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REPORT (COM(2021)0726 – C90438/2021 – 2021/0384(COD))

On the proposal for a directive of the European Parliament and of the Council amending Directive 2014/65/EU on markets in financial instruments

A-9-2023-0039

Committee on Economic and Monetary Affairs · Rapporteur: Danuta Maria Hübner

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Written by a language model from the full text only; every figure comes from the text. The paragraph links open the paragraph a statement rests on — check the text itself before relying on it.

Parliament's amended version of the Commission proposal to amend Directive 2014/65/EU on markets in financial instruments. It moves multilateral systems and the definition of multilateral system into Regulation (EU) No 600/2014, and limits the systematic internaliser regime to firms meeting qualitative criteria or opting in. It deletes the best execution reporting requirement, requires firms to inform clients where orders were executed, and asks ESMA to draft technical standards on order execution policy. It requires investment firms, market operators and regulated markets to have arrangements to meet data quality standards for the consolidated tape, and to verify issuers' Legal Entity Identifiers. It adds rules on trading halts, tick sizes, position management controls and weekly position reports, and asks ESMA to report on position limits by 31 December 2025. It adds new provisions to the list of rules for which member states must provide sanctions, and sets a transposition deadline of 12 months after the entry into force of the CTP Regulation.

Committee position. The Committee on Economic and Monetary Affairs proposes to adopt Parliament's position at first reading, amending the Commission proposal as set out in the text.

Key points

  1. Deletes Article 1(7) of Directive 2014/65/EU, moving multilateral systems into Regulation (EU) No 600/2014.
  2. Amends the exemption for persons dealing on own account who are members of or participants in a regulated market or an MTF, with an exception for non-financial entities.
  3. Requires the Commission to adopt a delegated act within 18 months of entry into force specifying criteria for the ancillary activity exemption, including an annual threshold of EUR 3 billion.
  4. Replaces the definition of 'multilateral system' to refer to Regulation (EU) No 600/2014 and limits the systematic internaliser definition to firms meeting qualitative criteria or opting in.
  5. Requires investment firms that are market data contributors to have arrangements to meet data quality standards set out in Article 22b of Regulation (EU) No 600/2014.
  6. Requires market operators and investment firms operating an MTF or OTF to verify that issuers have obtained the ISO 17442 Legal Entity Identifier.
  7. Deletes the best execution reporting requirement, requires firms to inform clients where orders were executed, and asks ESMA to develop technical standards on order execution policy by nine months after entry into force.
  8. Requires MTF and OTF operators to meet data quality standards, and requires regulated markets to have at least three materially active members or users.
  9. Requires regulated markets to be able to halt trading in emergencies, to publicly disclose circumstances leading to halts and principles for technical parameters, and asks ESMA to submit technical standards by 12 months after entry into force.
  10. Requires shares with a non-EEA international securities identification number to have the same tick size as the most relevant market in terms of liquidity.
  11. Requires trading venues trading commodity derivatives to apply position management controls, and asks ESMA to report on position limits by 31 December 2025.
  12. Requires weekly position reports, including one excluding options, and centralised publication by ESMA; adds new provisions to the list of rules for which member states must provide sanctions.

Who is affected

  • Investment firms, market operators and regulated markets, which must meet data quality standards and verify Legal Entity Identifiers.
  • Systematic internalisers, which are subject to a narrower definition based on qualitative criteria or opt-in.
  • Trading venues trading commodity derivatives, which must apply position management controls and publish weekly reports.
  • Member states, which must transpose the directive within 12 months after the CTP Regulation enters into force and provide sanctions.

Figures and deadlines

  • EUR 3 billion: annual threshold for net outstanding notional exposure in commodity derivatives for the ancillary activity exemption.
  • 18 months after entry into force: deadline for the Commission to adopt a delegated act on ancillary activity criteria.
  • Nine months after entry into force: deadline for ESMA to submit draft regulatory technical standards on order execution policy.
  • 12 months after entry into force: deadline for ESMA to submit draft regulatory technical standards on trading halts.
  • 31 December 2025: deadline for ESMA to submit a report on position limits and position management controls.
  • 12 months after entry into force of the CTP Regulation: deadline for member states to transpose the directive.
  • Twentieth day following publication: entry into force of the directive.

Legal basis: Article 53(1) of the Treaty on the Functioning of the European Union.