Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2014/65/EU on markets in financial instruments
Date: 2021-11-25
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: capital market, credit institution, financial instrument, financial legislation, financial supervision, financial transaction, investment company, trade licence

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   EUROPEAN COMMISSION  Brussels, 25.11.2021  COM(2021) 726 final 2021/0384 (COD)  Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2014/65/EU on markets in financial instruments (Text with EEA relevance) {SWD(2021) 346, 347} - {SEC(2021) 573}  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

This  initiative  is  one  of  a  series  of  measures  that  implement  the  Capital  Markets  Union 
(CMU). It aims to empower investors, in particular smaller and retail investors,1 by enabling 
them to access market data necessary to invest in shares or bonds more easily and by making 
EU market infrastructures more robust. This will also help increase market liquidity, making 
in  turn  easier  for  companies  to  get  funding  from  capital  markets.  In  order  to  deliver  on  its 
objective  of  fostering  a  true  and  efficient  single  market  for  trading,  the  Commission  has 
identified  three  priority  areas  for  the  review:  improving  transparency  and  availability  of 
market  data,  improving  the  level-playing  field  between  execution  venues  and  ensuring  that 
EU  market  infrastructures  can  remain  competitive  at  international  level.  This  initiative  is 
accompanied  by  a  proposal  to  amend  Regulation  (EU)  600/2014  on  markets  in  financial 
instruments (MiFIR) and is included in the Commission’s 2020 Work Programme. 

In its Communication on ‘The European economic and financial system: fostering openness, 
strength  and  resilience’  of  19  January  2021,2  the  European  Commission  confirmed  its 
intention to propose to improve, simplify and further harmonise capital markets’ transparency, 
as part of the review of the MiFID II and MiFIR framework (MiFID/R). In the wider context 
of  the  efforts  aimed  at  strengthening  the  international  role  of  the  euro,  the  Commission 
announced that such a reform would include the design and implementation of a consolidated 
tape,  in  particular  for  corporate  bond  issuances  with  an  aim  of  increasing  the  liquidity  of 
secondary trading3 in euro-denominated debt instruments. 

Whereas  the  major  part  of  the  legislative  measures  to  enact  this  package  are  situated  in  the 
Regulation amending MiFIR, the current proposal holds incidental modifications to Directive 
2014/65/EU  on  markets  in  financial  instruments  (MiFID  II)  which  are  necessary  to  ensure 
coherence. The two proposals should therefore be read in conjunction. 

• 

Consistency with existing policy provisions in the policy area 

The initiative of which this proposal is a part builds upon and improves the existing rules that 
govern  participation  in  the  capital  markets  of  the  European  Union.  In  2007,  MiFID  I4 
introduced competition in the market for equity trading. Later iterations of the text (MIFID II) 
extended  competition  to  trading  in  non-equity  asset  classes,  such  as  bonds  and  derivatives. 
The consequence is that, when a broker or investor wants to execute an order to buy or sell an 
asset,  they  can  choose  from  different  venues,  such  as  regulated  markets  (RMs),  multilateral 
trading facilities (MTFs), dark pools5, and systematic internalisers (SIs).  

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2 
3 

4 

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Retail investors refers to a large spectrum of investors that are non-professional investors.  
https://ec.europa.eu/info/publications/210119-economic-financial-system-communication_en.  
Secondary  trading  denotes  capital  market  activity  that  takes  place  after  the  issuance  of  a  financial 
instrument. The issuance can be done for example by means of an initial public offering (IPO). 
Directive 2004/39/EC of the European Parliament and of the  Council of 21 April 2004 on  markets in 
financial 
and 
Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 
93/22/EEC (OJ L 145, 30.4.2004, p. 1). 
Dark pools are (dedicated parts of) MTFs or RMs that do not apply pre-trade transparency following the 
use of pre-trade transparency waivers.  

amending  Council  Directives 

and 93/6/EEC 

85/611/EEC 

instruments 

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MiFIR,6  in  application  since  3 January 2018,  recognises  the  benefits  of  transparency  and 
market data consolidation for the investment community.  

