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PR_COD_1amCom
18.10.2023
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PROVISIONAL AGREEMENT RESULTING FROM INTERINSTITUTIONAL NEGOTIATIONS
* Consultation procedure
Subject: Proposal for a directive of the European Parliament and of the Council amending Directive 2014/65/EU on markets in financial instruments
*** Consent procedure
(COM(2021)0726 – C90438/2021 – 2021/0384(COD))
***I Ordinary legislative procedure (first reading)
The interinstitutional negotiations on the aforementioned proposal for a directive have led to a compromise. In accordance with Rule 74(4) of the Rules of Procedure, the provisional agreement, reproduced below, is submitted as a whole to the Committee on Economic and Monetary Affairs for decision by way of a single vote.
***II Ordinary legislative procedure (second reading)
DIRECTIVE (EU) 2023/… OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
***III Ordinary legislative procedure (third reading)
of …
(The type of procedure depends on the legal basis proposed by the draft act.)
amending Directive 2014/65/EU on markets in financial instruments
Amendments to a draft act
(Text with EEA relevance)
Amendments by Parliament set out in two columns
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Deletions are indicated in bold italics in the left-hand column. Replacements are indicated in bold italics in both columns. New text is indicated in bold italics in the right-hand column.
Having regard to the Treaty on the Functioning of the European Union, and in particular Article 53(1) thereof,
The first and second lines of the header of each amendment identify the relevant part of the draft act under consideration. If an amendment pertains to an existing act that the draft act is seeking to amend, the amendment heading includes a third line identifying the existing act and a fourth line identifying the provision in that act that Parliament wishes to amend.
Having regard to the proposal from the European Commission,
Amendments by Parliament in the form of a consolidated text
After transmission of the draft legislative act to the national parliaments,
New text is highlighted in bold italics. Deletions are indicated using either the ▌symbol or strikeout. Replacements are indicated by highlighting the new text in bold italics and by deleting or striking out the text that has been replaced.
After consulting the European Central Bank,
By way of exception, purely technical changes made by the drafting departments in preparing the final text are not highlighted.
Having regard to the opinion of the European Economic and Social Committee,
DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION
▌
on the proposal for a directive of the European Parliament and of the Council amending Directive 2014/65/EU on markets in financial instruments
Acting in accordance with the ordinary legislative procedure,
(COM2021(0726) – C90438/2021 – 2021/0384(COD))
Whereas:
(Ordinary legislative procedure: first reading)
(1) In its 2020 CMU Action Plan, the Commission announced its intention to table a legislative proposal to create a centralised data base which was meant to provide a comprehensive view on prices and volume of equity and equity-like financial instruments traded throughout the Union across a multitude of trading venues (‘consolidated tape’). On 2 December 2020, in its conclusion on the Commission’s CMU Action Plan, the Council encouraged the Commission to stimulate more investment activity inside the Union by enhancing data availability and transparency by further assessing how to tackle the obstacles to establishing a consolidated tape in the Union.
– having regard to the Commission proposal to Parliament and the Council (COM(2021)0726),
(2) In its roadmap on ‘The European economic and financial system: fostering openness, strength and resilience’ of 19 January 2021, the Commission confirmed its intention to improve, simplify and further harmonise capital markets’ transparency, as part of the review of Directive 2014/65/EU of the European Parliament and of the Council and of Regulation (EU) No 600/2014 the European Parliament and of the Council. As part of efforts to strengthen the international role of the Euro, the Commission also announced that such reform would include the design and implementation of a consolidated tape, in particular for corporate bond issuances to increase the liquidity of secondary trading in euro-denominated debt instruments.
– having regard to Article 294(2) and Article 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C90438/2021),
(3) Regulation (EU) No 600/2014 was amended by Regulation (EU) XX/XXXX of the European Parliament and of the Council+ removing the main obstacles that have prevented the emergence of a consolidated tape. That Regulation therefore introduced mandatory contributions of market data to the consolidated tape provider and enhanced the data quality including harmonizing the synchronisation of the business clock. In addition, that Regulation reduced the recourse to possibilities to waive pre-trade transparency for venues and systematic internalisers. Furthermore, it introduced enhancements to the trading obligations and the prohibition of the practice of receiving payment for forwarding client orders for execution. Since Directive 2014/65/EU also contains provisions related to consolidated tape and transparency, the amendments to Regulation (EU) No 600/2014 should be reflected in Directive 2014/65/EU.
– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,
(4) Article 1(7) of Directive 2014/65/EU requires operators of systems in which multiple third-party buying and selling trading interests in financial instruments are able to interact (‘multilateral systems’) to operate in accordance with the requirements concerning regulated markets (‘RMs’), multilateral trading facilities (‘MTFs’), or organised trading facilities (‘OTFs’). However, market practice, as evidenced by the European Securities and Markets Authority (‘ESMA’) in its final report on the functioning of the organised trading facility has shown that the principle of multilateral trading activity requiring a license has not been upheld in the Union, which has led to an uneven playing field between licensed and unlicensed multilateral systems. In addition, that situation has created legal uncertainty for certain market participants as to the regulatory expectations for such multilateral systems. To provide market participants with clarity, safeguard a level-playing field, improve the internal market functioning and ensure a uniform application of the requirement that hybrid systems can only perform multilateral trading activities where they are licensed as a regulated market, a multilateral trading facility (‘MTF’) or an organised trading facility (‘OTF’), the content of Article 1(7) of Directive 2014/65/EU should be moved from Directive 2014/65/EU to Regulation (EU) No 600/2014.
– having regard to Rule 59 of its Rules of Procedure,
(5) Article 2(1), point (d), point (ii), of Directive 2014/65/EU, exempts persons dealing on own account from the requirement to be licensed as an investment firm or credit institution, unless those persons are members of or participants in a regulated market or an MTF or have direct electronic access to a trading venue. Non-financial entities that are members of or participants in a regulated market or an MTF to execute transactions for the purpose of liquidity management or for the purpose of reducing risks directly relating to the commercial activity or treasury financing activity should not be required to be licensed as an investment firm as such a requirement would be disproportionate. Regarding direct electronic access to a trading venue, Articles 17(5) and 48(7) of Directive 2014/65/EU require that providers of direct electronic access are licensed investment firms or credit institutions. Investment firms or credit institutions that do provide direct electronic access are responsible for ensuring that their clients comply with the requirements laid down in Articles 17(5) and 48(7) of Directive 2014/65/EU. That gatekeeper function is effective and makes it unnecessary for clients of the direct electronic access provider, including persons dealing on own account, to become subject to Directive 2014/65/EU. In addition, removing that requirement would contribute to a level playing field between third country persons accessing EU venues via direct electronic access, for which Directive 2014/65/EU does not require a license, and persons established in the Union.
