Changes from report parliamentary committee draft to plenary report

RemovedThe 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.

Added‘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.’;

RemovedIn 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.

Added(ii) the following subparagraphs are added:

RemovedFinally, 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.

Added‘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.

AddedMember 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).’;

Added(b) paragraph 12 is amended as follows:

Added(i) in the first subparagraph, the following points are added:

Added‘(ga) the principles for establishing the main technical parameters regulated markets shall consider, taking into account the liquidity of different asset classes and sub-classes, the nature of the market model and the types of users when establishing their mechanisms to halt trading in accordance with paragraph 5;

Added(gb) the information that trading venues shall disclose, including templates regarding the parameters and circumstances triggering the use of circuit breakers that trading venues shall report to competent authorities in accordance with paragraph 5.';

Added(ii) the second subparagraph is replaced by the following:

Added' 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].’;

Added6b. in Article 49(2), the following point is added:

Added‘(ba) in the case of shares with a non-EEA international securities identification number, 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.’;

Added7. Article 50 is deleted;

Added7a. in Article 51(3), the first subparagraph is replaced by the following:

Added‘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.’;

Added7b. Article 57 is amended as follows:

Added(a) in paragraph 8, the first subparagraph is replaced by the following:

Added‘8. Member States shall ensure that an investment firm or a market operator operating a trading venue which trades commodity derivatives or derivatives on emission allowances applies position management controls, including powers for the trading venue to:’;

Added(b) the following paragraph is added:

Added‘15. By 31 December 2025, ESMA shall submit to the Commission a report with a comprehensive assessment of the position limit and position management controls regimes. The report shall assess:

Added(a) the effectiveness of the position limit and position management controls regimes to achieve the objectives mentioned in the first subparagraph of paragraph 1 of this Article;

Added(b) what constitutes a critical or significant position; and

Added(c) the appropriateness of the limitation of the scope of position limits to agricultural commodity derivatives and critical or significant commodity derivatives that are traded on trading venues, and to economically equivalent OTC contracts, as set out in Article 57.

AddedThe report shall notably rely on the data provided competent authorities to ESMA in accordance with paragraphs 5 and 10 of this Article.

AddedBased on the report produced by ESMA and an impact assessment, the Commission shall, if appropriate, submit to the European Parliament and the Council a legislative proposal concerning targeted changes on position limit and position management controls regimes.’;

Added7c. in Article 58, paragraph 1 is amended as follows:

Added(a) in the first subparagraph, point (a) is replaced by the following:

Added‘(a) make public two weekly reports, of which one excluding options, with the aggregate positions held by the different categories of persons for the different commodity derivatives or emission allowances or derivatives thereof 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, the total trading volume per day, expressed as the number of derivatives contracts bought or sold in a given trading day, for each category, and the number of persons holding a position in each category in accordance with paragraph 4;’;

Added(b) the following subparagraph is inserted after the first subparagraph:

Added‘Member States shall ensure that an investment firm or a market operator operating a trading venue which trades commodity derivatives or emission allowances or derivatives communicates the reports referred to in point (a) of the first subparagraph to the competent authority and to ESMA. ESMA shall proceed to a centralised publication of the information included in those reports.’;

Added8. in Article 70(3), point (a), point (xxx) is deleted;

Added9. in Article 70(3), point (b), the following points (iia), (xvia), (xvib), (xvic) and (xxviia) are inserted:

Added‘(iia) Article 5;’;

Added‘(xvia) Article 22a;’;

Added‘(xvib) Article 22b;’;

Added‘(xvic) Article 22c ;’ ;

Added‘(xxviia) Article 39a ;’.

Added1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by [OP please insert the date = 12 months after the date of entry into force of the CTP Regulation] at the latest.

AddedWhen 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.

Added2. 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.

AddedThis Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

AddedThis Directive is addressed to the Member States.

AddedDone at Brussels,

AddedFor the European Parliament For the Council

AddedThe President The President