To maintain a well-balanced trading landscape, the transparency rules that govern trading on 
exchanges  as  well  as  on  the  alternative  platforms  or  through  systematic  internalisers 
(investment  banks  and  market  makers)  would  benefit  from  certain  adjustments.  The  use  of 
certain  exemptions  from  the  transparency  rules  (so-called  “waivers”)  are  seen  as  being 
responsible  for  the  relatively  low  percentage  of  share  trades  that  are  executed  on  price 
transparent venues. The current regulation already contains rules to curb the use of the most 
commonly  used  transparency  waivers.  Rules  like  the  “double  volume  cap”  intend  to  put  an 
upper  limit  (cap)  on  the  amount  of  shares  that  market  participants  can  trade  under  a 
transparency  waiver.  Such  provisions,  apart  from  being  resource-intensive  to  administer  on 
the  part  of  the  regulators,  have  proven  to  be  rigid  and  collectively  introduce  unnecessary 
complexity  in  the  operation  of  equity  markets.  The  review  therefore  plans  to  streamline  the 
complex interplay between transparency waivers and the double volume cap.  

Furthermore,  as  regards  data  consolidation,  MiFIR  already  comprises  the  concept  of  a 
‘consolidated  tape  provider’  (‘CTP’).7  The  idea  behind  a  CTP  is  that  exchanges  and 
alternative trading venues would send real-time data streams to an accredited CTP. This CTP 
would make available to the public the exact same information, at so-called reasonable cost, 
using identical data tags and formats.  

The  current  rules  on  the  CT  rely  on  private  actors  (competing  consolidators)  consolidating 
market  data  from  various  execution  venues.  Based  on  the  MiFIR  provisions,  there  can  be 
multiple competing  CTPs,  but  it  is  also  possible  to  have  one  single  CTP  in  case  multiple 
providers do not step up. To date, this has not happened for a variety of reasons.  

The  proposed  reform  of  MiFIR  addresses  the  reasons  why  no  CTP  has  come  forward.  It 
amends the CT provisions in MiFIR to facilitate the emergence of a CTP for each asset class.  

• 

Consistency with other Union policies 

The  European  Union’s  financial  services  policy  encourages  transparency  and  competition. 
These policy goals extend to core market data. As part of the Capital Markets Union (CMU) 
action  plan,  the  Union  aims  to  create  an  integrated  view  of  EU  trading  markets.  A 
consolidated tape will provide consolidated data on prices and volume of traded securities in 
the  EU,  thereby  improving  overall  price  transparency  across  trading  venues.  It  will  also 
improve  competition  between  trading  venues,  giving  investors  access  to  considerably 
improved market information at a pan-European level. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  MiFID/MiFIR  framework  is  the  rulebook  governing  participation  in  European  capital 
markets.  It  consists  of  a  directive  (Directive  2014/65/EU,  MiFID  II)  and  a  regulation 

6 

7 

Regulation  (EU)  No 600/2014  of  the  European  Parliament  and  of  the  Council  of  15 May  2014  on 
markets in financial instruments and amending Regulation (EU) No 648/2012 (OJ L 173, 12.6.2014, p. 
84). 
Provisions regarding the CTP were initially introduced in MiFID II, but have been replaced to MiFIR, 
which changes enter into force as of 1 January 2022.  

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(Regulation  (EU)  No  600/2014,  MiFIR).  The  legal  basis  for  the  adoption  of  MiFID  II  is 
Article  53  of  the  Treaty  on  the  Functioning  of  the  European  Union  (TFEU).  Therefore,  the 
proposed reform should also fall under the same legal basis. Article 53 TFEU grants the co-
legislators the power to issue directives aimed at making it easier for persons to take up and 
pursue commercial activities across the EU. 

• 

Subsidiarity (for non-exclusive competence)  

According  to  the  principle  of  subsidiarity  (Article  5.3  of  the  TFEU),  action  on  EU  level 
should  be  taken  only  when  the  aims  envisaged  cannot  be  achieved  sufficiently  by  Member 
States  alone  and  can  therefore,  by  reason  of  the  scale  or  effects  of  the  proposed  action,  be 
better achieved at Union level.  

In  light  with  the  overall  objectives  of  the  consolidated  tape,  some  provisions  of  MiFIR  are 
moved  to  MiFIR  to  ensure  a  more  harmonised  approach  across  the  Union.  Action  taken  by 
individual Member States would not effectively address the need for consolidation of market 
data  that  trading  venues  generate  across  the  Union.  Member  States  could  attempt  to 
harmonise  market  data  reporting  standards  and  licensing  conditions  for  a  market  data 
consolidator  by  means  of  national  laws.  National  initiatives  would  not  prove  effective  in 
addressing  market  data  quality  or  licensing  of  market  data  to  a  consolidator  that  needs  to 
collect market data form trading venues across the Union.  