– having regard to the report of the Committee on Economic and Monetary Affairs (A90000/2022),
(6) Due to the removal of multilateral systems from the scope of Article 1(7) of Directive 2014/65/EU and into Regulation (EU) No 600/2014, it is equally logic to move the corresponding definition of ‘multilateral system’ into that Regulation.
1. Adopts its position at first reading hereinafter set out;
(6a) Directive XXX/ requires MTFs or OTFs to have at least three materially active members or users. That requirement should apply to all multilateral systems. Therefore, that requirement should be extended to regulated markets.
2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;
(6b) Directive 2014/65/EU provides that an investment firm is to be considered to be a systematic internaliser only when it is deemed to perform its activities on an organised, frequent, systematic and substantial basis or when it chooses to opt-in under the systematic internaliser regime. The frequent, systematic and substantial bases are determined by quantitative criteria which have led to excessive burden for investment firms that have to perform the assessment and for ESMA that has to publish data for the calculation, and should therefore be replaced by a qualitative assessment. Considering that Regulation (EU) No 600/2014 is being amended to exclude systematic internalisers from the scope of the pre-trade transparency requirements for non-equity instruments, the qualitative assessment of systematic internalisers should apply only to equity instruments, but it should be possible for an investment firm to opt-in to become a systematic internaliser for non-equity instruments.
3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.
(7) Article 27(3) and (6) of Directive 2014/65/EU contain the requirement for execution platforms to publish a list of details relating to best execution. Factual evidence and feedback from stakeholders has shown that those reports are rarely read and do not enable investors or any users of those reports to make meaningful comparisons based on the information provided in those reports. As a consequence, Directive (EU) 2021/338 of the European Parliament and of the Council suspended the reporting requirement under Article 27(3) for two years in order for that requirement to be reviewed. Regulation (EU) XX/XXXX has amended Regulation (EU) No 600/2014 to remove the obstacles that have prevented the emergence of a consolidated tape. ▌The data that the consolidated tape is expected to disseminate are European best bid and offer and post-trade information regarding ▌ transactions in shares and ETFs, and post-trade information regarding transactions in bonds and OTC derivatives. That information can be used for proving best execution. The reporting requirement laid down in Article 27(3) of Directive 2014/65/EU will therefore no longer be relevant and should therefore be deleted.
Amendment 1
(7a) More generally, Article 27 of Directive 2014/65/EU contains provisions related to the obligation to execute orders on terms most favourable to the client (‘best execution’). However, different interpretations of that Article by national competent authorities have led to diverging application of best execution requirements and of market practice supervision. That divergence is particularly evident in the different regulation across the Union of practices related to receiving payments for forwarding client orders for execution (‘payment for order flows’). Regulation (EU) .../...+ amending Regulation (EU) No 600/2014 bans the payment for order flows across the Union. However, feedback from regulators and stakeholders has shown that best execution requirements for professional clients could also benefit from further clarification. ESMA should develop draft regulatory technical standards on the criteria that should be taken into account for the purpose of defining and assessing the order execution policy, taking into account the difference between retail and professional clients under Article 27(5) and (7) of Directive 2014/65/EU.
Proposal for a directive
(8) The correct functioning of ▌ a consolidated tape depends on the quality of the data the consolidated tape provider receives. Regulation (EU) No 600/2014 sets out requirements for the quality of data that contributors to the consolidated tape should adhere to. In order to ensure that investment firms and market operators operating an MTF or an OTF, and regulated markets, effectively meet those requirements, Member States should require that those investment firms and market operators have the necessary arrangements in place to do so.
Recital 6 a (new)
(9) The receipt of high quality data is of the utmost importance for the functioning of the consolidated tape and the internal market. That includes the need for all market data contributors and the consolidated tape provider to timestamp their data in a synchronized manner and thus to synchronise their business clocks. Regulation (EU) XX/XXX has therefore amended Regulation (EU) No 600/2014 to extend that requirement, which under Directive 2014/65/EU only applied to trading venues and their members, to systematic internalisers, designated publishing entities, APAs amd consolidated tape providers. Since that requirement is now laid down in Regulation (EU) No 600/2014, it can be removed from Directive 2014/65/EU.
Text proposed by the Commission
(10) Within the framework regulating the Union’s markets in financial instruments, many substantive requirements laid down in Regulation (EU) No 600/2014 are supervised and sanctioned at national level and in accordance with Articles 69 and 70 of Directive 2014/65/EU. Regulation (EU) XX/XXXX has amended Regulation (EU) No 600/2014 to include new rules on the volume cap mechanism, on mandatory contributions of core market data to the consolidated tape, on data quality standards to which those contributions are subject and on the ban on receiving payments for forwarding client orders for execution. As the supervision of the relevant entities lies with national authorities, those new substantive requirements should be added to the list in Directive 2014/65/EU of provisions for which the Member States should provide sanctions at national level.
Amendment
(10a) Following the energy crisis of 2022 and the resulting higher and more frequent margin calls and extreme volatility, a comprehensive revision of the appropriateness of the overall framework for commodity derivatives markets and derivatives on emission allowances markets is warranted. Such a review should have a strategic focus and consider the liquidity and proper functioning of commodity derivative markets, emission allowances and derivatives on emission allowances markets in the Union to ensure that the framework governing those markets are fit for purpose to facilitate the energy transition, food security and the markets’ ability to withstand external shocks. In carrying out its analysis, the Commission should also consider that commodity derivatives markets play an important role in ensuring that market participants can properly risk manage the necessary investments, and that setting the right parameters is very important to ensure that the Union has competitive liquid commodity derivatives markets that ensure the open strategic autonomy of the Union and the delivery of the European Green Deal. With these objectives in mind, the Commission should, firstly, review whether the position limits and position management controls regime has been conducive to the prevention of market abuse and the support for orderly pricing and settlement conditions. That review should also establish to what extent nascent energy markets have been able to develop in the Union. Secondly, the Commission should review the ancillary activity exemption considering the overall liquidity in, and the orderly functioning of, commodity derivatives markets, emission allowances and derivatives of emission allowances markets. Over the last few years, energy companies have increasingly assumed the role of market makers in the energy commodity markets. Therefore, the Commission should duly take into consideration the overall impact of the ancillary activity exemption by not only looking at the authorisation but also at the impact of prudential requirements as set out in Regulation (EU) 2019/2033 of the European Parliament and of the Council and clearing, margining and bilateral collateralisation obligations as set out in Regulation (EU) No 648/2012 of the European Parliament and of the Council. Thirdly, the Commission should review to what extent transactions in commodity or derivative on emission allowance markets could be harmonized not only in terms of the number of data fields, but also with respect to formats, submission technologies and technical acknowledgement processes and data receivers for commodity derivatives or derivatives on emission allowances markets in Regulation (EU) No 600/2014 and Regulation (EU) No 648/2012 and could be collected in a single collecting entity. This single collection entity could be the consolidated tape provider for derivatives. The Commission should assess which transaction data would be relevant for the public and how that transaction data would be best disseminated.
