Changes from report parliamentary committee draft to plenary report

Added‘The reference price referred to in paragraph 1, point (a) shall be established by obtaining either of the following:

RemovedRegulation (EU) No 600/2014

Added(a) the midpoint within the current bid and offer prices of any of the following:

RemovedArticle 1 – paragraph 9 c (new), Article 20 – paragraph 2 a (new) and paragraph 3 point c: (9c) Article 20 is amended as follows: / (a) the following paragraph is inserted: / ‘2a. Each individual transaction shall be made public once through a single APA;’; / (b) in paragraph 3, point (c) is deleted; / (deleted)

Added(i) the trading venue where those financial instruments were first admitted to trading;

Removed(a) a transaction should be made public only through a single APA also for equity instruments. Today, despite a complex system on Level 2 to avoid potential double-reporting, there remain problems in the application, and clarifying this on Level 1 seems to be the clearer solution. This additional paragraph would ensure the post-trade information is only made once through a single APA also in the case of equity/equity-like financial instruments.

Added(ii) the most relevant market in terms of liquidity;

Removed(b) Removes ESMAs powers to specify reporting hierarchy since it is now included in the Designated Reporting Entity Article

Added(iii) the consolidated tape for shares and ETFs;

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Added(b) when the price referred to in point (a) is not available, the opening or closing price of the relevant trading session.’;

RemovedArticle 1 – paragraph 9 e (new), Article 21: (9e) Article 21 is amended as follows: / (a) paragraph 1 is replaced by the following: / ‘1. Investment firms which, either on own account or on behalf of clients, conclude transactions in bonds, structured finance products and emission allowances traded on a trading venue, or derivatives subject to the clearing obligation set out in Article 4 of Regulation (EU) No 648/2012, shall make public the volume and price of those transactions and the time at which they were concluded. That information shall be made public through an APA.’; / (b) paragraph 4 is replaced by the following: / ‘4. Investment firms may provide for deferred publication of transactions referred to in paragraph 1 of this Article and may temporarily suspend the obligations referred to in that paragraph on the same conditions as laid down in Article 11.’; / (c) paragraph 5, introductory part, is replaced by the following: / ‘5. ESMA shall develop draft regulatory technical standards in such a way as to enable the publication of information required under Article 27h of this Regulation to specify the following:’; / (d) in paragraph 5 point c is deleted.’;

Added(ba) paragraph 6 is amended as follows:

RemovedIntroduces derivatives subject to the clearing obligations into scope of OTC transparency and removes ToTV for derivatives. Also shortens paragraph 4 to take into account new deferrals as well as the removal of ToTV for deferrals

Added(i) point (a) is replaced by the following:

RemovedRegulation (EU) No 600/2014

Added‘(a) the range of bid and offer prices or designated market-maker quotes, and the depth of trading interest at those prices, to be made public for each class of financial instrument concerned in accordance with Article 3(1), taking into account the necessary calibration for different types of trading systems as referred to in Article 3(2), and the details of pre-trade data, including identifiers for different types of orders or quotes;’;

RemovedArticle 1 – paragraph 9 f (new), Article 21 a (new): (9f) the following Article is inserted: / 'Article 21a / Designated reporting entity / 1. Where only one party to a transaction is a designated reporting entity in accordance with paragraph 3 of this Article, it shall be responsible for the disclosure of transactions through an APA in accordance with Article 20(1) or Article 21(1). / 2. Where none of the parties to a transaction, or both of the parties to a transaction are designated reporting entities in accordance with paragraph 3, only the entity that sells the financial instrument concerned shall make the transaction public through an APA. / 3. Upon request to ESMA, investment firms shall obtain the status of designated reporting entity for specified financial instruments or classes of financial instruments. All systematic internalisers are automatically designated as reporting entities for the financial instruments or classes of financial instruments for which they are systematic internaliser. / 4. ESMA shall establish a register of all designated reporting entities, specifying the identity of the designated reporting entities, including the systematic internalisers, as well as the instruments or classes of instruments for which they are designated reporting entities.';

Added(ii) the following point is added:

RemovedIntroduces a designated reporting entity regime, as part of the decoupling of the SI status from the reporting obligation. This change is strongly supported by most market participants, and is expected to reduce the burden on smaller investment firms, provide additional clarity for market participants on who will be reporting trades, improve transaction reporting and reduce the number of SIs in the Union (leading to a more realistic picture of the markets).

Added‘(ea) the minimum size of an order that may be matched using the trading methodology referred to in paragraph 1, point (a), which shall be determined taking into account the international best practices, the competitiveness of Union firms, the significance of the market impact and the efficiency of the price formation.’;

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Added(4) Article 5 is amended as follows:

RemovedArticle 1 – paragraph 9 g (new), Article 22 – paragraph 1 – introductory part: (9g) in Article 22, paragraph 1, the introductory part is replaced by the following: / ‘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, and to prepare annual reports to the European Commission in accordance with Article 4(4), Article 9(2), Article 7(1) and Article 11(1), ESMA and competent authorities may require information from:’;

Added(a) the title is replaced by the following:

Removed(https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02014R0600-20220101)

Added‘Article 5 Volume cap’;

RemovedThis addition would allow ESMA to collect data on a per waiver and per deferral basis for both equity and non-equity. At the moment ESMA is in a position only to collect information on the equity waivers excluding OMF on the basis of the calculations for the tick-size parameter and on the request to perform this calculations.The collection of data in a more granular fashion would allow ESMA to provide more accurate reports, better monitor the application of waivers and deferrals, to better inform policy decisions

Added(b) paragraph 1 is replaced by the following:

