Changes from report parliamentary committee draft to plenary report

Added(c) the minimum quoting sizes as referred to in paragraph 3;

RemovedArticle 1 – paragraph 15 a (new), Article 27d b (new): (15a) the following Article is inserted: / ‘Article 27db / Authorisation process of consolidated tape providers / The application referred to in Article 27da shall provide all the information necessary to enable ESMA to confirm that the applicant has put in place, at the time of initial authorisation, all the necessary arrangements to fulfil the criteria set out in Article 27da(2) and to comply with the organisational requirements set out in Article 27h. / ESMA shall assess whether the application for authorisation is complete within 20 working days of its receipt. / Where the application is not complete, ESMA shall set a deadline by which the data reporting services provider is to provide additional information. / After assessing the application as complete, ESMA shall notify the CTP accordingly. Within three months from the receipt of a complete application, ESMA shall assess the compliance of the CTP with this Title. It shall adopt a fully reasoned decision granting or refusing authorisation and shall notify the applicant CTP accordingly within five working days. Such reasoned decision shall specify the conditions under which the CTP shall operate and, in particular, the level of fees referred to in Article 27da(2)(g) and, for shares, the level of the participation as referred to in paragraph 4 of that Article.’;

Added(d) the determination of whether prices reflect prevailing market conditions as referred to in paragraph 3; and

RemovedInclude a new, specific article on CTP authorisation. The procedure is in line with the authorisations of any market infrastructure and it is necessary to distinguish the selection procedure from the authorisation one to avoid: 1) CTP to sustain all compliance costs without been selected; 2) ESMA to authorise a CTP without assessing its compliance.This includes provision moved from Article 27 da, and others in line from Article 27c, but adapted to CTPs.

Added(e) the standard market size as referred to in paragraph 4.

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AddedOn the basis of the assessment referred to in the first subparagraph, ESMA shall develop draft regulatory technical standards to modify the thresholds referred to in points (a)-(e), where appropriate.

RemovedArticle 1 – paragraph 15 b (new), Article 27e – paragraph 2 a (new): (15b) In Article 27e, the following paragraph is inserted: / ‘2a. A DRSP from which registration has been withdrawn shall ensure orderly substitution, including the transfer of data to other DRSPs, the due notice to its clients and the redirection of reporting flows to other DRSP prior to the withdrawal.’;

AddedESMA shall submit those draft regulatory technical standards to the Commission by 31 December 2024.

RemovedEMIR provides that TRs for which authorisation is withdrawn shall orderly transfer their data to the other TRs, to avoid major data quality disruptions which may be caused by data loss or duplication.There is currently no equivalent provision for ARMs, and we would suggest introducing it.This would ensure alignment with EMIR and SFTR and preserve data quality in case of ARMs ceasing to provide the service.

AddedPower is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the second subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.’;

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Added(ba) in paragraph 7, the first subparagraph is replaced by the following:

RemovedArticle 1 – paragraph 15 c (new), Article 27f: (15c) Article 27f is replaced by the following: / ‘1. 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. / Where a market operator seeks authorisation to operate an APA or an ARM pursuant to Article 27c if it fulfils the criteria for derogation of ESMA supervision and the members of the management body of the APA, 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. / 4. ESMA, or the national competent authority where relevant, shall refuse or withdraw 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. / 4a. An APA shall have objective, non-discriminatory and publicly disclosed requirements for access to its services by undertakings that are subject to the transparency obligations under Article 20(1) and Article 21(1). An APA shall publicly disclose the prices and fees associated…

Added‘In order to ensure the efficient valuation of shares, depositary receipts, ETFs, certificates and other similar financial instruments and maximise the possibility of investment firms to obtain the best deal for their clients, ESMA shall develop draft regulatory technical standards to specify further the arrangements for the publication of a firm quote as referred to in paragraph 1, the determination of the minimum quoting sizes as referred to in paragraph 3, and of the standard market size as referred to in paragraph 4.’