(6a) Article 4(1), point (20), of Directive 2014/65/EU provides the definition of a systematic internaliser and subjects it to a number of qualitative criteria that determine whether an investment firm, on an organised, frequent, systematic and substantial basis, deals on own account when executing client orders outside a regulated market, an MTF or an OTF without operating a multilateral system. The quantitative criteria, related to the transaction reporting role of systematic internalisers, have led to a significant increase in the number of systematic internalisers in the Union and in the regulatory burden both on ESMA, which is required to assess the quantitative criteria for investment firms that qualify as systematic internalisers, and on investment firms themselves. In particular, the regulatory burden disproportionately affects smaller investment firms, which would benefit from a lighter and more flexible regime. Article 4(1), point (20), should therefore limit the systematic internaliser regime to investment firms that meet the qualitative criteria or investment firms that choose to opt-in to the systematic internaliser regime. Complementing those changes, Regulation (EU) XX/XXXX22 amending Regulation (EU) No 600/2014 introduces the concept of a ‘designated reporting entity’, decoupling the systematic internaliser status from the function of making transactions public through an approved publication arrangement.
(10b) Directive 2014/65/EU contains rules that require trading venues to implement mechanisms designed to limit excessive volatility in the markets, notably trading halts and price collars. However, the extreme circumstances that energy and commodity derivatives markets have experienced throughout the energy crisis of 2022 have led to further scrutiny of those mechanisms and have shown that there is a lack of transparency around the activation of those mechanisms by the relevant trading venues in the Union, as highlighted in ESMA's answer to the Commission's call for advice to address the excessive volatility in energy derivatives markets. Market participants would benefit from further information and more transparency on the circumstances that lead to trading being halted and on the main principles that regulated markets are to consider for establishing the technical parameters connected to the activation of those mechanisms. ESMA should provide the broad outline within which the regulated markets shall consider the main technical parameters. Due to the importance of ensuring orderly trading, regulated markets should maintain broad discretion of which mechanisms to use and how to parametrise those mechanisms. In addition, national competent authorities should carefully monitor the use of those mechanisms by trading venues and make use of their supervisory powers as appropriate.
Or. en
(10c) The Commission should be empowered to adopt the draft regulatory technical standards developed by ESMA with regard to the criteria to be taken into account when defining and assessing the order execution policy, taking into account the difference between retail and professional clients; the principles that regulated markets are to consider when establishing their mechanisms to halt trading; and the information that trading venues are to disclose on the circumstances leading to trading being halted, including the parameters of circuit breakers that trading venues are to report to competent authorities. The Commission should adopt those draft regulatory technical standards by means of delegated acts pursuant to Article 290 TFEU and in accordance with Articles 10 to 14 of Regulation (EU) No 1093/2010.
Amendment 2
(10d) Since the objectives of this Directive, namely to improve transparency on markets in financial instruments and to enhance the international competitiveness of the Union’s capital markets,cannot be sufficiently achieved by the Member States but can rather, by reason of its scale and effects, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.
Proposal for a directive
(10e) Directive 2014/65/EU should therefore be amended accordingly,
Recital 7
HAVE ADOPTED THIS DIRECTIVE:
Text proposed by the Commission
Article 1 Amendments to Directive 2014/65/EU
Amendment
Directive 2014/65/EU is amended as follows:
(7) Article 27(3) of Directive 2014/65/EU contains the requirement for execution platforms to publish a list of details relating to best execution. Factual evidence and feedback from stakeholders has shown that those reports are rarely read and do not enable investors or any users of those reports to make meaningful comparisons based on the information provided in those reports. As a consequence, Directive (EU) 2021/338 of the European Parliament and of the Council21 suspended the reporting requirement for two years in order for that requirement to be reviewed. Regulation (EU) XX/XXXX22 has amended Regulation (EU) 600/2014 to remove the obstacles that have prevented the emergence of a consolidated tape. Among the data that the consolidated tape is expected to provide are post-trade information regarding all transactions in financial instruments. That information can be used for proving best execution. The reporting requirement laid down in Article 27(3) of Directive 2014/65/EU will therefore no longer be relevant and should therefore be deleted.
(1) in Article 1, paragraph 7, is deleted;
(7) Articles 27(3) and 27(6) of Directive 2014/65/EU contain the requirement for execution platforms to publish a list of details relating to best execution. Factual evidence and feedback from stakeholders has shown that those reports are rarely read and do not enable investors or any users of those reports to make meaningful comparisons based on the information provided in those reports. As a consequence, Directive (EU) 2021/338 of the European Parliament and of the Council21 suspended the reporting requirement under Article 27(3) for two years in order for that requirement to be reviewed. Regulation (EU) XX/XXXX22 has amended Regulation (EU) No 600/2014 to remove the obstacles that have prevented the emergence of a consolidated tape. Among the data that the consolidated tape is expected to provide are pre-trade and post-trade information regarding all transactions in shares, and post-trade information regarding all transactions in other financial instruments. That information can be used for proving best execution. The reporting requirement laid down in Article 27(3) of Directive 2014/65/EU will therefore no longer be relevant and should therefore be deleted. The reporting requirement laid down in Article 27(6) of that Directive should also be deleted, as those reports have proven to be of limited value to users, and at the same time have created additional costs for the investment firms required to prepare them.
(2) in Article 2(1), point (d), point (ii) is replaced by the following:
__________________
‘(ii) are members of or participants in a regulated market or an MTF, except for non-financial entities who execute transactions on a trading venue which are part of liquidity management or which are objectively measurable as reducing risks directly relating to the commercial activity or treasury financing activity of those non-financial entities or their groups;’;
__________________
(3) in Article 4, paragraph 1 is amended as follows:
21 Directive (EU) 2021/338 of the European Parliament and of the Council of 16 February 2021 amending Directive 2014/65/EU as regards information requirements, product governance and position limits, and Directives 2013/36/EU and (EU) 2019/878 as regards their application to investment firms, to help the recovery from the COVID-19 crisis (OJ L 68, 26.2.2021, p. 14).
