LegalizeRegulation (EU) 2019/2175 of the European Parliament and of the Council of 18 December 2019 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 600/2014 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, and Regulation (EU) 2015/847 on information accompanying transfers of funds (Text with EEA relevance) (Text with EEA relevance)
(49) Article 58 is amended as follows: (a) paragraph 1 is replaced by the following: ‘1. The Board of Appeal of the European Supervisory Authorities is hereby established.’; (b) in paragraph 2, the first subparagraph is replaced by the following: ‘2. The Board of Appeal shall be composed of six members and six alternates, who shall be individuals of high repute with a proven record of relevant knowledge of Union law and of having international professional experience, to a sufficiently high level in the fields of banking, insurance, occupational pensions, securities markets or other financial services, excluding current staff of the competent authorities or other national or Union institutions or bodies involved in the activities of the Authority and members of the Securities and Markets Stakeholder Group. Members and alternates shall be nationals of a Member State and shall have a thorough knowledge of at least two official languages of the Union. The Board of Appeal shall have sufficient legal expertise to provide expert legal advice on the legality, including proportionality, of the Authority’s exercise of its powers.’; (c) paragraph 3 is replaced by the following: ‘3. Two members of the Board of Appeal and two alternates shall be appointed by the Management Board of the Authority from a shortlist 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. After having received the shortlist, the European Parliament may invite candidates for members and alternates to make a statement before it and answer any questions from its Members. The European Parliament may invite the members of the Board of Appeal to make a statement before it and answer any questions from its Members whenever so requested, to the exclusion of statements, questions or answers pertaining to individual cases decided by, or pending before, the Board of Appeal.’;
(50) in Article 59, paragraph 2 is replaced by the following: ‘2. Members of the Board of Appeal, and staff of the Authority providing operational and secretariat support, shall not take part in any appeal proceedings in which they have any personal interest, if they have previously been involved as representatives of one of the parties to the proceedings, or if they have participated in the decision under appeal.’;
(51) in Article 60, paragraph 2 is replaced by the following: ‘2. The appeal, together with a statement of grounds, shall be filed in writing at the Authority within three months of the date of notification of the decision to the person concerned, or, in the absence of a notification, of the day on which the Authority published its decision. The Board of Appeal shall decide upon the appeal within three months after the appeal has been lodged.’;
(52) the following article is inserted: ‘Article 60a Exceeding of competence by the Authority Any natural or legal person may send reasoned advice to the Commission if that person is of the opinion that the Authority has exceeded its competence, including by failing to respect the principle of proportionality referred to in Article 1(5), when acting under Articles 16 and 16b, and that is of direct and individual concern to that person.’;
(53) in Article 62, paragraph 1 is amended as follows: (a) the introductory part is replaced by the following: ‘1. The revenues of the Authority, a European body in accordance with Article 70 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (*47) (“the Financial Regulation”), shall consist, in particular, of any combination of the following: (b) the following points are added: ‘(d) any voluntary contribution from Member States or observers; (e) agreed charges for publications, training and for any other services provided by the Authority where they have been specifically requested by one or more competent authorities.’; (c) the following sub-paragraph is added: ‘Any voluntary contribution from Member States or observers referred to in point d of the first sub-paragraph shall not be accepted if such acceptance would cast doubt on the independence and impartiality of the Authority. Voluntary contributions that constitute compensation for the cost of tasks delegated by a competent authority to the Authority shall not be considered to cast doubt on the independence of the latter.’;
(54) Articles 63, 64 and 65 are replaced by the following: ‘Article 63 Establishment of the budget
Each year, the Executive Director 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 Management Board and the Board of Supervisors, together with the establishment plan.
The Board of Supervisors shall, on the basis of the draft which has been approved by the Management Board, adopt the draft single programming document for the three following financial years.
The single programming document shall be transmitted by the Management Board to the Commission, the European Parliament and the Council and to the European Court of Auditors by 31 January.