• 

Proportionality 

This  proposal  is  strictly  a complement to  the proposal  to  amend MiFIR.  It  is  limited on the 
one hand to the deletion of certain provisions in MiFID II which will become superfluous as a 
result of the modifications to MiFIR, and on the other hand to the creation of legal obligations 
for Member States to organise the supervision of rules newly set out in MiFIR.  

Therefore, the proposal takes full account of the principle of proportionality, being adequate 
to reach the objectives and not going beyond what is necessary in doing so. It is compatible 
with  the  proportionality  principle,  taking  into  account  the  right  balance  of  public  interest  at 
stake and the cost-efficiency of the measure. 

• 

Choice of the instrument 

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

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS8 

EVALUATIONS, 

EX-POST 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

The  first  stakeholder  consultation  undertaken  by  the  Commission  after  the  entry  into 
application of the MiFID/R rules in January 2018 was carried out between February and May 
2020. It is described in detail in the proposal to amend MiFIR that accompanies this proposal. 
In  particular,  it  revealed  that  most  investors  do  not  have  a  complete  view  of  prices  and 
available supply (ie liquidity) when deciding to invest in the Union’s capital markets.  

8 

This section refers to the legislative package as a whole. 

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Between  the  end  of  2019  and  2021  ESMA  performed  in-depth  analyses  of  the  MiFID/R 
framework  primarily  focussing  on  the  topics  addressed  in  the  review  clauses  in  Article  90 
MiFID and Article 52 MiFIR and published review reports containing recommendations for 
changes in the legal framework9. These review reports built on extensive public consultations 
and  contained  detail  recommendations  relating  to  market  structure  topics,  in  particular  the 
current  transparency  regime.  The  reports  are  described  in  detail  in  the  proposal  to  amend 
MiFIR which this proposal accompanies. 

• 

Stakeholder consultations 

On 28 June 2019, the Commission organised a workshop intended to engage stakeholders on 
an  interactive  discussion  about  the  creation  of  an  EU  consolidated  tape,  bringing  together 
around 80 market participants to debate the merits and technical characteristics of an EU CTP, 
as well as the obstacles to its creation. The participants were experts in trading or market data 
from  the  buy-side,  data  vendors,  trading  venues,  and  on  the  regulatory  side,  ESMA  and 
several  NCAs.  Generally,  participants  of  all  types  agreed  that  such  a  tool  could  be  useful, 
even if there were different views as to the characteristics of a tape. 

On  17  February  2020,  DG  FISMA  published  a  public  consultation  on  MiFID/R  review 
intended to gather evidence from stakeholders, and more generally from EU citizens, on the 
overall  functioning  of  the  regime  after  two  years  of  application.  Stakeholders  had  until  18 
May 2020 to express their views via the online EU Survey portal. 458 stakeholders replied to 
the  open  consultation  on  several  topics,  including  the  functioning  of  the  transparency 
framework, the consolidate tape, the share and derivative trading obligations. This feedback 
statement provides a factual summary of the 253 unique responses received during this period 
coming  from  sell  side,  buy  side,  trading  venues,  data  providers,  end  users  as  well  as 
regulators. 

Beyond the above, the Commission has been actively studying the issues at hand, mandating 
an extensive study for assessing and defining it ex-ante, with the final goal of supporting an 
informed decision-making process.  

Finally,  the  Commission  has  had  many  bilateral  contacts  with  a  broad  spectrum  of 
stakeholders,  notably  companies  that  specialise  in  the  aggregation  of  market  data,  further 
refining its analysis and policy approach.  

9 

ESMA published the following review reports: 
-  MiFID II/MiFIR Review  Report No. 1 On the  development in prices for pre- and post-trade data 
instruments: 

and 
mifid_ii_mifir_review_report_no_1_on_prices_for_market_data_and_the_equity_ct.pdf 
(europa.eu) 

consolidated 

equity 

tape 

the 

for 

on 

-  MiFID II/MiFIR Review Report on the transparency regime for equity and equity-like instruments, 
shares: 

obligations 

volume 

trading 

double 

and 

for 

cap  mechanism 

the 
https://www.esma.europa.eu/sites/default/files/library/esma70-156-
2682_mifidii_mifir_report_on_transparency_equity_dvc_tos.pdf  
in 
https://www.esma.europa.eu/sites/default/files/library/esma70-156-
2756_mifidii_mifir_report_on_systematic_internalisers.pdf  

internalisers 

systematic 

report 

the 

on 

-  MiFIR 

non-equity 

instruments: 

