Article 5 — ESAs Review Regulation

Regulation (EU) 2016/1011 is amended as follows:

(1)

in Article 3(1), point (24)(a) is amended as follows:

(a)

the introductory part is replaced by the following:

‘(a)

input data contributed entirely from:’;

(b)

point (vii) is replaced by the following:

‘(vii)

a service provider to which the benchmark administrator has outsourced the data collection in accordance with Article 10, with the exception of point (f) of Article 10(3), provided that the service provider receives the data entirely from an entity referred to in points (i) to (vi) of this point;’;

(2)

in Article 4, the following paragraph is added:

‘9. ESMA shall develop draft regulatory technical standards to specify the requirements to ensure that the governance arrangements referred to in paragraph 1 are sufficiently robust.

ESMA shall submit those draft regulatory technical standards to the Commission by 1 October 2020.

Power is delegated to the Commission to supplement this Regulation 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.’;

(3)

in Article 12, the following paragraph is added:

‘4. ESMA shall develop draft regulatory technical standards to specify the conditions to ensure that the methodology referred to in paragraph 1 complies with points (a) to (e) of that paragraph.

ESMA shall submit those draft regulatory technical standards to the Commission by 1 October 2020.

(4)

in Article 14, the following paragraph is added:

‘4. ESMA shall develop draft regulatory technical standards to specify the characteristics of the systems and controls referred to in paragraph 1.

ESMA shall submit those draft regulatory technical standards to the Commission by 1 October 2020.

(5)

in Article 20, the following paragraph is inserted:

‘1a. Where ESMA considers that a benchmark fulfils all of the criteria set out in point (c) of paragraph 1, it shall submit a documented request to the Commission to recognise that benchmark as critical.

After receiving that documented request, the Commission shall adopt an implementing act in accordance with paragraph 1.

ESMA shall review its assessment of the criticality of the benchmark at least every two years and shall notify and transmit the assessment to the Commission.’;

(6)

Article 21 is amended as follows:

(a)

paragraph 2 is replaced by the following:

‘2. Upon receipt of the assessment by the administrator referred to in paragraph 1, the competent authority shall:

(a)

inform ESMA and the college established under Article 46;

(b)

within four weeks following the receipt of that assessment, make its own assessment of how the benchmark is to be transitioned to a new administrator or be ceased to be provided, taking into account the procedure established in accordance with Article 28(1).

During the period referred to in point (b) of the first subparagraph, the administrator shall not cease the provision of the benchmark without the written consent of ESMA or the competent authority, where relevant.’;

(b)

paragraph 5 is added:

‘5. ESMA shall develop draft regulatory technical standards to specify the criteria on which the assessment referred to in point (b) of paragraph 2 is to be based.

ESMA shall submit those draft regulatory technical standards to the Commission by 1 October 2020.

(7)

in Article 23, paragraphs 3 and 4 are replaced by the following:

‘3. A supervised contributor to a critical benchmark that intends to cease contributing input data shall promptly notify the administrator thereof in writing. The administrator shall thereupon inform without undue delay its competent authority.

The competent authority of the critical benchmark administrator shall inform the competent authority of that supervised contributor, and where applicable ESMA, thereof without undue delay. The administrator shall submit to its competent authority an assessment of the implications on the capability of the critical benchmark to measure the underlying market or economic reality, as soon as possible but no later than 14 days after the notification made by the supervised contributor.

4. Upon receipt of the assessment referred to in paragraphs 2 and 3 of this Article, the competent authority of the administrator shall, where applicable, promptly inform ESMA or the college established under Article 46 and shall on the basis of that assessment make its own assessment of the capability of the benchmark to measure the underlying market and economic reality, taking into account the administrator’s procedure for cessation of the benchmark established in accordance with Article 28(1).’;

(8)

in Article 26, the following paragraph is added:

‘6. ESMA shall develop draft regulatory technical standards to specify the criteria under which competent authorities may require changes to the compliance statement as referred to in paragraph 4.

ESMA shall submit those draft regulatory technical standards to the Commission by 1 October 2020.

