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dossier	COM(2021)726 - Amendment of Directive 2014/65/EU on markets in financial instruments.
document	COM(2021)726
date	February 28, 2024

Article 1

Amendments to Directive 2014/65/EU

Directive 2014/65/EU is amended as follows:

(1)	in Article 1, paragraph 7 is deleted;

(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 that execute transactions on a trading venue where such transactions are part of liquidity management or 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:

(a)

point (19) is replaced by the following:

‘(19)

“multilateral system” means a multilateral system as defined in Article 2(1), point (11), of Regulation (EU) No 600/2014;’;

(b)

point (20) is replaced by the following:

‘(20)

“systematic internaliser” means an investment firm which, on an organised, frequent and systematic basis, deals on own account in equity instruments by executing client orders outside a regulated market, an MTF or an OTF, without operating a multilateral system, or which opts in to the status of systematic internaliser;’;

(4)

Article 27 is amended as follows:

(a)	paragraph 2 is deleted;

(b)

paragraph 3 is replaced by the following:

‘3. With regard to financial instruments that are subject to the trading obligations laid down in Articles 23 and 28 of Regulation (EU) No 600/2014, Member States shall require that, following the execution of an order on behalf of a client, an investment firm inform the client of the venue where the order was executed.’

;

(c)	paragraph 6 is deleted;

(d)

paragraph 7 is replaced by the following:

‘7. Member States shall require investment firms which execute client orders to monitor the effectiveness of their order execution arrangements and execution policy for the purpose of identifying and, where appropriate, correcting any deficiencies. In particular, Member States shall require such investment firms to 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.’

;

(e)

paragraph 10 is replaced by the following:

‘10. ESMA shall develop draft regulatory technical standards to specify the criteria to be taken into account in establishing and assessing the effectiveness of the order execution policy pursuant to 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)	factors determining the choice of execution venues included in the order execution policy;

(b)	the frequency of assessing and updating the order execution policy;

(c)	the manner in which to identify classes of financial instruments as referred to in paragraph 5.

ESMA shall submit those draft regulatory technical standards to the Commission by 29 December 2024.

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.’

;

(5)	in Article 31(1), the following subparagraph is added: ‘Member States shall require that investment firms and market operators operating an MTF or an OTF have arrangements in place to ensure that they meet data quality standards pursuant to Article 22b of Regulation (EU) No 600/2014.’;

(6)

in Article 47(1), the following points are added:

‘(g)	to have arrangements in place to ensure that it meets data quality standards pursuant to Article 22b of Regulation (EU) No 600/2014;

(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.’;

(7)

Article 48 is amended as follows:

(a)

paragraph 5 is amended as follows:

(i)

the first subparagraph is replaced by the following:

‘Member States shall require a regulated market to be able to temporarily halt or constrain trading in emergency situations or in the event of 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 or constraining 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.’;

(ii)

the following subparagraphs are added:

‘Member States shall require a regulated market to disclose publicly on its website information about the circumstances leading to the halting or constraining of trading and on the principles for establishing the main technical parameters used to do so.

Member States shall ensure that, where a regulated market does not halt or constrain trading as referred to in the first subparagraph, despite the fact that a significant price movement in a financial instrument or related financial instruments has led 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 using the supervisory powers referred to in Article 69(2), points (m) to (p).’;

(b)

paragraph 12 is amended as follows:

(i)

in the first subparagraph, the following points are added:

‘(h)

the principles that regulated markets are to consider when establishing their mechanisms to halt or constrain 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;

(i)	the information that regulated markets are to disclose, including the parameters for halting trading that regulated markets are to report to competent authorities, pursuant to paragraph 5.’;

(ii)

the second and third subparagraphs are replaced by the following:

‘ESMA shall submit those draft regulatory technical standards to the Commission by 29 March 2025.

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.’;

(c)	paragraph 13 is deleted;

(8)

in Article 49(2), the following subparagraph is added:

‘In respect of shares with an International Securities Identification Number (ISIN) issued outside the European Economic Area (EEA), or shares which have an EEA ISIN and which are traded on a third-country venue in the local currency or in a non-EEA currency, as 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, regulated markets may provide for the same tick size that applies on that venue.’;

(9)	Article 50 is deleted;

(10)

Article 57 is amended as follows:

(a)	the title is replaced by the following: ‘ Position limits in commodity derivatives and position management controls in commodity derivatives and derivatives of emission allowances ’;

(b)

in paragraph 8, the first subparagraph is amended as follows:

(i)

the introductory wording is replaced by the following:

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

(ii)

point (b) is replaced by the following:

‘(b)

obtain information, including all relevant documentation, from persons about the size and purpose of a position or exposure entered into, information about beneficial or underlying owners, any concert arrangements, and any related assets or liabilities in the underlying market, including, where appropriate, positions held in derivatives of emission allowances or positions held in commodity derivatives that are based on the same underlying and that share the same characteristics on other trading venues and in economically equivalent OTC contracts through members and participants;’;

(11)

Article 58 is amended as follows:

