Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (Text with EEA relevance)

• (18) in Article 114(1), the first subparagraph is replaced by the following: ‘1. Where an emergency situation arises, including a situation as described in Article 18 of Regulation (EU) No 1093/2010 or a situation of adverse developments in markets, which potentially jeopardises the market liquidity and the stability of the financial system in any of the Member States where entities of a group have been authorised or where significant branches as referred to in Article 51 are established, the consolidating supervisor shall, subject to Section 2 of Chapter 1 of Title VII of this Directive and where applicable Section 2 of Chapter 1 of Title IV of Directive (EU) 2019/2034, alert as soon as is practicable, EBA and the authorities referred to in Article 58(4) and Article 59 and shall communicate all information essential for the performance of their tasks. Those obligations shall apply to all competent authorities.’;

• (19) Article 116 is amended as follows:
• (a) paragraph 2 is replaced by the following: ‘2. The competent authorities participating in the colleges of supervisors and EBA shall cooperate closely. The confidentiality requirements under Title VII, Chapter 1, Section II of this Directive, and, where applicable, Section 2 of Chapter 1 of Title IV of Directive (EU) 2019/2034 shall not prevent the competent authorities from exchanging confidential information within colleges of supervisors. The establishment and functioning of colleges of supervisors shall not affect the rights and responsibilities of the competent authorities under this Directive and under Regulation (EU) No 575/2013.’;
• (b) in paragraph 6, the first subparagraph is replaced by the following: ‘6. The competent authorities responsible for the supervision of subsidiaries of an EU parent institution or an EU parent financial holding company or EU parent mixed financial holding company and the competent authorities of a host Member State where significant branches as referred to in Article 51 are established, ESCB central banks as appropriate, and third‐country supervisory authorities where appropriate and subject to confidentiality requirements that are equivalent, in the opinion of all competent authorities, to the requirements under Title VII, Chapter 1, Section II of this Directive and, where applicable, under Section 2 of Chapter 1 of Title IV of Directive (EU) 2019/2034 may participate in colleges of supervisors.’;
• (c) in paragraph 9, the first subparagraph is replaced by the following: ‘9. The consolidating supervisor, subject to the confidentiality requirements under Title VII, Chapter 1, Section II, of this Directive, and where applicable, under Section 2 of Chapter 1 of Title IV of Directive (EU) 2019/2034, shall inform EBA of the activities of the college of supervisors, including in emergency situations, and communicate to EBA all information that is of particular relevance for the purposes of supervisory convergence.’;

• (20) in Article 125, paragraph 2 is replaced by the following: ‘2. Information received within the framework of supervision on a consolidated basis, and in particular any exchange of information between competent authorities which is provided for in this Directive, shall be subject to professional secrecy requirements at least equivalent to those referred to in Article 53(1) of this Directive for credit institutions or under Article 15 of Directive (EU) 2019/2034.’;

• (21) in Article 128, the fifth paragraph is deleted;

• (22) in Article 129, paragraphs 2, 3 and 4 are deleted;

• (23) in Article 130, paragraphs 2, 3 and 4 are deleted;

• (24) in Article 143(1), point (d) is replaced by the following:
• ‘(d) without prejudice to the provisions set out in Title VII, Chapter 1, Section II of this Directive and where applicable, the provisions set out in Title IV, Chapter 1, Section 2 of Directive (EU) 2019/2034, aggregate statistical data on key aspects of the implementation of the prudential framework in each Member State, including the number and nature of supervisory measures taken in accordance with point (a) of Article 102(1) of this Directive and of administrative penalties imposed in accordance with Article 65 of this Directive.’.

Article 63

Amendments to Directive 2014/59/EU

Directive 2014/59/EU is amended as follows:

• (1) in Article 2(1), point (3) is replaced by the following:
• ‘(3) “investment firm” means an investment firm as defined in point (22) of Article 4(1) of Regulation (EU) 2019/2033 of the European Parliament and of the Council ([^E0024]) which is subject to the initial capital requirement laid down in Article 9(1) of Directive (EU) 2019/2034 of the European Parliament and of the Council ([^E0025]).

• (2) in Article 45, the following paragraph is added: ‘3. In accordance with Article 65 of Regulation (EU) 2019/2033, references to Article 92 of Regulation (EU) No 575/2013 in this Directive as regards the own funds requirements on an individual basis of investment firms referred to in point 3 of Article 2(1) of this Directive and which are not investment firms referred to in Article 1(2) or (5) of Regulation (EU) 2019/2033 shall be construed in the following way:

(a) references to point (c) of Article 92(1) of Regulation (EU) No 575/2013 as regards the total capital ratio requirement in this Directive shall refer to Article 11(1) of Regulation (EU) 2019/2033;

(b) references to Article 92(3) of Regulation (EU) No 575/2013 as regards the total risk exposure amount in this Directive shall refer to the applicable requirement in Article 11(1) of Regulation (EU) 2019/2033 multiplied by 12,5. In accordance with Article 65 of Directive (EU) 2019/2034, references in this Directive to Article 104a of Directive 2013/36/EU as regards additional own funds requirements of investment firms referred to in point 3 of Article 2(1) of this Directive and which are not investment firms referred to in Article 1(2) or (5) of Regulation (EU) 2019/2033 shall be construed as referring to Article 40 of Directive (EU) 2019/2034.’.