Taking account of the 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 TFEU.
The European Parliament and the Council shall adopt the establishment plan for the Authority. The European Parliament and the Council shall authorise the appropriations for the balancing contribution to the Authority.
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.
The Management Board shall, without undue delay, notify the European Parliament and the Council 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.
Without prejudice to Articles 266 and 267 of the Financial Regulation, authorisation from the European Parliament and the Council shall be required for any project which may have significant financial or long- term implications for the funding of the Authority’s budget, in particular any project relating to property, such as the rental or purchase of buildings, including break clauses.
Article 64
Implementation and control of the budget
The Executive Director shall act as authorising officer and shall implement the Authority’s annual budget.
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. Article 70 shall not preclude the Authority from providing to the Court of Auditors any information requested by the Court that is within its competence.
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.
The Authority’s accounting officer shall also send, by 31 March of the following year, the report on budgetary and financial management to the members of the Board of Supervisors, to the European Parliament, to the Council and to the Court of Auditors.
After receiving the observations of the Court of Auditors on the provisional accounts of the Authority in accordance with Article 246 of the Financial Regulation, the Authority’s accounting officer shall draw up the Authority’s final accounts. The Executive Director shall send them to the Board of Supervisors, which shall deliver an opinion on those accounts.
The Authority’s accounting officer shall, by 1 July of the following year, send the final accounts, accompanied by the opinion of the Board of Supervisors, 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 15 June each year, 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.
The final accounts shall be published in the Official Journal of the European Union by 15 November of the following year.
The Executive Director shall send the Court of Auditors a reply to the latter’s observations by 30 September and shall also send a copy of that reply to the Management Board and to the Commission.
The Executive Director shall submit to the European Parliament, at the latter’s request and as provided for in Article 261(3) of the Financial Regulation, any information necessary for the smooth application of the discharge procedure for the financial year in question.
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.
The Authority shall provide a reasoned opinion on the position of the European Parliament and on any other observations made by the European Parliament provided in the discharge procedure.
Article 65
Financial rules The financial rules applicable to the Authority shall be adopted by the Management Board after consulting the Commission. Those rules may not depart from Commission Delegated Regulation (EU) 2019/715 (*48) unless the specific operational needs for the functioning of the Authority so require and only with the prior agreement of the Commission.
(55) 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 (*49) shall apply to the Authority without any restriction.
(56) 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: ‘The obligation under paragraph 1 of this Article 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 legislative acts referred to in Article 1(2), and in particular for legal procedures for the adoption of decisions.’; (c) the following paragraph is inserted: ‘2a. The Management 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 Management 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 paragraphs 1 and 2. The same requirements for professional secrecy shall also apply to observers who attend the meetings of the Management Board, and the Board of Supervisors and who take part in the activities of the Authority.’; (d) paragraphs 3 and 4 are replaced by the following: ‘3. Paragraphs 1 and 2 shall not prevent the Authority from exchanging information with competent authorities in accordance with this Regulation and with other Union legislation applicable to financial market participants. That information shall be subject to the conditions of professional secrecy referred to in paragraphs 1 and 2. The Authority shall lay down in its internal rules of procedure the practical arrangements for implementing the confidentiality rules referred to in paragraphs 1 and 2.
The Authority shall apply Commission Decision (EU, Euratom) 2015/444 (*50).
(57) Article 71 is replaced by the following: ‘Article 71 Data protection 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) 2018/1725 of the European Parliament and of the Council (*51) when fulfilling its responsibilities.