(9)

Article 30 is amended as follows:

(a)

in paragraph 2, the following subparagraph is inserted after point (b):

‘The Commission may subject the application of the implementing decision referred to in the first subparagraph to the effective fulfilment by that third country of any condition, aiming at ensuring equivalent supervisory and regulatory standards, set out in that implementing decision on an ongoing basis and to the ability of ESMA to effectively exercise the monitoring responsibilities referred to in Article 33 of Regulation (EU) No 1095/2010.’;

(b)

the following paragraph 2a is inserted:

‘2a. The Commission may adopt a delegated act in accordance with Article 49 to specify the conditions referred to in points
(a) and
(b) of the first subparagraph of paragraph 2 of this Article.’;

(c)

in paragraph 3, the following subparagraph is inserted after point (b):

(d)

the following paragraph is inserted:

‘3a. The Commission may adopt a delegated act in accordance with Article 49 to specify the conditions referred to in points
(a) and
(b) of the first subparagraph of paragraph 3 of this Article.’;

(e)

the introductory part of paragraph 4 is replaced by the following:

‘4. ESMA shall establish cooperation arrangements with the competent authorities of third countries whose legal framework and supervisory practices have been recognised as equivalent in accordance with paragraph 2 or 3 of this Article. When establishing those arrangements, ESMA shall take into account whether a third country in question is, in accordance with a delegated act adopted pursuant to Article 9 of Directive (EU) 2015/849 of the European Parliament and of the Council (*56), on the list of jurisdictions which have strategic deficiencies in their national anti-money laundering and countering the financing of terrorism regimes that pose significant threats to the financial system of the Union. Such arrangements shall specify at least:

(*56) Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73).’;"

(10)

Article 32 is amended as follows:

(a)

paragraph 1 is replaced by the following:

‘1. Until such time as an equivalence decision is adopted in accordance with Article 30(2) and (3), a benchmark provided by an administrator located in a third country may be used by supervised entities in the Union, provided that that administrator acquires prior recognition by ESMA in accordance with this Article.’;

(b)

the second subparagraph of paragraph 2 is replaced by the following:

‘To determine whether the condition referred to in the first subparagraph is fulfilled and to assess compliance with the IOSCO principles for financial benchmarks or the IOSCO principles for PRAs, as applicable, ESMA may take into account an assessment by an independent external auditor or, a certification provided by the competent authority of the administrator in the third country where the administrator is located.’;

(c)

paragraph 3 is replaced by the following:

‘An administrator located in a third country intending to obtain prior recognition as referred to in paragraph 1 shall have a legal representative. The legal representative shall be a natural or legal person located in the Union and expressly appointed by that administrator to act on behalf of that administrator with regard to the administrator’s obligations under this Regulation. The legal representative shall, together with the administrator, perform the oversight function relating to the provision of benchmarks performed by the administrator under this Regulation and, in that respect, be accountable to ESMA.’;

(d)

paragraph 4 is deleted;

(e)

paragraph 5 is replaced by the following:

‘5. An administrator located in a third country intending to obtain prior recognition as referred to in paragraph 1 shall apply for recognition with ESMA. The applicant administrator shall provide all information necessary to satisfy ESMA that it has established, at the time of recognition, all the necessary arrangements to meet the requirements referred to in paragraph 2 and shall provide the list of its actual or prospective benchmarks which are intended for use in the Union and shall, where applicable, indicate the competent authority in the third country responsible for its supervision.

Within 90 working days of receipt of the application referred to in the first subparagraph of this paragraph, ESMA shall verify that the conditions laid down in paragraphs 2 and 3 are fulfilled.