Article 64

Amendments to Directive 2014/65/EU

Directive 2014/65/EU is amended as follows:

• (1) in Article 8, point (c) is replaced by the following:
• ‘(c) no longer meets the conditions under which authorisation was granted, such as compliance with the conditions set out in Regulation (EU) 2019/2033 of the European Parliament and of the Council ([^E0026]);

• (2) Article 15 is replaced by the following: ‘Article 15 Initial capital endowment Member States shall ensure that the competent authorities do not grant authorisation unless the investment firm has sufficient initial capital in accordance with the requirements of Article 9 of Directive (EU) 2019/2034 of the European Parliament and of the Council ([^E0027]), having regard to the nature of the investment service or activity in question.

• (3) Article 41 is replaced by the following: ‘Article 41 Granting of the authorisation

(a) the conditions under Article 39 are fulfilled; and (b) the branch of the third‐country firm will be able to comply with the provisions referred to in paragraphs 2 and 3. The competent authority shall inform the third‐country firm, within six months of submission of a complete application, whether or not the authorisation has been granted.

Member States shall not impose any additional requirements on the organisation and operation of the branch in respect of the matters covered by this Directive and shall not treat any branch of third‐country firms more favourably than Union firms. Member States shall ensure that competent authorities notify ESMA on an annual basis of the list of branches of third‐country firms active on their territory. ESMA shall publish on annual basis a list of third‐country branches active in the Union, including the name of the third‐country firm to which the branch belongs.

(a) the scale and scope of the services and activities carried out by the branch in that Member State; (b) for third‐country firms performing the activity listed in point (3) of Section A of Annex I, their monthly minimum, average and maximum exposure to EU counterparties; (c) for third‐country firms providing one or both of the services listed in point (6) of Section A of Annex I, the total value of financial instruments originating from EU counterparties underwritten or placed on a firm commitment basis over the previous 12 months; (d) the turnover and the aggregated value of the assets corresponding to the services and activities referred to in point (a); (e) a detailed description of the investor protection arrangements available to the clients of the branch, including the rights of those clients resulting from the investor‐compensation scheme referred to in point (f) of Article 39(2); (f) their risk management policy and arrangements applied by the branch for the services and activities referred to in point (a); (g) the governance arrangements, including key function holders for the activities of the branch; (h) any other information considered by the competent authority to be necessary to enable comprehensive monitoring of the activities of the branch.

(a) all the authorisations for branches authorised in accordance with paragraph 1 and any subsequent changes to such authorisations; (b) the scale and scope of the services and activities carried out by an authorised branch in the Member State; (c) the turnover and the total assets corresponding to the services and activities referred to in point (b); (d) the name of the third-country group to which an authorised branch belongs.

ESMA shall submit those draft implementing technical standards to the Commission by 26 September 2020. Power is conferred on the Commission to supplement this Directive by adopting the implementing technical standards referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) No 1095/2010.’;

• (4) Article 42 is replaced by the following: ‘Article 42 Provision of services at the exclusive initiative of the client

Without prejudice to intragroup relations, where a third‐country firm, including through an entity acting on its behalf or having close links with such third‐country firm or any other person acting on behalf of such entity, solicits clients or potential clients in the Union, it shall not be deemed to be a service provided at the own exclusive initiative of the client.

• (5) in Article 49, paragraph 1 is replaced by the following: ‘1. Member States shall require regulated markets to adopt tick‐size regimes in shares, depositary receipts, exchange‐traded funds, certificates and other similar financial instruments and in any other financial instrument for which regulatory technical standards are developed in accordance with paragraph 4. The application of tick sizes shall not prevent regulated markets from matching orders large in scale at mid‐point within the current bid and offer prices.’;

• (6) in Article 81(3), point (a) is replaced by the following:
• ‘(a) to check that the conditions governing the taking‐up of the business of investment firms are met and to facilitate the monitoring of the conduct of that business, administrative and accounting procedures and internal‐control mechanisms;’;

- (7) the following article is inserted:

‘Article 95a Transitional provision on the authorisation of credit institution referred to in point (1)(b) of Article 4(1) of Regulation (EU) No 575/2013 Competent authorities shall inform the competent authority referred to in Article 8 of Directive 2013/36/EU where the envisaged total assets of an undertaking which has applied for authorisation pursuant to Title II of this Directive before 25 December 2019 in order to carry out the activities referred to in points (3) and (6) of Section A of Annex I are equal to or exceed EUR 30 billion, and notify the applicant thereof.’.