(58) in Article 72, paragraph 2 is replaced by the following: ‘2. The Management Board shall adopt practical measures for applying Regulation (EC) No 1049/2001.’;
(59) 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 which they concluded after obtaining the approval of the Management Board.’;
(60) Article 76 is replaced by the following: ‘Article 76 Relationship with the Committee of European Securities Regulators The Authority shall be considered the legal successor of the Committee of European Securities Regulators (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. CESR 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 CESR and by the Commission.’;
(61) Article 81 is amended as follows: (a) paragraph 1 is amended as follows: (i) the introductory sentence is replaced by the following: ‘1. By 31 December 2021, and every three years thereafter, the Commission shall publish a general report on the experience acquired as a result of the operation of the Authority and the procedures laid down in this Regulation. That report shall evaluate, inter alia:’; (ii) in point (a), the introductory sentence, and point (i)are replaced by the following: ‘(a) the effectiveness and convergence in supervisory practices reached by competent authorities: (i) the independence of the competent authorities and convergence in standards equivalent to corporate governance;’; (iii) the following point is added: ‘(g) the functioning of the Joint Committee.’; (b) the following paragraphs are inserted: ‘2a. As part of the general report referred to in paragraph 1 of this Article, the Commission shall, after consulting all relevant authorities and stakeholders, conduct a comprehensive assessment of the application of Article 9a. 2b. As part of the general report referred to in paragraph 1, the Commission shall, after consulting all relevant authorities and stakeholders, conduct a comprehensive assessment of the potential supervision of third-country trading venues by the Authority exploring aspects such as recognition based on systemic importance, organisational requirements, ongoing compliance, fines and periodic penalty payments as well as staff and resources. In its assessment, the Commission shall take into account the effects on liquidity, including the availability of best price for investors, best execution for EU clients, access barriers and economic benefits for EU counterparties to trade globally as well as the development of the capital markets union. 2c. As part of the general report referred to in paragraph 1, the Commission shall, after consulting all relevant authorities and stakeholders, conduct a comprehensive assessment of the potential supervision of third-country central securities depositories (CSDs) by the Authority exploring aspects such as recognition based on systemic importance, organisational requirements, ongoing compliance, fines and periodic penalty payments as well as staff and resources. 2d. The Commission shall submit the assessments referred to in paragraphs 2b and 2c, together with any legislative proposal, if appropriate, to the European Parliament and to the Council by 30 June 2021.’.
Article 4
Amendments to Regulation (EU) No 600/2014
Regulation (EU) No 600/2014 is amended as follows:
(1) in Article 1(1), the following point is added: ‘(g) the authorisation and supervision of data reporting services providers.’;
(2) Article 2 is amended as follows: (a) paragraph 1 is amended as follows: (i) point (18) is replaced by the following: ‘(18) “competent authority” means a competent authority as defined in point (26) of Article 4(1) of Directive 2014/65/EU and, for the authorisation and supervision of data reporting services providers, ESMA, with the exception of those approved reporting mechanisms (ARMs) and approved publication arrangements (APAs) with a derogation in accordance with paragraph 3 of this Article;’; (ii) the following point is inserted: ‘(22a) “senior management” means senior management as defined in point (37) of Article 4(1) of Directive 2014/65/EU;’; (iii) 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;’; (iv) the following point is inserted: ‘(36a) “data reporting services provider” means a person referred to in points (34) to (36) and a person referred to in Article 27b(2);’; (b) the following paragraph is added: ‘3. The Commission is empowered to adopt delegated acts in accordance with Article 50, specifying criteria to identify those ARMs and APAs that, by way of derogation from this Regulation on account of their limited relevance for the internal market, are subject to authorisation and supervision by a competent authority of a Member State as defined in point (26) of Article 4(1) of Directive 2014/65/EU. When adopting the delegated act, the Commission shall take into account one or more of the following elements: (a) the extent to which the services are provided to investment firms authorised in one Member State only; (b) the number of trade reports or transactions; (c) whether the ARM or APA is part of a group of financial market participants operating cross border. Where an entity is supervised by ESMA for any services provided in its capacity as a data reporting services provider under this Regulation, none of its activities as an ARM or APA shall be excluded from ESMA supervision under any delegated act adopted pursuant to this paragraph.’;
(3) Article 22 is replaced by the following: ‘Article 22 Providing information for the purposes of transparency and other calculations
In order to carry out calculations for determining the requirements for the pre- 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.