21 Directive (EU) 2021/338 of the European Parliament and of the Council of 16 February 2021 amending Directive 2014/65/EU as regards information requirements, product governance and position limits, and Directives 2013/36/EU and (EU) 2019/878 as regards their application to investment firms, to help the recovery from the COVID-19 crisis (OJ L 68, 26.2.2021, p. 14).
22 COM 727
22 COM 727
Or. en
Amendment 3
Proposal for a directive
Recital 7 a (new)
Text proposed by the Commission
Amendment
(7a) More generally, Article 27 of Directive 2014/65/EU contains provisions related to the obligation to execute orders on terms most favourable to the client (‘best execution’). However, different interpretations of that Article by national competent authorities have led to widely diverging application of best execution requirements and of market practice supervision. That divergence is particularly evident in the different regulation across the Union of practices related to receiving payments for forwarding client orders for execution (‘payment for order flows’). Regulation (EU) XX/XXXX22 amending Regulation (EU) No 600/2014 clarifies the rules related to the best execution of retail orders, minimises supervisory divergence and bans the payment for order flows across the Union. The best execution requirement laid down in Article 27(2) of Directive 2014/65/EU should therefore be deleted, as it will be included in Regulation (EU) XX/XXXX22. However, feedback from regulators and stakeholders has shown that best execution requirements for professional clients could also benefit from further clarification. ESMA should develop draft regulatory technical standards on the criteria that should be taken into account for the purpose of defining and assessing the order execution policy under Article 27(5) and (7) of Directive 2014/65/EU.
Or. en
Amendment 4
Proposal for a directive
Article 1 – paragraph 1 – point 2
Directive 2014/65/EU
Article 2 – paragraph 1 – point d – point ii
Text proposed by the Commission
Amendment
‘(ii) are members of or participants in a regulated market or an MTF;’;
‘(ii) are members of or participants in a regulated market or an MTF, with the exception of non-financial entities that execute transactions on a trading venue that are objectively measurable as reducing risks directly related to the commercial activities or treasury financing activities of those non-financial entities or their groups;’;
Or. en
Justification
The amendment reinstates the exemption for non-financial entities, which needs to be maintained in order not to place an undue burden on non-financial entities and whose removal in the first place was unintended.
Amendment 5
Proposal for a directive
Article 1 – paragraph 1 – point 3 – introductory part
Directive 2014/65/EU
Article 4 – paragraph 1
Text proposed by the Commission
Amendment
3. in Article 4(1), point (19) is replaced by the following:
3. in Article 4, paragraph 1 is amended as follows:
Or. en
Amendment 6
Proposal for a directive
Article 1 – paragraph 1 – point 3 – point a (new)
Directive 2014/65/EU
Article 4 – paragraph 1 – point 19
Text proposed by the Commission
Amendment
(a) point (19) is replaced by the following:
‘(19) “multilateral‘multilateral system”system’ means a multilateral system as defined in Article 2(1), point (11), of Regulation (EU) No 600/214;’;600/2014;’;
‘(19) multilateral system’ means a multilateral system as defined in Article 2(1), point (11), of Regulation (EU) No 600/2014;’;
Or. en
Amendment 7
Proposal for a directive
Article 1 – paragraph 1 – point 3 – point b (new)
Directive 2014/65/EU
Article 4 – paragraph 1 – point 20
Present text
Amendment
(b) point (20) is replaced by the following:
(20)‘(20) ‘systematic internaliser’ means an investment firm which, on an organised, frequent systematic and substantialsystematic basis, deals on own account whenin equity instruments by executing client orders outside a regulated market, an MTF or an OTF without operating a multilateral system;system or which opts into the status of systematic internaliser;’;
‘(20) ‘systematic internaliser’ means an investment firm which, on an organised, frequent, systematic and substantial basis, deals on own account when executing client orders outside a regulated market, an MTF or an OTF without operating a multilateral system. The definition of a systematic internaliser shall apply only where the qualitative criteria indicating that an investment firm performs its activities on an organised, frequent, systematic and substantial basis are met, or where an investment firm chooses to opt-in under the systematic internaliser regime;’;
(4) Article 27 is amended as follows:
The frequent and systematic basis shall be measured by the number of OTC trades in the financial instrument carried out by the investment firm on own account when executing client orders. The substantial basis shall be measured either by the size of the OTC trading carried out by the investment firm in relation to the total trading of the investment firm in a specific financial instrument or by the size of the OTC trading carried out by the investment firm in relation to the total trading in the Union in a specific financial instrument. The definition of a systematic internaliser shall apply only where the pre-set limits for a frequent and systematic basis and for a substantial basis are both crossed or where an investment firm chooses to opt-in under the systematic internaliser regime;
(a) paragraph 2 is deleted;
Or. en
(b) paragraph 3 is replaced by the following;
Justification
‘3. In the case of financial instruments that are subject to the trading obligation set out in Articles 23 and 28 of Regulation (EU) No 600/2014, Member States shall require that, following execution of a transaction on behalf of a client, the investment firm shall inform the client where the order was executed.’;
Current SIs regime is complex and unclear, and it has increased the regulatory burden for ESMA and investment firms, and led to an inflated number of SIs in the Union. These factors disproportionally affects smaller investment firms. The amendment introduces qualitative criteria for SIs and introduces the possibility to opt-in into the SI status. The introduction in MiFIR of designated reporting entities complete overhaul of the regime by decoupling reporting obligations and SI definition. The new regime should provide more flexibility and better clarity for market participants.
(c) paragraph 6 is deleted;
Amendment 8
(d) paragraph 7 is replaced by the following:
Proposal for a directive
Article 1 – paragraph 1 – point 3 a (new)
Directive 2014/65/EU
Article 16 – paragraph 10 a (new)
Text proposed by the Commission
Amendment
3a. in Article 16, the following paragraph is inserted:
‘10a. An investment firm that is a market data contributor within the meaning of Article 2(1), point (34a), of Regulation (EU) No 600/2014 shall have arrangements in place to ensure it meets the data quality standards set out in Article 22b of that Regulation.’;
Or. en
Justification
The amendments seeks to mirror the provisions of Art 31(1) to ensure that not only trading venues but also investment firms are subject to data standards when they contribute market data.
