Commission Delegated Regulation (EU) 2017/567 of 18 May 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to definitions, transparency, portfolio compression and supervisory measures on product intervention and positions (Text with EEA relevance. )

COMMISSION DELEGATED REGULATION (EU) 2017/567 of 18 May 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to definitions, transparency, portfolio compression and supervisory measures on product intervention and positions (Text with EEA relevance)

CHAPTER I

DETERMINING LIQUID MARKETS FOR EQUITY INSTRUMENTS

Article 1

Determining liquid markets for shares

(Article 2(1), point (17)(b), of Regulation (EU) No 600/2014)

For the purposes of Article 2(1), point (17)(b), of Regulation (EU) No 600/2014, a share that is traded daily shall be considered to have a liquid market where all of the following conditions are met:

(a) the market capitalisation of the share is not less than EUR 100 million;

(b) the average daily number of transactions in the share is not less than 250;

(c) the average daily turnover for the share is not less than EUR 1 million.

Article 2

Determining liquid markets for depositary receipts

(Article 2(1), point (17)(b), of Regulation (EU) No 600/2014)

For the purposes of Article 2(1), point (17)(b), of Regulation (EU) No 600/2014, a depositary receipt that is traded daily shall be considered to have a liquid market where all of the following conditions are met:

(a) the market capitalisation is not less than EUR 100 million;

(b) the average daily number of transactions in the depositary receipt is not less than 250;

(c) the average daily turnover for the depositary receipt is not less than EUR 1 million.

Article 3

Determining liquid markets for exchange traded funds

(Article 2(1), point (17)(b), of Regulation (EU) No 600/2014)

For the purposes of Article 2(1), point (17)(b), of Regulation (EU) No 600/2014, an exchange traded fund that is traded daily shall be considered to have a liquid market where all of the following conditions are met:

(a) the market capitalisation is not less than 100 units;

(b) the average daily number of transactions in the exchange traded fund is not less than 10;

(c) the average daily turnover for the exchange traded fund is not less than EUR 500 000 .

Article 4

Determining liquid markets for certificates

(Article 2(1), point (17)(b), of Regulation (EU) No 600/2014)

For the purposes of Article 2(1), point (17)(b), of Regulation (EU) No 600/2014, a certificate that is traded daily shall be considered to have a liquid market where all of the following conditions are met:

(a) the market capitalisation is not less than EUR 1 million;

(b) the average daily number of transactions in the certificate is not less than 20;

(c) the average daily turnover for the certificate is not less than EUR 500 000 .

Article 4a

Determining liquid markets for other similar financial instruments

(Article 2(1), point (17)(b), of Regulation (EU) No 600/2014)

For the purposes of Article 2(1), point (17)(b), of Regulation (EU) No 600/2014, other similar financial instruments shall be considered not to have a liquid market over their entire trading life.

Article 5

Assessment of liquidity of equity instruments by the competent authorities

(Article 2(1), point (17)(b), of Regulation (EU) No 600/2014)

The competent authority of the most relevant market in terms of liquidity as specified in Article 16 of Commission Delegated Regulation (EU) 2017/590 (¹) shall assess whether a share, depositary receipt, exchange traded fund or a certificate has a liquid market for the purposes of Article 2(1), point (17)(b), of Regulation (EU) No 600/2014 in accordance with Articles 1 to 4 of this Regulation in each of the following scenarios:

(a) before the financial instrument is first traded on the trading venue, as specified in Article 1(4), Article 2(4), Article 3(4) and Article 4(4);

(b) between the end of the first four weeks of trading and the end of the first six weeks of trading of the financial instrument;

(c) between the end of every calendar year and before 1 March of the following year for financial instruments traded on a trading venue before 1 December of the relevant calendar year;

(d) immediately after the moment where, following a corporate action, any previous assessment has changed.

For the purposes of point (b), the assessment shall be based on the market capitalisation at the last trading day of the first four weeks of trading, the average daily number of transactions and the average daily turnover taking into consideration all transactions executed in the Union for that financial instrument during the first four weeks of trading. For the purposes of that assessment, the denominator shall be the number of days on which the financial instrument was available for trading on the most relevant market in terms of liquidity, as referred to in Article 4 of Delegated Regulation (EU) 2017/587, and on which such market was open.

For the purposes of point (c), the assessment shall be based on the market capitalisation at the last trading day of the relevant calendar year, the average daily number of transactions and the average daily turnover taking into Consideration all transactions executed in the Union for that financial instrument in that year. For the purposes of that assessment, the denominator shall be the number of days on which the financial instrument was available for trading on the most relevant market in terms of liquidity, as referred to in Article 4 of Delegated Regulation (EU) 2017/587, and on which such market was open.

Competent authorities shall publish the result of their assessment immediately upon completion of the assessment.

