  recommendation  to  each  competent 
authority  concerned  on  how  the  relevant  shortcomings  in  its  activities  can  be 
remedied.  

Based on the reports and its own assessment of risks, the Authority shall identify the 
activities  of  the  competent  authority  that  are  critical  to  fulfilling  the  Strategic 
Supervisory Plan and shall, as appropriate, conduct reviews under Article 30 of those 
activities. 

6.  The  Authority  shall  make  best  practices  identified  during  the  assessment  of  the 
annual work programmes publicly available."; 

(13) 

Article 30 is amended as follows: 

(a) 

the title of the article is replaced by the following: 

"Reviews of competent authorities"; 

(b) 

 paragraph 1 is replaced by the following: 

"1. The Authority shall periodically conduct reviews of some or all of the activities 
of competent authorities, to further strengthen consistency in supervisory outcomes. 
To that end, the Authority shall develop methods to allow for objective assessment 
and  comparison  between  the  competent  authorities  reviewed.  When  conducting 
reviews,  existing  information  and  evaluations  already  made  with  regard  to  the 
competent  authority  concerned, including  all  information  provided  to  the  Authority 
in accordance with Article 35, and any information from stakeholders shall be taken 
into account."; 

(c) 

 the following paragraph 1a is inserted: 

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"1a.  For  the  purposes  of  this  Article,  the  Authority  shall  establish  a  review 
committee,  exclusively  composed  of  staff  from  the  Authority.  The  Authority  may 
delegate certain tasks or decisions to the review committee."; 

(d) 

 paragraph 2 is amended as follows: 

(i) the introductory sentence is replaced by the following: 

"The review shall include an assessment of, but shall not be limited to:"; 

(ii)  point (a) is replaced by the following: 

"(a)  the  adequacy  of  resources,  the  degree  of  independence,  and  governance 
arrangements of the competent authority, with particular regard to the effective 
application  of  the  Union  acts  referred  to  in  Article  1(2)  and  the  capacity  to 
respond to market developments;"; 

(e) 

 paragraph 3 is replaced by the following: 

"3.  The  Authority  shall  produce  a  report  setting  out  the  results  of  the  review.  That 
report shall explain and indicate the follow-up measures that are foreseen as a result 
of the review. Those follow-up measures may be adopted in the form of guidelines 
and  recommendations  pursuant  to  Article  16  and  opinions  pursuant  to  Article 
29(1)(a).  

In accordance with Article 16(3), the competent authorities shall make every effort to 
comply  with  any  guidelines  and  recommendations  issued.  Where  competent 
authorities  do  not  take  action  to  address  the  follow-up  measures  indicated  in  the 
report, the Authority shall issue a follow-up report.  

When  developing  draft  regulatory  technical  standards  or  draft  implementing 
technical  standards  in  accordance  with  Articles  10  to  15,  or  guidelines  or 
recommendations  in  accordance  with  Article  16,  the  Authority  shall  take  into 
account the outcome of the review, along with any other information acquired by the 
Authority  in  carrying  out  its  tasks,  in  order  to  ensure  convergence  of  the  highest 
quality supervisory practices."; 

(f) 

 the following paragraph 3a is inserted: 

"3a. The Authority shall submit an opinion to the Commission where, having regard 
to the outcome of the review or to any other information acquired by the Authority in 
carrying out its tasks, it considers that further harmonisation of the rules applicable to 
financial institutions or competent authorities would be necessary."; 

(g) 

 paragraph 4 is replaced by the following: 

4.  The  Authority  shall  publish  the  reports  referred  to  in  paragraph  3  including  any 
follow-up  report  ,  unless  publication  would  involve  risks  to  the  stability  of  the 
financial  system.  The  competent  authority  that  is  subject  to  the  review  shall  be 
invited  to  comment  before  the  publication  of  any  report.  Those  comments  shall  be 
made publicly available unless publication would involve risks to the stability of the 
financial system."; 

(14) 

in Article 31 a paragraph is added: 

"Regarding  activity  of  competent  authorities  intended  to  facilitate  entry  into  the 
market  of  operators  or  products  relying  on  technological  innovation,  the  Authority 
shall  promote  supervisory  convergence,  in  particular  through  the  exchange  of 

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information  and  best  practices.  Where  appropriate,  the  Authority  may  adopt 
guidelines or recommendations in accordance with Article 16."; 

(15) 

the following Article 31a is inserted: 

"Article 31a 

Coordination on delegation and outsourcing of activities as well as of risk transfers 

1. 
The  Authority  shall  on  an  ongoing  basis  coordinate  supervisory  actions  of 
competent authorities with a view to promoting supervisory convergence in the fields 
of  delegation  and  outsourcing  of  activities  by  financial  institutions  as  well  as  in 
relation to risk transfers conducted by them, in accordance with paragraphs 2, 3, and 
4 and 5.  

2.  The  competent  authorities  shall  notify    the  Authority  where  they  intend  to  carry 
out  an  authorisation  or  registration  related  to  a  financial  institution  which  is  under 
supervision  of  the  competent  authority  concerned  in  accordance  with  the  acts 
referred  to  in  Article  1(2)  and  where  the  business  plan  of  the  financial  institution  
entails the outsourcing or delegation of a material part of its activities or any of the 
key  functions  or  the  risk  transfer  of  a  material  part  of  its  activities  into  third 
countries,  to  benefit  from  the  EU  passport  while  essentially  performing  substantial 
activities  or  functions  outside  the  Union.  The  notification  to  the  Authority  shall  be 
sufficiently detailed to allow for a proper assessment. by the Authority.  

Where  the  Authority  considers  it  necessary  to  issue  an  opinion  to  a  competent 
authority  regarding  the  non-compliance  of  an  authorisation  or  registration  notified 
pursuant to the first subparagraph with Union law or guidelines, recommendations or 
opinions  adopted  by  the  Authority,  the  Authority  shall  inform  that  competent 
authority  thereof  within  20  working  days  of  the  receipt  of  the  notification  by  that 
competent authority. In that case the competent authority concerned shall await the 
opinion of the Authority before carrying out the registration or authorisation.  

At the request of the Authority, the competent authority shall within 15 working days 
of  the  receipt  of  such  a  request  provide  information  related  to  its  decisions  to 
authorise  or  register  a  financial  institution  which  is  under  its  supervision  in 
accordance with the acts referred to in Article 1(2).  

The Authority shall issue the opinion, without prejudice to any time limits set out in 
Union law, at the latest within 2 months of the receipt of the notification pursuant to 
the first subparagraph.  

3.  A  financial  institution  shall  notify  the  competent  authority  of  the  outsourcing  or 
delegation of a material part of its activities or any of its key functions, and the risk 
transfer  of  a  material  part  of  its  activities,  to  another  entity  or  its  own  branch 
established  in  a  third  country.  The  competent  authority  concerned  shall  inform  the 
Authority of such notifications on a semi-annual basis.  

Without  prejudice  to  Article  35,  at  the  request  of  the  Authority,  the  competent 
authority shall provide information in relation to the outsourcing, delegation or risk 
transfer arrangements by financial institutions. 

The Authority shall monitor whether the competent authorities concerned verify that 
outsourcing,  delegation  or  risk  transfer  arrangements  referred  to  in  the  first 
subparagraph are concluded in accordance with Union law, comply with  guidelines, 

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recommendations  or  opinions  from  the  Authority  and  do  not  prevent  effective 
supervision by the competent authorities and enforcement in a third country. 

4. The Authority may issue recommendations to the competent authority concerned, 
including  recommendations  to  review  a  decision  or  to  withdraw  an  authorisation. 
Where  the  competent  authority  concerned  does  not  follow  the  recommendations  of 
the Authority within 15 working days, the competent authority shall state the reasons 
and  the  Authority  shall  make  its  recommendation  public  together  with  those 
reasons."; 

(16) 

Article 32 is amended as follows: 

(a) 

a new paragraph 2a is inserted:  

"2a. At least annually, the Authority shall consider whether it is appropriate to carry 
out Union-wide assessments referred to in paragraph 2 and shall inform the European 
Parliament,  the  Council  and  the  Commission  of  its  reasoning.  Where  such  Union-
wide assessments are carried out and the Authority considers it appropriate to do so, 
it shall disclose the results for each participating financial institution. 

Professional  secrecy  obligations  of  competent  authorities  shall  not  prevent  the 
competent  authorities  from  publishing  the  outcome  of  Union-wide  assessments 
referred to in paragraph 2 or from transmitting the outcome of such assessments to 
the  Authority  for  the  purpose  of  the  publication  by  the  Authority  of  the  results  of 
Union-wide assessments of the resilience of financial institutions."; 

(b)  paragraphs 3a and 3b are replaced by the following: 

"3a. The Authority may require competent authorities to conduct specific reviews. It 
may  request  competent  authorities  to  carry  out  on-site  inspections,  and  may 
participate  in  such  on-site  inspections  in  accordance  with  Article  21  and  subject  to 
the  conditions  set  out  therein,  in  order  to  ensure  comparability  and  reliability  of 
methods, practices and results."; 

(17) 

Article 33 is amended as follows: 

(a) 

 paragraph 2 is replaced by the following: 

"2.  The  Authority  shall  assist  the  Commission  in  preparing  equivalence  decisions 
pertaining  to  regulatory  and  supervisory  regimes  in  third  countries  following  a 
specific request for advice from the Commission or where required to do so by the 
acts referred to in Article 1(2)."; 

(b) 

the following paragraphs 2a, 2b and 2c are inserted: 

"2a.  The  Authority  shall  monitor  regulatory  and  supervisory  developments  and 
enforcement practices and relevant market developments in third countries for which 
equivalence  decisions  have  been  adopted  by  the  Commission  pursuant  to  the  acts 
referred to in Article 1(2) in order to verify whether the criteria, on the basis of which 
those decisions have been taken and any conditions set out therein, are still fulfilled. 
The Authority shall submit a confidential report on its findings to the Commission on 
an annual basis.  

Without  prejudice  to  specific  requirements  set  out  in  the  acts  referred  to  in  Article 
1(2) and subject to the conditions set out in the second sentence of paragraph 1, the 
Authority  shall  cooperate  with  the  relevant  competent  authorities,  and  where 
appropriate,  also  with  resolution  authorities,  of  third  countries  whose  legal  and 
supervisory  regimes  have  been  recognised  as  equivalent.  That  cooperation  shall  be 

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pursued  on  the  basis  of  administrative  arrangements  concluded  with  the  relevant 
third  countries.  When  negotiating  such  administrative 
authorities  of 
arrangements, the Authority shall include provisions on the following: 

those 

(a) 
the  mechanisms  which  allow  the  Authority  to  obtain  relevant 
information,  including   information  on  the regulatory  regime,  the supervisory 
approach,  relevant  market  developments  and  any  changes  that  may  affect  the 
decision on equivalence; 

to  the  extent  necessary  for  the  follow  up  of  such  decisions  on 
(b) 
equivalence  where  relevant  to  the  extent  necessary  for  the  follow-up  of  such 
decisions  on  equivalence,  the  procedures  concerning  the  coordination  of 
supervisory activities including, where necessary, on-site inspections.  

The  Authority  shall  inform  the  Commission  where  a  third-country  competent 
authority refuses to conclude such administrative arrangements or when it refuses to 
effectively cooperate. The Commission shall take this information into account when 
reviewing the relevant equivalence decisions. 

2b.  Where  the  Authority  identifies  developments  in  relation  to  the  regulation, 
supervision  or  the  enforcement  practices  in  the  third  countries  referred  to  in 
paragraph 2a that may impact the financial stability of the Union or of one or more of 
its  Member  States,  market  integrity  or  investor  protection  or  the  functioning  of  the 
internal market, it shall inform the Commission on a confidential basis and  without 
delay.   

The  Authority  shall  on  an  annual  basis  submit  a  confidential  report  to  the 
Commission  on  the  regulatory,  supervisory,  enforcement  and  market  developments 
in  the  third  countries  referred  to  in  paragraph  2a  with  a  particular  focus  on  their 
implications  for  financial  stability,  market  integrity,  investor  protection  or  the 
functioning of the internal market..   

to  conclude  any  administrative  arrangements  with 

2c.  The  competent  authorities  shall  inform  the  Authority  in  advance  of  their 
third-country 
intentions 
supervisory authorities in any of the areas governed by the acts referred to in Article 
1(2),  including  in  relation  to  branches  of  third  country  entities.  They  shall  provide 
simultaneously to the Authority a draft of such planned arrangements. 

The  Authority  may  develop  model  administrative  arrangements,  with  a  view  to 
establishing consistent, efficient and effective supervisory practices within the Union 
and  to  strengthening  international  supervisory  coordination.  In  accordance  with 
Article 16(3), the competent authorities shall make every effort to follow such model 
arrangements. 

In the report referred to in Article 43(5), the Authority shall include information on 
the  administrative  arrangements  agreed  upon  with  supervisory  authorities, 
international  organisations  or  administrations  in  third  countries,  the  assistance 
provided by the Authority to the Commission in preparing equivalence decisions and 
the monitoring activity pursued by the Authority in accordance with paragraph 2a."; 

(18) 

Article 34, paragraph 2, is replaced by the following: 

"2.  With  regard  to  assessments  under  Article  22  of  Directive  2013/36/EC,  and  which 
according  to  that  Directive  require  consultation  between  competent  authorities  from  two  or 
more Member States, the Authority may, on application of one of the competent authorities 
concerned,  issue  and  publish  an  opinion  on  such  an  assessment,  except  in  relation  to  the 

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criteria in Article 23(1)(e) of that Directive. The opinion shall be issued promptly and in any 
event before the end of the assessment period referred to in that Directive. Articles 35 and 35b 
shall apply to the areas in respect of which the Authority may issue an opinion."; 

(19) 

Article 35 is amended as follows: 

(a)  paragraphs 1, 2 and 3 are replaced by the following: 

"1.  At  the  request  of  the  Authority,  the  competent  authorities  shall  provide  the 
Authority with all the necessary information to carry out the tasks conferred on it by 
this Regulation, provided that they have legal access to the relevant information.  

The information provided shall be accurate, complete and submitted within the time 
limit prescribed by the Authority. 

2. The Authority may also request information to be provided at recurring intervals 
and  in  specified  formats  or  by  way  of  comparable  templates  approved  by  the 
Authority.  Such  requests  shall,  where  possible,  be  made  using  common  reporting 
formats. 

3.  Upon  a  duly  justified  request  from  a  competent  authority,  the  Authority  shall 
provide any information that is necessary to enable the competent authority to carry 
out  its  tasks  in  accordance  with  the  professional  secrecy  obligations  laid  down  in 
sectoral legislation and in Article 70."; 

(b)  paragraph 5 is replaced by the following: 

"5. Where information requested in accordance with paragraph 1 is not available or is 
not  made  available  by  the  competent  authorities  within  the  time  limit  set  by  the 
Authority, the Authority may address a duly justified and reasoned request to any of 
the following: 

(a)  other authorities with supervisory functions;  

(b)  to  the  ministry  responsible  for  finance  in  the  Member  State  concerned 
where it has at its disposal prudential information; 

(c) to the national central bank of the Member State concerned; 

(d) to the statistical office of the Member State concerned. 

At the request of the Authority, the competent authorities shall assist the Authority in 
collecting the information."; 

(c)  paragraphs 6 and 7a are deleted : 

(20) 

the following Articles 35a to 35h are inserted: 

"Article 35a 

Exercise of the powers referred to in Article 35b 

The  powers  conferred  on  the  Authority,  any  of  its  officials  or  another  person 
authorised  by  the  Authority  in  accordance  with  Article  35(b)  shall  not  be  used  to 
require the disclosure of information or documents that are subject to legal privilege. 

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Article 35b 

Request for information to financial institutions, holding companies or branches of relevant 
financial institutions and non-regulated operational entities within a financial group or 
conglomerate 

1. Where information requested under paragraph 1 or paragraph 5 of Article 35 is not 
available or is not made available within the time limit set by the Authority, it may 
by  simple  request  or  by  decision  require  the  following  institutions  and  entities  to 
provide all necessary information to enable the Authority to carry out its duties under 
this Regulation: 

(a) relevant financial institutions; 

(b) holding companies or branches of a relevant financial institution; 

(c) non-regulated operational entities within a financial group or conglomerate 
that  are  significant  to  the  financial  activities  of  the  relevant  financial 
institutions. 

2.  Any simple request for information referred to in paragraph 1shall: 

(a)   

refer to this Article as the legal base of that request; 

(b) 

(c) 

(d) 

state the purpose of the request; 

specify the information required; 

include a time limit within which the information is to be provided; 

(e) 
include a statement that there is no obligation on the person from whom 
the  information  is  requested  to  provide  that  information  but  that  in  case  of  a 
voluntary reply to the request, the information provided must not be incorrect 
or misleading; 

indicate the amount of the fine to be issued in accordance with Article 

(f) 
35c where the information provided is incorrect or misleading information. 

3.  When requesting information by decision, the Authority shall: 

(a)   

refer to this Article as the legal base of that request; 

(b) 

(c) 

(d) 

state the purpose of the request; 

specify the information required; 

set a time limit within which the information is to be provided; 

indicate  the  periodic  penalty  payments  provided  for  in  Article  35d 

(e) 
where the production of the required information is incomplete; 

indicate  the  fine  provided  for  in  Article  35c  where  the  answers  to  the 

(f) 
questions are incorrect or misleading information; 

(g) 
indicate the right to appeal the decision before the Board of Appeal and 
to have the decision reviewed by the Court of Justice of the European Union in 
accordance with Articles 60 and 61. 

4.  The relevant institutions and entities listed in paragraph 1 or their representatives 
and,  in  the  case  of  legal  persons  or  associations  having  no  legal  personality,  the 
persons authorised to represent them by law or by their constitution shall supply the 
information requested. Lawyers duly authorised to act may supply the information on 

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behalf  of  their  clients.  The  latter  shall  remain  fully  responsible  if  the  information 
supplied is incomplete, incorrect or misleading. 

5.    The  authority  shall  send,  without  delay,  a  copy  of  the  simple  request  or  of  its 
decision  to  the  competent  authority  of  the  Member  State  where  the  relevant  entity 
listed  in  paragraph  1  concerned  by  the  request  for  information  is  domiciled  or 
established. 

6.  The Authority may use confidential information received in accordance with this 
Article  only  for  the  purposes  of  carrying  out  the  tasks  assigned  to  it  by  this 
Regulation. 

Article 35c 

Procedural rules for imposing fines 

1.  Where,  in  carrying  out  its  duties  under  this  Regulation,  the  authority  finds  that 
there are serious indications of the possible existence of facts liable to constitute an 
infringement  as  referred  to  in  Article  35d(1),  the  Authority  shall  appoint  an 
independent investigation officer within the Authority to investigate the matter.  The 
appointed officer shall not be involved or have been directly or indirectly involved in 
the direct or indirect supervision of the institutions or entities listed in Article 35b(1) 
and shall perform his or her functions independently from the Board of Supervisors. 

2.  The investigation officer referred to  in  paragraph 1 shall investigate the alleged 
infringements, taking into account any comments submitted by the persons who are 
subject to the investigations, and shall submit a complete file with his or her findings 
to the Board of Supervisors. 

3.  In order to carry out his or her tasks, the investigation officer shall have the power 
to request information in accordance with Article 35b. 

4.  Where carrying out his or her tasks, the investigation officer shall have access to 
all documents and information gathered by the Authority in its supervisory activities. 

5.    Upon  completion  of  his  investigation  and  before  submitting  the  file  with  his  or 
her  findings  to  the  Board  of  supervisors,  the  investigation  officer  shall  give  the 
persons subject to the investigations the opportunity to be heard on the matters being 
investigated.  The investigation officer shall base his or her findings only on facts on 
which the persons concerned have had the opportunity to comment. 

6.    The  rights  of  defence  of  the  persons  subject  to  the  investigations  shall  be  fully 
respected during investigations undertaken pursuant   to this Article. 

7.    Upon  submission  of  the  file  with  his  finding  to  the  Board  of  Supervisors,  the 
investigation  officer  shall  notify  the  persons  who  are  subject  to  the  investigations.  
The persons subject to the investigations shall be entitled to have access to the file, 
subject to the legitimate interest of other persons in the protection of their business 
secrets.    The  right  of  access  to  the  file  shall  not  extend  to  confidential  information 
affecting third parties. 

8.  On the basis of the file containing the investigation officer's findings and, when 
requested  by  the  persons  subject  to  the  investigations,  after  having  heard  those 
persons in accordance with Article 35f, the Authority shall decide if one or more of 
the infringements as referred to in Article 35d(1) has been committed by the persons 

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subject to the investigations and, in such a case, shall take a measure in accordance 
with that Article. 

9.  The investigation officer shall not participate in the deliberations of the Board of 
Supervisors or intervene in any way in the decision-making process of the Board of 
Supervisors. 

10.  The Commission shall adopted delegated acts in accordance with Article 75a to 
specify  the  rules  of  procedure  for  the  exercise  of  the  power  to  impose  fines  or 
periodic penalty payments, including rules on the following: 

(a) rights of defence 

(b) temporal provisions,  

(c)  provisions  specifying  how  fines  or  periodic  penalty  payments  are  to  be 
collected,  

(d)  provisions  specifying  the  limitation  periods  for  the  imposition  and 
enforcement of fines and periodic penalty payments. 

11.    The  Authority  shall  refer  matters  for  criminal  prosecution  to  the  relevant 
national  authorities  where,  in  carrying  out  its  duties  under  this  Regulation,  it  finds 
that there are serious indications of the possible existence of facts liable to constitute 
criminal  offences.    In  addition,  the  Authority  shall  refrain  from  imposing  fines  or 
periodic penalty payments where a prior acquittal or conviction arising from identical 
fact  or  facts  which  are  substantially  the  same  has  already  acquired  the  force  of  res 
judicata as the result of criminal proceedings under national law. 

Article 35d 

Fines 

1.    The  Authority  shall  adopt  a  decision  to  impose  a  fine  where  it  finds  that  an 
institution or entity listed in Article 35b(1) has, intentionally or negligently, failed to 
provide  information  in  response  to  a  decision  requiring  information  pursuant  to 
Article  35b(3)  or  has  provided  incomplete,  incorrect  or  misleading  information  in 
response to a simple request for information or a decision pursuant to Article 35b(2). 

2.  The basic amount of the fine referred to in paragraph 1 shall amount to at least 
EUR 50 000 and shall not exceed EUR 200 000. 

3.    When  setting  the  basic  amount  of  the  fine  referred  to  in  paragraph  2,  the 
Authority  shall  have  regard  to  the  annual  turnover  of  the  institution  or  entity 
concerned for the preceding business year and shall be: 

 (a)  at  the  lower  end  of  the  limit  for  entities  with  an  annual  turnover  below 
EUR 10 million;  

(b) the middle of the limit for entities with an annual turnover between EUR 10 
and 50 million;  

(c) the higher end of the limit for entities with an annual turnover higher than 
EUR 50 million. 

The basic amounts defined within the limits set out in paragraph 2 shall be adjusted, 
where  necessary,  by  taking  into  account  aggravating  or  mitigating  factors  in 
accordance with the relevant coefficients set out in paragraph 5. 

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The relevant aggravating coefficient shall be applied one by one to the basic amount. 
Where  more  than  one  aggravating  coefficient  is  applicable,  the  difference  between 
the  basic  amount  and  the  amount  resulting  from  the  application  of  each  individual 
aggravating coefficient shall be added to the basic amount. 

The relevant mitigating coefficient shall be applied one by one to the basic amount. 
Where more than one mitigating coefficient is applicable, the difference between the 
basic  amount  and  the  amount  resulting  from  the  application  of  each  individual 
mitigating coefficient shall be subtracted from the basic amount. 

4.  The  following  adjustment  coefficients  shall  be  applied  cumulatively  to  the  basic 
amount referred to in paragraph 2, based on the following: 

(a) 

the adjustment coefficients linked to aggravating factors are as follows: 

(i) where the infringement has been committed repeatedly, an additional 
coefficient  of  1.1  shall  apply  each  time  the  infringement  has  been 
repeated; 

(ii) where the infringement lasted for more than six months, a coefficient 
of 1.5 shall apply; 

(iii)  where  the  infringement  has  been  committed  intentionally,  a 
coefficient of 2 shall apply; 

(iv) where no remedial action has been taken since the infringement has 
been identified, a coefficient of 1.7 shall apply; 

(v)  where  the  entity’s  senior  management  has  not  cooperated  with  the 
Authority, a coefficient of 1.5 shall apply. 

(b) 

the adjustment coefficients linked to mitigating factors are as follows: 

(i)  where  the  infringement  lasted  fewer  than  10  working  days,  a 
coefficient of 0.9 shall apply; 

(ii) where the institution's or entity’s senior management can demonstrate 
that they have taken all the necessary measures to prevent the failure to 
comply  with  a  request  pursuant  to  Article  35(6a),  a  coefficient  of  0.7 
shall apply; 

(iii)  where  the  entity  has  brought  the  infringement  to  the  Authority’s 
attention  quickly,  effectively  and  completely,  a  coefficient  of  0.4  shall 
apply; 

(iv) where the entity has voluntarily taken measures to ensure that similar 
infringement cannot be committed in the future, a coefficient of 0.6 shall 
apply. 

5.    Notwithstanding  paragraphs  2  and  3,  the  total  fine  shall  not  exceed  20%  of  the 
annual  turnover  of  the  entity  concerned  in  the  preceding  business  year  unless  the 
entity has directly or indirectly benefitted financially from the infringement. In that 
case, the total fine shall be at least equal to that financial benefit. 

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Article 35e 

Periodic penalty payments  

1. The Authority shall adopt decisions to impose a periodic penalty payment in order 
to compel institutions or entities referred to in Article 35b(1) to provide information 
requested by decision in accordance with Article 35b(3).. 

2.  A  periodic  penalty  payment  shall  be  effective  and  proportionate.  The  periodic 
penalty  payment  shall  be  imposed  on  a  daily  basis  until  the  institution  or  entity 
concerned complies with the relevant decision referred to in paragraph 1. 

3. Notwithstanding paragraph 2, the amount of a periodic penalty payment shall be 
3%  of  the  average  daily  turnover  of  the  institution  or  entity  concerned  in  the 
preceding business year. It shall be calculated from the date stipulated in the decision 
imposing the periodic penalty payment. 

4.  A  periodic  penalty  payment  may  be  imposed  for  a  period  of  no  more  than  six 
months following the notification of the Authority's decision. 

Article 35f 

Right to be heard 

1. Before taking any decision to impose a fine and periodic penalty payment under 
Articles 35d and 35e, the Authority shall give the institution or entity subject to the 
request for information the opportunity to be heard.  

The Authority shall base its decisions only on the findings on which the institutions 
or entities concerned have had the opportunity to comment. 

2. The rights of defence of the institution or entity referred to in paragraph 1 shall be 
fully respected during the procedure. The institution or entity shall be entitled to have 
access  to  the  Authority's  file,  subject  to  the  legitimate  interest  of  other  persons  in 
protecting  their  business  secrets.  The  right  of  access  to  the  file  shall  not  extend  to 
confidential information or internal preparatory documents of the Authority. 

Article 35g 

Disclosure, nature, enforcement and allocation of fines and periodic penalty payments   

1.    Fines  and  periodic  penalty  payments  imposed  pursuant  to  Articles  35d  and  35e 
shall be of an administrative nature and shall be enforceable. 

2.  Enforcement  of  the  fine  and  periodic  penalty  payment  shall  be  governed  by  the 
rules  of  procedure  in  force  in  the  Member  State  in  the  territory  of  which  the 
enforcement is carried out. The enforcement order shall be appended to the decision 
imposing a fine or a periodic penalty payment without the requirement for any other 
formality  than  the  verification  of  the  authenticity  of  the  decision  by  an  authority 
which each Member State shall designate for that purpose and shall make known to 
the Authority and to the Court of Justice of the European Union. 

3.  Where  the  formalities  referred  to  in  paragraph  2  have  been  completed  on 
application by the party concerned, the party concerned may proceed to enforcement 

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in  accordance  with  the  national  law,  by  bringing  the  matter  directly  before  the 
competent body. 

4. Enforcement of the fine or periodic penalty payment may only be suspended by a 
decision of the Court of Justice of the European Union. However, the courts of the 
Member State concerned shall have jurisdiction over complaints that the enforcement 
of the fine or periodic penalty payment is being carried out in an irregular manner. 

5. The Authority shall disclose to the public every fine and periodic penalty payment 
that has been imposed pursuant to Articles 35d and 35e, unless such disclosure to the 
public  would  seriously  jeopardise  the  financial  markets  or  cause  disproportionate 
damage to the parties involved. 

6. The amounts of the fines and periodic penalty payments shall be allocated to the 
general budget of the European Union. 

Article 35h 

Review by the Court of Justice of the European Union 

The  Court  of  Justice  of  the  European  Union  shall  have  unlimited  jurisdiction  to 
review  decisions  whereby  the  Authority  has  imposed  a  fine  or  a  periodic  penalty 
payment.  It  may  annul,  reduce  or  increase  the  fine  or  periodic  penalty  payment 
imposed by the Authority."; 

(21) 

In paragraph 5 of Article 36, the first subparagraph is replaced by the following: 

"On  receipt  of  a  warning  or  recommendation  from  the  ESRB  addressed  to  a 
competent  authority,  the  Authority  shall,  where  relevant,  use  the  powers  conferred 
upon it by this Regulation to ensure a timely follow-up." 

(22) 

Article 37 is amended as follows: 

(a) 

 in  paragraph  4,  the  last  sentence  of  the  first  subparagraph  is  replaced  by  the 
following: 

"Members of the Banking Stakeholder Group shall serve for a period of four years, 
following which a new selection procedure shall take place."; 

(b) 

 in paragraph 5, the following subparagraphs are added: 

"Where members of the Banking Stakeholder Group cannot reach a common opinion 
or advice, the members representing one group of stakeholders shall be permitted to 
issue a separate opinion or separate advice. 

The Banking Stakeholder Group, the Securities and Markets Stakeholder Group, the 
Insurance  and  Reinsurance  Stakeholder  Group,  and  the  Occupational  Pensions 
Stakeholder Group may issue joint opinions and advice on issues related to the work 
of the European Supervisory Authorities under Article 56 of this Regulation on joint 
positions and common acts."; 

(23) 

Article 39 is replaced by the following: 

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"Article 39 
Decision-making procedures 

1.  The  Authority  shall  act  in  accordance  with  paragraphs  2  to  6  when  adopting 
decisions  provided  for  in  this  Regulation  save  for  those  decisions  adopted  in 
accordance with Articles 35b, 35d and 35e. 

2. The Authority shall inform any addressee of a decision of its intention to adopt the 
decision, setting a time limit within which the addressee may express its views on the 
subject-matter  of  the  decision,  taking  full  account  of  the  urgency,  complexity  and 
potential  consequences  of  the  matter.  The  provision  laid  down  in  the  first  sentence 
shall apply mutatis mutandis to recommendations as referred to in Article 17(3). 

3.  The decisions of the Authority shall state the reasons on which they are based. 

4.    The  addressees  of  decisions  of  the  Authority  shall  be  informed  of  the  legal 
remedies available under this Regulation. 

5.    Where  the  Authority  has  taken  a  decision  pursuant  to  Article  18(3)  or  Article 
18(4), it shall review that decision at appropriate intervals. 

6.  The adoption of the decisions which the Authority takes pursuant to Articles 17, 
18  or  19  shall  be  made  public.  The  publication  shall  disclose  the  identity  of  the 
competent  authority  or  financial  institution  concerned  and  the  main  content  of  the 
decision,  unless  such  publication  is  in  conflict  with  the  legitimate  interest  of  those 
financial  institutions  or  with  the  protection  of  their  business  secrets  or  could 
seriously jeopardise the orderly functioning and integrity of financial markets or the 
stability of the whole or part of the financial system of the Union."; 

(24) 

Article 40 is amended as follows: 

(a) 

 paragraph 1 is amended as follows: 

(i) 

the following point (aa) is inserted: 

"(aa)  the  full  time  members  of  the Executive  Board  referred  to  Article  45(1), 
who shall be non-voting;"; 

(b) 

(c) 

in paragraph 7, the second subparagraph is deleted; 

the following paragraph 8 is added: 

"8.  Where  the  national  public  authority  referred  to  in  paragraph  1(b)  is  not 
responsible  for  the  enforcement  of  consumer  protection  rules,  the  member  of  the 
Board of Supervisors  referred to in that  point may decide to invite a representative 
from the Member State’s consumer protection authority, who shall be non-voting. In 
the  case  where  the  responsibility  for  consumer  protection  is  shared  by  several 
authorities  in  a  Member  State,  those  authorities  shall  agree  on  a  common 
representative."; 

(25) 

Article 41 is replaced by the following: 

"Article 41 

Internal committees 

"The  Board  of  Supervisors  may  establish  internal  committees  for  specific  tasks 
attributed to it. The Board of Supervisors may provide for the delegation of certain 

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clearly defined tasks and decisions to internal committees, to the Executive Board or 
to the Chairperson."; 

(26) 

in Article 42 the first paragraph is replaced by the following: 

"When  carrying  out  the  tasks  conferred  upon  them  by  this  Regulation  the  voting 
members of the Board of Supervisors shall act independently and objectively in the 
sole interest of the Union as a whole and shall neither seek nor take instructions from 
Union institutions or  bodies, from any  government of a  Member  State  or  from any 
other public or private body."; 

(27) 

Article 43 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

"1. The Board of Supervisors shall give guidance to the work of the Authority. Save 
as  otherwise  provided  in  this  Regulation  the  Board  of  Supervisors  shall  adopt  the 
opinions, recommendations, guidelines and decisions of the Authority, and issue the 
advice referred to in Chapter II, based on a proposal from the Executive Board."; 

(b)  paragraphs 2 and 3 are deleted; 

(c) 

in paragraph 4, the first subparagraph is replaced by the following: 

"The  Board  of  Supervisors  shall  adopt,  before  30  September  of  each  year,  on  the 
basis of a proposal by the Executive Board, the work programme of the Authority for 
the coming year, and shall transmit it for information to the European Parliament, the 
Council and the Commission."; 

(d) 

 paragraph 5 is replaced by the following: 

"5. The Board of Supervisors shall adopt, on the basis of a proposal by the Executive 
Board,  the  annual  report  on  the  activities  of  the  Authority,  including  on  the 
performance of the Chairperson’s duties, on the basis of the draft report referred to in 
Article 53(7) and shall transmit that report to the European Parliament, the Council, 
the  Commission,  the  Court  of  Auditors  and  the  European  Economic  and  Social 
Committee by 15 June each year. The report shall be made public.";    

(e)  paragraph 8 is deleted; 

(28) 

Article 44 is amended as follows: 

(a) 

the second subparagraph of paragraph 1 is replaced by the following: 

"With  regard  to  the  acts  specified  in  Articles  10  to  16  and  measures  and  decisions 
adopted under the third subparagraph of Article 9(5) and Chapter VI and by way of 
derogation  from  the  first  subparagraph  of  this  paragraph,  the  Board  of  Supervisors 
shall take decisions on the basis of a qualified majority of its members, as defined in 
Article 16(4) of the Treaty on European Union, which shall include at least a simple 
majority of the members, present at the vote, from competent authorities of Member 
States  that  are  participating  Member  States  as  defined  in  point  1  of  Article  2  of 
Regulation (EU) No 1024/2013 (participating Member States) and a simple majority 
of  the  members,  present  at  the  vote,  from  competent  authorities  of  Member  States 
that  are  not  participating  Member  States  as  defined  in  point  1  of  Article  2  of 
Regulation (EU) No 1024/2013 (non-participating Member States).  

The full time members of the Executive Board and the Chairperson shall not vote on 
these decisions."; 

(b) 

in paragraph 1, the third, fourth, fifth and sixth subparagraphs are deleted; 

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(c) 

 paragraph 4 is replaced by the following: 

"4.  The  non-voting  members  and  the  observers  shall  not  participate  in  any 
discussions  within  the  Board  of  Supervisors  relating  to  individual  financial 
institutions, unless otherwise provided for in Article 75(3) or in the acts referred to in 
Article 1(2)."; 

The first subparagraph shall not apply to the Chairperson, the members that are also 
members  of  the  Executive  Board  and  the  European  Central  Bank  representative 
nominated by its Supervisory Board.";  

(29) 

in Chapter III, the title of Section 2 is replaced by the following: 

"SECTION 2 

EXECUTIVE BOARD" 

(30) 

Article 45 is replaced by the following: 

"Article 45 

Composition 

1.  The  Executive  Board  shall  be  composed  of  the  Chairperson  and  three  full  time 
members. The Chairperson shall assign clearly defined policy and managerial tasks 
to  each  of  the  full  time  members.    One  of  the  full  time  members  shall  be  assigned 
responsibilities for budgetary matters and for matters relating to the work programme 
of the Authority ("Member in charge "). One of the full time members shall act as a 
Vice Chairperson and carry out the tasks of the Chairperson in his or her absence or 
reasonable impediment, in accordance with this Regulation.   

2. The full time members shall be selected on the basis of merit, skills, knowledge of 
financial  institutions  and  markets,  and  experience  relevant  to  financial  supervision 
and regulation. The full time members shall have extensive management experience. 
The  selection  shall  be  based  on  an  open  call  for  candidates,  to  be  published  in  the 
Official Journal of the European Union, following which the Commission shall draw 
up a shortlist of qualified candidates.  

The Commission shall submit the shortlist to the European Parliament for approval.  
Following the approval of that shortlist, the Council shall adopt a decision to appoint 
the full time members of the Executive Board including the Member in charge. The 
Executive Board shall be balanced and proportionate and shall reflect the Union as a 
whole. 

3. Where a full time member of the Executive Board no longer fulfils the conditions 
set  out  in  Article  46  or  has  been  found  guilty  of  serious  misconduct,  the  Council 
may, on a proposal from the Commission which has been approved by the European 
Parliament, adopt a decision to remove him or her from office.  

4.  The  term  of  office  of  the  full  time  members  shall  be  5  years  and  shall  be 
renewable once. In the course of the 9 months preceding the end of the 5-year term 
of office of the full time member, the Board of Supervisors shall evaluate: 

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(a)  the  results  achieved  in  the  first  term  of  office  and  the  way  in  which  they 
were achieved; 

(b) the Authority’s duties and requirements in the coming years. 

Taking into account the evaluation, the Commission shall submit the list of the full 
time  members  to  be  renewed  to  the  Council.  Based  on  this  list  and  taking  into 
account  the  evaluation,  the  Council  may  extend  the  term  of  office  of  the  full  time 
members."; 

(31) 

the following Article 45a is inserted: 

"Article 45a 

Decision-making 

1.  Decisions  by  the  Executive  Board  shall  be  adopted  by  simple  majority  of  its 
members.  Each  member  shall  have  one  vote.  In  the  event  of  a  tie,  the  Chairperson 
shall have a casting vote. 

2.  The  representative  of  the  Commission  shall  participate  in  meetings  of  the 
Executive  Board  without  the  right  to  vote  save  in  respect  of  matters  referred  to  in 
Article 63.  

3. The Executive Board shall adopt and make public its rules of procedure. 

4. Meetings of the Executive Board shall be convened by the Chairperson at his own 
initiative  or  at  the  request  of  one  of  its  members,  and  shall  be  chaired  by  the 
Chairperson. 

The Executive Board shall meet prior to every meeting of the Board of Supervisors 
and as often as the Executive Board deems necessary. It shall meet at least five times 
a year. 

5.  The  members  of  the  Executive  Board  may,  subject  to  the  rules  of  procedure,  be 
assisted  by  advisers  or  experts.  The  non-voting  participants  shall  not  attend  any 
discussions within the Executive Board relating to individual financial institutions."; 

(32) 

the following Article 45b is inserted: 

"Article 45b 

Internal committees 

The Executive Board may establish internal committees for specific tasks attributed 
to it."; 

(33) 

Article 46 is replaced by the following: 

"Article 46 

Independence 

The members of the Executive Board shall act independently and objectively in the 
sole interest of the Union as a whole and shall neither seek nor take instructions from 

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the  Union  institutions  or  bodies,  from  any  government  of  a  Member  State  or  from 
any other public or private body. 

Neither  Member  States,  the  Union  institutions  or  bodies,  nor  any  other  public  or 
private  body  shall  seek  to  influence  the  members  of  the  Executive  Board  in  the 
performance of their tasks."; 

(34) 

Article 47 is replaced by the following: 

"Article 47 

Tasks 

1.  The  Executive  Board  shall  ensure  that  the  Authority  carries  out  its  mission  and 
performs the tasks assigned to it in accordance with this Regulation. It shall take all 
necessary measures, notably the adoption of internal administrative instructions and 
the publication of notices, to ensure the functioning of the Authority, in accordance 
with this Regulation. 

2.  The Executive Board shall propose, for adoption by the Board of Supervisors, an 
annual and multi-annual work programme. 

3.  The  Executive  Board  shall  exercise  its  budgetary  powers  in  accordance  with 
Articles 63 and 64. 

For  the  purposes  of  Articles  17,  19,  22,  29a,  30,  31a,  32  and  35b  to  35h,  the 
Executive  Board  shall  be  competent  to  act  and  to  take  decisions.    The  Executive 
Board shall keep the Board of Supervisors informed of the decisions it takes. 

3a. The Executive Board shall examine, give an opinion and make proposals on all 
matters to be decided by the Board of Supervisors. 

4.  The Executive Board shall adopt the Authority's staff policy plan and, pursuant to 
Article  68(2),  the  necessary  implementing  measures  of  the  Staff  Regulations  of 
Officials of the European Communities ('the Staff Regulations’). 

5.  The Executive Board shall adopt the special provisions on right of access to the 
documents of the Authority, in accordance with Article 72. 

6.    The  Executive  Board  shall  propose  an  annual  report  on  the  activities  of  the 
Authority,  including  on  the  Chairperson’s  duties,  on  the  basis  of  the  draft  report 
referred to in Article 53(7) to the Board of Supervisors for approval. 

7.    The  Executive  Board  shall  appoint  and  remove  the  members  of  the  Board  of 
Appeal in accordance with Article 58(3) and (5). 

8. The members of the Executive Board shall make public all meetings held and any 
hospitality received. Expenses shall be recorded publicly in accordance with the Staff 
Regulations 

9. The Member in charge shall have the following specific tasks: 

(a)  to  implement  the  annual  work  programme  of  the  Authority  under  the 
guidance  of  the  Board  of  Supervisors  and  under  the  control  of  the  Executive 
Board; 

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(b)  to  take  all  necessary  measures,  notably  the  adoption  of  internal 
administrative  instructions  and  the  publication  of  notices,  to  ensure  the 
functioning of the Authority, in accordance with this Regulation; 

(c) to prepare a multi-annual work programme, as referred to in Article 47(2); 

(d)  to  prepare  a  work  programme  by  30  June  of  each  year  for  the  following 
year, as referred to in Article 47(2); 

(e) to draw up a preliminary draft budget of the Authority pursuant to Article 
63 and to implement the budget of the Authority pursuant to Article 64; 

(f) to prepare an annual draft report to include a section on the regulatory and 
supervisory  activities  of  the  Authority  and  a  section  on  financial  and 
administrative matters; 

(g)  to  exercise  in  respect  to  the  Authority’s  staff,  the  powers  laid  down  in 
Article 68 and to manage staff matters."; 

(35) 

Article 48 is amended as follows: 

(a) 

in paragraph 1, the second subparagraph is replaced by the following: 

"The Chairperson shall be responsible for preparing the work of the Board of Supervisors and 
shall chair the meetings of the Board of Supervisors and the Executive Board."; 

(b)  paragraph 2 is replaced by the following: 

"2.  The  Chairperson  shall  be  selected  on  the  basis  of  merit,  skills,  knowledge  of 
financial institutions and markets, and of experience relevant to financial supervision 
and regulation, following an open call for candidates to be published in the Official 
Journal  of  the  European  Union.  The  Commission  shall  submit  a  shortlist  of 
candidates  for  the  position  of  the  Chairperson  to  the  European  Parliament  for 
approval. Following the approval of that shortlist, the Council shall adopt a decision 
to appoint the Chairperson.   

Where the Chairperson no longer fulfil the conditions referred to in Article 49 or has 
been  found  guilty  of  serious  misconduct,  the  Council  may,  on  a  proposal  from  the 
Commission which has been approved by the European Parliament, adopt a decision 
to remove him or her from office."; 

(c) 

in paragraph 4, the second subparagraph is replaced by the following: 

"The  Council,  on  a  proposal  from  the  Commission  and  taking  into  account  the 
evaluation, may extend the term of office of the Chairperson once."; 

(d)  paragraph 5 is deleted; 

(36) 

Article 49a is replaced by the following: 

"Article 49a 

Expenses 

The  Chairperson  shall  make  public  all  meetings  held  and  any  hospitality  received. 
Expenses shall be recorded publicly in accordance with the Staff Regulations."; 

(37) 

(38) 

Articles 51, 52, 52a and 53 are deleted; 

in paragraph 2 of Article 54, the following indent is added: 

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" — depositor, consumer and investor protection issues";  

(39) 

in Article 55, paragraph 2 is replaced by the following: 

"2. One member of the Executive Board, the representative of the Commission and 
the ESRB shall be invited to the meetings of the Joint Committee, as well as of any 
Sub-Committees referred to in Article 57, as observers."; 

(40) 

Article 58 is amended as follows: 

(a)  paragraph 3 is replaced by the following: 

"3. Two members of the Board of Appeal and two alternates shall be appointed by 
the Executive Board of the Authority from a short-list proposed by the Commission, 
following a public call for expressions of interest published in the Official Journal of 
the European Union, and after consultation of the Board of Supervisors."; 

(b)  paragraph 5 is replaced by the following: 

"5.  A  member  of  the  Board  of  Appeal  appointed  by  the  Executive  Board  of  the 
Authority shall not be removed during his term of office, unless he has been found 
guilty of serious misconduct and the Executive Board takes a decision to that effect 
after consulting the Board of Supervisors."; 

(41) 

in Article 59, paragraph 1 is replaced by the following: 

"1.  The  members  of  the  Board  of  Appeal  shall  be  independent  in  making  their 
decisions. They shall not be bound by any instructions. They shall not perform any 
other  duties  in  relation  to  the  Authority,  its  Executive  Board  or  its  Board  of 
Supervisors."; 

(42) 

in Article 60, paragraph 1 is replaced by the following: 

"1. Any natural or legal person, including competent authorities, may appeal against 
a  decision  of  the  Authority  referred  to  in  Articles  17,  18,  19  and  35  and  any  other 
decision  taken  by  the  Authority  in  accordance  with  the  Union  acts  referred  to  in 
Article 1(2) which is addressed to that person, or against a decision which, although 
in  the  form  of  a  decision  addressed  to  another  person,  is  of  direct  and  individual 
concern to that person."; 

(43) 

Article 62 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

"1.  The revenues  of  the  Authority  shall  consist,  without  prejudice  to  other types  of 
revenue, of any combination of the following: 

(a) a balancing contribution from the Union, entered in the General Budget of 
the Union (Commission section) which shall not exceed 40% of the estimated 
revenues of the Authority;  

(b)  annual  contributions  from  financial  institutions,  based  on  the  annual 
estimated expenditure relating to the activities required by this Regulation and 
by the Union Acts referred to in Article 1(2) for each category of participants 
within the remit of the Authority;    

(c)  any  fees  paid  to  the  Authority  in  the  cases  specified  in  the  relevant 
instruments of Union law. 

(d) any voluntary contribution from Member States or observers;   

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(e)  charges  for  publications,  training  and  for  any  other  services  requested  by 
competent authorities."; 

(b) 

the following paragraphs 5 and 6 are added: 

"5.  The  annual  contributions  referred  to  in  paragraph  1(b)  shall  be  collected  each 
year  from  individual  financial  institutions  by  the  authorities  designated  by  each 
Member State. By 31 March of each financial year, each Member State shall pay to 
the Authority the amount that it is required to collect in accordance with the criteria 
set out in the delegated act referred in to Article 62a. 

6. Voluntary contributions from Members States and observers as referred to in point 
(d) of paragraph 1 shall not be accepted if such acceptance would cast doubt on the 
independence and impartiality of the Authority."; 

(44) 

the following Article 62a is inserted: 

"Article 62a 

Delegated acts on the calculation of annual contributions by financial institutions  

The  Commission  shall  be  empowered,  in  accordance  with  Article  75a,  to  adopt 
delegated  acts  determining  how  annual  contributions  by  individual  financial 
institutions referred to in point (e) of Article 62 are to be calculated, establishing the 
following:  

(a)  a  methodology  to  allocate  the  estimated  expenditure  to  categories  of 
financial institutions as a basis for determining the share of contributions to be 
made by financial institutions of each category;  

(b)  appropriate  and  objective  criteria  to  determine  the  annual  contributions 
payable by individual financial institutions within the scope of the Union Acts 
referred  to  in  Article  1(2)  based  on  their  size  so  as  to  approximately  reflect 
their importance in the market.  

The  criteria  referred  to  in  point  (b)  of  the  first  paragraph  may    establish  either  de 
minimis  thresholds  below  which  no  contribution  is  due  or  minima  below  which 
contributions must not fall."; 

(45) 

Article 63 is replaced by the following: 

"Article 63 

Establishment of the budget 

1.    Each  year,  the  Member  in  charge  shall  draw  up  a  provisional  draft  single 
programming  document  of  the  Authority  for  the  three  following  financial  years 
setting  out  the  estimated  revenue  and  expenditure,  as  well  as  information  on  staff, 
from its annual and multi-annual programming and shall forward it to the Executive 
Board and the Board of Supervisors, together with the establishment plan. 

1a. The Executive Board shall, on the basis of the draft which has been approved by 
the Board of Supervisors adopt the draft single programming document for the three 
following financial years. 

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1b.  The  draft  single  programming  document  shall  be  transmitted  by  the  Executive 
Board to the Commission, the European Parliament and the Council by 31 January. 

2. 
On the basis of the draft single programming document, the Commission shall 
enter in the draft budget of the Union the estimates it deems necessary in respect of 
the establishment plan and the amount of the balancing contribution to be charged to 
the  general  budget  of  the  Union  in  accordance  with  Articles  313  and  314  of  the 
Treaty. 

The  budgetary  authority  shall  adopt  the  establishment  plan  for  the  Authority. 
3. 
The  budgetary  authority  shall  authorise  the  appropriations  for  the  balancing 
contribution to the Authority. 

4.  The budget of the Authority shall be adopted by the Board of Supervisors. It shall 
become  final  after  the  final  adoption  of  the  general  budget  of  the  Union.  Where 
necessary, it shall be adjusted accordingly. 

5.  The  Executive  Board  shall,  without  delay,  notify  the  budgetary  authority  of  its 
intention to implement any project which may have significant financial implications 
for the funding of its budget, in particular any project relating to property, such as the 
rental or purchase of buildings."; 

(46) 

Article 64 is replaced by the following: 

"Article 64 

Implementation and control of the budget 

"1.  The  Member  in  charge  shall  act  as  authorising  officer  and  shall  implement  the 
Authority’s budget. 

2.    The  Authority’s  accounting  officer  shall  send  their  provisional  accounts  to  the 
Commission’s  accounting  officer  and  to  the  Court  of  Auditors  by  1  March  of  the 
following year. 

3.    The  Authority's  accounting  officer  shall  send  by  1  March  of  the  following  year 
the  required  accounting  information  for  consolidation  purposes  to  the  accounting 
officer of the  Commission, in the manner and format laid down by that accounting 
officer. 

4.  The  Authority’s  accounting  officer  shall  also  send  the  report  on  budgetary  and 
financial  management  to  the  members  of  the  Board  of  Supervisors,  the  European 
Parliament,  the  Council  and  the  Court  of  Auditors  by  31  March  of  the  following 
year. 

5.    After  receiving  the  observations  of  the  Court  of  Auditors  on  the  provisional 
accounts of the Authority in accordance with Article 148 of the Financial Regulation, 
the Authority's  accounting officer shall draw up the Authority's  final accounts. The 
Member in charge shall send them to the Board of Supervisors, which shall deliver 
an opinion on these accounts. 

6.  The Authority's accounting officer shall send the final accounts, accompanied by 
the  opinion  of  the  Board  of  Supervisors,  by  1  July  of  the  following  year  to  the 
accounting officer of the Commission, the European Parliament, the Council and the 
Court of Auditors. 

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The Authority's accounting officer shall also send by 1 July, a reporting package to 
the  Commission's  accounting  officer,  in  a  standardised  format  as  laid  down  by  the 
Commission's accounting officer for consolidation purposes. 

7.    The  final  accounts  shall  be  published  in  the  Official  Journal  of  the  European 
Union by 15 November of the following year. 

8.    The  Member  in  charge  shall  send  the  Court  of  Auditors  a  reply  to  the  latter’s 
observations  by  30  September.  He  shall  also  send  a  copy  of  that  reply  to  the 
Executive Board and the Commission. 

9.    The  Member  in  charge  shall  submit  to  the  European  Parliament,  at  the  latter’s 
request  and  as  provided  for  in  Article  165(3)  of  the  Financial  Regulation,  any 
information necessary for the smooth application of the discharge procedure for the 
financial year in question. 

10.  The European Parliament, following a recommendation from the Council acting 
by qualified majority, shall, before 15 May of the year N + 2, grant a discharge to the 
Authority for the implementation of the budget for the financial year N."; 

(47) 

Article 65 is replaced by the following: 

"Article 65 

Financial rules 

The  financial  rules  applicable  to  the  Authority  shall  be  adopted  by  the  Executive 
Board  after  consulting  the  Commission.  Those  rules  may  not  depart  from 
Commission Delegated Regulation (EU) No 1271/2013* for the bodies referred to in 
Article  208  of  Regulation  (EU,  Euratom)  No  966/2012  unless  the  specific 
operational needs  for  the  functioning  of  the  Authority  so  require  and  only  with  the 
prior agreement of the Commission. 

Commission Delegated Regulation (EU) No 1271/2013 of 30 September 2013 
* 
on  the  framework  financial  regulation  for  the  bodies  referred  to  in  Article  208  of 
Regulation  (EU,  Euratom)  No  966/2012  of  the  European  Parliament  and  of  the 
Council (OJ L 328, 7.12.2013, p. 42)."; 

(48) 

in Article 66, paragraph 1 is replaced by the following: 

"1.  For  the  purposes  of  combating  fraud,  corruption  and  any  other  illegal  activity, 
Regulation  (EU,  Euratom)  No  883/2013  of  the  European  Parliament  and  of  the 
Council** shall apply to the Authority without any restriction. 

**Regulation  (EU,  Euratom)  No  883/2013  of  the  European  Parliament  and  of  the 
Council of 11 September 2013 concerning investigations conducted by the European 
Anti-Fraud  Office  (OLAF)  and  repealing  Regulation  (EC)  No  1073/1999  of  the 
European  Parliament  and  of  the  Council  and  Council  Regulation  (Euratom)  No 
1074/1999 (OJ L 248, 18.9.2013, p. 1)."; 

(49) 

Article 68 is amended as follows: 

(a) 

 paragraphs 1 and 2 are replaced by the following: 

"1. The Staff Regulations, the Conditions of Employment of Other Servants and the 
rules adopted jointly by the Union institutions for the purpose of applying them shall 

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apply to the staff of the Authority, including the full time members of the Executive 
Board and its Chairperson. 

2.  The  Executive  Board,  in  agreement  with  the  Commission,  shall  adopt  the 
necessary implementing measures, in accordance with the arrangements provided for 
in Article 110 of the Staff Regulations."; 

(b)  paragraph 4 is replaced by the following: 

"4.  The  Executive  Board  shall  adopt  provisions  to  allow  national  experts  from 
Member States to be seconded to the Authority."; 

(50) 

Article 70 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

"1.  Members  of  the  Board  of  Supervisors  and  all  members  of  the  staff  of  the 
Authority including officials seconded by Member  States on a temporary  basis and 
all other persons carrying out tasks for the Authority on a contractual basis shall be 
subject to the requirements of professional secrecy pursuant to Article 339 TFEU and 
the relevant provisions in Union legislation, even after their duties have ceased."; 

(b) 

in paragraph 2, the second subparagraph is replaced by the following: 

"Moreover,  the  obligation  under  paragraph  1  and  the  first  subparagraph  of  this 
paragraph shall not  prevent the Authority and the competent authorities  from using 
the  information  for  the  enforcement  of  the  acts  referred  to  in  Article  1(2),  and  in 
particular for legal procedures for the adoption of decisions."; 

(c) 

the following paragraph 2a is inserted: 

"2a. The Executive Board and the Board of Supervisors shall ensure that individuals 
who provide any service, directly or indirectly, permanently or occasionally, relating 
to the tasks of the Authority, including officials and other persons authorised by the 
Executive  Board  and  the  Board  of  Supervisors  or  appointed  by  the  competent 
authorities  for  that  purpose,  are  subject  to  the  requirements  of  professional  secrecy 
equivalent to those in the previous paragraphs. 

The  same  requirements  for  professional  secrecy  shall  also  apply  to  observers  who 
attend the meetings of the Executive Board and the Board of Supervisors who take 
part in the activities of the Authority."; 

(d) 

in paragraph 3, the first subparagraph is replaced by the following: 

"Paragraphs  1  and  2  shall  not  prevent  the  Authority  from  exchanging  information 
with  competent  authorities  in  accordance  with  this  Regulation  and  other  Union 
legislation applicable to financial institutions."; 

(51) 

Article 71is replaced by the following: 

"This  Regulation  shall  be  without  prejudice  to  the  obligations  of  Member  States 
relating to their processing of personal data under Regulation (EU) 2016/679 or the 
obligations  of  the  Authority  relating  to  its  processing  of  personal  data  under 
Regulation (EU) No 2018/XXX (Data Protection Regulation for EU institutions and 
Bodies) when fulfilling its responsibilities."; 

(52) 

in Article 72, paragraph 2 is replaced by the following: 

"2. The Executive Board shall adopt practical measures for applying Regulation (EC) 
No 1049/2001."; 

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(53) 

in Article 73, paragraph 2 is replaced by the following: 

"2. The Executive Board shall decide on the internal language arrangements for the 
Authority."; 

(54) 

in Article 74, the first paragraph is replaced by the following: 

"The necessary arrangements concerning the accommodation to be provided for the 
Authority in the Member State where its seat is located and the facilities to be made 
available  by  that  Member  State,  as  well  as  the  specific  rules  applicable  in  that 
Member State to the staff of the Authority and members of their families shall be laid 
down  in  a  Headquarters  Agreement  between  the  Authority  and  that  Member  State 
concluded after obtaining the approval of the Executive Board."; 

(55) 

the following Article 75a is inserted: 

"Article 75a 

Exercise of the delegation 

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

2. The power to adopt delegated acts referred to in Article 35c and Article 62a shall 
be conferred for an indeterminate period of time.  

3. The delegation of power referred to in Article 35c and Article 62a 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.  

4. Before adopting a delegated act, the Commission shall consult experts designated 
by  each  Member  State  in  accordance  with  the  principles  laid  down  in  the 
Interinstitutional Agreement on Better Law-Making of 13 April 2016.  

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

6.  A  delegated  act  adopted  pursuant  to  Article  35c  or  Article  62a  shall  enter  into 
force only if no objection has been expressed either by the European Parliament or 
the Council within a period of three months of notification of that act to the European 
Parliament  and  the  Council  or  if,  before  the  expiry  of  that  period,  the  European 
Parliament  and  the  Council  have  both  informed  the  Commission  that  they  will  not 
object.  That  period  shall  be  extended  by  three  months  at  the  initiative  of  the 
European Parliament or the Council."; 

(56) 

Article 76 is replaced by the following: 

"Article 76 

Relationship with the CEBS 

The Authority shall be considered the legal successor of CEBS. By the date of establishment 
of  the  Authority,  all  assets  and  liabilities  and  all  pending  operations  of  CEBS  shall  be 

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automatically  transferred  to  the  Authority.  CEBS  shall  establish  a  statement  showing  its 
closing  asset  and  liability  situation  as  of  the  date  of  that  transfer.  That  statement  shall  be 
audited and approved by CEBS and by the Commission." 

(57) 

new Article 77a is inserted: 

Article 77a 

Transitional provisions 

The  tasks  and  position  of  the  Executive  Director  appointed  in  accordance  with 
Regulation  No  1093/2010  as  last  amended  by  Directive  (EU)  2015/2366  and  in 
office  on  [PO:  please  insert  date  3  months  after  the  entry  into  force  of  this 
Regulation] shall cease on that date. 

The tasks and position of the Chairperson appointed in accordance with Regulation 
No 1093/2010 as last amended by Directive (EU) 2015/2366 and in office on [PO: 
please  insert  date  3  months  after  the  entry  into  force  of  this  Regulation]  shall 
continue until its expiry. 

The  tasks  and  position  of  the  members  of  the  Management  Board  appointed  in 
accordance  with  Regulation  No  1093/2010  as  last  amended  by  Directive  (EU) 
2015/2366 and in office on [PO: please insert date 3 months after the entry into force 
of this Regulation] shall cease on that date.". 

Article 2 

Amendments to Regulation (EU) No 1094/2010 

Regulation (EU) 1094/2010 is amended as follows: 

(1) 

paragraph 2 of Article 1 is replaced by the following: 

"2. The Authority shall act within the powers conferred by this Regulation and within 
the  scope  of  Directive  2009/138/EC  with  the  exception  of  Title  IV  thereof,  of 
Directives  2002/92/EC,  2003/41/EC,  2002/87/EC,  Directive  2009/103/EC*  and,  to 
the extent that those acts apply to insurance undertakings, reinsurance undertakings, 
institutions  for  occupational  retirement  provision  and  insurance  intermediaries, 
within the relevant parts of Directives (EU) 2015/849 and 2002/65/EC, including all 
directives, regulations, and decisions based on those acts, and of any further legally 
binding Union act which confers tasks on the Authority. 

*  
Directive  2009/103/EC  of  the  European  Parliament  and  of  the  Council  of  16 
September  2009  relating  to  insurance  against  civil  liability  in  respect  of  the  use  of 
motor vehicles, and the enforcement of the obligation to insure against such liability 
(OJ L 263, 7.10.2009, p. 11).";   

(2) 

paragraph 5 of Article 2 the following subparagraph is inserted: 

"References to supervision in this Regulation include the activities of all competent 
authorities  to  be  carried  out  pursuant  to  the  legislative  acts  referred  to  in  Article 
1(2)."; 

(3) 

in point 2 of Article 4, point (ii) is replaced by the following: 

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"(ii) with regard to Directives 2002/65/EC and (EU) 2015/849, the authorities 
competent  for  ensuring  compliance  with  the  requirements  of  those 
Directives by financial institutions as defined in point 1;"; 

(4) 

Article 6 is amended as follows: 

(a) 

 point (2) is replaced by the following: 

"(2) an Executive Board, which shall exercise the tasks set out in Article 47;"; 

(b) 

 point (4) is deleted; 

(5) 

Article 8 is amended as follows: 

(a) 

 paragraph 1 is amended as follows: 

(i) 

the following point (aa) is inserted: 

"(aa) to develop and maintain an up to date Union supervisory handbook 
on the supervision of financial institutions in the Union;"; 

ii) 

points (e) and (f) are replaced by the following: 

"(e) to organise and conduct reviews of competent authorities and, in that 
context,  to  issue  guidelines  and  recommendations  and  to  identify  best 
practices,  with  a  view  to  strengthening  consistency  in  supervisory 
outcomes; 

(f)  to  monitor  and  assess  market  developments  in  the  area  of  its 
competences  including,  where  relevant,  developments  relating  to  trends 
in innovative financial services;"; 

(iii)  point (h) is replaced by the following: 

"(h) to foster the protection of policyholders, pensions scheme members 
and beneficiaries, consumers and investors"; 

(iv)  point  (l) is deleted; 

(v) 

the following point (m) is inserted: 

"(m) to issue opinions in respect of the applications of internal models, to 
facilitate decision making and to provide assistance as foreseen in Article 
21a;"; 

(b) 

a new paragraph 1a is inserted: 

"1a. " When carrying out its tasks in accordance with this Regulation, the authority 
shall  take  account  of  technological  innovation,  innovative  and  sustainable  business 
models, and the integration of environmental, social and governance related factors ";   

(c) 

in paragraph 2, the following are amended 

(i) point (ca) is inserted: 

"(ca) issue recommendations as laid down in Articles 29a and 31a;"; 

(ii) point h) is replaced by the following: 

"(h)  collect  the  necessary  information  concerning  financial  institutions  as 
provided for in Article 35 and Article 35b"; 

(d) 

 the following paragraph 3 is added: 

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"3. When carrying out the tasks referred to in paragraph 1 and exercising the powers 
referred  to  in  paragraph  2,  the  Authority  shall  have  due  regard  to  the  principles  of 
better  regulation,  including  the  results  of  cost-benefit  analyses  produced  in 
accordance with this Regulation."; 

(6) 

Article 9 is amended as follows: 

(a) 

in paragraph 1, the following points (aa) and (ab) are inserted: 

"(aa)  undertaking  in-depth  thematic  reviews  of  market  conduct,  building  a 
common  understanding  of  markets  practices  in  order  to  identify  potential 
problems and analyse their impact; 

(ab)  developing  retail  risk  indicators  for  the  timely  identification  of  potential 
causes of consumer harm;"; 

(b) 

in paragraph 1, point (d) is replaced by the following: 

"(d) developing common disclosure rules."; 

(c)  paragraph 2 is replaced by the following: 

"2. The Authority shall monitor new and existing financial activities and may adopt 
guidelines and recommendations with a view to promoting the safety and soundness 
of markets, and convergence of regulatory and supervisory practices."; 

(d)  paragraphs 4 is replaced by the following: 

"4. The Authority shall establish, as an integral part of the Authority, a Committee on 
financial  innovation,  which  brings  together  all  relevant  competent  national 
supervisory  authorities  and  authorities  responsible  for  consumer  protection  with  a 
view to achieving a coordinated approach to the regulatory and supervisory treatment 
of  new  or  innovative  financial  activities  and  providing  advice  for  the  Authority  to 
present to the European Parliament, the Council and the Commission. The Authority 
may also include national data protection authorities as part of the Committee."; 

(7) 

Article 16 is amended as follows: 

(a) 

in paragraph 1, the following subparagraph is added: 

"The Authority may also address guidelines and recommendations to the authorities 
of Member States that are not defined as competent authorities under this Regulation 
but  that  are  empowered  to  ensure  the  application  of  the  acts  referred  to  in  Article 
1(2)."; 

(b)  paragraph 2 is replaced by the following: 

"2.  The  Authority  shall,  save  in  exceptional  circumstances,  conduct  open  public 
consultations regarding the guidelines and recommendations which it issues and shall 
analyse  the  related  potential  costs  and  benefits  of  issuing  such  guidelines  and 
recommendations. Those consultations and analyses shall be proportionate in relation 
to the scope, nature and impact of the guidelines or recommendations. The Authority 
shall,  save  in  exceptional  circumstances,  also  request  opinions  or  advice  from  the 
Insurance  and  Reinsurance  Stakeholder  Group  and  of  the  Occupational  Pensions 
Stakeholder Group."; 

(c) 

in paragraph 4 the following sentence is added at the end: 

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"The  report  shall  also  explain  how  the  Authority  has  justified  the  issue  of  its 
the  feedback  from  public 
guidelines  and  recommendations  and  summarise 
consultations on those guidelines and recommendations."; 

(d) 

the following paragraph 5 is added: 

"5. Where two thirds of the members of the Insurance and Reinsurance Stakeholder 
Group  or  Occupational  Pensions  Stakeholder  Group  are  of  the  opinion  that  the 
Authority  has  exceeded 
issuing  certain  guidelines  or 
recommendations, they may send a reasoned opinion to the Commission.  

its  competence  by 

The  Commission  shall  request  an  explanation  justifying  the  issuance  of  the 
guidelines  or  recommendations  concerned  from  the  Authority.  The  Commission 
shall,  on  receipt  of  the  explanation  from  the  Authority,  assess  the  scope  of  the 
guidelines  or  recommendations  in  view  of  the  Authority's  competence.  Where  the 
Commission  considers  that  the  Authority  has  exceeded  its  competence,  and  after 
having  given the Authority the opportunity  to state its views, the Commission  may 
adopt  an  implementing  decision  requiring  the  Authority  to  withdraw  the  guidelines 
or  recommendations  concerned.  The  decision  of  the  Commission  shall  be  made 
public."; 

(8) 

in paragraph 2 of Article 17, the following subparagraphs are added: 

"Without prejudice to the powers laid down in Article 35, the Authority may address 
a  duly  justified  and  reasoned  request  for  information  directly  to  other  competent 
authorities or relevant financial institutions, whenever it is deemed necessary for the 
purpose of investigating an alleged breach or non-application of Union law. Where it 
is  addressed  to  financial  institutions,  the  reasoned  request  shall  explain  why  the 
information is necessary for the purposes of investigating an alleged breach or non-
application of Union law. 

The addressee of such a request shall provide the Authority with clear, accurate and 
complete information without undue delay.   

Where  a  request  for  information  has  been  addressed  to  a  financial  institution,  the 
Authority  shall  inform  the  relevant  competent  authorities  of  such  a  request.  The 
competent authorities shall assist the Authority in collecting the information, where 
so requested by the Authority."; 

(9) 

Article 19 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

"1.  In  cases  specified  in  the  Union  acts  referred  to  in  Article  1(2)  and  without 
prejudice  to  the  powers  laid  down  in  Article  17,  the  Authority  may  assist  the 
competent authorities in reaching an agreement in accordance with the procedure set 
out in paragraphs 2 to 4 in either of the following circumstances: 

(a) 
at  the  request  of  one  or  more  of  the  competent  authorities  concerned 
where  a  competent  authority  disagrees  with  the  procedure  or  content  of  an 
action, proposed action, or inactivity of another competent authority; 

on  its  own  initiative  where  on  the  basis  of  objective  criteria, 

(b) 
disagreement can be determined between competent authorities.  