Amendment 9
Proposal for a directive
Article 1 – paragraph 1 – point 3 b (new)
Directive 2014/65/EU
Article 18
Present text
Amendment
3b. Article 18 is amended as follows:
(a) the following paragraph is inserted:
‘2a. Member States shall require market operators and investment firms operating an MTF or an OTF to establish and maintain effective arrangements to verify that issuers of transferable securities that are traded under its systems have obtained the ISO 17442 Legal Entity Identifier.’;
(b) paragraph 8 is replaced by the following:
8. Where a transferable security that has been admitted to trading on a regulated market is also traded on an MTF or an OTF without the consent of the issuer, the issuer shall not be subject to any obligation relating to initial, ongoing or ad hoc financial disclosure with regard to that MTF or an OTF.
‘8. Where a transferable security that has been admitted to trading on a regulated market is also traded on an MTF or an OTF without the consent of the issuer, the issuer shall not be subject to the obligation in paragraph 2a of this Article and any obligation relating to initial, ongoing or ad hoc financial disclosure with regard to that MTF or an OTF.’;
Or. en
Justification
Introduces a reference to LEI to mirror, for trading venues, the treatment that MiFIR already envisaged for clients of investment firms. Such principle has already been implemented under the CSDR, so EU issuers are already required to obtain the LEI for settlement. However, the fact that the same LEI requirement cannot be imposed to non-EU issuer puts EU issuers at a disadvantage. The amendments therefore is essential to ensure an even playing field between EU and non-EU issuers and to operationalise the ESRB recommendations on the use of the LEI.
Amendment 10
Proposal for a directive
Article 1 – paragraph 1 – point 4 – point -a (new)
Directive 2014/65/EU
Article 27 – paragraph 1 – subparagraph 2
Present text
Amendment
(-a) in paragraph 1, the second subparagraph is deleted;
Where an investment firm executes an order on behalf of a retail client, the best possible result shall be determined in terms of the total consideration, representing the price of the financial instrument and the costs relating to execution, which shall include all expenses incurred by the client which are directly relating to the execution of the order, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.
Or. en
Justification
In light of the proposed introduction of Article 39a in MiFIR on ‘Rules for the execution of retail order flows’, Article 27 should be modified accordingly, removing redundant provisions to enhance legal clarity.
Amendment 11
Proposal for a directive
Article 1 – paragraph 1 – point 4 – point a
Directive 2014/65/EU
Article 27 – paragraphs 2, 3 and 6
Text proposed by the Commission
Amendment
(a) paragraph 3 is deleted;
(a) paragraphs 2, 3 and 6 are deleted;
Or. en
Justification
Evidence from stakeholders show that RTS 27 and 28 reports are rarely read, do not enable users of those reports to make meaningful comparisons, and create additional costs for reporting entities. Besides, the introduction of the CT can provide valuable info to prove best execution. The reporting requirements under paragraphs 3 and 6 should be deleted as no longer relevant, but the best execution framework should be strengthened via changes to Par. 10 below. Par. 2 is removed as the provision will be moved to MiFIR. and clarified by modifications to Art 27(10) MiFID and new Art 39a in MiFIR.
Amendment 12
Proposal for a directive
Article 1 – paragraph 1 – point 4 – point a b (new)
Directive 2014/65/EU
Article 27 – paragraph 7
Present text
Amendment
(ab) paragraph 7 is replaced by the following:
7. Member States shall require investment firms who execute client orders to monitor the effectiveness of their order execution arrangements and execution policy in order to identify and, where appropriate, correct any deficiencies. In particular, they shall assess, on a regular basis, whether the execution venues included in the order execution policy provide for the best possible result for the client or whether they need to make changes to their execution arrangements, taking account of, inter alia, the information published under paragraphs 3 and 6. Member States shall require investment firms to notify clients with whom they have an ongoing client relationship of any material changes to their order execution arrangements or execution policy.
‘7. Member States shall require investment firms who execute client orders to monitor the effectiveness of their order execution arrangements and execution policy in order to identify and, where appropriate, correct any deficiencies. In particular, they shall assess, on a regular basis, whether the execution venues included in the order execution policy provide for the best possible result for the client or whether they need to make changes to their execution arrangements. Member States shall require investment firms to notify clients with whom they have an ongoing client relationship of any material changes to their order execution arrangements or execution policy.’;
Or. en
(e) paragraph 10 is replaced by the following:
(02014L0065)
Justification
Removes reference to paragraphs 3 and 6 as they would be redundant should those two paragraph be deleted as proposed above.
Amendment 13
Proposal for a directive
Article 1 – paragraph 1 – point 4 – point b
Directive 2014/65/EU
Article 27 – paragraph 10 – point a
Text proposed by the Commission
Amendment
(b) in paragraph 10, point (a)is deleted;
deleted
Or. en
Justification
Current best execution regime proved to be ineffective. New Article 39a in MiFIR clarifies retail orders' best execution rules related, meaning that Article 27(2) should be deleted. Regulators and stakeholders also show that requirements for professional clients could benefit from further clarification. ESMA should develop RTS on the criteria for defining and assessing order execution policy of investment firms, differentiating between professional and retail clients and ensuring that the current divergence in supervisory interpretations is minimised, or at least reduced.
Amendment 14
Proposal for a directive
Article 1 – paragraph 1 – point 4 – point b
Directive 2014/65/EU
Article 27 – paragraph 10
Present text
Amendment
(b) paragraph 10 is replaced by the following:
10. ESMA shall develop draft regulatory technical standards to determine:
‘10. ESMA shall develop draft regulatory technical standards on the criteria to be taken into account when defining and assessing the order execution policy under paragraphs 5 and 7, taking into account whether the orders are executed on behalf of retail or professional clients.
Those criteria shall include at least the following:
(a) the specific content, the format and the periodicity of data relating to the quality of execution to be published in accordance with paragraph 3, taking into account the type of execution venue and the type of financial instrument concerned;
(a) factors determining the choice of execution venues included in the order execution policy;
(b) the content and the format of information to be published by investment firms in accordance with paragraph 6.
(b) the periodicity of assessing and updating the order execution policy;
(c) ways of defining classes of financial instruments under paragraph 5.
ESMA shall submit those draft regulatory technical standards to the Commission by 3... July[nine 2015.months after the date of entry into force of this amending Directive].
ESMAPower shallis submitdelegated thoseto draftthe Commission to supplement this Directive by adopting the regulatory technical standards referred to in the Commissionfirst bysubparagraph ...of [9this monthsArticle afterin theaccordance datewith ofArticles entry10 intoto force14 of thisRegulation Directive].(EU) No 1095/2010.’;
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.