(a)

paragraph 1 is amended as follows:

(i)

the first subparagraph is amended as follows:

—	the introductory wording is replaced by the following: ‘Member States shall ensure that an investment firm or a market operator operating a trading venue which trades in commodity derivatives or in derivatives of emission allowances:’;

—

point (a) is replaced by the following:

‘(a)

make public:

(i)

for trading venues where options are traded, two weekly reports, one of which is to exclude 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;

(ii)	for trading venues where options are not traded, a weekly report on the elements set out in point (i);’;

(ii)

the following subparagraph is added:

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

(b)

paragraph 2 is replaced by the following:

‘Member States shall ensure that investment firms trading in commodity derivatives or in 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 the 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.’;

(c)

in paragraph 4, the first subparagraph is amended as follows:

(i)

the introductory wording is replaced by the following:

‘Persons holding positions in a commodity derivative or in a 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:’;

(ii)

point (e) is replaced by the following:

‘(e)	in the case of derivatives of emission allowances, operators with compliance obligations under Directive 2003/87/EC.’;

(d)	in paragraph 5, the fourth subparagraph is replaced by the following: ‘In the case of derivatives of emission allowances, the reporting shall not prejudice the compliance obligations under Directive 2003/87/EC.’;

(12)

Article 70(3) is amended as follows:

(a)	in point (a), point (xxx) is deleted;

(b)

point (b) is amended as follows:

(i)

the following point is inserted:

‘(iia)

Article 5;’;

(ii)

point (v) is replaced by the following:

‘(v)	Article 8(1);

(va)	Article 8a(1) and (2);

(vb)	Article 8b;’;

(iii)

point (vii) is replaced by the following:

‘(vii)

Article 11(1), second subparagraph, first sentence, Article 11(1a), second subparagraph, Article 11(1b) and Article 11(3), fourth subparagraph;

(viia)

Article 11a(1), second subparagraph, first sentence, and Article 11a(1), fourth subparagraph;’;

(iv)

points (ix), (x) and (xi) are replaced by the following:

‘(ix)

Article 13(1) and (2);

(x)	Article 14(1), (2) and (3);

(xi)	Article 15(1), first subparagraph, second subparagraph, the first and third sentences, and fourth subparagraph, Article 15(2) and Article 15(4), second sentence;’;

(v)	point (xiii) is deleted;

(vi)

point (xiv) is replaced by the following:

‘(xiv)

Article 20(1) and (1a) and Article 20(2), first sentence;’;

(vii)

the following points are inserted:

‘(xvia)

Article 22a(1) and (5) to (8);

(xvib)

Article 22b(1);

(xvic)

Article 22c(1);’;

(viii)

point (xxi) is replaced by the following:

‘(xxi)

Article 28(1);’;

(ix)

point (xxiv) is replaced by the following:

‘(xxiv)

Article 31(3);’;

(x)

the following point is inserted:

‘(xxviia)

Article 39a;’;

(13)

in Article 90, the following paragraph is added:

‘5. The Commission shall, after consulting ESMA, the EBA and ACER, submit reports to the European Parliament and to the Council containing a comprehensive assessment of the markets for commodity derivatives, for emission allowances and for derivatives of emission allowances. Those reports shall assess at least for each of the following elements their contribution to the liquidity and proper functioning of Union markets for commodity derivatives, for emission allowances or for derivatives of emission allowances:

(a)	the regimes for the position limits and the position management controls, on the basis of data provided by competent authorities to ESMA in accordance with Article 57(5) and (10);

(b)

the elements referred to in Article 2(4), second and third subparagraphs, of this Directive and the criteria for establishing when an activity is to be considered to be ancillary to the main business at group level pursuant to Commission Delegated Regulation (EU) 2021/1833 (*1), taking into account the ability of persons as referred to in Article 2(1), point (j), of this Directive 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 laid down in Regulation (EU) No 648/2012;

(c)

for transactions in markets for commodity derivatives or for derivatives of emission allowances, the key elements to obtain harmonised data, the collection of transaction data by a single collecting entity, and the relevant information on and most appropriate format for transaction data to be made public.

The Commission shall submit:

—	the report referred to in the first subparagraph, point (b), of this paragraph by 31 July 2024, and

—	the reports referred to in the first subparagraph, points (a) and (c), of this paragraph by 31 July 2025.

Those reports shall, where appropriate, be accompanied by a legislative proposal concerning targeted changes to the market rules for commodity derivatives, emission allowances or derivatives of emission allowances framework.

(*1) Commission Delegated Regulation (EU) 2021/1833 of 14 July 2021 supplementing Directive 2014/65/EU of the European Parliament and of the Council by specifying the criteria for establishing when an activity is to be considered to be ancillary to the main business at group level (OJ L 372, 20.10.2021, p. 1).’."

Article 2

Transposition

1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 29 September 2025. They shall immediately inform the Commission thereof.

When Member States adopt those measures, they shall contain a reference to this Directive or shall be accompanied by such a reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States.

2. Member States shall communicate to the Commission the text of the main measures 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.