Competent authorities, market operators and investment firms, including investment firms operating a trading venue, shall use the information published in accordance with paragraph 1:

(a) for a period of six weeks commencing on the first day of trading of the financial instrument, where the assessment is carried out pursuant to paragraph 1, point (a);

(b) for a period commencing six weeks after the first day of trading of that financial instrument and ending on the day preceding the first Monday of April of the year of publication of the information in accordance with paragraph 1, point (c), where the assessment is carried out pursuant to paragraph 1, point (b);

(c) for a period of one year commencing on the first Monday of April following the date of publication where the assessment is carried out pursuant to paragraph 1, point (c).

Where the information referred to in this paragraph is replaced by new information pursuant to paragraph 1, point (d), competent authorities, market operators and investment firms, including investment firms operating a trading venue, shall use that new information for the purposes of Article 2(1), point (17)(b), of Regulation (EU) No 600/2014.

For the purposes of paragraph 1, trading venues shall submit to competent authorities the information set out in the Annex within the following timeframes:

(a) for financial instruments which are admitted to trading for the first time, before the day on which the financial instrument is first traded;

(b) for financial instruments already admitted to trading, in all the following timeframes: (i) no later than three days after the end of the first four weeks of trading; (ii) after the end of every calendar year but no later than 3 January of the following year; (iii) immediately after the moment where, following a corporate action, the information previously submitted to the competent authority has changed.

CHAPTER III

DATA PUBLICATION OBLIGATIONS FOR SYSTEMATIC INTERNALISERS

Article 12

Obligation for systematic internalisers to make quotes public on a regular and continuous basis during normal trading hours

(Article 15(1) of Regulation (EU) No 600/2014)

For the purposes of Article 15(1) of Regulation (EU) No 600/2014, a systematic internaliser shall be considered to make public its quotes on a regular and continuous basis during normal trading hours only where the systematic internaliser makes the quotes available at all times during the hours which the systematic internaliser has established and published in advance as its normal trading hours.

Article 13

Obligation for systematic internalisers to make quotes easily accessible

(Article 15(1) of Regulation (EU) No 600/2014)

Where systematic internalisers make public their quotes through proprietary arrangements only, the quotes shall also be made public in a human-readable format. Quotes shall be considered to be published in a human-readable format where:

(a) the content of the quote is in a format which can be understood by the average reader;

(b) the quote is published on the systematic internaliser's website and the website's homepage contains clear instructions for accessing the quote.

Article 14

Execution of orders by systematic internalisers

(Article 15(1), 15(2) and 15(3) of Regulation (EU) No 600/2014)

For the purposes of Article 15(1) of Regulation (EU) No 600/2014, exceptional market conditions are considered to exist where to impose on a systematic internaliser an obligation to provide firm quotes to clients would be contrary to prudent risk management and, in particular, where:

(a) the trading venue where the financial instrument was first admitted to trading or the most relevant market in terms of liquidity halts trading for that financial instrument in accordance with Article 48(5) of Directive 2014/65/EU;

(b) the trading venue where the financial instrument was first admitted to trading or the most relevant market in terms of liquidity allows market making obligations to be suspended;

(c) in the case of an exchange traded fund, a reliable market price is not available for a significant number of instruments underlying the ETF or the index;

(d) a competent authority prohibits short sales in that financial instrument according to Article 20 of Regulation (EU) No 236/2012 of the European Parliament and of the Council (⁴).

For the purposes of Article 15(2) of Regulation (EU) No 600/2014, a price falls within a public range close to market conditions where the following conditions are fulfilled:

(a) the price is within the bid and offer quotes of the systematic internaliser;

(b) the quotes referred to in point (a) reflect prevailing market conditions for the relevant financial instrument in accordance with Article 14(7) of Regulation (EU) No 600/2014.

Article 15

Orders considerably exceeding the norm

(Article 17(2) of Regulation (EU) No 600/2014)

Article 16a

Post-trade risk reduction services

(Article 31(4), point (b), of Regulation (EU) No 600/2014)

For the purposes of Article 31(1) of Regulation (EU) No 600/2014, post-trade risk reduction services are services that meet all the following conditions:

(a) they are provided by a third-party service provider on the basis of non-discretionary rules that are set in advance;

(b) the post-trade risk reduction exercise is accepted in full and, as a result, the participants in that exercise are not able to choose which trades to execute under the post-trade risk reduction exercise;

(c) they have the purpose of achieving a reduction of risk in each derivatives portfolio submitted to the post-trade risk reduction exercise by the counterparties to the derivative transactions;

(d) they are market-risk neutral, within the tolerances set by the counterparties to the derivative transactions submitted to the post-trade risk reduction exercise;

(e) transactions that result from a post-trade risk reduction exercise do not contribute to price formation.