In cases where the acts referred to in Article 1(2) require a joint decision to be taken 
by competent authorities, a disagreement shall be presumed in the absence of a joint 
decision being taken by those authorities within the time limits set out in those acts."; 

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(b) 

the following paragraphs 1a and 1b are inserted: 

"1a.  The  competent  authorities  concerned  shall  in  the  following  cases  notify  the 
Authority without delay that an agreement has not been reached:  

(a) 
where  a  time  limit  for  reaching  an  agreement  between  competent 
authorities has been provided for in the Union acts, referred to in Article 1(2), 
and the earlier of the following occurs :  

(i)  the time limit has expired; 

(ii)  one  or more  of  the  competent authorities  concerned  conclude that a 
disagreement exists, on the basis of objective factors; 

(b) 
where  no  time  limit  for  reaching  an  agreement  between  competent 
authorities has been provided in the Union acts referred to in Article 1(2), and 
the earlier of the following occurs:  

i. one  and  more  of  the  competent  authorities  concerned  conclude  that  a 
disagreement exists on the basis of objective factors; or  

ii. 
two  months  have  elapsed  from  the  date  of  receipt  by  a 
competent  authority  of  a  request  from  another  competent  authority  to 
take certain action in order to comply with Union law and the requested 
authority has not yet adopted  a decision that satisfies the request."; 

(c)  paragraph 1, sub-paragraph 2 is deleted; 

1b. The Chairperson shall assess whether the Authority should act in accordance with 
paragraph  1.  Where  the  intervention  is  at  the  Authority’s  own  initiative,  the 
Authority shall notify the competent authorities concerned of its decision regarding 
the intervention.  

Pending the Authority's decision in accordance with the procedure set out in Article 
47(3a), in cases where the acts referred to in Article 1(2) require a joint decision to 
be  taken,  all  competent  authorities  involved  in  the  joint  decision  shall  defer  their 
individual  decisions.  Where  the  Authority  decides  to  act,  all  competent  authorities 
involved in the joint decision shall defer their decisions until the procedure set out in 
paragraphs 2 and 3 is concluded."; 

(d)  paragraph 3 is replaced by the following: 

"Where  the  competent  authorities  concerned  fail  to  reach  an  agreement  within  the 
conciliation  phase  referred  to  in  paragraph  2,  the  Authority  may  take  a  decision 
requiring those authorities to take specific action or to refrain from certain action in 
order  to  settle  the  matter,  in  order  to  ensure  compliance  with  Union  law.  The 
decision  of  the  Authority  shall  be  binding  on  the  competent  authorities  concerned. 
The  Authority’s  decision  may  require  competent  authorities  to  revoke  or  amend  a 
decision that they have adopted or to make use of the powers which they have under 
the relevant Union law."; 

(e) 

the following paragraph 3a is inserted: 

"3a. The Authority shall notify the competent authorities concerned of the conclusion 
of  the  procedures  under  paragraphs  2  and  3  together  with,  where  applicable  its 
decision taken under paragraph 3."; 

(f) 

paragraph 4 is replaced by the following: 

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"4. Without prejudice to the powers of the Commission pursuant to Article 258 of the 
Treaty,  where  a  competent  authority  does  not  comply  with  the  decision  of  the 
Authority,  and  thereby  fails  to  ensure  that  a  financial  institution  complies  with 
requirements directly applicable to it by virtue of the acts referred to in Article 1(2), 
the  Authority  may  adopt  an  individual  decision  addressed  to  a  financial  institution 
requiring  the  necessary  action  to  comply  with  its  obligations  under  Union  law, 
including the cessation of any practice."; 

(10) 

Article 21 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

"The  Authority  shall  promote  and  monitor  the  efficient,  effective  and  consistent 
functioning of the colleges of supervisors  referred to in Directive 2009/138/EC and 
foster  the  coherence  of  the  application  of  Union  law  among  the  colleges  of 
supervisors. With the objective of converging supervisory best practices, staff from 
the Authority shall be able to participate or where appropriate lead the activities of 
the colleges of supervisors, including on-site examinations, carried out jointly by two 
or more competent authorities."; 

(b) 

in paragraph 2, subparagraph 2 is replaced by the following: 

"For the purpose of this paragraph and of paragraph 1 of this Article, the Authority 
shall  be  considered  a  ‘competent  authority’  or  a  'supervisory  authority'  within  the 
meaning of the relevant legislation."; 

(11) 

the following Article 21a is inserted: 

"Article 21a 

Internal models 

1.  In  order  to  contribute  to  the  establishment  of  high-quality  common  supervisory 
standards  and  practices,  the  Authority  shall  on  its  own  initiative,  or  upon  request 
from one or more supervisory authorities: 

(a) Issue opinions to the supervisory authorities concerned on the application to 
use  or  change  an  internal  model.  To  this  end,  EIOPA  may  request  all  the 
information necessary from the supervisory authorities concerned; and  

(b) In case of disagreement related to the approval of internal models assist the 
supervisory concerned authorities in reaching an agreement in accordance with 
the procedure set out in Article 19. 

2.  In  the  circumstances  set  out  under  Article  231(6a)  of  Directive  2009/138/EC, 
undertakings may  request  EIOPA to assist the competent authorities  in reaching an 
agreement in accordance with the procedure set out in Article 19. 

(12) 

in Article 22(4), the second subparagraph is replaced by the following: 

"For  those  purposes,  the  Authority  may  use  the  powers  may  use  the  powers 
conferred on it under this Regulation, including Article 35 and 35b."; 

(13) 

Article 29 is amended as follows: 

(a)  paragraph 1 is amended as follows:: 

(i) 

the following point (aa) is inserted: 

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"(aa)  issuing  the  Strategic  Supervisory  Plan  in  accordance  with  Article 
29a;"; 

(ii)  point (b) is replaced by the following:  

"(b) promoting an effective bilateral and multilateral exchange of information 
between  competent  authorities,  pertaining  to  all  relevant  issues,  including 
cyber  security  and  cyber-attacks  as  appropriate,  with  full  respect  for  the 
applicable  confidentiality  and  data  protection  provisions  provided  for  in  the 
relevant Union legislation;"; 

(iii) point (e) is replaced by the following: 

"(e)  establishing  sectoral  and  cross-sectoral  training  programmes,  including 
with respect to technological innovation, facilitating personnel exchanges 
and encouraging competent authorities to intensify the use of secondment 
schemes and other tools;"; 

(b) 

in paragraph 2, the following subparagraph 2 is added: 

"For  the  purpose  of establishing a common supervisory culture, the Authority shall 
develop and maintain an up-to-date Union supervisory handbook on the supervision 
of financial institutions in the Union, taking into account changing business practices 
and business models of financial institutions. The Union supervisory handbook shall 
set  out  supervisory  best  practices  and  shall  specify  high  quality  methodologies  and 
processes; 

(14) 

The following Article 29a is inserted: 

"Article 29a 

Strategic Supervisory Plan 

1. Upon the entry into application of Regulation [XXX insert reference to amending 
Regulation] and every three years thereafter by 31 March, the Authority shall issue a 
recommendation  addressed  to  competent  authorities,  laying  down  supervisory 
strategic  objectives  and  priorities  ("Strategic  Supervisory  Plan")  and,  taking  into 
account any contributions from competent authorities,. The Authority shall transmit 
the  Strategic  Supervisory  Plan  for  information  to  the  European  Parliament,  the 
Council and the Commission and shall make it public on its website.  

The  Strategic  Supervisory  Plan  shall  identify  specific  priorities  for  supervisory 
activities in order to promote consistent, efficient and effective supervisory practices 
and  the  common,  uniform  and  consistent  application  of  Union  law  and  to  address 
relevant  micro-prudential  trends,  potential  risks  and  vulnerabilities  identified  in 
accordance with Article 32. 

2.  By  30  September  of  each  year,  each  competent  authority  shall  submit  a  draft 
annual work programme for the following year to the Authority for consideration and 
specifically  stipulate  how  that  draft  programme  is  aligned  with  the  Strategic 
Supervisory Plan.  

The draft annual work programme shall contain specific objectives and priorities for 
supervisory  activities  and  quantitative  and  qualitative  criteria  for  the  selection  of 
financial  institutions,  market  practices  and  behaviours  and  financial  markets  to  be 

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examined  by  the  competent  authority  submitting  the  draft  annual  work  programme 
during the year covered by that programme. 

3. The Authority shall assess the draft annual work programme and where there are 
material risks for not attaining the priorities set out in the Strategic Supervisory Plan 
the  Authority  shall  issue  a  recommendation  to  the  relevant  competent  authority 
aiming  at  the  alignment  of  the  relevant  competent  authority's  annual  work 
programme with the Strategic Supervisory Plan.  

By  31  December  of  each  year,  the  competent  authorities  shall  adopt  their  annual 
work programmes taking into account any such recommendations. 

4.  By  31  March  of  each  year,  each  competent  authority  shall  transmit  to  the 
Authority a report on the implementation of the annual work programme.  

The report shall include at least the following information: 

(a) 
a description of the supervisory activities and examinations of financial 
institutions, market practices and behaviours and of financial markets, and on 
the  administrative  measures  and  sanctions 
imposed  against  financial 
institutions responsible for breaches of Union and national law; 

a  description  of    activities  that  were  carried  out  and  which  were  not 

(b) 
foreseen in the annual work programme; 

(c) 
an account of the activities provided for in the annual work programme 
that were not carried out and of the objectives of that programme that were not 
met, as well as of the reasons for the failure to carry out those activities and to 
reach those objectives. 

5. The Authority shall assess the implementation reports of the competent authorities.  
Where there are material risks of not attaining the priorities set out in the Strategic 
Supervisory  Plan  the  Authority  shall  issue  a  recommendation  to  each  competent 
authority  concerned  on  how  the  relevant  shortcomings  in  its  activities  can  be 
remedied.  

Based on the reports and its own assessment of risks, the Authority shall identify the 
activities  of  the  competent  authority  that  are  critical  to  fulfilling  the  Strategic 
Supervisory Plan, and shall as appropriate conduct reviews under Article 30 of those 
activities. 

6.  The  Authority  shall  make  best  practices  identified  during  the  assessment  of  the 
annual work programmes publicly available."; 

(15) 

Article 30 is amended as follows: 

(a) 

the title of the Article is replaced by the following: 

"Reviews of competent authorities"; 

(b)  paragraph 1 is replaced be the following: 

"1. The Authority shall periodically conduct reviews of some or all of the activities 
of competent authorities, to further strengthen consistency in supervisory outcomes. 
To that end, the Authority shall develop methods to allow for objective assessment 
and  comparison  between  the  competent  authorities  reviewed.  When  conducting 
reviews,  existing  information  and  evaluations  already  made  with  regard  to  the 
competent  authority  concerned, including  all  information  provided  to  the  Authority 

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in accordance with Article 35, and any information from stakeholders shall be taken 
into account."; 

(c) 

the following paragraph 1a is inserted: 

"1a. For the purpose of this Article, the Authority shall establish a review committee, 
exclusively  composed  of  staff  from  the  Authority.  The  Authority  may  delegate 
certain tasks or decisions to the review committee."; 

(d)  paragraph 2 is amended as follows: 

(i) the introductory sentence is replaced by the following: 

"The review shall include an assessment of, but shall not be limited to:"; 

(ii)  point (a) is replaced by the following: 

"(a)  the  adequacy  of  resources,  the  degree  of  independence  and 
governance  arrangements  of  the  competent  authority,  with  particular 
regard to the effective application of the Union acts referred to in Article 
1(2) and the capacity to respond to market developments;"; 

(e)  paragraph 3 is replaced by the following: 

"3.  The  Authority  shall  produce  a  report  setting  out  the  results  of  the  review.  This 
report shall explain and indicate the follow-up measures that are foreseen as a result 
of the review. Those follow-up measures may be adopted in the form of guidelines 
and recommendations pursuant to Article 16 and opinions pursuant Article 29(1)(a).  

In accordance with Article 16(3), the competent authorities shall make every effort to 
comply  with  any  guidelines  and  recommendations  issued.  Where  competent 
authorities  do  not  take  action  to  address  the  follow-up  measures  indicated  in  the 
report, the Authority shall issue a follow-up report.  

When  developing  draft  regulatory  technical  standards  or  draft  implementing 
technical  standards  in  accordance  with  Articles  10  to  15,  or  guidelines  or 
recommendations  in  accordance  with  Article  16,  the  Authority  shall  take  into 
account  the  outcome  of  the  review,  along  with  any  other  information  acquired  in 
carrying  out  its  tasks,  in  order  to  ensure  convergence  of  the  highest  quality 
supervisory practices."; 

(f) 

the following paragraph 3a is inserted: 

"3a. The Authority shall submit an opinion to the Commission where, having regard 
to the outcome of the review or to any other information acquired by the Authority in 
carrying  out  its  tasks,  it  considers  further  harmonisation  of  the  rules  applicable  to 
financial institutions or competent authorities would be necessary."; 

(g)  paragraph 4 is replaced by the following: 

4.  The Authority shall publish the report referred to in paragraph 3 and any follow-
up  report  referred,  unless  publication  would  involve  risks  to  the  stability  of  the 
financial  system.  The  competent  authority  that  is  subject  to  the  review  shall  be 
invited  to  comment  before  the  publication  of  any  report.  Those  comments  shall  be 
made publicly available unless publication would involve risks to the stability of the 
financial system."; 

(16) 

in Article 31 a new paragraph 2 is inserted: 

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"2.  Regarding  activity  of  competent  authorities  intended  to  facilitate  entry  into  the 
market  of  operators  or  products  relying  on  technological  innovation,  the  Authority 
shall  promote  supervisory  convergence,  in  particular  through  the  exchange  of 
information  and  best  practices.  Where  appropriate,  the  Authority  may  adopt 
guidelines or recommendations in accordance with Article 16."; 

(17) 

a new Article 31a is inserted: 

"Article 31a 

Coordination on delegation and outsourcing of activities as well as of risk transfer 

1.  The  Authority  shall  on  an  ongoing  basis  coordinate  supervisory  actions  of 
competent authorities with a view to promoting supervisory convergence in the fields 
of  delegation  and  outsourcing  of  activities  by  financial  institutions  as  well  as  in 
relation to risk transfers conducted by them, in accordance with paragraphs 2, 3 and 
4.  

2. The competent authorities shall notify the Authority where they intend to carry out 
an  authorisation  or  registration  related  to  a  financial  institution  which  is  under 
supervision  of  the  competent  authority  concerned  in  accordance  with  the  acts 
referred  to  in  Article  1(2)  and  where  the  business  plan  of  the  financial  institution 
entails the outsourcing or delegation of a material part of its activities or any of the 
key  functions  or  the  risk  transfer  of  a  material  part  of  its  activities  into  third 
countries,  to  benefit  from  the  EU  passport  while  essentially  performing  substantial 
activities  or  functions  outside  the  Union.  The  notification  to  the  Authority  shall  be 
sufficiently detailed to allow for a proper assessment by the Authority.  

Where  the  Authority  considers  it  necessary  to  issue  an  opinion  to  a  competent 
authority  regarding  the  non-compliance  of  an  authorisation  or  registration  notified 
pursuant to the first subparagraph with Union law or guidelines, recommendations or 
opinions  adopted  by  the  Authority,  the  Authority  shall  inform  that  competent 
authority  thereof  within  20  working  days  of  the  receipt  of  the  notification  by  that 
competent authority. In that case the competent authority concerned shall await the 
opinion of the Authority before carrying out the registration or authorisation.  

At the request of the Authority, the competent authority shall within 15 working days 
of  the  receipt  of  such  a  request  provide  information  related  to  its  decisions  to 
authorise  or  register  a  financial  institution  which  is  under  its  supervision  in 
accordance with the acts referred to in Article 1(2).  

The Authority shall issue the opinion, without prejudice to any time limits set out in 
Union law, at the latest within 2 months of the receipt of the notification pursuant to 
the first subparagraph.  

3.  A  financial  institution  shall  notify  the  competent  authority  of  the  outsourcing  or 
delegation of a material part of its activities or any of its key functions, and the risk 
transfer  of  a  material  part  of  its  activities,  to  another  entity  or  its  own  branch 
established  in  a  third  country.  The  competent  authority  concerned  shall  inform  the 
Authority of such notifications on a semi-annual basis.  

Without  prejudice  to  Article  35,  at  the  request  of  the  Authority,  the  competent 
authority shall provide information in relation to the outsourcing, delegation or risk 
transfer arrangements by financial institutions.  

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The Authority shall monitor whether the competent authorities concerned verify that 
outsourcing,  delegation  or  risk  transfer  arrangements  referred  to  in  the  first 
subparagraph are concluded in accordance with Union law, comply with guidelines, 
recommendations  or  opinions  from  the  Authority  and  do  not  prevent  effective 
supervision by the competent authorities [and enforcement] in a third country. 

4. The Authority may issue recommendations to the competent authority concerned, 
including  recommendations  to  review  a  decision  or  to  withdraw  an  authorisation. 
Where  the  competent  authority  concerned  does  not  follow  the  recommendations  of 
the Authority within 15 working days, the competent authority shall state the reasons 
and  the  Authority  shall  make  its  recommendation  public  together  with  those 
reasons."; 

(18) 

(19) 

Article 32 is amended as follows: 

a new paragraph 2a is inserted: 

"2a. At least annually, the Authority shall consider whether it is appropriate to carry 
out Union-wide assessments referred to in paragraph 2 and shall inform the European 
Parliament,  the  Council  and  the  Commission  of  its  reasoning.  Where  such  Union-
wide assessments are carried out and the Authority considers it appropriate to do so, 
it shall disclose the results for each participating financial institution. 

Professional  secrecy  obligations  of  competent  authorities  shall  not  prevent  the 
competent  authorities  from  publishing  the  outcome  of  Union-wide  assessments 
referred to in paragraph 2 or from transmitting the outcome of such assessments to 
the  Authority  for  the  purpose  of  the  publication  by  the  Authority  of  the  results  of 
Union-wide assessments of the resilience of financial institutions.."; 

(20) 

Article 33 is amended as follows 

(a)  paragraph 2 is replaced by the following: 

"2.  The  Authority  shall  assist  the  Commission  in  preparing  equivalence  decisions 
pertaining  to  regulatory  and  supervisory  regimes  in  third  countries  following  a 
specific request for advice from the Commission or where required to do so by the 
acts referred to in Article 1(2)."; 

(b) 

the following paragraphs 2a, 2b and 2c are inserted: 

"2a.  The  Authority  shall  monitor  the  regulatory  and  supervisory  developments,    as 
well  as  enforcement  practices  and  relevant  market  developments  in  third  countries 
for which equivalence decisions have been adopted by the Commission pursuant to 
the acts referred to in Article 1(2) in order to verify whether the criteria, on the basis 
of which those decisions have been taken and any conditions set out therein, are still 
fulfilled.  It  shall  take  into  account  the  market  relevance  of  the  third  countries 
concerned.    The  Authority  shall  submit  a  confidential  report  on  its  findings  to  the 
Commission on an annual basis. 

Without  prejudice  to  specific  requirements  set  out  in  the  acts  referred  to  in  Article 
1(2) and subject to the conditions set out in the second sentence of paragraph 1 the 
Authority shall cooperate where possible with the relevant competent authorities, and 
where appropriate, also with resolution authorities, of third countries whose legal and 
supervisory  regimes  have  been  recognised  as  equivalent.  That  cooperation  shall  be 
pursued  on  the  basis  of  administrative  arrangements  concluded  with  the  relevant 
authorities  of 
third  countries.  When  negotiating  such  administrative 
arrangements, the Authority shall include provisions on the following: 

those 

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(a) 
the  mechanisms  which  allow  the  Authority  to  obtain  relevant 
information, including  information on the regulatory regime,  the supervisory 
approach,  relevant  market  developments  and  any  changes  that  may  affect  the 
decision on equivalence; 

to  the  extent  necessary  for  the  follow  up  of  such  decisions  on 
b) 
equivalence,  the  procedures  concerning  the  coordination  of  supervisory 
activities including on-site inspections. 

The  Authority  shall  inform  the  Commission  where  a  third-country  competent 
authority refuses to conclude such administrative arrangements or when it refuses to 
effectively cooperate. The Commission shall take this information into account when 
reviewing the relevant equivalence decisions..  

2b.  Where  the  Authority  identifies  developments  in  relation  to  the  regulation, 
supervision  or  the  enforcement  practices  in  the  third  countries  referred  to  in 
paragraph 2a that may impact the financial stability of the Union or of one or more of 
its  Member  States,  market  integrity  or  investor  protection  or  the  functioning  of  the 
internal market, it shall inform the Commission on a confidential basis and without 
delay.   

The  Authority  shall  on  an  annual  basis  submit  a  confidential  report  to  the 
Commission  on  the  regulatory,  supervisory,  enforcement  and  market  developments 
in  the  third  countries  referred  to  in  paragraph  2a  with  a  particular  focus  on  their 
implications  for  financial  stability,  market  integrity,  investor  protection  or  the 
functioning of the internal market  

to  conclude  any  administrative  arrangements  with 

2c.  The  competent  authorities  shall  inform  the  Authority  in  advance  of  their 
intentions 
third-country 
supervisory authorities in any of the areas governed by the acts referred to in Article 
1(2),  including  in  relation  to  branches  of  third  country  entities.  They  shall  provide 
simultaneously to the Authority a draft of such planned arrangements. 

The  Authority  may  develop  model  administrative  arrangements,  with  a  view  to 
establishing consistent, efficient and effective supervisory practices within the Union 
and  to  strengthening  international  supervisory  coordination.  In  accordance  with 
Article 16(3), the competent authorities shall make every effort to follow such model 
arrangements. 

In the report referred to in Article 43(5), the Authority shall include information on 
the  administrative  arrangements  agreed  upon  with  supervisory  authorities, 
international  organisations  or  administrations  in  third  countries,  the  assistance 
provided by the Authority to the Commission in preparing equivalence decisions and 
the monitoring activity pursued by the Authority in accordance with paragraph 2a.";  

(21) 

in Article 34, paragraph 2, is replaced by the following: 

"2.  With regard  to prudential assessment of  mergers  and acquisitions falling within 
the scope of Directive 2009/138/EC and which, according to that Directive, require 
consultation  between  competent  authorities  from  two  or  more  Member  States,  the 
Authority  may,  on  application  of  one  of  the  competent  authorities  concerned,  issue 
and publish an opinion on a prudential assessment, except in relation to the criteria in 
Article 59(1)(e) of Directive 2009/138/EC. The opinion shall be issued promptly and 
in  any  event  before  the  end  of  the  assessment  period  in  accordance  with  Directive 
2009/138/EC.  Articles  35  and  35b  shall  apply  to  the  areas  in  respect  of  which  the 
Authority may issue an opinion." 

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(22) 

Article 35 is amended as follows: 

(a)  paragraphs 1, 2 and 3 are replaced by the following: 

"1.  At  the  request  of  the  Authority,  the  competent  authorities  shall  provide  the 
Authority with all the necessary information to carry out the tasks conferred on it by 
this Regulation, provided that they have legal access to the relevant information.   

The information provided shall be accurate, complete and submitted within the time 
limit prescribed by the Authority. 

2. The Authority may also request information to be provided at recurring intervals 
and  in  specified  formats  or  by  way  of  comparable  templates  approved  by  the 
Authority.  Such  requests  shall,  where  possible,  be  made  using  common  reporting 
formats. 

3.  Upon  a  duly  justified  request  from  a  competent  authority,  the  Authority  shall 
provide any information that is necessary to enable the competent authority to carry 
out  its  tasks  in  accordance  with  the  professional  secrecy  obligations  laid  down  in 
sectoral legislation and in Article 70."; 

(b)  paragraph 5 is replaced by the following: 

"5. Where information requested in accordance with paragraph 1 is not available or is 
not  made  available  by  the  competent  authorities  within  the  time  limit  set  by  the 
Authority, the Authority may address a duly justified and reasoned request to any of 
the following: 

(a)  other authorities with supervisory functions;  

(b)  to  the  ministry  responsible  for  finance  in  the  Member  State  concerned 
where it has at its disposal prudential information; 

(c) to the national central bank of the Member State concerned; 

(d) to the statistical office of the Member State concerned. 

At the request of the Authority, the competent authorities shall assist the Authority in 
collecting the information."; 

(c) 

 paragraphs 6 and 7 are deleted: 

(23) 

the following Articles 35a to 35h are inserted: 

"Article 35a 

Exercise of the powers referred to in Article 35b 

The  powers  conferred  on  the  Authority,  any  of  its  officials  or  another  person 
authorised  by  the  Authority  in  accordance  with  Article  35(b)  shall  not  be  used  to 
require the disclosure of information or documents that are subject to legal privilege. 

Article 35b 

Request for information to financial institutions 

1.   Where information  requested under paragraph 1 or  paragraph  5 of Article 35 is 
not  available  or  is  not  made  available  within  the  time  limit  set  by  the  Authority,  it 

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may  by  simple  request  or  by  decision  require  the  relevant  financial  institutions  to 
provide all necessary information to enable the Authority to carry out its duties under 
this Regulation. 

2.  Any simple request for information referred to in paragraph 1shall: 

(a)  

refer to this Article as the legal base of that request; 

(b) 

(c) 

(d) 

state the purpose of the request; 

specify the information required; 

include a time limit within which the information is to be provided; 

(e) 
include a statement that there is no obligation on the person from whom 
the  information  is  requested  to  provide  that  information  but  that  in  case  of  a 
voluntary reply to the request, the information provided must not be incorrect 
or misleading; 

indicate the amount of the fine to be issued in accordance with Article 

(f) 
35c where the information provided is incorrect or misleading information. 

3.  When requesting information by decision per, the Authority shall: 

(a)   

refer to this Article as the legal base of that request; 

(b) 

(c) 

(d) 

state the purpose of the request; 

specify the information required; 

set a time limit within which the information is to be provided; 

indicate  the  periodic  penalty  payments  provided  for  in  Article  35d 

(e) 
where the production of the required information is incomplete; 

indicate  the  fine  provided  for  in  Article  35c  where  the  answers  to  the 

(f) 
questions are incorrect or misleading information; 

(g) 
indicate the right to appeal the decision before the Board of Appeal and 
to have the decision reviewed by the Court of Justice of the European Union in 
accordance with Articles 60 and 61. 

4.  The financial institutions or their representatives and, in the case of legal persons 
or associations having no legal personality, the persons authorised to represent them 
by law or by their constitution shall supply the information requested. Lawyers duly 
authorised  to  act  may  supply  the  information  on  behalf  of  their  clients.  The  latter 
shall remain fully responsible if the information supplied is incomplete, incorrect or 
misleading. 

5.    The  authority  shall  send,  without  delay,  a  copy  of  the  simple  request  or  of  its 
decision  to  the  competent  authority  of  the  Member  State  where  the  relevant  entity 
listed  in  paragraph  1  concerned  by  the  request  for  information  is  domiciled  or 
established. 

6.  The Authority may use confidential information received in accordance with this 
Article  only  for  the  purposes  of  carrying  out  the  tasks  assigned  to  it  by  this 
Regulation."; 

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Article 35c 

Procedural rules for imposing fines 

1.    Where,  in  carrying  out  its  duties  under  this  Regulation,  the  authority  finds  that 
there are serious indications of the possible existence of facts liable to constitute an 
infringement  as  referred  to  in  Article  35d(1),  the  Authority  shall  appoint  an 
independent investigation officer within the Authority to investigate the matter.  The 
appointed officer shall not be involved or have been directly or indirectly involved in 
the  direct  or  indirect  supervision  of  the  financial  institutions  concerned  and  shall 
perform his or her functions independently from the Board of Supervisors. 

2.  The investigation officer referred to  in  paragraph 1 shall investigate the alleged 
infringements, taking into account any comments submitted by the persons who are 
subject to the investigations, and shall submit a complete file with his or her findings 
to the Board of Supervisors. 

3.  In order to carry out his or her tasks, the investigation officer shall have the power 
to request information in accordance with Article 35b. 

4.  Where carrying out his or her tasks, the investigation officer shall have access to 
all documents and information gathered by the Authority in its supervisory activities. 

5.  Upon completion of his  or  her investigation and before  submitting the  file  with 
his or her findings to the Board of supervisors, the investigation officer shall give the 
persons subject to the investigations the opportunity to be heard on the matters being 
investigated.  The investigation officer shall base his or her findings only on facts on 
which the persons concerned have had the opportunity to comment. 

6.    The  rights  of  defence  of  the  persons  subject  to  the  investigations  shall  be  fully 
respected during investigations undertaken pursuant to this Article. 

7.    Upon  submission  of  the  file  with  his  finding  to  the  Board  of  Supervisors,  the 
investigation  officer  shall  notify  the  persons  who  are  subject  to  the  investigations.  
The persons subject to the investigations shall be entitled to have access to the file, 
subject to the legitimate interest of other persons in the protection of their business 
secrets.    The  right  of  access  to  the  file  shall  not  extend  to  confidential  information 
affecting third parties. 

8.  On the basis of the file containing the investigation officer's findings and, when 
requested  by  the  persons  subject  to  the  investigations,  after  having  heard  those 
persons in accordance with Article 35f, the Authority shall decide if one or more of 
the infringements as referred to in Article 35d(1) has been committed by the persons 
subject to the investigations and, in such a case, shall take a measure in accordance 
with that Article. 

9.  The investigation officer shall not participate in the deliberations of the Board of 
Supervisors or intervene in any way in the decision-making process of the Board of 
Supervisors. 

10.  The Commission shall adopted delegated acts in accordance with Article 75a to 
specify  the  rules  of  procedure  for  the  exercise  of  the  power  to  impose  fines  or 
periodic penalty payments, including rules on the following: 

(a) rights of defence 

(b) temporal provisions,  

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(c)  provisions  specifying  how  fines  or  periodic  penalty  payments  are  to  be 
collected,  

(d)  provisions  specifying  the  limitation  periods  for  the  imposition  and 
enforcement of fines and periodic penalty payments. 

11.    The  Authority  shall  refer  matters  for  criminal  prosecution  to  the  relevant 
national  authorities  where,  in  carrying  out  its  duties  under  this  Regulation,  it  finds 
that there are serious indications of the possible existence of facts liable to constitute 
criminal  offences.    In  addition,  the  Authority  shall  refrain  from  imposing  fines  or 
periodic penalty payments where a prior acquittal or conviction arising from identical 
fact  or  facts  which  are  substantially  the  same  has  already  acquired  the  force  of  res 
judicata as the result of criminal proceedings under national law. 

Article 35d 

Fines 

1.    The  Authority  shall  adopt  a  decision  to  impose  a  fine  where  it  finds  that  a 
financial institution referred to in Article 35b has, intentionally or negligently, failed 
to  provide  information  in  response  to  a  decision  requiring  information  pursuant  to 
Article  35b(3)  or  has  provided  incomplete,  incorrect  or  misleading  information  in 
response to a simple request for information or a decision pursuant to Article 35b(2). 

2.  The basic amount of the fine referred to in paragraph 1 shall amount to at least 
EUR 50 000 and shall not exceed EUR 200 000. 

3. When setting the basic amount of the fine referred to in paragraph 2, the Authority 
shall have regard to the annual turnover of the financial institution concerned for the 
preceding business year and shall be: 

 (a)  at  the  lower  end  of  the  limit  for  entities  with  an  annual  turnover  below 
EUR 10 million;  

(b) the middle of the limit for entities with an annual turnover between EUR 10 
and 50 million;  

(c) the higher end of the limit for entities with an annual turnover higher than 
EUR 50 million. 

The basic amounts defined within the limits set out in paragraph 2 shall be adjusted, 
where  necessary,  by  taking  into  account  aggravating  or  mitigating  factors  in 
accordance with the relevant coefficients set out in paragraph 5. 

The relevant aggravating coefficient shall be applied one by one to the basic amount. 
Where  more  than  one  aggravating  coefficient  is  applicable,  the  difference  between 
the  basic  amount  and  the  amount  resulting  from  the  application  of  each  individual 
aggravating coefficient shall be added to the basic amount. 

The relevant mitigating coefficient shall be applied one by one to the basic amount. 
Where more than one mitigating coefficient is applicable, the difference between the 
basic  amount  and  the  amount  resulting  from  the  application  of  each  individual 
mitigating coefficient shall be subtracted from the basic amount. 

4.  The  following  adjustment  coefficients  shall  be  applied  cumulatively  to  the  basic 
amount referred to in paragraph 2, based on the following: 

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(a) 

the adjustment coefficients linked to aggravating factors are as follows: 

(i) where the infringement has been committed repeatedly, an additional 
coefficient  of  1.1  shall  apply  each  time  the  infringement  has  been 
repeated; 

(ii) where the infringement lasted for more than six months, a coefficient 
of 1.5 shall apply; 

(iii)  where  the  infringement  has  been  committed  intentionally,  a 
coefficient of 2 shall apply; 

(iv) where no remedial action has been taken since the infringement has 
been identified, a coefficient of 1.7 shall apply; 

(v)  where  the  financial  institution’s  senior  management  has  not 
cooperated with the Authority, a coefficient of 1.5 shall apply. 

(b) 

the adjustment coefficients linked to mitigating factors are as follows: 

(i)  where  the  infringement  lasted  fewer  than  10  working  days,  a 
coefficient of 0.9 shall apply; 

(ii) where the financial institution’s senior management can demonstrate 
that they have taken all the necessary measures to prevent the failure to 
comply  with  a  request  pursuant  to  Article  35(6a),  a  coefficient  of  0.7 
shall apply; 

(iii)  where  the  financial  institution  has  brought  the  infringement  to  the 
Authority’s attention quickly, effectively and completely, a coefficient of 
0.4 shall apply y; 

(iv)  where  the  financial  institution  has  voluntarily  taken  measures  to 
ensure  that  similar  infringement  cannot  be  committed  in  the  future,  a 
coefficient of 0.6 shall apply. 

5.    Notwithstanding  paragraphs  2  and  3,  the  total  fine  shall  not  exceed  20%  of  the 
annual turnover of the financial institution concerned in the preceding business year 
unless  the  financial  institution  has  directly  or  indirectly  benefitted  financially  from 
the  infringement.  In  that  case,  the  total  fine  shall  be  at  least  equal  to  that  financial 
benefit. 

Article 35e 

Periodic penalty payments 

1. The Authority shall adopt decisions to impose a periodic penalty payment in order 
to compel institutions or entities referred to in Article 35b(1) to provide information 
requested by decision in accordance with Article 35b(3).. 

2.  A  periodic  penalty  payment  shall  be  effective  and  proportionate.  The  periodic 
penalty  payment  shall  be  imposed  on  a  daily  basis  until  the  financial  institution 
concerned complies with the relevant decision referred to in paragraph 1. 

3. Notwithstanding paragraph 2, the amount of a periodic penalty payment shall be 
3%  of  the  average  daily  turnover  of  the  financial  institution  concerned  in  the 
preceding business year. It shall be calculated from the date stipulated in the decision 
imposing the periodic penalty payment. 

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4.  A  periodic  penalty  payment  may  be  imposed  for  a  period  of  no  more  than  six 
months following the notification of the Authority's decision. 

Article 35f 

Right to be heard 

1. Before taking any decision to impose a fine and periodic penalty payment under 
Articles 35d and 35e, the Authority shall give the financial institution subject to the 
request for information the opportunity to be heard.  

The  Authority  shall  base  its  decisions  only  on  the  findings  on  which  the  financial 
institutions concerned have had the opportunity to comment. 

2. The rights of defence of the financial institution referred to in paragraph 1 shall be 
fully  respected  during  the  procedure.  The  financial  institution  shall  be  entitled  to 
have access to the Authority's file, subject to the legitimate interest of other persons 
in protecting their business secrets. The right of access to the file shall not extend to 
confidential information or internal preparatory documents of the Authority. 

Article 35g 

Disclosure, nature, enforcement and allocation of fines and periodic penalty payments   

1.    Fines  and  periodic  penalty  payments  imposed  pursuant  to  Articles  35d  and  35e 
shall be of an administrative nature and shall be enforceable. 

2.  Enforcement  of  the  fine  and  periodic  penalty  payment  shall  be  governed  by  the 
rules  of  procedure  in  force  in  the  Member  State  in  the  territory  of  which  the 
enforcement is carried out. The enforcement order shall be appended to the decision 
imposing a fine or a periodic penalty payment without the requirement for any other 
formality  than  the  verification  of  the  authenticity  of  the  decision  by  an  authority 
which each Member State shall designate for that purpose and shall make known to 
the Authority and to the Court of Justice of the European Union. 

3.  Where  the  formalities  referred  to  in  paragraph  2  have  been  completed  on 
application by the party concerned, the party concerned may proceed to enforcement 
in  accordance  with  the  national  law,  by  bringing  the  matter  directly  before  the 
competent body. 

4. Enforcement of the fine or periodic penalty payment may only be suspended by a 
decision of the Court of Justice of the European Union. However, the courts of the 
Member State concerned shall have jurisdiction over complaints that the enforcement 
of the fine or periodic penalty payment is being carried out in an irregular manner. 

5. The Authority shall disclose to the public every fine and periodic penalty payment 
that has been imposed pursuant to Articles 35d and 35e, unless such disclosure to the 
public  would  seriously  jeopardise  the  financial  markets  or  cause  disproportionate 
damage to the parties involved. 

6.  The  amounts  of  the  fine  and  periodic  penalty  payment  shall  be  allocated  to  the 
general budget of the European Union. 

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Article 35h 

Review by the Court of Justice of the European Union 

The  Court  of  Justice  of  the  European  Union  shall  have  unlimited  jurisdiction  to 
review  decisions  whereby  the  Authority  has  imposed  a  fine  or  a  periodic  penalty 
payment.  It  may  annul,  reduce  or  increase  the  fine  or  periodic  penalty  payment 
imposed by the Authority."; 

(24) 

In paragraph 5 of Article 36, the first subparagraph is replaced by the following: 

"On  receipt  of  a  warning  or  recommendation  from  the  ESRB  addressed  to  a 
competent  authority,  the  Authority  shall,  where  relevant,  use  the  powers  conferred 
upon it by this Regulation to ensure a timely follow-up." 

(25) 

Article 37 is amended as follows: 

(a) 

in  paragraph  5  the  last  sentence  of  the  first  subparagraph  is  replaced  by  the 
following: 

"Members  of  the  Insurance  and  Reinsurance  Stakeholder  Group  and  of  the 
Occupational  Pensions  Stakeholder  Group  shall  serve  for  a  period  of  four  years, 
following which a new selection procedure shall take place."; 

(b) 

in paragraph 6, the following subparagraphs are added: 

"Where members of the Banking Stakeholder Group cannot reach a common opinion 
or advice, the members representing one group of stakeholders shall be permitted to 
issue a separate opinion or separate advice. 

The  Insurance  and  Reinsurance  Stakeholder  Group,  and  the  Occupational  Pensions 
Stakeholder  Group,  the  Banking  Stakeholder  Group,  the  Securities  and  Markets 
Stakeholder Group may issue joint opinions and advice on issues related to the work 
of the European Supervisory Authorities under Article 56 of this Regulation on joint 
positions and common acts."; 

(26) 

Article 39 is replaced by the following: 

"Article 39 

Decision-making procedures 

1.    The  Authority  shall  act  in  accordance  with  paragraphs  2  to  6  when  adopting 
decisions  provided  for  in  this  Regulation,  save  for  those  decisions  adopted  in 
accordance with Articles 35b, 35d and 35e. 

2. The Authority shall inform any addressee of a decision of its intention to adopt the 
decision, setting a time limit within which the addressee may express its views on the 
subject-matter  of  the  decision,  taking  full  account  of  the  urgency,  complexity  and 
potential  consequences  of  the  matter.  The  provision  laid  down  in  the  first  sentence 
shall apply mutatis mutandis to recommendations as referred to in Article 17(3). 

3.  The decisions of the Authority shall state the reasons on which they are based. 

4.    The  addressees  of  decisions  of  the  Authority  shall  be  informed  of  the  legal 
remedies available under this Regulation. 

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5.    Where  the  Authority  has  taken  a  decision  pursuant  to  Article  18(3)  or  Article 
18(4), it shall review that decision at appropriate intervals. 

6.  The adoption of the decisions which the Authority takes pursuant to Articles 17, 
18  or  19  shall  be  made  public.  The  publication  shall  disclose  the  identity  of  the 
competent  authority  or  financial  institution  concerned  and  the  main  content  of  the 
decision,  unless  such  publication  is  in  conflict  with  the  legitimate  interest  of  those 
financial  institutions  or  with  the  protection  of  their  business  secrets  or  could 
seriously jeopardise the orderly functioning and integrity of financial markets or the 
stability of the whole or part of the financial system of the Union."; 

(27) 

Article 40 is amended as follows: 

(a)  paragraph 1 is amended as follows: 

 (i) 

the following point (aa) is inserted: 

"(aa)  the  full  time  members  of  the Executive  Board  referred  to  Article  45(1), 
who shall be non-voting;"; 

(b) 

(c) 

 in paragraph 7, the second subparagraph  is deleted; 

 the following paragraph 8 is added; 

"8.  Where  the  national  public  authority  referred  to  in  paragraph  1(b)  is  not 
responsible  for  the  enforcement  of  consumer  protection  rules,  the  member  of  the 
Board of Supervisors  referred to in that  point may decide to invite a representative 
from the Member State’s consumer protection authority, who shall be non-voting. In 
the  case  where  the  responsibility  for  consumer  protection  is  shared  by  several 
authorities  in  a  Member  State,  those  authorities  shall  agree  on  a  common 
representative."; 

(28) 

Article 41 is replaced by the following" 

"Article 41 

Internal committees 

"The  Board  of  Supervisors  may  establish  internal  committees  for  specific  tasks 
attributed to it. The Board of Supervisors may provide for the delegation of certain 
clearly defined tasks and decisions to internal committees, to the Executive Board or 
to the Chairperson."; 

; 

(29) 

in Article 42, the first paragraph is replaced by the following: 

"When  carrying  out  the  tasks  conferred  upon  them  by  this  Regulation  the  voting 
members of the Board of Supervisors shall act independently and objectively in the 
sole interest of the Union as a whole and shall neither seek nor take instructions from 
Union institutions or  bodies, from any  government of a  Member  State  or  from any 
other public or private body."; 

(30) 

Article 43 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

"1. The Board of Supervisors shall give guidance to the work of the Authority. Save 
as  otherwise  provided  in  this  Regulation  the  Board  of  Supervisors  shall  adopt  the 

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opinions, recommendations, guidelines and decisions of the Authority, and issue the 
advice referred to in Chapter II, based on a proposal from the Executive Board."; 

(b)  paragraphs 2 and 3 are deleted; 

(c) 

in paragraph 4, the first sub-paragraph is replaced by the following: 

"The  Board  of  Supervisors  shall  adopt,  before  30  September  of  each  year,  on  the 
basis of a proposal by the Executive Board, the work programme of the Authority for 
the coming year, and shall transmit it for information to the European Parliament, the 
Council and the Commission."; 

(d)  paragraph 5 is replaced by the following: 

"5. The Board of Supervisors shall adopt, on the basis of a proposal by the Executive 
Board,  the  annual  report  on  the  activities  of  the  Authority,  including  on  the 
performance of the Chairperson’s duties, on the basis of the draft report referred to in 
Article 53(7) and shall transmit that report to the European Parliament, the Council, 
the  Commission,  the  Court  of  Auditors  and  the  European  Economic  and  Social 
Committee by 15 June each year. The report shall be made public."; 

(e) 

(e) 

paragraph 8 is deleted; 

(31) 

Article 44 is amended as follows: 

(a) 

in the second subparagraph of paragraph 1, the following sentence is added: 

"The full time members of the Executive Board and the Chairperson shall not vote on 
these decisions."; 

(b) 

in paragraph 1, the third and the fourth subparagraphs are deleted; 

(c)  paragraph 4 is replaced by the following: 

"4.  The  non-voting  members  and  the  observers  shall  not  participate  in  any 
discussions  within  the  Board  of  Supervisors  relating  to  individual  financial 
institutions, unless otherwise provided for in Article 75(3) or in the acts referred to in 
Article 1(2)."; 

The first subparagraph shall not apply to the Chairperson, the members that are also 
members  of  the  Executive  Board  and  the  European  Central  Bank  representative 
nominated by its Supervisory Board.";  

(32) 

in Chapter III, the title of Section 2 is replaced by the following: 

"Executive Board"; 

(33) 

Article 45 is replaced by the following: 

"Article 45 

Composition 

"1.  The  Executive  Board  shall  be  composed  of  the  Chairperson  and  three  full  time 
members. The Chairperson shall assign clearly defined policy and managerial tasks 
to  each  of  the  full  time  members.  One  of  the  full  time  members  shall  be  assigned 
responsibility for budgetary matters and for matters relating to the work programme 
of the Authority ("Member in charge"). One of the full time members shall act as a 

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Vice Chairperson and carry out the tasks of the Chairperson in his or her absence or 
reasonable impediment, in accordance with this Regulation.  . 

2. The full time members shall be selected on the basis of merit, skills, knowledge of 
financial  institutions  and  markets,  and  experience  relevant  to  financial  supervision 
and regulation. The full time members shall have extensive management experience. 
The  selection  shall  be  based  on  an  open  call  for  candidates,  to  be  published  in  the 
Official Journal of the European Union, following which the Commission shall draw 
up a shortlist of qualified candidates.   

The Commission shall submit the shortlist to the European Parliament for approval. 
Following the approval of that shortlist, the Council shall adopt a decision to appoint 
the full time members of the Executive Board including the Member in charge. 

3. Where a full time member of the Executive Board no longer fulfil the conditions 
set  out  in  Article  46  or  has  been  found  guilty  of  serious  misconduct,  the  Council 
may, on a proposal from the Commission which has been approved by the European 
Parliament, adopt a decision to remove him or her from office.  

4.  The  term  of  office  of  the  full  time  members  shall  be  5  years  and  shall  be 
renewable once. In the course of the 9 months preceding the end of the 5-year term 
of office of the full time member, the Board of Supervisors shall evaluate: 

(a)  the  results  achieved  in  the  first  term  of  office  and  the  way  in  which  they 
were achieved; 

(b) the Authority’s duties and requirements in the coming years. 

Taking into account the evaluation, the Commission shall submit the list of the full 
time  members  to  be  renewed  to  the  Council.  Based  on  this  list  and  taking  into 
account  the  evaluation,  the  Council  may  extend  the  term  of  office  of  the  full  time 
members."; 

(34) 

the following Article 45a is inserted: 

"Article 45a 

Decision-making 

1.  Decisions  by  the  Executive  Board  shall  be  adopted  by  simple  majority  of  its 
members.  Each  member  shall  have  one  vote.  In  the  event  of  a  tie,  the  Chairperson 
shall have a casting vote. 

2.  The  representative  of  the  Commission  shall  participate  in  meetings  of  the 
Executive  Board  without  the  right  to  vote  save  in  respect  of  matters  referred  to  in 
Article 63.  

3. The Executive Board shall adopt and make public its rules of procedure. 

4. Meetings of the Executive Board shall be convened by the Chairperson at his own 
initiative  or  at  the  request  of  one  of  its  members,  and  shall  be  chaired  by  the 
Chairperson. 

The Executive Board shall meet prior to every meeting of the Board of Supervisors 
and as often as the Executive Board deems necessary. It shall meet at least five times 
a year. 

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5.  The  members  of  the  Executive  Board  may,  subject  to  the  rules  of  procedure,  be 
assisted  by  advisers  or  experts.  The  non-voting  participants  shall  not  attend  any 
discussions within the Executive Board relating to individual financial institutions."; 

(35) 

the following Article 45b is inserted: 

"Article 45b 

Internal committees 

The Executive Board may establish internal committees for specific tasks attributed 
to it."; 

(36) 

Article 46 is replaced by the following: 

"Article 46 

Independence 

"The members of the Executive Board shall act independently and objectively in the 
sole interest of the Union as a whole and shall neither seek nor take instructions from 
the  Union  institutions  or  bodies,  from  any  government  of  a  Member  State  or  from 
any other public or private body. 

Neither  Member  States,  the  Union  institutions  or  bodies,  nor  any  other  public  or 
private  body  shall  seek  to  influence  the  members  of  the  Executive  Board  in  the 
performance of their tasks."; 

(37) 

Article 47 is replaced by the following: 

"Article 47 

Tasks 

1.  The  Executive  Board  shall  ensure  that  the  Authority  carries  out  its  mission  and 
performs the tasks assigned to it in accordance with this Regulation. It shall take all 
necessary measures, notably the adoption of internal administrative instructions and 
the publication of notices, to ensure the functioning of the Authority, in accordance 
with this Regulation.  

2.  The Executive Board shall propose, for adoption by the Board of Supervisors, an 
annual and multi-annual work programme. 

3.    The  Executive  Board  shall  exercise  its  budgetary  powers  in  accordance  with 
Articles 63 and 64. 

For  the  purposes  of  Articles  17,  19,  22,  29a,  30,  31a,  32  and  35b  to  35h,  the 
Executive  Board  shall  be  competent  to  act  and  to  take  decisions.  The  Executive 
Board shall keep the Board of Supervisors informed of the decisions taken.  

3a.  The  Executive  Board  shall  examine,  give  an  opinion  and  made  proposal  on  all 
matters to be decided by the Board of Supervisors. 

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4. The Executive Board shall adopt the Authority’s staff policy plan and, pursuant to 
Article  68(2),  the  necessary  implementing  measures  of  the  Staff  Regulations  of 
Officials of the European Communities ('the Staff Regulations’). 

5.  The Executive Board shall adopt the special provisions on right of access to the 
documents of the Authority, in accordance with Article 72. 

6.    The  Executive  Board  shall  propose  an  annual  report  on  the  activities  of  the 
Authority,  including  on  the  Chairperson’s  duties,  on  the  basis  of  the  draft  report 
referred to in Article 53(7) to the Board of Supervisors for approval. 

7.  The  Executive  Board  shall  appoint  and  remove  the  members  of  the  Board  of 
Appeal in accordance with Article 58(3) and (5). 

8 The members of the Executive Board shall make public all meetings held and any 
hospitality received. Expenses shall be recorded publicly in accordance with the Staff 
Regulations.   

9. The Member in charge shall have the following specific tasks: 

(a)  to  implement  the  annual  work  programme  of  the  Authority  under  the 
guidance  of  the  Board  of  Supervisors  and  under  the  control  of  the  Executive 
Board; 

(b)  to  take  all  necessary  measures,  notably  the  adoption  of  internal 
administrative  instructions  and  the  publication  of  notices,  to  ensure  the 
functioning of the Authority, in accordance with this Regulation; 

(c) to prepare a multi-annual work programme, as referred to in Article 47(2); 

(d)  to  prepare  a  work  programme  by  30  June  of  each  year  for  the  following 
year, as referred to in Article 47(2) ; 

(e) to draw up a preliminary draft budget of the Authority pursuant to Article 
63 and to implement the budget of the Authority pursuant to Article 64; 

(f) to prepare an annual draft report to include a section on the regulatory and 
supervisory  activities  of  the  Authority  and  a  section  on  financial  and 
administrative matters; 

(g)  to  exercise  in  respect  to  the  Authority’s  staff  the  powers  laid  down  in 
Article 68 and to manage staff matters."; 

(38) 

Article 48 is amended as follows: 

(a) 

 in paragraph 1, the second subparagraph is replaced by the following: 

"The  Chairperson  shall  be  responsible  for  preparing  the  work  of  the  Board  of 
Supervisors  and  shall  chair  the  meetings  of  the  Board  of  Supervisors  and  the 
Executive Board."; 

(b) 

 paragraph 2 is replaced by the following: 

"2.  The  Chairperson  shall  be  selected  on  the  basis  of  merit,  skills,  knowledge  of 
financial institutions and markets, and of experience relevant to financial supervision 
and regulation, following an open call for candidates to be published in the Official 
Journal  of  the  European  Union.  The  Commission  shall  submit  a  shortlist  of 
candidates  for  the  position  of  the  Chairperson  to  the  European  Parliament  for 
approval. Following the approval of that shortlist, the Council shall adopt a decision 
to appoint the Chairperson.  

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Where the Chairperson no longer fulfil the conditions referred to in Article 49 or has 
been  found  guilty  of  serious  misconduct,  the  Council  may,  on  a  proposal  from  the 
Commission which has been approved by the European Parliament, adopt a decision 
to remove him or her from office."; 

(c) 

 in paragraph 4, the second subparagraph is replaced by the following: 

"The  Council,  on  a  proposal  from  the  Commission  and  taking  into  account  the 
evaluation, may extend the term of office of the Chairperson once."; 

(d) 

 paragraph 5 is deleted; 

(39) 

the following Article 49a is inserted: 

"Article 49a 

Expenses 

"The Chairperson shall make all public meetings held and any hospitality received. 
Expenses shall be recorded publicly in accordance with the Staff Regulations."; 

(40) 

(41) 

Articles 51, 52 and 53 are deleted; 

in paragraph 2 of Article 54, the following indent is added: 

" — consumer and investor protection issues;" ; 

(42) 

in Article 55 paragraph 2 is replaced by the following: 

"2. One member of the Executive Board, The Member in charge in accordance with 
Article 47(8a), the representative of the Commission and the ESRB shall be invited 
to the meetings of the Joint Committee, as well as of any Sub-Committees referred to 
in Article 57, as observers."; 

(43) 

Article 58 is amended as follows: 

(a)  paragraph 3 is replaced by the following: 

"3. Two members of the Board of Appeal and two alternates shall be appointed by 
the Executive Board of the Authority from a short-list proposed by the Commission, 
following a public call for expressions of interest published in the Official Journal of 
the European Union, and after consultation of the Board of Supervisors."; 

(b)  paragraph 5 is replaced by the following: 

"5.  A  member  of  the  Board  of  Appeal  appointed  by  the  Executive  Board  of  the 
Authority shall not be removed during his term of office, unless he has been found 
guilty of serious misconduct and the Executive Board takes a decision to that effect 
after consulting the Board of Supervisors."; 

(44) 

in Article 59 paragraph 1 is replaced by the following: 

"1.  The  members  of  the  Board  of  Appeal  shall  be  independent  in  making  their 
decisions. They shall not be bound by any instructions. They shall not perform any 
other  duties  in  relation  to  the  Authority,  its  Executive  Board  or  its  Board  of 
Supervisors."; 

(45) 

in Article 60 paragraph 1 is replaced by the following: 

"1. Any natural or legal person, including competent authorities, may appeal against 
a  decision  of  the  Authority  referred  to  in  Articles  17,  18,  19  and  35  and  any  other 

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decision  taken  by  the  Authority  in  accordance  with  the  Union  acts  referred  to  in 
Article 1(2) which is addressed to that person, or against a decision which, although 
in  the  form  of  a  decision  addressed  to  another  person,  is  of  direct  and  individual 
concern to that person."; 

(46) 

Article 62 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

"1.  The revenues  of  the  Authority  shall  consist,  without  prejudice  to  other types  of 
revenue, of any combination of the following: 

 (a) a balancing contribution from the Union, entered in the General Budget of 
the Union (Commission section) which shall not exceed 40% of the estimated 
revenues of the Authority;  

(b)  annual  contributions  from  financial  institutions,  based  on  the  annual 
estimated expenditure relating to the activities required by this Regulation and 
by the Union Acts referred to in Article 1(2) for each category of participants 
within the remit of the Authority;    

(c)  any  fees  paid  to  the  Authority  in  the  cases  specified  in  the  relevant 
instruments of Union law. 

(d) any voluntary contribution from Member States or observers;   

(e)  charges  for  publications,  training  and  for  any  other  services  requested  by 
competent authorities."; 

(b) 

the following paragraphs 5 and 6 are added: 

"5.  The  annual  contributions  referred  to  in  paragraph  1(b)  shall  be  collected  each 
year  from  individual  financial  institutions  by  the  authorities  designated  by  each 
Member State. By 31 March of each financial year, each Member State shall pay to 
the Authority the amount that it is required to collect in accordance with the criteria 
set out in the delegated act referred in to Article 62a. 

6. Voluntary contributions from Members States and observers as referred to in point 
(d) of paragraph 1 shall not be accepted if such acceptance could cast doubt on the 
independence and impartiality of the Authority."; 

(47) 

the following Article 62a is inserted: 

"Article 62a 

Delegated acts on the calculation of annual contributions by financial institutions  

The  Commission  shall  be  empowered,  in  accordance  with  Article  75a,  to  adopt 
delegated  acts  determining  how  annual  contributions  by  individual  financial 
institutions referred to in point (e) of Article 62 are to be calculated, establishing the 
following:  

(a)  a  methodology  to  allocate  the  estimated  expenditure  to  categories  of 
financial institutions as a basis for determining the share of contributions to be 
made by financial institutions of each category;  

(b)  appropriate  and  objective  criteria  to  determine  the  annual  contributions 
payable by individual financial institutions within the scope of the Union Acts 

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referred  to  in  Article  1(2)  based  on  their  size  so  as  to  approximately  reflect 
their importance in the market.  

The  criteria  referred  to  in  point  (b)  of  the  first  paragraph  may  establish  either  de 
minimis  thresholds  below  which  no  contribution  is  due  or  minima  below  which 
contributions must not fall."; 

(48) 

Article 63 is replaced by the following: 

"Article 63 

Establishment of the budget 

1.    Each  year,  the  Member  in  charge  shall  draw  up  a  provisional  draft  single 
programming  document  of  the  Authority  for  the  three  following  financial  years 
setting  out  the  estimated  revenue  and  expenditure,  as  well  as  information  on  staff, 
from its annual and multi-annual programming and shall forward it to the Executive 
Board and the Board of Supervisors, together with the establishment plan. 

1a. The Executive Board shall, on the basis of the draft which has been approved by 
the Board of Supervisors adopt the draft single programming document for the three 
following financial years. 

1b.  The  draft  single  programming  document  shall  be  transmitted  by  the  Executive 
Board to the Commission, the European Parliament and the Council by 31 January. 

On the basis of the draft single programming document, the Commission shall 
2. 
enter in the draft budget of the Union the estimates it deems necessary in respect of 
the establishment plan and the amount of the balancing contribution to be charged to 
the  general  budget  of  the  Union  in  accordance  with  Articles  313  and  314  of  the 
Treaty. 

3. 
The  budgetary  authority  shall  adopt  the  establishment  plan  for  the  Authority. 
The  budgetary  authority  shall  authorise  the  appropriations  for  the  balancing 
contribution to the Authority. 

4.  The budget of the Authority shall be adopted by the Board of Supervisors. It shall 
become  final  after  the  final  adoption  of  the  general  budget  of  the  Union.  Where 
necessary, it shall be adjusted accordingly. 

5.  The  Executive  Board  shall,  without  delay,  notify  the  budgetary  authority  of  its 
intention to implement any project which may have significant financial implications 
for the funding of its budget, in particular any project relating to property, such as the 
rental or purchase of buildings."; 

(49) 

Article 64 is replaced by the following: 

Article 64 

Implementation and control of the budget 

1.  The  Member  in  charge  shall  act  as  authorising  officer  and  shall  implement  the 
Authority’s budget. 

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2.  The  Authority’s  accounting  officer  shall  send  their  provisional  accounts  to  the 
Commission’s  accounting  officer  and  to  the  Court  of  Auditors  by  1  March  of  the 
following year. 

3. The Authority's accounting officer shall send by 1 March of the following year the 
required accounting information for consolidation purposes to the accounting officer 
of the Commission, in the manner and format laid down by that accounting officer. 

4. The Authority’s accounting officer shall send the report on budgetary and financial 
management to the members of the Board of Supervisors, the European Parliament, 
the Council and the Court of Auditors by 31 March of the following year. 

5.  After  receiving  the  observations  of  the  Court  of  Auditors  on  the  provisional 
accounts of the Authority in accordance with Article 148 of the Financial Regulation, 
the Authority's  accounting officer shall draw up the Authority's  final accounts. The 
Member in charge shall send them to the Board of Supervisors, which shall deliver 
an opinion on these accounts. 

6. The Authority's accounting officer shall send the final accounts, accompanied by 
the  opinion  of  the  Board  of  Supervisors,  by  1  July  of  the  following  year,  to  the 
accounting officer of the Commission, the European Parliament, the Council and the 
Court of Auditors. 

The Authority's accounting officer shall also send by 1 July, a reporting package to 
the  Commission's  accounting  officer,  in  a  standardised  format  as  laid  down  by  the 
Commission's accounting officer for consolidation purposes. 

7.  The  final  accounts  shall  be  published  in  the  Official  Journal  of  the  European 
Union by 15 November of the following year. 

8.  The  Member  in  charge  shall  send  the  Court  of  Auditors  a  reply  to  the  latter’s 
observations  by  30  September.  He  shall  also  send  a  copy  of  that  reply  to  the 
Executive Board and the Commission. 

9.  The  Member  in  charge  shall  submit  to  the  European  Parliament,  at  the  latter’s 
request  and  as  provided  for  in  Article  165(3)  of  the  Financial  Regulation,  any 
information necessary for the smooth application of the discharge procedure for the 
financial year in question. 

10. The European Parliament, following a recommendation from the Council acting 
by qualified majority, shall, before 15 May of the year N + 2, grant a discharge to the 
Authority for the implementation of the budget for the financial year N."; 

(50) 

Article 65 is replaced by the following: 

"Article 65 

Financial rules 

The  financial  rules  applicable  to  the  Authority  shall  be  adopted  by  the  Executive 
Board  after  consulting  the  Commission.  Those  rules  may  not  depart  from 
Commission Delegated Regulation (EU) No 1271/2013* for the bodies referred to in 
Article  208  of  Regulation  (EU,  Euratom)  No  966/2012  unless  the  specific 
operational needs  for  the  functioning  of  the  Authority  so  require  and  only  with  the 
prior agreement of the Commission. 

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*Commission  Delegated  Regulation  (EU)  No  1271/2013  of  30  September  2013  on 
the  framework  financial  regulation  for  the  bodies  referred  to  in  Article  208  of 
Regulation  (EU,  Euratom)  No  966/2012  of  the  European  Parliament  and  of  the 
Council (OJ L 328, 7.12.2013, p. 42)."; 

(51) 

in Article 66, paragraph 1 is replaced by the following: 

"1.  For  the  purposes  of  combating  fraud,  corruption  and  any  other  illegal  activity, 
Regulation  (EU,  Euratom)  No  883/2013  of  the  European  Parliament  and  of  the 
Council* shall apply to the Authority without any restriction. 

*Regulation  (EU,  Euratom)  No  883/2013  of  the  European  Parliament  and  of  the 
Council of 11 September 2013 concerning investigations conducted by the European 
Anti-Fraud  Office  (OLAF)  and  repealing  Regulation  (EC)  No  1073/1999  of  the 
European  Parliament  and  of  the  Council  and  Council  Regulation  (Euratom)  No 
1074/1999 (OJ L 248, 18.9.2013, p. 1)."; 

(52) 

Article 68 is amended as follows: 

(a)  paragraphs 1 and 2 are replaced by the following: 

"1. The Staff Regulations, the Conditions of Employment of Other Servants and the 
rules adopted jointly by the Union institutions for the purpose of applying them shall 
apply to the staff of the Authority, including the full time members of the Executive 
Board and its Chairperson.   

2.  The  Executive  Board,  in  agreement  with  the  Commission,  shall  adopt  the 
necessary implementing measures, in accordance with the arrangements provided for 
in Article 110 of the Staff Regulations."; 

(b)  paragraph 4 is replaced by the following: 

"4.  The  Executive  Board  shall  adopt  provisions  to  allow  national  experts  from 
Member States to be seconded to the Authority."; 

(53) 

Article 70 is amended as follows: 

(a) 

the first subparagraph of paragraph 1 is replaced by the following: 

"1.  Members  of  the  Board  of  Supervisors  and  all  members  of  the  staff  of  the 
Authority including officials seconded by Member  States on a temporary  basis and 
all other persons carrying out tasks for the Authority on a contractual basis shall be 
subject to the requirements of professional secrecy pursuant to Article 339 TFEU and 
the relevant provisions in Union legislation, even after their duties have ceased."; 

(b) 

in paragraph 2, the second subparagraph is replaced by the following: 

"Moreover, the obligation under paragraph 1 and the first subparagraph of this 
paragraph  shall  not  prevent  the  Authority  and  the  competent  authorities  from 
using the information for the enforcement of the acts referred to in Article 1(2), 
and in particular for legal procedures for the adoption of decisions."; 

(c) 

the following paragraph 2a is inserted: 

"2a. The Executive Board and the Board of Supervisors shall ensure that individuals 
who provide any service, directly or indirectly, permanently or occasionally, relating 
to the tasks of the Authority, including officials and other persons authorised by the 
Executive  Board  and  the  Board  of  Supervisors  or  appointed  by  the  competent 
authorities  for  that  purpose,  are  subject  to  the  requirements  of  professional  secrecy 
equivalent to those in the previous paragraphs. 

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The  same  requirements  for  professional  secrecy  shall  also  apply  to  observers  who 
attend the meetings of the Executive Board and the Board of Supervisors who take 
part in the activities of the Authority."; 

(d) 

in paragraph 3, the first subparagraph is replaced by the following: 

"Paragraphs  1  and  2  shall  not  prevent  the  Authority  from  exchanging  information 
with  competent  authorities  in  accordance  with  this  Regulation  and  other  Union 
legislation applicable to financial institutions."; 

(54) 

In Article 71 is replaced by the following: 

"This  Regulation  shall  be  without  prejudice  to  the  obligations  of  Member  States 
relating to their processing of personal data under Regulation (EU) 2016/679 or the 
obligations  of  the  Authority  relating  to  its  processing  of  personal  data  under 
Regulation (EU) No 2018/XXX (Data Protection Regulation for EU institutions and 
Bodies) when fulfilling its responsibilities."; 

(55) 

in Article 72, paragraph 2 is replaced by the following: 

"2. The Executive Board shall adopt practical measures for applying Regulation (EC) 
No 1049/2001."; 

(56) 

in Article 73, paragraph 2 is replaced by the following: 

"2. The Executive Board shall decide on the internal language arrangements for the 
Authority."; 

(57) 

in Article 74, the first paragraph is replaced by the following: 

"The necessary arrangements concerning the accommodation to be provided for the 
Authority in the Member State where its seat is located and the facilities to be made 
available  by  that  Member  State,  as  well  as  the  specific  rules  applicable  in  that 
Member State to the staff of the Authority and members of their families shall be laid 
down  in  a  Headquarters  Agreement  between  the  Authority  and  that  Member  State 
concluded after obtaining the approval of the Executive Board."; 

(58) 

the following Article 75a is inserted: 

"Article 75a 

Exercise of the delegation 

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

2. The power to adopt delegated acts referred to in Article 35c and Article 62a shall 
be conferred for an indeterminate period of time.  

3. The delegation of power referred to in Article 35c and Article 62a 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.  

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4. 
Before  adopting  a  delegated  act,  the  Commission  shall  consult  experts 
designated by each Member State in accordance with the principles laid down in the 
Interinstitutional Agreement on Better Law-Making of 13 April 2016.  

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

6.  A  delegated  act  adopted  pursuant  to  Article  35c  or  Article  62a  shall  enter  into 
force only if no objection has been expressed either by the European Parliament or 
the Council within a period of three months of notification of that act to the European 
Parliament  and  the  Council  or  if,  before  the  expiry  of  that  period,  the  European 
Parliament  and  the  Council  have  both  informed  the  Commission  that  they  will  not 
object.  That  period  shall  be  extended  by  three  months  at  the  initiative  of  the 
European Parliament or the Council."; 

(59) 

Article 76 is replaced by the following: 

"Article 76 

Relationship with CEIOPS 

The  Authority  shall  be  considered  the  legal  successor  of  CEIOPS.  By  the  date  of 
establishment of the Authority, all assets and liabilities and all pending operations of 
CEIOPS shall be automatically transferred to the Authority. CEIOPS shall establish a 
statement  showing  its  closing  asset  and  liability  situation  as  of  the  date  of  that 
transfer.  That  statement  shall  be  audited  and  approved  by  CEIOPS  and  by  the 
Commission." 

(60) 

new Article 77a is inserted: 

Article 77a 

Transitional provisions 

The  tasks  and  position  of  the  Executive  Director  appointed  in  accordance  with 
Regulation No 1094/2010 as last amended by Directive 2014/51/EU and in office on 
[PO:  please insert  date  3  months  after the  entry into  force  of  this  Regulation]  shall 
cease on that date. 

The tasks and position of the Chairperson appointed in accordance with Regulation 
No 1094/2010 as last amended by Directive 2014/51/EU and in office on [PO: please 
insert date 3 months after the entry into force of this Regulation] shall continue until 
its expiry. 

The  tasks  and  position  of  the  members  of  the  Management  Board  appointed  in 
accordance with Regulation No 1094/2010 as last amended by Directive 2014/51/EU 
and  in  office  on  [PO:  please  insert  date  3  months  after  the  entry  into  force  of  this 
Regulation] shall cease on that date.". 

Article 3 

Amendments to Regulation (EU) No 1095/2010 

Regulation (EU) 1095/2010 is amended as follows: 

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(1) 

Article 1 is amended as follows: 

(a) 

 paragraph 2 is replaced by the following: 

"2. The Authority shall act within the powers conferred by this Regulation and within 
the scope of Directive 97/9/EC, Directive 98/26/EC, Directive 2001/34/EC, Directive 
2002/47/EC,  Directive  2003/71/EC,  Directive  2004/39/EC,  Directive  2004/109/EC, 
Directive 2009/65/EC, Directive 2011/61/EU of the European Parliament and of the 
Council * Regulation 1606/2002 of the European Parliament and of the Council**, 
Directive  2013/34/EU  of  the  European  Parliament  and  of  the  Council***,  and 
Regulation  (EC)  No  1060/2009,  and,  to  the  extent  that  these  acts  apply  to  firms 
providing  investment  services  or  to  collective  investment  undertakings  marketing 
their  units  or  shares  and  the  competent  authorities  that  supervise  them,  within  the 
relevant  parts  of,  Directive  2002/87/EC,  Directive  (EU)  2015/849,  Directive 
2002/65/EC, including all directives, regulations, and decisions based on those acts, 
and of any further legally binding Union act which confers tasks on the Authority. 