Trading venues, APAs and CTPs shall store the necessary data for a sufficient period.
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 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 supplement this Regulation by adopting 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 26(1), the third subparagraph is replaced by the following: ‘The competent authorities shall without undue delay make available to ESMA any information reported in accordance with this Article.’;
(5) Article 27 is replaced by the following: ‘Article 27 Obligation to supply financial instrument reference data
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 purpose 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 undue delay to those reference data.
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 consulting 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 of this Article; (b) the quality of the financial instrument reference data received pursuant to paragraph 1 of this Article is appropriate for the purpose of transaction reporting under Article 26; (c) the financial instrument reference data received pursuant to paragraph 1 of this Article is efficiently and without undue 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.
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 supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
ESMA may suspend the reporting obligations specified in paragraph 1 for certain or all financial instruments where all of the following conditions are met:
(a) the suspension is necessary in order to preserve the integrity and quality of the reference data subject to reporting obligation as specified in paragraph 1 which may be put at risk by any of the following: (i) serious incompleteness, inaccuracy or corruption of the submitted data, or (ii) unavailability in a timely manner, disruption or damage of the functioning of systems used for the submitting, collecting, processing or storing the respective reference data by ESMA, national competent authorities, market infrastructures, clearing and settlement systems, and important market participants; (b) the existing Union regulatory requirements that are applicable do not address the threat; (c) the suspension does not have any detrimental effect on the efficiency of financial markets or investors that is disproportionate to the benefits of the action; (d) the suspension does not create any regulatory arbitrage. When taking the measure referred to in the first subparagraph of this paragraph, ESMA shall take into account the extent to which the measure ensures the accuracy and completeness of the reported data for the purposes specified in paragraph 2. Before deciding to take the measure referred to in the first subparagraph, ESMA shall notify the relevant competent authorities. The Commission is empowered to adopt delegated acts in accordance with Article 50 in order to supplement this Regulation by specifying the conditions referred to in the first subparagraph and the circumstances under which the suspension referred to in that subparagraph ceases to apply.’;
(6) the following Title is inserted: ‘TITLE IVa DATA REPORTING SERVICES CHAPTER 1 Authorisation of data reporting services providers
Article 27a
For the purposes of this Title, a national competent authority means a competent authority as defined in point (26) of Article 4(1) of Directive 2014/65/EU.
Article 27b
Requirement for authorisation
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.
By way of derogation from the first subparagraph of this paragraph, an APA or ARM identified in accordance with the delegated act referred to in Article 2(3) shall be subject to prior authorisation and supervision by the relevant national competent authority in accordance with this Title.
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 or the relevant national competent authority that the investment firm or the market operator complies with this Title. The provision of those services shall be included in their authorisation.
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, or a national competent authority where relevant, has withdrawn an authorisation in accordance with Article 27e, that withdrawal shall be published in the register for a period of five years.
Data reporting services providers shall provide their services under the supervision of ESMA or the national competent authority where relevant. ESMA, or the national competent authority where relevant, shall regularly review the compliance of data reporting services providers with this Title. ESMA, or the national competent authority where relevant, shall monitor that data reporting services providers comply at all times with the conditions for initial authorisation established under this Title.
Article 27c
Authorisation of data reporting services providers
Data reporting services providers shall be authorised by ESMA, or the national competent authority where relevant, for the purposes of this Title where:
(a) the data reporting services provider is a legal person established in the Union; and (b) the data reporting services provider meets the requirements laid down in this Title.
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, or the national competent authority where relevant, for extension of that authorisation.
An authorised data reporting services provider shall comply at all times with the conditions for authorisation referred to in this Title. An authorised data reporting services provider shall, without undue delay, notify ESMA, or the national competent authority where relevant, of any material changes to the conditions for authorisation.
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 services provider to provide the services for which it has been authorised throughout the Union.