(5) in Article 31(1), the following subparagraph is added:
Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph of this Article in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.’;
‘Member States shall require that investment firms and market operators operating an MTF or an OTF ▌have arrangements in place to ensure they meet the data quality standards as set out in Article 22b of Regulation (EU) No 600/2014.’;
Or. en
(6) in Article 47(1), the following points are added:
Justification
‘(g) to have arrangements in place to ensure they meet the data quality standards as set out in Article 22b of Regulation (EU) No 600/2014;
Current best execution regime proved to be ineffective. New Article 39a in MiFIR clarifies retail orders' best execution rules related, meaning that Article 27(2) should be deleted. Regulators and stakeholders also show that requirements for professional clients could benefit from further clarification. ESMA should develop RTS on the criteria for defining and assessing order execution policy of investment firms, differentiating between professional and retail clients and ensuring that the current divergence in supervisory interpretations is minimised, or at least reduced.
(h) to have at least three materially active members or users, each having the opportunity to interact with all the others in respect of price formation.’;
Amendment 15
(7) Article 48 is amended as follows:
Proposal for a directive
(a) paragraph 5 is amended as follows:
Article 1 – paragraph 1 – point 6 - point g
(i) the first subparagraph is replaced by the following:
Directive 2014/65/EU
‘Member States shall require a regulated market to be able to temporarily halt or constrain trading in emergency situations or if there is a significant price movement in a financial instrument on that market or a related market during a short period and, in exceptional cases, to be able to cancel, vary or correct any transaction. Member States shall require a regulated market to ensure that the parameters for halting trading are appropriately calibrated in a way which takes into account the liquidity of different asset classes and sub-classes, the nature of the market model and the types of users, and is sufficient to avoid significant disruptions to the orderliness of trading.’;
Article 47 – paragraph 1 – point f a (new)
(ii) the following subparagraphs are added:
Text proposed by the Commission
‘Member States shall require a regulated market to publicly disclose on its website information on the circumstances leading to trading being halted and on the principles for establishing the main technical parameters used to do so.
Amendment
Member States shall ensure that, where a trading venue does not use the measures referred to in the first subparagraph despite a significant price movement affecting a financial instrument or related financial instruments leading to disorderly trading conditions on one or several markets, competent authorities are able to take appropriate measures to re-establish the normal functioning of the markets, including the powers referred to in Article 69(2) points (m), (n), (o) and (p).’;
‘(g) to have arrangements in place to ensure they meet the data quality standards as set out in Article 22b of Regulation (EU) No 600/2014.’;
(b) paragraph 12 is amended as follows:
‘(fa) to have at least two materially active liquidity providers each having the opportunity to interact with the independent order flow with regard to price formation.’;
(i) in the first subparagraph, the following points are added:
Or. en
‘(h) the principles that regulated markets are to consider when establishing their mechanisms to halt trading in accordance with paragraph 5, taking into account the liquidity of different asset classes and sub-classes, the nature of the market model and the types of users, and without prejudice to the discretion of regulated markets in setting those mechanisms;
Justification
(i) the information that trading venues shall disclose, including the parameters of circuit breakers that trading venues shall report to competent authorities in accordance with paragraph 5.’;
The requirement to have at least two materially active liquidity providers each having the opportunity to interact with the independent order flow with regard to price formation is contained in Article 18(7) of MiFID - applying to OTFs and MTFs. The amendments seeks to extend this requirement to Regulated Markets.
(ii) the second subparagraph is replaced by the following:
Amendment 16
‘ESMA shall submit those draft regulatory technical standards to the Commission by ... [12 months after the date of entry into force of this amending Directive].
Proposal for a directive
Power is delegated to the Commission to supplement this Directive 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 1 – paragraph 1 – point 6 a (new)
(c) paragraph 13 is deleted;
Directive 2014/65/EU
(8) in Article 49(2), the following point is added:
Article 49 – paragraph 2 – point b a (new)
‘(c) for shares with a non-EEA International Securities Identification Number (ISIN), or shares referred to in Article 23(1), point (a), of Regulation (EU) No 600/2014 for which the venue that is the most relevant market in terms of liquidity is in a third country, have the same tick size that applies on that venue.’;
Text proposed by the Commission
(9) Article 50 is deleted;
Amendment
(10) in Article 57(8), first subparagraph, the introductory wording is replaced by the following:
6a. in Article 49(2) the following point is added:
‘Member States shall ensure that an investment firm or a market operator operating a trading venue which trades commodity derivatives, emission allowances or derivatives on emission allowances applies position management controls, including powers for the trading venue to:’;
‘(ba) in the case of shares with a non-EEA ISIN, or shares referred to in Article 23(1), point (a), for which the venue that is the most relevant market in terms of liquidity is in a third country, have the same tick size that applies on that venue.’;
(11) Article 58 is amended as follows:
Or. en
(a) paragraph 1 is amended as follows:
Justification
(i) the first subparagraph is amended as follows:
The amendment seeks to allow, for third country shares, the use of the prevailing tick size on the main exchange in that third country, in order to align the Union’s standards with international practices and to ensure the competitiveness of EU firms.
– the introductory wording is replaced by the following:
Amendment 17
‘1. Member States shall ensure that an investment firm or a market operator operating a trading venue which trades commodity derivatives or derivatives of emission allowances:’;
Proposal for a directive
– point (a) is replaced by the following:
Article 1 – paragraph 1 – point 7 a (new)
‘(a) for those trading venues where options are traded, make public two weekly reports, one of which excluding options, with the aggregate positions held by the different categories of persons for the different commodity derivatives or derivatives of emission allowances traded on their trading venue, specifying the number of long and short positions by such categories, changes thereto since the previous report, the percentage of the total open interest represented by each category, and the number of persons holding a position in each category in accordance with paragraph 4;’;
Directive 2014/65/EU
(aa) for those trading venues where options are not traded, make public a weekly report on the elements set out in point (a);
Article 51 – paragrah 3 – subparagraph 1
(ii) the following subparagraph is inserted after the first subparagraph:
Present text
‘Member States shall ensure that an investment firm or a market operator operating a trading venue which trades commodity derivatives or derivatives of emission allowances communicates the reports referred to in point (a) of the first subparagraph to ESMA. ESMA shall proceed with a centralised publication of the information included in those reports.’;
Amendment
(b) paragraph 2 is replaced by the following:
7a. in Article 51(3), the first subparagraph is replaced by the following:
‘Member States shall ensure that investment firms trading in commodity derivatives or derivatives of emission allowances outside a trading venue provide, on at least a daily basis, the central competent authority referred to in Article 57(6) or – where there is no central competent authority – the competent authority of the trading venue where the commodity derivatives or derivatives of emission allowances are traded, with a complete breakdown of their positions taken in economically equivalent OTC contracts as well as of those of their clients and the clients of those clients until the end client is reached, in accordance with Article 26 of Regulation (EU) No 600/2014 and, where applicable, of Article 8 of Regulation (EU) No 1227/2011.’;
3. In addition to the obligations set out in paragraphs 1 and 2, Member States shall require the regulated market to establish and maintain effective arrangements to verify that issuers of transferable securities that are admitted to trading on the regulated market comply with their obligations under Union law in respect of initial, ongoing or ad hoc disclosure obligations.
