[ParlTrack]

Proposal for a regulation
Recital 4

(4) To date, however, no supervised entity has applied for authorisation to act as a CTP. ESMA has identified three main obstacles that have prevented supervised entities to apply for registration as a CTP33 . First, a lack of clarity as to how the CTP is to procure market data from the various execution venues or from the data reporting service providers concerned. Second, insufficient quality in terms of harmonisation of the data reported by those execution venues to allow for a cost- efficient consolidation. Third, a lack of commercial incentives to apply for authorisation as a CTP. It is therefore necessary to remove those obstacles. Such removal requires, first, that all trading venues and systematic internalisers (‘SIs’) provide CTPs with market data (provision rule). It secondly requires an improvement of the data quality by harmonising the data reports that trading venues and SIs should submit to the CTP. Furthermore, the design of the CTP should ensure that data providers receive a fair remuneration for submitting their data, in particular small trading venues, which business model mostly relies on data selling. Finally, retail investors and academics should be able to have free and unlimited access to the data disclosed by the CTP. __________________ 33 ESMA MiFID II/MiFIR Review Report No. 1 on the development in prices for pre- and post-trade data and on the consolidated tape for equity instruments.

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Recital 7

(7) Dark trading is trading without pre- trade transparency, using the reference price waiver laid down in Article 4(1), point (a) of Regulation (EU) No 600/2014 and the negotiated trade waiver laid down in Article 4(a) point (a), point (i) of that Regulation. The use of both waivers is capped by the double volume cap (‘DVC’). The DVC is a mechanism that limits the level of dark trading to a certain proportion of total trading in an equity instrument. The amount of dark trading in an equity instrument on an individual venue may not exceed 4% of total trading in that instrument in the Union. When this threshold is breached, dark trading in that instrument on that venue is suspended. Secondly the amount of dark trading in an equity instrument in the Union may not exceed 8% of total trading in that instrument in the Union. When this threshold is breached all dark trading in that instrument is suspended. The venue specific threshold leaves room for continued use of those waivers on other platforms on which trading in that equity instrument is not yet suspended, until the Union wide threshold is breached. This causes complexity in terms of monitoring the levels of dark trading and of enforcing the suspension. To simplify the double volume cap while keeping its effectiveness, the new single volume cap should rely solely on the EU-wide threshold. That threshold should be lowered to 76 % to compensate for a potential increase of trading under those waivers as a consequence of abolishing the venue specific threshold.

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Recital 9

(9) To ensure an adequate level of transparency, the price of a non-equity transaction should be published as close to real time as possible and only be delayed until maximally the end of the trading day. However, in order not to expose liquidity providers in non-equity instruments to undue risk, it should be possible to mask volumes of transactions for a short period of time, which should not be longer than ~~two~~one weeks. The exact calibration of the various buckets corresponding to different time deferrals should be left to ESMA due to the technical expertise required to specify the calibration as well as due to the need to allow for the flexibility to amend the calibration. Those deferrals should be based on the liquidity of the non-equity instrument, the size of the transaction and, for bonds, the credit rating and it should no longer include the size specific to the instrument concerned.

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Recital 20

(20) Competition among consolidated tape providers ensures that the consolidated tape is provided in the most efficient way and under the best conditions for users. However, no entity has, up until now, applied to act as a consolidated tape provider. It is therefore considered appropriate to empower ESMA to periodically organise a competitive selection procedure to select a single entity which is able to provide the consolidated tape for each specified asset class. Taking into account the novelty of the proposed scheme, ESMA should only mandate the provision of post-trade transparency data for the first selection procedure that it runs in relation to shares. At least 18 months before the launch of the second selection procedure, ESMA should submit a report to the Commission assessing whether there is market demand for extending the data contributed to the tape to pre-trade data. On the basis of such a report, the Commission should be empowered, by way of a delegated act, to further specify the depth of pre-trade data to the tape.

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Recital 25

(25) It is necessary to ensure that consolidated tape providers remedy information asymmetries in the capital markets in a sustainable manner, and to ensure that consolidated tape providers provide consolidated data that are reliable. Consolidated tape providers should therefore be obliged to adhere to organisational requirements and quality of service standards that must be met at all times once they have been authorised by ESMA. Quality standards should cover aspects related to the collection of consolidated core market data, accurate time-stamping of such data at various stages in the delivery chain, collection and administration of market data subscription fees, and allocation of revenue to market data contributors. Consolidated tape providers shall ensure to provide data in an easily accessible format and free access for specific users such as retail investors and academics.

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Recital 26

(26) In order to safeguard market participants’ continued trust in the operation of a consolidated tape provider, such entities should periodically make a series of public reports concerning compliance with their obligations under this Regulation, in particular on performance statistics and incident reports relating to data quality and systems. Consolidated tape providers shall also put in place adequate protocols to mitigate their exposures to cyber-risk and their environmental impact. Due to the highly technical nature of the substance of the report, ESMA should be empowered to specify the substance, format and timing.