Article 27d
Procedures for granting and refusing applications for authorisation
The applicant data reporting services provider shall submit an application providing all information necessary to enable ESMA, or the national competent authority where relevant, to confirm that the data reporting services 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.
ESMA, or the national competent authority where relevant, 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, or the national competent authority where relevant, shall set a deadline by which the data reporting services provider is to provide additional information. After assessing an application as complete, ESMA, or the national competent authority where relevant, shall notify the data reporting services provider accordingly.
ESMA, or the national competent authority where relevant, shall, within six months from the receipt of a complete application, assess the compliance of the data reporting services provider with this Title. It shall adopt a fully reasoned decision granting or refusing authorisation and shall notify the applicant data service provider accordingly within five working days.
ESMA shall develop draft regulatory technical standards to determine:
(a) the information to be provided under paragraph 1, including the programme of operations; (b) the information included in the notifications under Article 27f(2). Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
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 1 of this Article and in Article 27f(2).
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 27e
Withdrawal of authorisation
ESMA, or the national competent authority where relevant, may withdraw the authorisation of a data reporting services provider where the latter:
(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 this Regulation.
ESMA shall, where relevant, without undue delay, notify the national competent authority in the Member State where the data reporting services provider is established of a decision to withdraw the authorisation of a data reporting services provider.
Article 27f
Requirements for the management body of a data reporting services provider
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 27d 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 requirements laid down in the first subparagraph.
A data reporting services provider shall notify to ESMA, or the national competent authority where relevant, the names of all members of its management body and any changes to its membership, along with all information needed to assess whether the entity complies with paragraph 1.
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.
ESMA, or the national competent authority where relevant, shall refuse authorisation if it is not satisfied that the person or persons who 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 body of the data reporting services 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.
ESMA shall develop draft regulatory technical standards by 1 January 2021 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 supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. CHAPTER 2 Conditions for APAs, CTPs and ARMs
Article 27g
Organisational requirements for APAs
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.
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.
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 way and shall operate and maintain appropriate arrangements to separate different business functions.
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.
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.
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 supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
The Commission is empowered to adopt delegated acts in accordance with Article 50 in order to supplement this Regulation by specifying what constitutes a reasonable commercial basis to make information public as referred to in paragraph 1 of this Article.
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 supplement this Regulation by adopting 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 CTPs
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; (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.
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 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.
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.
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 operates a consolidated tape, shall treat all information collected in a non-discriminatory way and shall operate and maintain appropriate arrangements to separate different business functions.
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 of this Article, including identifying additional services the CTP could perform which increase the efficiency of the market.
Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
The Commission shall adopt delegated acts in accordance with Article 50 in order to supplement this Regulation by clarifying what constitutes a reasonable commercial basis to provide access to data streams as referred to in paragraphs 1 and 2 of this Article.
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 supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
Article 27i
Organisational requirements for ARMs
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.
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.
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.
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.
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 supplement this Regulation by adopting 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 following Title 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.
Article 38b
Request for information
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, where they are supervised by ESMA, 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);
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 the event 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 imposed in accordance with Article 38h where the information provided is incorrect or misleading.
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 38i where the production of the required information is incomplete; (f) indicate the fine provided for in Article 38h, 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.
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 statutes 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.
ESMA shall, without undue delay, send a copy of the simple request or of its decision to the competent authority of the Member State of the persons referred to in paragraph 1.
Article 38c
General investigations
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.
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.
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.
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.
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.
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
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).
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.
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 competent authority has confirmed that it does not object to those inspections.
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 38i where the persons concerned do not submit to the inspection.
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.
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 the competent authority of the Member State concerned may also attend the on-site inspections.
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.
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.
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.
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 5 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 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.
Article 38g
Supervisory measures by ESMA
Where ESMA finds that a person listed in point (a) of Article 38b(1) has committed one of the infringements of requirements provided for 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 or periodic penalty payments pursuant to Articles 38h and 38i; (c) issue public notices.