CHAPTER IV

DERIVATIVES

Article 17

Elements of Portfolio compression

(Article 31(4) of Regulation (EU) No 600/2014)

Before each compression process is initiated, investment firms and market operators providing portfolio compression shall:

(a) require each participant to the portfolio compression to specify the participant's risk tolerance including specifying a limit for counterparty risk, a limit for market risk and a cash payment tolerance. Investment firms and market operators shall respect the risk tolerance specified by the participants in the portfolio compression;

(b) link the derivatives submitted for portfolio compression and submit to each participant a portfolio compression proposal that includes the following information: (i) the identification of the counterparties affected by the compression, (ii) the related change to the combined notional value of the derivatives, (iii) the variation of the combined notional amount compared to the risk tolerance specified.

CHAPTER V

SUPERVISORY MEASURES ON PRODUCT INTERVENTION AND POSITION MANAGEMENT

SECTION 1

Product intervention

Article 19

Criteria and factors for the purposes of ESMA temporary product intervention powers

(Article 40(2) of Regulation (EU) No 600/2014)

For the purposes of the first subparagraph, ESMA may determine the existence of a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of the whole or part of the financial system of the Union based on one or more of those factors and criteria.

The factors and criteria to be assessed by ESMA to determine whether there is a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of the whole or part of the financial system of the Union shall be the following:

(a) the degree of complexity of the financial instrument or type of financial activity or practice in relation to the type of clients, as assessed in accordance with point (c), involved in the financial activity or financial practice, or to whom the financial instrument is marketed or sold, taking into account, in particular: — the type of the underlying or reference assets and the degree of transparency of the underlying or reference assets; — the degree of transparency of costs and charges associated with the financial instrument, financial activity or financial practice and, in particular, the lack of transparency resulting from multiple layers of costs and charges; — the complexity of the performance calculation, taking into account in particular whether the return is dependent on the performance of one or more underlying or reference assets which are in turn affected by other factors or whether the return depends not only on the values of the underlying or reference assets at the initial and maturity dates, but also on the values during the lifetime of the product; — the nature and scale of any risks; — whether the instrument or service is bundled with other products or services; or — the complexity of any terms and conditions;

(b) the size of potential detrimental consequences, considering in particular: — the notional value of the financial instrument; — the number of clients, investors or market participants involved; — the relative share of the product in investors' portfolios; — the probability, scale and nature of any detriment, including the amount of loss potentially suffered; — the anticipated duration of the detrimental consequences; — the volume of the issuance; — the number of intermediaries involved; — the growth of the market or sales; or — the average amount invested by each client in the financial instrument;

(c) the type of clients involved in a financial activity or financial practice or to whom a financial instrument is marketed or sold, taking into account, in particular: — whether the client is a retail client, a professional client or an eligible counterparty; — clients' skills and abilities, including the level of education, experience with similar financial instruments or selling practices; — clients' economic situation, including their income and wealth; — clients' core financial objectives, including pension saving and home ownership financing; or — whether the instrument or service is being sold to clients outside the intended target market or whether the target market has not been adequately identified;

(d) the degree of transparency of the financial instrument or type of financial activity or practice, taking into account, in particular: — the type and transparency of the underlying; — any hidden costs and charges; — the use of techniques drawing clients' attention but not necessarily reflecting the suitability or overall quality of the financial instrument, financial activity or financial practice; — the nature of risks and transparency of risks; or — the use of product names or terminology or other information that imply a greater level of security or return than those which are actually possible or likely, or which imply product features that do not exist;

(e) the particular features or components of the financial instrument, financial activity or financial practice, including any embedded leverage, taking into account, in particular: — the leverage inherent in the product; — the leverage due to financing; — the features of securities financing transactions; or — the fact that the value of any underlying is no longer available or reliable;

(f) the existence and degree of disparity between the expected return or profit for investors and the risk of loss in relation to the financial instrument, financial activity or financial practice, taking into account, in particular: — the structuring costs of such financial instrument, activity or practice and other costs; — the disparity in relation to the issuer's risk retained by the issuer; or — the risk/return profile;

(g) the ease and cost with which investors are able to sell the relevant financial instrument or switch to another financial instrument, taking into account, in particular: — the bid/ask spread; — the frequency of trading availability; — the issuance size and size of the secondary market; — the presence or absence of liquidity providers or secondary market makers; — the features of the trading system; or — any other barriers to exit;

(h) the pricing and associated costs of the financial instrument, financial activity or financial practice, taking into account, in particular: — the use of hidden or secondary charges; or — charges that do not reflect the level of service provided;

(i) the degree of innovation of a financial instrument, a financial activity or a financial practice, taking into account, in particular: — the degree of innovation related to the structure of the financial instrument, financial activity or financial practice, including embedding and triggering; — the degree of innovation relating to the distribution model or length of the intermediation chain; — the extent of innovation diffusion, including whether the financial instrument, financial activity or financial practice is innovative for particular categories of clients; — innovation involving leverage; — the lack of transparency of the underlying; or — the past experience of the market with similar financial instruments or selling practices;

(j) the selling practices associated with the financial instrument, taking into account, in particular: — the communication and distribution channels used; — the information, marketing or other promotional material associated with the investment; — the assumed investment purposes; or — whether the decision to buy is secondary or tertiary following an earlier purchase;