-  MiFID  II/MiFIR  Review  Report  on  the  transparency  regime  for  non-equity  instruments  and  the 
trading  obligation  for  derivatives:  https://www.esma.europa.eu/sites/default/files/library/esma70-
156-3329_mifid_ii_mifir_review_report_on_the_transparency_regime_for_non-
equity_instruments.pdf  

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• 

Collection and use of expertise 

The  proposal  builds  on  the  expertise  of  EU  competent  authorities  that  supervise  trading 
venues as well as on the expertise of market operators. In addition, the Commission monitors 
closely  developments  in  other  jurisdictions  (notably  U.S.  and  Canada)  that  have  already 
developed  their  consolidated  tapes  in  the  past,  and  the  possible  changes  that  these 
jurisdictions  are  contemplating  for  their  respective  tapes.  The  Commission  considered  the 
various alternatives and has taken a view on whether these alternatives could be applied to the 
EU situation. 

• 

Impact assessment 

The  Regulatory  Scrutiny  Board  reviewed  the  impact  assessment  that  focussed  on  the 
development  of  a  framework  for  consolidation  of  market  data.10  The  impact  assessment 
report,  which  is  described  in  detail  in  the  proposal  to  modify  MiFIR  which  this  proposal 
accompanies,  received  a  positive  opinion  with  reservations  from  the  Regulatory  Scrutiny 
Board  on  8  October  2021.  Other  topics  included  in  the  proposal  were  already  covered  in-
depth  in  the  various  ESMA  reports  on  the  functioning  of  the  MiFIR  framework  which 
explains why they were not the focus of the impact assessment. 

• 

Fundamental rights 

The  proposal  respects  the  fundamental  rights  and  observes  the  principles  recognised  by  the 
Charter of Fundamental Rights of the European Union, in particular the principle establishing 
a  high  level  of  consumer  protection  for  all  EU  citizens  (Article  38).  Without  creating  the 
condition  for  a  consolidated  tape  to  be  created  in  the  EU,  retail  clients  would  potentially 
remain without a tool useful to assess compliance with the best execution rule by their brokers 
and  to  allow  them  an  increased  range  of  investment  opportunities,  particularly  in  certain 
Member States where trading venues are smaller and offer fewer investment opportunities. 

4. 

BUDGETARY IMPLICATIONS 

The initiative does not  have  an impact  on the EU budget.  The tape will be provided by the 
private sector, under the registration of ESMA. The other elements that the proposal tackles 
do not have an impact on the EU budget either. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The proposal to amend MiFIR contains a monitoring and evaluation of the development of an 
integrated EU market for consolidated market data. Monitoring will cover both the evolution 
of  operating  models  for  a  consolidated  tape  used  and  the  success  in  facilitating  universal 
access  to  consolidated  market  data  for  the  wider  investor  community.  Particular  focus  of 
monitoring  will  be  on  the  asset  classes  for  which  a  consolidated  tape  has  emerged;  the 
timeliness  and  delivery  quality  of  market  data  consolidation;  the  role  of  market  data 
consolidation in reducing implementation shortfall per asset class; the number of subscribers 
to  consolidated  market  data  per  asset  class;  the  success  of  revenue  allocation  models  for 
market  data  contributors;  the  effect  of  market  data  consolidation  on  remedying  information 
asymmetries between various capital market participants; and the effect on more democratic 
access to consolidated market data on investments in SMEs.  

10 

The RSB sheet and opinion can be found at: [include link] 

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• 

Explanatory documents (for directives) 

The proposal does not require explanatory documents in relation to its transposition. 

• 

Detailed explanation of the specific provisions of the proposal 

Article 1(1), (3), (4), (7) and (8) hold deletions or replacements of provisions in MiFID II that 
will become superfluous as a result of the proposed amendments to MiFIR in this package. 

Article  1(2)  removes  the  licensing  requirement  for  persons  dealing  on  own  account  on  a 
trading  venue  by  means  of  direct  electronic  access  (DEA)  to  the  extent  that  they  do  not 
provide  or  perform  any  other  investment  services.  This  change  is  in  line  with  a 
recommendation by ESMA in the Report on algorithmic trading11.  