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.
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 taken.
The disclosure to the public referred to in the first subparagraph shall include the following: (a) a statement affirming the right of the person responsible for the 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. CHAPTER 2 Administrative sanctions and other administrative measures
Article 38h
Fines
Where in accordance with Article 38k(5), ESMA finds that any person has, intentionally or negligently, committed one of the infringements of the requirements provided for 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.
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.
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
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 point (a) of Article 38g(1); (b) a person referred to in Article 38b(1): (i) to supply complete information which has been requested by a decision pursuant to Article 38b; (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 38c; (iii) to submit to an on-site inspection ordered by a decision taken pursuant to Article 38d.
A periodic penalty payment shall be effective and proportionate. The periodic penalty payment shall be imposed for each day of delay.
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 38j
Disclosure, nature, enforcement and allocation of fines and periodic penalty payments
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 (EU) 2018/1725 of the European Parliament and of the Council (*52).
Fines and periodic penalty payments imposed pursuant to Articles 38h and 38i shall be of an administrative nature.
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 38h and 38i shall be enforceable.
Enforcement shall be governed by the rules of procedure in force in the Member State in the territory of which it is carried out.
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
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 of the requirements provided for 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 services provider concerned and shall perform its functions independently from ESMA.
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 ESMA.
In order to carry out his or her 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.
Where carrying out his or her tasks, the investigation officer shall have access to all documents and information gathered by ESMA in its supervisory activities.
Upon completion of his or her investigation and before submitting the file with his or her 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 or her 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 investigation shall be fully respected during investigations under this Article.
When submitting the file with his or her findings to ESMA, the investigation officer shall notify the persons who are subject to the investigation. 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, when requested by the persons subject to the investigation, after having heard those persons in accordance with Article 38l, ESMA shall decide if one or more of the infringements of the requirements provided for in Title IVa have been committed by the persons subject to the investigation and, in such a case, shall take a supervisory measure in accordance with Article 38g.
The investigation officer shall not participate in ESMA’s deliberations or in any other way intervene in ESMA’s decision-making process.
The Commission shall adopt delegated acts in accordance with Article 50 by 1 October 2021 to further specify 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.
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 a criminal offence. 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
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 adopt an interim decision and shall give the persons concerned the opportunity to be heard as soon as possible after taking its decision.
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
ESMA shall charge fees to the data reporting services providers in accordance with this Regulation and in accordance with the delegated acts adopted pursuant to paragraph 3 of this Article. Those fees shall fully cover ESMA’s necessary expenditure relating to the authorisation and supervision of data reporting services 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.
The amount of an individual fee charged to a particular data reporting services provider shall cover all administrative costs incurred by ESMA for the authorisation and supervisory activities relating to that provider. It shall be proportionate to the turnover of the data reporting services provider.
The Commission shall adopt a delegated act in accordance with Article 50 supplementing this Regulation by 1 October 2021 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 38o
Delegation of tasks by ESMA to competent authorities
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 conduct investigations and on-site inspections in accordance with Article 38c and Article 38d.
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.
In accordance with the delegated act adopted pursuant to Article 38n(3), ESMA shall reimburse a competent authority for costs incurred as a result of carrying out delegated tasks.
ESMA shall review the decision referred to in paragraph 1 at appropriate intervals. A delegation may be revoked at any time.
A delegation of tasks shall not affect the responsibility of ESMA nor limit ESMA’s ability to conduct and oversee the delegated activity.