(c) in paragraph 4, first subparagraph, is amended as follows:
‘3. In addition to the obligations set out in paragraphs 1 and 2, Member States shall require the regulated market to establish and maintain effective arrangements to verify that issuers of transferable securities that are admitted to trading on the regulated market have obtained the ISO 17442 Legal Entity Identifier and comply with their obligations under Union law in respect of initial, ongoing or ad hoc disclosure obligations.’;
(i) the introductory wording is replaced by the following:
Or. en
‘4. Persons holding positions in a commodity derivative or derivative of emission allowance shall be classified by the investment firm or market operator operating that trading venue according to the nature of their main business, taking account of any applicable authorisation, as either:’;
(02014L0065)
(ii) point (e) is replaced by the following:
Justification
‘(e) in the case of derivatives of emission allowances, operators with compliance obligations under Directive 2003/87/EC.’;
See justification for changes to Article 18.
(d) in paragraph 5, the fourth subparagraph is replaced by the following:
EXPLANATORY STATEMENT
‘In the case of derivatives of emission allowances, the reporting shall not prejudice the compliance obligations under Directive 2003/87/EC.’;
The rapporteur welcomes the Commission’s proposal for the review of the Markets in Financial Instruments Regulation and Directive (MiFIR/D). The review is timely: Europe needs effective, understandable and deliverable changes to the current framework to reduce the fragmentation and increase the size, competitiveness and attractiveness, of EU capital markets.
(12) Article 70(3) is amended as follows:
Nonetheless, the rapporteur has identified certain areas for improvement. The amendments included in the report are informed by the desire to establish a regulatory framework conducive to an environment where all market participants benefit from trading. The amendments are guided by four main principles:
(a) in point (a), point (xxx) is deleted;
a. reducing fragmentation and cross-border barriers;
(b) point (b) is amended as follows:
b. levelling the playing field, supporting a healthy degree of competition between different execution venues and methods;
(i) the following point is inserted:
c. allowing EU firms to be competitive internationally and more attractive for EU and third-countries investors;
‘(iia) Article 5;’;
d. encouraging retail participation and strengthening investor protection.
(ii) point (v) is replaced by the following:
It is clear that the changes require careful calibrations, in the spirit of an overall balanced approach and to the long-term benefit of EU market participants. The rapporteur has extensively engaged with market participants and national competent authorities, and has elaborated what is intended to be an ambitious yet balanced text, whose main changes classified into three areas: consolidated tape (CT), market structure and transparency, forwarding and execution of client orders.
‘(v) Articles 8(1(;’;
Consolidated Tape
(va) Article 8a(1) and (1a);’;
In its proposal, the Commission seeks to establish the conditions for the emergence of a CT in Europe across all asset classes. The rapporteur shares this objective: a CT displaying real-time prices for financial instruments across the Union is a fundamental tool to reduce fragmentation and improve the attractiveness of EU capital markets, and will provide great benefits to end investors.
(vb) Article 8b
The different CTs should be introduced in a phased approach - starting with bonds, then equities/ETFs and derivatives - and with no longer than six months between the initiation of the process for appointing the CTP in each asset class. To ensure an effective oversight of the tape by EU public authorities, ESMA should be granted sufficient time to run the selection and authorisation processes and address outstanding data issues. With respect to the latter, ESMA should consider industry’s prevailing standards and practices, to maximise the value of the CT for its users.
(iii) point (vii) is replaced by the following:
The efficiency of the CT will be proportionate to the value it provides to its users - in this sense, it is essential that the equity tape contains real-time, pre-trade information, necessary to inform investors’ trading decisions. While the biggest players in the market will continue to seek access to the data stream that they currently use, a pre-trade CT in equity will be a great addition for players such as small and medium-size asset managers, or foreign investors seeking to access the EU markets. The CT should also be a tool for retail investors, and for them it should be intelligible easy to access and free or, at most, only requiring the payment of a symbolic amount.
‘(vii) Article 11(1), second subparagraph, first sentence, Article 11(1b) and Article 11(3), fourth subparagraph;
The rapporteur recognises that the introduction of a CT for equities may impact regulated markets, which derive a significant share of their revenues from market data. Hence, the amendments introduce an exemption from mandatory contributions for markets that either (i) represent less than 1% of the total EU average daily trading volume, or (ii) do not contribute significantly to the fragmentation of EU markets as they mostly trade shares for which they are also the venue of primary admission.
(viia) Article 11a(1), second subparagraph, first sentence, and Article 11a(1), fourth subparagraphs;’;
Nonetheless, the rapporteur believes that the inclusion of all EU regulated markets in the CT would be beneficial for end investors, increase the attractiveness of the Union markets lead to an increase in trading volumes and visibility for smaller regulated markets - in line with the objectives of the Capital Markets Union action plan. The amendments therefore includes an opt-in option to the mandatory contribution scheme for those exemptible regulated markets. In those cases, a higher share of the CT revenues should be re-allocated to them.
(iv) points (ix), (x) and (xi) are replaced by the following:
Market structure and transparency
‘(ix) Article 13(1) and (2);
a. Waivers, DVC and SIs quoting and execution rules
(x) Article 14(1), the first sentence of Article 14(2) and Article 14(3);
Today market participants must adhere to highly complex transparency rules, including the application of waivers, deferrals and the cap mechanism. The amendments seek to simplify these rules to the benefit of the EU market structure and to increase the competitiveness and attractiveness of EU markets as a whole.
(xi) Article 15(1), first subparagraph, second subparagraph, the first and third sentences, and fourth subparagraph, Article 15(2) and Article 15(4), the second sentence;’;
There is also a recognition of the necessity to increase pre-trade transparency and thereby reinforce the price formation process, while ensuring that market quality, overall liquidity on EU trading venues and the domestic and international competitiveness and attractiveness of EU markets and firms are fostered.