Article  1(5)  requires  Member  States  to  oblige  investment  firms  and  market  operators 
operating an MTF or OTF to have arrangements in place to ensure they meet the data quality 
standards now enacted in MiFIR. 

Article 1(6) requires Member States to oblige regulated markets to have arrangements in place 
to ensure the data quality standards now enacted in MiFIR. 

Article 1(9) requires Member States to also provide for sanctions for infringements of certain 
new  provisions  in  MiFIR  in  relation  to  the  reviewed  volume  cap  mechanism,  to  mandatory 
contributions  to  consolidated  tape  providers,  to  the  quality  of  data  reported  to  consolidated 
tape providers as well as to payments for order flow. 

11 

« Report  on  algorithmic  trading »  https://www.esma.europa.eu/sites/default/files/library/esma70-156-
4572_mifid_ii_final_report_on_algorithmic_trading.pdf 

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2021/0384 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Directive 2014/65/EU on markets in financial instruments 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 53(1) thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Economic and Social Committee12, 
Having regard to the opinion of the European Central Bank13,  

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

In  its  2020  CMU  Action  Plan14,  the  Commission  announced  its  intention  to  table  a 
legislative  proposal  to  create  a  centralised  data  base  which  was  meant  to  provide  a 
comprehensive  view  on  prices  and  volume  of  equity  and  equity-like  financial 
instruments  traded  throughout  the  Union  across  a  multitude  of  trading  venues 
(‘consolidated  tape’).  On  2  December  2020,  in  its  conclusion  on  the  Commission’s 
CMU  Action  Plan15,  the  Council  encouraged  the  Commission  to  stimulate  more 
investment  activity inside the  Union by  enhancing data availability  and transparency 
by further assessing how to tackle the obstacles to establishing a consolidated tape in 
the Union. 

(2) 

In its roadmap on ‘The European economic and financial system: fostering openness, 
strength and resilience’ of 19 January 202116, the Commission confirmed its intention 
to  improve,  simplify  and  further  harmonise  capital  markets’  transparency,  as  part  of 
the review of Directive 2014/65/EU of the European Parliament and of the Council17 

12 
13 
14 
15 

16 
17 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
COM/2020/590 final.  
Council Conclusions on the Commission’s CMU Action Plan, 12898/1 of /20 REV 1 EF 286 ECOFIN 
1023: https://data.consilium.europa.eu/doc/document/ST-12898-2020-REV-1/en/pdf;  
COM/2021/32 final.  
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). 

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and of Regulation  (EU)  No 600/2014 the European Parliament and of the Council18. 
As part of efforts to strengthen the international role of the Euro, the Commission also 
announced  that  such  reform  would  include  the  design  and  implementation  of  a 
consolidated tape, in particular for corporate bond issuances to increase the liquidity of 
secondary trading in euro-denominated debt instruments.  

Regulation  (EU)  No  600/2014  was  amended  by  Regulation  (EU)  XX/XXXX  of  the 
European  Parliament  and  of  the  Council19  removing  the  main  obstacles  that  have 
prevented the emergence of a consolidated tape. That Regulation therefore introduced 
mandatory  contributions  of  market  data  to  the  consolidated  tape  provider  and 
enhanced  the  data  quality  including  harmonizing  the  synchronisation  of  the  business 
clock. In addition, that Regulation reduced the recourse to possibilities to  waive pre-
trade transparency for venues and systematic internalisers. Furthermore, it introduced 
enhancements to the trading obligations and the prohibition of the practice of receiving 
payment  for  forwarding  client  orders  for  execution.  Since  Directive  2014/65  also 
contains provisions related to consolidated tape and transparency, the amendments to 
Regulation (EU) No 600/2014 should be reflected in Directive 2014/65/EU.  