(8) in Article 40, paragraph 6 is replaced by the following: ‘6. ESMA shall review a prohibition or restriction imposed under paragraph 1 at appropriate intervals, and at least every six months. Following at least two consecutive renewals and based on proper analysis in order to assess the impact on the consumer, ESMA may decide on the annual renewal of the prohibition or restriction.’;
(9) in Article 41, paragraph 6 is replaced by the following: ‘6. EBA shall review a prohibition or restriction imposed under paragraph 1 at appropriate intervals, and at least every six months. Following at least two consecutive renewals and based on proper analysis in order to assess the impact on the consumer, EBA may decide on the annual renewal of the prohibition or restriction.’;
(10) 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) and (3), Article 13(2), Article 15(5), Article 17(3), Article 19(2) and (3), Article 27(4), Article 27g(7), Article 27h(7), Article 31(4), Article 38k(10), Article 38n(3), Article 40(8), Article 41(8), Article 42(7), Article 45(10) and Article 52(10), (12) and (14) shall be conferred for an indeterminate period 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) and (3), Article 13(2), Article 15(5), Article 17(3), Article 19(2) and (3), Article 27(4), Article 27g(7), Article 27h(7), Article 31(4), Article 38k(10), Article 38n(3), Article 40(8), Article 41(8), Article 42(7), Article 45(10) and Article 52(10), (12) and (14) 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) and (3), Article 13(2), Article 15(5), Article 17(3), Article 19(2) and (3), Article 27(4), Article 27g(7), Article 27h(7), Article 31(4), Article 38k(10), Article 38n(3), Article 40(8), Article 41(8), Article 42(7), Article 45(10) and Article 52(10), (12) and (14) shall enter into force only if no objection has been expressed either by the European Parliament or by the Council within a period of three months of notification of that act to the European Parliament and to 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.’;
(11) in Article 52, the following paragraphs are added: ‘14. The Commission shall, after consulting ESMA, present reports to the European Parliament and to the Council on the functioning of the consolidated tape established in accordance with Title IVa. The report relating to Article 27h(1) shall be presented by 3 September 2019. The report relating to Article 27h(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: (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) 2018/1046 of the European Parliament and of the Council (*53).
Where the procedure outlined in paragraph 14 of this Article has been initiated, the Commission is empowered to adopt delegated acts in accordance with Article 50 in order to supplement this Regulation, by specifying measures in order to:
(a) provide for the contract duration of the commercial entity operating 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 27b; (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; (e) ensure that the post trade information is provided on a reasonable commercial basis, on both a consolidated and unconsolidated basis, and meets the needs of the users of that information across the Union; (f) ensure that trading venues and APAs shall make their trade data 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 27b 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.
(12) the following articles are inserted:
‘Article 54a Transitional measures related to ESMA
All competences and duties related to the supervisory and enforcement activity in the field of data reporting services providers shall be transferred to ESMA on 1 January 2022, except for competences and duties related to APAs and ARMs subject to derogation referred to in Article 2(3). Those transferred competences and duties shall be taken-up by ESMA on the same date.
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 1 October 2021 shall not be transferred to ESMA, and the decision to register or refuse registration shall be taken by the relevant competent authority.
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 1 January 2022. 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.
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.
Any authorisation of a data reporting services provider granted by a competent authority as defined in point 26 of Article 4(1) of Directive 2014/65/EU shall remain valid after the transfer of competences to ESMA.
Article 54b
Relations with auditors
Any person authorised within the meaning of Directive 2006/43/EC of the European Parliament and of the Council (54), performing in a data reporting services provider the task described in Article 34 of Directive 2013/34/EU of the European Parliament and of the Council (55) or Article 73 of Directive 2009/65/EC or any other task prescribed by law, shall have a duty to report promptly to ESMA any fact or decision concerning that data reporting services provider of which that person has become aware while carrying out that task and which is liable to:
(a) constitute a material infringement of the laws, regulations or administrative provisions which lay down the conditions governing authorisation or which specifically govern pursuit of the activities of data reporting services provider; (b) affect the continuous functioning of the data reporting services provider; (c) lead to refusal to certify the accounts or to the expression of 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 or she is carrying out that task.
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.
Article 5
Amendments to Regulation (EU) 2016/1011
Regulation (EU) 2016/1011 is amended as follows:
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