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

Added(8a) Article 15 is amended as follows:

RemovedChanges to paragraph 1 in order to guarantee a proper supervision by ESMA of the conditions of authorisation, a clarification is needed that this paragraph only applies to DRSPs that are subject to the national supervision.Changes to paragraph 4 to include the possibility of the withdrawal of the authorisation for two reasons: later in the paragraph the article refers to changes in the management body, meaning that the DRSP is already authorised. Secondly, it is in line with the supervision of TRs and given the fact that DRSPs under ESMA supervision are already authorised it would create a double standard of enforcement. Article 27e 1(c) already provides for this possibilityInsertion of 5a and 5b to reflect that having access to an APA and to an ARM is a necessary condition for counterparties to fulfil MiFIR transparency obligations. Considering that the data reporting market is small, not very competitive and prone to consolidation, there is a risk for the establishment of an oligopoly. Subjecting access to APAs and ARMs to “FRAND” conditions is therefore necessariy, as it is already foreseen for TRs.

Added(a) in paragraph 1, the following subparagraphs are added:

RemovedRegulation (EU) No 600/2014

Added‘Upon the request of competent authorities, systematic internalisers shall provide the competent authority with a detailed description of the functioning of the systematic internaliser, including any links to or participation by a regulated market, an MTF, an OTF or a systematic internaliser owned by the same investment firm.

RemovedArticle 1 – paragraph 16, Article 27h – paragraph 1 – point c: (c) in the case of market data concerning shares and ETFs, redistribute part of their revenues for the purposes of covering the cost related to mandatory contribution, in accordance with Article 27da(4). The level of revenue redistributed to each market data contributor shall be proportional to the contribution to the price formation process of the data provided to the CTP by that market data contributor. Revenue generated from the pre-trade and post-trade consolidated data streams shall be redistributed exclusively to the contributors to a given data stream;

AddedCompetent authorities shall make that information available to ESMA on request.

RemovedAligning provision with contribution mechanism detailed in Art. 27da(4), and ensuring that pre-trade transparent data are assigned a higher value in the revenue redistribution mechanism, to better reflect the (higher) value of their contribution to the price formation process. This should lead to proportionally redistributing more revenues to lit venues. Contrary to the COM proposal however, the redistribution mechanism should only cover the costs faced by market data contributors.

AddedSystematic internalisers shall establish and implement transparent and non-discriminatory rules and objective criteria for the efficient execution of orders. They shall have arrangements for the sound management of their technical operations, including the establishment of effective contingency arrangements to cope with risks of systems disruption.’;

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Added(b) paragraph 5 is replaced by the following:

RemovedArticle 1 – paragraph 16, Article 27h – paragraph 1 – point c a (new): (ca) in case of market data concerning asset classes other than shares and ETFs, be allowed to redistribute part of the revenue to reward the quality and timeliness of data contributions;

Added‘5. ESMA shall develop draft implementing technical standards to determine the content and format of the description and notification referred to in paragraph 1.

RemovedIntroducing the possibility - on a non-mandatory basis - for CTPs in non-equities to redistribute part of their revenues to create a ‘virtuous’ mechanism in relation to the market data they receive. This, together with amendments related to transaction reporting, SI regime and data quality, is expected to contribute to improvements in the non-equity space, where the data are reportedly opaque and difficult to navigate.

AddedESMA shall submit those draft implementing technical standards to the Commission by ... [six months after the date of entry into force of this amending Regulation].

RemovedRegulation (EU) No 600/2014

AddedPower 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.’;

RemovedArticle 1 – paragraph 16, Article 27h – paragraph 1– point e: deleted

Added(8b) in Article 16, points (a) and (b) are replaced by the following:

RemovedThe responsibility to apply waivers and deferrals should not be given to the CTP, but remain with trading venues, APAs and SIs according to the Articles of this Regulation . However, once the CTPs are fully operational, an expansion in the scope of their responsibility to include the application of waivers and deferrals could be considered.

Added‘(a) that firms that meet the definition of systematic internaliser comply with the conditions for order execution laid down in Article 15(1);

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Added(b) that firms that meet the definition of systematic internaliser comply with the conditions for price improvement laid down in Article 15(2).’;

RemovedArticle 1 – paragraph 16, Article 27h – paragraph 1 – point f a (new): (fa) have systems in place that can effectively check trade reports for completeness, identify omissions and obvious errors, and request the re-transmission of erroneous reports.