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

**Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 
19  July  2002  on  the  application  of  international  accounting  standards  (OJ  L  243, 
11.9.2002, p. 1). 

***Directive 2013/34/EU of the European Parliament and of the Council of 26 June 
2013  on  the  annual  financial  statements,  consolidated  financial  statements  and 
related reports of certain types of undertakings, amending  Directive 2006/43/EC of 
the  European  Parliament  and  of  the  Council  and  repealing  Council  Directives 
78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19)."; 

(b) 

 the following paragraph 3a is inserted: 

"3a. This Regulation shall apply without prejudice to other Union acts conferring the 
functions  of  authorisation  or  supervision  and  corresponding  powers  upon  the 
Authority."; 

(2) 

in Article 2 paragraph 5  the following subparagraph is inserted: 

"References to supervision in this Regulation include the activities of all competent 
authorities  to  be  carried  out  pursuant  to  the  legislative  acts  referred  to  in  Article 
1(2).; 

(3) 

in point (3) of Article 4, point (ii) is replaced by the following: 

"(ii) with regard to Directives 2002/65/EC and (EU) 2015/849, the authorities 
competent  for  ensuring  compliance  with  the  requirements  of  those 
Directives  by  firms  providing  investment  services  and  by  collective 
investment undertakings marketing their units or shares;"; 

(4) 

Article 6 is amended as follows: 

(a) 

 point (2) is replaced by the following: 

"(2) an Executive Board, which shall exercise the tasks set out in Article 47;"; 

(b) 

 point (4) is deleted; 

(5) 

Article 8 is amended as follows: 

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(a) 

 paragraph 1 is amended as follows: 

(i)  

the following point (aa) is inserted: 

"(aa) to develop and maintain up to date a Union supervisory handbook on the 
supervision of financial market participants in the Union;";  

(ii)  points (e) and (f) are replaced by the following: 

"(e)  to  organise  and  conduct  reviews  of  competent  authorities  and,  in  that 
context, to issue guidelines and recommendations and to identify best practices, 
with a view to strengthening consistency in supervisory outcomes; 

(f)  to  monitor  and  assess  market  developments  in  the  area  of  its  competence 
including,  where  relevant,  developments  relating  to  trends  in  innovative 
financial services;"; 

(iii)  point (h) is replaced by the following: 

"(h) to foster consumer and investor protection;"; 

(iv)  point (l) is deleted; 

(b) 

a new paragraph 1a is inserted: 

"1a. " When carrying out its tasks in accordance with this Regulation, the authority 
shall  take  account  of  technological  innovation,  innovative  and  sustainable  business 
models, and the integration of environmental, social and governance related factors.";   

(c) 

in paragraph 2, the following are amended: 

(i) point (ca) is inserted: 

"(c) issue recommendations as laid down in Articles 29a and 31a;"; 

(ii) point h) is replaced by the following: 

"(h) collect the necessary information concerning financial institutions as 
provided for in Article 35 and Article 35b"; 

(d) 

the following paragraph 3 is added: 

"3. When carrying out the tasks referred to in paragraph 1 and exercising the powers 
referred  to  in  paragraph  2,  the  Authority  shall  have  due  regard  to  the  principles  of 
better  regulation,  including  the  results  of  cost-benefit  analyses  produced  in 
accordance with this Regulation."; 

(6) 

Article 9 is amended as follows: 

(a) 

in paragraph 1, the following points (aa) and (ab) are inserted: 

"(aa)  undertaking  in-depth  thematic  reviews  of  market  conduct,  building  a 
common  understanding  of  markets  practices  in  order  to  identify  potential 
problems and analyse their impact; 

(ab)  developing  retail  risk  indicators  for  the  timely  identification  of  potential 
causes of consumer  and investor harm;"; 

(b) 

 paragraph 2 is replaced by the following: 

"2. The Authority shall monitor new and existing financial activities and may 
adopt guidelines and recommendations with a view to promoting the safety and 
soundness  of  markets,  and  convergence  of  regulatory  and  supervisory 
practices."; 

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(c) 

 paragraph 4 is replaced by the following: 

"4.  The  Authority  shall  establish,  as  an  integral  part  of  the  Authority,  a 
Committee  on  financial  innovation,  which  brings  together  all  relevant 
competent  national  supervisory  authorities  and  authorities  responsible  for 
consumer  protection,  with  a  view  to  achieving  a  coordinated  approach  to  the 
regulatory  and  supervisory  treatment  of  new  or  innovative  financial  activities 
and providing advice for the Authority to present to the European Parliament, 
the Council and the Commission. The Authority may also include national data 
protection authorities as part of the Committee."; 

(7) 

Article 16 is amended as follows: 

(a) 

in paragraph 1, the following subparagraph is added: 

"The Authority may also address guidelines and recommendations to the authorities 
of Member States that are not defined as competent authorities under this Regulation 
but  that  are  empowered  to  ensure  the  application  of  the  acts  referred  to  in  Article 
1(2)."; 

(b) 

 paragraph 2 is replaced by the following: 

"2.  The  Authority  shall,  save  in  exceptional  circumstances,  conduct  open  public 
consultations regarding the guidelines and recommendations which it issues and shall 
analyse  the  related  potential  costs  and  benefits  of  issuing  such  guidelines  and 
recommendations. Those consultations and analyses shall be proportionate in relation 
to the scope, nature and impact of the guidelines or recommendations. The Authority 
shall,  save  in  exceptional  circumstances,  also  request  opinions  or  advice  from  the 
Securities and Markets Stakeholder Group referred to in Article 37."; 

(c) 

in paragraph 4, the following sentence is added: 

"The  report  shall  also  explain  how  the  Authority  has  justified  the  issue  of  its 
guidelines  and  recommendations  and  summarise 
the  feedback  from  public 
consultations on issued guidelines and recommendations."; 

(d) 

the following paragraph 5 is added: 

"5.  Where  two  thirds  of  the  members  of  the  Securities  and  Markets  Stakeholder 
Group are of the opinion that the Authority has exceeded its competence by issuing 
certain  guidelines  or  recommendations,  they  may  send  a  reasoned  opinion  to  the 
Commission.  

The  Commission  shall  request  an  explanation  justifying  the  issuance  of  the 
guidelines  or  recommendations  concerned  from  the  Authority.  The  Commission 
shall,  on  receipt  of  the  explanation  from  the  Authority,  assess  the  scope  of  the 
guidelines  or  recommendations  in  view  of  the  Authority's  competence.  Where  the 
Commission  considers  that  the  Authority  has  exceeded  its  competence,  and  after 
having  given the Authority the opportunity  to state its views, the Commission  may 
adopt  an  implementing  decision  requiring  the  Authority  to  withdraw  the  guidelines 
or  recommendations  concerned.  The  decision  of  the  Commission  shall  be  made 
public."; 

(8) 

in paragraph 2 of Article 17, the following subparagraphs are added: 

Without prejudice to the powers laid down in Article 35, the Authority may address a 
duly  justified  and  reasoned  request  for  information  directly  to  other  competent 
authorities or relevant financial market participants, whenever deemed necessary for 

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the  purpose  of  investigating  an  alleged  breach  or  non-application  of  Union  law. 
Where  it  is  addressed  to  financial  market  participants,  the  reasoned  request  shall 
explain why the information is necessary for the purposes of investigating an alleged 
breach or non-application of Union law. 

The addressee of such a request shall provide the Authority with clear, accurate and 
complete information without undue delay.   

Where a request for information has been addressed to a financial market participant, 
the Authority shall inform the relevant competent authorities of such a request. The 
competent authorities shall assist the Authority in collecting the information, where 
so requested by the Authority."; 

(9) 

Article 19 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

"1.    In  cases  specified  in  the  Union  acts  referred  to  in  Article  1(2)  and  without 
prejudice  to  the  powers  laid  down  in  Article  17,  the  Authority  may  assist  the 
competent authorities in reaching an agreement in accordance with the procedure set 
out in paragraphs 2 to 4 in either of the following circumstances: 

a) 
at  the  request  of  one  or  more  of  the  competent  authorities  concerned 
where  a  competent  authority  disagrees  with  the  procedure  or  content  of  an 
action, proposed action, or inactivity of another competent authority; 

on  its  own  initiative  where  on  the  basis  of  objective  criteria, 

(b) 
disagreement can be determined between competent authorities.   

In cases where the acts referred to in Article 1(2) require a joint decision to be taken 
by competent authorities, a disagreement shall be presumed in the absence of a joint 
decision being taken by those authorities within the time limits set out in those acts;"; 

(b) 

the following paragraphs 1a and 1b are inserted:  

"1a.  The  competent  authorities  concerned  shall  in  the  following  cases  notify  the 
Authority without delay that an agreement has not been reached:  

(a) 
where  a  time  limit  for  reaching  an  agreement  between  competent 
authorities has been provided for in the Union acts, referred to in Article 1(2), 
and the earlier of the following occurs :  

(i)  the time limit has expired; 

(ii)  one  or  more  of  the  competent  authorities  conclude  that  a 
disagreement exists, on the basis of objective factors; 

(b) 
where  no  time  limit  for  reaching  an  agreement  between  competent 
authorities has been provided in the Union acts referred to in Article 1(2) , and 
the earlier of the following occurs:  

(i) 
that a disagreement exists on the basis of objective factors; or  

one  or  more  of  the  competent  authorities  concerned  conclude 

two  months  have  elapsed  from  the  date  of  receipt  by  a 
(ii) 
competent  authority  of  a  request  from  another  competent  authority  to 
take certain action in order to comply with Union law and the requested 
authority has not yet adopted a decision that satisfies the request. 

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1b. The Chairperson shall assess whether the Authority should act in accordance with 
paragraph  1.  Where  the  intervention  is  at  the  Authority’s  own  initiative,  the 
Authority shall notify the competent authorities concerned of its decision regarding 
the intervention.  

Pending the Authority's decision in accordance with the procedure set out in Article 
47(3a), in cases where the acts referred to in Article 1(2) require a joint decision to 
be  taken,  all  competent  authorities  involved  in  the  joint  decision  shall  defer  their 
individual  decisions.  Where  the  Authority  decides  to  act,  all  the  competent 
authorities  involved  in  the  joint  decision  shall  defer  their  decisions  until  the 
procedure set out in paragraphs 2 and 3 is concluded."; 

(c)  paragraph 3 is replaced by the following: 

"Where  the  competent  authorities  concerned  fail  to  reach  an  agreement  within  the 
conciliation  phase  referred  to  in  paragraph  2,  the  Authority  may  take  a  decision 
requiring those authorities to take specific action or to refrain from certain action in 
order  to  settle  the  matter,  in  order  to  ensure  compliance  with  Union  law.  The 
decision  of  the  Authority  shall  be  binding  on  the  competent  authorities  concerned. 
The  Authority’s  decision  may  require  competent  authorities  to  revoke  or  amend  a 
decision that they have adopted or to make use of the powers which they have under 
the relevant Union law."; 

(d) 

the following paragraph 3a is inserted: 

"3a. The Authority shall notify the competent authorities concerned of the conclusion 
of  the  procedures  under  paragraphs  2  and  3  together,  where  applicable  with  its 
decision taken under paragraph 3."; 

(e)  paragraph 4 is replaced by the following: 

"4. Without prejudice to the powers of the Commission pursuant to Article 258 of the 
Treaty,  where  a  competent  authority  does  not  comply  with  the  decision  of  the 
Authority,  and  thereby  fails  to  ensure  that  a  financial  market  participant  complies 
with requirements directly applicable to it by virtue of the acts referred to in Article 
1(2), the Authority may adopt an individual decision addressed to a financial market 
participant requiring the necessary action to comply with its obligations under Union 
law, including the cessation of any practice."; 

(10) 

in Article 22(4), the second subparagraph is replaced by the following: 

"For  those  purposes,  the  Authority  may  use  the  powers  may  use  the  powers 
conferred on it under this Regulation, including Article 35 and 35b."; 

(11) 

Article 29 is amended as follows: 

(a)  paragraph 1 is amended as follows: 

(i) the following point (aa) is inserted: 

"(aa) issuing the Strategic Supervisory Plan in accordance with Article 29a;"; 

(ii) point (b) is replaced by the following:  

"(b) promoting an effective bilateral and multilateral exchange of information 
between competent authorities, pertaining to all relevant issues, including 
cyber security and cyber-attacks as appropriate, with full respect for the 
applicable confidentiality and data protection provisions provided for in 
the relevant Union legislation;"; 

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(iii) point (e) is replaced by the following: 

"(e)  establishing  sectoral  and  cross-sectoral  training  programmes,  including 
with respect to technological innovation, facilitating personnel exchanges and 
encouraging competent authorities to intensify the use of secondment schemes 
and other tools;"; 

(b) 

in paragraph 2, the following subparagraph is added: 

"For the  purpose  of establishing a common supervisory culture, the Authority shall 
develop and maintain an up to date Union supervisory handbook on the supervision 
of financial market participants in the Union, taking into account, inter alia, changing 
business practices and business models, including due to technological innovation, of 
financial  market  participants.  The  Union  supervisory  handbook  shall  set  out 
supervisory best practices and high quality methodologies and processes."; 

(12) 

the following Article 29a is inserted: 

"Article 29a 

Strategic Supervisory Plan 

1. Upon the entry into application of Regulation [XXX insert reference to amending 
Regulation] and every three years thereafter by 31 March, the Authority shall issue a 
recommendation  addressed  to  competent  authorities,  laying  down  supervisory 
strategic  objectives  and  priorities  ("Strategic  Supervisory  Plan")  and,  taking  into 
account any contributions from competent authorities,. The Authority shall transmit 
the  Strategic  Supervisory  Plan  for  information  to  the  European  Parliament,  the 
Council and the Commission and shall make it public on its website.  

The  Strategic  Supervisory  Plan  shall  identify  specific  priorities  for  supervisory 
activities in order to promote consistent, efficient and effective supervisory practices 
and  the  common,  uniform  and  consistent  application  of  Union  lawand  to  address 
relevant  micro-prudential  trends,  potential  risks  and  vulnerabilities  identified  in 
accordance with Article 32. 

2.  By  30  September  of  each  year,  each  competent  authority  shall  submit  a  draft 
annual work programme for the following year to the Authority for consideration and 
specifically  stipulate  how  that  draft  programme  is  aligned  with  the  Strategic 
Supervisory Plan.  

The draft annual work programme shall contain specific objectives and priorities for 
supervisory  activities  and  quantitative  and  qualitative  criteria  for  the  selection  of 
financial market participants, market practices and behaviours and financial markets 
to  be  examined  by  the  competent  authority  submitting  the  draft  work  programme 
during the year covered by that programme. 

3. The Authority shall assess the draft annual work programme and where there are 
material risks for not attaining the priorities set out in the Strategic Supervisory Plan 
the  Authority  shall  issue  a  recommendation  to  the  relevant  competent  authority 
aiming  at  the  alignment  of  the  relevant  competent  authority's  annual  work 
programme with the Strategic Supervisory Plan.  

By  31  December  of  each  year,  the  competent  authorities  shall  adopt  their  annual 
work programmes taking into account any such recommendations. 

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4.  By  31  March  of  each  year,  each  competent  authority  shall  transmit  to  the 
Authority a report on the implementation of the annual work programme.  

The report shall include at least the following information: 

(a) 
a description of the supervisory activities and examinations of financial 
institutions, market practices and behaviours and of financial markets, and on 
the  administrative  measures  and  sanctions 
imposed  against  financial 
institutions responsible for breaches of Union and national law; 

a  description  of  activities  that  were  carried  out  and  which  were  not 

(b) 
foreseen in the annual work programme; 

(c) 
an account of the activities provided for in the annual work programme 
that were not carried out and of the objectives of that programme that were not 
met,  as  well  as  the  reasons  for  the  failure  to  carry  out  those  activities  and  to 
reach those objectives. 

5. The Authority shall assess the implementation reports of the competent authorities.  
Where there are material risks of not attaining the priorities set out in the Strategic 
Supervisory  Plan  the  Authority  shall  issue  a  recommendation  to  each  competent 
authority  concerned  on  how  the  relevant  shortcomings  in  its  activities  can  be 
remedied.  

Based on the reports and its own assessment of risks, the Authority shall identify the 
activities  of  the  competent  authority  that  are  critical  to  fulfilling  the  Strategic 
Supervisory Plan, and shall as appropriate conduct reviews under Article 30 of those 
activities. 

6.  The  Authority  shall  make  best  practices  identified  during  the  assessment  of  the 
annual work programmes publicly available."; 

(13) 

Article 30 is amended as follows: 

(a) 

the title of the article is replaced by the following: 

"Reviews of competent authorities"; 

(b)  paragraph 1 is replaced by the following: 

"1. The Authority shall periodically conduct reviews of some or all of the activities 
of competent authorities, to further strengthen consistency in supervisory outcomes. 
To that end, the Authority shall develop methods to allow for objective assessment 
and  comparison  between  the  competent  authorities  reviewed.  When  conducting 
reviews,  existing  information  and  evaluations  already  made  with  regard  to  the 
competent  authority  concerned, including  all  information  provided  to  the  Authority 
in accordance with Article 35, and any information from stakeholders shall be taken 
into account."; 

(c) 

the following paragraph 1a is inserted: 

"1a.  For  the  purposes  of  this  Article,  the  Authority  shall  establish  a  review 
committee,  exclusively  composed  of  staff  from  the  Authority.  The  Authority  may 
delegate certain tasks or decisions related to reviews of competent authorities to the 
review committee."; 

(d)  paragraph 2 is amended as follows: 

(i) the introductory sentence is replaced by the following: 

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"The review shall include an assessment of, but shall not be limited to:"; 

(ii) point (a) is replaced by the following: 

"(a)  the  adequacy  of  resources,  the  degree  of  independence,  and  governance 
arrangements of the competent authority, with particular regard to the effective 
application  of  the  Union  acts  referred  to  in  Article  1(2)  and  the  capacity  to 
respond to market developments;"; 

(e)  paragraph 3 is replaced by the following: 

"3.  The  Authority  shall  produce  a  report  setting  out  the  results  of  the  review.  That 
report shall explain and indicate the follow-up measures that are foreseen as a result 
of the review. Those follow-up measures may be adopted in the form of guidelines 
and  recommendations  pursuant  to  Article  16  and  opinions  pursuant  to  Article 
29(1)(a).  

In accordance with Article 16(3), the competent authorities shall make every effort to 
comply  with  any  guidelines  and  recommendations  issued.  Where  competent 
authorities  do  not  take  action  to  address  the  follow-up  measures  indicated  in  the 
report, the Authority shall issue a follow-up report.  

When  developing  draft  regulatory  technical  standards  or  draft  implementing 
standards in accordance with Articles 10 to 15, or guidelines or recommendations in 
accordance  with  Article  16,  the  Authority  shall  take  into  account  the  outcome  of 
reviews conducted in accordance with this Article, along with any other information 
acquired by the Authority in carrying out its tasks, in order to ensure convergence of 
the highest quality supervisory practices."; 

(f) 

the following paragraph 3a is inserted: 

"3a. The Authority shall submit an opinion to the Commission where, having regard 
to the outcome of the review or to any other information acquired by the Authority in 
carrying  out  its  tasks,  it  considers  further  harmonisation  of  the  rules  applicable  to 
financial market participants or competent authorities would be necessary."; 

(g)  paragraph 4 is replaced by the following: 

"4.  The  Authority  shall  publish  the  report  referred  to  in  paragraph  3  including  any 
follow-up  report,  unless  publication  would  involve  risks  to  the  stability  of  the 
financial  system.  The  competent  authority  that  is  subject  to  the  review  shall  be 
invited  to  comment  before  the  publication  of  any  report.  Those  comments  shall  be 
made publicly available unless publication would involve risks to the stability of the 
financial system."; 

(14) 

in Article 31a new paragraph is added: 

"Regarding  activity  of  competent  authorities  intended  to  facilitate  entry  into  the 
market  of  operators  or  products  relying  on  technological  or  other  innovation,  the 
Authority shall promote supervisory convergence, in particular through the exchange 
of  information  and  best  practices.  Where  appropriate,  the  Authority  may  adopt 
guidelines or recommendations in accordance with Article 16."; 

(15) 

new Article 31a is inserted: 

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"Article 31a 

Coordination on delegation and outsourcing of activities as well as of risk transfers 

"1.  The  Authority  shall  on  an  ongoing  basis  coordinate  supervisory  actions  of 
competent authorities with a view to promoting supervisory convergence in the fields 
of delegation and outsourcing of activities by financial market participants as well as 
in  relation  to  risk  transfers  conducted  by  them,  in  accordance  with  paragraphs  2,  3 
and 4.  

2. The competent authorities shall notify the Authority where they intend to carry out 
an  authorisation  or  registration  related  to  a  financial  market  participant  which  is 
under supervision of the competent authority concerned in accordance with the acts 
referred  to  in  Article  1(2)  and  where  the  business  plan  of  the  financial  market 
participant entails the outsourcing or delegation of a material part of its activities or 
any  of  the  key  functions  or  the  risk  transfer  of  a  material  part  of  its  activities  into 
third  countries,  to  benefit  from  the  EU  passport  while  essentially  performing 
substantial activities or functions outside the Union. The notification to the Authority 
shall be sufficiently detailed to allow for a proper assessment by the Authority.  

Where  the  Authority  considers  it  necessary  to  issue  an  opinion  to  a  competent 
authority  regarding  the  non-compliance  of  an  authorisation  or  registration  notified 
pursuant to the first subparagraph with Union law or guidelines, recommendations or 
opinions  adopted  by  the  Authority,  the  Authority  shall  inform  that  competent 
authority  thereof  within  20  working  days  of  the  receipt  of  the  notification  by  that 
competent authority. In that case the competent authority concerned shall await the 
opinion of the Authority before carrying out the registration or authorisation.  

At the request of the Authority, the competent authority shall within 15 working days 
of  the  receipt  of  such  a  request  provide  information  related  to  its  decisions  to 
authorise or register a financial market participant which is under its supervision in 
accordance with the acts referred to in Article 1(2). 

The Authority shall issue the opinion, without prejudice to any time limits set out in 
Union law, at the latest within 2 months of the receipt of the notification pursuant to 
the first subparagraph.  

3.  A  financial  market  participant  shall  notify  the  competent  authority  of  the 
outsourcing  or  delegation  of  a  material  part  of  its  activities  or  any  of  its  key 
functions, and the risk transfer of a material part of its activities, to another entity or 
its  own  branch  established  in  a  third  country.  The  competent  authority  concerned 
shall inform the Authority of such notifications on a semi-annual basis.  

Without  prejudice  to  Article  35,  at  the  request  of  the  Authority,  the  competent 
authority shall provide information in relation to the outsourcing, delegation or risk 
transfer arrangements by financial market participants.  

The Authority shall monitor whether the competent authorities concerned verify that 
outsourcing,  delegation  or  risk  transfer  arrangements  referred  to  in  the  first 
subparagraph are concluded in accordance with Union law, comply with guidelines, 
recommendations  or  opinions  from  the  Authority  and  do  not  prevent    effective 
supervision by the competent authorities and enforcement in a third country. 

4. The Authority may issue recommendations to the competent authority concerned, 
including  recommendations  to  review  a  decision  or  to  withdraw  an  authorisation. 

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Where  the  competent  authority  concerned  does  not  follow  the  recommendations  of 
the Authority within 15 working days, the competent authority shall state the reasons 
and  the  Authority  shall  make  its  recommendation  public  together  with  those 
reasons."; 

(16) 

new Article 31b is inserted: 

"Article 31b 

Coordination function in relation to orders, transactions and activities with significant cross-
border effects 

1. Where the Authority has reasonable grounds to suspect that orders, transactions or 
any  other  activity  with  significant  cross-border  effects  threaten  the  orderly 
functioning and integrity of financial markets or the financial stability in the Union, 
it  shall  recommend  that  competent  authorities  of  the  Member  States  concerned 
initiate  an  investigation  and  shall  provide  those  competent  authorities  with  the 
relevant information.  

2.  Where  a  competent  authority  has  reasonable  grounds  to  suspect  that  orders, 
transactions  or  any  other  activity  with  significant  cross-border  effects  threaten  the 
orderly functioning and integrity of financial markets or the financial stability in the 
Union,  it  shall  promptly  notify  the  Authority  and  provide  the  relevant  information. 
The  Authority  may  recommend  the  competent  authorities  of  the  Member  States 
where  the  suspected  activity  has  occurred  to  take  action  after  transmitting  the 
relevant information to those competent authorities.  

3. To facilitate the exchange of information between the Authority and the competent 
authorities, the Authority shall establish and maintain a data storage facility designed 
for that purpose."; 

(17) 

in Article 32 a new paragraph 2a is inserted:  

"2a. At least annually, the Authority shall consider whether it is appropriate to carry 
out Union-wide assessments referred to in paragraph 2 and shall inform the European 
Parliament,  the  Council  and  the  Commission  of  its  reasoning.  Where  such  Union-
wide assessments are carried out and the Authority considers it appropriate to do so, 
it shall disclose the results for each participating financial institution. 

Professional  secrecy  obligations  of  competent  authorities  shall  not  prevent  the 
competent  authorities  from  publishing  the  outcome  of  Union-wide  assessments 
referred to in paragraph 2 or from transmitting the outcome of such assessments to 
the  Authority  for  the  purpose  of  the  publication  by  the  Authority  of  the  results  of 
Union-wide assessments of the resilience of financial institutions."; 

(18) 

Article 33 is amended as follows: 

(a) 

 paragraph 2 is replaced by the following: 

"2.  The  Authority  shall  assist  the  Commission  in  preparing  equivalence  decisions 
pertaining  to  regulatory  and  supervisory  regimes  in  third  countries  following  a 
specific request for advice from the Commission or where required to do so by the 
acts referred to in Article 1(2)."; 

(b) 

the following paragraphs 2a, 2b and 2c are inserted: 

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"2a.  The  Authority  shall  monitor  the  regulatory  and  supervisory  developments  and 
enforcement practices and relevant market developments in third countries for which 
equivalence  decisions  have  been  adopted  by  the  Commission  pursuant  to  the  acts 
referred to in Article 1(2) in order to verify whether the criteria, on the basis of which 
those decisions have been taken and any conditions set out therein, are still fulfilled. 
It shall take into account the market relevance of the third countries concerned.  The 
Authority shall submit a confidential report on its findings to the Commission on an 
annual basis 

Without  prejudice  to  specific  requirements  set  out  in  the  acts  referred  to  in  Article 
1(2) and subject to the conditions set out in the second sentence of paragraph 1 the 
Authority shall cooperate where possible with the relevant competent authorities, and 
where  appropriate,  also  with  resolution  authorities,  of  third  countries  whose 
regulatory  and  supervisory  regimes  have  been  recognised  as  equivalent.  That 
cooperation shall be pursued on the basis of administrative arrangements concluded 
with  the  relevant  authorities  of  those  third  countries.  When  negotiating  such 
administrative  arrangements,  the  Authority  shall  seek  to  include  provisions  on  the 
following:  

a) 
the  mechanisms  which  would  allow  the  Authority  to  obtain  relevant 
information,  including    information  on  the  regulatory  regime,    as  well  as  the 
supervisory approach, relevant market developments and any changes that may 
affect the decision on equivalence; 

to  the  extent  necessary  for  the  follow  up  of  such  decisions,  the 
b) 
procedures  concerning  the  coordination  of  supervisory  activities  including, 
where necessary, on-site inspections. 

The  Authority  shall  inform  the  Commission  where  a  third  -country  competent 
authority refuses to conclude such administrative arrangements or when it refuses to 
effectively cooperate. The Commission shall take this information into account when 
reviewing the relevant equivalence decisions. 

2b.  Where  the  Authority  identifies  developments  in  relation  to  the  regulation, 
supervision  or  the  enforcement  practices  in  the  third  countries  referred  to  in 
paragraph 2a that may impact the financial stability of the Union or of one or more of 
its  Member  States,  market  integrity  or  investor  protection  or  the  functioning  of  the 
internal market, it shall inform the Commission on a confidential basis and without 
delay.   

The  Authority  shall  on  an  annual  basis  submit  a  confidential  report  to  the 
Commission  on  the  regulatory,  supervisory,  enforcement  and  market  developments 
in  the  third  countries  referred  to  in  paragraph  2a  with  a  particular  focus  on  their 
implications  for  financial  stability,  market  integrity,  investor  protection  or  the 
functioning of the internal market.   

to  conclude  any  administrative  arrangements  with 

2c.  The  competent  authorities  shall  inform  the  Authority  in  advance  of  their 
intentions 
third-country 
supervisory authorities in any of the areas governed by the acts referred to in Article 
1(2)  including  in  relation  to  branches  of  third  country  entities.  They  shall  provide 
simultaneously to the Authority a draft of such planned arrangements. 

The  Authority  may  develop  model  administrative  arrangements,  with  a  view  to 
establishing consistent, efficient and effective supervisory practices within the Union 
and  to  strengthening  international  supervisory  coordination.  In  accordance  with 

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Article 16(3), the competent authorities shall make every effort to follow such model 
arrangements. 

In the report referred to in Article 43(5), the Authority shall include information on 
the  administrative  arrangements  agreed  upon  with  supervisory  authorities, 
international  organisations  or  administrations  in  third  countries,  the  assistance 
provided by the Authority to the Commission in preparing equivalence decisions and 
the monitoring activity pursued by the Authority in accordance with paragraph 2a."; 

(19) 

in Article 34, paragraph 2, the last sentence is replaced by the following: 

"Articles 35 and 35b shall apply to the areas in respect of which the Authority may 
issue an opinion." 

(20) 

Article 35 is amended as follows: 

(a)  paragraphs 1, 2 and 3 are replaced by the following: 

"1.  At  the  request  of  the  Authority,  the  competent  authorities  shall  provide  the 
Authority with all the necessary information to carry out the tasks conferred on it by 
this Regulation, provided that they have legal access to the relevant information.   

The information provided shall be accurate, complete and submitted within the time 
limit prescribed by the Authority." 

2. The Authority may also request information to be provided at recurring intervals 
and  in  specified  format  or  by  way  of  comparable  templates  approved  by  the 
Authority.  Such  requests  shall,  where  possible,  be  made  using  common  reporting 
formats. 

3.  Upon  a  duly  justified  request  from  a  competent  authority,  the  Authority  may 
provide any information that is necessary to enable the competent authority to carry 
out  its  tasks,  in  accordance  with  the  professional  secrecy  obligations  laid  down  in 
sectoral legislation and in Article 70."; 

(b)  paragraph 5 is replaced by the following: 

"5. Where information requested in accordance with paragraph 1 is not available or is 
not  made  available  by  the  competent  authorities  within  the  time  limit  set  by  the 
Authority, the Authority may address a duly justified and reasoned request to any of 
the following: 

(a)  other supervisory authorities with supervisory functions;,  

(b)  to  the  ministry  responsible  for  finance  in  the  Member  State  concerned 
where it has at its disposal prudential information;,  

(c) to the national central bank or to the statistical office of the Member State 
concerned; 

(d) to the statistical office of the Member State concerned.. 

At the request of the Authority, the competent authorities shall assist the Authority in 
collecting the information."; 

(c)  paragraphs 6 and 7 are deleted; 

(21) 

The following Articles 35a to 35 h are inserted: 

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"Article 35a 

Exercise of the powers referred to in Article 35b 

The  powers  conferred  on  the  Authority  or  any  of  its  official  or  other  person 
authorised  by  the  Authority  in  accordance  with  Article  35b  shall  not  be  used  to 
require the disclosure of information or documents that are subject to legal privilege. 

Article 35b 

Request for information to financial market participants 

1.   Where information  requested under paragraph 1 or  paragraph  5 of Article 35 is 
not  available  or  is  not  made  available  within  the  time  limit  set  by  the  Authority,  it 
may  by  simple  request  or  by  decision  require  the  relevant  financial  market 
participants to provide all necessary information to enable the Authority to carry out 
its duties under this Regulation. 

2.  Any simple request for information referred to in paragraph 1 shall: 

(a)   

refer to this Article as the legal base of that request; 

(b) 

(c) 

(d) 

state the purpose of the request; 

specify the information required; 

include a time limit within which the information is to be provided; 

(e) 
include a statement that there is no obligation on the person from whom 
the  information  is  requested  to  provide  that  information  but  that  in  case  of  a 
voluntary reply to the request, the information provided must not be incorrect 
or misleading; 

indicate the amount of the fine to be issued in accordance with Article 

(f) 
35c where the information provided is incorrect or misleading information." 

3.  When requesting to supply information by decision, the Authority shall: 

(a)   

refer to this Article as the legal base of that request; 

(b) 

(c) 

(d) 

state the purpose of the request; 

specify the information required; 

set a time limit within which the information is to be provided; 

indicate  the  periodic  penalty  payments  provided  for  in  Article  35d 

(e) 
where the production of the required information is incomplete; 

indicate  the  fine  provided  for  in  Article  35c  where  the  answers  to  the 

(f) 
questions are incorrect or misleading information; 

(g) 
indicated  the  right  to  appeal  the  decision  before  the  Board  of  Appeal 
and  to  have  the  decision  reviewed  by  the  Court  of  Justice  of  the  European 
Union in accordance with Articles 60 and 61. 

4.  The relevant financial market participants or their representatives and, in the case 
of legal persons or associations having no legal personality, the persons authorised to 
represent them by law or by their constitution shall supply the information requested. 
Lawyers duly authorised to act may supply the information on behalf of their clients. 

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The  latter  shall  remain  fully  responsible  if  the  information  supplied  is  incomplete, 
incorrect or misleading. 

5.    The  authority  shall  send,  without  delay,  a  copy  of  the  simple  request  or  of  its 
decision to the competent authority of the Member State where the relevant financial 
market  participant  concerned  by  the  request  for  information  is  domiciled  or 
established. 

6.  The Authority may use confidential information received in accordance with this 
Article  only  for  the  purposes  of  carrying  out  the  tasks  assigned  to  it  by  this 
Regulation."; 

Article 35c 

Procedural rules for imposing fines 

1.    Where,  in  carrying  out  its  duties  under  this  Regulation,  the  authority  finds  that 
there are serious indications of the possible existence of facts liable to constitute an 
infringement  as  referred  to  in  Article  35d(1),  the  Authority  shall  appoint  an 
independent investigation officer within the Authority to investigate the matter.  The 
appointed officer shall not be involved or have been directly or indirectly involved in 
the direct or indirect supervision of the financial market participants concerned and 
shall perform his or her functions independently from the Board of Supervisors. 

2.  The investigation officer referred to  in  paragraph  1 shall investigate the alleged 
infringements, taking into account any comments submitted by the persons who are 
subject to the investigations, and shall submit a complete file with his or her findings 
to the Board of Supervisors. 

3.  In order to carry out his or her tasks, the investigation officer shall have the power 
to request information in accordance with Article 35b. 

4.  Where carrying out his or her tasks, the investigation officer shall have access to 
all documents and information gathered by the Authority in its supervisory activities. 

5.    Upon  completion  of  his  investigation  and  before  submitting  the  file  with  his  or 
her  findings  to  the  Board  of  supervisors,  the  investigation  officer  shall  give  the 
persons subject to the investigations the opportunity to be heard on the matters being 
investigated.  The investigation officer shall base his or her findings only on facts on 
which the persons concerned have had the opportunity to comment. 

6.    The  rights  of  defence  of  the  persons  subject  to  the  investigations  shall  be  fully 
respected during investigations undertaken pursuant to this Article. 

7.    Upon  submission  of  the  file  with  his  finding  to  the  Board  of  Supervisors,  the 
investigation  officer  shall  notify  the  persons  who  are  subject  to  the  investigations.  
The persons subject to the investigations shall be entitled to have access to the file, 
subject to the legitimate interest of other persons in the protection of their business 
secrets.    The  right  of  access  to  the  file  shall  not  extend  to  confidential  information 
affecting third parties. 

8.  On the basis of the file containing the investigation officer's findings and, when 
requested  by  the  persons  subject  to  the  investigations,  after  having  heard  those 
persons in accordance with Article 35f, the Authority shall decide if one or more of 
the infringements as referred to in Article 35d(1) has been committed by the persons 

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subject to the investigations and, in such a case, shall take a measure in accordance 
with that Article. 

9.  The investigation officer shall not participate in the deliberations of the Board of 
Supervisors or intervene in any way in the decision-making process of the Board of 
Supervisors. 

10.  The Commission shall adopted delegated acts in accordance with Article 75a to 
specify  the  rules  of  procedure  for  the  exercise  of  the  power  to  impose  fines  or 
periodic penalty payments, including rules on the following:  

(a) rights of defence 

(b) temporal provisions,  

(c)  provisions  specifying  how  fines  or  periodic  penalty  payments  are  to  be 
collected,  

(d)  provisions  specifying  the  limitation  periods  for  the  imposition  and 
enforcement of fines and periodic penalty payments. 

11.    The  Authority  shall  refer  matters  for  criminal  prosecution  to  the  relevant 
national  authorities  where,  in  carrying  out  its  duties  under  this  Regulation,  it  finds 
that there are serious indications of the possible existence of facts liable to constitute 
criminal  offences.    In  addition,  the  Authority  shall  refrain  from  imposing  fines  or 
periodic penalty payments where a prior acquittal or conviction arising from identical 
fact  or  facts  which  are  substantially  the  same  has  already  acquired  the  force  of  res 
judicata as the result of criminal proceedings under national law. 

Article 35d 

Fines 

1.  The  Authority  shall adopt a decision  to  impose  a  where  it finds that a financial 
market participant has, intentionally or negligently, failed to provide information in 
response  to  a  decision  requiring  information  pursuant  to  Article  35b(3)  or  has 
provided  incomplete,  incorrect  or  misleading  information  in  response  to  a  simple 
request for information or a decision pursuant to Article 35b(2). 

2.  The basic amount of the fine referred to in paragraph 1 shall amount to at least 
EUR 50 000 and shall not exceed EUR 200 000. 

3.    When  setting  the  basic  amount  of  the  fine  referred  to  in  paragraph  2,  the 
Authority shall have regard to the annual turnover of the financial market participant 
concerned for the preceding business year and shall be: 

 (a)  at  the  lower  end  of  the  limit  for  entities  with  an  annual  turnover  below 
EUR 10 million;  

(b) the middle of the limit for entities with an annual turnover between EUR 10 
and 50 million;  

(c) the higher end of the limit for entities with an annual turnover higher than 
EUR 50 million. 

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The basic amounts defined within the limits set out in paragraph 2 shall be adjusted, 
where  necessary,  by  taking  into  account  aggravating  or  mitigating  factors  in 
accordance with the relevant coefficients set out in paragraph 5. 

The relevant aggravating coefficient shall be applied one by one to the basic amount. 
Where  more  than  one  aggravating  coefficient  is  applicable,  the  difference  between 
the  basic  amount  and  the  amount  resulting  from  the  application  of  each  individual 
aggravating coefficient shall be added to the basic amount. 

The relevant mitigating coefficient shall be applied one by one to the basic amount. 
Where more than one mitigating coefficient is applicable, the difference between the 
basic  amount  and  the  amount  resulting  from  the  application  of  each  individual 
mitigating coefficient shall be subtracted from the basic amount. 

4.  The  following  adjustment  coefficients  shall  be  applied  cumulatively  to  the  basic 
amount referred to in paragraph 2, based on the following: 

(a) 

the adjustment coefficients linked to aggravating factors are as follows: 

(i) where the infringement has been committed repeatedly, an additional 
coefficient  of  1.1  shall  apply  each  time  the  infringement  has  been 
repeated; 

(ii) where the infringement lasted for more than six months, a coefficient 
of 1.5 shall apply; 

(iii)  where  the  infringement  has  been  committed  intentionally,  a 
coefficient of 2 shall apply; 

(iv) where no remedial action has been taken since the infringement has 
been identified, a coefficient of 1.7 shall apply; 

(v)  where  the  financial  market  participant’s  senior  management  has  not 
cooperated with the Authority, a coefficient of 1.5 shall apply. 

(b) 

the adjustment coefficients linked to mitigating factors are as follows: 

(i)  where  the  infringement  lasted  fewer  than  10  working  days,  a 
coefficient of 0.9 shall apply; 

(ii)  where  the  financial  market  participant’s  senior  management  can 
demonstrate  that  they  have  taken  all  the  necessary  measures  to  prevent 
the  failure  to  comply  with  a  request  pursuant  to  Article  35(6a),  a 
coefficient of 0.7 shall apply; 

(iii) where the financial market participant has brought the infringement 
to  the  Authority’s  attention  quickly,  effectively  and  completely,  a 
coefficient of 0.4 shall apply; 

(iv) where the financial market participant has voluntarily taken measures 
to ensure that similar infringement cannot be committed in the future, a 
coefficient of 0.6 shall apply. 

5.    Notwithstanding  paragraphs  2  and  3,  the  total  fine  shall  not  exceed  20%  of  the 
annual  turnover  of  the  financial  market  participant  concerned  in  the  preceding 
business  year  unless  the  financial  market  participant  has  directly  or  indirectly 
benefitted  financially  from  the  infringement.  In  that  case,  the  total  fine  shall  be  at 
least equal to that financial benefit. 

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Article 35e 

Periodic penalty payments 

1. The Authority shall adopt decisions to impose a periodic penalty payment in order 
to  compel  financial  market  participants  referred  to  in  Article  35b(1)  to  provide 
information requested by decision in accordance with Article 35b(3). 

2.  A  periodic  penalty  payment  shall  be  effective  and  proportionate.  The  periodic 
penalty  payment  shall  be  imposed  on  a  daily  basis  until  the  financial  market 
participant concerned complies with the relevant decision referred to in paragraph 1. 

3. Notwithstanding paragraph 2, the amount of a periodic penalty payment shall be 
3% of the average daily turnover of the financial market participant in the preceding 
business year. It shall be calculated from the date stipulated in the decision imposing 
the periodic penalty payment. 

4.  A  periodic  penalty  payment  may  be  imposed  for  a  period  of  no  more  than  six 
months following the notification of the Authority's decision. 

Article 35f 

Right to be heard 

1. Before taking any decision to impose a fine and periodic penalty payment under 
Articles 35d and 35e, the Authority shall give the financial market participant subject 
to the request for information the opportunity to be heard.  

The  Authority  shall  base  its  decisions  only  on  the  findings  on  which  the  financial 
market participants concerned have had the opportunity to comment. 

2. The rights of defence of the financial market participant referred to in paragraph 1 
shall be fully respected during the procedure. The financial market participant shall 
be entitled to have access to the Authority's file, subject to the legitimate interest of 
other persons in protecting their business secrets. The right of access to the file shall 
not  extend  to  confidential  information  or  internal  preparatory  documents  of  the 
Authority.   

Article 35g 

Disclosure, nature, enforcement and allocation of fines and periodic penalty payments   

1.    Fines  and  periodic  penalty  payments  imposed  pursuant  to  Articles  35d  and  35e 
shall be of an administrative nature and shall be enforceable. 

2.  Enforcement  of  the  fine  and  periodic  penalty  payment  shall  be  governed  by  the 
rules  of  procedure  in  force  in  the  Member  State  in  the  territory  of  which  the 
enforcement is carried out. The enforcement order shall be appended to the decision 
imposing a fine or a periodic penalty payment without the requirement for any other 
formality  than  the  verification  of  the  authenticity  of  the  decision  by  an  authority 
which each Member State shall designate for that purpose and shall make known to 
the Authority and to the Court of Justice of the European Union. 

3.  Where  the  formalities  referred  to  in  paragraph  2  have  been  completed  on 
application by the party concerned, the party concerned may proceed to enforcement 

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in  accordance  with  the  national  law,  by  bringing  the  matter  directly  before  the 
competent body. 

4. Enforcement of the fine or periodic penalty payment may only be suspended by a 
decision of the Court of Justice of the European Union. However, the courts of the 
Member State concerned shall have jurisdiction over complaints that the enforcement 
of the fine or periodic penalty payment is being carried out in an irregular manner. 

5. The Authority shall disclose to the public every fine and periodic penalty payment 
that has been imposed pursuant to Articles 35d and 35e, unless such disclosure to the 
public  would  seriously  jeopardise  the  financial  markets  or  cause  disproportionate 
damage to the parties involved. 

6. The amounts of the fines and periodic penalty payments shall be allocated to the 
general budget of the European Union. 

Article 35h 

Review by the Court of Justice of the European Union 

The  Court  of  Justice  of  the  European  Union  shall  have  unlimited  jurisdiction  to 
review  decisions  whereby  the  Authority  has  imposed  a  fine  or  a  periodic  penalty 
payment.  It  may  annul,  reduce  or  increase  the  fine  or  periodic  penalty  payment 
imposed by the Authority.";   

(22) 

In paragraph 5 of Article 36, the first subparagraph is replaced by the following: 

"On  receipt  of  a  warning  or  recommendation  from  the  ESRB  addressed  to  a 
competent  authority,  the  Authority  shall,  where  relevant,  use  the  powers  conferred 
upon it by this Regulation to ensure a timely follow-up." 

(23) 

Article 37 is amended as follows: 

(a) 

in  paragraph  4  the  last  sentence  of  the  first  subparagraph  is  replaced  by  the 
following: 

"Members of the Securities and Markets Stakeholder Group shall serve for a period 
of four years, following which a new selection procedure shall take place."; 

(b) 

in paragraph 5, the following subparagraphs are added: 

"Where  members  of  the  Securities  and  Markets  Stakeholder  Group  cannot  reach  a 
common  opinion  or  advice,  the  members  representing  one  group  of  stakeholders 
shall be permitted to issue a separate opinion or separate advice. 

The Securities and Markets Stakeholder Group, the Banking Stakeholder Group, the 
Insurance  and  Reinsurance  Stakeholder  Group,  and  the  Occupational  Pensions 
Stakeholder Group may issue joint opinions and advice on issues related to the work 
of the European Supervisory Authorities under Article 56 of this Regulation on joint 
positions and common acts."; 

(24) 

Article 39 is replaced by the following: 

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"Article 39 

Decision making procedure 

"1.  The  Authority  shall  act  in  accordance  with  paragraphs  2  to  6  when  adopting 
decisions  provided  for  in  this  Regulation,  save  for  those  decisions  adopted  in 
accordance with Articles 35b, 35d and 35e.  

2. The Authority shall inform any addressee of a decision of its intention to adopt the 
decision, setting a time limit within which the addressee may express its views on the 
subject-matter  of  the  decision,  taking  full  account  of  the  urgency,  complexity  and 
potential  consequences  of  the  matter.  The  provision  laid  down  in  the  first  sentence 
shall apply mutatis mutandis to recommendations as referred to in Article 17(3). 

3.  The decisions of the Authority shall state the reasons on which they are based. 

4.    The  addressees  of  decisions  of  the  Authority  shall  be  informed  of  the  legal 
remedies available under this Regulation. 

5.    Where  the  Authority  has  taken  a  decision  pursuant  to  Article  18(3)  or  Article 
18(4), it shall review that decision at appropriate intervals. 

6.  The adoption of the decisions which the Authority takes pursuant to Articles 17, 
18  or  19  shall  be  made  public.  The  publication  shall  disclose  the  identity  of  the 
competent authority or financial market participant concerned and the main content 
of the decision, unless such publication is in conflict with the  legitimate interest of 
financial market participants or with the protection of their business secrets or could 
seriously jeopardise the orderly functioning and integrity of financial markets or the 
stability of the whole or part of the financial system of the Union."; 

(25) 

Article 40 is amended as follows: 

(a)  paragraph 1 is amended as follows: 

(i) 

the following point (aa) is inserted: 

"(aa)  the  full  time  members  of  the Executive  Board  referred  to  Article  45(1), 
who shall be non-voting;"; 

(b) 

(c) 

 in paragraph 6, the second subparagraph is deleted; 

the following paragraph 7 is added: 

"7.  Where  the  national  public  authority  referred  to  in  paragraph  1(b)  is  not 
responsible  for  the  enforcement  of  consumer  protection  rules,  the  member  of  the 
Board of Supervisors  referred to in that  point may decide to invite a representative 
from the Member State’s consumer protection authority, who shall be non-voting. In 
the  case  where  the  responsibility  for  consumer  protection  is  shared  by  several 
authorities  in  a  Member  State,  those  authorities  shall  agree  on  a  common 
representative."; 

(26) 

Article 41 is replaced by the following: 

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"Article 41 

Internal committees 

(27) 

"The  Board  of  Supervisors  may  establish  internal  committees  for  specific  tasks 
attributed to it. The Board of Supervisors may provide for the delegation of certain 
clearly defined tasks and decisions to internal committees, to the Executive Board or 
to the Chairperson." 

(28) 

in Article 42, the first paragraph is replaced by the following: 

"When  carrying  out  the  tasks  conferred  upon  them  by  this  Regulation  the  voting 
members  of  the  Board  of  Supervisors,  as  well  as  the  voting  CCP  specific  and 
permanent  members  of  the  CCP  Executive  Session,  shall  act  independently  and 
objectively in the sole interest of the Union as a whole and shall neither seek nor take 
instructions  from  Union  institutions  or  bodies,  from  any  government  of  a  Member 
State or from any other public or private body."; 

(29) 

Article 43 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

"The Board of Supervisors shall give guidance to the work of the Authority. 

It  shall  adopt  the  opinions,  recommendations,  guidelines  and  decisions  of  the 
Authority, and issue the advice referred to in Chapter II, except for those tasks and 
powers for which the CCP Executive Session is responsible pursuant to Article 44b 
and  the  Executive  Board  is  responsible  pursuant  to  Article  47.  It  shall  act  on  a 
proposal from the Executive Board."; 

(b)  paragraphs 2 and 3 are deleted; 

(c) 

in paragraph 4, the first subparagraph is replaced by the following: 

"The  Board  of  Supervisors  shall  adopt,  before  30  September  of  each  year,  on  the 
basis of a proposal by the Executive Board, the work programme of the Authority for 
the coming year, and shall transmit it for information to the European Parliament, the 
Council and the Commission."; 

(d)  Paragraph 5 is replaced by the following: 

"5. The Board of Supervisors shall adopt, on the basis of a proposal by the Executive 
Board,  the  annual  report  on  the  activities  of  the  Authority,  including  on  the 
performance of the Chairperson’s duties, on the basis of the draft report referred to in 
Article 53(7) and shall transmit that report to the European Parliament, the Council, 
the  Commission,  the  Court  of  Auditors  and  the  European  Economic  and  Social 
Committee by 15 June each year. The report shall be made public."; 

(e)  paragraph 8 is deleted. 

(30) 

Article 44 is amended as follows: 

(a) 

in the second subparagraph of paragraph 1, the following sentence is added: 

"The full time members of the Executive Board and the Chairperson shall not vote on 
those decisions."; 

(b) 

in paragraph 1, the third and fourth sub-paragraphs  are deleted. 

(c)  paragraph 4 is replaced by the following: 

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"4.  The  non-voting  members  and  the  observers  shall  not  participate  in  any 
discussions  within  the  Board  of  Supervisors  relating  to  individual  financial 
institutions, unless otherwise provided for in Article 75(3) or in the acts referred to in 
Article 1(2)."; 

The first subparagraph shall not apply to the Chairperson, the members that are also 
members  of  the  Executive  Board  and  the  European  Central  Bank  representative 
nominated by its Supervisory Board.";  

(31) 

in Chapter III, the title of Section 2 is replaced by the following: 

"Executive Board"; 

(32) 

Article 45 is replaced by the following: 

"Article 45 

Composition 

"1.  The  Executive  Board  shall  be  composed  of  the  Chairperson  and  five  full  time 
members. The Chairperson shall assign clearly defined policy and managerial tasks 
to  each  of  the  full  time  members.  One  of  the  full  time  members  shall  be  assigned 
responsibilities for budgetary matters and for matters relating to the work programme 
of the Authority ("Member in charge"). One of the full time members shall act as a 
Vice Chairperson and carry out the tasks of the Chairperson in his or her absence or 
reasonable  impediment,  in  accordance  with  this  Regulation.  The  Head  of  the  CCP 
Executive  Session  shall  participate  as  observer  to  all  meetings  of  the  Executive 
Board. 

2. The full time members shall be selected on the basis of merit, skills, knowledge of 
financial  market  participants  and  markets,  and  experience  relevant  to  financial 
supervision and regulation. The full time members shall have extensive management 
experience.  The  selection  shall  be  based  on  an  open  call  for  candidates,  to  be 
published  in  the  Official  Journal  of  the  European  Union,  following  which  the 
Commission shall draw up a shortlist of qualified candidates.  

The Commission shall submit the shortlist to the European Parliament for approval. 
Following the approval of that shortlist, the Council shall adopt a decision to appoint 
the full time members of the Executive Board including the Member in charge. The 
Executive Board shall be balanced and proportionate and shall reflect the Union as a 
whole. 

3. Where a full time member of the Executive Board no longer fulfil the conditions 
set  out  in  Article  46  or  has  been  found  guilty  of  serious  misconduct,  the  Council 
may, on a proposal from the Commission which has been approved by the European 
Parliament, adopt a decision to remove him or her from office.  

4.  The  term  of  office  of  the  full  time  members  shall  be  5  years  and  shall  be 
renewable once. In the course of the 9 months preceding the end of the 5-year term 
of office of the full time member, the Board of Supervisors shall evaluate: 

(a)  the  results  achieved  in  the  first  term  of  office  and  the  way  in  which  they 
were achieved; 

(b) the Authority’s duties and requirements in the coming years. 

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Taking into account the evaluation, the Commission shall submit the list of the full 
time  members  to  be  renewed  to  the  Council.  Based  on  this  list    and  taking  into 
account  the  evaluation,  the  Council  may  extend  the  term  of  office  of  the  full  time 
members."; 

(33) 

the following Article 45a is inserted: 

"Article 45a 

Decision-making 

1.  Decisions  by  the  Executive  Board  shall  be  adopted  by  simple  majority  of  its 
members.  Each  member  shall  have  one  vote.  In  the  event  of  a  tie,  the  Chairperson 
shall have a casting vote. 

2.  The  representative  of  the  Commission  shall  participate  in  meetings  of  the 
Executive Board without the right  to vote save in  respect of   matters  referred to  in 
Article 63.   

3.The Executive Board shall adopt and make public its rules of procedure. 

4.  Meetings of the Executive Board shall be convened by the Chairperson at his own 
initiative  or  at  the  request  of  one  of  its  members,  and  shall  be  chaired  by  the 
Chairperson. 

The Executive Board shall meet prior to every meeting of the Board of Supervisors 
and as often as the Executive Board deems necessary. It shall meet at least five times 
a year. 

5.  The  members  of  the  Executive  Board  may,  subject  to  the  rules  of  procedure,  be 
assisted  by  advisers  or  experts.  The  non-voting  participants  shall  not  attend  any 
discussions  within  the  Executive  Board  relating  to  individual  financial  market 
participants."; 

(34) 

the following Article 45b is inserted: 

"Article 45b 

Internal committees  

The Executive Board may establish internal committees for specific tasks attributed 
to it."; 

(35) 

Article 46 is replaced by the following: 

"Article 46 

Independence 

"The members of the Executive Board shall act independently and objectively in the 
sole interest of the Union as a whole and shall neither seek nor take instructions from 
the  Union  institutions  or  bodies,  from  any  government  of  a  Member  State  or  from 
any other public or private body. 

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Neither  Member  States,  the  Union  institutions  or  bodies,  nor  any  other  public  or 
private  body  shall  seek  to  influence  the  members  of  the  Executive  Board  in  the 
performance of their tasks."; 

(36) 

Article 47 is replaced by the following: 

"Article 47 

Tasks 

"1.  The Executive Board shall  ensure that the Authority  carries out its mission  and 
performs the tasks assigned to it in accordance with this Regulation. It shall take all 
necessary measures, notably the adoption of internal administrative instructions and 
the publication of notices, to ensure the functioning of the Authority, in accordance 
with this Regulation.  

2.  The Executive Board shall propose, for adoption by the Board of Supervisors, an 
annual and multi-annual work programme, which includes a part on CCP matters. 

3.    The  Executive  Board  shall  exercise  its  budgetary  powers  in  accordance  with 
Articles 63 and 64. 

For  the  purposes  of  Articles  17,  19,  22,  29a,  30,  31a,  32  and  35b  to  35h,  the 
Executive Board shall be competent to act and to take decisions, except with regard 
to  CCP  matters  for  which  the  CCP  Executive  Session  shall  be  competent.  The 
Executive  Board  shall  keep  the  Board  of  Supervisors  informed  of  the  decisions  it 
takes. 

3a. The Executive Board shall examine, give an opinion and make a proposal on all 
matters to be decided by the Board of Supervisors. 

4.  The  Executive  Board  shall  examine  and  prepare  decisions  for  adoption  by  the 
Board  of  Supervisors  on  all  matters  where  acts  referred  to  in  Article  1(2)  have 
conferred functions of authorisation or  supervision and corresponding  powers  upon 
the Authority.4.  The Executive Board shall  adopt  the Authority’s staff policy plan 
and,  pursuant  to  Article  68(2),  the  necessary  implementing  measures  of  the  Staff 
Regulations of Officials of the European Communities ('the Staff Regulations’). 

5.  The Executive Board shall adopt the special provisions on right of access to the 
documents of the Authority, in accordance with Article 72. 

6.    The  Executive  Board  shall  propose  an  annual  report  on  the  activities  of  the 
Authority,  including  on  the  Chairperson’s  duties,  on  the  basis  of  the  draft  report 
referred to in Article 53(7) to the Board of Supervisors for approval. 

7.    The  Executive  Board  shall  appoint  and  remove  the  members  of  the  Board  of 
Appeal in accordance with Article 58(3) and (5). 

8.  The  members  of  the  Executive  Board  shall  make  public  all  meetings  held  and 
hospitality received. Expenses shall be recorded publicly in accordance with the Staff 
Regulations. .  

9. The Member in charges shall have the following tasks: 

(a)  to  implement  the  annual  work  programme  of  the  Authority  under  the 
guidance  of  the  Board  of  Supervisors,  and  of  the  CCP  Executive  Session  for 

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the tasks and powers referred to in Article 44b(1), and under the control of the 
Executive Board; 

(b)  to  take  all  necessary  measures,  notably  the  adoption  of  internal 
administrative  instructions  and  the  publication  of  notices,  to  ensure  the 
functioning of the Authority, in accordance with this Regulation; 

(c) to prepare a multi-annual work programme, as referred to in paragraph 2; 

(d)  to  prepare  a  work  programme  by  30  June  of  each  year  for  the  following 
year, as referred to in Article 47(2); 

(e) to draw up a preliminary draft budget of the Authority pursuant to Article 
63 and implement the budget of the Authority pursuant to Article 64; 

(f) to prepare an annual draft report to include a section on the regulatory and 
supervisory  activities  of  the  Authority  and  a  section  on  financial  and 
administrative matters;  

(g)  to  exercise  in  respect  to  the  Authority’s  staff  the  powers  laid  down  in 
Article 68 and to manage staff matters. 

However,  in  respect  of  the  part  on  CCP  matters,  as  referred  to  in  paragraph  2,  the 
CCP Executive Session shall carry out the tasks referred to in points (c) and (d) of 
the first subparagraph. 

In respect of the annual draft report referred to in point (f) of the first subparagraph, 
the CCP Executive Session shall carry out the tasks referred to therein with regard to 
CCP matters. 

."; 

(37) 

The title of Section III of Chapter III is replaced by the following: 

"Chairperson,  Head  of  CCP  Executive  Session  and  Directors  of  CCP  Executive 
Session"; 

(38) 

Article 48 is amended as follows: 

(a) 

in paragraph 1, the second sub-paragraph is replaced by the following: 

"The  Chairperson  shall  be  responsible  for  preparing  the  work  of  the  Board  of 
Supervisors  and  shall  chair  the  meetings  of  the  Board  of  Supervisors  and  the 
Executive Board."; 

(b) 

 paragraph 2 is replaced by the following: 

"2.  The  Chairperson  shall  be  selected  on  the  basis  of  merit,  skills,  knowledge  of 
financial  market  participants  and  markets,  and  of  experience  relevant  to  financial 
supervision and regulation, following an open call for candidates to be published in 
the Official Journal of the European Union. The Commission shall submit a shortlist 
of  candidates  for  the  position  of  the  Chairperson  to  the  European  Parliament  for 
approval. Following the approval of that shortlist, the Council shall adopt a decision 
to appoint the Chairperson.  

"Where the Chairperson no longer fulfils the conditions referred to in Article 49 or 
has  been  found  guilty  of  serious  misconduct,  the  Council  may,  on  a  proposal  from 
the  Commission  which  has  been  approved  by  the  European  Parliament,  adopt  a 
decision to remove him or her from office."; 

(c) 

in paragraph 4, the second subparagraph is replaced by the following: 

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"The  Council,  on  a  proposal  from  the  Commission  and  taking  into  account  the 
evaluation, may extend the term of office of the Chairperson once."; 

(d)  paragraph 5 is deleted; 

(39) 

the following Article 49a is inserted: 

"Article 49a 

Expenses 

"The Chairperson shall make public all meetings held and any hospitality received. 
Expenses shall be recorded publicly in accordance with the Staff Regulations."; 

(40) 

(41) 

Articles 51, 52 and 53 are deleted; 

in paragraph 2 of Article 54, the following indent is added: 

" — consumer and investor protection issues"; 

(42) 

in Article 55, paragraph 2 is replaced by the following: 

"2. One member of the Executive Board, the representative of the Commission and 
the ESRB shall be invited to the meetings of the Joint Committee, as well as of any 
Sub-Committees referred to in Article 57, as observers."; 

(43) 

Article 58 is amended as follows: 

(a)  paragraph 3 is replaced by the following: 

"3. Two members of the Board of Appeal and two alternates shall be appointed by 
the Executive Board of the Authority from a short-list proposed by the Commission, 
following a public call for expressions of interest published in the Official Journal of 
the European Union, and after consultation of the Board of Supervisors."; 

(b)  paragraph 5 is replaced by the following: 

"5.  A  member  of  the  Board  of  Appeal  appointed  by  the  Executive  Board  of  the 
Authority shall not be removed during his term of office, unless he has been found 
guilty of serious misconduct and the Executive Board takes a decision to that effect 
after consulting the Board of Supervisors."; 

(44) 

in Article 59, paragraph 1 is replaced by the following: 

"1.  The  members  of  the  Board  of  Appeal  shall  be  independent  in  making  their 
decisions. They shall not be bound by any instructions. They shall not perform any 
other  duties  in  relation  to  the  Authority,  its  Executive  Board  or  its  Board  of 
Supervisors."; 

(45) 

in Article 60, paragraph 1 is replaced by the following: 

"1. Any natural or legal person, including competent authorities, may appeal against 
a  decision  of  the  Authority  referred  to  in  Articles  17,  18,  19  and  35  and  any  other 
decision  taken  by  the  Authority  in  accordance  with  the  Union  acts  referred  to  in 
Article 1(2) which is addressed to that person, or against a decision which, although 
in  the  form  of  a  decision  addressed  to  another  person,  is  of  direct  and  individual 
concern to that person."; 

(46) 

Article 62 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

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"1.  The revenues  of  the  Authority  shall  consist,  without  prejudice  to  other types  of 
revenue, of any combination of the following: 

 (a) a balancing contribution from the Union, entered in the General Budget of 
the Union (Commission section) which shall not exceed 40% of the estimated 
revenues of the Authority;  

(b)  annual  contributions  from  financial  institutions,  based  on  the  annual 
estimated expenditure relating to the activities required by this Regulation and 
by the Union Acts referred to in Article 1(2) for each category of participants 
within the remit of the Authority;    

(c)  any  fees  paid  to  the  Authority  in  the  cases  specified  in  the  relevant 
instruments of Union law. 

(d) any voluntary contribution from Member States or observers;   

(e)  charges  for  publications,  training  and  for  any  other  services  requested  by 
competent authorities."; 

(b) 

the following paragraphs 5 and 6 are added:: 

"5.  The  annual  contributions  referred  to  in  paragraph  1(b)  shall  be  collected  each 
year  from  individual  financial  institutions  by  the  authorities  designated  by  each 
Member State. By 31 March of each financial year, each Member State shall pay to 
the Authority the amount that it is required to collect in accordance with the criteria 
set out in the delegated act referred in to Article 62a. 

6. Voluntary contributions from Members States and observers as referred to in point 
(d) of paragraph 1 shall not be accepted if such acceptance would cast doubt on the 
independence and impartiality of the Authority."; 

(47) 

the following Article 62a is inserted: 

"Article 62a 

Delegated acts on the calculation of annual contributions by financial institutions  

The  Commission  shall  be  empowered,  in  accordance  with  Article  75a,  to  adopt 
delegated  acts  determining  how  annual  contributions  by  individual  financial 
institutions referred to in point (e) of Article 62 are to be calculated, establishing the 
following:  

(a)  a  methodology  to  allocate  the  estimated  expenditure  to  categories  of 
financial institutions as a basis for determining the share of contributions to be 
made by financial institutions of each category;  

(b)  appropriate  and  objective  criteria  to  determine  the  annual  contributions 
payable by individual financial institutions within the scope of the Union Acts 
referred  to  in  Article  1(2)  based  on  their  size  so  as  to  approximately  reflect 
their importance in the market.  

The  criteria  referred  to  in  point  (b)  of  the  first  paragraph  may  establish  either  de 
minimis  thresholds  below  which  no  contribution  is  due  or  minima  below  which 
contributions must not fall."; 

(48) 

Article 63 is replaced by the following: 

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"Article 63 

Establishment of the Budget 

1.    Each  year,  the  Member  in  charge  shall  draw  up  a  provisional  draft  single 
programming  document  of  the  Authority  for  the  three  following  financial  years 
setting  out  the  estimated  revenue  and  expenditure,  as  well  as  information  on  staff, 
from its annual and multi-annual programming and shall forward it to the Executive 
Board and the Board of Supervisors, together with the establishment plan. 

ESMA’s expenditure and fees relating to the tasks and powers referred to in Article 
44b (1) shall be separately identifiable within the statement of estimates referred to in 
the first subparagraph. Prior to the adoption of that statement of estimates, the draft 
prepared  by  the  Member  in  charge  relating  to  such  expenditure  and  fees  shall  be 
approved by the CCP Executive Session. 

The  annual accounts  of  ESMA  drawn  up  and  published  in  accordance  with  Article 
64(6) shall include the income and expenses related to the tasks referred to in Article 
44b(1). 

1a. The Executive Board shall, on the basis of the draft which has been approved by 
the  Board  of  Supervisors  and  by  the  CCP  Executive  Session  for  expenditures  and 
fees relating to tasks and powers referred to in Article 44b(1),  adopt the draft single 
programming document for the three following financial years.. 

1b.  The  draft  single  programming  document  shall  be  transmitted  by  the  Executive 
Board to the Commission, the European Parliament and the Council by 31 January. 

2. 
On the basis of the draft single programming document, the Commission shall 
enter in the draft budget of the Union the estimates it deems necessary in respect of 
the establishment plan and the amount of the balancing contribution to be charged to 
the  general  budget  of  the  Union  in  accordance  with  Articles  313  and  314  of  the 
Treaty. 

The  budgetary  authority  shall  adopt  the  establishment  plan  for  the  Authority. 
3. 
The  budgetary  authority  shall  authorise  the  appropriations  for  the  balancing 
contribution to the Authority. 

4.  The budget of the Authority shall be adopted by the Board of Supervisors. It shall 
become  final  after  the  final  adoption  of  the  general  budget  of  the  Union.  Where 
necessary, it shall be adjusted accordingly. 

5.  The  Executive  Board  shall,  without  delay,  notify  the  budgetary  authority  of  its 
intention to implement any project which may have significant financial implications 
for the funding of its budget, in particular any project relating to property, such as the 
rental or purchase of buildings."; 

(49) 

Article 64 is replaced by the following: 

"Article 64 

Implementation and control of the budget 

1.  The  Member  in  charge  shall  act  as  authorising  officer  and  shall  implement  the 
Authority’s budget. 

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2.    The  Authority’s  accounting  officer  shall  send  the  provisional  accounts  to  the 
Commission’s  accounting  officer  and  to  the  Court  of  Auditors  by  1  March  of  the 
following year. 

3.    The  Authority's  accounting  officer  shall  send  by  1  March  of  the  following  year 
the  required  accounting  information  for  consolidation  purposes  to  the  accounting 
officer of the  Commission, in the manner and format laid down by that accounting 
officer. 

4. The Authority’s accounting officer shall send the report on budgetary and financial 
management to the members of the Board of Supervisors, the European Parliament, 
the Council and the Court of Auditors by 31 March of the following year. 

5.    After  receiving  the  observations  of  the  Court  of  Auditors  on  the  provisional 
accounts of the Authority in accordance with Article 148 of the Financial Regulation, 
the Authority's  accounting officer shall draw up the Authority's  final accounts. The 
Member in charge shall send them to the Board of Supervisors, which shall deliver 
an opinion on these accounts. 

6.  The Authority's accounting officer shall send the final accounts, accompanied by 
the  opinion  of  the  Board  of  Supervisors,  by  1  July  of  the  following  year,  to  the 
accounting officer of the Commission, the European Parliament, the Council and the 
Court of Auditors. 

The Authority's  accounting officer shall also send by 1 July a  reporting package to 
the  Commission's  accounting  officer,  in  a  standardised  format  as  laid  down  by  the 
Commission's accounting officer for consolidation purposes. 

7.    The  final  accounts  shall  be  published  in  the  Official  Journal  of  the  European 
Union by 15 November of the following year. 

8.    The  Member  in  charge  shall  send  the  Court  of  Auditors  a  reply  to  the  latter’s 
observations  by  30  September.  He  shall  also  send  a  copy  of  that  reply  to  the 
Executive Board and the Commission. 

9.    The  Member  in  charge  shall  submit  to  the  European  Parliament,  at  the  latter’s 
request  and  as  provided  for  in  Article  165(3)  of  the  Financial  Regulation,  any 
information necessary for the smooth application of the discharge procedure for the 
financial year in question. 