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Added‘1. Trading venues shall suspend their use of the waivers referred to in Article 4(1), point (a), and 4(1), point (b)(i) where the percentage of volume traded in the Union in a financial instrument carried out under those waivers exceeds 7% of the total volume traded in that financial instrument in the Union. Trading venues shall base their decision to suspend the use of those waivers on the data published by ESMA in accordance with paragraph 4, and shall take such decision within two working days after the publication of those data and for a period of six months.’;

RemovedArticle 1 – paragraph 10, Article 22a – paragraph 1: 1. Market data contributors shall, with regard to shares, ETFs and bonds that are traded on a trading venue, and with regard to OTC derivatives as defined in Article 2(7) of Regulation (EU) No 648/2012 that are subject to the clearing obligation as referred to in Article 4 of that Regulation, provide the CTP with all the market data and regulatory data as set out in Article 22b(2) as needed for the CTP to be operational. Those market data shall be provided in a harmonised format, through a high quality transmission protocol, and as close to real-time as is technically possible.

Added(c) paragraph 2 and 3 are deleted;

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Added(d) paragraph 4 is replaced by the following:

RemovedArticle 1 – paragraph 10, Article 22a – paragraph 1 a (new): 1a. Regulated markets whose average daily trading volume of shares represents less than 1 % of the average daily trading volume of the Union shall not be required to provide market data to the CTP;

Added‘4. ESMA shall publish within seven working days of the end of each calendar month all of the following data:

RemovedIntroduces exclusion mechanism for smaller regulated markets. Paragraph 2 introduces a first-level threshold related to the market share.

Added(a) the total volume of Union trading per financial instrument in the previous 12 months;

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Added(b) the percentage of trading in a financial instrument carried out ▌under the waivers referred to in Article 4(1), point (a), and Article 4(1), point (b)(i) across the Union and on each trading venue in the previous 12 months;

RemovedArticle 1 – paragraph 10, Article 22a – paragraph 2 a (new): 2a. Regulated markets whose average daily trading volume of shares exceeds 1 % of the average trading volume of the Union shall not be required to provide market data to the CTP if: / (i) the regulated market accounts for more than 70 % of the average daily trading volume of shares that were first admitted to trading on that regulated market; or / (ii) the average daily trading volume of shares first admitted on a regulated market on MTFs and systematic internalisers is 20 % or less of the average daily trading volume of those shares. / ESMA shall publish on its website a list of regulated markets exempted from providing market data to the CTP and shall update that list regularly.

Added(c) the methodology that is used to derive the percentages referred to in point (b).’;

RemovedIntroduces exclusion mechanism for smaller regulated markets. Should market share exceeds 1% (paragraph 2 first threshold) but the exchange continues to present low levels of fragmentation as the shares admitted to the venue are also mostly traded in that venue, then a second-level threshold is inserted. Please note that the two fragmentation criteria apply alternatively, not cumulatively (thereby maximising options for exemption). Please refer to the explanatory note for further details on the rationale and the goals of this exemption.

Added(e) paragraphs 5 and 6 are deleted;

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Added(f) paragraph 7 is replaced by the following:

RemovedArticle 1 – paragraph 10, Article 22a – paragraph 2 b (new): 2b. Notwithstanding paragraphs 2 and 2a, smaller regulated markets may decide to provide market data to the CTP, subject to the provisions of paragraph 1, by notifying ESMA. Those regulated markets that decide to subject themselves to the requirement to provide market data in accordance with paragraph 1 should start providing market data to the CTP within 30 working days of the date of the notification to ESMA.

Added‘7. To ensure a reliable basis for monitoring the trading taking place under the waivers referred to in Article 4(1), point (a), and Article 4(1), point (b)(i) and for determining whether the limits referred to in paragraph 1 have been exceeded, operators of trading venues shall have in place systems and procedures to enable the identification of all trades which have taken place on their venue under those waivers’;

RemovedDespite the possibility for exemption, the consolidated tape may represent a viable way for smaller regulated markets to enhance their visibility to ‘outside’ investors - both within the Union and outside - and increase their market share. This will be coherent with the goals of the CMU, and will increase the size and the attractiveness of the EU capital markets as a whole. For this reason, an opt-in provision is inserted, should smaller regulated markets voluntarily decide to participate to the mandatory contribution scheme.

Added(fa) the following paragraph is added:

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Added‘9a. By ... [three years after the date of entry into force of this amending Regulation], and every two years thereafter, ESMA shall submit to the Commission a report assessing the volume cap threshold set out in paragraph 1 and the method by which it is defined, taking into account financial stability, international best practices, the competitiveness of Union firms, the significance of the market impact as well as the efficiency of the price formation.

RemovedArticle 1 – paragraph 10, Article 22a – paragraph 3: 3. Market data contributors shall, with regard to transactions in the instruments referred to in paragraph 1 that are concluded by investment firms outside a trading venue, provide the CTP with the market data concerning those transactions through an APA. Market data providers shall, with regard to the best bids and offers in shares provided by investment firms outside a trading venue, provide the CTP with the market data concerning those bids and offers either directly or through an APA.

AddedThe Commission is empowered to adopt delegated acts in accordance with Article 50 to amend this Regulation pursuant to regular reviews of the volume cap threshold set out in paragraph 1. For the purpose of this subparagraph, the Commission shall take into account the report from ESMA referred to in the first subparagraph, international developments and standards agreed at Union or international level.’;

RemovedTransactions to the CTP should only be reported by an APA to avoid double reporting. Pre-trade data, however, can also be communicated by investment firms directly.

Added(4a) Article 8 is amended as follows:

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Added(a) paragraphs 1 and 2 are replaced by the following:

RemovedArticle 1 – paragraph 10, Article 22a – paragraph 4: 4. Market data contributors shall not receive any remuneration for the market data provided other than the revenue sharing as referred to in Article 27h(1).