(k) the financial and business situation of the issuer of a financial instrument, taking into account, in particular: — the financial situation of the issuer or any guarantor; or — the transparency of business situation of the issuer or guarantor;

(l) whether there is insufficient, or unreliable, information about a financial instrument, provided either by the manufacturer or the distributors, to enable market participants at whom it is targeted to make an informed decision, taking into account the nature and type of the financial instrument;

(m) whether the financial instrument, financial activity or financial practice poses a high risk to the performance of transactions entered into by participants or investors in the relevant market;

(n) whether the financial activity or financial practice would significantly compromise the integrity of the price formation process in the market concerned, such that the price or value of the financial instrument in question is no longer determined according to legitimate market forces of supply and demand, or such that market participants are no longer able to rely on the prices formed in that market or in the volumes of trading as a basis for their investment decisions;

(o) whether the characteristics of a financial instrument make it particularly susceptible to being used for the purposes of financial crime and, in particular whether those characteristics could potentially encourage the use of the financial instrument for: — any fraud or dishonesty; — misconduct in, or misuse of information in relation to a financial market; — handling the proceeds of crime; — the financing of terrorism; or — facilitating money laundering;

(p) whether the financial activity or financial practice poses a particularly high risk to the resilience or smooth operation of markets and their infrastructure;

(q) whether a financial instrument, financial activity or financial practice could lead to a significant and artificial disparity between prices of a derivative and those in the underlying market;

(r) whether the financial instrument, financial activity or financial practice poses a high risk of disruption to financial institutions deemed to be important to the financial system of the Union;

(s) the relevance of the distribution of the financial instrument as a funding source for the issuer;

(t) whether a financial instrument, financial activity or financial practice poses particular risks to the market or payment systems infrastructure, including trading, clearing and settlement systems; or

(u) whether a financial instrument, financial activity or financial practice may threaten investors' confidence in the financial system.

Article 20

Criteria and factors for the purposes of EBA temporary product intervention powers

(Article 41(2) of Regulation (EU) No 600/2014)

For the purposes of the first subparagraph, EBA may determine the existence of a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or to the stability of the whole or part of the financial system of the Union based on one or more of those factors and criteria.

The factors and criteria to be assessed by EBA to determine whether there is a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or to the stability of the whole or part of the financial system in the Union shall be the following:

(a) the degree of complexity of a structured deposit or type of financial activity or practice in relation to the type of clients, as assessed in accordance with point (c), involved in the financial activity, or financial practice, taking into account, in particular: — the type of the underlying or reference assets and the degree of transparency of the underlying or reference assets; — the degree of transparency of costs and charges associated with the structured deposit, financial activity or financial practice and, in particular, the lack of transparency resulting from multiple layers of costs and charges; — the complexity of the performance calculation, taking into account in particular whether the return is dependent on the performance of one or more underlying or reference assets which are in turn affected by other factors or whether the return depends not only on the values of the underlying or reference assets at the initial and maturity or interest payment dates, but also on the values during the lifetime of the product; — the nature and scale of any risks; — whether the structured deposit or service is bundled with other products or services; or — the complexity of any terms and conditions;

(b) the size of potential detrimental consequences, considering, in particular: — the notional value of an issuance of structured deposits; — the number of clients, investors or market participants involved; — the relative share of the product in investors' portfolios; — the probability, scale and nature of any detriment, including the amount of loss potentially suffered; — the anticipated duration of the detrimental consequences; — the volume of the issuance; — the number of institutions involved; — the growth of the market or sales; — the average amount invested by each client in the structured deposit; or — the coverage level defined in Directive 2014/49/EU of the European Parliament and of the Council (⁶);

(c) the type of clients involved in a financial activity or financial practice or to whom a structured deposit is marketed or sold, taking into account, in particular: — whether the client is a retail client, a professional client or an eligible counterparty; — clients' skills and abilities, including level of education, experience with similar financial products or selling practices; — clients' economic situation, including income, wealth; — clients' core financial objectives, including pension saving, home ownership financing; — whether the product or service is being sold to clients outside the intended target market or where the target market has not been adequately identified; or — the eligibility for coverage by a deposit guarantee scheme;

(d) the degree of transparency of the structured deposit or type of financial activity or financial practice, taking into account, in particular: — the type and transparency of the underlying; — any hidden costs and charges; — the use of techniques drawing clients' attention but not necessarily reflecting the suitability or overall quality of the product or service; — the type and transparency of risks; — the use of product names or of terminology or other information that is misleading by implying product features that do not exist; or — whether the identity of deposit takers which might be responsible for the client's deposit, is disclosed;

(e) the particular features or components of the structured deposit or financial activity or financial practice, including any embedded leverage, taking into account, in particular: — the leverage inherent in the product; — the leverage due to financing; or — the fact that the value of any underlying is no longer available or reliable;