10.  The European Parliament, following a recommendation from the Council acting 
by qualified majority, shall, before 15 May of the year N + 2, grant a discharge to the 
Authority for the implementation of the budget for the financial year N."; 

(50) 

Article 65 is replaced by the following: 

"Article 65 

Financial Rules 

The  financial  rules  applicable  to  the  Authority  shall  be  adopted  by  the  Executive 
Board  after  consulting  the  Commission.  Those  rules  may  not  depart  from 
Commission Delegated Regulation (EU) No 1271/2013* for the bodies referred to in 
Article  208  of  Regulation  (EU,  Euratom)  No  966/2012  unless  the  specific 
operational needs  for  the  functioning  of  the  Authority  so  require  and  only  with  the 
prior agreement of the Commission. 

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*Commission  Delegated  Regulation  (EU)  No  1271/2013  of  30  September  2013  on 
the  framework  financial  regulation  for  the  bodies  referred  to  in  Article  208  of 
Regulation  (EU,  Euratom)  No  966/2012  of  the  European  Parliament  and  of  the 
Council ( OJ L 328, 7.12.2013, p. 42)."; 

(51) 

in Article 66, paragraph 1 is replaced by the following: 

"1.  For  the  purposes  of  combating  fraud,  corruption  and  any  other  illegal  activity, 
Regulation  (EU,  Euratom)  No  883/2013  of  the  European  Parliament  and  of  the 
Council* shall apply to the Authority without any restriction. 

*Regulation  (EU,  Euratom)  No  883/2013  of  the  European  Parliament  and  of  the 
Council of 11 September 2013 concerning investigations conducted by the European 
Anti-Fraud  Office  (OLAF)  and  repealing  Regulation  (EC)  No  1073/1999  of  the 
European  Parliament  and  of  the  Council  and  Council  Regulation  (Euratom)  No 
1074/1999 (OJ L 248, 18.9.2013, p. 1)."; 

(52) 

Article 68 is amended as follows: 

(a)  paragraphs 1 and 2 is replaced by the following: 

"1. The Staff Regulations, the Conditions of Employment of Other Servants and the 
rules adopted jointly by the Union institutions for the purpose of applying them shall 
apply to the staff of the Authority, including the full time members of the Executive 
Board,  the  Chairperson,  the  Head  of  the  CCP  Executive  Session  and  the  Directors 
referred to in point (i) of Article 44a(1)(a). 

2.  The  Executive  Board,  in  agreement  with  the  Commission,  shall  adopt  the 
necessary implementing measures, in accordance with the arrangements provided for 
in Article 110 of the Staff Regulations."; 

(b)  paragraph 4 is replaced by the following: 

"4.  The  Executive  Board  shall  adopt  provisions  to  allow  national  experts  from 
Member States to be seconded to the Authority."; 

(53) 

Article 70 is amended as follows: 

(a) 

 paragraph 1 is replaced by the following: 

"1.  Members  of  the  Board  of  Supervisors  and  all  members  of  the  staff  of  the 
Authority including officials seconded by  Member States on a temporary  basis and 
all other persons carrying out tasks for the Authority on a contractual basis shall be 
subject to the requirements of professional secrecy pursuant to Article 339 TFEU and 
the relevant provisions in Union legislation, even after their duties have ceased."; 

(b) 

in paragraph 2, the second subparagraph is replaced by the following: 

"Moreover,  the  obligation  under  paragraph  1  and  the  first  subparagraph  of  this 
paragraph shall not  prevent the Authority and the competent authorities from using 
the  information  for  the  enforcement  of  the  acts  referred  to  in  Article  1(2),  and  in 
particular for legal procedures for the adoption of decisions."; 

(c) 

the following paragraph 2a is inserted: 

"2a. The Executive Board, the CCP Executive Session and the Board of Supervisors 
shall  ensure  that  individuals  who  provide  any  service,  directly  or  indirectly, 
permanently or occasionally, relating to the tasks of the Authority, including officials 
and other persons authorised by the Executive Board and the Board of Supervisors or 

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appointed  by  the  competent  authorities  for  that  purpose,  are  subject  to  the 
requirements of professional secrecy equivalent to those in the previous paragraphs. 

The  same  requirements  for  professional  secrecy  shall  also  apply  to  observers  who 
attend  the  meetings  of  the  Executive  Board,  the  CCP  Executive  Session  and  the 
Board of Supervisors who take part in the activities of the Authority."; 

(d) 

in paragraph 3, the first subparagraph is replaced by the following: 

"Paragraphs  1  and  2  shall  not  prevent  the  Authority  from  exchanging  information 
with  competent  authorities  in  accordance  with  this  Regulation  and  other  Union 
legislation applicable to financial institutions."; 

(54) 

Article 71 is replaced by the following: 

"This  Regulation  shall  be  without  prejudice  to  the  obligations  of  Member  States 
relating to their processing of personal data under Regulation (EU) 2016/679 or the 
obligations  of  the  Authority  relating  to  its  processing  of  personal  data  under 
Regulation (EU) No 2018/XXX (Data Protection Regulation for EU institutions and 
Bodies) when fulfilling its responsibilities."; 

(55) 

in Article 72, paragraph 2 is replaced by the following: 

"2. The Executive Board shall adopt practical measures for applying Regulation (EC) 
No 1049/2001." 

(56) 

in Article 73, paragraph 2 is replaced by the following: 

"2. The Executive Board shall decide on the internal language arrangements for the 
Authority."; 

(57) 

in Article 74, the first paragraph is replaced by the following: 

"The necessary arrangements concerning the accommodation to be provided for the 
Authority in the Member State where its seat is located and the facilities to be made 
available  by  that  Member  State,  as  well  as  the  specific  rules  applicable  in  that 
Member State to the staff of the Authority and members of their families shall be laid 
down  in  a  Headquarters  Agreement  between  the  Authority  and  that  Member  State 
concluded after obtaining the approval of the Executive Board."; 

(58) 

the following Article 75a is inserted: 

"Article 75a 

Exercise of the delegation 

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

2. The power to adopt delegated acts referred to in Article 35c and Article 62a shall 
be conferred for an indeterminate period of time.  

3. The delegation of power referred to in Article 35c and Article 62a 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.  

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4. 
Before  adopting  a  delegated  act,  the  Commission  shall  consult  experts 
designated by each Member State in accordance with the principles laid down in the 
Interinstitutional Agreement on Better Law-Making of 13 April 2016.  

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

6. A delegated act adopted pursuant to Article 35c or Article 62(2a) shall enter into 
force only if no objection has been expressed either by the European Parliament or 
the Council within a period of three months of notification of that act to the European 
Parliament  and  the  Council  or  if,  before  the  expiry  of  that  period,  the  European 
Parliament  and  the  Council  have  both  informed  the  Commission  that  they  will  not 
object.  That  period  shall  be  extended  by  three  months  at  the  initiative  of  the 
European Parliament or the Council."; 

(59) 

Article 76 is replaced by the following: 

"Article 76 

Relationship with the CESR 

The  Authority  shall  be  considered  the  legal  successor  of  CESR.  By  the  date  of 
establishment of the Authority, all assets and liabilities and all pending operations of 
CESR shall be automatically transferred to the Authority. The CESR shall establish a 
statement  showing  its  closing  assets  and  liability  situation  as  of  the  date  of  that 
transfer.  That  statement  shall  be  audited  and  approved  by  CESR  and  by  the 
Commission." 

(60) 

new Article 77a is inserted: 

Article 77a 

Transitional provisions 

The  tasks  and  position  of  the  Executive  Director  appointed  in  accordance  with 
Regulation No 1095/2010 as last amended by Directive 2014/51/EU and in office on 
[PO:  please insert  date  3  months  after the  entry into  force  of  this  Regulation]  shall 
cease on that date. 

The tasks and position of the Chairperson appointed in accordance with Regulation 
No 1095/2010 as last amended by Directive 2014/51/EU and in office on [PO: please 
insert date 3 months after the entry into force of this Regulation] shall continue until 
its expiry. 

The  tasks  and  position  of  the  members  of  the  Management  Board  appointed  in 
accordance with Regulation No 1095/2010 as last amended by Directive 2014/51/EU 
and  in  office  on  [PO:  please  insert  date  3  months  after  the  entry  into  force  of  this 
Regulation] shall cease on that date.". 

Article 4 

Amendments to Regulation (EU) No 345/2013 on European venture capital funds 

Regulation (EU) No 345/2013 is amended as follows: 

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(1) 

Article 2 is amended as follows: 

(a) 

in paragraph 1, point (c) is deleted; 

(b)  paragraph 2 is replaced by the following: 

“2.  Articles 3 to 6, Article 12, points (c) and (i) of Article 13(1), Articles 14a to 
19, 19a to 19c, 20, 20a to 20c, 21, 21a to 21d, and 25 of this Regulation shall apply 
to  managers  of  collective  investment  undertakings  authorised  under  Article  6  of 
Directive 2011/61/EU that manage portfolios of qualifying venture capital funds and 
intend to use the designation ‘EuVECA’ in relation to the marketing of those funds 
in the Union.”; 

(2) 

in Article 3, the first paragraph is amended as follows: 

(a)  point (m) is replaced by the following: 

‘competent  authority’  means  any  competent  authority  referred  to  in 

“(m) 
points (f) and (h) of Article 4(1) of Directive 2011/61/EU;”; 

(b)  point (n) is deleted; 

(3) 

in Article 7 the following subparagraphs  are added: 

“ESMA  shall  develop  draft  regulatory  technical  standards  specifying  the  criteria  to 
be used to assess whether managers of qualifying venture capital funds comply with 
their  obligations  under  points  (a)  to  (g)  of  paragraph  1,  ensuring  consistency  with 
Article 12(1) of Directive 2011/61/EU. 

ESMA shall submit those draft regulatory technical standards to the Commission by 
[[PO: Please insert date 24 months after the date of entry into force]]. 

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.”; 

(4) 

in Article 8, the following paragraph 3 is added: 

“3.  The  Commission  shall  adopt  delegated  acts  in  accordance  with  Article  25 
specifying the requirements for the delegation of functions referred to in paragraph 2, 
ensuring consistency with the requirements applicable to the delegation of functions 
set out in Article 20 of Directive 2011/61/EU.”; 

(5) 

Article 10 is amended as follows: 

(a) 

(b) 

in the second and in the last sentence of paragraph 3, the words “the competent 
authority of their home Member State” are replaced by the words “ESMA”; 

in  paragraph  5  the  words  “the  competent  authority  of  their  home  Member 
State” are replaced by the word “ESMA”; 

(c) 

the following paragraph 7 is added: 

“7.  ESMA  shall  develop  draft  regulatory  technical  standards  specifying  the 
appropriate human and technical resources necessary for the proper management of 
the qualifying venture capital funds referred to in paragraph 1. 

ESMA shall submit those draft regulatory technical standards to the Commission by 
[PO: Please insert date 24 months after the date of entry into force]. 

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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.”; 

(6) 

in Article 11, the following paragraphs 3 and 4 are added: 

“3.  ESMA  shall  develop  draft  regulatory  technical  standards  specifying  the  rules 
and  procedures  for  the  valuation  of  assets  referred  to  in  paragraph  1,  ensuring 
consistency  with  the  requirements  applicable  to  the  valuation  of  assets  set  out  in 
Article 19 of Directive 2011/61/EU. 

ESMA shall submit those draft regulatory technical standards to the Commission by 
[PO: Please insert date 24 months after the date of entry into force]. 

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

(7) 

Article 12 is amended as follows: 

(a) 

in  paragraph  1,  in  the  first  sentence  of  the  first  subparagraph,  the  words  “the 
competent  authority  of  the  home  Member  State”  are  replaced  by  the  word 
“ESMA”; 

(b)  paragraph 4 is replaced by the following:  

“4.  ESMA  shall  make  available,  upon  request,  information  gathered  under  this 
Article to competent authorities in a timely manner.”; 

(8) 

Article 14 is amended as follows: 

(a)  paragraph 1 is amended as follows: 

(i) 

in  the  introductory  words,  the  words  “the  competent  authority  of  their 
home Member State” are replaced by the word “ESMA”; 

(ii) 

the following point (-a) is inserted:  

“(-a) 
capital fund has its registered office”; 

the Member State in which the manager of a qualifying venture 

(iii)  point (b) is re2placed by the following: 

“(b) 
the  identity  and  the  domicile  of  the  qualifying  venture  capital 
funds  the  units  or  shares  of  which  are  to  be  marketed  and  their  
investment strategies”; 

(b) 

in the introductory words of paragraph 2 , the words “the competent authority 
of the home Member State” are replaced by the word “ESMA”; 

(c)  paragraph 4 is replaced by the following: 

“4.  ESMA  shall  inform  all  of  the  following  whether  the  manager  referred  to  in 
paragraph 1 have been registered as a manager of a qualifying venture capital fund 
no later than two months after it has provided all the information referred to in that 
paragraph: 

(a) 

the manager referred to in paragraph 1; 

the competent authorities of the Member States referred to in point (-a) 

(b) 
of paragraph 1; 

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the competent authorities of the Member States refer to in point (d) of 

(c) 
paragraph 1."; 

(d) 

 paragraph 6 is amended as follows: 

(i) 

in  the  first  subparagraph,  the  words  “the  competent  authority  of  their 
home Member State” are replaced by the word “ESMA”;  

(ii) 

the second subparagraph is replaced by the following: 

“Where  ESMA objects to  the changes referred to  in  the first subparagraph, it 
shall  inform  the  manager  of  the  qualifying  venture  capital  fund  within  two 
months of the notification of those changes and shall state the reasons for the 
objection.  The  changes  referred  to  in  the  first  subparagraph  may  only  be 
implemented provided that ESMA does not object to those changes within that 
period.”; 

(e) 

 paragraphs 7 and 8 are replaced by the following:  

“7.  ESMA shall develop draft regulatory technical standards specifying the criteria 
to assess the sufficient good repute and the sufficient experience referred to in point 
(a) of paragraph 2. 

ESMA shall submit those draft regulatory technical standards to the Commission by 
[PO: Please insert date 24 months after the date of entry into force]. 

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

8. 
ESMA shall develop draft implementing technical standards on specifying the 
forms,  templates  and  procedures  for  the  provision  of  the  information  referred  to  in 
paragraph 1, including the information to be provided for the purposes of point (a) of 
paragraph 2. 

ESMA shall submit those draft implementing technical standards to the Commission 
by [PO: Please insert date 24 months after the date of entry into force].  

Power is conferred on the Commission to adopt the implementing technical standards 
referred to in the first subparagraph of this paragraph in accordance with Article 15 
of Regulation (EU) No 1095/2010.”; 

(9) 

Article 14a is amended as follows: 

(a) 

in  the  introductory words  of paragraph 2, the words “the competent authority 
of the qualifying venture capital fund” are replaced by the word “ESMA”;  

(b)  paragraph 3 is replaced by the following: 

“3.  For  the  purposes  of  assessing  an  application  for  registration  pursuant  to 
paragraph 1, ESMA shall ask the competent authority of the manager submitting the 
application whether the qualifying venture capital fund falls within the scope of that 
manager's  authorisation  to  manage  collective  investment  undertakings  and  whether 
the conditions laid down in point (a) of Article 14(2) are fulfilled.  

ESMA  may request clarification and information  as  regards the documentation and 
information provided under the first subparagraph.  

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The competent authority of the manager shall provide an answer within one month of 
the  date  of  receipt  of  a  request  submitted  by  ESMA  pursuant  to  first  or  second 
subparagraphs.”; 

(c) 

in  paragraph  5  the  words  “the  competent  authority  of  the  qualifying  venture 
capital fund” are replaced by the word “ESMA”; 

(d)  paragraph 6 is replaced by the following: 

“6.  ESMA shall inform all of the following whether a fund has been registered as a 
qualifying venture capital fund no later than two months after the managers of those 
funds have provided all the documentation referred to in paragraph 2: 

(a) 

the manager referred to in paragraph 1; 

the  competent  authorities  of  the  Member  State  referred  to  in  Article 

(b) 
14(1)(-a); 

the  competent  authorities  of  the  Member  States  referred  to  in  Article 

(c) 
14(1)(d); 

the  competent  authorities  of  the  Member  States  referred  to  in  Article 

(d) 
14a(2)(d).”; 

(e)  paragraph 8 is replaced by the following: 

“8.  ESMA  shall  develop  draft  implementing  technical  standards  to  specify  the 
standard  forms,  templates  and  procedures  for  the  provision  of  the  information 
referred to in accordance with paragraph 2.  

ESMA shall submit those draft implementing technical standards to the Commission 
by [PO: Please insert date 24 months after the date of entry into force]. 

Power is conferred on the Commission to adopt the implementing technical standards 
referred to in the first subparagraph of this paragraph in accordance with Article 15 
of Regulation (EU) No 1095/2010.”; 

(f) 

paragraphs 9 and 10 are deleted; 

(10) 

Article 14b is replaced by the following: 

“Article 14b 

ESMA shall notify any decision refusing to register a manager referred to in Article 
14 or a fund referred to in Article 14a to the managers referred to in those Articles.”; 

(11) 

the following Article 14c is inserted: 

“Article 14c 

1.  Without prejudice to Article 20, ESMA shall withdraw the registration for an 
EuVECA  where  the  manager  of  that  EuVECA  meets  any  of  the  following 
conditions: 

the manager has expressly renounced the authorisation or has  not made 
(a) 
use  of  the  authorisation  within  six  months  after  the  authorisation  has  been 
granted; 

the manager has obtained the authorisation by making false statements 

(b) 
or by any other irregular means;  

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the  EuVECA  no  longer  meets  the  conditions  under  which  it  was 

(c) 
authorised. 

The withdrawal of the authorisation shall have immediate effect throughout the 

2. 
Union.”; 

(12) 

in  Article  15,  the  words  “the  competent  authority  of  the  home  Member  State”  are 
replaced by the word “ESMA”; 

(13) 

Article 16 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

“1.  ESMA shall notify the competent authorities referred to in point (4) of Article 
14 and  in  point (6) of Article 14a immediately of any registration or  removal from 
the  register  of  a  manager  of  a  qualifying  venture  capital  fund,  any  addition  to  or 
removal from the register of a qualifying venture capital fund and any addition to or 
removal from the list of Member States in which a manager of a qualifying venture 
capital fund intends to market those funds.”; 

(b)  paragraph 3 is replaced by the following: 

“3. 
In  order  to  ensure  uniform  application  of  this  Article,  ESMA  shall  develop 
draft implementing technical standards to determine the format of notification under 
this Article. 

ESMA shall submit those draft implementing technical standards to the Commission 
by [PO: Please insert date 24 months after the date of entry into force]. 

Power is conferred on the Commission to adopt the implementing technical standards 
referred to in paragraph 3 of this Article in accordance with the procedure laid down 
in Article 15 of Regulation (EU) No 1095/2010.”; 

(c)  paragraphs 4 and 5 are deleted: 

Article 16a is deleted; 

Article 18 is replaced by the following: 

(14) 

(15) 

“Article 18 

1. 

ESMA shall ensure that this Regulation is applied on an ongoing basis. 

For the managers referred to in Article 2(1), ESMA shall supervise compliance 

2. 
with the requirements laid down in this Regulation. 

3. 
For  the  managers  referred  to  in  Article  2(2),  ESMA  shall  supervise  the 
compliance  with  the  rules  laid  down  in  provisions  listed  in  Article  2(2)  and  the 
relevant  requirements  of  Directive  2011/61/EU  in  respect  of  the  qualifying  venture 
capital fund. 

ESMA  shall  be  responsible  for  supervising  the  qualifying  venture  capital  fund´s 
compliance  with  the  obligations  set  out  in  the  fund's  rules  and  instruments  of 
incorporation. 

4. 
For the purposes of carrying out the tasks conferred on it by this Regulation, 
and with the objective of ensuring high standards of supervision, ESMA shall apply 
all  relevant  Union  law,  and  where  that  Union  law  is  composed  of  directives,  the 
national legislation transposing those directives. 

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5. 
Competent  authorities  shall  monitor  that  collective  investment  undertakings 
established or marketed in their territories do not use the designation ‘EuVECA’ or 
do  not  suggest  that  they  are  an  EuVECA  unless  they  are  registered  in  accordance 
with this Regulation. 

Where a competent authority believes that a collective investment undertaking uses 
the  designation  ‘EuVECA’,  or  suggests  that  it  is  an  EuVECA  without  having  been 
registered  in  accordance  with  this  Regulation,  it  shall  promptly  inform  ESMA 
thereof.”; 

(16) 

Article 19 is replaced by the following: 

“Article 19 

The  powers  conferred  on  ESMA  or  any  official  of  or  other  person  authorised  by 
ESMA  by  Articles  19a  to  19c  shall  not  be  used  to  require  the  disclosure  of 
information or documents which are subject to legal privilege.”; 

(17) 

the following Articles 19a, 19b and 19c are inserted: 

“Article 19a 

1.  ESMA  may  by  simple  request  or  by  decision  require  the  following  persons  to 
provide all necessary information to enable ESMA to carry out its duties under this 
Regulation: 

(a) managers of qualifying venture capital funds;  

(b) persons involved in the management of qualifying venture capital funds; 

(c) third parties to whom a manager of an qualifying venture capital fund has 
delegated functions; 

(d)  persons  otherwise  closely  and  substantially  related  or  connected  to  the 
management of qualifying venture capital funds. 

2. Any simple request for information referred to in paragraph 1 shall: 

(a) refer to this Article as the legal basis of that request; 

(b) state the purpose of the request; 

(c) specify the information required; 

(d) include a time limit within which the information is to be provided; 

(e) include a statement that there is no obligation on the person from whom the 
information  is  requested  to  provide  that  information  but  that  in  case  of  a 
voluntary reply to the request, the information provided must not be incorrect 
or misleading; 

(e) indicate the amount of the fine to be issued in accordance with Article 20a 
where the information provided is incorrect or misleading. 

3.  When  requiring  to  supply  information  under  paragraph  1  by  decision,  ESMA 
shall: 

(a) refer to this Article as the legal basis of that request; 

(b) state the purpose of the request; 

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(c) specify the information required; 

(d) set a time limit within which the information is to be provided; 

(e)  indicate  the  periodic  penalty  payments  provided  for  in  Article  20b  where 
the production of the required information is incomplete; 

(f) indicate the fine provided for in Article 20a, where the answers to questions 
asked are incorrect or misleading; 

(g)  indicate  the  right  to  appeal  the  decision  before  ESMA’s  Board  of  Appeal 
and  to  have  the  decision  reviewed  by  the  Court  of  Justice  of  the  European 
Union (‘Court of Justice’) in accordance with Articles 60 and 61 of Regulation 
(EU) No 1095/2010. 

4. The persons referred to in paragraph 1 or their representatives and, in the case of 
legal  persons  or  associations  having  no  legal  personality,  the  persons  authorised  to 
represent them by law or by their constitution shall supply the information requested. 
Lawyers duly authorised to act may supply the information on behalf of their clients. 
The  latter  shall  remain  fully  responsible  if  the  information  supplied  is  incomplete, 
incorrect or misleading. 

5. ESMA shall, 4. without delay, send a copy of the simple request or of its decision 
to  the  competent  authority  of  the  Member  State  where  the  persons  referred  to  in 
paragraph 1 concerned by the request for information are domiciled or established. 

Article 19b 

1.  In  order  to  carry  out  its  duties  under  this  Regulation,  ESMA  may  conduct 
necessary  investigations  of  persons  referred  to  in  Article  19a(1).  To  that  end,  the 
officials and other persons authorised by ESMA shall be empowered to: 

(a) examine any records, data, procedures and any other material relevant to the 
execution of its tasks irrespective of the medium on which they are stored; 

(b)  take  or  obtain  certified  copies  of  or  extracts  from  such  records,  data, 
procedures and other material; 

(c)  summon  and  ask  any  person  referred  to  in  Article  19a(1)  or  their 
representatives or staff for oral or written explanations on facts or documents 
relating  to  the  subject  matter  and  purpose  of  the  inspection  and  to  record  the 
answers; 

(d) interview any other natural or legal person who consents to be interviewed 
for  the  purpose  of  collecting  information  relating  to  the  subject  matter  of  an 
investigation; 

(e) request records of telephone and data traffic. 

2.  The  officials  and  other  persons  authorised  by  ESMA  for  the  purposes  of  the 
investigations referred to in paragraph 1 shall exercise their powers upon production 
of  a  written  authorisation  specifying  the  subject  matter  and  purpose  of  the 
investigation.  That  authorisation  shall  also  indicate  the  periodic  penalty  payments 
provided  for  in  Article  20b  where  the  production  of  the  required  records,  data, 
procedures  or  any  other  material,  or  the  answers  to  questions  asked  to  persons 
referred  to  in  Article  19a(1)  are  not  provided  or  are  incomplete,  and  the  fines 
provided for in Article 20, where the answers to questions asked to persons referred 
to in Article 19a(1) are incorrect or misleading. 

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3. The persons referred to in Article 19a(1) are required to submit to investigations 
launched on the basis of a decision of ESMA. The decision shall specify the subject 
matter and purpose of the investigation, the periodic penalty payments provided for 
in  Article  20b,  the  legal  remedies  available  under  Regulation  (EU)  No  1095/2010 
and the right to have the decision reviewed by the Court of Justice. 

4.  In  good  time  before  an  investigation  referred  to  in  paragraph  1,  ESMA  shall 
inform the competent authority of the Member State where the investigation is to be 
carried out of the investigation and of the identity of the authorised persons. Officials 
of the competent authority concerned shall, upon the request of ESMA, assist those 
authorised  persons  in  carrying  out  their  duties. Officials  of the competent authority 
concerned may also attend the investigations upon request. 

5.  If  a  request  for  records  of  telephone  or  data  traffic  referred  to  in  point  (e)  of 
paragraph  1  requires  authorisation  from  a  national  judicial  authority  according  to 
applicable  national  law,  such  authorisation  shall  be  applied  for.  Such  authorisation 
may also be applied for as a precautionary measure. 

6. Where a national judicial authority receives an application for the authorisation of 
a request for records of telephone or data traffic referred to in point (e) of paragraph 
1, that authority shall verify the following: 

(a) 

the decision adopted by ESMA referred to in paragraph 3 is authentic; 

any  measures  to  be  taken  are  proportionate  and  not  arbitrary  or 

(b) 
excessive. 

7.  For  the  purposes  of  point  (b), the  national  judicial  authority  may  ask  ESMA  for 
detailed explanations, in particular relating to the grounds ESMA has for suspecting 
that  an  infringement  of  this  Regulation  has  taken  place  and  the  seriousness  of  the 
suspected infringement and the nature of the involvement of the person subject to the 
coercive  measures.  However,  the  national  judicial  authority  shall  not  review  the 
necessity for the investigation or demand that it be provided with the information on 
ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by 
the Court of Justice following the procedure set out in Article 61 of Regulation (EU) 
No 1095/2010. 

Article 19c 

1.  In  order  to  carry  out  its  duties  under  this  Regulation,  ESMA  may  conduct  all 
necessary on-site inspections  at  any business premises  of the persons  referred to  in 
Article 19a(1). 

2.  The  officials  and  other  persons  authorised  by  ESMA  to  conduct  an  on-site 
inspection may enter any business premises of the persons subject to an investigation 
decision adopted by ESMA and shall have all the powers stipulated in Article 19b(1). 
They shall also have the power to seal any business premises and books or records 
for the period of, and to the extent necessary for, the inspection.  

3. In sufficient time before the inspection, ESMA shall give notice of the inspection 
to  the  competent  authority  of  the  Member  State  where  the  inspection  is  to  be 
conducted.  Where  the  proper  conduct  and  efficiency  of  the  inspection  so  require, 
ESMA,  after  informing  the  relevant  competent  authority,  may  carry  out  the  on-site 
inspection without prior notice. Inspections in accordance with this Article shall be 

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conducted provided that the relevant authority has confirmed that it does not object 
to those inspections.  

4.  The  officials  and  other  persons  authorised  by  ESMA  to  conduct  an  on-site 
inspection  shall  exercise  their  powers  upon  production  of  a  written  authorisation 
specifying the subject matter and purpose of the inspection and the periodic penalty 
payments provided for in Article 20b where the persons concerned do not submit to 
the inspection.   

5.  The  persons  referred  to  in  Article  19a(1)  shall  submit  to  on-site  inspections 
ordered  by  decision  of  ESMA.  The  decision  shall  specify  the  subject  matter  and 
purpose  of  the  inspection,  appoint  the  date  on which  it  is  to  begin  and  indicate  the 
periodic penalty payments provided for in Article 20b, the legal remedies available 
under  Regulation  (EU)  No  1095/2010  as  well  as  the  right  to  have  the  decision 
reviewed by the Court of Justice.   

6. Officials of, as well as those authorised or appointed by, the competent authority 
of the Member State where the inspection is to be conducted shall, at the request of 
ESMA, actively assist the officials and other persons authorised by ESMA. Officials 
of that competent authority may also attend the on-site inspections upon request.  

7. ESMA may also require competent authorities to carry out specific investigatory 
tasks and on-site inspections as provided for in this Article and in Article 19b(1) on 
its behalf. To that end, competent authorities shall enjoy the same powers as ESMA 
as set out in this Article and in Article 19b(1). 

8.  Where  the  officials  and  other  accompanying  persons  authorised  by  ESMA  find 
that  a  person  opposes  an  inspection  ordered  pursuant to  this  Article, the  competent 
authority of the Member State concerned shall afford them the necessary assistance, 
requesting,  where  appropriate,  the  assistance  of  the  police  or  of  an  equivalent 
enforcement authority, to enable them to conduct their on-site inspection.  

9. If the on-site inspection provided for in paragraph 1 or the assistance provided for 
in paragraph 7 requires authorisation by a national judicial authority according to the 
applicable  national  law,  such  authorisation  shall  be  applied  for.  Such  authorisation 
may also be applied for as a precautionary measure. 

10. Where a national judicial authority receives an application for the authorisation 
of an on-site inspection provided for in paragraph 1 or the assistance provided for in 
paragraph 7, that authority shall verify the following: 

(a) 

the decision adopted by ESMA referred to in paragraph 4 is authentic; 

any  measures  to  be  taken  are  proportionate  and  not  arbitrary  or 

(b) 
excessive. 

11. For the purposes of point (b), the national judicial authority may ask ESMA for 
detailed explanations, in particular relating to the grounds ESMA has for suspecting 
that  an  infringement  of  this  Regulation  has  taken  place  and  the  seriousness  of  the 
suspected infringement and the nature of the involvement of the person subject to the 
coercive  measures.  However,  the  national  judicial  authority  shall  not  review  the 
necessity for the investigation or demand that it be provided with the information on 
ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by 
the Court of Justice following the procedure set out in Article 61 of Regulation (EU) 
No 1095/2010."; 

(18) 

Article 20 is replaced by the following: 

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“Article 20 

1. Where, in accordance with Article 21(5), ESMA finds that a person has committed 
one  of  the  infringements  listed  in  Article  20a(2),  it  shall  take  one  or  more  of  the 
following actions: 

(a)  withdraw  the  registration  of  the  manager  of  the  qualifying  venture capital 
fund or the qualifying venture capital fund; 

(b) adopt a decision requiring the person to bring the infringement to an end; 

(c) adopt a decision imposing fines; 

(d) issue public notices. 

2. When taking the actions referred to in paragraph 1, ESMA shall take into account 
the  nature  and  seriousness  of  the  infringement,  having  regard  to  the  following 
criteria: 

(a) the duration and frequency of the infringement; 

(b)  whether  financial  crime  has  been  occasioned,  facilitated  or  otherwise 
attributable to the infringement; 

(c) whether the infringement has been committed intentionally or negligently; 

(d) the degree of responsibility of the person responsible for the infringement; 

(e)  the  financial  strength  of  the  person  responsible  for  the  infringement,  as 
indicated  by  the  total  turnover  of  the  responsible  legal  person  or  the  annual 
income and net assets of the responsible natural person; 

(f) the impact of the infringement on retail investors’ interests; 

(g)  the  importance  of  the  profits  gained,  losses  avoided  by  the  person 
responsible for the infringement or the losses for third parties derived from the 
infringement, insofar as they can be determined; 

(h) the level of cooperation of the person responsible for the infringement with 
ESMA, without prejudice to the need to ensure disgorgement of profits gained 
or losses avoided by that person; 

(i) previous infringements by the person responsible for the infringement; 

(j)  measures  taken  after  the  infringement  by  the  person  responsible  for  the 
infringement to prevent its repetition. 

3. Without undue delay, ESMA shall notify any action taken pursuant to paragraph 1 
to  the  person  responsible  for  the  infringement,  and  shall  communicate  it  to  the 
competent authorities of the Member States and to the Commission. It shall publicly 
disclose any such action on its website within 10 working days from the date when it 
was adopted. 

4. The disclosure to the public referred to in the first subparagraph shall include the 
following: 

a  statement  affirming  the  right  of  the  person  responsible  for  the 

(a) 
infringement to appeal the decision; 

where  relevant,  a  statement  affirming  that  an  appeal  has  been  lodged 

(b) 
and specifying that such an appeal does not have suspensive effect; 

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(c) 
a statement asserting that it is possible for ESMA’s Board of Appeal to 
suspend  the  application  of  the  contested  decision  in  accordance  with  Article 
60(3) of Regulation (EU) No 1095/20101.”; 

(19) 

the following Articles 20a, 20b, and 20c are inserted: 

“Article 20a 

1.  Where,  in  accordance  with  Article  21(8),  ESMA  finds  that  any  person  has, 
intentionally  or  negligently,  committed  one  or  more  of  the  infringements  listed  in 
paragraph 2, it shall adopt a decision imposing a fine in accordance with paragraph 3 
of this Article. 

An infringement shall be considered to have been committed intentionally if ESMA 
finds objective factors which demonstrate that a person acted deliberately to commit 
the infringement. 

2. The list of infringements referred to in paragraph 1 shall be the following: 

failure  to  comply  with  the  requirements  that  apply  to  portfolio 

(a) 
composition, in breach of Article 5; 

marketing,  in breach  of Article 6, the units and shares  of a qualifying 

(b) 
venture capital fund to non-eligible investors; 

(c) 
using  the  designation  ‘EuVECA’  without  having  been  registered  in 
accordance  with  Article  14,  or  without  having  registered  a  collective 
investment undertaking in accordance with Article 14a; 

(d) 
using the designation ‘EuVECA’ for the marketing of funds which are 
not established in accordance with point (b)(iii) of the first paragraph of Article 
3; 

obtaining  registration  through  false  statements  or  any  other  irregular 

(e) 
means, in breach of Article 14 or Article 14a; 

failure  to  act  honestly,  fairly  or  with  due  skill,  care  or  diligence,  in 

(f) 
conducting business, in breach of point (a) of the first paragraph of Article 7; 

failure  to  apply  appropriate  policies  and  procedures  for  preventing 

(g) 
malpractices, in breach of point (b) of the first paragraph of Article 7; 

repeated  failure  to  comply  with  the  requirements  under  Article  12 

(h) 
regarding the annual report; 

repeated  failure  to  comply  with  the  obligation  to  inform  investors  in 

(i) 
accordance with Article 13. 

3. The amount of the fines referred to in paragraph 1 shall amount to  at least EUR 
500  000  and  shall  not  exceed  EUR  5  million  for  the  infringements  referred  to  in 
points (a) to (i) of paragraph 2. 

4.  When  determining  the  level  of  a  fine  pursuant  to  paragraph  3,  ESMA  shall  take 
into account the criteria set out in Article 20(2). 

5. Notwithstanding paragraph 3, where a person has directly or indirectly benefited 
financially  from  the  infringement,  the  amount  of  the  fine  shall  be  at  least  equal  to 
that benefit. 

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Where an act or omission of a person constitutes more than one infringement listed 
in  paragraph 2, only  the  higher fine calculated in  accordance  with  paragraph 4 and 
relating to one of those infringements shall apply. 

Article 20b 

1. ESMA shall, by decision, impose periodic penalty payments in order to compel: 

(a)  a  person  to  put  an  end  to  an  infringement  in  accordance  with  a  decision 
taken pursuant to Article 20(1)(b);  

(b) a person referred to in Article 19a(1): 

(i) 
decision pursuant to Article 19a; 

to supply complete information which has been requested by a 

(ii) 
to  submit  to  an  investigation  and  in  particular  to  produce 
complete records, data, procedures or any other material required and to 
complete  and  correct  other  information  provided  in  an  investigation 
launched by a decision pursuant to Article 19b;  

(iii) 
pursuant to Article 19c. 

to  submit  to  an  on-site  inspection  ordered  by  a  decision  taken 

2.  A  periodic  penalty  payment  shall  be  effective  and  proportionate.  The  periodic 
penalty payment shall be imposed for each day of delay. 

3.  Notwithstanding  paragraph  2,  the  amount  of  the  periodic  penalty  payments  shall 
be 3% of the average daily turnover in the preceding business year, or, in the case of 
natural  persons,  2%  of  the  average  daily  income  in  the  preceding  calendar  year.  It 
shall  be  calculated  from  the  date  stipulated  in  the  decision  imposing  the  periodic 
penalty payment. 

A periodic penalty payment shall be imposed for a maximum period of six  months 
following  the  notification  of  ESMA’s  decision.  Following  the  end  of  the  period, 
ESMA shall review the measure. 

Article 20c 

1.  ESMA  shall  disclose  to  the  public  every  fine  and  periodic  penalty  payment  that 
has  been  imposed  pursuant  to  Articles  20a  and  20b  unless  such  disclosure  to  the 
public  would  seriously  jeopardise  the  financial  markets  or  cause  disproportionate 
damage to the parties involved.  

2.  Fines  and  periodic  penalty  payments  imposed  pursuant  to  Articles  20a  and  20b 
shall be of an administrative nature. 

3. Where ESMA decides to impose no fines or penalty payments, it shall inform the 
European Parliament, the Council, the Commission, and the competent authorities of 
the  Member  State  concerned  accordingly  and  shall  set  out  the  reasons  for  its 
decision. 

4.  Fines  and  periodic  penalty  payments  imposed  pursuant  to  Articles  20a  and  20b 
shall be enforceable. 

Enforcement shall be governed by the rules of civil procedure in force in the Member 
State or third-country in which it is carried out. 

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5. The amounts of the fines and periodic penalty payments shall be allocated to the 
general budget of the European Union."; 

(20) 

Articles 21 and 21a are replaced by the following: 

"Article 21 

1. Where, in carrying out its duties under this Regulation, ESMA finds that there are 
serious indications of the possible existence of facts liable to constitute one or more 
of  the  infringements  listed  in  Article  20a(2),  ESMA  shall  appoint  an  independent 
investigation  officer  within  ESMA  to  investigate  the  matter.  The  appointed  officer 
shall not be involved or have been directly or indirectly involved in the approval of 
the  prospectus  to  which  the  infringement  relates  and  shall  perform  his  functions 
independently from ESMA's Board of Supervisors. 

2.  The  investigation  officer  referred  to  in  paragraph  1  shall  investigate  the  alleged 
infringements, taking into account any comments submitted by the persons who are 
subject  to  the  investigations,  and  shall  submit  a  complete  file  with  his  findings  to 
ESMA's Board of Supervisors. 

3.  In  order  to  carry  out  his  tasks,  the  investigation  officer  shall  have  the  power  to 
request information in accordance with Article 19a and to conduct investigations and 
on-site inspections in accordance with Articles 19b and 19c.  

4.  Where  carrying  out  his  tasks,  the  investigation  officer  shall  have  access  to  all 
documents and information gathered by ESMA in its supervisory activities. 

5.  Upon  completion  of  his  investigation  and  before  submitting  the  file  with  his 
findings  to  ESMA's  Board  of  Supervisors,  the  investigation  officer  shall  give  the 
persons subject to the investigations the opportunity to be heard on the matters being 
investigated. The investigation officer shall base his findings only on facts on which 
the persons concerned have had the opportunity to comment. 

6. The rights of the defence of the persons subject to the investigations shall be fully 
respected during investigations under this Article. 

7. Upon submission of the file with his findings to ESMA's Board of Supervisors, the 
investigation  officer  shall  notify  the  persons  who  are  subject  to  the  investigations. 
The persons subject to the investigations shall be entitled to have access to the file, 
subject to the legitimate interest of other persons in the protection of their business 
secrets.  The  right  of  access  to  the  file  shall  not  extend  to  confidential  information 
affecting third parties. 

8. On the basis of the file containing the investigation officer’s findings  and, when 
requested  by  the  persons  subject  to  the  investigations,  after  having  heard  those 
persons  in  accordance  with  Article  20b,  ESMA  shall  decide  if  one  or  more  of  the 
infringements listed in Article 20a(2) has been committed by the persons subject to 
the investigations and, in such a case, shall take a supervisory measure in accordance 
with Article 20. 

9.  The  investigation  officer  shall  not  participate  in  the  deliberations  of  ESMA's 
Board of Supervisors or in any other way intervene in the decision-making process of 
ESMA’s Board of Supervisors. 

10.  The  Commission  shall  adopt  delegated  acts  in  accordance  with  Article  25  by 
[PO:  Please  insert  date  24  months  after  the  date  of  entry  into  force]  to  specify  the 

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rules of procedure for the exercise of the power to impose fines or periodic penalty 
payments,  including  provisions  on  rights  of  defence,  temporal  provisions,  and  the 
collection  of  fines  or  periodic  penalty  payments,  and  the  limitation  periods  for  the 
imposition and enforcement of fines and periodic penalty payments.  

11.  ESMA  shall  refer  matters  for  criminal  prosecution  to  the  relevant  national 
authorities where, in carrying out its duties under this Regulation, it finds that there 
are serious indications of the possible existence of facts liable to constitute criminal 
offences.  In  addition,  ESMA  shall  refrain  from  imposing  fines  or  periodic  penalty 
payments  where  a  prior  acquittal  or  conviction  arising  from  identical  fact  or  facts 
which are substantially the same has already acquired the force of res judicata as the 
result of criminal proceedings under national law.” 

"Article 21a 

1. Before taking any decision pursuant to Articles 20, 20a and 20b ESMA shall give 
the persons subject to proceedings the opportunity to be heard on its findings. ESMA 
shall base its decisions only on findings on which the persons subject to proceedings 
have had an opportunity to comment. 

The first subparagraph shall not apply where urgent action pursuant to Article 20 is 
needed in order to prevent significant and imminent damage to the financial system. 
In  such  a  case  ESMA  may  adopt  an  interim  decision  and  shall  give  the  persons 
concerned the opportunity to be heard as soon as possible after taking its decision. 

2. The rights of defence of the persons subject to proceedings shall be fully respected 
in the proceedings. They shall be entitled to have access to ESMA’s file, subject to 
the legitimate interest of other persons in the protection of their business secrets. The 
right  of  access  to  the  file  shall  not  extend  to  confidential  information  or  ESMA’s 
internal preparatory documents. 

(21) 

the following Articles 21b, 21c, and 21d are inserted; 

“Article 21b 

The  Court  of  Justice  shall  have  unlimited  jurisdiction  to  review  decisions  whereby 
ESMA  has  imposed  a  fine  or  a  periodic  penalty  payment.  It  may  annul,  reduce  or 
increase the fine or periodic penalty payment imposed. 

Article 21c 

1.  ESMA  shall  charge  fees  to  managers  of  qualifying  venture  capital  funds  in 
accordance  with  this  Regulation  and  in  accordance  with  the delegated  acts  adopted 
pursuant to paragraph 3. Those fees shall fully cover ESMA’s necessary expenditure 
relating  to  registration  authorisation  and  supervision  of  managers  of  qualifying 
venture capital funds and qualifying venture capital funds and the reimbursement of 
any costs that the competent authorities may incur carrying out work pursuant to this 
Regulation  in  particular  as  a  result  of  any  delegation  of  tasks  in  accordance  with 
Article 21d. 

2. The amount of an individual fee charged to a particular manager of  a qualifying 
venture  capital  fund  shall  cover  all  administrative  costs  incurred  by  ESMA  for  its 
activities  in  relation  to  registration  and  on-going  supervision  of  a  manager  of 
qualifying  venture  capital  funds  and  a  qualifying  venture  capital  fund.  It  shall  be 

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proportionate  to  assets  under  management  of  the  qualifying  venture  capital  fund 
concerned or, where relevant, own funds of the manager of qualifying venture capital 
fund. 

3. The Commission shall adopt delegated acts in accordance with Article 25 by [PO: 
Please insert date 24 months after the date of entry into force] to specify the type of 
fees,  the  matters  for  which  fees  are  due,  the  amount  of  the  fees  and  the  manner  in 
which they are to be paid. 

Article 21d 

1.  Where  necessary  for  the  proper  performance  of  a  supervisory  task,  ESMA  may 
delegate specific supervisory tasks to the competent authority of a Member State in 
accordance with the guidelines issued by ESMA pursuant to Article 16 of Regulation 
(EU) No 1095/2010. Such specific supervisory tasks may, in particular, include the 
power  to  carry  out  requests  for  information  in  accordance  with  Article  19a  and  to 
conduct  investigations  and  on-site  inspections  in  accordance  with  Article  19b  and 
Article 19c. 

By  way  of  derogation  from  the  first  subparagraph,  the  registrations  pursuant  to 
Articles 14 and 14a shall not be delegated. 

2.  Prior  to  the  delegation  of  a  task  in  accordance  with  paragraph  1,  ESMA  shall 
consult the relevant competent authority about: 

(a) the scope of the task to be delegated; 

(b) the timetable for the performance of the task; and 

(c) the transmission of necessary information by and to ESMA. 

3.  ESMA  shall  reimburse  a  competent  authority  for  costs  incurred  as  a  result  of 
carrying  out  delegated  tasks  in  accordance  with  the  delegated  act  referred  to  in 
Article 21c(3). 

4.  ESMA  shall  review  any  delegation  made  in  accordance  with  paragraph  1  at 
appropriate intervals. A delegation may be revoked at any time. 

5.  A  delegation  of  tasks  shall  not  affect  the  responsibility  of  ESMA  and  shall  not 
limit ESMA’s ability to conduct and oversee the delegated activity.”; 

(22) 

Article 25 is replaced by the following: 

“Article 25 

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

2. The power to adopt delegated acts referred to in Articles 8(3), 21(10) and 21c(3) 
shall be conferred on the Commission for an indeterminate period of time from [PO: 
Please insert date of entry into force]. 

3.  The  delegation  of  power  referred  to  in  Articles  8(3),  21(10)  and  21c(3)  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. 

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4. Before adopting a delegated act, the Commission shall consult experts designated 
by  each  Member  State  in  accordance  with  the  principles  laid  down  in  the 
Interinstitutional Agreement on Better Law-Making of 13 April 2016. 

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

6.  A  delegated  act  adopted  pursuant  to  Articles  8(3),  21(10)  and  21c(3)  shall  enter 
into force only if no objection has been expressed either by the European Parliament 
or  by the Council  within a period  of [two  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 [two months] at the initiative of the 
European Parliament or of the Council."; 

(23) 

Article 26 is amended as follows: 

(a) 

in paragraph 1,  

(i) point (f) is replaced by the following: 

"(f)  the  effectiveness,  proportionality  and  application  of  fines  and  periodic 
penalty payments provided for in accordance with this Regulation;" 

(ii) the following point (k) is added: 

"(k) 
an  evaluation  of  the  role  of  ESMA,  its  investigatory  powers,  the 
delegation  of  tasks  to  competent  authorities,  and  the  effectiveness  of 
supervisory measures taken."; 

(b) 

in paragraph 2, t he following point (c) is added: 

"(c)  by  [PO:  Please  insert  date  84  months  after  entry  into  force]  as  regards 
points (f) and (k)."; 

(24) 

the following Article 27a is inserted: 

“Article 27a 

1. 
 All  competences  and  duties  related  to  the  supervisory  and  enforcement 
activity  in  the  field  of  qualifying  venture  capital  funds  that  are  conferred  on 
competent authorities shall be terminated on [PO: Please insert date 36 months after 
entry into force]. Those competences and duties shall be taken-up by ESMA on the 
same date. 

2.    Any  files  and  working  documents  related  to  the  supervisory  and  enforcement 
activity  in  the  field  of  qualifying  venture  capital  funds,  including  any  ongoing 
examinations and enforcement actions, or certified copies thereof, shall be taken over 
by ESMA on the date referred to in paragraph 1. 

However,  an  application  for  registration  that  has  been  received  by  competent 
authorities before [PO: Please insert date 30 months after entry into force] shall not 
be  transferred  to  ESMA,  and  the  decision  to  register  or  refuse  registration  shall  be 
taken by the relevant authority. 

3.  The competent authorities referred to in paragraph 1 shall ensure that any existing 
records and working papers, or certified copies thereof, shall be transferred to ESMA 
as  soon  as  possible  and  in  any  event  by  qualifying  venture  capital  funds.  Those 
competent authorities shall also render all necessary assistance and advice to ESMA 

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to  facilitate  effective  and  efficient  transfer  and  taking-up  of  supervisory  and 
enforcement activity in the field of qualifying venture capital funds. 

4.  ESMA shall act as the legal successor of the competent authorities referred to in 
paragraph 1 in any administrative or judicial proceedings that result from supervisory 
and  enforcement  activity  pursued  by  those  competent  authorities  in  relation  to 
matters that fall under this Regulation. 

5.    Any  registration  of  a  manager  of  a  qualifying  venture  capital  fund  or  of  a 
qualifying  venture  capital  fund  granted  by  a  competent  authority  referred  to  in 
paragraph 1 shall remain valid after the transfer of competences to ESMA..”. 

Article 5 

Amendments to Regulation (EU) No 346/2013 on European social entrepreneurship funds 

Regulation (EU) No 346/2013 is amended as follows: 

(1) 

Article 2 is amended as follows: 

(a) 

in paragraph 1, point (c) is deleted; 

(b)  paragraph 2 is replaced by the following: 

“2.  Articles  3  to  6,  Articles  10  and  13,  points  (d),  (e)  and  (f)  of  Article  14(1), 
Articles  15a  to  20,  20a  to  20c,  21,  21a  to  21c,  22,  22a  to  22d  and  26  of  this 
Regulation shall apply to managers of collective investment undertakings authorised 
under Article 6 of Directive 2011/61/EU that manage portfolios of qualifying social 
entrepreneurship funds and intend to use the designation ‘EuSEF’ in relation to the 
marketing of those funds in the Union.”; 

(2) 

in Article 3, the first paragraph is amended as follows: 

(a)  point (m) is replaced by the following: 

‘competent  authority’  means  any  competent  authority  referred  to  in 

“(m) 
points (f) and (h) of Article 4(1) of Directive 2011/61/EU;”; 

(b)  point (n) is deleted; 

(3) 

Article 7 the following subparagraphs  are added: 

“ESMA  shall  develop  draft  regulatory  technical  standards  specifying  the  criteria  to 
be  used  to  assess  whether  managers  of  qualifying  social  entrepreneurship  funds 
comply  with  their  obligations  under  points  (a)  to  (g)  of  paragraph  1,  ensuring 
consistency with Article 12(1) of Directive 2011/61/EU. 

ESMA shall submit those draft regulatory technical standards to the Commission by 
[PO: Please insert date 24 months after the date of entry into force ]. 

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.”; 

(4) 

in Article 8, the following paragraph 3 is added: 

“3.  The  Commission  shall  adopt  delegated  acts  in  accordance  with  Article  26 
specifying the requirements for the delegation of functions referred to in paragraph 2, 
ensuring consistency with the requirements applicable to the delegation of functions 
set out in Article 20 of Directive 2011/61/EU.”; 

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(5) 

Article 11 is amended as follows: 

(a) 

(b) 

in the second and in the last sentence of paragraph 3, the words “the competent 
authority of their home Member State” are replaced by the words “ESMA”; 

in  paragraph  5  the  words  “the  competent  authority  of  their  home  Member 
State” are replaced by the word “ESMA”; 

(c) 

the following paragraph 7 is added: 

“7.  ESMA  shall  develop  draft  regulatory  technical  standards  specifying  the 
appropriate human and technical resources necessary for the proper management of 
the qualifying social entrepreneurship funds referred to in paragraph 1 . 

ESMA shall submit those draft regulatory technical standards to the Commission by 
[PO: Please insert date 24 months after the date of entry into force]. 

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.”; 

(6) 

in Article 12, the following paragraphs 3 and 4 are added: 

“3.  ESMA  shall  develop  draft  regulatory  technical  standards  specifying  the  rules 
and  procedures  for  the  valuation  of  assets  referred  to  in  paragraph  1,  ensuring 
consistency  with  the  requirements  applicable  to  the  valuation  of  assets  set  out  in 
Article 19 of Directive 2011/61/EU. 

ESMA shall submit those draft regulatory technical standards to the Commission by 
[PO: Please insert date 24 months after the date of entry into force]. 

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

(7) 

Article 13 is amended as follows: 

(a) 

in  paragraph  1,  in  the  first  sentence  of  the  first  subparagraph,  the  words  “the 
competent  authority  of  the  home  Member  State”  are  replaced  by  the  word 
“ESMA”; 

(b)  paragraph 4 is replaced by the following:  

“4.  ESMA  shall  make  available,  upon  request,  information  gathered  under  this 
Article to competent authorities in a timely manner.”; 

(8) 

Article 15 is amended as follows: 

(a)  paragraph 1 is amended as follows: 

(i) 

in  the  introductory  words,  the  words  “the  competent  authority  of  their 
home Member State” are replaced by the word “ESMA”; 

(ii) 

the following point (-a) is inserted:  

“(-a) 
entrepreneurship fund has its registered office”; 

the  Member  State  in  which  the  manager  of  a  qualifying  social 

(iii)  point (b) is replaced by the following: 

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“(b)  the 

identity  and 

social 
entrepreneursh2ip  funds  the  units  or  shares  of  which  are  to  be 
marketed and their investment strategies”; 

the  domicile  of 

the  qualifying 

(b) 

 in the introductory words of paragraph 2, the words “the competent authority 
of the home Member State” are replaced by the word “ESMA”; 

(c)  paragraph 4 is replaced by the following: 

“4.  ESMA  shall  inform  all  of  the  following  whether  the  manager  referred  to  in 
paragraph  1  have  been  registered  as  a  manager  of  a  qualifying  social 
entrepreneurship  fund  no  later  than  two  months  after  it  has  provided  all  the 
information referred to in that paragraph: 

(a) 

the manager referred to in paragraph 1; 

the competent authorities of the Member States referred to in point (-a) 

(b) 
of paragraph 1; 

the competent authorities of the Member States refer to in point (d) of 

(c) 
paragraph 1."; 

(d) 

 paragraph 6 is amended as follows: 

(i) 

in  the  first  subparagraph,  the  words  “the  competent  authority  of  their 
home Member State” are replaced by the word “ESMA”;  

(ii) 

the second subparagraph is replaced by the following: 

“Where  ESMA objects to  the changes referred to  in  the first subparagraph, it 
shall inform the manager of the qualifying social entrepreneurship fund within 
two months of the notification of those changes and shall state the reasons for 
the  objection.  The  changes  referred  to  in  the  first  subparagraph  may  only  be 
implemented provided that ESMA does not object to those changes within that 
period.”; 

(e)  paragraphs 7 and 8 are replaced by the following:  

“7. 
ESMA shall develop draft regulatory technical standards specifying the 
criteria  to  assess  the  sufficient  good  repute  and  the  sufficient  experience 
referred to in point (a) of paragraph 2. 

ESMA  shall  submit  those  draft  regulatory  technical  standards  to  the 
Commission by [PO: Please insert date 24 months after the date of entry into 
force of this Regulation]. 

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

8. 
ESMA  shall  develop  draft  implementing  technical  standards  on 
specifying  the  forms,  templates  and  procedures  for  the  provision  of  the 
information  referred  to  in  paragraph  1,  including  the  information  to  be 
provided for the purposes of point (a) of paragraph 2. 

ESMA  shall  submit  those  draft  implementing  technical  standards  to  the 
Commission by [PO: Please insert date 24 months after the date of entry into 
force of this Regulation]. 

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Power  is  conferred  on  the  Commission  to  adopt  the  implementing  technical 
standards referred to in the first subparagraph of this paragraph in accordance 
with Article 15 of Regulation (EU) No 1095/2010.”; 

(9) 

Article 15a is amended as follows: 

(a) 

in  the  introductory words  of paragraph 2, the words “the competent authority 
of  the  qualifying  social  entrepreneurship  fund”  are  replaced  by  the  word 
“ESMA”;  

(b)  paragraph 3 is replaced by the following: 

“3. 
For the purposes of assessing an application for registration pursuant to 
paragraph  1,  ESMA  shall  ask  the  competent  authority  of  the  manager 
submitting the application whether the qualifying social entrepreneurship fund 
falls  within  the  scope  of  that  manager's  authorisation  to  manage  collective 
investment undertakings and whether the conditions laid down in point (a) of 
Article 15(2) are fulfilled.  

ESMA may request clarification and information as regards the documentation 
and information provided under the first subparagraph.  

The  competent  authority  of  the  manager  shall  provide  an  answer  within  one 
month of the date of receipt of a request submitted by ESMA pursuant to first 
or second subparagraphs.”; 

(c) 

in  paragraph  5  the  words  “the  competent  authority  of  the  qualifying  social 
entrepreneurship fund” are replaced by the word “ESMA”; 

(d)  paragraph 6 is replaced by the following: 

“6. 
ESMA  shall  inform  all  of  the  following  whether  a  fund  has  been 
registered  as  a  qualifying  social  entrepreneurship  fund  no  later  than  two 
months after the managers of those funds have provided all the documentation 
referred to in paragraph 2: 

(a) 

the manager referred to in paragraph 1; 

(b) 
Article 15(1)(-a); 

the  competent  authorities  of  the  Member  State  referred  to  in 

(c) 
Article 15(1)(d); 

the  competent  authorities  of  the  Member  States  referred  to  in 

(d) 
Article 15a(2)(d).”; 

the  competent  authorities  of  the  Member  States  referred  to  in 

(e) 

the first subparagraph of paragraph 8 is replaced by the following: 

“8.  ESMA  shall  develop  draft  regulatory  technical  standards  to  specify  the 
information to be provided pursuant to paragraph 2. 

ESMA  shall  submit  those  draft  regulatory  technical  standards  to  the 
Commission by [PO: Please insert date 24 months after the date of entry into 
force of this Regulation]. 

Power  is  delegated  to  the  Commission  to  supplement  this  Regulation  by 
adopting the regulatory technical standards referred to in the first subparagraph 
of this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 
1095/2010.”; 

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(f) 

 paragraphs 9 and 10 are deleted; 

(10) 

Article 15b is replaced by the following: 

“Article 15b 

ESMA shall notify any decision refusing to register a manager referred to in Article 
15 or a fund referred to in Article 15a to the managers referred to in those Articles.”; 

(11) 

the following Article 15c is inserted: 

“Article 15c 

1.  Without prejudice to Article 21, ESMA shall withdraw the registration for an 
EuSEF where the manager of that EuSEF meets any of the following conditions: 

the manager has expressly renounced the authorisation or has not made 
(a) 
use  of  the  authorisation  within  six  months  after  the  authorisation  has  been 
granted; 

the manager has obtained the authorisation by making false statements 

(b) 
or by any other irregular means;  

the  EuSEF  no  longer  meets  the  conditions  under  which  it  was 

(c) 
authorised. 

The withdrawal of the authorisation shall have immediate effect throughout the 

2. 
Union.”; 

(12) 

in  Article  16,  the  words  “the  competent  authority  of  the  home  Member  State”  are 
replaced by the word “ESMA”; 

(13) 

Article 17 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

“1.  ESMA shall notify the competent authorities referred to in point (4) of Article 
15 and  in  point (6) of Article 15a immediately of any registration or  removal from 
the register of a manager of a qualifying social entrepreneurship fund, any addition to 
or  removal  from  the  register  of  a  qualifying  social  entrepreneurship  fund  and  any 
addition  to  or  removal  from  the  list  of  Member  States  in  which  a  manager  of  a 
qualifying social entrepreneurship fund intends to market those funds.”; 

(b)  paragraph 3 is replaced by the following: 

“3. 
In  order  to  ensure  uniform  application  of  this  Article,  ESMA  shall  develop 
draft implementing technical standards to determine the format of notification under 
this Article. 

ESMA shall submit those draft implementing technical standards to the Commission 
by  [PO:  Please  insert  date  24  months  after  the  date  of  entry  into  force  of  this 
Regulation]. 

Power is conferred on the Commission to adopt the implementing technical standards 
referred to in paragraph 3 of this Article in accordance with the procedure laid down 
in Article 15 of Regulation (EU) No 1095/2010.”; 

(c)  paragraphs 4 and 5 are deleted; 

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(14) 

(15) 

Article 17a is deleted; 

Article 19 is replaced by the following: 

“Article 19 

1. 

ESMA shall ensure that this Regulation is applied on an ongoing basis. 

For the managers referred to in Article 2(1), ESMA shall supervise compliance 

2. 
with the requirements laid down in this Regulation. 

For  the  managers  referred  to  in  Article  2(2),  ESMA  shall  supervise  the 
3. 
compliance  with  the  rules  laid  down  in  provisions  listed  in  Article  2(2)  and  the 
relevant  requirements  of  Directive  2011/61/EU  in  respect  of  the  qualifying  social 
entrepreneurship fund. 

ESMA  shall  be  responsible  for  supervising  the  qualifying  social  entrepreneurship 
fund´s compliance with the obligations set out in the fund's rules and instruments of 
incorporation. 

For the purposes of carrying out the tasks conferred on it by this Regulation, 
4. 
and with the objective of ensuring high standards of supervision, ESMA shall apply 
all  relevant  Union  law,  and  where  that  Union  law  is  composed  of  directives,  the 
national legislation transposing those directives. 

5. 
Competent  authorities  shall  monitor  that  collective  investment  undertakings 
established or marketed in their territories do not use the designation ‘EuSEF’ or do 
not suggest that they are a EuSEF unless they are registered in accordance with this 
Regulation. 

Where a competent authority believes that a collective investment undertaking uses 
the  designation  ‘EuSEF’,  or  suggests  that  it  is  a  EuSEF  without  having  been 
registered  in  accordance  with  this  Regulation,  it  shall  promptly  inform  ESMA 
thereof.”; 

(16) 

Article 20 is replaced by the following: 

“Article 20 

The  powers  conferred  on  ESMA  or  any  official  of  or  other  person  authorised  by 
ESMA  by  Articles  20a  to  20c  shall  not  be  used  to  require  the  disclosure  of 
information or documents which are subject to legal privilege.”; 

(17) 

the following Articles 20a, 20b and 20c are inserted: 

“Article 20a 

1.  ESMA  may  by  simple  request  or  by  decision  require  the  following  persons  to 
provide all necessary information to enable ESMA to carry out its duties under this 
Regulation: 

(a) managers of qualifying social entrepreneurship funds;  

(b) persons involved in the management of qualifying social entrepreneurship 
funds; 

(c)  third  parties  to  whom  a  manager  of  an  qualifying  social  entrepreneurship 
fund has delegated functions; 

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(d)  persons  otherwise  closely  and  substantially  related  or  connected  to  the 
management of qualifying social entrepreneurship funds. 

2. Any simple request for information referred to in paragraph 1 shall: 

(a) refer to this Article as the legal basis of that request; 

(b) state the purpose of the request; 

(c) specify the information required; 

(d) include a time limit within which the information is to be provided; 

(e) include a statement that there is no obligation on the person from whom the 
information  is  requested  to  provide  that  information  but  that  in  case  of  a 
voluntary reply to the request, the information provided must not be incorrect 
or misleading; 

(f) indicate the amount of the fine to be issued in accordance with Article 21a 
where the information provided is incorrect or misleading. 

3.  When  requiring  to  supply  information  under  paragraph  1  by  decision,  ESMA 
shall: 

(a) refer to this Article as the legal basis of that request; 

(b) state the purpose of the request; 

(c) specify the information required; 

(d) set a time limit within which the information is to be provided; 

(e)  indicate  the  periodic  penalty  payments  provided  for  in  Article  21b  where 
the production of the required information is incomplete; 

(f) indicate the fine provided for in Article 21a, where the answers to questions 
asked are incorrect or misleading; 

(g)  indicate  the  right  to  appeal  the  decision  before  ESMA’s  Board  of  Appeal 
and  to  have  the  decision  reviewed  by  the  Court  of  Justice  of  the  European 
Union (‘Court of Justice’) in accordance with Articles 60 and 61 of Regulation 
(EU) No 1095/2010. 

4. The persons referred to in paragraph 1 or their representatives and, in the case of 
legal  persons  or  associations  having  no  legal  personality,  the  persons  authorised  to 
represent them by law or by their constitution shall supply the information requested. 
Lawyers duly authorised to act may supply the information on behalf of their clients. 
The  latter  shall  remain  fully  responsible  if  the  information  supplied  is  incomplete, 
incorrect or misleading. 

5. ESMA shall, without delay, send a copy of the simple request or of its decision to 
the  competent  authority  of  the  Member  State  where  the  persons  referred  to  in 
paragraph 1 concerned by the request for information are domiciled or established. 

Article 20b 

1.  In  order  to  carry  out  its  duties  under  this  Regulation,  ESMA  may  conduct 
necessary  investigations  of  persons  referred  to  in  Article  20a(1).  To  that  end,  the 
officials and other persons authorised by ESMA shall be empowered to: 

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(a) examine any records, data, procedures and any other material relevant to the 
execution of its tasks irrespective of the medium on which they are stored; 

(b)  take  or  obtain  certified  copies  of  or  extracts  from  such  records,  data, 
procedures and other material; 

(c)  summon  and  ask  any  person  referred  to  in  Article  20a(1)  or  their 
representatives or staff for oral or written explanations on facts or  documents 
relating  to  the  subject  matter  and  purpose  of  the  inspection  and  to  record  the 
answers; 

(d) interview any other natural or legal person who consents to be interviewed 
for  the  purpose  of  collecting  information  relating  to  the  subject  matter  of  an 
investigation; 

(e) request records of telephone and data traffic. 

2.  The  officials  and  other  persons  authorised  by  ESMA  for  the  purposes  of  the 
investigations referred to in paragraph 1 shall exercise their powers upon production 
of  a  written  authorisation  specifying  the  subject  matter  and  purpose  of  the 
investigation.  That  authorisation  shall  also  indicate  the  periodic  penalty  payments 
provided  for  in  Article  21b  where  the  production  of  the  required  records,  data, 
procedures  or  any  other  material,  or  the  answers  to  questions  asked  to  persons 
referred  to  in  Article  20a(1)  are  not  provided  or  are  incomplete,  and  the  fines 
provided for in Article 21, where the answers to questions asked to persons referred 
to in Article 20a(1) are incorrect or misleading. 

3. The persons referred to in Article 20a(1) are required to submit to investigations 
launched on the basis of a decision of ESMA. The decision shall specify the subject 
matter and purpose of the investigation, the periodic penalty payments provided for 
in  Article  21b,  the  legal  remedies  available  under  Regulation  (EU)  No  1095/2010 
and the right to have the decision reviewed by the Court of Justice. 

4.  In  good  time  before  an  investigation  referred  to  in  paragraph  1,  ESMA  shall 
inform the competent authority of the Member State where the investigation is to be 
carried out of the investigation and of the identity of the authorised persons. Officials 
of the competent authority concerned shall, upon the request of ESMA, assist those 
authorised  persons  in  carrying  out  their  duties. Officials  of the competent authority 
concerned may also attend the investigations upon request. 

5.  If  a  request  for  records  of  telephone  or  data  traffic  referred  to  in  point  (e)  of 
paragraph  1  requires  authorisation  from  a  national  judicial  authority  according  to 
applicable  national  law,  such  authorisation  shall  be  applied  for.  Such  authorisation 
may also be applied for as a precautionary measure. 

6. Where a national judicial authority receives an application for the authorisation of 
a request for records of telephone or data traffic referred to in point (e) of paragraph 
1, that authority shall verify the following: 

(a) 

the decision adopted by ESMA referred to in paragraph 3 is authentic; 

any  measures  to  be  taken  are  proportionate  and  not  arbitrary  or 

(b) 
excessive. 

For  the  purposes  of  point  (b),  the  national  judicial  authority  may  ask  ESMA  for 
detailed explanations, in particular relating to the grounds ESMA has for suspecting 
that  an  infringement  of  this  Regulation  has  taken  place  and  the  seriousness  of  the 

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suspected infringement and the nature of the involvement of the person subject to the 
coercive  measures.  However,  the  national  judicial  authority  shall  not  review  the 
necessity for the investigation or demand that it be provided with the information on 
ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by 
the Court of Justice following the procedure set out in Article 61 of Regulation (EU) 
No 1095/2010. 

Article 20c 

1.  In  order  to  carry  out  its  duties  under  this  Regulation,  ESMA  may  conduct  all 
necessary on-site inspections  at  any business premises  of the persons  referred to  in 
Article 20a(1). 

2.  The  officials  and  other  persons  authorised  by  ESMA  to  conduct  an  on-site 
inspection may enter any business premises of the persons subject to an investigation 
decision adopted by ESMA and shall have all the powers stipulated in Article 20b(1). 
They shall also have the power to seal any business premises and books or records 
for the period of, and to the extent necessary for, the inspection.  

3. In sufficient time before the inspection, ESMA shall give notice of the inspection 
to  the  competent  authority  of  the  Member  State  where  the  inspection  is  to  be 
conducted.  Where  the  proper  conduct  and  efficiency  of  the  inspection  so  require, 
ESMA,  after  informing  the  relevant  competent  authority,  may  carry  out  the  on-site 
inspection without prior notice. Inspections in accordance with this Article shall be 
conducted provided that the relevant authority has confirmed that it does not object 
to those inspections.  

4.  The  officials  and  other  persons  authorised  by  ESMA  to  conduct  an  on-site 
inspection  shall  exercise  their  powers  upon  production  of  a  written  authorisation 
specifying the subject matter and purpose of the inspection and the periodic penalty 
payments provided for in Article 21b where the persons concerned do not submit to 
the inspection. 