TITLE VIII FINAL PROVISIONS

Article 65

References to Directive 2013/36/EU in other Union legal acts

For the purposes of prudential supervision and resolution of investment firms, references to Directive 2013/36/EU in other Union acts shall be construed as references to this Directive.

Article 66

Review

By 26 June 2024, the Commission, in close cooperation with EBA and ESMA, shall submit a report, together with a legislative proposal if appropriate, to the European Parliament and to the Council, on the following:

• (a) the provisions on remuneration in this Directive and in Regulation (EU) 2019/2033 as well as in Directives 2009/65/EC and 2011/61/EU with the aim of achieving a level playing field for all investment firms active in the Union, including the application of those provisions;

• (b) the appropriateness of the reporting and disclosure requirements in this Directive and in Regulation (EU) 2019/2033, taking into account the principle of proportionality;

• (c) an assessment, which shall take into account the EBA report referred to in Article 35 and the taxonomy on sustainable finance, on whether any:
• (i) ESG risks are to be considered for an investment firm’s internal governance;
• (ii) ESG risks are to be considered for an investment firm’s remuneration policy;
• (iii) ESG risks are to be considered for the treatment of risks;
• (iv) ESG risks are to be included in the supervisory review and evaluation process;

• (d) the effectiveness of information‐sharing arrangements under this Directive;

• (e) the cooperation of the Union and Member States with third countries in the application of this Directive and of Regulation (EU) 2019/2033;

• (f) the implementation of this Directive and of Regulation (EU) 2019/2033 to investment firms on the basis of their legal structure or ownership model;

• (g) the potential for investment firms to pose a risk of disruption in the financial system with serious negative consequences to the financial system and the real economy and appropriate macroprudential tools to address such a risk and replace the requirements of point (d) of Article 36(1) of this Directive;

- (h) the conditions under which the competent authorities may apply to investment firms, in accordance with Article 5 of this Directive, the requirements of Regulation (EU) No 575/2013.

Article 67

Transposition

They shall apply those measures from 26 June 2021. However, Member States shall apply the measures necessary to comply with point (6) of Article 62 as regards Article 8a(3) of Directive 2013/36/EU by 27 December 2020, and the measures necessary to comply with point (5) of Article 64 from 26 March 2020.

When Member States adopt those measures, they shall contain a reference to this Directive or shall be accompanied by such reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States.

Where the documents accompanying notification of transposition measures provided by Member States are not sufficient to fully assess the compliance of the transposing provisions with certain provisions of this Directive, the Commission may, upon EBA’s request and with a view to carrying out its tasks under Regulation (EU) No 1093/2010, or on its own initiative, require Member States to provide more detailed information regarding the transposition and implementation of those provisions and this Directive.

Article 68

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 69

Addressees

This Directive is addressed to the Member States.

[^E0001]: 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).

[^E0002]: 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).

[^E0003]: 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).

[^E0004]: Directive (EU) 2019/878 of the European Parliament and of the Council of 20 May 2019 amending Directive 2013/36/EU as regards exempted entities, financial holding companies, mixed financial holding companies, remuneration, supervisory measures and powers and capital conservation measures (OJ L 150, 7.6.2019 p. 253).

[^E0005]: Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council (OJ L 35, 11.2.2003, p. 1).

[^E0006]: Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1).

[^E0007]: Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (OJ L 331, 15.12.2010, p. 1).

[^E0008]: Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1).

[^E0009]: 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).

[^E0010]: 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).

[^E0011]: Commission Recommendation of 30 April 2009 on remuneration policies in the financial services sector (OJ L 120, 15.5.2009, p. 22).

[^E0012]: Regulation (EU) 2023/2859 of the European Parliament and of the Council of 13 December 2023 establishing a European single access point providing centralised access to publicly available information of relevance to financial services, capital markets and sustainability (OL L, 2023/2859, 20.12.2023, ELI: http://data.europa.eu/eli/reg/2023/2859/oj).

[^E0013]: Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).

[^E0014]: Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).

[^E0015]: Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).

[^E0016]: 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).

[^E0017]: Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (OJ L 314, 5.12.2019, p. 64).’.

[^E0018]: Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).’.

[^E0019]: Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).’.

[^E0020]: 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)’;

[^E0021]: 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).

[^E0022]: Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).

[^E0023]: Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (OJ L 314, 5.12.2019, p. 64).’;

[^E0024]: Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).

[^E0025]: Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (OJ L 314, 5.12.2019, p. 64).’;

[^E0026]: Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).’;

[^E0027]: Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (OJ L 314, 5.12.2019, p. 64).’;