(f) the existence and degree of disparity between the expected return or profit for investors and the risk of loss in relation to the structured deposit, financial activity or financial practice, taking into account, in particular: — the structuring costs of such structured deposits, activity or practice and other costs; — the disparity in relation to the issuer's risk retained by the issuer; or — the risk-return profile;

(g) the costs of and ease with which investors are able to exit a structured deposit, in particular considering: — the fact that early withdrawal is not allowed; or — any other barriers to exit;

(h) the pricing and associated costs of the structured deposit, financial activity or financial practice, taking into account, in particular: — the use of hidden or secondary charges; or — charges that do not reflect the level of service provided;

(i) the degree of innovation of a structured deposit, a financial activity or a financial practice, taking into account, in particular: — the degree of innovation related to the structure of the structured deposit, financial activity or financial practice, including embedding and triggering; — the degree of innovation relating to the distribution model or length of the intermediation chain; — the extent of innovation diffusion, including whether the structured deposit, financial activity or financial practice is innovative for particular categories of clients; — innovation involving leverage; — the lack of transparency of the underlying; or — the past experience of the market with similar structured deposits or selling practices;

(j) the selling practices associated with the structured deposit, taking into account, in particular: — the communication and distribution channels used; — the information, marketing or other promotional material associated with the investment; — the assumed investment purposes; or — whether the decision to buy is a secondary or tertiary following an earlier purchase;

(k) the financial and business situation of the issuer of a structured deposit, taking into account, in particular: — the financial situation of the issuer or any guarantor; or — the transparency of the business situation of the issuer or guarantor;

(l) whether there is insufficient or unreliable information about a structured deposit, provided either by the manufacturer or the distributors, to enable market participants at whom it is targeted to make an informed decision, taking into account the nature and type of the structured deposit;

(m) whether the structured deposit, the financial activity or the financial practice poses a high risk to the performance of transactions entered into by participants or investors in the relevant market;

(n) whether the structured deposit, the financial activity or the financial practice would leave the Union economy vulnerable to risks;

(o) whether the characteristics of a structured deposit make it particularly susceptible to being used for the purposes of financial crime and, in particular whether those characteristics could potentially encourage the use of structured deposits for: — any fraud or dishonesty; — misconduct in, or misuse of information, in relation to a financial market; — handling the proceeds of crime; — the financing of terrorism; or — facilitating money laundering;

(p) whether the financial activity or financial practice poses a particularly high risk to the resilience or smooth operation of markets and their infrastructure;

(q) whether a structured deposit, a financial activity or a financial practice could lead to a significant and artificial disparity between prices of a derivative and those in the underlying market;

(r) whether the structured deposit, a financial activity or a financial practice poses a high risk of disruption to financial institutions deemed to be important to the financial system of the Union, in particular considering the hedging strategy pursued by financial institutions in relation to the issuance of the structured deposit, including the mispricing of the capital guarantee at maturity or the reputational risks posed by the structured deposit or practice or activity to the financial institutions;

(s) the relevance of the distribution of structured deposit as a funding source for the financial institution;

(t) whether a structured deposit, financial practice or financial activity poses particular risks to the market or payment systems infrastructure; or

(u) whether a structured deposit or financial practice or financial activity could threaten investors' confidence in the financial system.

Article 21

Criteria and factors to be taken into account by competent authorities for the purposes of product intervention powers

(Article 42(2) of Regulation (EU) No 600/2014)

For the purposes of the first subparagraph, competent authorities may determine the existence of a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of the whole or part of the financial system within at least one Member State based on one or more of those factors and criteria.

The factors and criteria to be assessed by competent authorities to determine whether there is a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of the whole or part of the financial system within at least one Member State shall include the following:

(a) the degree of complexity of the financial instrument or type of financial activity or practice in relation to the type of clients, as assessed in accordance with point (c), involved in the financial activity or financial practice, or to whom the financial instrument or structured deposit is marketed or sold, taking into account, in particular: — the type of the underlying or reference assets and the degree of transparency of the underlying or reference assets; — the degree of transparency of costs and charges associated with the financial instrument, structured deposit, financial activity or financial practice, and, in particular, the lack of transparency resulting from multiple layers of costs and charges; — the complexity of the performance calculation, taking into account whether the return is dependent on the performance of one or more underlying or reference assets which are in turn affected by other factors or whether the return depends not only on the values of the underlying or reference assets at the initial and maturity dates, but also on the values during the lifetime of the product; — the nature and scale of any risks; — whether the product or service is bundled with other products or services; — the complexity of any terms and conditions;

(b) the size of potential detrimental consequences, considering in particular: — the notional value of the financial instrument or of an issuance of structured deposits; — the number of clients, investors or market participants involved; — the relative share of the product in investors' portfolios; — the probability, scale and nature of any detriment, including the amount of loss potentially suffered; — the anticipated duration of the detrimental consequences; — the volume of the issuance; — the number of intermediaries involved; — the growth of the market or sales; — the average amount invested by each client in the financial instrument or structured deposit; or — the coverage level defined in Directive 2014/49/EU, in the case of structured deposits;