(v) point (xiii) is deleted;
As such, the rapporteur proposes a rebalancing of the rules governing capital markets by limiting the use of the waivers to pre-trade transparency obligations under Article 4 of MiFIR. The threshold for the use of those waivers should be determined by ESMA, and not be higher than twice the standard market size. This proposal introduces greater flexibility than the Commission’s proposed fixed threshold, allowing ESMA to factor in different elements when determining the threshold.
(vi) point (xiv) is replaced by the following:
At the same time, the cap mechanism limiting dark trading under these waivers should be suspended. These caps were set arbitrarily and proved to be of limited utility, and their removal would reduce complexity and align the Union with international practices.
‘(xiv) Article 20(1), (1a) and Article 20(2), first sentence;’;
SIs quoting and executions rules are also reviewed, applying the same threshold as that under Article 4 of MiFIR.
(vii) the following points are inserted:
The increase of the threshold for the use of waivers, the limits to SIs quoting and execution, and the suspension of the cap mechanism should achieve the dual objective of strengthening trading in lit venues while simplifying the rules, maintaining the competitiveness of EU firms and the number of trading choices available to end-investors. ESMA should be monitoring the impact of these changes on the functioning of markets, and intervene if the price formation process is undermined.
‘(xvia) Article 22a;
b. Non-equities deferrals
(xvib) Article 22b;
To simplify the current regime and ensure end-investors transparency, the rapporteur believes that the deferral regime for non-equities should be harmonised at Union level. The price and the volume of a non-equity transaction should be published as close to real time as possible, and the price should only be delayed until maximally the end of the trading day. Evidence from other jurisdictions indicate that shorter deferrals are beneficial for end-investors and - for certain categories of transactions - do not affect negatively the liquidity available in the markets. At the same time, in recognition of the need for liquidity providers not to be exposed to undue risks, the amendments allow for the masking of the price and volume of very large transactions for a maximum of four weeks. The exact calibration of the various buckets for the deferrals should be left to ESMA, but the proposed approach should ensure greater transparency while accounting for the different necessities of market participants.
(xvic) Article 22c;’;
c. SIs definition and reporting requirements
(viii) point (xxi) is replaced by the following:
The existing reporting regime for investment firms created uncertainty about who should report the trade and lead to duplicative reporting. Besides, the link between the reporting obligation and the status of a SI led to an inflated number of SIs in the Union, distorting the picture of market participants. The amendments thus seek to decouple the SI status and the reporting requirements, introducing the possibility for market participants to register as a ‘designated reporting entity’ (DRE).
‘(xxi) Article 28(1);’;
ESMA should establish a register of all SIs and DREs, specifying their identity and the instruments or classes of instruments for which they are either an SI or a DRE. This would remove uncertainty and would reduce the regulatory burden for investment firms, particularly smaller ones. The rapporteur believes that under this approach, firms qualifying or opting in as SIs will only be those firms acting as liquidity providers, providing further clarity to the overall equity market structure.
(ix) point (xxiv) is replaced by the following:
d. DTO suspension
‘(xxiv) Article 31(3);’;
The rapporteur shares the Commission’s aim to enhance the Union’s clearing capacity by introducing a targeted suspension of the derivatives trading obligations (DTO). The COM proposal addresses the impact of the dealer-to-customer market by allowing for the temporary suspension when receiving client quotes from counterparties with no active membership on an EU trading venue. However, this solution does not address the dealer-to-dealer market for CDS in Europe. The amendment introduces the possibility for DTO suspensions in favour of dealer-to-dealer platforms that have established links to CCPs established in the Union, directly supporting the EU agenda to support the competitiveness of EU CCPs and clearing in the EU.
(x) the following point is inserted:
Forwarding and execution of client orders
‘(xxviia) Article 39a;’.
The rapporteur believes that the problems identified by the Commission with the practices related to the so-called payments for order flows (PFOF) are symptomatic of a broader issue related to the best-execution regime. In particular, the way in which the best-execution requirements under Art. 27 of MiFID are worded has led to widely divergent supervisory interpretations, of which PFOF is the starkest example. This has led to increasing opportunities for regulatory arbitrage across borders, contrary to the objectives of a CMU.
(14) in Article 90, the following paragraph is added:
In light of this, while the rapporteur maintains the initial proposal regarding PFOF, the amendments seek to implement changes to the best execution requirements with a view to ensure a harmonised approach to best execution, more transparency and a level playing field across Europe, to the benefits of end-investors. Art. 27 therefore mandates to develop clearer RTS for professional investors, while best-execution requirements for retail investors are brought under MiFIR, Art. 39a.
‘5. The Commission shall, after consulting ESMA, EBA and ACER, present a report to the European Parliament and the Council with a comprehensive assessment of the markets for commodity derivatives, emission allowances or derivatives on emission allowances. The report shall assess at least for each of the following elements their contribution to the liquidity and proper functioning of European markets for commodity derivative, emission allowances or derivatives on emission allowances:
Finally, the transparency requirements should be effective and add value for market participants. Measures that in the name of transparency increase the regulatory burden faced by venues and investments firms without providing value to the investors should be removed - as it is the case for the so-called RTS 27 and 28 reports under Art. 27(3) and (6) of MiFID.
(a) the position limit and position management controls regimes relying on data provided by competent authorities to ESMA in accordance with Article 57(5) and (10);
(b) the elements referred to in the second and third subparagraph of Article 2(4) and the criteria for establishing when an activity is to be considered to be ancillary to the main business at group level pursuant to the Commission Delegated Regulation (EU) 2021/1833, taking into account the ability to enter into transactions for effectively reducing risks directly relating to the commercial activity or treasury financing activity, the application of requirements from 26 June 2026 for investment firms specialised in commodity derivatives or emission allowances or derivatives thereof as set out in Regulation (EU) 2019/2033 and requirements for financial counterparties as set out in Regulation (EU) No 648/2012;
(c) the key elements to obtain a harmonized data set for transactions by the commodity derivative market to a single collecting entity. The relevant information on transaction data to be made public and its most appropriate format.
The Commission shall present its reports:
– by 31 July 2024 for point b) of the first sub-paragraph of this Article;
– by 31 July 2025 for points a) and c) of the first sub-paragraph of this Article.
These reports shall be accompanied, if appropriate, with a legislative proposal concerning targeted changes to the market rules for commodity derivatives, emission allowances or derivatives on emission allowances framework.’.
Article 2 Transposition
1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by … [18 months after the date of entry into force of this amending Directive] at the latest.
When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.
2. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.
Article 3 Entry into force
This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
Article 4 Addressees
This Directive is addressed to the Member States.
Done at …,
For the European Parliament For the Council
The President The President