5.  The  persons  referred  to  in  Article  20a(1)  shall  submit  to  on-site  inspections 
ordered  by  decision  of  ESMA.  The  decision  shall  specify  the  subject  matter  and 
purpose  of  the  inspection,  appoint  the  date  on which  it  is  to  begin  and  indicate  the 
periodic penalty payments provided for in Article 21b, the legal remedies available 
under  Regulation  (EU)  No  1095/2010  as  well  as  the  right  to  have  the  decision 
reviewed by the Court of Justice. 

6. Officials of, as well as those authorised or appointed by, the competent authority 
of the Member State where the inspection is to be conducted shall, at the request of 
ESMA, actively assist the officials and other persons authorised by ESMA. Officials 
of that competent authority may also attend the on-site inspections upon request.  

7. ESMA may also require competent authorities to carry out specific investigatory 
tasks and on-site inspections as provided for in this Article and in Article 20b(1) on 
its behalf. To that end, competent authorities shall enjoy the same powers as ESMA 
as set out in this Article and in Article 20b(1). 

8.  Where  the  officials  and  other  accompanying  persons  authorised  by  ESMA  find 
that  a  person  opposes  an  inspection  ordered  pursuant to  this  Article, the  competent 
authority of the Member State concerned shall afford them the necessary assistance, 
requesting,  where  appropriate,  the  assistance  of  the  police  or  of  an  equivalent 
enforcement authority, to enable them to conduct their on-site inspection.  

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9. If the on-site inspection provided for in paragraph 1 or the assistance provided for 
in paragraph 7 requires authorisation by a national judicial authority according to the 
applicable  national  law,  such  authorisation  shall  be  applied  for.  Such  authorisation 
may also be applied for as a precautionary measure. 

10. Where a national judicial authority receives an application for the authorisation 
of an on-site inspection provided for in paragraph 1 or the assistance provided for in 
paragraph 7, that authority shall verify the following: 

(a) 

the decision adopted by ESMA referred to in paragraph 4 is authentic; 

any  measures  to  be  taken  are  proportionate  and  not  arbitrary  or 

(b) 
excessive. 

11. For the purposes of point (b), the national judicial authority may ask ESMA for 
detailed explanations, in particular relating to the grounds ESMA has for suspecting 
that  an  infringement  of  this  Regulation  has  taken  place  and  the  seriousness  of  the 
suspected infringement and the nature of the involvement of the person subject to the 
coercive  measures.  However,  the  national  judicial  authority  shall  not  review  the 
necessity for the investigation or demand that it be provided with the information on 
ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by 
the Court of Justice following the procedure set out in Article 61 of Regulation (EU) 
No 1095/2010."; 

(18) 

Article 21 is replaced by the following: 

“Article 21 

1. Where, in accordance with Article 22(5), ESMA finds that a person has committed 
one  of  the  infringements  listed  in  Article  21a(2),  it  shall  take  one  or  more  of  the 
following actions: 

(a)  withdraw  the  registration  of  the  manager  of  the  qualifying  social 
entrepreneurship fund or the qualifying social entrepreneurship fund; 

(b) adopt a decision requiring the person to bring the infringement to an end; 

(c) adopt a decision imposing fines; 

(d) issue public notices. 

2. When taking the actions referred to in paragraph 1, ESMA shall take into account 
the  nature  and  seriousness  of  the  infringement,  having  regard  to  the  following 
criteria: 

(a) the duration and frequency of the infringement; 

(b)  whether  financial  crime  has  been  occasioned,  facilitated  or  otherwise 
attributable to the infringement; 

(c) whether the infringement has been committed intentionally or negligently; 

(d) the degree of responsibility of the person responsible for the infringement; 

(e)  the  financial  strength  of  the  person  responsible  for  the  infringement,  as 
indicated  by  the  total  turnover  of  the  responsible  legal  person  or  the  annual 
income and net assets of the responsible natural person; 

(f) the impact of the infringement on retail investors’ interests; 

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(g)  the  importance  of  the  profits  gained,  losses  avoided  by  the  person 
responsible for the infringement or the losses for third parties derived from the 
infringement, insofar as they can be determined; 

(h) the level of cooperation of the person responsible for the infringement with 
ESMA, without prejudice to the need to ensure disgorgement of profits gained 
or losses avoided by that person; 

(i) previous infringements by the person responsible for the infringement; 

(j)  measures  taken  after  the  infringement  by  the  person  responsible  for  the 
infringement to prevent its repetition. 

3. Without undue delay, ESMA shall notify any action taken pursuant to paragraph 1 
to  the  person  responsible  for  the  infringement,  and  shall  communicate  it  to  the 
competent authorities of the Member States and to the Commission. It shall publicly 
disclose any such action on its website within 10 working days from the date when it 
was adopted. 

4. The disclosure to the public referred to in the first subparagraph shall include the 
following: 

a  statement  affirming  the  right  of  the  person  responsible  for  the 

(a) 
infringement to appeal the decision; 

where  relevant,  a  statement  affirming  that  an  appeal  has  been  lodged 

(b) 
and specifying that such an appeal does not have suspensive effect; 

(c) 
a statement asserting that it is possible for ESMA’s Board of Appeal to 
suspend  the  application  of  the  contested  decision  in  accordance  with  Article 
60(3) of Regulation (EU) No 1095/20101.”; 

(19) 

the following Articles 21a, 21b, and 21c are inserted: 

“Article 21a 

1.  Where,  in  accordance  with  Article  22(8),  ESMA  finds  that  any  person  has, 
intentionally  or  negligently,  committed  one  or  more  of  the  infringements  listed  in 
paragraph 2, it shall adopt a decision imposing a fine in accordance with paragraph 3 
of this Article. 

An infringement shall be considered to have been committed intentionally if ESMA 
finds objective factors which demonstrate that a person acted deliberately to commit 
the infringement. 

3. The list of infringements referred to in paragraph 1 shall be the following: 

failure  to  comply  with  the  requirements  that  apply  to  portfolio 

(a) 
composition, in breach of Article 5; 

marketing,  in breach  of Article 6, the units and shares  of a qualifying 

(b) 
social entrepreneurship fund to non-eligible investors; 

using  the  designation  ‘EuSEF’  without  having  been  registered  in 
(c) 
accordance  with  Article  15,  or  without  having  registered  a  collective 
investment undertaking in accordance with Article 15a; 

using the designation ‘EuSEF’ for the marketing of funds which are not 

(d) 
established in accordance with point (b)(iii) of the first paragraph of Article 3; 

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obtaining  registration  through  false  statements  or  any  other  irregular 

(e) 
means, in breach of Article 15 or Article 15a; 

failure  to  act  honestly,  fairly  or  with  due  skill,  care  or  diligence,  in 

(f) 
conducting business, in breach of point (a) of the first paragraph of Article 7; 

failure  to  apply  appropriate  policies  and  procedures  for  preventing 

(g) 
malpractices, in breach of point (b) of the first paragraph of Article 7; 

repeated  failure  to  comply  with  the  requirements  under  Article 

(h) 
13regarding the annual report; 

repeated  failure  to  comply  with  the  obligation  to  inform  investors  in 

(i) 
accordance with Article 14. 

3. The amount of the fines referred to in paragraph 1 shall amount to  at least EUR 
500  000  and  shall  not  exceed  EUR  5  million  for  the  infringements  referred  to  in 
points (a) to (i) of paragraph 2.. 

4.  When  determining  the  level  of  a  fine  pursuant  to  paragraph  3,  ESMA  shall  take 
into account the criteria set out in Article 21(2). 

5. Notwithstanding paragraph 3, where a person has directly or indirectly benefited 
financially  from  the  infringement,  the  amount  of  the  fine  shall  be  at  least  equal  to 
that benefit. 

6. Where an act or omission of a person constitutes more than one infringement listed 
in  paragraph 2, only  the  higher fine  calculated in  accordance  with  paragraph 4 and 
relating to one of those infringements shall apply. 

Article 21b 

1. ESMA shall, by decision, impose periodic penalty payments in order to compel: 

(a)  a  person  to  put  an  end  to  an  infringement  in  accordance  with  a  decision 
taken pursuant to Article 21(1)(b);  

(b) a person referred to in Article 20a(1): 

(i) 
decision pursuant to Article 20a; 

to supply complete information which has been requested by a 

(ii) 
to  submit  to  an  investigation  and  in  particular  to  produce 
complete records, data, procedures or any other material required and to 
complete  and  correct  other  information  provided  in  an  investigation 
launched by a decision pursuant to Article 20b;  

(iii) 
pursuant to Article 20c. 

to  submit  to  an  on-site  inspection  ordered  by  a  decision  taken 

2.  A  periodic  penalty  payment  shall  be  effective  and  proportionate.  The  periodic 
penalty payment shall be imposed for each day of delay. 

3.  Notwithstanding  paragraph  2,  the  amount  of  the  periodic  penalty  payments  shall 
be 3% of the average daily turnover in the preceding business year, or, in the case of 
natural  persons,  2%  of  the  average  daily  income  in  the  preceding  calendar  year.  It 
shall  be  calculated  from  the  date  stipulated  in  the  decision  imposing  the  periodic 
penalty payment. 

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A periodic penalty payment shall be imposed for a maximum period of six  months 
following  the  notification  of  ESMA’s  decision.  Following  the  end  of  the  period, 
ESMA shall review the measure. 

Article 21c 

1.  ESMA  shall  disclose  to  the  public  every  fine  and  periodic  penalty  payment  that 
has  been  imposed  pursuant  to  Articles  21a  and  21b  unless  such  disclosure  to  the 
public  would  seriously  jeopardise  the  financial  markets  or  cause  disproportionate 
damage to the parties involved.  

2.  Fines  and  periodic  penalty  payments  imposed  pursuant  to  Articles  21a  and  21b 
shall be of an administrative nature. 

3. Where ESMA decides to impose no fines or penalty payments, it shall inform the 
European Parliament, the Council, the Commission, and the competent authorities of 
the  Member  State  concerned  accordingly  and  shall  set  out  the  reasons  for  its 
decision. 

4.  Fines  and  periodic  penalty  payments  imposed  pursuant  to  Articles  21a  and  21b 
shall be enforceable. 

Enforcement shall be governed by the rules of civil procedure in force in the Member 
State or third-country in which it is carried out. 

5. The amounts of the fines and periodic penalty payments shall be allocated to the 
general budget of the European Union."; 

(20) 

Articles 22 and 22a are replaced by the following: 

"Article 22 

1. Where, in carrying out its duties under this Regulation, ESMA finds that there are 
serious indications of the possible existence of facts liable to constitute one or more 
of  the  infringements  listed  in  Article  21a(2),  ESMA  shall  appoint  an  independent 
investigation  officer  within  ESMA  to  investigate  the  matter.  The  appointed  officer 
shall not be involved or have been directly or indirectly involved in the approval of 
the  prospectus  to  which  the  infringement  relates  and  shall  perform  his  functions 
independently from ESMA's Board of Supervisors. 

2.  The  investigation  officer  referred  to  in  paragraph  1  shall  investigate  the  alleged 
infringements, taking into account any comments submitted by the persons who are 
subject  to  the  investigations,  and  shall  submit  a  complete  file  with  his  findings  to 
ESMA's Board of Supervisors. 

3.  In  order  to  carry  out  his  tasks,  the  investigation  officer  shall  have  the  power  to 
request information in accordance with Article 20a and to conduct investigations and 
on-site inspections in accordance with Articles 20b and 20c.  

4.  Where  carrying  out  his  tasks,  the  investigation  officer  shall  have  access  to  all 
documents and information gathered by ESMA in its supervisory activities. 

5.  Upon  completion  of  his  investigation  and  before  submitting  the  file  with  his 
findings  to  ESMA's  Board  of  Supervisors,  the  investigation  officer  shall  give  the 
persons subject to the investigations the opportunity to be heard on the matters being 
investigated. The investigation officer shall base his findings only on facts on which 
the persons concerned have had the opportunity to comment. 

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6. The rights of the defence of the persons subject to the investigations shall be fully 
respected during investigations under this Article. 

7. Upon submission of the file with his findings to ESMA's Board of Supervisors, the 
investigation  officer  shall  notify  the  persons  who  are  subject  to  the  investigations. 
The persons subject to the investigations shall be entitled to have access to the file, 
subject to the legitimate interest of other persons in the protection of their business 
secrets.  The  right  of  access  to  the  file  shall  not  extend  to  confidential  information 
affecting third parties. 

8. On the basis of the file containing the investigation officer’s findings  and, when 
requested  by  the  persons  subject  to  the  investigations,  after  having  heard  those 
persons  in  accordance  with  Article  21b,  ESMA  shall  decide  if  one  or  more  of  the 
infringements listed in Article 21a(2) has been committed by the persons subject to 
the investigations and, in such a case, shall take a supervisory measure in accordance 
with Article 21. 

9.  The  investigation  officer  shall  not  participate  in  the  deliberations  of  ESMA's 
Board of Supervisors or in any other way intervene in the decision-making process of 
ESMA’s Board of Supervisors. 

10 The Commission shall adopt delegated acts in accordance with Article 26 by [PO: 
Please insert date 24 months after entry into force] to specify the rules of procedure 
for the exercise of the power to impose fines or periodic penalty payments, including 
provisions  on  rights  of  defence,  temporal  provisions,  and  the  collection  of  fines  or 
periodic  penalty  payments,  and  the  limitation  periods  for  the  imposition  and 
enforcement of fines and periodic penalty payments.  

11.  ESMA  shall  refer  matters  for  criminal  prosecution  to  the  relevant  national 
authorities where, in carrying out its duties under this Regulation, it finds that there 
are serious indications of the possible existence of facts liable to constitute criminal 
offences.  In  addition,  ESMA  shall  refrain  from  imposing  fines  or  periodic  penalty 
payments  where  a  prior  acquittal  or  conviction  arising  from  identical  fact  or  facts 
which are substantially the same has already acquired the force of res judicata as the 
result of criminal proceedings under national law.”; 

Article 22a 

1. Before taking any decision pursuant to Articles 21, 21a and 21b ESMA shall give 
the persons subject to proceedings the opportunity to be heard on its findings. ESMA 
shall base its decisions only on findings on which the persons subject to proceedings 
have had an opportunity to comment. 

2. The first subparagraph shall not apply where urgent action pursuant to Article 21 
is  needed  in  order  to  prevent  significant  and  imminent  damage  to  the  financial 
system.  In  such  a  case  ESMA  may  adopt  an  interim  decision  and  shall  give  the 
persons  concerned  the  opportunity  to  be  heard  as  soon  as  possible  after  taking  its 
decision. 

3. The rights of defence of the persons subject to proceedings shall be fully respected 
in the proceedings. They shall be entitled to have access to ESMA’s file, subject to 
the legitimate interest of other persons in the protection of their business secrets. The 
right  of  access  to  the  file  shall  not  extend  to  confidential  information  or  ESMA’s 
internal preparatory documents.”; 

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(21) 

the following Articles 22b, 22c, and 22d are inserted: 

“Article 22b 

The  Court  of  Justice  shall  have  unlimited  jurisdiction  to  review  decisions  whereby 
ESMA  has  imposed  a  fine  or  a  periodic  penalty  payment.  It  may  annul,  reduce  or 
increase the fine or periodic penalty payment imposed. 

Article 22c 

1. ESMA shall charge fees to managers of qualifying social entrepreneurship funds 
in accordance with this Regulation and in accordance with the delegated acts adopted 
pursuant to paragraph 3. Those fees shall fully cover ESMA’s necessary expenditure 
relating to registration authorisation and supervision of managers of qualifying social 
entrepreneurship  funds  and  qualifying  social  entrepreneurship  funds  and  the 
reimbursement  of  any  costs  that  the  competent  authorities  may  incur  carrying  out 
work pursuant to this Regulation in particular as a result of any delegation of tasks in 
accordance with Article 22d. 

2. The amount of an individual fee charged to a particular manager of  a qualifying 
social entrepreneurship fund shall cover all administrative costs incurred by ESMA 
for its activities in relation to registration and on-going supervision of a manager of 
qualifying  social  entrepreneurship  funds  and  a  qualifying  social  entrepreneurship 
fund.  It  shall  be  proportionate  to  assets  under  management  of  the  qualifying  social 
entrepreneurship  fund  concerned  or,  where  relevant,  own  funds  of  the  manager  of 
qualifying social entrepreneurship fund. 

3. The Commission shall adopt delegated acts in accordance with Article 26 by [PO: 
Please  insert  date  24  months  after  entry  into  force]  to  specify  the  type  of  fees,  the 
matters for which fees are due, the amount of the fees and the manner in which they 
are to be paid. 

Article 22d 

1.  Where  necessary  for  the  proper  performance  of  a  supervisory  task,  ESMA  may 
delegate specific supervisory tasks to the competent authority of a Member State in 
accordance with the guidelines issued by ESMA pursuant to Article 16 of Regulation 
(EU) No 1095/2010. Such specific supervisory tasks may, in particular, include the 
power  to  carry  out  requests  for  information  in  accordance  with  Article  20a  and  to 
conduct  investigations  and  on-site  inspections  in  accordance  with  Article  20b  and 
Article 20c. 

By  way  of  derogation  from  the  first  subparagraph,  the  registrations  pursuant  to 
Articles 15 and 15a shall not be delegated. 

2.  Prior  to  the  delegation  of  a  task  in  accordance  with  paragraph  1,  ESMA  shall 
consult the relevant competent authority about: 

(a) the scope of the task to be delegated; 

(b) the timetable for the performance of the task; and 

(c) the transmission of necessary information by and to ESMA. 

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3.  ESMA  shall  reimburse  a  competent  authority  for  costs  incurred  as  a  result  of 
carrying  out  delegated  tasks  in  accordance  with  the  delegated  act  referred  to  in 
Article 22c(3). 

4.  ESMA  shall  review  any  delegation  made  in  accordance  with  paragraph  1  at 
appropriate intervals. A delegation may be revoked at any time. 

5.  A  delegation  of  tasks  shall  not  affect  the  responsibility  of  ESMA  and  shall  not 
limit ESMA’s ability to conduct and oversee the delegated activity.”; 

(22) 

Article 26 is replaced by the following: 

“Article 26 

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

2. The power to adopt delegated acts referred to in Articles 8(3), 22(10) and 22c(3) 
shall be conferred on the Commission for an indeterminate period of time from [PO: 
Please insert date of entry into force]. 

3.  The  delegation  of  power  referred  to  in  Articles  8(3),  22(10)  and  22c(3)  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. 

4. Before adopting a delegated act, the Commission shall consult experts designated 
by  each  Member  State  in  accordance  with  the  principles  laid  down  in  the 
Interinstitutional Agreement on Better Law-Making of 13 April 2016. 

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

6.  A  delegated  act  adopted  pursuant  to  Articles  8(3),  22(10)  and  22c(3)  shall  enter 
into force only if no objection has been expressed either by the European Parliament 
or  by the Council  within a period  of [two  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 [two months] at the initiative of the 
European Parliament or of the Council."; 

(23) 

Article 27 is amended as follows: 

(a) 

in paragraph 1,  

(i) point (n) is added: 

"(n)  the  effectiveness,  proportionality  and  application  of  fines  and  periodic 
penalty payments provided for in accordance with this Regulation;" 

(ii) the following point (o) is added: 

"(o) 
an  evaluation  of  the  role  of  ESMA,  its  investigatory  powers,  the 
delegation  of  tasks  to  competent  authorities,  and  the  effectiveness  of 
supervisory measures taken."; 

(b) 

(b) in paragraph 2, the following point (c) is added: 

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"(c)  by  [PO:  Please  insert  date  84  months  after  entry  into  force]  as  regards 
points (n) and (o)."; 

(24) 

the following Article 28a is inserted: 

“Article 28a 

1. 
All competences and duties related to the supervisory and enforcement activity 
in  the  field  of  qualifying  social  entrepreneurship  funds  that  are  conferred  on 
competent authorities shall be terminated on [PO: Please insert date 36 months after 
entry into force]. Those competences and duties shall be taken-up by ESMA on the 
same date. 

2.    Any  files  and  working  documents  related  to  the  supervisory  and  enforcement 
activity  in  the  field  of  qualifying  social  entrepreneurship  funds,  including  any 
ongoing  examinations and enforcement actions, or  certified copies thereof, shall  be 
taken over by ESMA on the date referred to in paragraph 1. 

However,  an  application  for  registration  that  has  been  received  by  competent 
authorities before [PO: Please insert date 30 months after entry into force] shall not 
be  transferred  to  ESMA,  and  the  decision  to  register  or  refuse  registration  shall  be 
taken by the relevant authority. 

3.  The competent authorities referred to in paragraph 1 shall ensure that any existing 
records and working papers, or certified copies thereof, shall be transferred to ESMA 
as  soon  as  possible  and  in  any  event  by  qualifying  social  entrepreneurship  funds. 
Those competent authorities shall also render all necessary assistance and advice to 
ESMA to facilitate effective and efficient transfer and taking-up of supervisory and 
enforcement activity in the field of qualifying social entrepreneurship funds. 

4.  ESMA shall act as the legal successor of the competent authorities referred to in 
paragraph 1 in any administrative or judicial proceedings that result from supervisory 
and  enforcement  activity  pursued  by  those  competent  authorities  in  relation  to 
matters that fall under this Regulation. 

5.  Any registration of a manager of a qualifying social entrepreneurship fund or of a 
qualifying social entrepreneurship fund granted by a competent authority referred to 
in paragraph 1 shall remain valid after the transfer of competences to ESMA..". 

”. 

Article 6 

Amendments to Regulation (EU) No 600/2014 on markets in financial instruments 

Regulation (EU) No 600/2104 is amended as follows: 

(25) 

Article 1 is amended as follows: 

(a) 

in paragraph 1, the following point (g) is added: 

'(g) the authorisation and supervision of data reporting service providers';  

(b) 

in Article 1, the following paragraph 5a is inserted: 

‘‘5a.  Articles  40  and  42  also  apply  to    in  respect  of    management  companies  of 
undertakings for collective investment in transferable securities (UCITS) and UCITS  
investment  companies  authorised  in  accordance  with  Directive  2009/65/EC  and  of 

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managers  of  alternative  investment  funds  (AIFMs)  authorized  in  accordance  with 
Directive 2011/61/EU ."; 

(26) 

Article 2(1) is amended as follows: 

(a)  points (34), (35) and (36) are replaced by the following:  

"(34)  ‘approved publication arrangement’ or ‘APA’ means a person authorised under 
this  Regulation  to  provide  the  service  of  publishing  trade  reports  on  behalf  of 
investment firms pursuant to Articles 20 and 21; 

(35)  ‘consolidated  tape  provider’  or  ‘CTP’  means  a  person  authorised  under  this 
Regulation to provide the service of collecting trade reports for financial instruments 
listed in Articles 6, 7, 10, 12 and 13, 20 and 21 from regulated markets, MTFs, OTFs 
and  APAs  and  consolidating  them  into  a  continuous  electronic  live  data  stream 
providing price and volume data per financial instrument; 

(36)  ‘approved  reporting  mechanism’  or  ‘ARM’  means  a  person  authorised  under 
this  Regulation  to  provide  the  service  of  reporting  details  of  transactions  to 
competent authorities or to ESMA on behalf of investment firms;"; 

(b) 

the following point (36a) is inserted: 

'(36a) ‘data reporting service providers’ means the persons referred to in points (34) 
to (36) and persons referred to in Article 38a27a(2)];'; 

(27) 

Article 22 is replaced by the following: 

'Article 22 

Providing information for the purposes of transparency and other calculations 

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

(a) trading venues; 

(b) APAs; and 

(c) CTPs. 

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

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

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

(28) 

Article 26 is replaced by the following: 

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'Article 26 

Obligation to report transactions 

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

ESMA shall make available to the competent authorities any information reported in 
accordance with this Article. 

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

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

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

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

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

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

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

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

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

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ESMA  shall  develop  by  [PO:  Please  insert  date  24  months  after  date  of  entry  into 
force] guidelines in accordance with Article 16 of Regulation (EU) No 1095/2010 to 
ensure that the application of legal entity identifiers within the Union complies with 
international  standards,  in  particular  those  established  by  the  Financial  Stability 
Board. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

10.    By  [PO:  Please  insert  date  24  months  after  date  of  entry  into  force],  ESMA 
shall submit a report to the Commission on the functioning of this Article, including 
its  interaction  with  the  related  reporting  obligations  under  Regulation  (EU)  No 
648/2012,  and  whether  the  content  and  format  of  transaction  reports  received  and 
transmitted  to  competent  authorities  comprehensively  enables  monitoring  of  the 
activities of investment firms in accordance with Article 24 of this Regulation. The 
Commission may take steps to propose any changes in this regard. The Commission 
shall forward ESMA’s report to the European Parliament and to the Council.'; 

(29) 

Article 27 is replaced by the following: 

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'Article 27 

Obligation to supply financial instrument reference data 

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

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

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

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

(a) ESMA effectively receives the financial instrument reference data pursuant 
to paragraph 1; 

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

(c) the financial instrument reference data received pursuant to paragraph 1 is 
efficiently and without delay transmitted to the relevant competent authorities. 

(d) there are effective mechanisms in place between ESMA and the competent 
authorities to resolve data delivery or data quality issues.     

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

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

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

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. 

(30) 

the following Title IVa is inserted:  

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‘TITLE IVa  

DATA REPORTING SERVICES 

CHAPTER 1 

Authorisation of data reporting service providers  

Article 27a  

Requirement for authorisation 

1. The operation of an APA, a CTP or an ARM as a regular occupation or business 
shall be subject to prior authorisation by ESMA in accordance with this Title. 

2.  An  investment  firm  or  a  market  operator  operating  a  trading  venue  may  also 
provide the services of an APA, a CTP or an ARM, subject to the prior verification 
by ESMA that the investment firm or the market operator comply with this Title. The 
provision of those services shall be included in their authorisation. 

3.  ESMA  shall  establish  a  register  of  all  data  reporting  services  providers  in  the 
Union. The register shall be publicly available and shall contain information on the 
services  for which  the  data  reporting  services  provider  is  authorised  and  it  shall  be 
updated on a regular basis.  

Where  ESMA  has  withdrawn  an  authorisation  in  accordance  with  Article  27d,  that 
withdrawal shall be published in the register for a period of 5 years.. 

4. Data reporting services providers shall provide their services under the supervision 
of  ESMA.  ESMA  shall  regularly  review  the  compliance  of  data  reporting  services 
providers with this Title. ESMA shall monitor that data reporting services providers 
comply at all times with the conditions for initial authorisation established under this 
Title. 

Article 27b 

Authorisation of data reporting service providers 

1. Data reporting service providers shall be authorised by ESMA for the purposes of 
Title IVa where: 

(a) the data service provider is a legal person established in the Union; and 

(b) the data service provider meets the requirements laid down in Title IVa. 

2. The authorisation referred to in paragraph 1 shall specify the data reporting service 
which  the  data  reporting  services  provider  is  authorised  to  provide.  Where  an 
authorised data reporting services provider seeks to extend its business to additional 
data  reporting  services,  it  shall  submit  a  request  to  ESMA  for  extension  of  that 
authorisation. 

3.  An  authorised  data  reporting  service  provider  shall  comply  at  all  times  with  the 
conditions  for  authorisation  referred  to  in  Title  IVa.  An  authorised  data  reporting 

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service provider shall, without undue delay, notify ESMA of any material changes to 
the conditions for authorisation. 

4.  The  authorisation  referred  to  in  paragraph  1  shall  be  effective  and  valid  for  the 
entire  territory  of  the  Union  and  shall  allow  the  data  reporting  service  provider  to 
provide the services for which it has been authorised, throughout the Union. 

Article 27c 

Procedures for granting and refusing applications for authorisation 

1. The applicant data reporting service provider shall submit an application providing 
all information necessary to enable ESMA to confirm that the data reporting service 
provider  has  established,  at  the  time  of  initial  authorisation,  all  the  necessary 
arrangements  to  meet  its  obligations  under  the  provisions  of  this  Title,  including  a 
programme of operations setting out, inter alia, the types of services envisaged and 
the organisational structure.. 

2. ESMA shall assess whether the application for authorisation is complete within 20 
working days of receipt of the application. 

Where the application is not complete, ESMA shall set a deadline by which the data 
reporting service provider is to provide additional information. 

After  assessing  an  application  as  complete,  ESMA  shall  notify  the  data  reporting 
service provider accordingly. 

3. ESMA shall, within six months from the receipt of a complete application, assess 
the compliance of the data reporting service provider with this Title and shall adopt a 
fully  reasoned  decision  granting  or  refusing  authorisation  and  shall  notify  the 
applicant data service provider accordingly within five working days. 

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

(a)  the  information  to  be  provided  to  it  under  paragraph  6,  including  the 
programme of operations;  

(b) the information included in the notifications under Article 27b(3). 

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. 

8. ESMA shall develop draft implementing technical standards to determine standard 
forms,  templates  and  procedures  for  the  notification  or  provision  of  information 
provided for in paragraph 2 of this Article and in Article 27e(3).. 

Power is conferred on the Commission to adopt the implementing technical standards 
referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) 
No 1095/2010. 

Article 27d 

Withdrawal of authorisation 

1. ESMA may withdraw the authorisation of a data reporting service provider where 
the latter: 

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(a)  does  not  make  use  of  the  authorisation  within  12  months,  expressly 
renounces  the  authorisation  or  has  provided  no  services  for  the  preceding  six 
months; 

(b)  obtained  the  authorisation  by  making  false  statements  or  by  any  other 
irregular means; 

(c) no longer meets the conditions under which it was authorised;  

(d) has seriously and systematically infringed the provisions of this Regulation. 

2. ESMA shall, without undue delay, notify the competent authority in the Member 
State  where  the  data  reporting  service  provider  is  established  of  a  decision  to 
withdraw the authorisation of a data reporting service provider.'; 

Article 27e 

Requirements for the management body of a data reporting services provider 

1. The management body of a data reporting services provider shall at all times be of 
sufficiently  good  repute,  possess  sufficient  knowledge,  skills  and  experience  and 
commit sufficient time to perform their duties. 

The  management  body  shall  possess  adequate  collective  knowledge,  skills  and 
experience  to  be  able  to  understand  the  activities  of  the  data  reporting  services 
provider. Each member of the management body shall act with honesty, integrity and 
independence  of  mind  to  effectively  challenge  the  decisions  of  the  senior 
management  where  necessary  and  to  effectively  oversee  and  monitor  management 
decision-making where necessary. 

Where a market operator seeks authorisation to operate an APA, a CTP or an ARM 
pursuant to Article 27c and the members of the management body of the APA, the 
CTP  or  the  ARM  are  the  same  as  the  members  of  the  management  body  of  the 
regulated  market,  those  persons  are  deemed  to  comply  with  the  requirement  laid 
down in the first subparagraph.  

2.  Data  reporting  services  provider  shall  notify  to  ESMA  all  members  of  its 
management body and of any changes to its membership, along with all information 
needed to assess whether the entity complies with paragraph 1. 

3.  The  management  body  of  a  data  reporting  services  provider  shall  define  and 
oversee the implementation of the governance arrangements that ensure effective and 
prudent  management  of  an  organisation  including  the  segregation  of  duties  in  the 
organisation  and  the  prevention  of  conflicts  of  interest,  and  in  a  manner  that 
promotes the integrity of the market and the interest of its clients. 

4. ESMA shall refuse authorisation if it is not satisfied that the person or the persons 
who shall effectively direct the business of the data reporting services provider are of 
sufficiently  good  repute,  or  if  there  are  objective  and  demonstrable  grounds  for 
believing that proposed changes to the management of the provider pose a threat to 
its sound and prudent management and to the adequate consideration of the interest 
of its clients and the integrity of the market. 

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5.  ESMA shall develop draft regulatory technical standards [PO: Please insert date 
24 months after entry into force]  for the assessment of the suitability of the members 
of the management body described in paragraph 1, taking into account different roles 
and functions carried out by them and the need to avoid conflicts of interest between 
members of the management body and users of the APA, CTP or ARM. 

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

Chapter 2 

CONDITIONS FOR APAS, CTPS AND ARMS 

Article 27f 

Organisational requirements for APAs 

1.  An  APA  shall  have  adequate  policies  and  arrangements  in  place  to  make  public 
the  information  required  under  Articles  20  and  21  as  close  to  real  time  as  is 
technically  possible,  on  a  reasonable  commercial  basis.  The  information  shall  be 
made available free of charge 15 minutes after the APA has published it. The APA 
shall efficiently and consistently disseminate such information in a way that ensures 
fast  access  to  the  information,  on  a  non-discriminatory  basis  and  in  a  format  that 
facilitates the consolidation of the information with similar data from other sources. 

2.  The  information  made  public  by  an  APA  in  accordance  with  paragraph  1  shall 
include, at least, the following details: 

(a) the identifier of the financial instrument; 

(b) the price at which the transaction was concluded; 

(c) the volume of the transaction; 

(d) the time of the transaction; 

(e) the time the transaction was reported; 

(f) the price notation of the transaction; 

(g) the code for the trading venue the transaction was executed on, or where the 
transaction  was  executed  via  a  systematic  internaliser  the  code  ‘SI’  or 
otherwise the code ‘OTC’; 

(h)  if  applicable,  an  indicator  that  the  transaction  was  subject  to  specific 
conditions. 

3.  An  APA  shall  operate  and  maintain  effective  administrative  arrangements 
designed to prevent conflicts of interest with its clients. In particular, an APA who is 
also  a  market  operator  or  investment  firm  shall  treat  all  information  collected  in  a 
non-discriminatory fashion and shall operate and maintain appropriate arrangements 
to separate different business functions. 

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4. An APA shall have sound security mechanisms in place designed to guarantee the 
security of the means of transfer of information, minimise the risk of data corruption 
and unauthorised access and to prevent information leakage before publication. The 
APA shall maintain adequate resources and have back-up facilities in place in order 
to offer and maintain its services at all times. 

5. The APA shall have systems in place that can effectively check trade reports for 
completeness,  identify  omissions  and  obvious  errors  and  request  re-transmission  of 
any such erroneous reports. 

6.  ESMA  shall  develop  draft  regulatory  technical  standards  to  determine  common 
formats,  data  standards  and  technical  arrangements  facilitating  the  consolidation  of 
information as referred to in paragraph 1. 

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

7. The Commission shall be empowered to adopt delegated acts in accordance with 
Article  50  specifying  what  constitutes  a  reasonable  commercial  basis  to  make 
information public as referred to in paragraph 1 of this Article. 

8. ESMA shall develop draft regulatory technical standards specifying: 

(a) the means by which an APA may comply with the information obligation 
referred to in paragraph 1; 

(b)  the  content  of  the  information  published  under  paragraph  1,  including  at 
least the information referred to in paragraph 2 in such a way as to enable the 
publication of information required under this Article; 

(c) the concrete organisational requirements laid down in paragraphs 3, 4 and 
5. 

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

Article 27g  

Organisational requirements for CTPs 

1.  A  CTP  shall  have  adequate  policies  and  arrangements  in  place  to  collect  the 
information made public in accordance with Articles 6 and 20, consolidate it into a 
continuous electronic data stream and make the information available to the public as 
close to real time as is technically possible, on a reasonable commercial basis. 

That information shall include, at least, the following details: 

(a) the identifier of the financial instrument; 

(b) the price at which the transaction was concluded; 

(c) the volume of the transaction; 

(d) the time of the transaction; 

(e) the time the transaction was reported; 

(f) the price notation of the transaction; 

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(g) the code for the trading venue the transaction was executed on, or where the 
transaction  was  executed  via  a  systematic  internaliser  the  code  ‘SI’  or 
otherwise the code ‘OTC’; 

(h) where applicable, the fact that a computer algorithm within the investment 
firm  was  responsible  for  the  investment  decision  and  the  execution  of  the 
transaction; 

(i)  if  applicable,  an  indicator  that  the  transaction  was  subject  to  specific 
conditions; 

(j) if the obligation to make  public the information  referred to  in Article 3(1) 
was waived in accordance with point (a) or (b) of Article 4(1), a flag to indicate 
which of those waivers the transaction was subject to. 

The information shall be made available free of charge 15 minutes after the CTP has 
published it. The CTP shall be able to efficiently and consistently disseminate such 
information  in  a  way  that  ensures  fast  access  to  the  information,  on  a  non-
discriminatory  basis  and  in  formats  that  are  easily  accessible  and  utilisable  for 
market participants. 

2.  A  CTP  shall  have  adequate  policies  and  arrangements  in  place  to  collect  the 
information made public in accordance with Article 10 and Article 21, consolidate it 
into a continuous electronic data stream and make following information available to 
the public as close to real time as is technically possible, on a reasonable commercial 
basis including, at least, the following details: 

(a) the identifier or identifying features of the financial instrument; 

(b) the price at which the transaction was concluded; 

(c) the volume of the transaction; 

(d) the time of the transaction; 

(e) the time the transaction was reported; 

(f) the price notation of the transaction; 

(g) the code for the trading venue the transaction was executed on, or where the 
transaction  was  executed  via  a  systematic  internaliser  the  code  ‘SI’  or 
otherwise the code ‘OTC’; 

(h)  if  applicable,  an  indicator  that  the  transaction  was  subject  to  specific 
conditions. 

The information shall be made available free of charge 15 minutes after the CTP has 
published it. The CTP shall be able to efficiently and consistently disseminate such 
information  in  a  way  that  ensures  fast  access  to  the  information,  on  a  non-
discriminatory  basis  and  in  generally  accepted  formats  that  are  interoperable  and 
easily accessible and utilisable for market participants. 

3. The CTP shall ensure that the data provided is consolidated from all the regulated 
markets,  MTFs,  OTFs  and  APAs  and  for  the  financial  instruments  specified  by 
regulatory technical standards under point (c) of paragraph 8. 

4.  The  CTP  shall  operate  and  maintain  effective  administrative  arrangements 
designed to prevent conflicts of interest. In particular, a market operator or an APA, 
who also  operate a consolidated tape,  shall treat all information collected in  a non-

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discriminatory  fashion  and  shall  operate  and  maintain  appropriate  arrangements  to 
separate different business functions. 

5. The CTP shall have sound security mechanisms in place designed to guarantee the 
security  of  the  means  of  transfer  of  information  and  to  minimise  the  risk  of  data 
corruption and unauthorised access. The CTP shall maintain adequate resources and 
have back-up facilities in place in order to offer and maintain its services at all times. 

ESMA shall develop draft regulatory technical standards to determine data standards 
and formats for the information to be published in accordance with Articles 6, 10, 20 
and 21 , including financial instrument identifier, price, quantity, time, price notation, 
venue identifier and indicators for specific conditions the transactions was subject to 
as  well  as 
technical  arrangements  promoting  an  efficient  and  consistent 
dissemination  of  information  in  a  way  ensuring  for  it  to  be  easily  accessible  and 
utilisable  for  market  participants  as  referred  to  in  paragraphs  1  and  2,  including 
identifying additional services the CTP could perform which increase the efficiency 
of the market. 

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. 

6.  The  Commission  shall  adopt  delegated  acts  in  accordance  with  Article  89 
clarifying  what  constitutes  a reasonable  commercial  basis  to  provide  access  to  data 
streams as referred to in paragraphs 1 and 2 of this Article. 

7. ESMA shall develop draft regulatory technical standards specifying: 

(a) the means by which the CTP may comply with the information obligation 
referred to in paragraphs 1 and 2; 

(b) the content of the information published under paragraphs 1 and 2; 

(c) the financial instruments data of which must be provided in the data stream 
and for non-equity instruments the trading venues and APAs which need to be 
included; 

(d)  other  means  to  ensure  that  the  data  published  by  different  CTPs  is 
consistent  and  allows  for  comprehensive  mapping  and  cross-referencing 
against similar data from other sources, and is capable of being aggregated at 
Union level; 

(e) the concrete organisational requirements laid down in paragraphs 4 and 5. 

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

Article 27h 

Organisational requirements for ARMs 

1.  An  ARM  shall  have  adequate  policies  and  arrangements  in  place  to  report  the 
information  required  under  Article  26  as  quickly  as  possible,  and  no  later  than  the 
close of the working day following the day upon which the transaction took place.  

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2.  The  ARM  shall  operate  and  maintain  effective  administrative  arrangements 
designed to prevent conflicts of interest with its clients. In particular, an ARM that is 
also  a  market  operator  or  investment  firm  shall  treat  all  information  collected  in  a 
non-discriminatory fashion and shall operate and maintain appropriate arrangements 
to separate different business functions. 

3.  The  ARM  shall  have  sound  security  mechanisms  in  place  designed  to  guarantee 
the security and authentication of the means of transfer of information, minimise the 
risk of data corruption and unauthorised access and to prevent information leakage, 
maintaining  the  confidentiality  of  the  data  at  all  times.  The  ARM  shall  maintain 
adequate resources and have back-up facilities in place in order to offer and maintain 
its services at all times. 

4.  The  ARM  shall  have  systems  in  place  that  can  effectively  check  transaction 
reports  for  completeness,  identify  omissions  and  obvious  errors  caused  by  the 
investment firm and where such error or omission occurs, to communicate details of 
the error or omission to the investment firm and request re-transmission of any such 
erroneous reports. 

The  ARM  shall  have  systems  in  place  to  enable  the  ARM  to  detect  errors  or 
omissions caused by the ARM itself and to enable the ARM to correct and transmit, 
or  re-transmit  as  the  case  may  be,  correct  and  complete  transaction  reports  to  the 
competent authority. 

5. ESMA shall develop draft regulatory technical standards specifying: 

(a) the means by which the ARM may comply with the information obligation 
referred to in paragraph 1; and 

(b) the concrete organisational requirements laid down in paragraphs 2, 3 and 
4. 

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. 

(31) 

the following Title VIa is inserted:  

'TITLE VIa  

ESMA powers and competences 

CHAPTER 1 

COMPETENCES AND PROCEDURES 

Article 38a  

Exercise of ESMA's powers 

The  powers  conferred  on  ESMA  or  any  official  of  or  other  person  authorised  by 
ESMA  by  Articles  38b  to  38e  shall  not  be  used  to  require  the  disclosure  of 
information or documents which are subject to legal privilege. 

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Article 38b 

Request for information 

1.  ESMA  may  by  simple  request  or  by  decision  require  the  following  persons  to 
provide all information to enable ESMA to carry out its duties under this Regulation: 

(a)  
an APA, a CTP, an ARM, and an investment firm or a market operator 
operating a trading venue to operate the data reporting services of an APA, a 
CTP or an ARM, and the persons that control them or are controlled by them; 

 (b) the managers of the persons referred to in point (a); 

(c) the auditors and advisors of the persons referred to in point (a); 

2. Any simple request for information referred to in paragraph 1 shall: 

(a) refer to this Article as the legal basis of that request; 

(b) state the purpose of the request; 

(c) specify the information required; 

(d) include a time limit within which the information is to be provided; 

(e) include a statement that there is no obligation on the person from whom the 
information  is  requested  to  provide  that  information  but  that  in  case  of  a 
voluntary reply to the request, the information provided must not be incorrect 
or misleading;  

(f) indicate the amount of the fine to be issued in accordance with Article 38e 
where the information provided is incorrect or misleading. 

3.  When  requiring  to  supply  information  under  paragraph  1  by  decision,  ESMA 
shall: 

(a) refer to this Article as the legal basis of that request; 

(b) state the purpose of the request; 

(c) specify the information required; 

(d) set a time limit within which the information is to be provided; 

(e)  indicate  the  periodic  penalty  payments  provided  for  in  Article  38g  where 
the production of the required information is incomplete; 

(f) indicate the fine provided for in Article 38f, where the answers to questions 
asked are incorrect or misleading;  

(g)  indicate  the  right  to  appeal  the  decision  before  ESMA’s  Board  of  Appeal 
and  to  have  the  decision  reviewed  by  the  Court  of  Justice  of  the  European 
Union (‘Court of Justice’) in accordance with Articles 60 and 61 of Regulation 
(EU) No 1095/2010. 

4. The persons referred to in paragraph 1 or their representatives and, in the case of 
legal  persons  or  associations  having  no  legal  personality,  the  persons  authorised  to 
represent them by law or by their constitution shall supply the information requested. 
Lawyers duly authorised to act may supply the information on behalf of their clients. 
The  latter  shall  remain  fully  responsible  if  the  information  supplied  is  incomplete, 
incorrect or misleading. 

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5. ESMA shall, without delay, send a copy of the simple request or of its decision to 
the  competent  authority  of  the  Member  State  where  the  persons  referred  to  in 
paragraph 1 concerned by the request for information are domiciled or established. 

Article 38c  

General investigations 

1.  In  order  to  carry  out  its  duties  under  this  Regulation,  ESMA  may  conduct 
necessary  investigations  of  persons  referred  to  in  Article  38b(1).  To  that  end,  the 
officials and other persons authorised by ESMA shall be empowered to: 

(a) examine any records, data, procedures and any other material relevant to the 
execution of its tasks irrespective of the medium on which they are stored; 

(b)  take  or  obtain  certified  copies  of  or  extracts  from  such  records,  data, 
procedures and other material; 

(c)  summon  and  ask  any  person  referred  to  in  Article  38b(1)  or  their 
representatives or staff for oral or written explanations on facts or documents 
relating  to  the  subject  matter  and  purpose  of  the  inspection  and  to  record  the 
answers; 

(d) interview any other natural or legal person who consents to be interviewed 
for  the  purpose  of  collecting  information  relating  to  the  subject  matter  of  an 
investigation; 

(e) request records of telephone and data traffic. 

2.  The  officials  and  other  persons  authorised  by  ESMA  for  the  purposes  of  the 
investigations referred to in paragraph 1 shall exercise their powers upon production 
of  a  written  authorisation  specifying  the  subject  matter  and  purpose  of  the 
investigation.  That  authorisation  shall  also  indicate  the  periodic  penalty  payments 
provided  for  in  Article  38i  where  the  production  of  the  required  records,  data, 
procedures  or  any  other  material,  or  the  answers  to  questions  asked  to  persons 
referred  to  in  Article  38b(1)  are  not  provided  or  are  incomplete,  and  the  fines 
provided for in Article 38h, where the answers to questions asked to persons referred 
to in Article 38b(1) are incorrect or misleading. 

3. The persons referred to in Article 38b(1) are required to submit to investigations 
launched on the basis of a decision of ESMA. The decision shall specify the subject 
matter and purpose of the investigation, the periodic penalty payments provided for 
in Article 38i, the legal remedies available under Regulation (EU) No 1095/2010 and 
the right to have the decision reviewed by the Court of Justice. 

4.  In  good  time  before  an  investigation  referred  to  in  paragraph  1,  ESMA  shall 
inform the competent authority of the Member State where the investigation is to be 
carried out of the investigation and of the identity of the authorised persons. Officials 
of the competent authority concerned shall, upon the request of ESMA, assist those 
authorised  persons  in  carrying  out  their  duties. Officials  of the competent authority 
concerned may also attend the investigations upon request.  

5.  If  a  request  for  records  of  telephone  or  data  traffic  referred  to  in  point  (e)  of 
paragraph 1 requires  authorisation  from a judicial authority according  to applicable 
national law, such authorisation shall be applied for. Such authorisation may also be 
applied for as a precautionary measure. 

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6. Where a national judicial authority receives an application for the authorisation of 
a request for records of telephone or data traffic referred to in point (e) of paragraph 
1, that authority shall verify the following: 

(a) the decision adopted by ESMA referred to in paragraph 3 is authentic; 

(b) any measures to be taken are proportionate and not arbitrary or excessive. 

For  the  purposes  of  point  (b),  the  national  judicial  authority  may  ask  ESMA  for 
detailed explanations, in particular relating to the grounds ESMA has for suspecting 
that  an  infringement  of  this  Regulation  has  taken  place  and  the  seriousness  of  the 
suspected infringement and the nature of the involvement of the person subject to the 
coercive  measures.  However,  the  national  judicial  authority  shall  not  review  the 
necessity for the investigation or demand that it be provided with the information on 
ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by 
the  Court  of  Justice  following  the  procedure  set  out  in  Regulation  (EU)  No 
1095/2010. 

Article 38d  

On-site inspections 

1.  In  order  to  carry  out  its  duties  under  this  Regulation,  ESMA  may  conduct  all 
necessary on-site inspections  at  any business premises  of the persons  referred to  in 
Article 38b(1). 

2.  The  officials  and  other  persons  authorised  by  ESMA  to  conduct  an  on-site 
inspection may enter any business premises of the persons subject to an investigation 
decision adopted by ESMA and shall have all the powers stipulated in Article 38b(1). 
They shall also have the power to seal any business premises and books or records 
for the period of, and to the extent necessary for, the inspection. 

3. In sufficient time before the inspection, ESMA shall give notice of the inspection 
to  the  competent  authority  of  the  Member  State  where  the  inspection  is  to  be 
conducted.  Where  the  proper  conduct  and  efficiency  of  the  inspection  so  require, 
ESMA,  after  informing  the  relevant  competent  authority,  may  carry  out  the  on-site 
inspection without prior notice. Inspections in accordance with this Article shall be 
conducted provided that the relevant authority has confirmed that it does not object 
to those inspections.  

4.  The  officials  and  other  persons  authorised  by  ESMA  to  conduct  an  on-site 
inspection  shall  exercise  their  powers  upon  production  of  a  written  authorisation 
specifying the subject matter and purpose of the inspection and the periodic penalty 
payments provided for in Article 38g where the persons concerned do not submit to 
the inspection. 

5.  The  persons  referred  to  in  Article  38b(1)  shall  submit  to  on-site  inspections 
ordered  by  decision  of  ESMA.  The  decision  shall  specify  the  subject  matter  and 
purpose  of  the  inspection,  appoint  the  date  on which  it  is  to  begin  and  indicate  the 
periodic  penalty  payments  provided  for  in  Article  38i,  the  legal  remedies  available 
under  Regulation  (EU)  No  1095/2010  as  well  as  the  right  to  have  the  decision 
reviewed by the Court of Justice 

6. Officials of, as well as those authorised or appointed by, the competent authority 
of the Member State where the inspection is to be conducted shall, at the request of 

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ESMA, actively assist the officials and other persons authorised by ESMA. Officials 
of the competent authority of the Member State concerned may  also attend the on-
site inspections. 

7. ESMA may also require competent authorities to carry out specific investigatory 
tasks and on-site inspections as provided for in this Article and in Article 38b(1) on 
its behalf. 

8.  Where  the  officials  and  other  accompanying  persons  authorised  by  ESMA  find 
that  a  person  opposes  an  inspection  ordered  pursuant to  this  Article, the  competent 
authority of the Member State concerned shall afford them the necessary assistance, 
requesting,  where  appropriate,  the  assistance  of  the  police  or  of  an  equivalent 
enforcement authority, so as to enable them to conduct their on-site inspection. 

9. If the on-site inspection provided for in paragraph 1 or the assistance provided for 
in  paragraph  7  requires  authorisation  by  a  judicial  authority  according  to  national 
law, such authorisation shall be applied for. Such authorisation may also be applied 
for as a precautionary measure. 

10. Where a national judicial authority receives an application for the authorisation 
of an on-site inspection provided for in paragraph 1 or the assistance provided for in 
paragraph 7, that authority shall verify the following: 

(a)  

the decision adopted by ESMA referred to in paragraph 4 is authentic; 

any  measures  to  be  taken  are  proportionate  and  not  arbitrary  or 

(b)  
excessive. 

For  the  purposes  of  point  (b),  the  national  judicial  authority  may  ask  ESMA  for 
detailed explanations, in particular relating to the grounds ESMA has for suspecting 
that  an  infringement  of  this  Regulation  has  taken  place  and  the  seriousness  of  the 
suspected infringement and the nature of the involvement of the person subject to the 
coercive  measures.  However,  the  national  judicial  authority  shall  not  review  the 
necessity for the investigation or demand that it be provided with the information on 
ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by 
the  Court  of  Justice  following  the  procedure  set  out  in  Regulation  (EU)  No 
1095/2010. 

Article 38e  

Exchange of information 

ESMA and the competent authorities shall, without undue delay, provide each other 
with the information required for the purposes of carrying out their duties under this 
Regulation. 

Article 38f  

Professional secrecy 

The  obligation  of  professional  secrecy  referred  to  in  Article  76  of  Directive 
2014/65/EU shall apply to ESMA and all persons who work or who have worked for 
ESMA  or  for  any  other  person  to  whom  ESMA  has  delegated  tasks,  including 
auditors and experts contracted by ESMA. 

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Article 38g 

Supervisory measures by ESMA 

1.  Where  ESMA  finds  that  a  person  listed  in  point  (a)  of  Article  38a(1)  has 
committed one of the infringements listed in Title IVa, it shall take one or more of 
the following actions: 

(a) adopt a decision requiring the person to bring the infringement to an end; 

(b) adopt a decision imposing fines pursuant to Articles 38h and 38i; 

(c) issue public notices. 

2. When taking the actions referred to in paragraph 1, ESMA shall take into account 
the  nature  and  seriousness  of  the  infringement,  having  regard  to  the  following 
criteria: 

(a) the duration and frequency of the infringement; 

(b)  whether  financial  crime  has  been  occasioned,  facilitated  or  otherwise 
attributable to the infringement; 

(c) whether the infringement has been committed intentionally or negligently. 

(d) the degree of responsibility of the person responsible for the infringement; 

(e)  the  financial  strength  of  the  person  responsible  for  the  infringement,  as 
indicated  by  the  total  turnover  of  the  responsible  legal  person  or  the  annual 
income and net assets of the responsible natural person; 

(f) the impact of the infringement on investors’ interests; 

(g)  the  importance  of  the  profits  gained,  losses  avoided  by  the  person 
responsible for the infringement or the losses for third parties derived from the 
infringement, insofar as they can be determined; 

(h) the level of cooperation of the person responsible for the infringement with 
ESMA, without prejudice to the need to ensure disgorgement of profits gained 
or losses avoided by that person; 

(i) previous infringements by the person responsible for the infringement; 

(j)  measures  taken  after  the  infringement  by  the  person  responsible  for  the 
infringement to prevent its repetition. 

3. Without undue delay, ESMA shall notify any action taken pursuant to paragraph 1 
to  the  person  responsible  for  the  infringement,  and  shall  communicate  it  to  the 
competent authorities of the Member States and to the Commission. It shall publicly 
disclose any such decision on its website within 10 working days from the date when 
it was adopted. 

The  disclosure  to  the  public  referred  to  in  the  first  subparagraph  shall  include  the 
following: 

a  statement  affirming  the  right  of  the  person  responsible  for  the 

(a)  
infringement to appeal the decision; 

(b)    where  relevant,  a  statement  affirming  that  an  appeal  has  been  lodged 
and specifying that such an appeal does not have suspensive effect; 

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(c)  
a statement asserting that it is possible for ESMA’s Board of Appeal to 
suspend  the  application  of  the  contested  decision  in  accordance  with  Article 
60(3) of Regulation (EU) No 1095/2010. 

CHAPTER 2 

ADMINISTRATIVE SANCTIONS AND OTHER MEASURES 

Article 38h 

Fines  

1.  Where  in  accordance  with  Article  38k(5),  ESMA  finds  that  any  person  has, 
intentionally or negligently, committed one of the infringements listed in Title IVa, it 
shall adopt a decision imposing a fine in accordance with paragraph 2 of this Article.. 

An infringement shall be considered to have been committed intentionally if ESMA 
finds objective factors which demonstrate that a person acted deliberately to commit 
the infringement. 

2. The maximum amount of the fine referred to in paragraph 1 shall be EUR 200 000 
or, in the Member States whose currency is not the euro, the corresponding value in 
the national currency.  .  

3.  When  determining  the  level  of  a  fine  pursuant  to  paragraph  1,  ESMA  shall  take 
into account the criteria set out in Article 38g(2). 

Article 38i 

Periodic penalty payments 

1. ESMA shall, by decision, impose periodic penalty payments in order to compel: 

(a)  a  person  to  put  an  end  to  an  infringement  in  accordance  with  a  decision 
taken pursuant to Article 38b(1)(a);  

(b) a person referred to in Article 38b(1): 

– 

– 

– 

to  supply  complete  information  which  has  been  requested  by  a 
decision pursuant to Article 38b; 

to submit to an investigation and in particular to produce complete 
records,  data,  procedures  or  any  other  material  required  and  to 
complete and correct other information provided in an investigation 
launched by a decision pursuant to Article 38c;  

to  submit  to  an  on-site  inspection  ordered  by  a  decision  taken 
pursuant to Article 38d. 

2.  A  periodic  penalty  payment  shall  be  effective  and  proportionate.  The  periodic 
penalty payment shall be imposed for each day of delay. 

3.  Notwithstanding  paragraph  2,  the  amount  of  the  periodic  penalty  payments  shall 
be 3 % of the average daily turnover in the preceding business year, or, in the case of 
natural persons, 2 % of the average daily income in the preceding calendar year. It 

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shall  be  calculated  from  the  date  stipulated  in  the  decision  imposing  the  periodic 
penalty payment. 

4. A periodic penalty payment shall be imposed for a maximum period of six months 
following  the  notification  of  ESMA’s  decision.  Following  the  end  of  the  period, 
ESMA shall review the measure. 

Article 38j  

Disclosure, nature, enforcement and allocation of fines and periodic penalty payments 

1.  ESMA  shall  disclose  to  the  public  every  fine  and  periodic  penalty  payment  that 
has  been  imposed  pursuant  to  Articles  38h  and  38i  unless  such  disclosure  to  the 
public  would  seriously  jeopardise  the  financial  markets  or  cause  disproportionate 
damage  to  the  parties  involved.  Such  disclosure  shall  not  contain  personal  data 
within the meaning of Regulation (EC) No 45/2001. 

2.  Fines  and  periodic  penalty  payments  imposed  pursuant  to  Articles  38h  and  38i 
shall be of an administrative nature. 

3. Where ESMA decides to impose no fines or penalty payments, it shall inform the 
European Parliament, the Council, the Commission, and the competent authorities of 
the  Member  State  concerned  accordingly  and  shall  set  out  the  reasons  for  its 
decision. 

4.  Fines  and  periodic  penalty  payments  imposed  pursuant  to  Articles  38h  and  38i 
shall be enforceable. 

5. Enforcement shall be governed by the rules of civil procedure in force in the State 
in the territory of which it is carried out.  

6. The amounts of the fines and periodic penalty payments shall be allocated to the 
general budget of the European Union. 

Article 38k 

Procedural rules for taking supervisory measures and imposing fines 

1. Where, in carrying out its duties under this Regulation, ESMA finds that there are 
serious indications of the possible existence of facts liable to constitute one or more 
of  the  infringements  listed  in  Title  IVa,  ESMA  shall  appoint  an  independent 
investigation  officer  within  ESMA  to  investigate  the  matter.  The  appointed  officer 
shall not be involved or have been directly or indirectly involved in the supervision 
or  the  authorisation  process  of  the  data  reporting  service  provider  concerned  and 
shall perform its functions independently from ESMA.  

2.  The  investigation  officer  referred  to  in  paragraph  1  shall  investigate  the  alleged 
infringements, taking into account any comments submitted by the persons who are 
subject  to  the  investigations,  and  shall  submit  a  complete  file  with  his  findings  to 
ESMA. 

3. In order to carry out its tasks, the investigation officer may exercise the power to 
request information in accordance with Article 38b and to conduct investigations and 
on-site inspections in accordance with Articles 38c and 38d.  

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4.  Where  carrying  out  his  tasks,  the  investigation  officer  shall  have  access  to  all 
documents and information gathered by ESMA in its supervisory activities. 

5.  Upon  completion  of  his  investigation  and  before  submitting  the  file  with  his 
findings  to  ESMA,  the  investigation  officer  shall  give  the  persons  subject  to  the 
investigations  the  opportunity  to  be  heard  on  the  matters  being  investigated.  The 
investigation  officer  shall  base  his  findings  only  on  facts  on  which  the  persons 
concerned have had the opportunity to comment. 

6. The rights of the defence of the persons concerned shall be fully respected during 
investigations under this Article. 

7. When submitting the file with his findings to ESMA, the investigation officer shall 
notify the persons  who are subject to the investigations.  The persons  subject to  the 
investigations  shall  be  entitled  to  have  access  to  the  file,  subject  to  the  legitimate 
interest  of  other  persons  in  the  protection  of  their  business  secrets.  The  right  of 
access to the file shall not extend to confidential information affecting third parties. 

8. On the basis of the file containing the investigation officer’s findings  and, when 
requested  by  the  persons  subject  to  the  investigations,  after  having  heard  the  those 
persons  in  accordance  with  Article  38l,  ESMA  shall  decide  if  one  or  more  of  the 
infringements listed in Title IVa have been committed by the persons subject to the 
investigations  and,  in  such  a  case,  shall  take  a  supervisory  measure  in  accordance 
with Article 38m. 

9.  The  investigation  officer  shall  not  participate  in  ESMA’s  deliberations  or  in  any 
other way intervene in ESMA’s decision-making process. 

10. The Commission shall adopt delegated acts in  accordance  with  Article 50 [PO: 
Please insert date 24 months after entry into force] by to specifying  further the rules 
of  procedure  for  the  exercise  of  the  power  to  impose  fines  or  periodic  penalty 
payments, including provisions on the rights of the defence, temporal provisions, and 
the collection of fines or periodic penalty payments, and the limitation periods for the 
imposition and enforcement of fines and periodic penalty payments. 

11.  ESMA  shall  refer  matters  for  criminal  prosecution  to  the  relevant  national 
authorities where, in carrying out its duties under this Regulation, it finds that there 
are serious indications of the possible existence of facts liable to constitute criminal 
offences.  In  addition,  ESMA  shall  refrain  from  imposing  fines  or  periodic  penalty 
payments  where  a  prior  acquittal  or  conviction  arising  from  identical  fact  or  facts 
which are substantially the same has already acquired the force of res judicata as the 
result of criminal proceedings under national law. 

Article 38l  

Hearing of the persons concerned 

1. Before taking any decision pursuant to Articles 38g, 38h and 38i, ESMA shall give 
the  persons  subject  to  the  proceedings  the  opportunity  to  be  heard  on  its  findings. 
ESMA shall base its decisions only on findings on which the persons subject to the 
proceedings have had an opportunity to comment. 

The first subparagraph shall not apply if urgent action is needed in order to prevent 
significant and imminent damage to the financial system. In such a case ESMA may 

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adopt an interim decision and shall give the persons concerned the opportunity to be 
heard as soon as possible after taking its decision. 

2.  The  rights  of  the  defence  of  the  persons  subject  to  investigations  shall  be  fully 
respected in the proceedings. They shall be entitled to have access to ESMA’s file, 
subject to the legitimate interest of other persons in the protection of their business 
secrets. The right of access to the file shall not extend to confidential information or 
ESMA’s internal preparatory documents. 

Article 38m 

Review by the Court of Justice 

The  Court  of  Justice  shall  have  unlimited  jurisdiction  to  review  decisions  whereby 
ESMA  has  imposed  a  fine  or  a  periodic  penalty  payment.  It  may  annul,  reduce  or 
increase the fine or periodic penalty payment imposed. 

Article 38n 

Authorisation and supervisory fees 

1. ESMA shall charge fees to the data reporting service providers in accordance with 
this  Regulation  and  in  accordance  with  the  delegated  acts  adopted  pursuant  to 
paragraph 3. Those fees shall fully cover ESMA’s necessary expenditure relating to 
the  authorisation  and  supervision  of  data  reporting  service  providers  and  the 
reimbursement  of  any  costs  that  the  competent  authorities  may  incur  carrying  out 
work pursuant to this Regulation, in particular as a result of any delegation of tasks 
in accordance with Article 38o. 

2.  The  amount  of  an  individual  fee  charged  to  a  particular  data  reporting  service 
providers shall cover all administrative costs incurred by ESMA for its activities in 
relation  to  the  prospectus,  including  supplements  thereto,  drawn  up  by  such  issuer, 
offeror  or  person asking for admission  to  trading on a regulated market. It shall  be 
proportionate to the turnover of the issuer, offeror or person asking for admission to 
trading on a regulated market. 

3. The Commission shall adopt a delegated act in accordance with Article 50 by [PO: 
Please insert date 24 months after entry into force] by to specifying further the type 
of fees, the matters for which fees are due, the amount of the fees and the manner in 
which they are to be paid.' 

Article 38o 

Delegation of tasks by ESMA to competent authorities 

 1.  Where  necessary  for  the  proper  performance  of  a  supervisory  task,  ESMA  may 
delegate specific supervisory tasks to the competent authority of a Member State in 
accordance with the guidelines issued by ESMA pursuant to Article 16 of Regulation 
(EU) No 1095/2010. Such specific supervisory tasks may, in particular, include the 
power  to  carry  out  requests  for  information  in  accordance  with  Article  38b  and  to 

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conduct  investigations  and  on-site  inspections  in  accordance  with  Article  38c  and 
Article 38d. 

2. Prior to delegation of a task, ESMA shall consult the relevant competent authority 
about: 

(a) the scope of the task to be delegated; 

(b) the timetable for the performance of the task; and 

(c) the transmission of necessary information by and to ESMA. 

3. In accordance with the regulation on fees adopted by the Commission pursuant to 
Article 38n(3), ESMA shall reimburse a competent authority for costs incurred as a 
result of carrying out delegated tasks. 

4. ESMA shall review the decision referred to in paragraph 1 at appropriate intervals. 
A delegation may be revoked at any time. 

(32) 

5.  A  delegation  of  tasks  shall  not  affect  the  responsibility  of  ESMA  and  shall  not 
limit  ESMA’s  ability  to  conduct  and  oversee  the  delegated  activity.";  Article  50  is 
amended as follows: 

(a) 

 paragraph 2 is replaced by the following: 

'2. The power to adopt delegated acts referred to in Article 1(9), Article 2(2), Article 
13(2), Article 15(5), Article 17(3), Article 19(2) and (3), Article 27c, Article 31(4), 
Article 40(8), Article 41(8), Article 42(7), Article 45(10) and Article 52(10) and (12) 
shall be conferred for an indeterminate period of time from 2 July 2014.'; 

(b) 

 in paragraph 3, the first sentence is replaced by the following: 

'The  delegation  of  power  referred  to  in  Article  1(9),  Article  2(2),  Article  13(2), 
Article 15(5), Article 17(3), Article 19(2) and (3), Article 27c, Article 31(4), Article 
40(8), Article 41(8), Article 42(7), Article 45(10) and Article 52(10) and (12) may be 
revoked at any time by the European Parliament or by the Council.'; 

(c) 

in paragraph 5, the first sentence is replaced by the following: 

 'A delegated act adopted pursuant to Article 1(9), Article 2(2), Article 13(2), Article 
15(5), Article 17(3), Article 19(2) and (3), Article 27c, Article 31(4), Article 40(8), 
Article 41(8), Article 42(7), Article 45(10) and Article 52(10) or (12) shall enter into 
force only if no objection has been expressed either by the European Parliament or 
the Council within a period of three months of notification of that act to the European 
Parliament  and  the  Council  or  if,  before  the  expiry  of  that  period,  the  European 
Parliament  and  the  Council  have  both  informed  the  Commission  that  they  will  not 
object.'; 

(33) 

in Article 52, the following paragraphs 13 and 14 are added: 

'13.   The Commission shall, after consulting ESMA, present reports to the European 
Parliament and the Council on the functioning of the consolidated tape established in 
accordance with Title IVa. The report relating to Article 27d(1) shall be presented by 
3  September  2019.  The  report  relating  to  Article  27d(2)  shall  be  presented  by  3 
September 2021.  

The  reports  referred  to  in  the  first  subparagraph  shall  assess  the  functioning  of  the 
consolidated tape against the following criteria: 

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(a)  
the  availability  and  timeliness  of  post  trade  information  in  a 
consolidated format capturing all transactions irrespective of whether they are 
carried out on trading venues or not; 

(b)  
the availability and timeliness of full and partial post trade information 
that  is  of  a  high  quality,  in  formats  that  are  easily  accessible  and  usable  for 
market participants and available on a reasonable commercial basis. 

Where the Commission concludes that the CTPs have failed to provide information 
in a way that meets the criteria set out in the second subparagraph, the Commission 
shall attach a request to its report  for ESMA to launch a negotiated procedure for the 
appointment  though  a  public  procurement  process  run  by  ESMA  of  a  commercial 
entity  operating  a  consolidated  tape.  ESMA  shall  launch  the  procedure  after 
receiving  the  request  from  the  Commission  on  the  conditions  specified  in  the 
Commission’s  request  and  in  accordance  with  Regulation  (EU,  Euratom)  No 
966/2012 of the European Parliament and of the Council (**). 

14.   The  Commission  shall,  where  the  procedure  outlined  in  paragraph  13  is 
initiated, adopt delegated acts in accordance with Article 50, by specifying measures 
in order to: 

provide  for the  contract  duration  of  the  commercial  entity  operating  a 
(a)  
consolidated tape and the process and conditions for renewing the contract and 
the launching of new public procurement; 

(b)  
provide  that  the  commercial  entity  operating  a  consolidated  tape  shall 
do  so  on  an  exclusive  basis  and  that  no  other  entity  shall  be  authorised  as  a 
CTP in accordance with Article 27a; 

(c)  
empower  ESMA  to  ensure  adherence  with  tender  conditions  by  the 
commercial  entity  operating  a  consolidated  tape  appointed  through  a  public 
procurement; 

(d)  
ensure  that  the  post-trade  information  provided  by  the  commercial 
entity  operating  a  consolidated  tape  is  of  a  high  quality,  in  formats  that  are 
easily  accessible  and  usable  for  market  participants  and  in  a  consolidated 
format capturing the entire market; 

ensure  that  the  post  trade  information  is  provided  on  a  reasonable 
(e)  
commercial basis, on both a consolidated and unconsolidated basis, and meets 
the needs of the users of that information across the Union; 

ensure  that  trading  venues  and  APAs  shall  make  their  trade  data 
(f)  
available  to  the  commercial  entity  operating  a  consolidated  tape  appointed 
through a public procurement process run by ESMA at a reasonable cost; 

(g)  
specify arrangements applicable where the commercial entity operating 
a  consolidated  tape  appointed  through  a  public  procurement  fails  to  fulfil  the 
tender conditions; 

(h)  
specify  arrangements  under  which  CTPs  authorised  under  Article  27a 
may continue to operate a consolidated tape where the empowerment provided 
for in  point (b) of this  paragraph is not  used or, where  no entity is  appointed 
through the public procurement, until such time as a new public procurement is 
completed and a commercial entity is appointed to operate a consolidated tape. 