(c) the type of clients involved in a financial activity or financial practice or to whom a financial instrument or structured deposit is marketed or sold, taking into account, in particular: — whether the client is a retail client, a professional client or an eligible counterparty; — clients' skills and abilities, including the level of education, experience with similar financial instruments or structured deposits or selling practices; — clients' economic situation, including their income, and wealth; — clients' core financial objectives, including pension saving and home ownership financing; — whether the product or service is being sold to clients outside the intended target market or where the target market has not been adequately identified; or — the eligibility for coverage by a deposit guarantee scheme, in the case of structured deposits;

(d) the degree of transparency of the financial instrument, structured deposit or type of financial activity or practice, taking into account, in particular: — the type and transparency of the underlying; — any hidden costs and charges; — the use of techniques drawing clients' attention but not necessarily reflecting the suitability or overall quality of the product, the financial activity or the financial practice; — the nature of risks and transparency of risks; — the use of product names or terminology or other information that is misleading by implying a greater level of security or return than those which are actually possible or likely, or which imply product features that do not exist; or — in case of structured deposits, whether the identity of deposit takers which might be responsible for the client's deposit, is disclosed;

(e) the particular features or components of the structured deposit, financial instrument, financial activity or financial practice, including any embedded leverage, taking into account, in particular: — the leverage inherent in the product; — the leverage due to financing; — the features of securities financing transactions; or — the fact that the value of any underlying is no longer available or reliable;

(f) the existence and degree of disparity between the expected return or profit for investors and the risk of loss in relation to the financial instrument, structured deposit, financial activity or financial practice, taking into account, in particular: — the structuring costs of such financial instrument, structured deposit, financial activity or financial practice and other costs; — the disparity in relation to the issuer's risk retained by the issuer; or — the risk-return profile;

(g) the costs and ease with which investors are able to sell the relevant financial instrument or switch to another financial instrument, or exit a structured deposit, taking into account, in particular, where applicable depending on whether the product is a financial instrument or structured deposit: — the bid-ask spread; — the frequency of trading availability; — the issuance size and size of the secondary market; — the presence or absence of liquidity providers or secondary market makers; — the features of the trading system; or — any other barriers to exit or the fact that early withdrawal is not allowed;

(h) the pricing and associated costs of the structured deposit, financial instrument, financial activity or financial practice, taking into account, in particular: — the use of hidden or secondary charges; or — charges that do not reflect the level of service provided;

(i) the degree of innovation of a financial instrument or structured deposit, a financial activity or financial practice, taking into account, in particular: — the degree of innovation related to the structure of the financial instrument, structured deposit, financial activity or financial practice, including embedding and triggering; — the degree of innovation relating to the distribution model or length of the intermediation chain; — the extent of innovation diffusion, including whether the financial instrument, structured deposit, financial activity or financial practice is innovative for particular categories of clients; — innovation involving leverage; — the lack of transparency of the underlying; or — the past experience of the market with similar financial instruments, structured deposits or selling practices;

(j) the selling practices associated with the financial instrument or structured deposit, taking into account, in particular: — the communication and distribution channels used; — the information, marketing or other promotional material associated with the investment; — the assumed investment purposes; or — whether the decision to buy is secondary or tertiary decision following an earlier purchase;

(k) the financial and business situation of the issuer of a financial instrument or structured deposit, taking into account, in particular: — the financial situation of the issuer or any guarantor; or — the transparency of the business situation of the issuer or guarantor;

(l) whether there is insufficient, or unreliable, information about a financial instrument or structured deposit, provided either by the manufacturer or the distributors, to enable market participants at whom it is targeted to make an informed decision, taking into account the nature and type of the financial instrument or the structured deposit;

(m) whether the financial instrument, structured deposit, financial activity or financial practice poses a high risk to the performance of transactions entered into by participants or investors in the relevant market;

(n) whether the financial activity or financial practice would significantly compromise the integrity of the price formation process in the market concerned such that the price or value of the financial instrument or structured deposit in question is no longer determined according to legitimate market forces of supply and demand, or such that market participants are no longer able to rely on the prices formed in that market or in the volumes of trading as a basis for their investment decisions;

(o) whether a financial instrument, structured deposit, financial activity or practice would leave the national economy vulnerable to risks;

(p) whether the characteristics of a financial instrument or structured deposit make it particularly susceptible to being used for the purposes of financial crime and, in particular whether the characteristics could potentially encourage the use of the financial instrument or structured deposit for: — any fraud or dishonesty; — misconduct in, or misuse of information, in relation to a financial market; — handling the proceeds of crime; — the financing of terrorism; or — facilitating money laundering;

(q) whether a financial activity or a financial practice poses a particularly high risk to the resilience or smooth operation of markets and their infrastructure;