Added(9) Article 17a is replaced by the following:

RemovedRequirement added to ensure consistency with the analogous APA requirement.

Added‘Article 17a Tick sizes

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Added1. Systematic internalisers’ quotes, price improvements on those quotes and execution prices shall comply with the tick sizes set in accordance with Article 49 of Directive 2014/65/EU.

RemovedArticle 1 – paragraph 16, Article 27h – paragraph 1 – subparagraph 2: For the purpose of establishing the revenue redistribution in point (c) of this paragraph, smaller regulated markets opting in to the mandatory contribution of market data to the CTP, in accordance with Article 22a(2b), shall be allocated a higher share of the revenue of the CTP, according to a formula that reflects the proportion of pre-trade transparent liquidity in shares displayed by that regulated market relative to the average daily turnover in these shares in the Union.

Added2. The application of the tick sizes set in accordance with Article 49 of Directive 2014/65/EU shall not prevent systematic internalisers from matching orders ▌at mid-point within the current bid and offer prices for sizes above the threshold determined by ESMA in accordance with Article 4(6)(ea).’;

RemovedShare of revenue redistributed to small regulated markets that decide to opt-in the CT should be higher than that allocated to other market data contributors (i.e. should not only be covering the costs for producing and ‘sending’ the market data, but also a little extra). The goal of this provision is to create an incentive for smaller regulated markets to be included in the CT. Smaller regulated markets would benefit from an inclusion in the CT, i.e. increase in their relative market share, overall attractiveness for investor, bigger flow of capitals - in line with the CMU objectives.

Added(9a) Article 18 is replaced by the following:

RemovedRegulation (EU) No 600/2014

Added‘Obligation for systematic internalisers to make public firm quotes in respect of bonds, structured finance products, emission allowances and derivatives

RemovedArticle 1 – paragraph 16, Article 27h – paragraph 4: 4. After 24 months of full operation of the CTP for shares and ETF, ESMA shall provide the Commission with a motivated opinion on the effectiveness and fairness of the level of participation of smaller regulated markets that decided to opt in the mandatory contribution of market data, in accordance with Article 22a(2b), in the revenues generated by the CTP as set out in accordance with the second subparagraph of paragraph 1 of this Article. The Commission may request ESMA to provide further opinions, where necessary or appropriate. The Commission shall be empowered to adopt a delegated act in accordance with Article 50 to revise the allocation key for the revenue redistribution, where appropriate.

Added1. Investment firms shall make public firm quotes in respect of bonds, structured finance products, emission allowances traded on a trading venue and derivatives subject to the clearing obligation set out in Article 4 of Regulation (EU) No 648/2012, for which they are systematic internalisers and for which there is a liquid market when the following conditions are fulfilled:

RemovedThe CT should be operation for more than a year in porder for ESMA to be able to provide a first reliable assessment of the marekt impact of the CT. ESMA shoud in partocular assess whether the revenue redistribution scheme has proved effective in pulling smaller regulated markets towards the CT and whether for those that opted-in there were tanhible benefits. Sghould it be demonstrated that the overall effect of the inclusion of smaller regulated markets were positive, the COM may want to consider removing the exemptions provided under Article 22b(2ab)

Added(a) they are prompted for a quote by a client of the systematic internaliser;

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Added(b) they agree to provide a quote.

RemovedArticle 1 – paragraph 17 a (new), Article 27i – paragraphs 4a and 4b (new): (17a) in Article 27i, the following paragraphs are inserted: / '4a. An ARM shall have objective, non-discriminatory and publicly disclosed requirements for access to its services by undertakings subject to the reporting obligation set out in Article 26. / An ARM shall publicly disclose the prices and fees related to the services provided under this Regulation. It shall disclose separately the prices and fees of each service provided, including discounts and rebates and the conditions to benefit from those reductions. It shall allow reporting entities to access specific services separately. The prices and fees charged by an ARM shall be cost-related. / 4b. ARMs shall keep and preserve records relating to their business for at least five years. The information concerning the first two years shall be kept in an easily accessible place and ARM shall provide such records to ESMA without delay upon request.’;

Added2. Systematic internalisers may update their quotes at any time.

RemovedFRAND and record keeping requirements for ARMs - in line with previous amendments on 27f