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Recital 30

(30) An ad-hoc suspension mechanism is necessary to ensure that the Commission may swiftly react to significant changes in market conditions that may have a material effect on the trading of derivatives and their counterparties. Where such market conditions are present, and upon the request of the competent authority of a Member state, the Commission should be able to suspend the trading obligation, independently from any suspension of the clearing obligation. Such a suspension of the trading obligation should be possible where the activities of an EU investment firm with a non-EEA counterparty are unduly affected by the scope of the EU trading obligation on derivatives and where that investment firm acts as a market-maker in the category of derivatives subject to the trading obligation. The issue of overlapping DTOs is particularly acute when trading with counterparties domiciled in a third- country jurisdiction that applies its own DTO. This suspension would also help EU counterparties remaining competitive on global markets. When deciding upon the suspension of the trading obligation, the Commission should take into consideration the impact of such suspension on the clearing obligation laid down in Regulation (EU) No 648/2012.deleted

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Recital 32

(32) Financial intermediaries should strive to achieve the best possible price and the highest possible likelihood of execution for trades that they execute on behalf of their clients. To that end, financial intermediaries should select the trading venue or counterparty for executing their client trades solely on the basis of achieving best execution for their clients. It should be incompatible with that principle of best execution that a financial intermediary receives a payment from a trading counterpart in exchange for ensuring the execution of client trades. Investment firms should be therefore be prohibited from receiving such paymentLack of harmonisation of what is entailed by the best execution requirements has led to divergent practices across the EU. Therefore, a new article 39a is introduced to specify the execution rules for retail orders.

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Recital 33 a (new)

(33 a) The Russian aggression over Ukraine triggered high market volatility on some commodity derivatives markets, in particular on energy and gas markets. However, trading venues have made little use of the tools provided in Article 48 of Directive 2014/65/EU and did not halt trading despite the significant volume and price volatility. Therefore, it appears necessary to enable competent authorities to require trading venues to make use of these tools in case of markets turmoil.

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 2 – point a a (new)

Regulation (EU) No 600/2014
Article 2 – paragraph 1 – point 30

(a a) Point (30) is replaced by the following: (30) ‘commodity derivatives’ means those financial instruments defined in point (44)(c) of Article 4(1) of Directive 2014/65/EU; which relate to a commodity or an underlying referred to in Section C(10) of Annex I to Directive 2014/65/EU; or in points (4), (5), (6), (7), (10) and (101) of Section C of Annex I thereto;

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 4 – point b

Regulation 600/2014
Article 5(1)

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 76% 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 this publication of those data and for a period of six months.;

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 5 – point a a (new)

Regulation (EU) No 600/2014
Article 9 – paragraph 3

(a a) Paragraph 3 is replaced by the following "3. Competent authorities shall regularly monitor the use and impact of the waivers granted in accordance with paragraph 1 and inform ESMA of their findings. Competent authorities, may, either on their own initiative or upon request by other competent authorities or by ESMA, withdraw a waiver granted under paragraph 1 if they observe that the waiver is being used in a way that deviates from its original purpose or if they consider that the waiver is being used to circumvent the requirements established in this Article. Competent authorities shall notify ESMA and other competent authorities of such withdrawal without delay and before it takes effect, providing full reasons for their decision. . " Or. en (https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:02014R0600- 20220101&from=EN)

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 6 – point a – point i

Regulation (EU) No 600/2014
Article 11 – Paragraph 1 - Subparagraph 1

Based on the deferral regime as set out in paragraph 4, competent authorities shall authorise market operators and investment firms operating a trading venue to defer the publication of the price of transactions until the end of the trading day, or the volume of transactions for a maximum of ~~two~~one weeks.;

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 6 – point b

Regulation (EU) No 600/2014
Article 11 – Paragraph 3

3. Competent authorities may, when authorising a deferred publication as referred to in paragraph 1 with regard to transactions in sovereign debt of their Member State, allow market operators and investment firms operating a trading venue:

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 6 – point c – point -i (new)

Regulation (EU) No 600/2014
Article 11 – Paragraph 4 -introductory part

4. (-i) The introductory part is replaced by the following: 'ESMA shall develop draft regulatory technical standards to specify the following in such a way as to enable the publication of information required under ~~Article 64 of Directive 2014/65/EU:~~ this chapter' Or. en(https://eur-lex.europa.eu/legal- content/EN/TXT/HTML/?uri=CELEX:32014R0600&from=EN)

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 8 – point a

Regulation (EU) No 600/2014
Article 14 – paragraph 2

2. This Article and Articles 15~~, 16~~ (1) and 17 shall apply to systematic internalisers when they deal in sizes up to twice the standard market size. Systematic internalisers shall not be subject to this Article and Articles 15, 16 and 17 when they deal in sizes above twice the standard market size.