(r) whether a financial instrument, structured deposit, financial activity or financial practice could lead to a significant and artificial disparity between prices of a derivative and those in the underlying market;

(s) whether the financial instrument, structured deposit, financial activity or financial practice poses a high risk of disruption to financial institutions deemed to be important to the financial system of the Member State of the relevant competent authority, in particular considering the hedging strategy pursued by financial institutions in relation to the issuance of the structured deposit, including the mispricing of the capital guarantee at maturity or the reputational risks posed by the structured deposit or practice or activity to the financial institutions;

(t) the relevance of the distribution of the financial instrument or structured deposit as a funding source for the issuer or financial institutions;

(u) whether a financial instrument, structured deposit, financial activity or financial practice poses particular risks to the market or payment systems infrastructure, including trading, clearing and settlement systems; or

(v) whether a financial instrument, structured deposit, financial activity or financial practice would threaten investors' confidence in the financial system.

SECTION 2

Position management powers

Article 22

Position management powers of ESMA

(Article 45 of Regulation (EU) No 600/2014)

For the purposes of Article 45(2)(a) of Regulation (EU) No 600/2014, the criteria and factors determining the existence of a threat to the orderly functioning and integrity of financial markets, including commodity derivative markets in accordance with the objectives listed in Article 57(1) of Directive 2014/65/EU and in relation to delivery arrangements for physical commodities, or to the stability of the whole or part of the financial system in the Union shall be the following:

(a) the existence of serious financial, monetary or budgetary problems which could lead to the financial instability of a Member State or a financial institution deemed important to the global financial system, including credit institutions, insurance companies, market infrastructure providers and asset management companies operating within the Union, provided that these problems could threaten the orderly functioning and integrity of financial markets or the stability of the financial system within the Union;

(b) a rating action or a default by a Member State or a credit institution or other financial institution deemed important to the global financial system, such as insurance companies, market infrastructure providers and asset management companies operating within the Union, that causes or may reasonably be expected to cause severe uncertainty about their solvency;

(c) substantial selling pressures or unusual volatility causing significant downward spirals in any financial instrument related to any credit institution or other financial institutions deemed important to the global financial system, such as insurance companies, market infrastructure providers and asset management companies operating within the Union and sovereign issuers;

(d) any damage to the physical structures of important financial issuers, market infrastructures, clearing and settlement systems or competent authorities which may adversely and significantly affect markets in particular where such damage results from a natural disaster or a terrorist attack;

(e) a disruption in any payment system or settlement process, in particular where it is related to interbank operations, which causes or may cause significant payments or settlement failures or delays within the Union payment systems, especially when these may lead to the propagation of financial or economic stress in a credit institution or other financial institutions deemed important to the global financial system, such as insurance companies, market infrastructure providers and asset management companies or in a Member State;

(f) a significant and abrupt decrease in the supply of a commodity or an increase in the demand of a commodity, which disrupts the supply and demand balance;

(g) a significant position in a certain commodity held by one person, or by several persons acting in concert, in one or several trading venues, through one or several market members;

(h) an inability of a trading venue to exercise its own position management powers due to a business continuity event.

For the purposes of Article 45(1)(b) of Regulation (EU) No 600/2014 the criteria and factors determining the appropriate reduction of a position or exposure shall be the following:

(a) the nature of the holder of the position, including producers, consumers or financial institution;

(b) the maturity of the financial instrument;

(c) the size of the position relative to the size of the relevant commodity derivative market;

(d) the size of the position relative to the size of the market for the underlying commodity;

(e) the direction of the position (short or long) and delta or ranges of delta;

(f) the purpose of the position, in particular whether the position serves hedging purposes or whether it is held for financial exposure;

(g) the experience of a position holder in holding positions of a given size, or in making or taking delivery of a given commodity;

(h) the other positions held by the person in the underlying market or in different maturities of the same derivative;

(i) the liquidity of the market and the impact of the measure on other market participants;

(j) the method of delivery.

For the purposes of Article 45(3)(b) of Regulation (EU) No 600/2014, the criteria specifying the situations where a risk of regulatory arbitrage may arise shall be the following:

(a) whether the same contract is traded in a different trading venue or OTC;

(b) whether a substantially equivalent contract is traded on a different venue or OTC (similar and interrelated, but not considered part of the same fungible open interest);

(c) the effects of the decision on the market of the underlying commodity;

(d) the effects of the decision on markets and participants not subject to ESMA's position management powers; and

(e) the likely effect on the orderly functioning and integrity of the markets absent ESMA action.

For the purposes of the first subparagraph, a competent authority shall be considered as failing to act where, based on the powers conferred to it, it has at its disposal sufficient regulatory powers to fully address the threat at the time of the event without the assistance of any other competent authority, but fails to take such action.

A competent authority shall be considered as being unable to sufficiently address a threat where one or more of the factors referred to in Article 45(10)(a) of Regulation (EU) No 600/2014 occur within the jurisdiction of a competent authority and in one or more additional jurisdictions.