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* 
Directive  2013/34/EU  of  the  European  Parliament  and  of  the  Council  of  26 
June 2013 on the annual financial statements, consolidated financial statements and 
related reports of certain types of undertakings, amending  Directive 2006/43/EC of 
the  European  Parliament  and  of  the  Council  and  repealing  Council  Directives 
78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19). 

**  Regulation  (EU,  Euroatom)  No  966/2012  of  the  European  Parliament  and  of 
the  Council  of  25  October  2012  on  the  financial  rules  applicable  to  the  general 
budget  of  the  Union  and  repealing  Council  Regulation  (EC,  Euroatom)  No 
1605/2002 (OJ L 298, 26.10.2012, p. 1).'; 

(34) 

the following Articles 54a and 54b are inserted:  

'Article 54a 
Transitional measures related to ESMA 

1.  All competences and duties related to the supervisory and enforcement activity in 
the  field  of  data  reporting  services  providers  that  are  conferred  on  competent 
authorities  pursuant  to  Article  67  of  Directive  2014/65/EU  shall  be  terminated  on 
[PO:  Please  insert  date  36  months  after  entry  into  force].  Those  competences  and 
duties shall be taken-up by ESMA on the same date. 

2.    Any  files  and  working  documents  related  to  the  supervisory  and  enforcement 
activity  in  the  field  of  data  reporting  services  providers,  including  any  ongoing 
examinations and enforcement actions, or certified copies thereof, shall be taken over 
by ESMA on the date referred to in paragraph 1. 

However,  an  application  for  authorisation  that  has  been  received  by  competent 
authorities before [PO: Please insert date 30 months after entry into force] shall not 
be  transferred  to  ESMA,  and  the  decision  to  register  or  refuse  registration  shall  be 
taken by the relevant authority. 

3.  The competent authorities referred to in paragraph 1 shall ensure that any existing 
records and working papers, or certified copies thereof, shall be transferred to ESMA 
as  soon  as  possible  and  in  any  event  by  data  reporting  services  providers.  Those 
competent authorities shall also render all necessary assistance and advice to ESMA 
to  facilitate  effective  and  efficient  transfer  and  taking-up  of  supervisory  and 
enforcement activity in the field of data reporting services providers. 

4.  ESMA shall act as the legal successor to the competent authorities referred to in 
paragraph 1 in any administrative or judicial proceedings that result from supervisory 
and  enforcement  activity  pursued  by  those  competent  authorities  in  relation  to 
matters that fall under this Regulation. 

5.    Any  authorisation  of  a  data  reporting  services  provider  granted  by  a  competent 
authority  referred  to  in  paragraph  1  shall  remain  valid  after  the  transfer  of 
competences to ESMA  

Article 54b 
Relations with auditors 

1.   Any  person  authorised  within  the  meaning  of  Directive  2006/43/EC  of  the 
European Parliament and of the Council (*), performing in a data reporting services 
provider  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 

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promptly  to  ESMA  any  fact  or  decision  concerning  that  undertaking  of  which  that 
person has become aware while carrying out that task and which is liable to: 

constitute  a  material 

the 
laws,  regulations  or 
(a)  
administrative  provisions  which 
the  conditions  governing 
authorisation  or  which  specifically  govern  pursuit  of  the  activities  of  data 
reporting services provider; 

infringement  of 
lay  down 

affect  the  continuous  functioning  of  the  data  reporting  services 

(b)  
provider; 

lead  to  refusal  to  certify  the  accounts  or  to  the  expression  of 

(c)  
reservations. 

That  person  shall  also  have  a  duty  to  report  any  facts  and  decisions  of  which  the 
person becomes aware in the course of carrying out one of the tasks referred to in the 
first  subparagraph  in  an  undertaking  having  close  links  with  the  data  reporting 
services provider within which he is carrying out that task. 

2.    The  disclosure  in  good  faith  to  the  competent  authorities,  by  persons 
authorised  within  the  meaning  of  Directive  2006/43/EC,  of  any  fact  or  decision 
referred  to  in  paragraph  1  shall  not  constitute  a  breach  of  any  contractual  or  legal 
restriction on disclosure of information and shall not involve such persons in liability 
of any kind. 

*  
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).'. 

Article 7 

Amendments to Regulation (EU) No 2015/760 on European long-term investment funds 

Regulation (EU) 2015/760 is amended as follows: 

(1) 

Article 2 is amended as follows: 

(a)  point (10) is replaced by the following: 

‘competent  authority’  means  any  competent  authority  referred  to  in 

“(10) 
points (f) and (h) of Article 4(1) of Directive 2011/61/EU;”; 

(b)  point (11) is deleted; 

(2) 

in Article 3, paragraph 3 is replaced by the following:  

“3.  ESMA shall keep  a central  public register identifying  each ELTIF authorised 
under  this  Regulation  and  the  manager  of  the  ELTIF.  The  register  shall  be  made 
available in electronic format.”; 

(3) 

Article 5 is amended as follows: 

(a)  paragraph 1 is amended as follows: 

(i) 

the first subparagraph is replaced by the following: 

“An application for authorisation as an ELTIF shall be made to ESMA.”; 

(ii) 

in the second subparagraph, the following point (e) is added: 

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“(e) 

a list of Member States where the ELTIF is intended to be marketed.”;  

(iii) 

the third subparagraph is replaced by the following: 

“ESMA  may 
regards 
documentation and information provided under the second subparagraph.”; 

request  clarification  and 

information  as 

the 

(b)  paragraph 2 is amended as follows: 

(i) 

the first subparagraph is replaced by the following: 

“Only an EU AIFM authorised in accordance with Directive 2011/61/EU may 
apply  to  ESMA  for  approval  to  manage  an  ELTIF  for  which  authorisation  is 
requested in accordance with paragraph 1.”; 

(ii) 

the last subparagraph is replaced by the following: 

“ESMA may ask the competent authority of the EU AIFM for clarification and 
information  as  regards 
the  second 
subparagraph  or  an  attestation  as  to  whether  ELTIFs  fall  within  the  scope  of 
the EU AIFM's authorisation to manage AIFs. The competent authority of the 
EU  AIFM  shall  provide  an  answer  within  10  working  days  from  the  date  on 
which it received the request submitted by ESMA.”; 

the  documentation  referred 

in 

to 

(c)  paragraph 4 is replaced by the following: 

“4.  Any subsequent modifications to the documentation referred to in paragraphs 1 
and 2 shall be immediately notified to ESMA.”; 

(d)  paragraph 5 is replaced by the following: 

“5.  By  way  of  derogation  from  paragraphs  1  to  3,  an  EU  AIF  the  legal  form  of 
which permits internal management and the governing body of which chooses not to 
appoint an external AIFM shall apply to ESMA simultaneously for authorisation as 
an  ELTIF  in  accordance  with  this  Regulation  and  as  an  AIFM  in  accordance  with 
Directive 2011/61/EU. 

The  application  for  authorisation  as  an  internally  managed  ELTIF  shall  include  the 
following: 

(a) 

(b) 

the fund rules or instruments of incorporation; 

information on the identity of the depositary; 

(c) 
a  description  of  the  information  to  be  made  available  to  investors, 
including  a  description  of  the  arrangements  for  dealing  with  complaints 
submitted by retail investors; 

(e) 

a list of Member States where the ELTIF is intended to be marketed; 

the  information  referred  to  in  points  (a)  to  (e)  of  Article  7(2)  of 

 (f) 
Directive 2011/61/EU. 

ESMA shall inform the EU AIF about whether the authorisations referred to in the 
first  subparagraph  have  been  granted  within  three  months  from  the  date  of 
submission of a complete application.”; 

(e) 

the following paragraphs 6 and 7 are added: 

“6. ESMA shall notify without delay the competent authorities of the Member States 
in which the ELTIF is intended to be marketed of the authorisations granted pursuant 
to Article 6 in accordance with Article 31(2). 

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7.  The  notification  referred  to  in  paragraph  6  shall  comprise  the  following 
information : 

the identification of the manager of the ELTIF, of the ELTIF and of the 

(a) 
Member State in which the ELTIF has its registered office or head office; 

(b) 

(c) 

(d) 

the ELTIF rules or instruments of incorporation; 

the identification of the depositary of the ELTIF; 

a description of the information to be made available to investors; 

a description of the arrangements for dealing with complaints submitted 

(e) 
by retail investors; 

the  prospectus  and,  where  relevant,  the  key  information  document 

(f) 
referred to in  Regulation (EU) No 1286/2014; 

(g) 

information on the facilities referred to in Article 26.”; 

(4) 

Article 6 is amended as follows: 

(a)  paragraphs 1 to 3 are replaced by the following: 

“1.  An EU AIF shall be authorised as an ELTIF only where ESMA: 

is satisfied that the EU AIF is able to meet all the requirements of this 

(a) 
Regulation; 

(b) 
has approved the application of an EU AIFM authorised in accordance 
with Directive 2011/61/EU to manage the ELTIF, the fund rules or instruments 
of incorporation, and the choice of the depositary. 

In the event that an EU AIF makes an application pursuant to Article 5(5) of 

2. 
this Regulation, ESMA shall authorise the EU AIF as an ELTIF only where it: 

(a) 

is satisfied that the EU AIF complies with this Regulation; 

is satisfied that the EU AIF complies with the requirements of Directive 

(b) 
2011/61/EU; 

has  approved  the  fund  rules  or  instruments  of  incorporation,  and  the 

(c) 
choice of the depositary. 

ESMA  may  refuse  to  approve  the  application  of  an  EU  AIFM  to  manage  an 

3. 
ELTIF only where the EU AIFM: 

(a) 

does not comply with this Regulation; 

does not comply with Directive 2011/61/EU in respect of the ELTIF it 

(b) 
intends to manage; 

is not authorised by the competent authority of the manager of the EU 
(c) 
AIFM to manage AIFs that follow investment strategies of the type covered by 
this Regulation; 

has not provided the documentation referred to in Article 5(2), or any 

(d) 
clarification or information requested thereunder. 

ESMA  shall  consult  the  competent  authority  of  the  EU  AIFM  before  refusing  to 
approve an application.”; 

(b)  paragraph 4 is deleted; 

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(c)  paragraph 5 is replaced by the following: 

“5.  ESMA  shall  communicate  to  the  EU  AIF  the  reason  for  its  refusal  to  grant 
authorisation as an ELTIF.”; 

(d)  paragraphs 6 and 7 are deleted; 

(5) 

the following Article 6a is inserted: 

“Article 6a 

Withdrawal of authorisation 

1.  Without  prejudice  to  Article  35,  ESMA  shall  withdraw  the  authorisation  for  an 
ELTIF where the manager of that ELTIF meets any of the following conditions: 

(a) 
the manager has expressly renounced the authorisation or has  not made 
use  of  the  authorisation  within  six  months  after  the  authorisation  has  been 
granted; 

the manager has obtained the authorisation by making false statements 

(b) 
or by any other irregular means;  

the  ELTIF  no  longer  meets  the  conditions  under  which  it  was 

(c) 
authorised. 

2.  The    withdrawal  of  the  authorisation  shall  have  immediate  effect  throughout  the 
Union.”; 

(6) 

in Article 7, paragraph 3 is replaced by the following: 

“3.  The manager of the ELTIF shall be responsible for ensuring compliance with 
this  Regulation  and  with  the  relevant  requirements  of  Directive  2011/61/EU  in 
respect  of  the  ELTIF.  The  manager  of  the  ELTIF  shall  also  be  liable  for  losses  or 
damages resulting from non-compliance with this Regulation.”; 

(7) 

in paragraph 1 of Article 17 the second subparagraph is replaced by the following: 

“The date referred to in point (a) of the first subparagraph shall take account of the 
particular features and characteristics of the assets to be invested by the ELTIF, and 
shall be no later than either five years after the date of the authorisation as an ELTIF, 
or  half  the  life  of  the  ELTIF  as  determined  in  accordance  with  Article 18(3), 
whichever is the earlier. In exceptional circumstances, ESMA, upon submission of a 
duly  justified  investment  plan,  may  approve  an  extension  of  that  time  limit  by  no 
more than one additional year.”; 

(8) 

in paragraph 2 of Article 18, point (b) is replaced by the following: 

“(b)  at the time of authorisation and throughout the life of the ELTIF, the manager 
of  the  ELTIF  is  able  to  demonstrate  to  ESMA  that  an  appropriate  liquidity 
management system and effective procedures for monitoring the liquidity risk of the 
ELTIF are in place, which are compatible with the long-term investment strategy of 
the ELTIF and the proposed redemption policy;”; 

(9) 

in Article 21, paragraph 1 is replaced by the following: 

“1.  An ELTIF shall adopt an itemised schedule for the orderly disposal of its assets 
in  order  to  redeem  investors'  units  or  shares  after  the  end  of  the  life  of  the  ELTIF, 

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and shall disclose this to ESMA at the latest one year before the date of the end of 
the life of the ELTIF.”; 

(10) 

in paragraph 3 of Article 23, point (f) is replaced by the following: 

 “(f)  any other information considered by ESMA to be relevant for the purposes of 
paragraph 2.”; 

(11) 

in Article 24, paragraph 1 is replaced by the following: 

“1.  An ELTIF shall send its prospectus and any amendments thereto, as well as its 
annual report, to ESMA. Upon request, an ELTIF shall provide that documentation 
to the competent authority of the manager of the ELTIF. That documentation shall be 
provided by the ELTIF within the time period specified by ESMA and the competent 
authority of the manager of the ELTIF.”; 

(12) 

in Article 28, paragraph 3 is added: 

“3.  The Commission shall adopt delegated acts in accordance with Article 36a by 
[PO:  Please  insert  date  24  months  after  date  of  entry  into  force]  to  specify  the 
internal  process  for  the  assessment  whether  the  ELTIF  is  suitable  for  marketing  to 
retail  investors  referred  to  in  paragraph  1,  ensuring  consistency  with  provisions 
regarding the assessment of suitability and appropriateness provided for in Article 25 
of Directive 2014/65/EU*. 

___________________________________ 

*  Directive 2014/65/EU  of  the  European  Parliament  and  of  the  Council  of  15  May 
2014  on  markets  in  financial  instruments  and  amending  Directive  2002/92/EC  and 
Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349)."; 

(13) 

Articles 31 32, 33 and 34 are replaced by the following: 

“Article 31 

Marketing of units or shares of ELTIFs 

The  manager  of  an  ELTIF  shall  be  allowed  to  market  the  units  or  shares  of  that 
ELTIF  immediately  after  the  manager  has  been  informed  by  ESMA  of  the 
notification referred to in Article 5(6).  

 Article 32 

Supervision by ESMA 

1. 

ESMA shall ensure that this Regulation is applied on an ongoing basis.  

ESMA  shall  supervise  compliance  with 

2. 
instruments  of 
incorporation of the ELTIF and with the obligations set out in the prospectus, which 
shall comply with this Regulation. 

the  rules  or 

For the purposes of carrying out the tasks conferred on it by this Regulation, 
3. 
and with the objective of ensuring high standards of supervision, ESMA shall apply 
all  relevant  Union  law,  and  where  that  Union  law  is  composed  of  directives,  the 
national legislation transposing those directives. 

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4. 
Competent  authorities  shall  monitor  that  collective  investment  undertakings 
established or marketed in their territories do not use the designation ‘ELTIF’ or do 
not suggest that they are an ELTIF unless they are authorised in accordance with this 
Regulation. 

Where a competent authority believes that a collective investment undertaking uses 
the  designation  ‘ELTIF’,  or  suggests  that  it  is  an  ELTIF  without  having  been 
authorised  in  accordance  with  this  Regulation,  it  shall  promptly  inform  ESMA 
thereof. 

 Article 33 

Exercise of the powers referred to in Articles 34, 34a and 34b 

The powers conferred on ESMA, any of its officials or any other person authorised 
by ESMA by Articles 34, 34a and 34b shall not be used to require the disclosure of 
information or documents that are subject to legal privilege. 

Article 34 

Requests for information 

1. 
ESMA may by simple request or by decision require the following persons to 
provide all information that is necessary to carry out its duties under this Regulation: 

 (a) 

 (b) 

 (c) 

managers of ELTIFs;  

persons involved in the management of ELTIFs;  

third parties to whom a manager of an ELTIF has delegated functions; 

persons otherwise closely and substantially related or connected to the 

 (d) 
management of ELTIFs. 

2. 

Any simple request for information referred to in paragraph 1 shall: 

(a) 

(b) 

(c) 

(d) 

refer to this Article as the legal basis of that request; 

state the purpose of the request; 

specify the information required; 

include a time-limit within which the information is to be provided; 

(e) 
include a statement that there is no obligation on the person from whom 
the  information  is  requested  to  provide  that  information  but  that  in  case  of  a 
voluntary reply to the request, the information provided must not be incorrect 
or misleading; 

indicate the amount of the fine to be issued in accordance Article 35a, 

(f) 
where the information provided is incorrect or misleading. 

3.  When  requiring  to  supply  of  information  under  paragraph  1  by  decision, 
ESMA shall: 

(a) 

(b) 

refer to this Article as the legal basis of that request; 

state the purpose of the request; 

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(c) 

(d) 

specify the information required; 

set a time-limit within which the information is to be provided; 

indicate  the  periodic  penalty  payments  provided  for  in  Article  35b 

(e) 
where the production of the required information is incomplete; 

(f) 
indicate  the  fine  provided  for  in  Article  35a(3),  in  conjunction  with 
point (n) of Article 35a(2), where the answers to questions asked are incorrect 
or misleading;  

indicate the right to appeal the decision before the Board of Appeal and 
(g) 
to have the decision reviewed by the Court of Justice of the European Union in 
accordance with Articles 60 and 61 of Regulation (EU) No 1095/2010. 

The persons referred to in paragraph 1 or their representatives and, in the case 
4. 
of legal persons or associations having no legal personality, the persons authorised to 
represent  them  by  law  or  by  their  constitution,  shall  supply  the  information 
requested. Lawyers duly authorised to  act may supply the information  on behalf of 
their  clients.  The  latter  shall  remain  fully  responsible  if  the  information  supplied  is 
incomplete, incorrect or misleading. 

5. 
ESMA shall, without delay, send a copy of the simple request or of its decision 
to  the  competent  authority  of  the  Member  State  where  the  persons  referred  to  in 
paragraph  1  who  are  concerned  by  the  request  for  information  are  domiciled  or 
established.”; 

(14) 

the following Articles 34a, 34b, 34c and 34d are inserted: 

“Article 34a 

General investigations 

1. 
In order to carry out its duties under this Regulation, ESMA may conduct all 
necessary  investigations  of  persons  referred  to  in  Article  34(1).  To  that  end,  the 
officials of and other persons authorised by ESMA shall be empowered to: 

(a) 
examine any records, data, procedures and any other material relevant 
to  the  execution  of  its  tasks  irrespective  of  the  medium  on  which  they  are 
stored; 

take  or  obtain  certified  copies  of  or  extracts  from  such  records,  data, 

(b) 
procedures and other material; 

(c) 
summon  and  ask  any  person  referred  to  in  Article  34(1)  or  their 
representatives or staff for oral or written explanations on facts or documents 
related  to  the  subject  matter  and  purpose  of  the  inspection  and  to  record  the 
answers; 

(d) 
interview  any  other  natural  or  legal  person  who  consents  to  be 
interviewed  for  the  purpose  of  collecting  information  relating  to  the  subject 
matter of an investigation; 

(e) 

request records of telephone and data traffic. 

The officials of and other persons authorised by ESMA for the purposes of the 
2. 
investigations referred to in paragraph 1 shall exercise their powers upon production 
of  a  written  authorisation  specifying  the  subject  matter  and  purpose  of  the 

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investigation.  That  authorisation  shall  also  indicate  the  periodic  penalty  payments 
provided  for  in  Article  35b  where  the  production  of  the  required  records,  data, 
procedures  or  any  other  material,  or  the  answers  to  questions  asked  of  the  persons 
referred to in Article 34(1) are not provided or are incomplete, and the fines provided 
for  in  Article  35a(3),  in  conjunction  with  point  (o)  of  Article  35a(2),  where  the 
answers to questions asked of the persons referred to in Article 34(1) are incorrect or 
misleading. 

3. 
The persons referred to in Article 34(1) shall submit to investigations launched 
on the basis of a decision of ESMA. The decision shall specify the subject matter and 
purpose  of  the  investigation,  the  periodic  penalty  payments  provided  for  in  Article 
35b, the legal remedies available under Regulation (EU) No 1095/2010 and the right 
to have the decision reviewed by the Court of Justice of the European Union. 

4. 
In  good  time  before  the  investigation,  ESMA  shall  inform  the  competent 
authority  of  the  Member  State  where  the  investigation  is  to  be  carried  out  of  the 
investigation and of the identity of the authorised persons. Officials of the competent 
authority concerned shall, upon the request of ESMA, assist those authorised persons 
in carrying out their duties. Officials of the competent authority concerned may also 
attend the investigations upon request. 

If  a  request for  records of  telephone  or  data  traffic  referred to  in  point  (e)  of 
5. 
paragraph  1  requires  authorisation  from  a  judicial  authority  according  to  national 
rules, such authorisation shall be applied for. Such authorisation may also be applied 
for as a precautionary measure. 

6.  Where a national judicial authority receives an application for the authorisation 
of  a  request  for  records  of  telephone  or  data  traffic  referred  to  in  point  (e)  of 
paragraph 1, that authority shall verify the following: 

(a) the decision adopted by ESMA referred to in paragraph 3 is authentic;  

(b)  any measures to be taken are proportionate and not arbitrary or excessive. 

For  the  purposes  of  point  (b),  the  national  judicial  authority  may  ask  ESMA  for 
detailed explanations, in particular relating to the grounds ESMA has for suspecting 
that  an  infringement  of  this  Regulation  has  taken  place  and  the  seriousness  of  the 
suspected infringement and the nature of the involvement of the person subject to the 
coercive  measures.  However,  the  national  judicial  authority  shall  not  review  the 
necessity for the investigation or demand that it be provided with the information on 
ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by 
the Court of Justice following the procedure set out in Article 61 of Regulation (EU) 
No 1095/2010. 

Article 34b 

On-site inspections 

In order to carry out its duties under this Regulation, ESMA may conduct all 
1. 
necessary on-site inspections at the business premises of the legal persons referred to 
in Article 34(1). 

2. 
The officials of and other persons authorised by ESMA to conduct an on-site 
inspection may enter any business premises and land of the legal persons subject to 
an investigation decision adopted by ESMA and shall have all the powers stipulated 

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in Article 34a(1). They shall also have the power to seal any business premises and 
books or records for the period of, and to the extent necessary for, the inspection. 

3. 
In  sufficient  time  before  the  inspection,  ESMA  shall  give  notice  of  the 
inspection to the competent authority of the Member State where the inspection is to 
be conducted. Where the proper conduct and efficiency of the inspection so require, 
ESMA,  after  informing  the  relevant  competent  authority,  may  carry  out  the  on-site 
inspection without prior notice. Inspections in accordance with this Article shall be 
conducted provided that the relevant authority has confirmed that it does not object 
to those inspections. 

4.  The  officials  of  and  other  persons  authorised  by  ESMA  to  conduct  an  on-site 
inspection  shall  exercise  their  powers  upon  production  of  a  written  authorisation 
specifying the subject matter and purpose of the inspection, and the periodic penalty 
payments provided for in Article 35b where the persons concerned do not submit to 
the inspection.  

The  persons  referred  to  in  Article  34(1)  shall  submit  to  on-site  inspections 
5. 
ordered  by  decision  of  ESMA.  The  decision  shall  specify  the  subject  matter  and 
purpose  of  the  inspection,  appoint  the  date  on which  it  is  to  begin  and  indicate  the 
periodic penalty payments provided for in Article 35b, the legal remedies available 
under  Regulation  (EU)  No  1095/2010  as  well  as  the  right  to  have  the  decision 
reviewed by the Court of Justice of the European Union.  

6. 
Officials  of,  as  well  as  those  authorised  or  appointed  by,  the  competent 
authority of the Member State where the inspection is to be conducted shall, at the 
request  of  ESMA,  actively  assist  the  officials  of  and  other  persons  authorised  by 
ESMA. Officials of that competent authority may also attend the on-site inspections 
upon request. 

7. 
ESMA  may  also  require  competent  authorities  to  carry  out  specific 
investigatory  tasks  and  on-site  inspections  as  provided  for  in  this  Article  and  in 
Article 34a(1) on its behalf. To that end, competent authorities shall enjoy the same 
powers as ESMA as set out in this Article and in Article 34a(1). 

8.  Where  the officials  of and other accompanying persons authorised by ESMA 
find  that  a  person  opposes  an  inspection  ordered  pursuant  to  this  Article,  the 
competent authority of the Member State concerned shall afford them the necessary 
assistance,  requesting,  where  appropriate,  the  assistance  of  the  police  or  of  an 
equivalent enforcement authority, to enable them to conduct their on-site inspection. 

If the on-site inspection provided for in paragraph 1 or the assistance provided 
9. 
for  in  paragraph  7  requires  authorisation  by  a  judicial  authority  according  to  the 
applicable  national  law,  such  authorisation  shall  be  applied  for.  Such  authorisation 
may also be applied for as a precautionary measure. 

10.  Where a national judicial authority receives an application for the authorisation 
of  an  on-site  inspection  provided  for  in  paragraph  1  or  the  assistance  provided  in 
paragraph 7, that authority shall verify the following: 

(a) the decision adopted by ESMA referred to in paragraph 4 is authentic;  

(b)  any measures to be taken are proportionate and not arbitrary or excessive. 

For  the  purposes  of  point  (b),  the  national  judicial  authority  may  ask  ESMA  for 
detailed explanations, in particular relating to the grounds ESMA has for suspecting 
that  an  infringement  of  this  Regulation  has  taken  place  and  the  seriousness  of  the 

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suspected infringement and the nature of the involvement of the person subject to the 
coercive  measures.  However,  the  national  judicial  authority  shall  not  review  the 
necessity for the investigation or demand that it be provided with the information on 
ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by 
the Court of Justice following the procedure set out in Article 61 of Regulation (EU) 
No 1095/2010. 

Article 34c 

Exchange of information 

ESMA and the competent  authorities shall, without  undue delay, supply each other 
with the information required for the purposes of carrying out their duties under this 
Regulation. 

Article 34d 

Professional secrecy 

1.  The  obligation  of  professional  secrecy  shall  apply  to  ESMA,  the  competent 
authorities,  and  all  persons  who  work  or  who  have  worked  for  ESMA,  for  the 
competent  authorities  or  for  any  other  person  to  whom  ESMA  has  delegated  tasks, 
including  auditors  and  experts  contracted  by  ESMA.  Information  covered  by 
professional  secrecy  shall  not  be  disclosed  to  another  person  or  authority  except 
where such disclosure is necessary for legal proceedings. 

2. 
All  the  information  that,  under  this  Regulation,  is  acquired  by,  or  exchanged 
between,  ESMA  and  the  competent  authorities  shall  be  considered  confidential, 
except where ESMA or the competent authority states at the time of communication 
that  such  information  may  be  disclosed  or  where  such  disclosure  is  necessary  for 
legal proceedings.”; 

(15) 

the following Chapter VIa is inserted: 

“CHAPTER VIa 

ADMINISTRATIVE SANCTIONS AND OTHER MEASURES” 

(16) 

Article 35 is replaced by the following; 

“Article 35 

Supervisory measures by ESMA 

1.  Where,  in  accordance  with  Article  35d(8),  ESMA  finds  that  a  person  has 
committed one of the infringements listed in Article 35a(2), it shall take one or more 
of the following actions: 

(a) 

withdraw the authorisation as an ELTIF; 

temporarily  prohibit  the  manager  of  the  ELTIF  from  marketing  the 
(b) 
ELTIF  throughout  the  Union,  until  the  infringement  has  been  brought  to  an 
end; 

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(c) 
end; 

(d) 

(e) 

adopt  a  decision  requiring  the  person  to  bring  the  infringement  to  an 

adopt a decision imposing fines pursuant to Article 35a; 

issue public notices. 

2.  When  taking  the  decisions  referred  to  in  paragraph 1,  ESMA  shall  take  into 
account  the  nature  and  seriousness  of  the  infringement,  having  regard  to  the 
following criteria: 

(a) 

the duration and frequency of the infringement; 

whether  financial  crime  has  been  occasioned,  facilitated  or  otherwise 

(b) 
attributable to the infringement; 

whether 

(c) 
negligently; 

the 

infringement  has  been  committed 

intentionally  or 

the  degree  of  responsibility  of  the  person  responsible  for  the 

(d) 
infringement; 

(e) 
the financial strength of the person responsible for the infringement, as 
indicated  by  the  total  turnover  of  the  responsible  legal  person  or  the  annual 
income and net assets of the responsible natural person; 

(f) 

the impact of the infringement on retail investors’ interests; 

the  importance  of  the  profits  gained,  losses  avoided  by  the  person 
(g) 
responsible for the infringement or the losses for third parties derived from the 
infringement, insofar as they can be determined; 

(h) 
the level of cooperation of the person responsible for the infringement 
with  ESMA,  without  prejudice  to  the  need  to  ensure  disgorgement  of  profits 
gained or losses avoided by that person; 

(i) 
infringement; 

previous  infringements  by  the  person  responsible  for  the 

(j) 
for the infringement to prevent its repetition.  

measures taken after the infringement by the person responsible 

3.  Without  undue  delay,  ESMA  shall  notify  any  action  taken  pursuant  to 
paragraph 1 to the person responsible for the infringement, and shall communicate it 
to  the  competent  authorities  of  the  Member  States  and  to  the  Commission.  It  shall 
publicly  disclose  any  such  action  on  its  website  within  10  working  days  from  the 
date when it was adopted. 

The  disclosure  to  the  public  referred  to  in  the  first  subparagraph  shall  include  the 
following: 

a  statement  affirming  the  right  of  the  person  responsible  for  the 

(a)  
infringement to appeal the decision; 

(b)    where  relevant,  a  statement  affirming  that  an  appeal  has  been  lodged 
and specifying that such an appeal does not have suspensive effect; 

(c)  
a statement asserting that it is possible for ESMA’s Board of Appeal to 
suspend  the  application  of  the  contested  decision  in  accordance  with  Article 
60(3) of Regulation (EU) No 1095/2010.”; 

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(17) 

the following Articles 35a, 35b, 35c, 35d, 35e, 35f, 35g and 35h are added: 

“Article 35a 

Fines 

1.  Where,  in  accordance  with  Article  35d(8),  ESMA  finds  that  a  manager  of  an 
ELTIF,  persons  referred  to  in  Article  34(1)  or  a  collective  investment  undertaking 
have, intentionally or negligently, committed one or more of the infringements listed 
in paragraph 2, it shall adopt a decision imposing a fine in accordance with paragraph 
3 of this Article. 

An infringement shall be considered to have been committed intentionally if ESMA 
finds objective factors which demonstrate that a person acted deliberately to commit 
the infringement. 

2. The list of infringements referred to in paragraph 1 shall be the following: 

(a)  

(b)  

failure to comply with the requirements set out in Article 8;  

investing, in breach of Articles 9 to 12, in non-eligible investments; 

composing  and  diversifying  the  portfolio  in  breach  of  Articles  13  and 
(c)  
17 or composing and diversifying the portfolio in breach of Articles 13 and 17 
and taking no measures pursuant to Article 14; 

failure to comply with the concentration requirements set out in Article 

(e)  
15; 

failure to comply with the requirements on borrowing the cash set out 

(f)  
in Article 16; 

failure to comply with the requirements on redemptions and life of the 

(g)  
ELTIF set out in Article 18; 

(h)  

failure to disclose information in accordance with Article 19(3) and (4); 

failure  to  offer  new  units  or  shares  to  existing  investors  in  ELTIF  in 

(i)  
accordance with Article 20(2); 

disposing,  in  breach  of  Article  21,  of  ELTIF  assets  or  distributes,  in 

(j)  
breach of Article 22, proceeds and capital; 

failure to comply with the transparency requirements set out in Articles 

(k)  
23 to 25; 

failure to comply with the requirements on marketing of units or shares 

(l)  
of ELTIFs set out in Articles 26 to 31; 

obtaining  authorisation  through  false statements  or  any other irregular 

(m)  
means; 

(n)  
failure  to  provide  information  in  response  to  a  decision  requiring 
information  pursuant  to  Article  34(2)  and  (3),  or  providing  incorrect  or 
misleading  information  in  response  to  a  simple  request  for  information  or  a 
decision; 

infringing  point  (c)  of  Article  34a(1)  by  failing  to  provide  an 
(o)  
explanation, or by providing an incorrect or misleading explanation, on facts or 
documents related to the subject matter and purpose of an inspection; 

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using  the  designation  ‘ELTIF’  without  having  been  authorised  in 

(p)  
accordance with this Regulation. 

3. The amount of the fines referred to in paragraph 1 shall amount to  at least EUR 
500  000  and  shall  not  exceed  EUR  5  million  for  the  infringements  referred  to  in 
points (a) to (p) of paragraph 2. 

4.  When determining the level of a fine pursuant to paragraph 3, ESMA shall take 
into account the criteria set out in Article 35(2). 

 Notwithstanding  paragraph  3,  where  a  person  has  directly  or  indirectly 
5. 
benefited financially from the infringement, the amount of the fine shall be at least 
equal to that benefit. 

6.  Where an act or omission of a person constitutes more than one infringement 
listed in paragraph 2, only the higher fine calculated in accordance with paragraph 4 
and relating to one of those infringements shall apply. 

Article 35b 

Periodic penalty payments 

1. ESMA shall, by decision, impose a periodic penalty payment in order to compel: 

a person to put an end to an infringement, in accordance with a decision 

(a) 
taken pursuant to point (c) of Article 35(1); 

(b) 

a person referred to in Article 34(1): 

(i)  to  supply  complete  information  which  has  been  requested  by  a  decision 
pursuant to Article 34; 

(ii) to submit to an investigation and in particular to produce complete records, 
data,  procedures  or  any  other  material  required  and  to  complete  and  correct 
other information provided in an investigation launched by a decision pursuant 
to Article 34a;  

(iii) to submit to an on-site inspection ordered by a decision taken pursuant to 
Article 34b. 

A periodic penalty payment shall be effective and proportionate. The periodic 

2. 
penalty payment shall be imposed for each day of delay. 

Notwithstanding  paragraph  2,  the  amount  of  the  periodic  penalty  payments 
3. 
shall be 3% of the average daily turnover in the preceding business year, or, in the 
case  of  natural  persons,  2%  of  the  average  daily  income  in  the  preceding  calendar 
year.  It  shall  be  calculated  from  the  date  stipulated  in  the  decision  imposing  the 
periodic penalty payment. 

4. 
A  periodic  penalty  payment  shall  be  imposed  for  a  maximum  period  of  six 
months  following  the  notification  of  ESMA’s  decision.  Following  the  end  of  the 
period, ESMA shall review the measure. 

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Article 35c 

Disclosure, nature, enforcement and allocation of fines and periodic penalty payments 

1. 
ESMA shall disclose to the public every fine and periodic penalty payment that 
has  been  imposed  pursuant  to  Articles  35a  and  35b,  unless  such  disclosure  to  the 
public  would  seriously  jeopardise  the  financial  markets  or  cause  disproportionate 
damage to the parties involved. 

Fines and periodic penalty payments imposed pursuant to Articles 35a and 35b 

2. 
shall be of an administrative nature. 

3.  Where ESMA decides to impose no fines or penalty payments, it shall inform 
the  European  Parliament,  the  Council,  the  Commission,  and  the  competent 
authorities of the Member State concerned accordingly and shall set out the reasons 
for its decision. 

Fines and periodic penalty payments imposed pursuant to Articles 35a and 35b 

4. 
shall be enforceable. 

Enforcement shall be governed by the rules of civil procedure in force in the Member 
State or third-country in which it is carried out.  

The amounts of the fines and periodic penalty payments shall be allocated to 

4. 
the general budget of the European Union. 

Article 35d 

Procedural rules for taking supervisory measures and imposing fines 

1.  Where, in carrying out its duties under this Regulation, ESMA finds that there 
are  serious  indications  of  the  possible  existence  of  facts  liable  to  constitute  one  or 
more  of  the  infringements  listed  in  Article  35a(2),  ESMA  shall  appoint  an 
independent  investigating  officer  within  ESMA  to  investigate  the  matter.  The 
investigating  officer  shall  not  be  involved  or  have  been  involved  in  the  direct  or 
indirect supervision or registration process of the credit rating agency concerned and 
shall perform his functions independently from ESMA's Board of Supervisors. 

2. 
The  investigating  officer  shall  investigate  the  alleged  infringements,  taking 
into  account  any  comments  submitted  by  the  persons  subject  to  investigation,  and 
shall submit a complete file with his findings to ESMA's Board of Supervisors. 

3. 
In order to carry out his tasks, the investigating officer may exercise the power 
to  require  information  in  accordance  with  Article  34  and  to  conduct  investigations 
and on-site inspections in accordance with Articles 34a and 34b. When using those 
powers, the investigating officer shall comply with Article 33. 

4.  Where carrying out his tasks, the investigating officer shall have access to all 
documents and information gathered by ESMA in its supervisory activities. 

Upon  completion  of  his  investigation  and  before  submitting  the  file  with  his 
5. 
findings  to  ESMA's  Board  of  Supervisors,  the  investigating  officer  shall  give  the 
persons  subject  to  investigation  the  opportunity  to  be  heard  on  the  matters  being 
investigated. The investigating officer shall base his findings only on facts on which 
the persons subject to investigation have had the opportunity to comment. 

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The rights of defence of the persons concerned shall be fully respected during 

6. 
investigations under this Article. 

7. 
Upon submission of the file with his findings to ESMA's Board of Supervisors, 
the  investigating  officer  shall  notify  that  fact  to  the  persons  who  are  subject  to 
investigations. The persons subject to investigations shall be entitled to have access 
to the file, subject to the legitimate interest of other persons in the protection of their 
business  secrets.  The  right  of  access  to  the  file  shall  not  extend  to  confidential 
information affecting third parties. 

8. 
On  the  basis  of  the  file  containing  the  investigating  officer's  findings  and, 
when  requested  by  the  persons  concerned,  after  having  heard  those  persons  in 
accordance with Article 35e, ESMA shall decide if one or more of the infringements 
listed in Article 35a(2) has been committed by the persons subject to investigation, 
and in such case, shall take a supervisory measure in accordance with Article 35 and 
impose a fine in accordance with Article 35a. 

The  investigating  officer  shall  not  participate  in  the  deliberations  of  ESMA's 
9. 
Board of Supervisors or in any other way intervene in the decision-making process of 
ESMA's Board of Supervisors. 

10.  The Commission shall adopt delegated acts in accordance with Article 36a by 
[PO: Please insert date 24 months after date of entry into force] to further specify the 
procedure for the exercise of the power to impose fines or periodic penalty payments, 
including provisions on rights of defence, temporal provisions, the collection of fines 
or  periodic  penalty  payments,  and  detailed  rules  on  the  limitation  periods  for  the 
imposition and enforcement of penalties. 

11.  ESMA  shall  refer  matters  for  criminal  prosecution  to  the  relevant  national 
authorities where, in carrying out its duties under this Regulation, it finds that there 
are serious indications of the possible existence of facts liable to constitute criminal 
offences.  In  addition,  ESMA  shall  refrain  from  imposing  fines  or  periodic  penalty 
payments where a prior acquittal or conviction arising from identical facts, or from 
facts which are substantially the same, has acquired the force of  res judicata as the 
result of criminal proceedings under national law. 

 Article 35e 

Hearing of the persons subject to the proceedings 

Before taking any decision pursuant to Articles 35, 35a or points (a) and (b) of 
1. 
Article  35b(1),  ESMA  shall  give  the  persons  subject  to  the  proceedings  the 
opportunity to be heard on ESMA's findings. ESMA shall base its decisions only on 
findings on which the persons subject to the proceedings have had the opportunity to 
comment. 

The  first  subparagraph  shall  not  apply  if  urgent  action  pursuant  to  Article  35  is 
needed in order to prevent significant and imminent damage to the financial system. 
In  such  a  case  ESMA  may  adopt  an  interim  decision  and  shall  give  the  persons 
concerned the opportunity to be heard as soon as possible after taking its decision. 

2. 
The rights  of defence  of the persons subject to the proceedings shall be fully 
respected  during  the  proceedings.  They  shall  be  entitled  to  have  access  to  ESMA's 
file,  subject  to  the  legitimate  interest  of  other  persons  in  the  protection  of  their 

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business  secrets.  The  right  of  access  to  the  file  shall  not  extend  to  confidential 
information or internal preparatory documents of ESMA. 

Article 35f 

Review by the Court of Justice of the European Union 

The  Court  of  Justice  of  the  European  Union  shall  have  unlimited  jurisdiction  to 
review decisions whereby ESMA has imposed a fine or a periodic penalty payment. 
It may annul, reduce or increase the fine or periodic penalty payment imposed. 

Article 35g 

Authorisation and supervisory fees 

ESMA  shall  charge  fees  to  managers  of  ELTIFs  in  accordance  with  this 
1. 
Regulation and in accordance with the delegated acts adopted pursuant to paragraph 
3.  Those  fees  shall  fully  cover  ESMA’s  necessary  expenditure  relating  to  the 
authorisation and supervision of ELTIFs and the reimbursement of any costs that the 
competent  authorities  may  incur  carrying  out  work  pursuant  to  this  Regulation,  in 
particular as a result of any delegation of tasks in accordance with Article 35h. 

2. 
The  amount  of  an  individual  fee  charged  to  a  particular  manager  of  ELTIF 
shall cover all administrative costs incurred by ESMA for its activities in relation to 
authorisation  and  supervision  of  a  manager  of  ELTIF  and  ELTIF.  It  shall  be 
proportionate  to  assets  under  management  of  the  ELTIF  concerned  or,  where 
relevant, own funds of the manager of ELTIF. 

3. 
The Commission shall adopt delegated acts in accordance with Article 36a by 
[PO: Please insert date 24 months after date of entry into force] to specify the type of 
fees, the matters for which fees are due, the amount of the fees, and the manner in 
which they are to be paid.   

Article 35h 

Delegation of tasks by ESMA to competent authorities 

1.  Where necessary for the proper performance of a supervisory task, ESMA may 
delegate specific supervisory tasks to the competent authority of a Member State in 
accordance with the guidelines issued by ESMA pursuant to Article 16 of Regulation 
(EU) No 1095/2010. Such specific supervisory tasks may, in particular, include the 
power  to  request  information  in  accordance  with  Article  34  and  to  conduct 
investigations and on-site inspections in accordance with Article 34a and Article 34b. 

Prior to the delegation of a task in accordance with paragraph 1, ESMA shall 

2. 
consult the relevant competent authority about: 

(a) 

(b) 

(c) 

the scope of the task to be delegated; 

the timetable for the performance of the task to be delegated; 

the transmission of necessary information by and to ESMA. 

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3. 
In accordance with the delegated act referred to in Article 35g(3), ESMA shall 
reimburse  a  competent  authority  for  the  costs  incurred  as  a  result  of  carrying  out 
delegated tasks. 

ESMA  shall  review  the  delegation  referred  to  in  paragraph  1  at  appropriate 

4. 
intervals. A delegation of tasks may be revoked at any time. 

A delegation of tasks shall not affect the responsibility of ESMA and shall not limit 
ESMA's  ability  to  conduct  and  oversee  the  delegated  activity.  Supervisory 
including  registration  decisions,  final 
responsibilities  under 
assessments  and  follow-up  decisions  concerning  infringements,  shall  not  be 
delegated.”; 

this  Regulation, 

(18) 

the following Articles 36a and 36b are inserted: 

“Article 36a 

Exercise of the delegation 

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

2.  The  power  to  adopt  delegated  acts  referred  to  in  referred  to  in  Articles  28(3), 
35d(10)  and  35g(3)  shall  be  conferred  on  the  Commission  for  an  indeterminate 
period of time from [PO: Please insert date of entry into force]. 

3. The delegation of power referred to in Articles 28(3), 35d(10) and 35g(3) 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. 

Before  adopting  a  delegated  act,  the  Commission  shall  consult  experts 
4. 
designated by each Member State in accordance with the principles laid down in the 
Interinstitutional Agreement on Better Law-Making of 13 April 2016. 

As  soon  as  it  adopts  a  delegated  act,  the  Commission  shall  notify  it 

5. 
simultaneously to the European Parliament and to the Council. 

6. 
A  delegated  act  adopted  pursuant  to  Articles  28(3),  35d(10)  and  35g(3)  shall 
enter  into  force  only  if  no  objection  has  been  expressed  either  by  the  European 
Parliament or by the Council within a period of [two 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 [two months] at the initiative 
of the European Parliament or of the Council. 

 Article 36b 

Transitional measures related to ESMA 

1.  All competences and duties related to the supervisory and enforcement activity in 
the field  of ELTIFs that are conferred on competent authorities shall  be terminated 

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on [PO: Please insert date 36 months after entry into force]. Those competences and 
duties shall be taken-up by ESMA on the same date. 

2.    Any  files  and  working  documents  related  to  the  supervisory  and  enforcement 
activity in the field of ELTIFs, including any ongoing examinations and enforcement 
actions, or certified copies thereof, shall be taken over by ESMA on the date referred 
to in paragraph 1. 

However,  an  application  for  authorisation  as  an  ELTIF  that  has  been  received  by 
competent authorities before [PO: Please insert date 30 months after entry into force] 
shall not be transferred to ESMA, and the decision to register or refuse authorsation 
shall be taken by the relevant authority. 

3.  Competent authorities shall ensure that any existing records and working papers, 
or certified copies thereof, shall be transferred to ESMA as soon as possible and in 
any  event  by  [PO:  Please  insert  date  36  months  after  entry  into  force].  Those 
competent authorities shall also render all necessary assistance and advice to ESMA 
to  facilitate  effective  and  efficient  transfer  and  taking-up  of  supervisory  and 
enforcement activity in the field of ELTIFs. 

4.  ESMA shall act as the legal successor to the competent authorities referred to in 
paragraph 1 in any administrative or judicial proceedings that result from supervisory 
and  enforcement  activity  pursued  by  those  competent  authorities  in  relation  to 
matters that fall under this Regulation. 

5.    Any  authorisation  of  an  ELTIF  granted  by  a  competent  authority  referred  to  in 
paragraph 1 shall remain valid after the transfer of competences to ESMA.";"; 

(19) 

Article 37 is amended as follows: 

(a) 

the following paragraph 1a is inserted:  

"1a. By [[PO: Please insert date 84 months after entry into force], the Commission 
shall start a review of the application of this Regulation. The review shall analyse, in 
particular: 

(a)  the  effectiveness,  proportionality  and  application  of  fines  and  periodic 
penalty payments provided for in accordance with this Regulation; 

(b)  the  role  of  ESMA,  its  investigatory  powers,  the  delegation  of  tasks  to 
competent authorities, and the effectiveness of supervisory measures taken."; 

(b) 

in  paragraph  2,  the  introductory  words:  "Following  the  review  referred  to  in 
paragraph  1  of  this  Article"  are  replaced  by  the  following:  "Following  the 
reviews referred to in paragraphs 1 or 1a of this Article". 

Article 8 

Amendments to Regulation (EU) No 2016/1011 on indices used as benchmarks in financial 
instruments and financial contracts or to measure the performance of investment funds 

Regulation (EU) 2016/1011 is amended as follows: 

(1) 

in Article 4, the following  paragraph is added: 

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“9.  The  Commission  shall  adopt  delegated  acts  in  accordance  with  Article  49  to 
specify  the  requirements  to  ensure  that  the  governance  arrangements  referred  to  in 
paragraph 1 are sufficiently robust.”; 

(2) 

in Article 12, the following  paragraph is added: 

“4.  The  Commission  shall  adopt  delegated  acts  in  accordance  with  Article  49  to 
specify  the  conditions  to  ensure  that  the  methodology  referred  to  in  paragraph  1 
complies with points (a) to (e) of that paragraph.”; 

(3) 

in Article 14, the following paragraph is added: 

“4.  The  Commission  shall  adopt  delegated  acts  in  accordance  with  Article  49  to 
specify the characteristics of the systems and controls referred to in paragraph 1.”; 

(4) 

Article 20 is replaced by the following:  

"Article 20  

Critical benchmarks 

1. 
The  Commission  shall  designate  as  critical  benchmark  any  benchmark 
provided by an administrator located within the Union and used directly or indirectly 
within  a  combination  of  benchmarks  as  a  reference  for  financial  instruments  or 
financial  contracts  or  for  measuring  the  performance  of  investment  funds  having  a 
total value of at least EUR 500 billion on the basis of all the range of maturities or 
tenors of the benchmark, where applicable. 

Where  a  competent  authority  of  a  Member  State  or  ESMA  is  of  the  opinion  that  a 
benchmark should be designated as a critical benchmark in accordance with the first 
sub-paragraph,  that  competent  authority  or  ESMA,  as  appropriate,  shall  notify  the 
Commission thereof and substantiate its opinion in writing. 

The Commission shall review its assessment of the criticality of the benchmarks at 
least every two years. 

2. 
ESMA  shall  designate  as  critical  any  benchmarks  referenced  by  financial 
instruments  or  financial  contracts  or  for  measuring  the  performance  of  investment 
funds having  a total  value of less than EUR 500 billion as set out in  paragraph (1) 
that fulfil criterion (a) and either criterion (b) or (c) below: 

(a) 

the benchmark has no, or very few, appropriate market-led substitutes;  

there  would  be  significant  and  adverse  impacts  on  market  integrity, 
(b) 
financial stability, consumers, the real economy, or the financing of households 
and businesses in more than one Member State in the event that the benchmark 
ceased to be provided, was provided on the basis of input data no longer fully 
representative  of  the  underlying  market  or  economic  reality,  or  was  provided 
on the basis of unreliable input data; 

the benchmark is based on submissions by contributors the majority of 

(c)(i) 
which are located in that Member State, and 

(c)(ii)  there  would  be  significant  and  adverse  impacts  on  market  integrity, 
financial stability, consumers, the real economy, or the financing of households 
and businesses in one Member State, in the event that the benchmark ceased to 
be  provided,  was  provided  on  the  basis  of  input  data  no  longer  fully 

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representative  of  the  underlying  market  or  economic  reality,  or  was  provided 
on the basis of unreliable input data.  

3.  When  assessing  whether  the  criteria  laid  down  in  points  (a)  and  (b)  are 
fulfilled, ESMA shall take into account all of the consideration: 

the  value  of  financial  instruments  and  financial  contracts  that 
(i) 
reference  the  benchmark  and  the  value  of  investment  funds  referencing 
the  benchmark  for  measuring  their  performance  and  their  relevance  in 
terms of the total value of financial instruments and of financial contracts 
outstanding,  and  of  the  total  value  of  investment  funds,  in  the  Member 
States concerned; 

(ii) 
the  value  of  financial  instruments  and  financial  contracts  that 
reference  the  benchmark  and  the  value  of  investment  funds  referencing 
the  benchmark  for  measuring  their  performance  within  the  Member 
States  concerned  and  their  relevance  in  terms  of  the  gross  national 
product of those Member States; 

(iii) 
any  other  figure  to  assess  on  objective  grounds  the  potential 
impact  of  the  discontinuity  or  unreliability  of  the  benchmark  on  market 
integrity,  financial  stability,  consumers,  the  real  economy,  or  the 
financing of households and businesses in the Member States concerned. 

4. 
Before designating a benchmark as a critical benchmark, ESMA shall consult 
the competent authority of the administrator of that benchmark and take into account 
the assessment made by that competent authority.  

ESMA shall review its assessment of the criticality of the benchmark at least every 
two years.  

ESMA  shall  notify  the  Commission  without  undue  delay  of  any  designation  of  a 
benchmark as a critical benchmark and of any decision to revise a designation of a 
benchmark  as  a  critical  benchmark  in  case  the  review  referred  to  in  the  fourth 
subparagraph of this paragraph leads to the conclusion that a benchmark ESMA had 
designated as critical is no longer assessed as critical. 

Where a competent authority of a Member State is of the opinion that a benchmark 
should be designated as a critical benchmark in accordance with this paragraph, that 
competent  authority  shall  notify  ESMA  thereof  and  substantiate  its  opinion  in 
writing. ESMA shall provide that competent authority with a reasoned opinion if it 
decides not to designate that benchmark as critical benchmark.  

3. 
The  Commission  shall  adopt  implementing  acts  in  accordance  with  the 
examination procedure referred to in Article 50(2) to establish a list of benchmarks 
which have been designated as critical benchmarks in accordance with paragraphs 1 
and  2.  The  Commission  shall  adopt  implementing  acts  in  accordance  with  the 
examination procedure referred to in Article 50(2) to update that list without undue 
delay in the following situations: 

the  Commission  designates  a  benchmark  as  a  critical  benchmark  or 

(a) 
reviews that designation in accordance with paragraph 1; 

the Commission receives notifications from ESMA as referred to in the 

(b) 
fifth subparagraph of paragraph 2. 

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The  Commission  shall  be  empowered  to  adopt  delegated  acts  in  accordance 

4. 
with Article 49 in order to: 

(a) 
specify  how  the  nominal  amount  of  financial  instruments  other  than 
derivatives,  the  notional  amount  of  derivatives  and  the  net  asset  value  of 
investment  funds  are  to  be  assessed,  including  in  the  event  of  an  indirect 
reference to a benchmark within a combination of benchmarks, in order to be 
compared with the thresholds referred to in paragraph 1 of this Article and in 
point (a) of Article 24(1); 

(b) 
review the calculation method used to determine the thresholds referred 
to  in  paragraph  1  of  this  Article  in  the  light  of  market,  price  and  regulatory 
developments  as  well  as 
the  classification  of 
benchmarks with a total value of financial instruments, financial contracts, or 
investment funds referencing them that is close to the thresholds; such review 
shall take place at least every two years as from ... [18 months after the date of 
entry into force of this Regulation]; 

the  appropriateness  of 

(c) 
specify  how  the  criteria  laid  down  in  points  (i)  to  (iii)  in  the  second 
subparagraph  paragraph  2  of  this  Article  are  to  be  applied,  taking  into 
consideration  any  data  which  help  assess  on  objective  grounds  the  potential 
impact  of  the  discontinuity  or  unreliability  of  the  benchmark  concerned  on 
market  integrity,  financial  stability,  consumers,  the  real  economy,  or  the 
financing of households and businesses in one or more Member States. 

The  Commission  shall  take  into  account  relevant  market  or  technological 
developments..”; 

(5) 

Article 21 is amended as follows:  

(a)  paragraph 2 is replaced by the following: 

“2.  Upon receipt of the assessment by the administrator referred to in paragraph 1, 
the competent authority shall: 

(a) 

inform ESMA thereof; 

(b) 
within  four  weeks  following  the  receipt  of  that  assessment,  make  its 
own  assessment  of  how  the  benchmark  is  to  be  transitioned  to  a  new 
administrator  or  be  ceased  to  be  provided,  taking  into  account  the  procedure 
established in accordance with Article 28(1). 

During  the  period  of  time  referred  to  in  point  (b)  of  the  first  subparagraph,  the 
administrator  shall  not  cease  the  provision  of  the  benchmark  without  the  written 
consent of ESMA.” 

(b) 

a new paragraph 5 is added: 

“5.  The  Commission  shall  be  empowered  to  adopt  delegated  acts  in  accordance 
with Article 49 to specify the criteria on which the assessment  referred to in point 
(b) of paragraph 2 is to be based.”; 

(6) 

in Article 23, paragraphs 3 and 4 are replaced by the following : 

“3.  A  supervised  contributor  to  a  critical  benchmark  that  intends  to  cease 
contributing input data shall promptly notify the administrator thereof in writing. The 
administrator shall thereupon inform ESMA thereof without delay. 

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ESMA  shall  inform  the  competent  authority  of  that  supervised  contributor  thereof 
without  delay.  The  administrator  shall  submit  to  ESMA  an  assessment  of  the 
implications  on  the  capability  of  the  critical  benchmark  to  measure  the  underlying 
market  or  economic  reality,  as  soon  as  possible  but  no  later  than  14  days  after  the 
notification made by the supervised contributor. 

4. 
Upon receipt of the assessment referred to in paragraphs 2 and 3, ESMA shall 
on  the  basis  of  that  assessment  make  its  own  assessment  on  the  capability  of  the 
benchmark  to  measure  the  underlying  market  and  economic  reality,  taking  into 
account the administrator's procedure for cessation of the benchmark established in 
accordance with Article 28(1).”; 

(7) 

in Article 26, the following  paragraph is added: 

“6.  The  Commission  shall  be  empowered  to  adopt  delegated  acts  in  accordance 
with Article 49 to specify the criteria under which competent authorities may require 
changes to the compliance statement as referred to in paragraph 4.”; 

(8) 

Article 30 is amended as follows: 

(a)  paragraph 2 is replaced by the following: 

“2.  The  Commission  may  adopt  an  implementing  decision  stating  that  the  legal 
framework and supervisory practice of a third country ensures the following: 

(a) 
administrators  authorised  or  registered  in  that  third  country  comply 
with binding requirements which are equivalent to the requirements under this 
Regulation.  When  assessing  the  equivalence  the  Commission  may  take  into 
account  whether  the  legal  framework  and  supervisory  practice  of  that  third 
country  ensures  compliance  with 
the  IOSCO  principles  for  financial 
benchmarks or with the IOSCO principles for PRAs; 

those  binding  requirements  are  subject  to  effective  supervision  and 

(b) 
enforcement on an on-going basis in that third country. 

The Commission may subject the application of the implementing decision referred 
to  in  the  first  subparagraph  to  the  effective  fulfilment  by  that  third  country  of  any 
condition set out in that implementing decision on an ongoing basis and to the ability 
of ESMA to effectively exercise the monitoring responsibilities referred to in Article 
33 of Regulation (EU) No 1095/2010. 

That  implementing  decision  shall  be  adopted  in  accordance  with  the  examination 
procedure referred to in Article 50(2) of this Regulation.”; 

(b) 

the following paragraph 2a is inserted: 

“2a.  The  Commission  may  adopt  a  delegated  act  in  accordance  with  Article  49  to 
specify  the  conditions  referred  to  in  points  (a)  and  (b)  of  the  first  subparagraph  of 
paragraph 2.”;  

(c)  paragraph 3 is replaced by the following: 

“3.  Where  no  implementing  decision  has  been  adopted  pursuant  to  paragraph  2, 
the Commission may adopt an implementing decision stating all of the following: 

(a) 
binding  requirements  in  a  third  country  with  respect  to  specific 
administrators,  benchmarks  or  families  of  benchmarks,  are  equivalent  to  the 
requirements under this Regulation taking into account, in particular, whether 
the  legal  framework  and  supervisory  practice  of  that  third  country  ensures 

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compliance  with  the  IOSCO  principles  for  financial  benchmarks  or  with  the 
IOSCO principles for PRAs; 

(b) 
those  specific  administrators,  benchmarks  or  families  of  benchmarks 
are  subject  to  effective  supervision  and  enforcement  on  an  on-going  basis  in 
that third country. 

The Commission may subject the application of the implementing decision referred 
to  in  the  first  subparagraph  to  the  effective  fulfilment  by  that  third  country  of  any 
condition set out in that implementing decision on an ongoing basis and to the ability 
of ESMA to effectively exercise the monitoring responsibilities referred to in Article 
33 of Regulation (EU) No 1095/2010. 

That  implementing  decision  shall  be  adopted  in  accordance  with  the  examination 
procedure referred to in Article 50(2) of this Regulation.”; 

(d) 

the following paragraph 3a is inserted: 

“3a.  The Commission may adopt a  delegated act in  accordance with  Article 49 to 
specify the conditions referred to in points (a) and (b) of paragraph 3.”;  

(e) 

the introductory subparagraph of paragraph 4 is replaced by the following: 

"4.  ESMA shall establish cooperation arrangements with the competent authorities 
of  third  countries  whose  legal  framework  and  supervisory  practices  have  been 
recognised  as  equivalent  in  accordance  with  paragraph  2  or  3  unless  that  third 
country,  in  accordance  with  a  delegated  act  in  force  adopted  by  the  Commission 
pursuant to Article 9 of Directive (EU) 2015/849 of the European Parliament and of 
the  Council,  is  on  the  list  of  jurisdictions  which  have  strategic  deficiencies  in  their 
national  anti-money  laundering  and  countering  the  financing  of  terrorism  regimes 
that pose significant threats to the financial system of the Union. Such arrangements 
shall specify at least:";  

(f) 

in paragraph 4, the following point (d) is added: 

the procedures for the exchange of information on a regular basis, and 
“(d) 
at  least  quarterly,  about  benchmarks  provided  in  that  third  country  that  fulfil 
any of the conditions set out in points (a) or (c) of Article 20(1).”; 

(g) 

the second subparagraph of paragraph 5 is replaced by the following: 

“ESMA shall submit those draft regulatory technical standards to the Commission by 
[PO:  please  insert  date  24  months  after  the  date  of  entry  into  force  of  this 
Regulation].”; 

(9) 

Article 32 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

“1.  Until  such  time  as  an  equivalence  decision  is  adopted  in  accordance  with 
paragraphs 2 and 3 of Article 30, a benchmark provided by an administrator located 
in a third country may be used by supervised entities in the Union, provided that that 
administrator acquires prior recognition by ESMA in accordance with this Article.”; 

(b) 

the second subparagraph of paragraph 2 is replaced by the following: 

“To determine whether the condition referred to in the first subparagraph is fulfilled 
and to assess compliance with the IOSCO principles for financial benchmarks or the 
IOSCO  principles  for  PRAs,  as  applicable,  ESMA  may  take  into  account  an 
assessment  by  an  independent  external  auditor  or,  a  certification  provided  by  the 

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competent authority of the administrator in the third country where the administrator 
is located.”; 

(c)  paragraph 3 is replaced by the following: 

“3.  An  administrator  located  in  a  third  country  intending  to  obtain  prior 
recognition as referred to in paragraph 1 shall have a legal representative. The legal 
representative shall  be a  natural or legal person located in  the  Union and expressly 
appointed by that administrator to act on behalf of that administrator with regard to 
the administrator’s obligations under this Regulation. The legal representative shall, 
together  with  the  administrator,  perform  the  oversight  function  relating  to  the 
provision of benchmarks performed by the administrator under this Regulation and, 
in that respect, be accountable to ESMA.”; 

(d)  paragraph 4 is deleted; 

(e)  paragraph 5 is replaced by the following: 

“5.  An  administrator  located  in  a  third  country  intending  to  obtain  prior 
recognition as referred to in paragraph 1 shall apply for recognition with ESMA. The 
applicant administrator shall provide all information necessary to satisfy ESMA that 
it has established, at the time of recognition, all the necessary arrangements to meet 
the requirements referred to in paragraph 2 and shall provide the list of its actual or 
prospective  benchmarks  which  are  intended  for  use  in  the  Union  and  shall,  where 
applicable,  indicate  the  competent  authority  in  the  third  country  responsible  for  its 
supervision.  

Within  90  working  days  of  receipt  of  the  application  referred  to  in  the  first 
subparagraph of this paragraph, ESMA shall verify that the conditions laid down in 
paragraphs 2 and 3 are fulfilled. 

Where ESMA considers that the conditions laid down in paragraphs 2 and 3 are not 
fulfilled, it shall refuse the recognition request and set out the reasons for that refusal. 
In  addition,  no  recognition  shall  be  granted  unless  the  following  additional 
conditions are fulfilled: 

(a) 
where  an  administrator  located  in  a  third  country  is  subject  to 
supervision,  an  appropriate  cooperation  arrangement  is  in  place  between 
ESMA  and  the  competent  authority  of  the  third  country  where  the 
administrator is located, in compliance with the regulatory technical standards 
adopted  pursuant  to  Article  30(5),  to  ensure  an  efficient  exchange  of 
information that enables the competent authority of that third country to carry 
out its duties in accordance with this Regulation; 

(b) 
the effective exercise by ESMA of its supervisory functions under this 
Regulation  is  neither  prevented  by  the  laws,  regulations  or  administrative 
provisions  of  the  third  country  where  the  administrator  is  located,  nor,  where 
applicable,  by  limitations  in  the  supervisory  and  investigatory  powers  of  that 
third country’s competent authority.”; 

(f) 

paragraphs 6 and 7 are deleted; 

(g)  paragraph 8 is replaced by the following: 

“8. 
 ESMA shall suspend or, where appropriate, withdraw the recognition granted 
in  accordance  with  paragraph  5  where  it  has  well-founded  reasons,  based  on 
documented evidence, to consider that the administrator: 

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is  acting  in  a  manner  which  is  clearly  prejudicial  to  the  interests  of 

(a) 
users of its benchmarks or to the orderly functioning of markets; 

has  seriously  infringed  the  relevant  requirements  set  out  in  this 

(b) 
Regulation; 

made  false  statements  or  used  any other  irregular means to obtain  the 

(c) 
recognition.”;”; 

(10) 

Article 33 is replaced by the following : 

Article 33 
Endorsement of benchmarks provided in a third country 

An  administrator  located  in  the  Union  and  authorised  or  registered  in 
1. 
accordance with Article 34, or any other supervised entity located in the Union with 
a  clear  and  well-defined  role  within  the  control  or  accountability  framework  of  a 
third  country  administrator,  which  is  able  to  monitor  effectively  the  provision  of  a 
benchmark, may apply to ESMA to endorse a benchmark or a family of benchmarks 
provided  in  a  third  country  for  their  use  in  the  Union,  provided  that  all  of  the 
following conditions are fulfilled:  

the endorsing administrator or other supervised entity has verified and 
(a)  
is able to demonstrate on an on-going basis to ESMA that the provision of the 
benchmark or family of benchmarks to be endorsed fulfils, on a mandatory or 
on  a  voluntary  basis,  requirements  which  are  at  least  as  stringent  as  the 
requirements of this Regulation; 

(b)  
the endorsing administrator or other supervised entity has the necessary 
expertise to monitor effectively the activity of the provision of a benchmark in 
a third country and to manage the associated risks;  

(c)  
there  is  an  objective  reason  to  provide  the  benchmark  or  family  of 
benchmarks in a third country and for said benchmark or family of benchmarks 
to be endorsed for their use in the Union. 

For the purpose of point (a), when assessing whether the provision of the benchmark 
or  family  of  benchmarks  to  be  endorsed  fulfils  requirements  which  are  at  least  as 
stringent  as  the  requirements  of  this  Regulation,  ESMA  may  take  into  account 
whether the compliance of the provision of the benchmark or family of benchmarks 
with  the  IOSCO  principles  for  financial  benchmarks  or  the  IOSCO  principles  for 
PRAs,  as  applicable,  would  be  equivalent  to  compliance  with  the  requirements  of 
this Regulation. 

2. 
An  administrator  or  other  supervised  entity  that  makes  an  application  for 
endorsement as referred to in paragraph 1 shall provide all information necessary to 
satisfy  ESMA  that,  at  the  time  of  application,  all  the  conditions  referred  to  in  that 
paragraph are fulfilled. 

3.  Within 90 working days of receipt of the application for endorsement referred 
to in paragraph 1, ESMA shall examine the application and adopt a decision either to 
authorise the endorsement or to refuse it and inform the applicant accordingly. 

4. 
An  endorsed  benchmark  or  an  endorsed  family  of  benchmarks  shall  be 
considered  to  be  a  benchmark  or  family  of  benchmarks  provided  by  the  endorsing 
administrator  or  other  supervised  entity.  The  endorsing  administrator  or  other 

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supervised  entity  shall  not  use  the  endorsement  with  the  intention  of  avoiding  the 
requirements of this Regulation. 

5. 
An administrator or other supervised entity that has endorsed a benchmark or a 
family of benchmarks provided in a third country shall remain fully responsible for 
such a benchmark or family of benchmarks and for compliance with the obligations 
under this Regulation. 

6.  Where  ESMA  has  well-founded  reasons  to  consider  that  the  conditions  laid 
down under paragraph 1 are no longer fulfilled, it shall have the power to require the 
endorsing administrator or other supervised entity to cease the endorsement. Article 
28 shall apply in case of cessation of the endorsement. 

7. 
The  Commission  shall  be  empowered  to  adopt  delegated  acts  in  accordance 
with Article 49 concerning measures to determine the conditions under which ESMA 
may assess whether there is an objective reason for the provision of a benchmark or 
family  of  benchmarks  in  a  third  country  and  their  endorsement  for  their  use  in  the 
Union. The Commission shall take into account elements such as the specificities of 
the  underlying  market  or  economic  reality  the  benchmark  intends  to  measure,  the 
need  for  proximity  of  the  provision  of  the  benchmark  to  such  market  or  economic 
reality, the need for proximity of the provision of the benchmark to contributors, the 
material  availability  of  input  data  due  to  different  time  zones,  and  specific  skills 
required in the provision of the benchmark."; 

(11) 

in Article 34, the following paragraph 1a is inserted: 

“1a.  Where  one  or  more  of  the  indices  provided  by  the  person  referred  to  in 
paragraph 1 would qualify as critical benchmarks, the application shall be addressed 
to ESMA.”; 

(12) 

Article 40 is replaced by the following: 

“1.  For  the  purposes  of  this  Regulation,  ESMA  shall  be  the  competent  authority 
for: 

administrators  of  critical  benchmarks  as  referred  to  in  paragraphs  (1) 

(a) 
and (2) of Article 20; 

(b) 

administrators of the benchmarks referred to in Articles 30 and 32; 

administrators  or  other  supervised  entities 

(c) 
the 
endorsement  or  have  endorsed  a  benchmark  provided  in  a  third  country  in 
accordance with Article 33; 

that  apply  for 

supervised contributors to critical benchmarks as referred to in Article 

(d) 
20(1); 

supervised contributors to the benchmarks referred to in Articles 30, 32 

(e) 
and 33. 

the  relevant  competent  authority 
2.    Each  Member  State  shall  designate 
responsible  for  carrying  out 
this  Regulation  concerning 
the  duties  under 
administrators and supervised entities and shall inform the Commission and ESMA 
thereof. 