2022/10/20
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 10

Regulation (EU) No 600/2014
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 and with regard to the best bids and offers in shares, provide the CTP with the market data concerning those transactions either directly or through an APA.

2022/10/21
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 10

Regulation (EU) No 600/2014
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 27~~da(2),~~h (1) point (c).

2022/10/21
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 10

Regulation (EU) No 600/2014
Article 22a – paragraph 5 a (new)

5 a. Competent authorities shall monitor the data quality provided to the CTP by market data contributors. Where data quality is deemed insufficient, competent authorities shall take the necessary measures, including sanctions as provided by Article 70 of [include reference to Mifid] and Title VIa, Chapter 2 of this Regulation

2022/10/21
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 10

Regulation (EU) No 600/2014
Article 22b – paragraph 1

1. The Commission shall set up an expert stakeholder group by [OP add 3 months as of entry into force] to provide advice on the quality and the substance of market data, the common interpretation of market data and the quality of the transmission protocol referred to in Article 22a(1). The expert stakeholder group shall provide advice on a yearly basis. That advice shall be made public. The expert stakeholder group shall be composed of Members with a sufficiently wide range of expertise, skills, knowledge and background to provide adequate advice. Members of the expert stakeholder group shall be selected following an open and transparent selection procedure. In making its decision, the Commission shall ensure an appropriate reflection of diversity of the financial sector, geographical and gender balance and representation of stakeholders across the Union. Members of the expert stakeholder group shall elect a Chair from among its members. The position of the Chair shall be held for a period of two years. The European Parliament may invite the Chair of the expert stakeholder group to make a statement before it and answer any questions from its members whenever so requested.

2022/10/21
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 10

Regulation (EU) No 600/2014
Article 22b – paragraph 2 – second subpagraph – point b a (new)

(b a) what constitutes the transmission of data “as close to real time as technically possible’

2022/10/21
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 15

Regulation (EU) No 600/2014
Article 27da – paragraph 1

1. By [OP insert date 312 months as of entry into force], ESMA shall organise a selection procedure for the appointment of the CTP for a five year term. ESMA shall organise a transparent and open separate selection procedure for each of the following asset classes: shares, exchange traded funds, bonds and derivatives (or relevant subclasses of derivatives).

2022/10/21
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 15

Regulation (EU) No 600/2014
Article 27da – paragraph 2 – point ja (new)

(j a) the process the applicants will put in place to mitigate and address cyber- risk;

2022/10/21
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 15

Regulation (EU) No 600/2014
Article 27da – paragraph 2 – point jb (new)

(j b) the process the applicants will put in place to mitigate the energy consumption generated by the storage of data.

2022/10/21
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 15

Regulation (EU) No 600/2014
Article 27da – paragraph 3

3. The first selection procedure organised for shares shall only invite bids for the provision of a consolidated tape containing post trade data. Prior to subsequent selection procedures, ESMA shall assess market demand and revenue impacts on regulated markets and based on that assessment, report to the Commission on the opportunity of adding best bids and offers and corresponding volumes to the tape. Based on that report and on the experience gained further to the first selection procedure, the Commission is empowered to adopt a dFor each asset class, ESMA shall issue a call for tenders specifying the selection criteria and the deadline for application. ESMA shall assess whether the application for authorisation is complete within 20 working days of its receipt. Within three months from the receipt of complete applications, ESMA shall select the CTP through a reasoned decision. The reasoned decision shall be communicated to the selegacted a~~ct specifying the appropriate level of pre-trade data to be contributed to the CTP~~nd rejected applicants within five days after its adoption.

2022/10/21
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 15

Regulation (EU) No 600/2014
Article 27da – paragraph 4

4. The selection of the CTP for shares shall, in addition to the criteria in paragraph 2, consider the revenue participation scheme, and in particular the formula, applicable to regulated markets that are market data contributors. ESMA shall, when considering the competing tenders, select the CTP for shares that offers the revenue participation scheme that provides ~~regulated markets, in particular~~ smaller regulated markets, with the highest amount of revenue that remains for distribution once deducted operating costs and a reasonable margin. This revenue shall be distributed in accordance with Article 27h(1)(c), and in a manner commensurate to the market data contributed according to Article 22a.

2022/10/21
Committee: ECON

Karima DELLI

Proposal for a regulation
Article 1 – paragraph 15

Regulation (EU) No 600/2014
Article 27da – paragraph 5

5. ESMA shall adopt a fully reasoned decision selecting and authorising the entities operating the consolidated tapes within 3 months as of initiation of the selection procedure referred to in paragraph 2. Such reasoned decision shall specify the conditions under which the CTPs shall operate, and in particular the level of fees referred to in paragraph 2, point (g) ~~and for shares the level of the participation referred to in paragraph 3, in particular for smaller regulated markets~~.

2022/10/21
Committee: ECON

Karima DELLI