CHAPTER VI

FINAL PROVISIONS

Article 23

Transitional provisions

By way of derogation from Article 5(1), from the date of entry into force of this Regulation until the date of application thereof, competent authorities shall carry out liquidity assessments and shall publish the result of those assessments immediately upon their completion in accordance with the following timeframe:

(a) where the date on which financial instruments are traded for the first time on a trading venue within the Union is a date not less than 10 weeks prior to the date of application of Regulation (EU) No 600/2014, competent authorities shall publish the result of the assessments no later than four weeks prior to the date of application of Regulation (EU) No 600/2014;

(b) where the date on which financial instruments are traded for the first time on a trading venue within the Union is a date falling within the period commencing 10 weeks prior to the date of application of Regulation (EU) No 600/2014 and ending on the day preceding the date of application of Regulation (EU) No 600/2014, competent authorities shall publish the result of the assessments no later than the date of application of Regulation (EU) No 600/2014.

The assessments referred to in paragraph 1 shall be carried out as follows:

(a) where the date on which financial instruments are traded for the first time on a trading venue within the Union is a date not less than sixteen weeks prior to the date of application of Regulation (EU) No 600/2014, the assessments shall be based on data available for a forty-week reference period commencing fifty-two weeks prior to the date of application of Regulation (EU) No 600/2014;

(b) where the date on which financial instruments are traded for the first time on a trading venue within the Union is a date within the period commencing sixteen weeks prior to the date of application of Regulation (EU) No 600/2014 and ending 10 weeks prior to the date of application of Regulation (EU) No 600/2014, the assessments shall be based on data available for the first four week trading period of the financial instrument.

(c) where the date on which financial instruments are traded for the first time on a trading venue within the Union is a date falling within the period commencing 10 weeks prior to the date of application of Regulation (EU) No 600/2014 and ending on the day preceding the date of application of Regulation (EU) No 600/2014, the assessments shall be based on the trading history of the financial instruments or other financial instruments considered to have similar characteristics to those financial instruments.

During the period referred to in paragraph 3, competent authorities shall ensure the following with regard to the financial instruments referred to in points (b) and (c) of paragraph 2:

(a) that the information published in accordance with paragraph 1 remains appropriate for the purposes of Article 2(1)(17)(b) of Regulation (EU) No 600/2014;

(b) that the information published in accordance with paragraph 1 is updated on the basis of a longer trading period and a more comprehensive trading history, where necessary.

Article 24

Entry into Force

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

It shall apply from 3 January 2018.

However, Article 23 shall apply from the date of entry into force of this Regulation.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

ANNEX

Symbol	Data type	Definition
{ALPHANUM-n}	Up to n alphanumerical characters	Free text field.
{ISIN}	12 alphanumerical characters	ISIN code, as defined in ISO 6166.
{MIC}	4 alphanumerical characters	Market identifier as defined in ISO 10383.
{DATEFORMAT}	ISO 8601 date format	Dates shall be formatted by the following format: YYYY-MM-DD.
{DECIMAL-n/m}	Decimal number of up to n digits in total of which up to m digits can be fraction digits	Numerical field for both positive and negative values. — Decimal separator is ‘.’ (full stop), — negative numbers are prefixed with ‘–’ (minus), — values are rounded and not truncated.
#	Field	Details to be reported
---	---	---
1	Instrument identification code	Code used to identify the financial instrument
2	Instrument full name	Full name of the financial instrument
3	Trading venue	Segment MIC for the trading venue, where available, otherwise operational MIC
4	MiFIR identifier	Identification of equity financial instruments Shares as referred to in Article 4(1)(44)(a) of Directive 2014/65/EU Depositary receipts as defined in Article 4(1)(45) of Directive 2014/65/EU Exchange-traded fund as defined in Article 4(1)(46) of Directive 2014/65/EU Certificates as defined in Article 2(1)(27) of Regulation (EU) No 600/2014 Other equity-like financial instruments as defined in Table 2 of Annex III to Delegated Regulation (EU) 2017/587
5	Reporting day	Date for which the data is provided Data has to be provided at least for the following dates: — case 1: the day corresponding to the date of admission to trading or first trading date as per Article 5(3)(a) — case 2: the last day of the 4-week period starting on the date of admission to trading or first trading date as per Article 5(3)(b)(i) — case 3: the last trading day of each calendar year as per Article 5(3)(b)(ii) — case 4: the day on which a corporate action is effective as per Article 5(3)(b)(iii)
6	Number of outstanding instruments	For shares and depositary receipts The total number of outstanding instruments For ETFs Number of units issued for trading
7	Price of the instrument	For shares and depositary receipts only The price of the instrument at the end of the reporting day The price shall be expressed in euros
8	Issuance size	For certificates only The issuance size of the certificate expressed in euros
9	Number of trading days in the period	The total number of trading days for which the data is provided
10	Total turnover	The total turnover for the period
11	Total number of transactions	The total number of transactions for the period