3.   A  Member  State  that  designates  more  than  one  competent  authority  in 
accordance  with  paragraph  2  shall  clearly  determine  the  respective  roles  of  those 

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competent  authorities  and  shall  designate  a  single  authority  to  be  responsible  for 
coordinating the cooperation and the exchange of information with the Commission, 
ESMA and other Member States’ competent authorities. 

4.   ESMA  shall  publish  on  its  website  a  list  of  the  competent  authorities 
designated in accordance with paragraphs 1 to 3.”; 

(13) 

Article 41 is amended as follows: 

(a) 

in paragraph 1, the introductory part is replaced by the following: 

In  order  to  fulfil  their  duties  under  this  Regulation,  competent  authorities 
“1. 
referred to in Article 40(2) shall have, in  conformity with national law, at least the 
following supervisory and investigatory powers:”; 

(b) 

in paragraph 2, the introductory part is replaced by the following: 

“1.  The  competent  authorities  referred  to  in  Article  40(2)  shall  exercise  their 
functions and powers referred to in paragraph 1 and the powers to impose sanctions 
referred to in Article 42 in accordance with their national legal frameworks, in any of 
the following ways:”; 

(14) 

in Article 43(1), the introductory part is replaced by the following: 

“1.  Member  States  shall  ensure  that,  when  determining  the  type  and  level  of 
administrative  sanctions  and  other  administrative  measures,  competent  authorities 
they have designated in accordance with Article 40(2) take into account all relevant 
circumstances, including where appropriate:”; 

(15) 

Article 44 is replaced by the following: 

“Article 44 

Obligation to cooperate 

1.  Member  States  that  have  chosen,  in  accordance  with  Article  42,  to  lay  down 
criminal sanctions for infringements of the provisions referred to in that Article shall 
ensure  that  appropriate  measures  are  in  place  so  that  the  competent  authorities 
designated in accordance with  Article 40(2) have all  the necessary powers to  liaise 
with  judicial  authorities  within  their  jurisdiction  to  receive  specific  information 
relating 
investigations  or  proceedings  commenced  for  possible 
infringements  of  this  Regulation.  Those  competent  authorities  shall  provide  that 
information to other competent authorities and to ESMA. 

to  criminal 

2. 
Competent  authorities  shall  assist  other  competent  authorities  and  ESMA.  In 
particular,  they  shall  exchange  information  and  cooperate  in  any  investigation  or 
supervisory  activities.  Competent  authorities  may  also  cooperate  with  other 
competent authorities to facilitate the recovery of pecuniary sanctions.”; 

(16) 

in Article 45(5), the first subparagraph is replaced by the following: 

“5.  Member States shall provide ESMA with aggregated information regarding all 
administrative  sanctions  and  other  administrative  measures  imposed  pursuant  to 
Article  42  on  an  annual  basis.  That  obligation  shall  not  apply  to  measures  of  an 
investigatory  nature.  ESMA  shall  publish  that  information  in  an  annual  report, 
together  with  aggregated  information  on  all  administrative  sanctions  and  other 
administrative measures it has imposed itself pursuant to Article 48f.”; 

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(17) 

(18) 

Article 46 is deleted; 

in Article 47, paragraphs 1 and 2 are replaced by the following: 

“1.  The  competent  authorities  referred  to  in  Article  40(2)  shall  cooperate  with 
ESMA for the purposes of this Regulation, in accordance with Regulation (EU) No 
1095/2010. 

2. 
The  competent  authorities  referred  to  in  Article  40(2)  shall,  without  delay, 
provide ESMA with all information necessary to carry out its duties, in accordance 
with  Article  35  of  Regulation  (EU)  No  1095/2010  [To  be  checked  against  the 
amendments to ESMA's Regulation].”; 

(19) 

in Title VI, the following Chapter 4 is inserted: 

CHAPTER 4  

ESMA powers and competences 

Section 1 

Competences and procedures 

Article 48a 

Exercise of the powers by ESMA 

The  powers  conferred  on  ESMA,  on  any  official  of  ESMA  or  on  any  other  person 
authorised  by  ESMA  by  Articles  48b  to  48d  shall  not  be  used  to  require  the 
disclosure of information or documents that are subject to legal privilege. 

Article 48b 

Request for information 

ESMA may by simple request or by decision require the following persons to 
1. 
provide all necessary information to enable ESMA to carry out its duties under this 
Regulation: 

persons  involved  in  the  provision  of,  or  the  contribution  of  input  data 

(a) 
to, the benchmarks referred to in Article 40; 

entities  using  the  benchmarks  referred  to  under  (a)  and  related  third 

(b) 
parties; 

third parties to whom the persons referred to under (a) have outsourced 

(c) 
functions or activities; 

persons otherwise closely and substantially related or connected to the 

(d) 
persons referred to under (a). 

2. 

Any simple request for information as referred to paragraph 1 shall: 

(a) 

refer to this Article as the legal basis of that request; 

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(b) 

(c) 

(d) 

state the purpose of that request; 

specify what information is required; 

include a time limit within which the information is to be provided; 

include a statement that there is no obligation on the person from whom 
(e) 
the  information  is  requested  to  provide  that  information  but  that  in  case  of  a 
voluntary reply to the request, the information provided must not be incorrect 
or misleading; 

indicate the amount of the fine to be issued in accordance with Article 

(f) 
[48f] where information provided is incorrect or misleading. 

3.  When requiring to supply information under paragraph 1 by decision, ESMA 
shall: 

(a) 

(b) 

(c) 

(d) 

refer to this Article as the legal basis of that request; 

state the purpose of that request; 

specify what information is required; 

set a time limit within which the information is to be provided; 

indicate  the  periodic  penalty  payments  provided  for  in  Article  [48g] 

(e) 
where the required information is incomplete; 

indicate the fine provided for in Article [48f], where the answers to the 

(f) 
questions asked are incorrect or misleading; 

(g) 
indicate  the  right  to  appeal  the  decision  before  ESMA’s  Board  of 
Appeal  and  to  have  the  decision  reviewed  by  the  Court  of  Justice  of  the 
European  Union  (‘Court  of  Justice’)  in  accordance  with  Articles  [ex60 
Appeals]  and  [ex61  Action  before  the  Court…]  of  Regulation  (EU)  No 
1095/2010. 

The persons referred to in paragraph 1 or their representatives and, in the case 
4. 
of legal persons or associations having no legal personality, the persons authorised to 
represent  them  by  law  or  by  their  constitution,  shall  supply  the  information 
requested. Lawyers duly authorised to  act may supply the information on behalf of 
their  clients.  The  latter  shall  remain  fully  responsible  if  the  information  supplied  is 
incomplete, incorrect or misleading. 

5. 
ESMA shall, without delay, send a copy of the simple request or of its decision 
to  the  competent  authority  of  the  Member  State  where  the  administrator  or 
supervised  contributor  referred  to  in  paragraph  1  concerned  by  the  request  for 
information is domiciled or established. 

Article 48c 

General investigations 

1. 
In  order  to  carry  out  its  duties  under  this  Regulation,  ESMA  may  conduct 
necessary investigations of the persons referred to in Article 48b(1). To that end, the 
officials and other persons authorised by ESMA shall be empowered to: 

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(a) 
examine any records, data, procedures and any other material relevant 
to  the  execution  of  its  tasks,  irrespective  of  the  medium  on  which  they  are 
stored; 

take  or  obtain  certified  copies  of  or  extracts  from  such  records,  data, 

(b) 
procedures and other material; 

(c) 
summon and ask  any of those persons  or  their representatives or  staff 
for  oral  or  written  explanations  on  facts  or  documents  relating  to  the  subject 
matter and purpose of the inspection and to record the answers; 

(d) 
interview  any  other  natural  or  legal  person  who  consents  to  be 
interviewed  for  the  purpose  of  collecting  information  relating  to  the  subject 
matter of an investigation; 

(e) 

request records of telephone and data traffic. 

2. 
The  officials  and  other  persons  authorised  by  ESMA  for  the  purposes  of  the 
investigations referred to in paragraph 1 shall exercise their powers upon production 
of  a  written  authorisation  specifying  the  subject  matter  and  purpose  of  the 
investigation.  That  authorisation  shall  indicate  the  periodic  penalty  payments 
provided  for  in  Article  [48g]  where  the  production  of  the  required  records,  data, 
procedures  or  any  other  material,  or  the  answers  to  questions  asked  to  the  persons 
referred to in Article 48b(1) or are incomplete, and the fines provided for in Article 
[48f],  where  the  answers  to  questions  asked  to  those  persons  are  incorrect  or 
misleading. 

3. 
The  persons  referred  to  in  Article  48b(1)  are  required  to  submit  to 
investigations  launched  on  the  basis  of  a  decision  of  ESMA.  The  decision  shall 
specify  the  subject  matter  and  purpose  of  the  investigation,  the  periodic  penalty 
payments  provided  for  in  Article  [48g],  the  legal  remedies  available  under 
Regulation  (EU)  No  1095/2010  and  the  right  to  have  the  decision  reviewed  by  the 
Court of Justice. 

In  good  time  before  an  investigation  referred  to  in  paragraph  1,  ESMA  shall 
4. 
inform the competent authority of the Member State where the investigation is to be 
carried out of the investigation and of the identity of the authorised persons. Officials 
of  the  competent  authority  concerned  shall,  at  the  request  of  ESMA,  assist  those 
authorised  persons  in  carrying  out  their  duties. Officials  of the competent authority 
concerned may attend the investigations upon request. 

5. 
If  a  request for  records of  telephone  or  data  traffic  referred to  in  point  (e)  of 
paragraph  1  requires  authorisation  from  a  national  judicial  authority  according  to 
applicable  national  law,  such  authorisation  shall  be  applied  for.  Such  authorisation 
may also be applied for as a precautionary measure. 

6.  Where a national judicial authority receives an application for the authorisation 
of  a  request  for  records  of  telephone  or  data  traffic  referred  to  in  point  (e)  of 
paragraph 5 that authority shall verify the following: 

(a) 

the decision referred to in paragraph 3 is authentic; 

any  measures  to  be  taken  are  proportionate  and  not  arbitrary  or 

(b) 
excessive. 

For  the  purposes  of  point  (b),  the  national  judicial  authority  may  ask  ESMA  for 
detailed explanations, in particular relating to the grounds ESMA has for suspecting 

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that  an  infringement  of  this  Regulation  has  taken  place  and  the  seriousness  of  the 
suspected infringement and the nature of the involvement of the person subject to the 
coercive  measures.  However,  the  national  judicial  authority  shall  not  review  the 
necessity for the investigation or demand that it be provided with the information on 
ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by 
the  Court  of  Justice  following  the  procedure  set  out  in  Article  [61]  of  Regulation 
(EU) No 1095/2010. 

Article 48d 

On-site inspections 

In order to carry out its duties under this Regulation, ESMA may conduct all 
1. 
necessary on-site inspections  at  any business premises  of the persons  referred to  in 
Article 48b(1). 

The  officials  and  other  persons  authorised  by  ESMA  to  conduct  an  on-site 
2. 
inspection may enter any business premises of the persons subject to an investigation 
decision adopted by ESMA and shall have all the powers stipulated in Article 48c(1). 
They shall have the power to seal any business premises and books or records for the 
period of, and to the extent necessary for, the inspection. 

3. 
In  sufficient  time  before  the  inspection,  ESMA  shall  give  notice  of  the 
inspection to the competent authority of the Member State where the inspection is to 
be conducted. Where the proper conduct and efficiency of the inspection so require, 
ESMA,  after  informing  the  relevant  competent  authority,  may  carry  out  the  on-site 
inspection without prior notice. Inspections in accordance with this Article shall be 
conducted provided that the relevant authority has confirmed that it does not object 
to those inspections. 

4. 
The  officials  and  other  persons  authorised  by  ESMA  to  conduct  an  on-site 
inspection  shall  exercise  their  powers  upon  production  of  a  written  authorisation, 
specifying the subject matter and purpose of the inspection and the periodic penalty 
payments provided for in Article [48g] where the persons concerned do not submit to 
the inspection. 

The  persons  referred  to  in  Article  48b(1)shall  submit  to  on-site  inspections 
5. 
ordered by a decision  of ESMA. That decision shall  specify the subject  matter  and 
purpose of the inspection, the date on which it is to begin and indicate the periodic 
penalty  payments  provided  for  in  Article  [48g],  the  legal  remedies  available  under 
Regulation (EU) No 1095/2010 as well as the right to have the decision reviewed by 
the Court of Justice.  

6. 
Officials  of,  as  well  as  those  authorised  or  appointed  by,  the  competent 
authority of the Member State where the inspection is to be conducted, shall, at the 
request  of  ESMA,  actively  assist  the  officials  and  other  persons  authorised  by 
ESMA. Officials of that competent authority may also attend the on-site inspections 
upon request. 

7. 
ESMA  may  also  require  competent  authorities  to  carry  out  specific 
investigatory  tasks  and  on-site  inspections  as  provided  for  in  this  Article  and  in 
Article 48c(1) on its behalf. To that end, competent authorities shall enjoy the same 
powers as ESMA as set out in this Article and in Article 48c(1). 

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8.  Where the officials and other accompanying persons authorised by ESMA find 
that  a  person  opposes  an  inspection  ordered  pursuant to  this  Article, the  competent 
authority of the Member State concerned shall afford them the necessary assistance, 
requesting,  where  appropriate,  the  assistance  of  the  police  or  of  an  equivalent 
enforcement authority, to enable them to conduct their on-site inspection. 

9. 
If the on-site inspection provided for in paragraph 1 or the assistance provided 
for in paragraph 7 requires authorisation by a national judicial authority according to 
the  applicable  national  law,  such  authorisation  shall  be  applied  for.  Such 
authorisation may also be applied for as a precautionary measure. 

10.  Where a national judicial authority receives an application for the authorisation 
of an on-site inspection provided for in paragraph 1 or the assistance provided for in 
paragraph 7, that authority shall verify the following: 

(a) 

the decision adopted by ESMA referred to in paragraph 4 is authentic; 

any  measures  to  be  taken  are  proportionate  and  not  arbitrary  or 

(b) 
excessive. 

For  the  purposes  of  point  (b),  the  national  judicial  authority  may  ask  ESMA  for 
detailed explanations, in particular relating to the grounds ESMA has for suspecting 
that  an  infringement  of  this  Regulation  has  taken  place  and  the  seriousness  of  the 
suspected infringement and the nature of the involvement of the person subject to the 
coercive  measures.  However,  the  national  judicial  authority  shall  not  review  the 
necessity of the investigation or demand that it be provided with the information on 
ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by 
the Court of Justice following the procedure set out in Article 61 Regulation (EU) No 
1095/2010. 

SECTION 2  

ADMINISTRATIVE SANCTIONS AND OTHER MEASURES 

Article 48e 

Supervisory measures by ESMA 

1.  Where,  in  accordance  with  Article  48i(5),  ESMA  finds  that  a  person  has 
committed one of the infringements listed in Article 48f(2), it shall take one or more 
of the following actions: 

(a) 
end; 

(b) 

(c) 

adopt  a  decision  requiring  the  person  to  bring  the  infringement  to  an 

adopt a decision imposing fines pursuant to Article 48f; 

issue public notices. 

2.  When  taking  the  actions  referred  to  in  paragraph  1,  ESMA  shall  take  into 
account  the  nature  and  seriousness  of  the  infringement,  having  regard  to  the 
following criteria: 

(a) 

the duration and frequency of the infringement; 

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whether  financial  crime  has  been  occasioned,  facilitated  or  otherwise 

(b) 
attributable to the infringement; 

whether 

(c) 
negligently. 

the 

infringement  has  been  committed 

intentionally  or 

the  degree  of  responsibility  of  the  person  responsible  for  the 

(d) 
infringement; 

(e) 
the financial strength of the person responsible for the infringement, as 
indicated  by  the  total  turnover  of  the  responsible  legal  person  or  the  annual 
income and net assets of the responsible natural person; 

(f) 

the impact of the infringement on retail investors’ interests; 

the  importance  of  the  profits  gained,  losses  avoided  by  the  person 
(g) 
responsible for the infringement or the losses for third parties derived from the 
infringement, insofar as they can be determined; 

the level of cooperation of the person responsible for the infringement 
(h) 
with  ESMA,  without  prejudice  to  the  need  to  ensure  disgorgement  of  profits 
gained or losses avoided by that person; 

(i) 

previous infringements by the person responsible for the infringement; 

measures taken after the infringement by the person responsible for the 

(j) 
infringement to prevent its repetition. 

3.  Without  undue  delay,  ESMA  shall  notify  any  action  taken  pursuant  to 
paragraph 1 to the person responsible for the infringement, and shall communicate it 
to  the  competent  authorities  of  the  Member  States  and  to  the  Commission.  It  shall 
publicly  disclose  any  such  action  on  its  website  within  10  working  days  from  the 
date when it was adopted. 

The  disclosure  to  the  public  referred  to  in  the  first  subparagraph  shall  include  the 
following: 

a  statement  affirming  the  right  of  the  person  responsible  for  the 

(a) 
infringement to appeal the decision; 

where  relevant,  a  statement  affirming  that  an  appeal  has  been  lodged 

(b) 
and specifying that such an appeal does not have suspensive effect; 

(c) 
a statement asserting that it is possible for ESMA’s Board of Appeal to 
suspend  the  application  of  the  contested  decision  in  accordance  with  Article 
60(3) of Regulation (EU) No 1095/2010. 

Article 48f 

Fines 

1.  Where,  in  accordance  with  Article  48i(5),  ESMA  finds  that  any  person  has, 
intentionally  or  negligently,  committed  one  or  more  of  the  infringements  listed  in 
paragraph 2, it shall adopt a decision imposing a fine in accordance with paragraph 3 
of this Article. 

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An infringement shall be considered to have been committed intentionally if ESMA 
finds objective factors which demonstrate that a person acted deliberately to commit 
the infringement 

The  list  of  infringements  referred  to  in  paragraph  1  shall  be  the  following: 

2. 
Infringements of Articles 4 - 16, 21, 23 - 29 and 34 of Regulation (EU) 2016/1011.  

3. 

The maximum amount of the fine referred to in paragraph 1 shall be: 

(i) in the case of a legal person, EUR 1 000 000, or, in the Member States 
whose  currency  is  not  the  euro,  the  corresponding  value  in  the  national 
currency  on  30  June  2016,  or  10  %  of  the  total  annual  turnover  of  that 
legal person according to the last available financial statements approved 
by the management body, whichever is the higher; 

(ii)  in  the  case  of  a  natural  person,  EUR    500  000,  or,  in  the  Member 
States  whose  currency  is  not  the  euro,  the  corresponding  value  in  the 
national currency on 30 June 2016. 

Notwithstanding  the  first  subparagraph,  The  maximum  amount  of  the  fine  for 
infringements  of  point  (d)  of  Article  11(1)  or  of  Article  11(4)  of  Regulation  (EU) 
2016/1011 shall be EUR 250 000 or, in the Member States whose official currency is 
not the euro, the corresponding value in the national currency on 30 June 2016 or 2 
%  of  the  total  annual  turnover  of  that  legal  person  according  to  the  last  available 
financial statements approved by the management body, whichever is the higher for 
legal persons, and EUR 100 000 or, in the Member States whose official currency is 
not  the euro, the corresponding  value  in  the national  currency on 30 June  2016 for 
natural persons. 

For  the  purposes  of  point  (i),  where  the  legal  person  is  a  parent  undertaking  or  a 
subsidiary of a parent undertaking which is required to prepare consolidated financial 
accounts in accordance with Directive 2013/34/EU, the relevant total annual turnover 
shall be the total annual turnover or the corresponding type of income in accordance 
with the relevant Union law in the area of accounting according to the last available 
consolidated  accounts  approved  by  the  management  body  of  the  ultimate  parent 
undertaking.  

4.  When determining the level of a fine pursuant to paragraph 1, ESMA shall take 
into account the criteria set out in Article 48e(2).  

5. 
Notwithstanding paragraph 4, where the legal person has directly or indirectly 
benefited financially from the infringement, the amount of the fine shall be at least 
equal to that benefit. 

6.  Where an act or omission of an person constitutes more than one infringement 
listed in Article 48f(2), only the higher fine calculated in accordance with paragraph 
3 and relating to one of those infringements shall apply. 

Article 48g 

Periodic penalty payments 

1. 

ESMA shall, by decision, impose periodic penalty payments to compel: 

(a)  a  person  to  put  an  end  to  an  infringement  in  accordance  with  a  decision 
taken pursuant to Article [48e(1)(a)];  

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(b) persons referred to in Article 48b(1): 

(i) 
decision pursuant to Article [48b]; 

to supply complete information which has been requested by a 

(ii) 
to  submit  to  an  investigation  and  in  particular  to  produce 
complete records, data, procedures or any other material required and to 
complete  and  correct  other  information  provided  in  an  investigation 
launched by a decision pursuant to Article [48c]; 

(iii) 
pursuant to Article [48d]. 

to  submit  to  an  on-site  inspection  ordered  by  a  decision  taken 

A periodic penalty payment shall be effective and proportionate. The periodic 

2. 
penalty payment shall be imposed for each day of delay. 

3. 
Notwithstanding  paragraph  2,  the  amount  of  the  periodic  penalty  payments 
shall be 3 % of the average daily turnover in the preceding business year, or, in the 
case of natural persons, 2 % of the average daily income in the preceding calendar 
year.  It  shall  be  calculated  from  the  date  stipulated  in  the  decision  imposing  the 
periodic penalty payment. 

4. 
A  periodic  penalty  payment  shall  be  imposed  for  a  maximum  period  of  six 
months  following  the  notification  of  ESMA’s  decision.  Following  the  end  of  the 
period, ESMA shall review the measure.  

Article 48h 

Disclosure, nature, enforcement and allocation of fines and periodic penalty payments 

ESMA  shall  disclose  to  the  public  every  fine  and  every  periodic  penalty 
1. 
payment  that  has  been  imposed  pursuant  to  Articles  48f  and  48g,  unless  such 
disclosure  to  the  public  would  seriously  jeopardise  the  financial  markets  or  cause 
disproportionate  damage  to  the  parties  involved.  Such  disclosure  shall  not  contain 
personal data within the meaning of Regulation (EC) No 45/2001. 

Fines  and  periodic  penalty  payments  imposed  pursuant  to  Articles  [48f]  and 

2. 
[48g] shall be of an administrative nature. 

3.  Where  ESMA  decides  not  to  impose  any  fines  or  penalty  payments,  it  shall 
inform  the  European  Parliament,  the  Council,  the  Commission  and  the  competent 
authorities of the Member State concerned thereof and shall set out the reasons for its 
decision. 

Fines  and  periodic  penalty  payments  imposed  pursuant  to  Articles  [48f]  and 

4. 
[48g] shall be enforceable.  

Enforcement shall be governed by the rules of civil procedure in force in the Member 
State or third country in which it is carried out. 

The amounts of the fines and the periodic penalty payments shall be allocated 

5. 
to the general budget of the European Union. 

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SECTION 3 

PROCEDURES AND REVIEW 

Article 48i 

Procedural rules for taking supervisory measures and imposing fines 

1.  Where, in carrying out its duties under this Regulation, ESMA finds that there 
are  serious  indications  of  the  possible  existence  of  facts  liable  to  constitute  one  or 
more  of  the  infringements  listed  in  Article  48f(2),  ESMA  shall  appoint  an 
independent  investigation  officer  within  ESMA  to  investigate  the  matter.  The 
appointed officer shall not be involved or have been directly or indirectly involved in 
the  supervision  of  the  benchmarks  to  which  the  infringement  relates  and  shall 
perform his functions independently from ESMA's Board of Supervisors. 

The investigation officer referred to in paragraph 1 shall investigate the alleged 
2. 
infringements,  take  into  account  any  comments  submitted  by  the  persons  who  are 
subject  to  the  investigations,  and  shall  submit  a  complete  file  with  his  findings  to 
ESMA's Board of Supervisors. 

3. 
In order to carry out his tasks, the investigation officer shall have the power to 
request information in accordance with Article 48b and to conduct investigations and 
on-site inspections in accordance with Articles 48c and 48d. 

4.  Where carrying out those tasks, the investigation officer shall have access to all 
documents  and  information  that  have  been  gathered  by  ESMA  in  its  supervisory 
activities. 

5. 
Upon  completion  of  his  investigation  and  before  submitting  the  file  with  his 
findings  to  ESMA's  Board  of  Supervisors,  the  investigation  officer  shall  give  the 
persons subject to the investigations the opportunity to be heard on the matters being 
investigated. The investigation officer shall base his findings only on facts on which 
the persons concerned have had the opportunity to comment.  

The rights of the defence of the persons subject to the investigations shall be 

6. 
fully respected during investigations under this Article.  

7. 
Upon submission of the file with his findings to ESMA's Board of Supervisors, 
the investigation officer shall notify the persons who are subject to the investigations. 
The persons subject to the investigations shall be entitled to have access to the file, 
subject to the legitimate interest of other persons in the protection of their business 
secrets.  The  right  of  access  to  the  file  shall  not  extend  to  confidential  information 
affecting third parties. 

On  the  basis  of  the  file  containing  the  investigation  officer’s  findings  and, 
8. 
when  requested  by  the  persons  concerned,  after  having  heard  those  persons  in 
accordance  with  Article  [48j],  ESMA  shall  decide  if  one  or  more  of  the 
infringements listed in Article 48f(1) has been committed by the persons subject to 
the investigations and, in such case, shall take a supervisory measure in accordance 
with Article 48e and impose a fine in accordance with Article [48f]. 

The  investigation  officer  shall  not  participate  in  the  deliberations  of  ESMA's 
9. 
Board of Supervisors or in any other way intervene in the decision-making process of 
ESMA’s Board of Supervisors. 

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10.  The  Commission  shall  adopt  delegated  acts  in  accordance  with  Article  49  to 
specify  the  rules  of  procedure  for  the  exercise  of  the  power  to  impose  fines  or 
periodic  penalty  payments,  including  provisions  on  rights  of  defence,  temporal 
provisions,  and  the  collection  of  fines  or  periodic  penalty  payments,  and  the 
limitation  periods  for  the  imposition  and  enforcement  of  fines  and  periodic  penalty 
payments. 

11.  ESMA  shall  refer  matters  for  criminal  prosecution  to  the  relevant  national 
authorities where,  in  carrying  out  its  tasks  under  this  Regulation,  it  finds  that  there 
are serious indications of the possible existence of facts liable to constitute criminal 
offences.  In  addition,  ESMA  shall  refrain  from  imposing  fines  or  periodic  penalty 
payments where a prior acquittal or conviction arising from an identical fact or facts 
which are substantially the same has already acquired the force of res judicata as the 
result of criminal proceedings under national law. 

Article 48j 

Hearing of the persons subject to investigations  

1. 
Before taking any decision pursuant to Articles 48f, 48g and 48e, ESMA shall 
give  the  persons  subject  to  the  proceedings  the  opportunity  to  be  heard  on  its 
findings.  ESMA  shall  base  its  decisions  only  on  findings  on  which  the  persons 
subject to the proceedings have had an opportunity to comment. 

The first subparagraph shall not apply if urgent action pursuant to Article 48e 
2. 
is  needed  in  order  to  prevent  significant  and  imminent  damage  to  the  financial 
system.  In  such  a  case  ESMA  may  adopt  an  interim  decision  and  shall  give  the 
persons  concerned  the  opportunity  to  be  heard  as  soon  as  possible  after  taking  its 
decision. 

3. 
The  rights  of  the  defence  of  the  persons  subject  to  the  proceedings  shall  be 
fully respected in the investigations. They shall be entitled to have access to ESMA’s 
file,  subject  to  the  legitimate  interest  of  other  persons  in  the  protection  of  their 
business  secrets.  The  right  of  access  to  the  file  shall  not  extend  to  confidential 
information or ESMA’s internal preparatory documents. 

Article 48k 

Review by the Court of Justice 

The  Court  of  Justice  shall  have  unlimited  jurisdiction  to  review  decisions  whereby 
ESMA  has  imposed  a  fine  or  a  periodic  penalty  payment.  It  may  annul,  reduce  or 
increase the fine or periodic penalty payment imposed. 

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SECTION 4  

FEES AND DELEGATION 

Article 48l 

Supervisory fees 

ESMA shall charge fees to administrators in  accordance with this Regulation 
1. 
and  in  accordance  with  the  delegated  acts  adopted  pursuant  to  paragraph  3.  Those 
fees  shall  fully  cover  ESMA’s  necessary  expenditure  relating  to  the  supervision  of 
administrators and the reimbursement of any costs that the competent authorities may 
incur  carrying  out  work  pursuant  to  this  Regulation  in  particular  as  a  result  of  any 
delegation of tasks in accordance with Article 48m. 

2. 
The  amount  of  an  individual  fee  charged  to  an  administrator  shall  cover  all 
administrative costs incurred by ESMA for its activities in relation to the supervision. 
It shall be proportionate to the turnover of the administrator. 

3. 
The  Commission  shall  adopt  delegated  acts  in  accordance  with  Article  49  to 
specify the type of fees, the matters for which fees are due, the amount of the fees 
and the manner in which they are to be paid. 

Article 48m 

Delegation of tasks by ESMA to competent authorities 

1.   Where necessary for the proper performance of a supervisory task, ESMA may 
delegate specific supervisory tasks to the competent authority of a Member State in 
accordance with the guidelines issued by ESMA pursuant to Article 16 of Regulation 
(EU) No 1095/2010. Such specific supervisory tasks may, in particular, include the 
power  to  carry  out  requests  for  information  in  accordance  with  Article  48b  and  to 
conduct  investigations  and  on-site  inspections  in  accordance  with  Article  48c  and 
Article 48d. 

By  way  of  derogation  from  the  first  subparagraph,  the  authorisation  of  critical 
benchmarks shall not be delegated. 

Prior to the delegation of a task in accordance with paragraph 1, ESMA shall 

2. 
consult the relevant competent authority about: 

(a) the scope of the task to be delegated; 

(b) the timetable for the performance of the task; and 

(c) the transmission of necessary information by and to ESMA. 

3. 
ESMA shall reimburse a competent authority for costs incurred as a result of 
carrying out delegated tasks in accordance with the regulation on fees adopted by the 
Commission pursuant to Article 48l(3). 

ESMA  shall  review  any  delegation  made  in  accordance  with  paragraph  1  at 

4. 
appropriate intervals. A delegation may be revoked at any time. 

A delegation of tasks shall not affect the responsibility of ESMA and shall not 

5. 
limit ESMA’s ability to conduct and oversee the delegated activity." 

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Article 48o  

Transition measures related to ESMA  

1.   All competences and duties related to the supervisory and enforcement activity 
regarding administrators referred to in Article 40(1) that are conferred on competent 
authorities shall be terminated on [PO: Please insert date 36 months after entry into 
force]. Those competences and duties shall be taken-up by ESMA on the same date. 

2.    Any  files  and  working  documents  related  to  the  supervisory  and  enforcement 
activity regarding administrators referred to in Article 40(1), including any ongoing 
examinations and enforcement actions, or certified copies thereof, shall be taken over 
by ESMA on the date referred to in paragraph 1. 

However,  applications  for  authorisation  by  administrators  of  a  critical  benchmark, 
applications  for  recognition  in  accordance  with  Article  32  and  applications  for 
approval  of  endorsement  in  accordance  with  Article  33  that  have  been  received  by 
competent authorities before [PO: Please insert date 34 months after entry into force] 
shall  not  be  transferred  to  ESMA,  and  the  decision  to  authorise  or  refuse 
authorisation, recognition or approval of endorsement shall be taken by the relevant 
competent authority. 

3.  Competent authorities shall ensure that any existing records and working papers, 
or certified copies thereof, shall be transferred to ESMA as soon as possible and in 
any  event  by  [PO:  Please  insert  date  36  months  after  entry  into  force].  Those 
competent authorities shall also render all necessary assistance and advice to ESMA 
to  facilitate  effective  and  efficient  transfer  and  taking-up  of  supervisory  and 
enforcement activity regarding administrators referred to in Article 40(1). 

4.  ESMA shall act as the legal successor to the competent authorities referred to in 
paragraph 1 in any administrative or judicial proceedings that result from supervisory 
and  enforcement  activity  pursued  by  those  competent  authorities  in  relation  to 
matters that fall under this Regulation. 

5.    Any  authorisation  of  administrators  of  a  critical  benchmark,  recognition  in 
accordance with Article 32 and approval of endorsement in accordance with Article 
33  granted  by  a  competent  authority  referred  to  in  paragraph  1  shall  remain  valid 
after the transfer of competences to ESMA.”; 

(20) 

Article 53 is replaced by the following: 

“Article 53 

ESMA reviews 

ESMA shall have the power to require the documented evidence from a competent 
authority for any of the decisions adopted in accordance with the first subparagraph 
of  Article  51(2)  and  Article  25(3),  as  well  as  for  actions  taken  with  regard  to  the 
enforcement of Article 24(1).”. 

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Article 9 

Amendments to Regulation (EU) 2017/1129 on the prospectus to be published when securities 
are offered to the public or admitted to trading on a regulated market 

Regulation (EU) 2017/1129 is amended as follows: 

(1) 

Article 2 is amended as follows:  

(a)  point (iii) of the definition of 'home Member State' under letter (m) is deleted. 

(b) 

the following definitions are inserted: 

"(za)  'property companies' means an undertaking whose principal activities concern 
the  economic  activities  listed  in  Section  L  of  Annex  I  to  Regulation  (EC)  No 
1893/2006 of the European Parliament and of the Council*. 

(zb) 
'mineral  companies'  means  an  undertaking  whose  principal  activities  concern 
the  economic  activities  listed  in  Section  B,  Divisions  05  to  08  of  Annex  I  to 
Regulation (EC) No 1893/2006. 

(zc) 
'scientific  research  based  companies'  means  an  undertaking  whose  principal 
activities  concern  the  economic  activities  listed  in  Section  M,  Division  72,  group 
72.1 of Annex I to Regulation (EC) No 1893/2006. 

(zd) 
'shipping  companies'  means an  undertaking  whose principal activity concerns 
the  economic  activities  listed  in  Section  H,  Division  50  of  Annex  I  to  Regulation 
(EC) No 1893/2006. 

* Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 
20  December  2006  establishing  the  statistical  classification  of  economic  activities 
NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as 
certain EC Regulations on specific statistical domains, OJ L 393, 30.12.2006, p.1."; 

(2) 

in Article 4, paragraph 2 is replaced by the following: 

"2.   Such voluntarily drawn up prospectus approved by the competent authority of 
the home Member State, as determined in accordance with point (m) of Article 2, or 
by ESMA in accordance with Article 31a, shall entail all the rights and obligations 
provided for a prospectus required under this Regulation and shall be subject to all 
provisions of this Regulation, under the supervision of that competent authority." ; 

(3) 

in Article 20, paragraph 8 is replaced by the following: 

"8.  On  request  of  the  issuer,  the  offeror  or  the  person  asking  for  admission  to 
trading  on  a  regulated  market,  the  competent  authority  of  the  home  Member  State 
may  transfer  the  approval  of  a  prospectus  to  the  competent  authority  of  another 
Member  State,  subject  to  the  agreement  of  that  competent  authority  and,  unless 
ESMA  assumes  the  role  of  competent  authority  of  the  home  Member  State  in 
accordance  with  Article  31a,  the  prior  notification  to  ESMA.  The  competent 
authority of the home Member State shall transfer the documentation filed, together 
with its decision to grant the transfer, in electronic format, to the competent authority 
of the other Member State on the date of its decision. Such a transfer shall be notified 
to the issuer, the offeror or the person asking for admission to trading on a regulated 
market  within  three  working  days  from  the  date  of  the  decision  taken  by  the 
competent  authority  of  the  home  Member  State.  The  time  limits  set  out  in  the  first 
subparagraph of paragraph 2 and paragraph 3 shall apply from the date the decision 
was  taken  by  the  competent  authority  of  the  home  Member  State.  Article  28(4)  of 

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Regulation (EU) No 1095/2010 shall not apply to the transfer of the approval of the 
prospectus in accordance with this paragraph. Upon completion of the transfer of the 
approval, the competent authority to whom the approval of the prospectus has been 
transferred shall be deemed to be the competent authority of the home Member State 
for that prospectus for the purposes of this Regulation."; 

(4) 

Article 22 is amended as follows: 

(a) 

the following paragraph 6a is inserted: 

"6a.  By  derogation  from  paragraph  6,  ESMA  shall  have  the  power  to  exercise 
control  over  compliance  of  advertising  activity  with  the  requirements  set  out  in 
paragraphs 2 to 4 in each host Member State where advertisements are disseminated, 
in any of the following cases:. 

(a) where ESMA is the competent authority in accordance with Article 31a; 

(b) for any prospectus drawn up in accordance with the laws of a third country 
and used in the Union in accordance with Article 29.   

Without prejudice to Article 32(1), scrutiny of the advertisements by ESMA shall not 
constitute a precondition for the offer of securities to the public or the admission to 
trading to a regulated market to take place in any host Member State. 

The use of any of the supervisory and investigatory powers set out in Article 32 in 
relation to the enforcement of this Article by ESMA shall be communicated without 
undue delay to the competent authority of the relevant host Member State. 

At the request of the competent authority of a Member State, ESMA shall exercise 
the control referred to in the first subparagraph for all advertisements disseminated in 
its  jurisdiction  in  relation  to  all,  or  some,  categories  of  prospectuses  approved  by 
ESMA in  accordance with  Article 31a. ESMA shall  publish and regularly update a 
list  of  the  Member  States  for  which  it  exercises  such  control  and  the  categories  of 
prospectuses concerned. ."; 

(b)  paragraph 7 is replaced by the following: 

"7.  Competent authorities of host Member States and ESMA may only charge fees 
that are linked to the performance of their supervisory tasks pursuant to this Article. 
The level of fees shall be disclosed on the websites of the competent authorities and 
ESMA.  Fees  shall  be  non-discriminatory,  reasonable  and  proportionate  to  the 
supervisory task. Competent authorities of host Member States and ESMA shall not 
impose  any  requirements or  administrative  procedures in  addition to  those  required 
for the exercise of their supervisory tasks pursuant to this Article." 

(c)  paragraph 8 is replaced by the following: 

"8.  By  way  of  derogation  from  paragraphs  6  and  6a,  any  two  competent 
authorities, including ESMA where applicable, may conclude an agreement whereby, 
for  the  purposes  of  exercising  control  over  compliance  of  advertising  activity  in 
cross-border  situations  or  in  situations  where  paragraph  6a  applies,  the  competent 
authority of the home Member State, or, where paragraph 6a applies, the competent 
authority  of  the  host  Member  State,  is  to  retain  control  over  that  compliance.  Any 
such  agreement  shall  be  notified  to  ESMA,  unless  ESMA  is  a  signatory  to  the 
agreement  in  its  capacity  of  competent  authority  of  the  Home  Member  State  in 
accordance with Article 31a. ESMA shall publish and regularly update a list of such 
agreements."; 

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(5) 

Article 25 is amended as follows: 

(a) 

 paragraph 4 is replaced by the following: 

"4.  Where the final terms of a base prospectus are neither included in the base prospectus, 
nor in a supplement, the competent authority of the home Member State shall communicate 
them electronically, as soon as practicable after they are filed, to ESMA and, where the base 
prospectus  has  been  previously  notified,  to  the  competent  authority  of  the  host  Member 
State(s)." 

(b) 

the following paragraph 6a is inserted: 

"6a.  For  all  prospectuses  drawn  up  by  a  third  country  issuer  in  accordance  with 
Article 29, the certificate of approval referred to in this article shall be replaced by a 
certificate of filing."; 

(6) 

in Article 27, the following paragraph 3a is inserted: 

"3a.  By  way  of  derogation  from  paragraphs  1,  2  and  3,  where  ESMA  is  the 
competent authority in accordance with Article 31a, the prospectus shall be drawn up 
either in a language accepted by the competent authorities of each host Member State 
or in a language customary in the sphere of international finance, at the choice of the 
issuer,  the  offeror,  or  the  person  asking  for  admission  to  trading  on  a  regulated 
market. 

The competent authority of each host Member State shall require that the summary 
referred  to  in  Article  7  be  available  in  its  official  language,  or  at  least  one  of  its 
official languages, or in another language accepted by the competent authority of that 
Member  State,  but  it  shall  not  require  the  translation  of  any  other  part  of  the 
prospectus."; 

(7) 

Article 28 is replaced by the following: 

"Article 28 

Offer of securities to the public or admission to trading on a regulated market made 
under a prospectus drawn up in accordance with this Regulation 

Where a third country issuer intends to offer securities to the public in the Union or 
to  seek  admission  to  trading  of  securities  on  a  regulated  market  established  in  the 
Union  under  a  prospectus  drawn  up  in  accordance  with  this  Regulation,  it  shall 
obtain approval of its prospectus from ESMA in accordance with Article 20. 

Once  a  prospectus  is  approved  in  accordance  with  the  first  subparagraph,  it  shall 
entail all the rights and obligations provided for a prospectus under this Regulation 
and  the  prospectus  and  the  third  country  issuer  shall  be  subject  to  all  of  the 
provisions of this Regulation under the supervision of ESMA."; 

(8) 

Article 29 is replaced by the following: 

"Article 29 

Offer of securities to the public or admission to trading on a regulated market made under a 
prospectus drawn up in accordance with the laws of a third country 

A third country issuer may offer securities to the public in the Union or seek 
1. 
admission  to  trading  of  securities  on  a  regulated  market  in  the  Union  after  prior 

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publication of a prospectus drawn up and approved in accordance with, and which is 
subject to, the national laws of the third country issuer, provided that: 

the  Commission  has  adopted  an  implementing  decision  in  accordance 

(a) 
with paragraph 3;  

(b) 

the third country issuer has filed the prospectus with ESMA; 

(c) 
the  third  country  issuer  has  provided  a  written  confirmation  that  the 
prospectus has been approved by a third country supervisory authority and has 
provided the contact details of that authority; 

(d) 

the prospectus fulfils the language requirements set out in Article 27; 

(e) 
all advertisements disseminated in the Union by the third country issuer 
in relation to the offer or admission to trading comply with the requirements set 
out in paragraphs 2 to 5 of Article 22; 

(f)  ESMA  has  concluded  cooperation  arrangements  with  the  relevant 
supervisory  authorities  of  the  third  country  issuer  in  accordance  with  Article 
30.  

References to 'the competent authority of the home Member State' in this Regulation 
shall  be  understood  as  referring  to  ESMA  with  regard  to  any  provision  applied  to 
prospectuses referred to in this paragraph. 

2. 
The  requirements  set  out  in  Articles  24  and  25  shall  apply  to  the  prospectus 
drawn up in accordance with the laws of a third country where the conditions set out 
in paragraph 1 are fulfilled. 

3. 
The  Commission  is  empowered  to    adopt  delegated  acts  in  accordance  with 
Article 44 to supplement this Regulation by establishing general equivalence criteria, 
based on the requirements laid down in Articles 6, 7, 11, 12, 13 and in Chapter IV of 
this Regulation. 

On the basis of the criteria set out in these delegated acts, the Commission may adopt 
an  implementing  decision  stating  that  the  legal  and  supervisory  arrangements  of  a 
third country ensure that prospectuses drawn up in accordance with the national law 
of  that  third  country  comply  with  legally  binding  requirements  which  have  an 
equivalent  regulatory  effect  to  the  requirements  set  out  in  this  Regulation.  Such 
implementing  decision  shall  be  adopted  in  accordance  with  the  examination 
procedure referred to in Article 45(2). 

The Commission may make the application of the implementing decision subject to 
the effective fulfilment by a third country, on a continuous basis, of any requirements 
set  out  within  that  implementing  decision  and  to  ESMA's  ability  to  effectively 
exercise  its  responsibilities  in  relation  to  monitoring  referred  to  in  paragraph  2a  of 
Article 33 of Regulation (EU) No 1095/2010."; 

(9) 

Article 30 is amended as follows: 

(a)  paragraph 1 is replaced by the following: 

 "1.  For the purposes of Article 29, and, where deemed necessary, for the purposes 
of  Article  28,  ESMA  shall  conclude  cooperation  arrangements  with  supervisory 
authorities of third countries on the exchange of information with those third country 
authorities  and  the  enforcement  of  obligations  in  third  countries  pursuant  to  this 
Regulation.  Those  cooperation  arrangements  shall  ensure,  at  a  minimum,  the 

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efficient exchange of information allowing ESMA to carry out their duties under this 
Regulation. 

By way of derogation from the first subparagraph, where a third country is included 
in  the  list  of  jurisdictions  which  are  considered  to  have  national  anti-money 
laundering  policies  and  policies  countering  the  financing  of  terrorism  regimes  with 
strategic  deficiencies  that  pose  significant  threats  to  the  financial  system  of  the 
Union, as referred to in a delegated act in force adopted by the Commission pursuant 
to  Article  9  of  Directive  (EU)  2015/849  of  the  European  Parliament  and  of  the 
Council*,  ESMA  shall  not  conclude  cooperation  arrangements  with  supervisory 
authorities of that third country.  

ESMA  shall  inform  all  the  competent  authorities  designated  in  accordance  with 
Article 31(1) of any cooperation arrangement concluded in accordance with the first 
subparagraph. 

* Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 
2015 on the prevention of the use of the financial system for the purposes of money 
laundering  or  terrorist  financing,  amending  Regulation  (EU)  No  648/2012  of  the 
European Parliament and of the Council, and repealing Directive 2005/60/EC of the 
European Parliament and of the Council and Commission Directive 2006/70/EC (OJ 
L 141, 5.6.2015, p. 73)."; 

(b)  paragraph 2 is deleted; 

(c)  paragraph 3 is renumbered as paragraph 2 and is replaced by the following: 

"2.  ESMA  shall  conclude  cooperation  arrangements  on  exchange  of  information 
with  the  supervisory  authorities  of  third  countries  only  where  the  information 
disclosed  is  subject  to  guarantees  of  professional  secrecy  which  are  at  least 
equivalent to those set out in Article 35."; 

(d)  paragraph 4 is deleted; 

(10) 

in Chapter VII, the following Articles 31a  and 31b are inserted:   

"Article 31a 

Supervision by ESMA of certain types of prospectuses 

For  the  following  prospectuses,  including  any  supplement  thereto,  ESMA  shall  be 
the competent authority with regard to scrutiny and approval of those prospectuses as 
laid  out  in  Article  20  and  notifications  to  competent  authorities  of  host  Member 
States as laid out in Article 25: 

(a)  
prospectuses drawn up by any legal entity or person established in the 
Union  and  relating  to  the  admission  to  trading on  a  regulated  market  of  non-
equity  securities  which  are  to  be  traded  only  on  a  regulated  market,  or  a 
specific segment thereof, to which only qualified investors can have access for 
the purposes of trading such securities;; 

prospectuses drawn up by any legal entity or person established in the 

(b)  
Union and relating to asset backed securities; 

prospectuses drawn up by the following types of companies established 

(c)  
in the Union: 

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(i)  property companies; 

(ii) mineral companies; 

(iii) scientific research based companies; 

(iv) shipping companies. 

prospectuses  drawn  up  by  third  country  issuers  in  accordance  with 

(d)  
Article 28 of this Regulation. 

References to 'the competent authority of the home Member State' in this Regulation 
shall  be  understood  as  referring  to  ESMA  with  regard  to  any  provision  applied  to 
prospectuses listed in the first subparagraph."; 

(11) 

a new Article 34 b is inserted: 

"Article 31b 

Transitional measures related to ESMA 

1. 
Prospectuses  listed  in  Article  31a  which  have  been  submitted  to  a  competent 
authority  for  approval  prior  to  [PO:  Please  insert  date  36  months  after  entry  into 
force] shall continue to be supervised by that competent authority, including where 
applicable as regards any supplements and final terms thereto, until the end of their 
validity. 

The approval granted by a competent authority for those prospectuses prior to  [PO: 
Please  insert  date  36  months  after  entry  into  force]  shall  remain  valid  after  the 
transfer of competences to ESMA referred to in paragraph 2.  

The  supervision  of  those  prospectuses,  including  where  applicable  as  regards  any 
supplements  and  final  terms  thereto,  shall  remain  subject  to  the  rules  applicable  at 
the time of submission to the competent authority.  

All competences and duties related to the supervisory and enforcement activity 
2. 
of the prospectuses listed in Article 31a and submitted for approval from [PO: Please 
insert date 36 months after entry into force] shall be taken-up by ESMA 

." 

(12) 

Article 32 is amended as follows: 

(a) 

the introductory sentence of the first subparagraph of paragraph 1 is  replaced 
by the following: 

"1. 
In order to fulfil their duties under this Regulation, competent authorities and 
ESMA shall have, in accordance with national law, at least the following supervisory 
and investigatory powers:"; 

(b)  point (j) of the first subparagraph of paragraph 1 is replaced by the following: 

"(j)  to  suspend  the  scrutiny  of  a  prospectus  submitted  for  approval  or  suspend  or 
restrict  an  offer  of  securities  to  the  public  or  admission  to  trading  on  a  regulated 
market  where  ESMA  or  the  competent  authority  is  making  use  of  the  power  to 
impose  a  prohibition or restriction pursuant to Article 40 or  42 of Regulation (EU) 
No 600/2014 of the European Parliament and of the Council, until such prohibition 
or restriction has ceased;"; 

(c) 

the second subparagraph of paragraph 1 is replaced by the following: 

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"Where necessary under national law, the competent authority or ESMA may ask the 
relevant judicial authority to decide on the use of the powers referred to in the first 
subparagraph."; 

(d)  paragraph 2 is replaced by the following: 

"2.  Competent  authorities  and  ESMA  shall  exercise  their  functions  and  powers 
referred to in paragraph 1 in any of the following ways: 

(a) 

(b) 

(c) 

(d) 

directly; 

in collaboration with other authorities or ESMA; 

under their responsibility by delegation to such authorities or ESMA; 

by application to the competent judicial authorities." 

(e)  paragraph 5 is replaced by the following: 

"5.  A person making information available to the competent authority or ESMA in 
accordance  with  this  Regulation  shall  not  be  considered  to  be  infringing  any 
restriction  on  disclosure  of  information  imposed  by  contract  or  by  any  legislative, 
regulatory  or  administrative  provision,  and  shall  not  be  subject  to  liability  of  any 
kind related to such notification."; 

(13) 

the second paragraph of Article 35 is replaced by the following: 

"2.  The obligation of professional secrecy shall apply to all persons who work or 
who  have  worked  for  the  competent  authority,  for  ESMA  or  for  any  third  party  to 
whom  the  competent  authority  or  ESMA  has  delegated  its  powers.  Information 
covered  by  professional  secrecy  may  not  be  disclosed  to  any  other  person  or 
authority except by virtue of provisions laid down by Union or national law.";  

(14) 

the last subparagraph of paragraph 1 of Article 38 is replaced by the following: 

"By 21 July 2019, Member States shall notify, in detail, the rules referred to in the 
first  and  second  subparagraph  to  the  Commission  and  to  ESMA.  They  shall  notify 
the Commission and ESMA of any subsequent amendment thereto without delay.";  

(15) 

the following chapter is inserted:   

"CHAPTER VIIIA 

ESMA POWERS AND COMPETENCES 

SECTION 1 

COMPETENCES AND PROCEDURES 

Article 43a  

Exercise of the powers by ESMA 

The  powers  conferred  on  ESMA  or  any  official  of  or  other  person  authorised  by 
ESMA  by  Articles  43b  to  43d  shall  not  be  used  to  require  the  disclosure  of 
information or documents which are subject to legal privilege. 

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Article 43b  

Request for information 

1. 
ESMA may by simple request or by decision require the following persons to 
provide all necessary information to enable ESMA to carry out its duties under this 
Regulation: 

issuers,  offerors  or  persons  asking  for  admission  to  trading  on  a 

(a) 
regulated market, and the persons that control them or are controlled by them; 

(b) 

(c) 

the managers of the persons referred to under (a); 

the auditors and advisors of the persons referred to under (a); 

(d) 
the  financial  intermediaries  commissioned  by  the  persons  referred  to 
under (a) to carry out the offer of securities to the public or ask for admission 
to trading on a regulated market. 

the  guarantor  of  the  securities  offered  to  the  public  or  admitted  to 

(e) 
trading on a regulated market. 

2. 

Any simple request for information referred to paragraph 1 shall: 

(a) 

(b) 

(c) 

(d) 

refer to this Article as the legal basis of that request; 

state the purpose of the request; 

specify the information required; 

include a time limit within which the information is to be provided; 

(e) 
include a statement that there is no obligation on the person from whom 
the  information  is  requested  to  provide  that  information  but  that  in  case  of  a 
voluntary reply to the request, the information provided must not be incorrect 
or misleading; 

indicate the amount of the fine to be issued in accordance with Article 

(f) 
43f where the information provided is incorrect or misleading. 

3.  When requiring to supply information under paragraph 1 by decision, ESMA 
shall: 

(a) 

(b) 

(c) 

(d) 

refer to this Article as the legal basis of that request; 

state the purpose of the request; 

specify the information required; 

set a time limit within which the information is to be provided; 

indicate  the  periodic  penalty  payments  provided  for  in  Article  43g 

(e) 
where the production of the required information is incomplete; 

indicate  the  fine  provided  for  in  Article  43f,  where  the  answers  to 

(f) 
questions asked are incorrect or misleading; 

(g) 
indicate  the  right  to  appeal  the  decision  before  ESMA’s  Board  of 
Appeal  and  to  have  the  decision  reviewed  by  the  Court  of  Justice  of  the 
European Union (‘Court of Justice’) in accordance with Articles 60 and 61 of 
Regulation (EU) No 1095/2010. 

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4. 
The persons referred to in paragraph 1 or their representatives and, in the case 
of legal persons or associations having no legal personality, the persons authorised to 
represent them by law or by their constitution shall supply the information requested. 
Lawyers duly authorised to act may supply the information on behalf of their clients. 
The  latter  shall  remain  fully  responsible  if  the  information  supplied  is  incomplete, 
incorrect or misleading. 

5. 
ESMA shall, without delay, send a copy of the simple request or of its decision 
to  the  competent  authority  of  the  Member  State  where  the  persons  referred  to  in 
paragraph 1 concerned by the request for information are domiciled or established. 

Article 43c 

General investigations 

1. 
In  order  to  carry  out  its  duties  under  this  Regulation,  ESMA  may  conduct 
necessary  investigations  of  persons  referred  to  in  Article  43b(1).  To  that  end,  the 
officials and other persons authorised by ESMA shall be empowered to: 

(a) 
examine any records, data, procedures and any other material relevant 
to  the  execution  of  its  tasks  irrespective  of  the  medium  on  which  they  are 
stored; 

take  or  obtain  certified  copies  of  or  extracts  from  such  records,  data, 

(b) 
procedures and other material; 

(c) 
summon  and  ask  any  person  referred  to  in  Article  43b(1)  or  their 
representatives or staff for oral or written explanations on facts or documents 
relating  to  the  subject  matter  and  purpose  of  the  inspection  and  to  record  the 
answers; 

(d) 
interview  any  other  natural  or  legal  person  who  consents  to  be 
interviewed  for  the  purpose  of  collecting  information  relating  to  the  subject 
matter of an investigation; 

(e) 

request records of telephone and data traffic. 

2. 
The  officials  and  other  persons  authorised  by  ESMA  for  the  purposes  of  the 
investigations referred to in paragraph 1 shall exercise their powers upon production 
of  a  written  authorisation  specifying  the  subject  matter  and  purpose  of  the 
investigation.  That  authorisation  shall  also  indicate  the  periodic  penalty  payments 
provided  for  in  Article  43g  where  the  production  of  the  required  records,  data, 
procedures  or  any  other  material,  or  the  answers  to  questions  asked  to  persons 
referred  to  in  Article  43b(1)  are  not  provided  or  are  incomplete,  and  the  fines 
provided for in Article 43f, where the answers to questions asked to persons referred 
to in Article 43b(1) are incorrect or misleading. 

3. 
The  persons  referred  to  in  Article  43b(1)  are  required  to  submit  to 
investigations  launched  on  the  basis  of  a  decision  of  ESMA.  The  decision  shall 
specify  the  subject  matter  and  purpose  of  the  investigation,  the  periodic  penalty 
payments provided for in Article 43g, the legal remedies available under Regulation 
(EU)  No  1095/2010  and  the  right  to  have  the  decision  reviewed  by  the  Court  of 
Justice. 

3. 
In  good  time  before  an  investigation  referred  to  in  paragraph  1,  ESMA  shall 
inform the competent authority of the Member State where the investigation is to be 

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carried out of the investigation and of the identity of the authorised persons. Officials 
of the competent authority concerned shall, upon the request of ESMA, assist those 
authorised  persons  in  carrying  out  their  duties. Officials  of the competent authority 
concerned may also attend the investigations upon request. 

If  a  request for  records  of  telephone  or  data  traffic  referred to  in  point  (e)  of 
5. 
paragraph  1  requires  authorisation  from  a  national  judicial  authority  according  to 
applicable  national  law,  such  authorisation  shall  be  applied  for.  Such  authorisation 
may also be applied for as a precautionary measure. 

6.  Where a national judicial authority receives an application for the authorisation 
of  a  request  for  records  of  telephone  or  data  traffic  referred  to  in  point  (e)  of 
paragraph 1, that authority shall verify the following: 

(a) the decision adopted by ESMA referred to in paragraph 3 is authentic; 

(b) any measures to be taken are proportionate and not arbitrary or excessive. 

For  the  purposes  of  point  (b),  the  national  judicial  authority  may  ask  ESMA  for 
detailed explanations, in particular relating to the grounds ESMA has for suspecting 
that  an  infringement  of  this  Regulation  has  taken  place  and  the  seriousness  of  the 
suspected infringement and the nature of the involvement of the person subject to the 
coercive  measures.  However,  the  national  judicial  authority  shall  not  review  the 
necessity for the investigation or demand that it be provided with the information on 
ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by 
the Court of Justice following the procedure set out in Article 61 of Regulation (EU) 
No 1095/2010. 

Article 43d 

On-site inspections 

1. 
In order to carry out its duties under this Regulation, ESMA may conduct all 
necessary on-site inspections  at  any business premises  of the persons referred to  in 
Article 43b(1). 

2. 
The  officials  and  other  persons  authorised  by  ESMA  to  conduct  an  on-site 
inspection may enter any business premises of the persons subject to an investigation 
decision adopted by ESMA and shall have all the powers stipulated in Article 43c(1). 
They shall also have the power to seal any business premises and books or records 
for the period of, and to the extent necessary for, the inspection.  

3. 
In  sufficient  time  before  the  inspection,  ESMA  shall  give  notice  of  the 
inspection to the competent authority of the Member State where the inspection is to 
be conducted. Where the proper conduct and efficiency of the inspection so require, 
ESMA,  after  informing  the  relevant  competent  authority,  may  carry  out  the  on-site 
inspection without prior notice. Inspections in accordance with this Article shall be 
conducted provided that the relevant authority has confirmed that it does not object 
to those inspections.  

4. 
The  officials  and  other  persons  authorised  by  ESMA  to  conduct  an  on-site 
inspection  shall  exercise  their  powers  upon  production  of  a  written  authorisation 
specifying the subject matter and purpose of the inspection and the periodic penalty 
payments provided for in Article 43g where the persons concerned do not submit to 
the inspection.   

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5. 
The  persons  referred  to  in  Article  43b(1)  shall  submit  to  on-site  inspections 
ordered  by  decision  of  ESMA.  The  decision  shall  specify  the  subject  matter  and 
purpose  of  the  inspection,  appoint  the  date  on which  it  is  to  begin  and  indicate  the 
periodic penalty payments provided for in Article 43g, the legal remedies available 
under  Regulation  (EU)  No  1095/2010  as  well  as  the  right  to  have  the  decision 
reviewed by the Court of Justice.   

6. 
Officials  of,  as  well  as  those  authorised  or  appointed  by,  the  competent 
authority of the Member State where the inspection is to be conducted shall, at the 
request  of  ESMA,  actively  assist  the  officials  and  other  persons  authorised  by 
ESMA. Officials of that competent authority may also attend the on-site inspections 
upon request.  

ESMA  may  also  require  competent  authorities  to  carry  out  specific 
7. 
investigatory  tasks  and  on-site  inspections  as  provided  for  in  this  Article  and  in 
Article 43c(1) on its behalf. To that end, competent authorities shall enjoy the same 
powers as ESMA as set out in this Article and in Article 43c(1).  

8.  Where the officials and other accompanying persons authorised by ESMA find 
that  a  person  opposes  an  inspection  ordered  pursuant to  this  Article, the  competent 
authority of the Member State concerned shall afford them the necessary assistance, 
requesting,  where  appropriate,  the  assistance  of  the  police  or  of  an  equivalent 
enforcement authority, to enable them to conduct their on-site inspection.  

9. 
If the on-site inspection provided for in paragraph 1 or the assistance provided 
for in paragraph 7 requires authorisation by a national judicial authority according to 
the  applicable  national  law,  such  authorisation  shall  be  applied  for.  Such 
authorisation may also be applied for as a precautionary measure. 

10.  Where a national judicial authority receives an application for the authorisation 
of an on-site inspection provided for in paragraph 1 or the assistance provided for in 
paragraph 7, that authority shall verify the following: 

(a) 

the decision adopted by ESMA referred to in paragraph 4 is authentic; 

any  measures  to  be  taken  are  proportionate  and  not  arbitrary  or 

(b) 
excessive. 

For  the  purposes  of  point  (b),  the  national  judicial  authority  may  ask  ESMA  for 
detailed explanations, in particular relating to the grounds ESMA has for suspecting 
that  an  infringement  of  this  Regulation  has  taken  place  and  the  seriousness  of  the 
suspected infringement and the nature of the involvement of the person subject to the 
coercive  measures.  However,  the  national  judicial  authority  shall  not  review  the 
necessity for the investigation or demand that it be provided with the information on 
ESMA’s file. The lawfulness of ESMA’s decision shall be subject to review only by 
the Court of Justice following the procedure set out in Article 61 of Regulation (EU) 
No 1095/2010. 

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SECTION 2 

ADMINISTRATIVE SANCTIONS AND OTHER MEASURES 

Article 43e  

Supervisory measures by ESMA 

1.  Where,  in  accordance  with  Article  43i(5),  ESMA  finds  that  a  person  has 
committed one of the infringements listed in point (a) of Article 38(1), it shall take 
one or more of the following actions: 

(a) 
end; 

(b) 

(c) 

adopt  a  decision  requiring  the  person  to  bring  the  infringement  to  an 

adopt a decision imposing fines pursuant to Article 43f; 

issue public notices. 

2.  When  taking  the  actions  referred  to  in  paragraph  1,  ESMA  shall  take  into 
account  the  nature  and  seriousness  of  the  infringement,  having  regard  to  the 
following criteria: 

(a) 

the duration and frequency of the infringement; 

whether  financial  crime  has  been  occasioned,  facilitated  or  otherwise 

(b) 
attributable to the infringement; 

whether 

(c) 
negligently. 

the 

infringement  has  been  committed 

intentionally  or 

the  degree  of  responsibility  of  the  person  responsible  for  the 

(d) 
infringement; 

(e) 
the financial strength of the person responsible for the infringement, as 
indicated  by  the  total  turnover  of  the  responsible  legal  person  or  the  annual 
income and net assets of the responsible natural person; 

(f) 

the impact of the infringement on retail investors’ interests; 

the  importance  of  the  profits  gained,  losses  avoided  by  the  person 
(g) 
responsible for the infringement or the losses for third parties derived from the 
infringement, insofar as they can be determined; 

the level of cooperation of the person responsible for the infringement 
(h) 
with  ESMA,  without  prejudice  to  the  need  to  ensure  disgorgement  of  profits 
gained or losses avoided by that person; 

(i) 

previous infringements by the person responsible for the infringement; 

measures taken after the infringement by the person responsible for the 

(j) 
infringement to prevent its repetition. 

3.  Without  undue  delay,  ESMA  shall  notify  any  action  taken  pursuant  to 
paragraph 1 to the person responsible for the infringement, and shall communicate it 
to  the  competent  authorities  of  the  Member  States  and  to  the  Commission.  It  shall 
publicly  disclose  any  such  action  on  its  website  within  10  working  days  from  the 
date when it was adopted. 

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The  disclosure  to  the  public  referred  to  in  the  first  subparagraph  shall  include  the 
following: 

a  statement  affirming  the  right  of  the  person  responsible  for  the 

(a) 
infringement to appeal the decision; 

where  relevant,  a  statement  affirming  that  an  appeal  has  been  lodged 

(b) 
and specifying that such an appeal does not have suspensive effect; 

(c) 
a statement asserting that it is possible for ESMA’s Board of Appeal to 
suspend  the  application  of  the  contested  decision  in  accordance  with  Article 
60(3) of Regulation (EU) No 1095/2010. 

Article 43f  

Fines 

1.  Where,  in  accordance  with  Article  43i(5),  ESMA  finds  that  any  person  has, 
intentionally  or  negligently,  committed  one  or  more  of  the  infringements  listed  in 
point (a) of Article 38(1), it shall adopt a decision imposing a fine in accordance with 
paragraph 2 of this Article. 

An infringement shall be considered to have been committed intentionally if ESMA 
finds objective factors which demonstrate that a person acted deliberately to commit 
the infringement. 

2. 

The maximum amount of the fine referred to in paragraph 1 shall be: 

(i) 
in the case of a legal person, EUR 10 000 000, or, in the Member States 
whose  currency  is  not  the  euro,  the  corresponding  value  in  the  national 
currency  on  20  July  2017,  or  6  %  of  the  total  annual  turnover  of  that  legal 
person  according  to  the  last  available  financial  statements  approved  by  the 
management body. 

in  the  case  of  a  natural  person,  EUR  1  400  000,  or,  in  the  Member 
 (ii) 
States whose currency is not the euro, the corresponding value in the national 
currency on 20 July 2017. 

For  the  purposes  of  point  (i),  where  the  legal  person  is  a  parent  undertaking  or  a 
subsidiary of a parent undertaking which is required to prepare consolidated financial 
accounts in accordance with Directive 2013/34/EU, the relevant total annual turnover 
shall be the total annual turnover or the corresponding type of income in accordance 
with the relevant Union law in the area of accounting according to the last available 
consolidated  accounts  approved  by  the  management  body  of  the  ultimate  parent 
undertaking. 

3.  When determining the level of a fine pursuant to paragraph 1, ESMA shall take 
into account the criteria set out in Article 43e(2). 

4. 
Notwithstanding  paragraph  3,  where  a  person  has  directly  or  indirectly 
benefited financially from the infringement, the amount of the fine shall be at least 
equal to that benefit. 

5.  Where an act or omission of a person constitutes more than one infringement 
listed in point (a) of Article 38(1), only the higher fine calculated in accordance with 
paragraph 3 and relating to one of those infringements shall apply. 

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Article 43g 

Periodic penalty payments 

ESMA  shall,  by  decision,  impose  periodic  penalty  payments  in  order  to 

1. 
compel: 

a person to put an end to an infringement in accordance with a decision 

(a) 
taken pursuant to Article 43e(1)(a);  

(b) 

a person referred to in Article 43b(1): 

(i)  
decision pursuant to Article 43b; 

to supply complete information which has been requested by a 

(ii)  
to  submit  to  an  investigation  and  in  particular  to  produce 
complete records, data, procedures or any other material required and to 
complete  and  correct  other  information  provided  in  an  investigation 
launched by a decision pursuant to Article 43c;  

(iii)  
pursuant to Article 43d. 

to  submit  to  an  on-site  inspection  ordered  by  a  decision  taken 

A periodic penalty payment shall be effective and proportionate. The periodic 

2. 
penalty payment shall be imposed for each day of delay. 

3. 
Notwithstanding  paragraph  2,  the  amount  of  the  periodic  penalty  payments 
shall be 3% of the average daily turnover in the preceding business year, or, in the 
case  of  natural  persons,  2%  of  the  average  daily  income  in  the  preceding  calendar 
year.  It  shall  be  calculated  from  the  date  stipulated  in  the  decision  imposing  the 
periodic penalty payment. 

4. 
A  periodic  penalty  payment  shall  be  imposed  for  a  maximum  period  of  six 
months  following  the  notification  of  ESMA’s  decision.  Following  the  end  of  the 
period, ESMA shall review the measure. 

Article 43h  

Disclosure, nature, enforcement and allocation of fines and periodic penalty payments 

1. 
ESMA shall disclose to the public every fine and periodic penalty payment that 
has  been  imposed  pursuant  to  Articles  43f  and  43g  unless  such  disclosure  to  the 
public  would  seriously  jeopardise  the  financial  markets  or  cause  disproportionate 
damage to the parties involved.  

Fines and periodic penalty payments imposed pursuant to Articles 43f and 43g 

2. 
shall be of an administrative nature. 

3.  Where ESMA decides to impose no fines or penalty payments, it shall inform 
the  European  Parliament,  the  Council,  the  Commission,  and  the  competent 
authorities of the Member State concerned accordingly and shall set out the reasons 
for its decision. 

Fines and periodic penalty payments imposed pursuant to Articles 43f and 43g 

4. 
shall be enforceable. 

Enforcement shall be governed by the rules of civil procedure in force in the Member 
State or third-country in which it is carried out. 

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The amounts of the fines and periodic penalty payments shall be allocated to 

5. 
the general budget of the European Union. 

SECTION 3 

PROCEDURES AND REVIEW 

Article 43i  

Procedural rules for taking supervisory measures and imposing fines 

1.  Where, in carrying out its duties under this Regulation, ESMA finds that there 
are  serious  indications  of  the  possible  existence  of  facts  liable  to  constitute  one  or 
more of the infringements listed in point (a) of Article 38(1), ESMA shall appoint an 
independent  investigation  officer  within  ESMA  to  investigate  the  matter.  The 
appointed officer shall not be involved or have been directly or indirectly involved in 
the approval of the prospectus to which the infringement relates and shall perform his 
functions independently from ESMA's Board of Supervisors. 