Article 1(7) of Directive 2014/65/EU requires operators of systems in which multiple 
third-party  buying  and  selling  trading  interests  in  financial  instruments  are  able  to 
interact  (‘multilateral  systems’)  to  operate  in  accordance  with  the  requirements 
concerning  regulated  markets  (‘RMs’),  multilateral  trading  facilities  (‘MTFs’),  or 
organised  trading  facilities  (‘OTFs’).  However,  market  practice,  as  evidenced  by  the 
European  Securities  and  Markets  Authority  (‘ESMA’)  in  its  final  report  on  the 
functioning  of  the  organised  trading  facility20  has  shown  that  the  principle  of 
multilateral  trading  activity  requiring  a  license  has  not  been  upheld  in  the  Union, 
which has led to an uneven playing field between licensed and unlicensed multilateral 
systems.  In  addition,  that  situation  has  created  legal  uncertainty  for  certain  market 
participants as to the regulatory expectations for such multilateral systems. To provide 
market  participants  with clarity,  safeguard a level-playing  field,  improve  the internal 
market  functioning  and  ensure  a  uniform  application  of  the  requirement  that  hybrid 
systems  can  only  perform  multilateral  trading  activities  where  they  are  licensed  as  a 
regulated  market,  a  multilateral  trading  facility  (‘MTF’)  or  an  organised  trading 
facility (‘OTF’), the content of Article 1(7) of Directive 2014/65/EU should be moved 
from Directive 2014/65/EU to Regulation (EU) No 600/2014. 

Article 2(1), point (d), point (ii), of Directive 2014/65/EU, exempts persons dealing on 
own  account  from  the  requirement  to  be  licensed  as  an  investment  firm  or  credit 
institution,  unless  those  persons  have  direct  electronic  access  to  a  trading  venue. 
Articles  17(5)  and  48(7)  of  Directive  2014/65/EU  require  that  providers  of  direct 
electronic access are licensed investment firms or credit institutions. Investment firms 
or  credit  institutions  that  do  provide  direct  electronic  access  are  responsible  for 
ensuring  that  their  clients  comply  with  the  requirements  laid  down  in  Articles  17(5) 

Regulation  (EU)  No  600/2014  of  the  European  Parliament  and  of  the  Council  of  15  May  2014  on 
markets  in  financial  instruments  and  amending  Regulation  (EU)  No  648/2012  (OJ  L  173,  12.6.2014, 
p. 84). 
Regulation (EU) XX/XXXX of the European Parliament and of the Council amending Regulation (EU) 
No 600/2014 as regards enhancing market data transparency, removing obstacles to the emergence of a 
consolidated tape, optimising the trading obligations and prohibiting receiving payments for forwarding 
client orders (COM 727) 
https://www.esma.europa.eu/sites/default/files/esma70-156-
4225_mifid_ii_final_report_on_functioning_of_otf.pdf. 

(3) 

(4) 

(5) 

18 

19 

20 

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8 

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(6) 

(7) 

(8) 

(9) 

and 48(7) of Directive 2014/65/EU. That gatekeeper function is effective and makes it 
unnecessary  for  clients  of  the  direct  electronic  access  provider,  including  persons 
dealing  on  own  account,  to  become  subject  to  Directive  2014/65/EU.  In  addition, 
removing  that  requirement  would  contribute  to  a  level  playing  field  between  third 
country persons accessing EU venues via direct electronic access, for which Directive 
2014/65/EU does not require a license, and persons established in the Union. 

Due to the removal of multilateral systems from the scope of Article 1(7) of Directive 
2014/65/EU  and  into  Regulation  (EU)  600/2014,  it  is  equally  logic  to  move  the 
corresponding definition of ‘multilateral system’ into that Regulation. 

Article  27(3)  of  Directive  2014/65/EU  contains  the  requirement  for  execution 
platforms  to  publish  a  list  of  details  relating  to  best  execution.  Factual  evidence  and 
feedback  from  stakeholders  has  shown  that  those  reports  are  rarely  read  and  do  not 
enable investors or any users of those reports to make meaningful comparisons based 
on  the  information  provided  in  those  reports.  As  a  consequence,  Directive  (EU) 
2021/338  of  the  European  Parliament  and  of  the  Council21  suspended  the  reporting 
requirement  for  two  years  in  order  for  that  requirement  to  be  reviewed.  Regulation 
(EU)  XX/XXXX22  has  amended  Regulation  (EU)  600/2014  to  remove  the  obstacles 
that  have  prevented  the  emergence  of  a  consolidated  tape.  Among  the  data  that  the 
consolidated  tape  is  expected  to  provide  are  post-trade  information  regarding  all 
transactions  in  financial  instruments.  That  information  can  be  used  for  proving  best 
execution.  The  reporting  requirement  laid  down  in  Article  27(3)  of  Directive 
2014/65/EU will therefore no longer be relevant and should therefore be deleted. 