The investigation officer referred to in paragraph 1 shall investigate the alleged 
2. 
infringements, taking into account any comments submitted by the persons who are 
subject  to  the  investigations,  and  shall  submit  a  complete  file  with  his  findings  to 
ESMA's Board of Supervisors. 

3. 
In order to carry out his tasks, the investigation officer shall have the power to 
request information in accordance with Article 43b and to conduct investigations and 
on-site inspections in accordance with Articles 43c and 43d.  

4.  Where carrying out his tasks, the investigation officer shall have access to all 
documents and information gathered by ESMA in its supervisory activities. 

5. 
Upon  completion  of  his  investigation  and  before  submitting  the  file  with  his 
findings  to  ESMA's  Board  of  Supervisors,  the  investigation  officer  shall  give  the 
persons subject to the investigations the opportunity to be heard on the matters being 
investigated. The investigation officer shall base his findings only on facts on which 
the persons concerned have had the opportunity to comment. 

The rights of the defence of the persons subject to the investigations shall be 

6. 
fully respected during investigations under this Article. 

Upon submission of the file with his findings to ESMA's Board of Supervisors, 
7. 
the investigation officer shall notify the persons who are subject to the investigations. 
The persons subject to the investigations shall be entitled to have access to the file, 
subject to the legitimate interest of other persons in the protection of their business 
secrets.  The  right  of  access  to  the  file  shall  not  extend  to  confidential  information 
affecting third parties. 

8. 
On  the  basis  of  the  file  containing  the  investigation  officer’s  findings  and, 
when requested by the persons subject to the investigations, after having heard those 
persons  in  accordance  with  Article  43j,  ESMA  shall  decide  if  one  or  more  of  the 
infringements listed in point (a) of Article 38(1) has been committed by the persons 
subject to the investigations and, in such a case, shall take a supervisory measure in 
accordance with Article 43e and impose a fine in accordance with Article 43f. 

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9. 
The  investigation  officer  shall  not  participate  in  the  deliberations  of  ESMA's 
Board of Supervisors or in any other way intervene in the decision-making process of 
ESMA’s Board of Supervisors. 

10.  The  Commission  shall  adopt  delegated  acts  in  accordance  with  Article  44  to 
specify  the  rules  of  procedure  for  the  exercise  of  the  power  to  impose  fines  or 
periodic  penalty  payments,  including  provisions  on  rights  of  defence,  temporal 
provisions,  and  the  collection  of  fines  or  periodic  penalty  payments,  and  the 
limitation  periods  for  the  imposition  and  enforcement  of  fines  and  periodic  penalty 
payments.  

11.  ESMA  shall  refer  matters  for  criminal  prosecution  to  the  relevant  national 
authorities where, in carrying out its duties under this Regulation, it finds that there 
are serious indications of the possible existence of facts liable to constitute criminal 
offences.  In  addition,  ESMA  shall  refrain  from  imposing  fines  or  periodic  penalty 
payments  where  a  prior  acquittal  or  conviction  arising  from  identical  fact  or  facts 
which are substantially the same has already acquired the force of res judicata as the 
result of criminal proceedings under national law. 

Article 43j 

Hearing of the persons subject to investigations 

1. 
Before taking any decision pursuant to Articles 43e, 43f and 43g, ESMA shall 
give the persons subject to investigations the opportunity to be heard on its findings. 
ESMA  shall  base  its  decisions  only  on  findings  on  which  the  persons  subject  to 
investigations have had an opportunity to comment. 

The  first  subparagraph  shall  not  apply  if  urgent  action  pursuant  to  Article  43e  is 
needed in order to prevent significant and imminent damage to the financial system. 
In  such  a  case  ESMA  may  adopt  an  interim  decision  and  shall  give  the  persons 
concerned the opportunity to be heard as soon as possible after taking its decision. 

2. 
The  rights  of  defence  of  the  persons  subject  to  investigations  shall  be  fully 
respected in the investigations. They shall be entitled to have access to ESMA’s file, 
subject to the legitimate interest of other persons in the protection of their business 
secrets. The right of access to the file shall not extend to confidential information or 
ESMA’s internal preparatory documents. 

Article 43k 

Review by the Court of Justice 

The  Court  of  Justice  shall  have  unlimited  jurisdiction  to  review  decisions  whereby 
ESMA  has  imposed  a  fine  or  a  periodic  penalty  payment.  It  may  annul,  reduce  or 
increase the fine or periodic penalty payment imposed. 

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SECTION 4 

FEES AND DELEGATION 

Article 43l  

Supervisory fees 

ESMA shall charge fees to issuers, offerors or persons asking for admission to 
1. 
trading on a regulated market in accordance with this Regulation and in accordance 
with the delegated acts adopted pursuant to paragraph 3. Those fees shall fully cover 
ESMA’s necessary expenditure relating to the scrutiny and approval of prospectuses, 
including  supplements  thereto,  and  to  their  notification  to  competent  authorities  of 
host  Member  States,  and  the  reimbursement  of  any  costs  that  the  competent 
authorities may incur carrying out work pursuant to this Regulation in particular as a 
result of any delegation of tasks in accordance with Article 43m. 

2. 
The  amount  of  an  individual  fee  charged  to  a  particular  issuer,  offeror  or 
person  asking  for  admission  to  trading  on  a  regulated  market  shall  cover  all 
administrative costs incurred by ESMA for its activities in relation to the prospectus, 
including supplements thereto, drawn up by such issuer, offeror or person asking for 
admission to trading on a regulated market. It shall be proportionate to the turnover 
of the issuer, offeror or person asking for admission to trading on a regulated market. 

The  Commission  shall  adopt  delegated  acts  in  accordance  with  Article  44  to 
3. 
specify the type of fees, the matters for which fees are due, the amount of the fees 
and the manner in which they are to be paid. 

Article 43m  

Delegation of tasks by ESMA to competent authorities 

1.  Where necessary for the proper performance of a supervisory task, ESMA may 
delegate specific supervisory tasks to the competent authority of a Member State in 
accordance with the guidelines issued by ESMA pursuant to Article 16 of Regulation 
(EU) No 1095/2010. Such specific supervisory tasks may, in particular, include the 
power  to  carry  out  requests  for  information  in  accordance  with  Article  43b  and  to 
conduct  investigations  and  on-site  inspections  in  accordance  with  Article  43c  and 
Article 43d. 

By  way  of  derogation  from  the  first  subparagraph,  the  scrutiny,  approval  and 
notification of prospectuses, including supplements thereto, the final assessments and 
follow-up decisions concerning infringements shall not be delegated. 

Prior to the delegation of a task in accordance with paragraph 1, ESMA shall 

2. 
consult the relevant competent authority about: 

(a) 

(b) 

(c) 

the scope of the task to be delegated; 

the timetable for the performance of the task; and 

the transmission of necessary information by and to ESMA. 

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3. 
ESMA shall reimburse a competent authority for costs incurred as a result of 
carrying  out  delegated  tasks  in  accordance  with  the  delegated  act  referred  to  in 
Article 43l(3). 

ESMA  shall  review  any  delegation  made  in  accordance  with  paragraph  1  at 

4. 
appropriate intervals. A delegation may be revoked at any time. 

A delegation of tasks shall not affect the responsibility of ESMA and shall not 

5. 
limit ESMA’s ability to conduct and oversee the delegated activity." 

Article 10 

Transitional provisions  

4. 

5. 

Article 1. The procedure for the appointment of the members of the Executive Board 
shall  be  published  following  the  entry  into  force  of  Articles  1,  2  and  3.  Until  such 
time  as  all  members  of  the  Executive  Board  take  up  their  duties  the  Board  of 
Supervisors and the Management Board shall continue carry out their tasks. 

The  Chairpersons  appointed  before the  entry  into  force  of  Articles  1, 2  and  3  shall 
continue  carrying  out  their  tasks  and  duties  until  the  end  of  their  mandate.  The 
Chairpersons  to  be  appointed  after  entry  into  force  of  Articles  1,  2  and  3  shall  be 
selected and appointed in accordance to the new appointment procedure.  

Article 11 

Entry into force and entry into application 

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

It shall apply from [24 months after entry into force] 

Articles 1, 2 and 3 shall apply as from [PO: please insert date 3 months after the date 
of  entry  into  force].  However,  point  [Article  62]  of  Article  1,  point  [Article  62]  of 
Article 2 and point [Article 62] of Article 3 shall apply from 1 January [PO: please 
insert  date  of  1  January  of  the  year following  the  expiry  of  a  one-year  period  after 
date of entry into force]. 

This Regulation shall be binding in its entirety and directly applicable in the Member 
States in accordance with the Treaties. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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Legislative financial statement ‘Agencies’ 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

Title of the proposal/initiative  

Policy area(s) concerned 

Nature of the proposal/initiative  

Objective(s)  

Grounds for the proposal/initiative  

Duration and financial impact  

1. 

1.1. 

1.2. 

1.3. 

1.4. 

1.5. 

1.6. 

1.7.  Management mode(s) planned  

2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

2.2.  Management and control system  

2.3.  Measures to prevent fraud and irregularities  

3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected  

3.2. 

Estimated impact on expenditure  

3.2.1. 

Summary of estimated impact on expenditure  

3.2.2.  Estimated impact on [body]'s appropriations  

3.2.3.  Estimated impact on [body]'s human resources 

3.2.4.  Compatibility with the current multiannual financial framework 

3.2.5.  Third-party contributions  

3.3. 

Estimated impact on revenue 

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LEGISLATIVE FINANCIAL STATEMENT  

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

Proposal for a Regulation of the European Parliament and of the Council amending: 

-  Regulation  (EU)  No  1093/2010  of  the  European  Parliament  and  of  the  Council  of  24 
November  2010  establishing  a  European  Supervisory  Authority  (European  Banking 
Authority), 

-  Regulation  (EU)    No  1094/2010  of  the  European  Parliament  and  of  the  Council  of  24 
November  2010  establishing  a  European  Supervisory  Authority  (European  Insurance  and 
Occupational Pensions Authority), 

-  Regulation  (EU)    No  1095/2010  of  the  European  Parliament  and  of  the  Council  of  24 
November  2010  establishing  a  European  Supervisory  Authority  (European  Securities  and 
Markets Authority), 

and amending:  

Regulation (EU) No 2015/760 on European long-term investment funds;  

Regulation (EU) No 345/2013 on European venture capital funds;  

Regulation  (EU)  No  346/2013  on  European  social  entrepreneurship  funds;  amending 
Regulation (EU) No 600/2014 on markets in financial instruments;  

Directive 2014/65/EU on Markets in Financial Instruments; 

Regulation  (EU)  2016/1011  on  indices  used  as  benchmarks  in  financial  instruments  and 
financial contracts or to measure the performance of investment funds  

Regulation (EU) 2017/1129 on the prospectus to be published when securities are offered to 
the public or admitted to trading on a regulated market;  

Directive  2009/138/EC  on  the  taking-up  and  pursuit  of  the  business  of  Insurance  and 
Reinsurance (Solvency II)     

1.2. 

Policy area(s) concerned  

Policy area: Financial stability, financial services and Capital Markets Union 

Activity: Financial stability 

1.3. 

Nature of the proposal/initiative  

 The proposal/initiative relates to a new action  

  The  proposal/initiative  relates  to  a  new  action  following  a  pilot  project/preparatory 
action39  

 The proposal/initiative relates to the extension of an existing action  

 The proposal/initiative relates to an action redirected towards a new action  

39 

As referred to in Article 54(2)(a) or (b) of the Financial Regulation. 

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1.4. 

Objective(s) 

1.4.1.  The Commission's multiannual strategic objective(s) targeted by the proposal/initiative  

Contribute to a deeper and fairer internal market with a strengthened industrial base 

1.4.2. 

Specific objective(s) 

Specific objective No 

2.5 The financial regulatory framework is evaluated, appropriately implemented and enforced 
across the EU 

1.4.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

The  ESAs  will  ensure  greater  supervisory  convergence  with  a  strengthened  EU  dimension.  
Enhanced supervisory convergence has the potential to reduce administrative burdens for all 
supervised  entities  and  additional  synergies  in  reducing  compliance  costs  for  cross-border 
ones, while preserving the system from supervisory arbitrage by market participants. 

The ESAs will be in a position to better coordinate national authorities and to exercise, where 
appropriate, direct supervision.  This enhanced role of the ESAs can further market integration 
by facilitating cross-border business.  

Enhancing  supervisory  convergence  and  establishing  a  level  playing  field  across  the  Single 
market with a uniform fee setting mechanism would enable ESAs to raise funds (under a clear 
and transparent mechanism respecting the principle of equal treatment) in order to meet their 
current  and  future  tasks  and  mandates  in  full.  Such  outcome  would  ultimately  benefit  all 
market participants. 

1.4.4. 

Indicators of results and impact  

Specify the indicators for monitoring implementation of the proposal/initiative. 

Possible indicators: 

• 

Number of adopted technical standards relative to those required to be developed 

Number  of  draft  technical  standards  submitted  to  the  Commission  for  endorsement 

• 
within the deadlines  

• 

Number of technical standards proposed but rejected by the Commission 

Number  of  adopted  non-binding  recommendations  relative  to  those  required  to  be 

• 
developed 

• 

• 

• 

• 

• 

• 

• 

Number of requests for explanation by CAs 

Number of investigations of breach of EU law successfully closed 

Average duration of an investigation of breach of EU law 

Number of warnings on manifest breach of the EU law 

Number of successful mediations without binding settlement 

Number of colleges with EBA / EIOPA / ESMA participation 

Number of bilateral meetings with CAs 

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• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

Number of joint on-site inspections 

Number of hours training for supervisors 

Number of staff participating in exchanges / secondments 

Number of peer reviews conducted 

Number of obstacles to convergence identified and removed 

New practical tools and instruments to promote convergence 

Number of initiatives on financial literacy and education 

Number of analytical studies published 

Number of on-site inspections and dedicated investigations 

Number of meetings with supervised entities 

Number of complaints / appeals from supervised companies 

Number of formal decisions adopted addressing emergency situations 

Number of populated databases 

Number of stress tests or equivalent exercises carried out 

Ratio of proposed versus adopted final budget (per annum) 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term  

This proposal should address the following challenges:  

1)  Powers:  While  harmonized  regulation  through  the  Single  Rulebook  is  important  for  the 
Single  Market,  it  is  not  sufficient.    Having  a  coherent  approach  to  the  interpretation  and 
application of EU legislation is equally important in order to improve the functioning of the 
single market and reduce risks of supervisory arbitrage and competition. For this purpose, the 
ESAs need to be equipped to promote the proper application of EU law and effective common 
supervisory  standards  across  the  EU  via  supervisory  convergence  measures  and  direct 
supervision in certain areas.  This is particularly the case for ESMA within the context of the 
CMU.  That's  why  the  legislative  proposal  aims  at  granting  new  powers  to  enhance  market 
integration  (for  ESMA)  and  strengthening  or  clarifying  existing  powers  set  out  in  the  ESA 
Regulations. 

2) Governance: The main problem with the current governance set-up is the composition of 
the Board of Supervisors and the Management Board which does not sufficiently lead to the 
promotion of EU interests in decision-making and impedes the ESAs from delivering on their 
mandates in full by disincentivising the use of certain existing tools.  The problem lies in the 
fact that the ESAs’ Management Boards and Boards of Supervisors are mainly composed of 
representatives of national competent authorities, which are also the only ones that have voting 
rights  (except  for  the  Commission  when  voting  on  the  budget  in  each  of  the  Management 
Boards).    This  creates  conflicts  of  interest.    Moreover,  the  role  and  the  powers  of  the 
chairpersons are also very limited and they are appointed by the Boards of Supervisors, which 
reduces  their  authority  and  independence.    Additionally,  the  Boards  of  Supervisors  are 

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overburdened while the Management Boards have morelimited tasks, which does not allow for 
swift  decision  making.  Furthermore,  the  governance  set-up  impacts  on  the  incentives  of  the 
ESAs to use certain tools such as binding mediation, the scope of peer reviews, the launch of 
breach of EU law procedures or the adoption of follow-up reports.  

3)  Funding:  A  revision  of  the  current  funding  system  would  be  necessary  to  ensure  the 
effective  operations  of  the  ESAs  and  a  fair  sharing  of  the  cost  of  their  operations.    As  the 
legislative  proposal  aims  at  enhancing  the  ESAs  role  in  supervision,  funding  will  need  to 
adjust  (most  likely  upwards)  in  an  environment  in  which  both  EU  and  national  budgets  are 
under strain.  Moreover, full public funding for the ESAs implies that public money pays for a 
service targeted to a specific part of the private sector.  A more efficient and fair allocation of 
the ESAs' costs to economic actors would be possible by applying the "allocation-by-cause" 
principle and ensuring at least partial funding by that industry.  Finally, the current system is 
not totally fair for some national competent authorities which provide a disproportionate share 
of funding compared to the size of the sector in their respective Member States. 

1.5.2.  Added  value  of  Union  involvement  (it  may  result  from  different  factors,  e.g.  coordination 
gains,  legal  certainty,  greater  effectiveness  or  complementarities).  For  the  purposes  of  this 
point 'added value of Union involvement' is the value resulting from Union intervention which 
is additional to the value that would have been otherwise created by Member States alone. 

Reasons for action at European level (ex-ante)  

The  2017  evaluation  demonstrates  that  EU  action  is  justified  and  necessary  to  address 
identified problems in the area of powers available to the ESAs, their governance framework 
and their funding framework.  Any actions in this respect will require amendments to the ESA 
Regulations. The ESAs are Union bodies whose powers and operation can only be amended 
by the Union legislator – in this case on the basis of Article 114 TFEU. 

Expected generated Union added value (ex-post) 

With  the  creation  of  the  ESAs  it  was  acknowledged  that  there  was  a  need  for  an  EU-level 
supervisory system to enhance consumer and investor protection and sustainably reinforce the 
stability  and  effectiveness  of  the  financial  system  throughout  the  EU.  These  objectives  are 
better achieved at Union level. 

Stakeholders  agree  that  the  ESAs  have  significantly  contributed  to  strengthening  of 
coordination and cooperation among national supervisions and played a key role in ensuring 
that  the  financial  markets  across  the  EU  are  functioning  in  an  orderly  manner,  are  well 
regulated and supervised and consumers' protection is enhanced. 

The  need  for  the  ESAs and  their  contribution  to  effective supervision  across the  EU  will  be 
even more important in light of the increasing interconnectedness of financial markets, EU and 
globally.  The ESAs will be at the heart of efforts to build a Capital Markets Union ("CMU") 
given  the  central  role  that  they  play  in  promoting  market  integration  and  creating  single 
market opportunities for financial entities and investors. 

Going  back  to  a  nationally  based  supervisory  framework  based  on  the  principle  of  home 
country control combined with minimum prudential standards and mutual recognition would 
simply not be able to deliver on the urgent needs to further integrate the EU financial markets 
and especially the capital markets framework.  This would have a negative consequence on the 

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EU's ability to strengthen long term investments and create funding sources for EU businesses 
which  are  necessary  elements  to  strengthen  the  EU  economy  and  stimulate  investment  to 
create jobs. 

1.5.3.  Lessons learned from similar experiences in the past 

The three ESAs started operating as independent EU agencies in January 2011 under the 2010 
ESA Regulations. 

The  Commission  carried  out  an  evaluation  of  the  ESAs  operations  in  2014.    At  that  time  it 
concluded  that  the  ESAs  had  performed  well  but  nonetheless  identified  four  areas  where  a 
number of issues could be considered for improvement: (1) funding framework (replacing the 
current  framework);  (2)  powers  (e.g.,  an  increased  focus  on  supervisory  convergence,  more 
effective  use  of  existing  powers,  and  clarifications  of  and  possible  extensions  to  current 
mandates);  (3)  governance  (e.g.,  enhanced  internal  governance  to  ensure  that  decisions  are 
taken  in  the  interest  of  the  EU  as  a  whole);  and  (4)  supervisory  architecture  (assessment  of 
structural changes such as merging the authorities into a single body and seat or introducing a 
twin-peaks approach).  

In October 2013 also the European Parliament carried out a review of the ESAs.  Some of the 
conclusions were similar to those of the Commission in terms of the performance of the ESAs, 
including  on  the  fact  that  the  observation  period  was  very  short.    The  Parliament  report 
contained  a  detailed  list  of  items  for  improvement,  some  of  which  would  require  legislative 
changes.    Additionally,  in  its  March  2014  resolution  on  the  ESFS  review,  the  Parliament 
requested the Commission to submit new legislative proposals for the revision of the ESAs in 
areas including governance, representation, supervisory cooperation and convergence, and the 
enhancement of powers.   

The Council concluded in November 2014 that targeted adaptations should  be considered in 
order to improve the ESAs performance, governance and financing.  

In  this  legislative  proposal,  consideration  has  been  given  to  issues  raised  in  previous 
evaluations and stakeholder claims (including those made in the context of the Commission's 
call  for  evidence  and  of  the  CMU).    Particular consideration  has  however  been  given  to  the 
evaluation concluded during the spring of 2017 which concluded hat the ESAs have broadly 
delivered  on  their  current  objectives  and  that  the  current  sectoral  supervisory  architecture  of 
the  ESAs  is  appropriate.    Targeted  improvement  to  face  future  challenges  were  however 
recommended, in particular in relation to enhancing the ESAs powers, governance framework 
and funding framework.  

1.5.4.  Compatibility and possible synergy with other appropriate instruments 

The objectives of this proposal are consistent with a number of other EU policies and ongoing 
initiatives that are aimed at: (i) developing the Economic and Monetary Union ("EMU"); (ii) 
developing the CMU; (iii) enhancing the efficiency and effectiveness of EU-level supervision, 
both within and outside the EU.  

First,  this  proposal  is  coherent  with  the  EMU.  The  Five  Presidents'  Report  on  Completing 
Europe's EMU underlined that the closer integration of capital markets and gradual removal of 
remaining  national  barriers  could  create  new  risks  to  financial  stability.  According  to  this 

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report, there will be a need to expand and strengthen the supervisory framework to ensure the 
solidity of all financial actors. The Five Presidents' Report concluded that this situation should 
lead  ultimately  to  a  Single  European  Capital  Markets  Supervisor.  Furthermore,  the  recent 
Reflection Paper on the deepening of the EMU stressed that: 'A more integrated supervisory 
framework  ensuring  common  implementation  of  the  rules  for  the  financial  sector  and  more 
centralised supervisory enforcement is key'.  While the legislative proposal does not commit to 
creating  a  single  supervisor  for  capital  markets,  this  proposal  aims  at  strengthening  the 
supervisory framework. It also foresees the transfer of some supervisory responsibilities (such 
as the approval of some EU prospectuses, benchmarks administrators, data reporting services 
providers, some EU funds) to the EU level and to ESMA in particular.  

Second, this proposal is coherent with the CMU project. By promoting more diverse funding 
channels,  CMU  will  help  to  increase  the  resilience  of  the  EU  financial  system.  At  the  same 
time, there is a need to be alert to financial risks emerging in the capital markets. Therefore, 
the  quality  of  the  supervisory  framework  is  a  necessary  element  for  well-functioning  and 
integrated capital  markets.  The legislative proposal should ensure that the single rulebook is 
implemented  in  a  uniform  way  across  the  Single  Market.  Therefore,  financial  entities  with 
similar  business  size  and  risk  profiles  would  be  subject  to  the  same  standard  of  supervision 
regardless of where they are located in the EU and to avoid regulatory arbitrage.  

Third,  the  proposal  is  coherent  with  the  general  objective  of  enhancing  the  efficiency  and 
effectiveness of EU-level supervision, both within and outside the EU. In recent years the EU 
has put in place a range of reforms to make the banking, insurance and capital markets sectors 
more transparent, well regulated and robust. By clarifying some powers conferred to the ESAs 
(such as dispute settlements, independent reviews) and by modifying the governance structure 
of those agencies, the proposal will lead to improved supervision inside the EU. Furthermore, 
EU  financial  legislation  has  increasingly  incorporated  'third  country  regimes'  which  allows 
non-EU firms to access the EU, usually on condition that they are authorised in a State which 
has a regulatory regime equivalent to that in the EU and which provides an effective reciprocal 
mechanism offering access to EU firms. The legislative proposal would more clearly state that 
the ESAs may assist the Commission with the monitoring of third-country developments (i.e., 
regulatory,  supervisory and  market developments in  third  country as  well  as  the supervisory 
record of third country authorities) in jurisdictions subject to a positive equivalence decision 
by  the  Commission.  The  purpose  of  this  monitoring  is  to  ensure  that  the  conditions  upon 
which the equivalence decision is based continue to be fulfilled on an ongoing basis, with a 
particular  emphasis  on  third-country  developments  that  may  impact  the  financial  stability  of 
the Union or of one and more of its Member States. 

Fourth, this legislative proposal is also in line with the recent Commission's proposal on the 
procedures and authorities involved for the authorisation of Central Counterparties ("CCPs") 
and requirements for the recognition of third-country CCPs40. The CCP proposal introduces a 
more  pan-European  approach  to  the  supervision  of  EU  CCPs.  A  newly-created  supervisory 
mechanism  will be established  within  ESMA which will be responsible for ensuring  a  more 

40  Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 
No  1095/2010  establishing  a  European  Supervisory  Authority  (European  Securities  and  Markets 
Authority)  and  amending  Regulation  (EU)  No  648/2012  as  regards  the  procedures  and  authorities 
involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs. 

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coherent and consistent supervision of EU CCPs as well as more robust supervision of CCPs 
in non-EU countries, or 'third countries'.  

1.6. 

Duration and financial impact  

 Proposal/initiative of limited duration  

–   

Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY  

–   

Financial impact from YYYY to YYYY 

 Proposal/initiative of unlimited duration 

– 

– 

Implementation with a start-up period from 2019 to 2020, 

followed by full-scale operation. 

1.7.  Management mode(s) planned41  

 Direct management by the Commission through 

–   

executive agencies  

 Shared management with the Member States  

 Indirect management by entrusting budget implementation tasks to: 

 international organisations and their agencies (to be specified); 

the EIB and the European Investment Fund; 

 bodies referred to in Articles 208 and 209; 

 public law bodies; 

 bodies governed by private law with a public service mission to the extent that they provide 
adequate financial guarantees; 

  bodies  governed  by  the  private  law  of  a  Member  State  that  are  entrusted  with  the 
implementation of a public-private partnership and that provide adequate financial guarantees; 

  persons  entrusted  with  the  implementation  of  specific  actions  in  the  CFSP  pursuant  to 
Title V of the TEU, and identified in the relevant basic act. 

Comments  

N/A 

41 

Details  of  management  modes  and  references  to  the  Financial  Regulation  may  be  found  on  the  BudgWeb  site: 
https://myintracomm.ec.europa.eu/budgweb/EN/man/budgmanag/Pages/budgmanag.aspx. 

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2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

In line with already existing arrangements, the ESAs prepare regular reports on their activity 
(including internal reporting to Senior Management, reporting to Boards and the production of 
the  annual  report),  and  are  subject  to  audits  by  the  Court  of  Auditors  and  the  Commission's 
Internal Audit Service on their use of resources and performance. Monitoring and reporting of 
the actions included in the proposal will comply with the already existing requirements as well 
as with any new requirements resulting from this proposal.  

2.2.  Management and control system  

2.2.1.  Risk(s) identified  

In relation to the legal, economic, efficient and effective use of appropriations resulting from 
the proposal, it is expected that the proposal would not bring about new significant risks that 
would not be currently covered by an existing internal control framework.  

However,  a  new  challenge  might  be  related  to  the  shift  of  funding,  namely,  ensuring  timely 
collection of annual contributions from financial institutions and financial market participants 
concerned.  

2.2.2.  Control method(s) envisaged  

Management  and  control  systems  as  provided  for  in  the  ESAs  Regulations  are  already 
implemented. ESAs work closely together with the Internal Audit Service of the Commission 
to  ensure  that  the  appropriate  standards  are  met  in  all  areas  of  internal  control  framework. 
These  arrangements  will  apply  also  with  regard  to  the  role  of  ESA  according  to  the  present 
proposal. 

In addition, every financial year, the European Parliament, following a recommendation from 
the Council, grants discharge to each ESA for the implementation of their budget. 

2.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures. 

For the purposes of combating fraud, corruption and any other illegal activity, the provisions 
of Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council of 
11  September  2013  concerning  investigations  conducted  by  the  European  Anti-Fraud  Office 
(OLAF) apply to the ESAs without any restriction. 

The  ESAs  have  a  dedicated  anti-fraud  strategy  and  resulting  action  plan.  The  ESAs' 
strengthened  actions  in  the  area  of  anti-fraud  will  be  compliant  with  the  rules  and  guidance 
provided  by  the  Financial  Regulation  (anti-fraud  measures  as  part  of  sound  financial 
management), OLAF’s fraud prevention policies, the provisions provided by the Commission 
Anti-Fraud  Strategy  (COM(2011)376)  as  well  as  set  out  by  the  Common  Approach  on  EU 
decentralised agencies (July 2012) and the related roadmap. 

In addition, the Regulations establishing the ESAs as well as the ESAs Financial Regulations 
set  out  the  provisions  on  implementation  and  control  of  the  ESAs  budget  and  applicable 
financial rules, including those aimed at preventing fraud and irregularities. 

EN 

261 

   EN 

 
3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected  

  Existing budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of  
expenditure 

Contribution  

Number  
[Heading………………………...…………] 

Diff./Non-
42 
diff.

from 
EFTA 
countries
43 

from 
candidate 
44
countries

from third 
countries 

within the meaning 
of Article 21(2)(b) 
of the Financial 
Regulation  

12 02 04 EBA 

12 02 05 EIOPA 
12 02 06 ESMA 

Diff. 

Y
E
S 

NO 

N
O 

NO 

  New budget lines requested: N/A 

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of 
expenditure 

Contribution  

Number  
[Heading……………………………………
…] 

Diff./non-
diff. 

from 
EFTA 
countries 

from 
candidate 
countries 

from third 
countries 

within the meaning 
of Article 21(2)(b) 
of the Financial 
Regulation  

Heading of 
multiannual 
financial 
framework 

1a 

Heading of 
multiannual 
financial 
framework 

[…] 

[XX.YY.YY.YY] 
[…] 

[…] 

YES/NO 

YES/NO 

YES/NO 

YES/NO 

42  Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 
43  EFTA: European Free Trade Association. 
44  Candidate countries and, where applicable, potential candidates from the Western Balkans. 

EN 

262 

   EN 

 
 
                                                 
 
3.2. 

Estimated impact on expenditure  

This legislative initiative will have the following impact on expenditure: 

1. The hiring of 210 new staff members in total at EBA, EIOPA and ESMA during 2019-2022. 

2. The cost of these new staff members (and other expenditure related to the new tasks required 
from the ESAs) will be fully funded by annual contributions for indirect supervision and fees for 
direct supervision raised from the industry (no impact on EU Budget). With regard to ESMA it 
has to be noted that the additional staff and all additional costs of direct supervision will be fully 
covered by fees from the industry. 

However, assuming that the adoption and entry into force would take place in the first quarter of 
2019, the fact that the Commission would have to prepare a delegated act specifying the annual 
contributions, the  matters to  which  the fees are due, the amount of the  fees and the  manner in 
which they are to be paid,  the proposal envisages that annual contributions are collected as of 
the beginning of the year that starts one full year after the entry into force – which means in this 
scenario  that  from  1  January  2021  the  additional  expenditure  for  indirect  supervision  resulting 
from  this  proposal  can  be  funded  from  the  annual  contributions.  As  the  ESAs  would  however 
incur costs under the Regulation from the entry into force of the Regulation, there is however a 
need to obtain additional budget from the EU in 2019 and 2020 in order to cover on a transitional 
basis for early phase of operations until annual contributions will be collected and will actually 
from  2021  onwards  be  able  to  reimburse  the  EU  budget  for  the  before  mentioned  transitional 
cover that it has provided in 2019 and 2020.  

Similarly,  fees  that  will  cover  the  expenditure  for  direct  supervision  (which,  according  to  this 
proposal, would apply from 24 months after its entry into force, i.e., 2021 in this scenario) in full 
will also only be collected after entry into force of specific delegated acts . It has been assumed 
in this document that in 2021 there is an impact on the EU budget from advances before these 
fees can be collected and that the ESAs will return the advance made by the EU at the latest in 
2022. In 2022 no additional expenditure for the EU budget is expected, accordingly; in principle, 
additional  expenditure  in  the  area  of  direct  supervision  will  be  funded  by  fees  to  be  collected 
from the market participants to be supervised. 

This additional budget should come from the EU general budget, as DG FISMA's budget cannot 
cover for such an amount.  

The  costs  of  already  existing  and  ongoing  ESAs  tasks  and  activities  in  2019  and  2020  will  be 
funded according to the current funding framework in line with the MFF 2014-2020. 

THE  ESTIMATED  IMPACT  ON  EXPENDTURE  AND  STAFFING  FOR  THE  YEARS 
2021  AND  BEYOND  IN  THIS  LEGISLATIVE  STATEMENT  IS  ADDED  FOR 
ILLUSTRATIVE  PURPOSES  AND  DOES  NOT  PREJUDGE  THE  POST  2020 
MULTIANNUAL  FINANCIAL  FRAMEWORK  PROPOSAL  TO  BE  PRESENTED  BY 
MAY 2018.   IT SHOULD ALSO  BE NOTED IN THIS CONTEXT  THAT  WHILE THE 
HEADCOUNT  NECESSARY  FOR  DIRECT  SUPERVISION  WILL  DEPEND  OVER 
TIME  ON  THE  DEVELOPMENT  OF  THE  NUMBER  AND  SIZE  OF  CAPITAL 
MARKETS  PARTICIPANTS  TO  BE 
SUPERVISED,  THE  RESPECTIVE 
EXPENDITURE  WILL  IN  PRINCIPLE  BE  FUNDED  BY  FEES  TO  BE  COLLECTED 
FROM THOSE MARKET PARTICIPANTS. 

EN 

263 

   EN 

 
 
EN 

264 

   EN 

 
 
3.2.1. 

Summary of estimated impact on expenditure 

EUR million (to three decimal places) 

Heading of multiannual financial  
framework  

Number  Heading 1a Competitiveness for growth and jobs 

DG: FISMA 

2019 

2020 

2021 

2022 

TOTAL 

12.0204 EBA  

12.0205 EIOPA 

12.0206 ESMA 

Commitments 
Payments 

Commitments 

Payments 

Commitments 

Payments 

(1) 

(2) 

(1a) 

(2a) 

(3a) 

(3b) 

2 493,0 
2 493,0 
3 759,7 
3 759,7 

17 728,6 

17 728,6 

4 096,3 
4 096,3 
5 356,0 
5 356,0 

20 589,6 

20 589,6 

0 
0 
0 
0 

10 142,8 

10 142,8 

TOTAL appropriations 
for DG FISMA 

Commitments 

=1+1a +3a 

23 981,3 

30 041,9 

10 142,8 

Payments 

=2+2a+3b 

23 981,3 

30 041,9 

10 142,8 

6 589,3 
6 589,3 
9 115,7 
9 115,7 

48 461,0 

48 461,0 

64 166,0 

64 166,0 

EN 

265 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Heading of multiannual financial  
framework  

5 

‘Administrative expenditure’ 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as 
necessary to show the duration 
of the impact (see point 1.6)  

TOTAL 

EUR million (to three decimal places) 

DG: <…….> 

 Human Resources  
 Other administrative expenditure  

TOTAL DG <…….> 

Appropriations  

TOTAL appropriations 
under HEADING 5 
of the multiannual financial framework  

(Total  commitments  = 
Total payments) 

2019 

2020 

2021 

2022 

TOTAL appropriations  
under HEADINGS 1 to 5 
of the multiannual financial framework  

Commitments 

23 981,3 

30 041,9 

10 142,8 

Payments 

23 981,3 

30 041,9 

10 142,8 

EUR million (to three decimal places) 

Enter as many 
years as 
necessary to 
show the duration 
of the impact (see 
point 1.6) 

TOTAL 

64 166,0 

64 166,0 

EN 

266 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.2.  Estimated impact on [body]'s appropriations  

The proposal/initiative does not require the use of operational appropriations  

The proposal/initiative requires the use of operational appropriations, as explained below: 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

OUTPUTS 

Commitment appropriations in EUR million (to three decimal places) 

Enter as many years as necessary to show the 
duration of the impact (see point 1.6) 

TOTAL 

o
N

Cost  N

o

Cost 

o
N

Cost 

o
N

Cost  N

o

Cost  N

o

Cost  N

o

Cost 

Total 
No 

Total 
cost 

–   

–   

Indicate 
objectives and 
outputs  

 

Type
45

Avera
ge 
cost 

SPECIFIC OBJECTIVE No 1

46

… 

- Output 

- Output 

- Output 

Subtotal for specific objective No 1 

SPECIFIC OBJECTIVE No 2 ... 

- Output 

Subtotal for specific objective No 2 

TOTAL COST 

45  Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.). 
46  As described in point 1.4.2. ‘Specific objective(s)…’ 

EN 

267 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
3.2.3.  Estimated impact on [body]'s human resources – Please see Annex to the legislative 

financial statement 

1. 

Summary  

–   

The proposal/initiative does not require the use of appropriations of an 

administrative nature  

–   

The  proposal/initiative  requires  the  use  of  appropriations  of  an 

administrative nature, as explained below: 

EUR million (to three decimal places) 

Year 
N 47 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary to 
show the duration of the impact (see 
point 1.6) 

TOTAL 

Officials (AD Grades) 

Officials 
grades) 

(AST 

Contract staff 

Temporary staff  

Seconded National 
Experts 

TOTAL 

Estimated impact on the staff (additional FTE) – establishment plan 

Function group and grade 

Year N 

Year N+1 

Year N+2 

Enter as many years as necessary 
to show the duration of the impact 
(see point 1.6) 

AD16 

AD15 

AD14 

AD13 

AD12 

47 

Year N is the year in which implementation of the proposal/initiative starts. 

EN 

268 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
AD11 

AD10 

AD9 

AD8 

AD7 

AD6 

AD5 

AD Total 

AST11 

AST10 

AST9 

AST8 

AST7 

AST6 

AST5 

AST4 

AST3 

AST2 

AST1 

AST Total 

AST/SC 6 

AST/SC 5 

AST/SC 4 

AST/SC 3 

AST/SC 2 

AST/SC 1 

EN 

269 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AST/SC  Total 

GRAND TOTAL 

Estimated impact on the staff (additional) – external personnel 

Contract agents 

Year N 

Year N+1 

Year N+2 

Enter as many years as necessary 
to show the duration of the impact 
(see point 1.6) 

Function group IV 

Function group III 

Function group II 

Function group I 

Total 

Seconded National Experts 

Year N 

Year N+1 

Year N+2 

Enter as many years as necessary 
to show the duration of the impact 
(see point 1.6) 

Total 

Please indicate the planned recruitment date and adapt the amount accordingly (if recruitment 
occurs  in  July,  only  50 %  of  the  average  cost  is  taken  into  account)  and  provide  further 
explanations in an annex.  

EN 

270 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2. 

Estimated requirements of human resources for the parent DG 

–   

The proposal/initiative does not require the use of human resources.  

–   

The  proposal/initiative  requires  the  use  of  human  resources,  as 

explained below: 

Estimate to be expressed in full amounts (or at most to one decimal place) 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as 
necessary to show the 
duration of the impact (see 
point 1.6) 

 Establishment plan posts (officials and 

temporary staff) 

XX 01 01 01 (Headquarters and 
Commission’s Representation 
Offices) 

XX 01 01 02 (Delegations) 

XX 01 05 01 (Indirect research) 

10 01 05 01 (Direct research) 

 External staff (in Full Time Equivalent 
unit: FTE)48 

XX 01 02 01 (AC, END, INT from 
the ‘global envelope’) 

XX 01 02 02 (AC, AL, END, INT 
and JED in the Delegations) 

XX 01 04 
yy49 

- at 
Headquarters50 

- in 
Delegations  

XX 01 05 02 (AC, END, INT – 
Indirect research) 

10 01 05 02 (AC, END, INT – 
Direct research) 

Other budget lines (specify) 

TOTAL 

XX is the policy area or budget title concerned. 

The human resources required will be met by staff from the DG who are already assigned to 
management of the action and/or have been redeployed within the DG, together if necessary 

48  AC = Contract Staff; AL = Local Staff; END = Seconded National Expert; INT = agency staff; JED = Junior 

Experts in Delegations.  

49  Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines). 
50  Mainly for the Structural Funds, the European Agricultural Fund for Rural Development (EAFRD) and the 

European Fisheries Fund (EFF). 

EN 

271 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
with any additional allocation which may be granted to the managing DG under the annual 
allocation procedure and in the light of budgetary constraints. 

Description of tasks to be carried out: 

Officials and temporary staff 

External staff 

Description  of  the  calculation  of  cost  for  FTE  units  should  be  included  in  the  Annex  V, 
section 3.  

EN 

272 

   EN 

 
 
 
 
3.2.4.  Compatibility with the current multiannual financial framework  

–   

The  proposal/initiative  is  compatible  with  the  current  multiannual 

financial framework. 

–   

The  proposal/initiative  will  entail  reprogramming  of  the  relevant 

heading in the multiannual financial framework. 

Explain what reprogramming is required, specifying the budget lines concerned and the corresponding 
amounts. 

A  reprogramming  of  the  ESAs  budget  lines  (12.0204,  12.0205  and  12.0206)  is 
required. Although the full amounts envisaged will be ultimately covered by fees, an 
advance  will  be  required  from  the  EU  budget  to  cover  the  costs  incurred  during  at 
least the first 18 months of operation. 

After adoption of the proposal, the Commission will be required to adopt a delegated 
act specifying in detail the methodology for calculating and collecting the fees. This 
will  then  require  non-objection  from  the  European  Parliament  and  the  Council  and 
publication in the Official Journal before fees can start being collected. Nevertheless, 
these costs should be recuperated over time, at the latest in 2021. 

–   

The proposal/initiative requires application of the flexibility instrument 

or revision of the multiannual financial framework51. 

Explain what is required, specifying the headings and budget lines concerned and the corresponding 
amounts. 

[…] 

3.2.5.  Third-party contributions  

– 

– 

The proposal/initiative does not provide for co-financing by third parties.  

The proposal/initiative provides for the co-financing estimated below: 

EUR million (to three decimal places) 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary 
to show the duration of the 
impact (see point 1.6) 

Total 

Specify  the  co-financing 
body  

TOTAL 
co-financed  

appropriations 

51 

See  Articles  11  and  17  of  Council  Regulation  (EU,  Euratom)  No  1311/2013  laying  down  the 
multiannual financial framework for the years 2014-2020. 

EN 

273 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
3.3. 

Estimated impact on revenue  

–   

The proposal/initiative has no financial impact on revenue. 

–   

The proposal/initiative has the following financial impact: 

–    on own resources  

–    on miscellaneous revenue  

Appropriation
s available for 
the current 
financial year 

Budget revenue line: 

Article …………. 

EUR million (to three decimal places) 

Impact of the proposal/initiative

52

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

Enter as many years as necessary to show 
the duration of the impact (see point 1.6) 

For miscellaneous ‘assigned’ revenue, specify the budget expenditure line(s) affected. 

[…] 

Specify the method for calculating the impact on revenue. 

[…] 

52  As  regards  traditional  own  resources  (customs  duties,  sugar  levies),  the  amounts  indicated  must  be  net 

amounts, i.e. gross amounts after deduction of 25 % for collection costs. 

EN 

274 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
ANNEX 

The costs related to the tasks to be carried out by the ESAs have been estimated for 
staff expenditure in conformity with the cost classification in the ESAs' draft budget 
for 2018. This legislative initiative will have an impact on costs incurred by the ESAs 
because  of  the  changes  brought  to:  (I.)  the  governance,  (II.)  the  indirect  supervisory 
powers  of the ESAs (III.) the funding system to  finance  those  agencies and (IV) the 
direct  supervisory  powers  granted  to  ESMA.  The  extra-staff  will  also  need  to  be 
supported  by  overheads  resources  and  legal  experts  (V.).  Given  the  increase  in  staff 
members,  this  legislative  proposal  may  also  imply  some  changes  in  ESAs  premises 
(VI.).  

I. Governance of the ESAs:  

As  a  consequence  of  this  legislative  proposal,  the  current  Management  Board 
(composed  of  the  Chairperson, the Executive  Director  and members  of  the  Board of 
Supervisors) would be replaced by an Executive Board, a newly set-up body of four 
full-time independent members (including the Chairperson) for EBA and EIOPA and 
6  full-time  independent  members  (including  the  Chairperson)  for  ESMA  with  an 
exclusive focus on the ESAs' mandates. The current Executive Director could become 
part of the Executive Board. Those changes may require two additional staff members 
for  EBA  and  EIOPA  and  four  additional  staff  members53  for  ESMA  (provided  that 
those  employees  are  recruited  outside  the  organisation).  They  will  be  paid  from  the 
ESAs' budget. Those 2 new employees for EBA and EIOPA and 4 for ESMA  should 
be experienced and should be recruited as AD temporary agents of at least a grade of 
AD  13.  Recruitment-related  costs  (travel,  hotel,  medical  examinations  and  other 
allowances,  removal  costs,  and  so  on)  estimated  at  EUR  12  700  per  person  will 
inevitably be incurred for these additional staff.    

Under  the  legislative  proposal,  this  Executive  Board  would  be  granted  decision-
making  powers  for  certain  non-regulatory  tasks,  where  the  incentive  misalignments 
implied by the current governance model are most problematic (e.g., breach of Union 
law procedures and dispute settlements). As one of the objectives of this proposal is to 
increase  the  use  of  those  powers,  the  permanent  members  of  the  Executive  Board 
should  be  adequately  supported  in  their  tasks  by  additional  human  resources.  For 
instance, the modifications brought to those powers should imply an increased number 
of requests for information (sent to competent authorities or market participants) and 
an increased use of dispute settlement powers. Most of those new tasks can be carried 
out  by  existing  ESAs  staff  that  can  be  redeployed  from  quasi-legislative  work  to 
supervisory convergence tasks. Indeed, in the future, it is expected that the regulatory 
work  may  slightly  decrease  or  stagnate  and  more  ESAs  FTEs  could  work  on 
supervisory  convergence.  As  a  consequence,  in  order  to  support  the  new  Executive 
Board in its new tasks, only 2 additional FTEs for EBA and EIOPA and 3 additional 
FTEs for ESMA should be necessary. 

53 

6 permanent members of the Executive Boards – 1 Executive Director – 1 Chairperson = 4 new permanent 
members. 

EN 

275 

   EN 

 
 
 
 
                                                 
 
To summarise, this legislative financial statement assumes that changes in the governance of 
the ESAs may imply for each of those agencies:  

  The  recruitment  of    4  new  ADs  temporary  agent  for  ESMA  and  2  new  ADs 
temporary  agent  for  EBA  and  EIOPA  of  at  least  a  grade  of  AD  13  with  a  high 
level of professional experience;   

  2 FTEs (all TAs) for EBA and EIOPA and 3  FTEs for ESMA to  help the New 
Executive  Board  members  in  their  new  tasks  and  that  will  compensate  the 
expected increase workload related to supervisory convergence works;  

  Recruitment-related  costs  for  these  additional  staff  (travel,  hotel,  medical  examinations 

and other allowances, removal costs, and so on).  

II. Indirect Supervision by the ESAs:  

i. Common tasks requiring the same resources for the 3 ESAs  

In  order  to  foster  consistency  within  the  network  of  financial  supervisors,  the  peer 
reviews  conducted  by  the  ESAs  would  be  replaced  by  independent  reviews.  While 
peer reviews are currently conducted by peer review panels mainly comprised of staff 
from  the  EU-28  national  competent  authorities,  the  independent  reviews  will  be 
carried out under the supervision of the newly-established Executive Board. In order 
to fulfil this task, the legislative proposal provides that the Executive Board could set 
up  a  review  committee.  This  committee  would  be  composed  of  ESAs  staff  only,  in 
order to ensure the independence of the reviews. The creation of such an] committee 
would thus require additional staff, even if some ESAs staff already participate in the 
current  peer reviews. This  increase in  ESAs staff can  be  estimated  at five additional 
staff members for each ESA, to compensate the absence of human resources provided 
by competent authorities for such exercises..  

The  ESAs  will  be  also  charged  with  a  new  mission  aimed  at  coordinating  the 
competent  authorities,  with  a  view  to  ensuring  convergence  in  supervisory  practices 
and consistent application of Union law. In this context, the ESAs would set common 
goals and objectives for supervision in the form of a multiannual EU Strategic Plan. 
The ESAs already prepares an annual work programme. However, the current ESAs' 
annual work programme is meant to cover regulatory and supervisory activities to be 
undertaken  by  the  ESAs  themselves,  whereas  the  new  EU  Strategic  Plan  would  be 
meant  to  cover  supervisory  activities  to  be  carried  out  by  competent  authorities.  In 
addition,  the  new  coordination  powers  also  imply  that  the  competent  authorities 
the  Single  Resolution 
(including 
Mechanism/Board) would be required to draw up annual work programs (in line with 
the EU Strategic Plan) and submit them to the ESAs that  would assess them against 
the EU Strategic Plan. The ESAs would then issue a recommendation or an individual 
approval  decision  addressed  to  each  competent  authority  for  its  respective  annual 
program and would review the implementation as it progresses. This interaction with 
the  competent  authorities  and  the  coordination  work  with  the  relevant  teams  within 
each ESA would require additional human resources. Three additional staff members 
would be needed per ESA. 

the  Single  Supervision  Mechanism  and 

EN 

276 

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The ESAs would also be tasked with new missions related to Financial Technologies 
(FinTech). Under the legislative proposal, the ESAs would be required to: (i) pursue 
convergence on licensing requirements for Fintech companies, (ii) clarify and update 
the supervisory outsourcing frameworks, in particular as regards outsourcing to cloud 
services;  (iii)  coordinate  national  technological  innovation  hubs,  and  possibly  issue 
guidelines  about  technological  innovation  hubs/regulatory  sandboxes  set  up  by 
Member States; and (iv) on cybersecurity, pursue convergence of IT risk management 
and  contribute  to  develop,  together  with  the  Commission  and  the  European  Central 
Bank,  cyber  stress  testing  modalities.  Dedicated  resources  on  FinTech  would  be 
necessary to cover these additional tasks, estimated at 3 additional staff members. 

ii. Tasks requiring different resources for the three ESAs 

The  ESAs  would  also  have  more  clearly  defined  responsibilities  in  terms  of 
monitoring  the  Commission's  equivalence  decision  applicable  to  a  third  country's 
regulatory and supervisory framework. In the past, absent a clear legal basis for ESAs 
to assist the Commission with post-equivalence monitoring, some ESAs were unable 
to  assist  because  of  resource  constraints.  At  present,  the  ESA  provides  an  initial 
analysis  feeding  into  the  equivalence  assessment  of  the  Commission  in  one  of  two 
scenarios:  the  Commission  has  specifically  requested  EBA  to  provide  technical 
advice,  or  EBA  is  specifically  tasked  to  do  so  under  some  primary  legislation.  The 
ESA  legislative  proposal  would  more  clearly  state  that  the  ESAs  may  assist  the 
Commission  with  the  monitoring  of  third-country  developments  (i.e.,  regulatory, 
supervisory  and  market  developments  in  third  country  as  well  as  the  supervisory 
record  of  third  country  authorities)  in  jurisdictions  subject  to  a  positive  equivalence 
decision  by  the  Commission.  The  purpose  of  this  monitoring  is  to  ensure  that  the 
conditions upon which the equivalence decision is based continue to be fulfilled on an 
ongoing  basis,  with  a  particular  emphasis  on  third-country  developments  that  may 
impact the financial stability of the Union or of one and more of its Member States. 
The ESAs would notably submit an annual report on its findings to the Commission. 
This  clarified  role  would  require  the  analysis  of  third  country  developments  on  an 
ongoing  basis  and  to  coordinate  the  work  with  interlocutors  within  or  outside  the 
organisation.  

However,  the  three  ESAs  do  not  have  the  same  workload  in  terms  of  equivalence 
decisions. ESMA is in charge of 11 legislative texts out of 13 regulations of the three 
ESAs  that  allow  for  third  country  equivalence  decisions.  EIOPA  and  EBA  are  in 
charge of one text each providing for third country equivalence (i.e., Solvency II and 
CRDIV/CRR  respectively).  As  a  consequence,  the  additional  resources  needed  by 
ESMA should be more important than those needed by EIOPA and EBA.  

The additional resources for ESMA can be estimated at 9 FTEs and related transaction 
costs can be estimated at EUR 1 million per year. For EIOPA and EBA, the additional 
human  resources  can  be  estimated  at  2  FTEs  and  related  transactions  costs  can  be 
estimated at EUR 200 000 per year.   

iii. Specific task for ESMA  

The proposal would confer a stronger mandate on ESMA to foster cooperation among 
national  competent  authorities  in  relation  to  potential  cross-border  cases  of  market 
abuse, while the investigation, enforcement and prosecution would remain at national 
level.  Under this legislative proposal, ESMA would play a role of "information hub" 
to  collect  and  disseminate  upon  the  request  of  regulators  trading  data  involving 

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multiple EU jurisdictions. In addition, if and when a competent authority identifies a 
suspicious cross-border transaction in the course of the oversight process, it would be 
required  to  report  it  to  ESMA  which  would  in  turn  be  tasked  with  actively 
coordinating the investigatory activities at EU level. Such structure would go beyond 
the existing Market Abuse Regulation and Market in Financial Instruments Regulation 
mandates  as  it  would  give  ESMA  enhanced  coordination  powers  and  facilitate  the 
work  of  regulators  engaged  in  cross-border  investigations. Those  new  tasks  would 
require 2 additional FTEs (one for coordination, one for IT services) in addition to IT 
costs  necessary  to  establish  a  'drop  box'  where  competent  authorities  can  download 
and  upload  documents  provided  by  their  peers  and  related  to  market  abuse 
surveillance  and  investigations.  Those  recurrent  IT  costs  are  estimated  at  EUR  100 
000 per year and the one-off IT costs are estimated at EUR 500 000. 

Among the reporting requirements set out in  MiFID II/MiFIR, there is an obligation 
for  the  national  competent  authorities  to  collect  data  from  trading  venues  on  a  high 
number  of  financial  instruments  and  transaction  reports  submitted  (about  15  million 
EU-wide)  by  investment  firms.  Under  the  proposal,  ESMA  will  be  charged  with 
centralising  the  collection  of  reference  data  according  to  MiFID  II/MiFIR  and  to 
collect  it  directly  from  trading  venues.  The  existence  of  common  IT  infrastructure 
within  ESMA 
is  a  way  of  enhancing  supervisory  convergence  concerning 
MiFID2/MiFIR implementation. Given the increase of data to be reported, ESMA will 
need  additional  resources,  including  IT  resources.  Centralisation  of  reporting 
transactions would require 8 FTEs as well as IT costs (EUR 3 million in the first year 
and EUR 2 million in maintenance for the following years). 

iv. Specific task for EIOPA  

Under this legislative proposal, EIOPA would also be conferred with new powers in 
respect  of  internal  models  of  insurance  undertakings.  EIOPA  would  notably  be 
empowered  to  undertake  an  independent  assessment  of  the  applications  to  use  or 
change  an  internal  model  and  to  issue  an  opinion  to  the  competent  authorities 
concerned.  In  case  of  disputes  among  competent  authorities  over  an  internal  model, 
the  possibility  for  EIOPA  to  assist  in  the  settlement  of  disputes,  by  conducting  a 
binding  mediation,  will  be  enhanced.  EIOPA  currently  has  an  'internal  model  team' 
that comprises 4 full-time employees (and in the near future, 5 employees). This new 
task  conferred  on  EIOPA  would  considerably  increase  the  workload  of  such  a  team 
and  require  additional  staff  specialised  in  internal  models.  Those  needs  in  terms  of 
human resources can be estimated at 5 additional FTEs, given the technical nature of 
the work.  

To  summarise,  this  legislative  financial  statement  assumes  that  the  attribution  of  new  and 
stronger indirect supervisory powers to the ESAs may imply:  

  For  EIOPA:  18  FTEs  (15  TAs  and  3  SNEs)  would  be  needed;  EUR  200  000  per  year  for 

translation costs 

  For ESMA: 30 FTEs (24  TAs and 6  SNEs) would be needed; EUR 3.5  million one-off  IT 
costs;  EUR  2.1  million  per  year  for  IT  maintenance  costs;  EUR  1  million  per  year  for 
translation costs.  

  For  EBA:  13  FTEs  (11  TAs  and  2  SNEs)  would  be  needed;  EUR  200,000  per  year  for 

translation costs 

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III. Funding 

i. Resources for calculation of the annual contributions 

This legislative proposal aims to change the financing of the ESAs. This finance will 
mainly  rely  on  a  subsidy  from  the  general  budget  of  the  EU  as  well  as  annual 
contributions  from  the  entities  within  the  remit  of  the  authority.  The  legislative 
proposal  indicates  that  the  annual  contributions  from  the  private  sector  should  be 
collected  indirectly  by  the  ESAs  through  authorities  designated  by  each  member 
States.  Even  in  that  scenario,  the  ESAs  would  have  to:  (i)  request  information  from 
national  competent  authorities;  (ii)  calculate  the  annual  contributions;  and  (iii)  send 
this  information  to  the  Member  States/national  competent  authoritiess.  Then,  the 
national competent authorities or the Member States would: (i) prepare the invoices; 
and  (ii)  collect  the  annual  contributions  from  the  private  sector.  Finally,  the  ESAs 
would  verify  the  amounts  of  annual  contributions  received  from  the  Member 
States/NCAs.  The  Member  States/national  competent  authorities  would  be  in  charge 
of taking enforcement measures in case of non payment. The number of entities within 
the remit of the ESAs is very important. There are more than 11,600 credit institutions 
and investment firms within 's remit, 20,000 entities within ESMA's remit and 20,000 
insurance  and  pension  undertakings  within  EIOPA's  remit.  As  a  consequence,  the 
extra-staff needed for this new task can be estimated at 4 additional FTEs (including 3 
for data collection and fee calculation and 1 for running the IT system).  

In addition, this new funding system will require building a new IT system. Instead of 
developing  their  own  IT  system,  the  three  ESAs  could  develop  a  common  IT 
infrastructure,  which  would  create  synergies.  A  common  IT  interface  would  also  be 
more practical for financial market participants that can be subject to the payment of a 
fee to more than one ESA (e.g. investment firms).  

Such  an  IT  system  could  be  evaluated  at  EUR  1.5  million  (one  off-costs,  i.e.  EUR 
500,000  for  each  ESA)  and  then  EUR  300  000  of  maintenance  costs  per  year  (i.e. 
EUR  100,000  for  each  ESA.  This  new  IT  system  would  need  to  interface  with  the 
activity-based accounting system of the ESAs.  

ii. Resources for calculation, invoicing and collection of supervisory fees (ESMA) 

This legislative proposal would grant ESMA new direct supervisory powers (see next 
section).  Therefore,  ESMA  would  levy  fees  on  the  entities  that  it  will  supervise 
directly or will receive fees for the services that they would provide. ESMA needs new 
resources to invoice those entities and collect fees from them.  

Four new sectors will be transferred to ESMA (funds, prospectuses, benchmarks, data 
reporting  services  providers).  It  can  be  estimated  that  one  FTE  per  sector  would  be 
needed, i.e., 3 additional FTEs.   

To summarise, this legislative financial statement assumes that the changes in the funding of 
the ESAs may imply:  

  For  EBA  and  EIOPA:    4  additional  FTEs  (1  TA  and  3  CAs)  and  IT  systems  estimated  at 

EUR0.5 million (one-off costs) and EUR 100 000 per year (maintenance costs)  

  For  ESMA:  7  additional  FTEs  (1  TA  and  6  CAs)  and  IT  systems  estimated  at  EUR  0.5 

million (one-off costs) and EUR 100 000 per year (maintenance costs) 

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IV. Direct Supervisory powers -ESMA 

As  a  way  of  introduction,  it  should  be  recalled  that  entities  subject  to  direct 
supervision  by  ESMA  should  pay  fees  to  ESMA  (one-off  costs  for  registration  and 
recurrent  costs  for  ongoing  supervision)  .  This  is  the  case  for  credit  rating  agencies 
(see  COM  delegated  regulation  272/2012)  and  trade  repositories  (COM  delegated 
regulation 1003/2013). 

Under this legislative proposal, ESMA will be in  charge of the direct supervision of 
European  Venture  Capital  Funds  (EuVECA),  European  Social  Entrepreneurships 
Funds  (EuSEF)  and  European  Long  Term  Investment  Funds  (ELTIFs).  The 
supervisory  duties  would  consist  of  authorisation/notification  (passporting)  of  those 
funds  and  day-to-day  supervision.  ESMA  will  also  have  direct  investigative  powers 
vis-a-vis  those  funds.  Currently,  there  are  117  EuVECA  funds  (managed  by  97 
EuVECA managers), 7 EuSEF funds (managed by 3 EuSEF managers) and less than 
10  ELTIFs  authorised  in  the  EU.  As  those  funds  are  relatively  new  structures,  the 
number of registrations is high (e.g., 22 new EuVECA in 2016).  Because of the new 
legal  framework  applying  to  EuVECA  or  EuSEF  and  the  changes  in  the  capital 
charges for insurance companies' investments in  ELTIFs, the number of requests for 
authorisation is expected to increase. Additional staff specialised in asset management 
shall  therefore  be  hired  by  ESMA.  Those  needs  in  term  of  human  resources  can  be 
estimated at 7 FTEs (including one FTE specialised in IT and one data analyst). One 
IT system is also  needed to  manage the authorisation and the supervision process as 
well as for the collection of data from the funds. Those costs are estimated at EUR 500 
000 (one-off costs) as well as EUR 100 000 per year for maintenance.  

It should be noted of this transfer of powers from the NCAs to ESMA as regards the 
authorisation  and  the  day-to-day  monitoring  of  those  funds  (  ELTIFs,  EuVECA  and 
EuSEF funds) could also imply a reduction of the NCAs staff currently dealing with 
their  supervision.  The  NCAs  with  the  largest  asset  management  industry  employs  a 
large number of FTEs dealing with funds, mainly UCITs and Alternative Investment 
Funds  (AIFs)  (i.e.  LU  197  FTEs,  FR  102,  DE  120,  NL  25,  IT  65/70  plus  regional 
branches,  UK  100).  It  can  be  estimated  that  the  creation  of  7  FTEs  at  EU  level  to 
supervise  ELTIFs,  EuVECA  and  EuSEF  should  also  lead  to  a  global  decrease  in 
NCAs staff of 7 FTEs. If the number of funds increases in later years more resources 
will be needed but these will then be funded by fees from the industry.     

Under the legislative proposal, ESMA will also be in charge of the approval of some 
prospectuses (wholesale non-equity prospectuses , prospectuses drawn up by specialist 
issuers,  prospectuses  of  asset-backed  securities,  and  prospectuses  by  third  country 
issuers),  including  their  supplements.  It  can  be  estimated  that  ESMA  will  approve 
1600  prospectuses  per  year  (1100  prospectuses,  400  ABS  prospectuses,  60 
prospectuses from specialist issuers). Furthermore, this proposal is also transferring to 
ESMA the supervision of advertisements related to those prospectuses that would be 
approved by ESMA. To carry out the above task, ESMA should have adequate staff 
resources  with  the  right  language  skills  and  sufficient  knowledge  of  the  relevant 
national rules on consumer protection, notably for the control of marketing materials.  
It is estimated that ESMA would need to employ 35 FTEs (including 33 specialised in 
prospectuses, 1 FTE specialised in IT system and 1 data analyst). Those new powers 
would  also  imply  IT  costs  to  manage  the  approval  process  of  prospectuses.    Those 
costs are estimated at EUR 500 000 (one-off costs) as well as EUR 100 000 per year 

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for  maintenance.  As  the  draft  prospectuses  can  be  submitted  for  approval  in  the  23 
official  languages  of  the  EU,  these  new  powers  granted  to  ESMA  would  also  imply 
translation costs estimated at EUR 1,2 million per year. 

ESMA would approve 1,600 prospectuses out of the 3,500 prospectuses approved by 
all the NCAs across the EU, i.e. 45% of all the EU prospectuses. As a consequence, 
this transfer of powers should be accompanied by a decrease in the NCAs staff dealing 
with the approval of prospectuses that would be approved by ESMA.    

This  legislative  proposal  also  foresees  that  ESMA  will  authorise  and  supervise 
administrators  of  critical  benchmarks,  approve  the  endorsement  of  third  country 
benchmarks,  and  recognise  the  administrators  located  in  third  countries.  ESMA  will 
also  be  conferred  with 
those  benchmark 
investigative  powers  as 
administrators.  Given  the  synergies  that  a  direct  supervision  at  EU  level  would 
provide, it can be estimated that 10 additional FTEs should be hired. This transfer of 
powers to ESMA would allow avoiding the recruitment of extra staff by the national 
competent  authorities 
the  supervision  of  critical  benchmark 
administrators54.  

to  deal  with 

regards 

ESMA will be in charge of registering data reporting services providers (i.e., approved 
reporting  mechanisms,  approved  publication  arrangements  and  consolidated  tape 
providers)  that  are  new  types  of  entities,  created  by  the  Market  in  Financial 
Instruments Directive. ESMA will also ensure their ongoing supervision and it will be 
empowered to conduct investigations. This will also necessitate additional specialised 
staff  estimated  at  20  FTEs,  including  3  FTEs  specialised  in  IT  systems  and  2  data 
analysts.  Given the large number of data managed by those entities, a large IT system 
is needed to assess their quality, the way they are processed and published. Those IT 
costs are estimated at EUR 2 million (one-off costs) as well as EUR 400 000 per year 
(maintenance  costs).    This  transfer  of  powers  to  ESMA  would  allow  avoiding  the 
recruitment  of  extra  staff  by  the  national  competent  authorities  to  deal  with  the 
supervision of data reporting services providers.  

To  summarise,  this  legislative  financial  statement  assumes  that  the  new  direct  supervisory 
powers of ESMA over the above-mentioned entities would imply: 

  The recruitment of 65 additional FTEs until 2022. 
  One-off IT costs are estimated at EUR 3 million;  
  Recurrent IT costs estimated at EUR  600 000 per year.  
  Translation costs are estimated at EUR 1,2 million per year.   

V. Overheads and legal support 

The  overheads  in  terms  of  resources  support  at  the  agencies  level  cover  Human 
Resources,  Finance,  Facility  Management,  Coordination  and  IT  basic  support 
(excluding  IT  pan  European  projects).  Given  their  extensive  regulatory  work,  the 
ESAs have also important needs in terms of legal support. Based on ESMA's Activity 

54  For instance, the UK FCA estimated that the supervision of a critical benchmark of the LIBOR for instance 
would amount to one-off costs of £0.2m and ongoing costs of £0.9m, including both salaries and overheads. 

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Based  Management  system,  the  Resources  overheads  and  legal  support  stand 
respectively account for 22% and 13% of the total staff. In other words, it means that 
for  7  FTEs  executing  a  core  activity,  roughly  2  additional  staff  are  allocated  to 
resources  overheads and 1 staff to legal support. Taking into account that the ESAs, 
while growing, can further develop economies of scale, we assumed in this Legislative 
Financial  Statement  that  the  overheads  in  terms  of  resources  and  the  legal  support 
would stand for 18% and 8% of the total staff respectively.     

As a consequence, until 2022 the increase in terms of human resources (FTEs) can be 
summarised as follows:  

EBA:  

Core Activity 

Governance 
Indirect Supervisory 
powers 
Funding 
Total 

4 
13 

4 
21 

EIOPA:  

Core Activity 

Governance 
Indirect Supervisory 
powers 
Funding 
Total 

4 
18 

4 
 26 

ESMA:  

Core Activity 

Governance 
Indirect Supervisory 
powers 
Funding 
Direct Supervisory 
powers 
Total 

7 
30 

7 
65 

109 

Resources 
Overheads 
1 
3 

1 
5 

Resources 
Overheads 
1 
4 

1 
6 

Resources 
Overheads 
2 
7 

2 
16 

27 

Legal support  Total 

1  
2 

0 
3 

6 
18 

5 
29 

Legal support  Total 

1 
2 

0 
3 

6 
24 

5 
35 

Legal support  Total 

1 
3 

0 
6 

10 

10 
40 

9 
87 

146 

In order to further reduce the costs incurred by the ESAs, a large number of new FTEs 
could be employed as Contract Agents (CAs) or Seconded National Experts (SNEs). 
However,  the  number  of  SNEs  should  not  be  overestimated.  The  ESAs  might  face 
difficulty recruiting such experts because of the costs this would represent for Member 
States  and  national  competent  authorities.  In  addition  to  these  difficulties  with  their 

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availability,  in  the  area  of  direct  supervision  it  should  be  expected  that  they  will 
provide  essential  experience  when  ESMA  takes  up  those  tasks,  but  in  the  long  run 
beyond the start-up phase it will be more important for ESMA to maintain expertise in 
house  and  rely  relatively  more  on  Temporary  Agent  staff.  The  following  table 
provides for an indicative split of staff into those categories. 

2019 

2020 

2021 

2022 

Temporary Agents 
Seconded National Experts 
Contractual Agents 
Total 

63 
5 
29 
97 
(staff in 2021 and later years is indicative 

104 
11 
37 
152 

121 
15 
41 
177 

147 
15 
48 
210 

VI. Premises 

The modifications of tasks will also imply new resources in terms of premises for the 
ESAs.  The  estimated  additional  costs  have  been  taken  into  account  for  both  ESMA 
and  EIOPA.  Regarding  EBA,  no  additional  costs  have  been  accounted  for  in  this 
document  as  no  information  is  available  at  this  time  regarding  the  new  seat  and  the 
size of the building proposed by the Member States. 

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