The correct functioning of market data consolidation via a consolidated tape depends 
on the quality of the data the consolidated tape provider receives. Regulation (EU) No 
600/2014  sets  out  requirements  for  the  quality  of  data  that  contributors  to  the 
consolidated  tape  should  adhere  to.  In  order  to  ensure  that  investment  firms  and 
market  operators  operating  an  MTF  or  an  OTF,  and  regulated  markets,  effectively 
meet  those  requirements,  Member  States  should  require  that  those  investment  firms 
and market operators have the necessary arrangements in place to do so. 

The receipt of high quality data is of the utmost importance for the functioning of the 
consolidated tape and the internal  market.  That  includes  the need for all market  data 
contributors  and  the  consolidated  tape  provider  to  timestamp  their  data  in  a 
synchronized manner and thus to synchronise their business clocks. Regulation (EU) 
XX/XXX23  has  therefore  amended  Regulation  (EU)  600/2014  to  extend  that 
requirement,  which  under  Directive  2014/65/EU  only  applied  to  trading  venues  and 
their members, to systematic internalisers, APAs and CTPs. Since that requirement is 
now  laid  down  in  Regulation  (EU)  600/2014,  it  can  be  removed  from  Directive 
2014/65/EU. 

(10)  Within the framework regulating the Union’s markets in financial instruments, many 
substantive  requirements  laid  down  in  Regulation  (EU)  No  600/2014  are  supervised 
and sanctioned at national level and in accordance with Articles 69 and 70 of Directive 

21 

22 
23 

Directive (EU) 2021/338 of the European Parliament and of the Council of 16 February 2021 amending 
Directive 2014/65/EU as regards information requirements, product governance and position limits, and 
Directives 2013/36/EU and (EU) 2019/878 as regards their application to investment firms, to help the 
recovery from the COVID-19 crisis (OJ L 68, 26.2.2021, p. 14). 
COM 727 
COM 727 

EN 

9 

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2014/65/EU.  Regulation  (EU)  XX/XXXX24  has  amended  Regulation  (EU)  No 
600/2014  to  include  new  rules  on  the  volume  cap  mechanism,  on  mandatory 
contributions of core market data to the consolidate tape, on data quality standards to 
which  those  contributions  are  subject  and  on  the  ban  on  receiving  payments  for 
forwarding client orders for execution. As the supervision of the relevant entities lies 
with  national  authorities, those new substantive requirements should be added to  the 
list  in  Directive  2014/65/EU  of  provisions  for  which  the  Member  States  should 
provide sanctions at national level,  

HAVE ADOPTED THIS DIRECTIVE: 

Article 1 
Amendments to Directive 2014/65/EU 

Directive 2014/65/EU is amended as follows: 

1. 

2. 

3. 

in Article 1, paragraph 7, is deleted;  

in Article 2(1), point (d), point (ii) is replaced by the following: 

‘(ii)  are members of or participants in a regulated market or an MTF;’; 

in Article 4(1), point (19) is replaced by the following: 

‘(19)  multilateral  system’  means  a  multilateral  system  as  defined  in  Article  2(1), 
point (11), of Regulation EU (No) 600/2014;’; 

4. 

Article 27 is amended as follows: 

(a) 

(b) 

paragraph 3 is deleted; 

in paragraph 10, point (a)is deleted; 

5. 

in Article 31(1), the following sentence is added: 

‘Investment  firms  and  market  operators  operating  an  MTF  or  an  OTF  shall  have 
arrangements  in  place  to  ensure  they  meet  the  data  quality  standards  as  set  out  in 
Article 22b of Regulation (EU) No 600/2014.’; 

6. 

in Article 47(1), the following point (g) is added: 

to have arrangements in place to ensure they meet the data quality standards as 

‘(g) 
set out in Article 22b of Regulation (EU) No 600/2014.’; 

7. 

8. 

9. 

Article 50 is deleted; 

in Article 70(3), point (a), point (xxx) is deleted; 

in  Article  70(3),  point  (b),  the  following  points  (iia),  (xvia),  (xvib),  (xvic)  and 
(xxviia) are inserted: 

‘(iia)  Article 5;’; 

‘(xvia) 

‘(xvib) 

‘(xvic) 

Article 22a;’; 

Article 22b;’; 

Article 22c ;’ ; 

‘(xxviia) Article 39a ;’. 

24 

COM 727 

EN 

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Article 2 
Transposition 

1. 

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative 
provisions necessary to comply with this Directive by [OP please insert the date = 12 
months after the date of entry into force of the CTP Regulation] at the latest. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

Article 3 
Entry into force 

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

Article 4 
Addressees 

This Directive is addressed to the Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

EN 

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