Where ESMA considers that the conditions laid down in paragraphs 2 and 3 are not fulfilled, it shall refuse the recognition request and set out the reasons for that refusal. In addition, no recognition shall be granted unless the following additional conditions are fulfilled:

(a)

where an administrator located in a third country is subject to supervision, an appropriate cooperation arrangement is in place between ESMA and the competent authority of the third country where the administrator is located, in compliance with the regulatory technical standards adopted pursuant to Article 30(5), to ensure an efficient exchange of information that enables the competent authority of that third country to carry out its duties in accordance with this Regulation;

(b)

the effective exercise by ESMA of its supervisory functions under this Regulation is neither prevented by the laws, regulations or administrative provisions of the third country where the administrator is located, nor, where applicable, by limitations in the supervisory and investigatory powers of that third country’s competent authority.’;

(f)

paragraphs 6 and 7 are deleted;

(g)

paragraph 8 is replaced by the following:

‘8. ESMA shall suspend or, where appropriate, withdraw the recognition granted in accordance with paragraph 5 where it has well-founded reasons, based on documented evidence, to consider that the administrator:

(a)

is acting in a manner which is clearly prejudicial to the interests of users of its benchmarks or to the orderly functioning of markets;

(b)

has seriously infringed the relevant requirements set out in this Regulation;

(c)

made false statements or used any other irregular means to obtain the recognition.’;

(11)

in Article 34, the following paragraph is inserted:

‘1a. Where one or more of the indices provided by the person referred to in paragraph 1 would qualify as critical benchmarks as referred to in points (a) and (c) of Article 20(1), the application shall be addressed to ESMA.’;

(12)

Article 40 is replaced by the following:

‘Article 40

Competent authorities

1. For the purposes of this Regulation, ESMA shall be the competent authority for:

(a)

administrators of critical benchmarks as referred to in points (a) and (c) of Article 20(1);

(b)

administrators of the benchmarks referred to in Article 32.

2. Each Member State shall designate the relevant competent authority responsible for carrying out the duties under this Regulation and shall inform the Commission and ESMA thereof.

3. A Member State that designates more than one competent authority in accordance with paragraph 2 shall clearly determine the respective roles of those competent authorities and shall designate a single authority to be responsible for coordinating the cooperation and the exchange of information with the Commission, ESMA and other Member States’ competent authorities.

4. ESMA shall publish on its website a list of the competent authorities designated in accordance with paragraphs 2 and 3.’;

(13)

Article 41 is amended as follows:

(a)

in paragraph 1, the introductory part is replaced by the following:

‘1. In order to fulfil their duties under this Regulation, competent authorities referred to in Article 40(2) shall have, in conformity with national law, at least the following supervisory and investigatory powers:’;

(b)

in paragraph 2, the introductory part is replaced by the following:

‘2. The competent authorities referred to in Article 40(2) shall exercise their functions and powers referred to in paragraph 1 of this Article and the powers to impose sanctions referred to in Article 42 in accordance with their national legal frameworks, in any of the following ways:’;

(14)

in Article 43(1), the introductory part is replaced by the following:

‘1. Member States shall ensure that, when determining the type and level of administrative sanctions and other administrative measures, competent authorities that they have designated in accordance with Article 40(2) take into account all relevant circumstances, including where appropriate:’;

(15)

Article 44 is replaced by the following:

‘Article 44

Obligation to cooperate

1. Member States that have chosen to lay down criminal sanctions for infringements of the provisions referred to in Article 42 shall ensure that appropriate measures are in place so that the competent authorities designated in accordance with Article 40(2) and (3) have all the necessary powers to liaise with judicial authorities within their jurisdiction to receive specific information relating to criminal investigations or proceedings commenced for possible infringements of this Regulation. Those competent authorities shall provide that information to other competent authorities and to ESMA.

2. Competent authorities designated in accordance with Article 40(2) and (3) shall assist other competent authorities and ESMA. In particular, they shall exchange information and cooperate in any investigation or supervisory activities. Competent authorities may also cooperate with other competent authorities to facilitate the recovery of pecuniary sanctions.’;

(16)

in Article 45(5), the first subparagraph is replaced by the following:

‘5. Member States shall provide ESMA with aggregated information regarding all administrative sanctions and other administrative measures imposed pursuant to Article 42 on an annual basis. That obligation shall not apply to measures of an investigatory nature. ESMA shall publish that information in an annual report, together with aggregated information on all administrative sanctions and other administrative measures it has imposed pursuant to Article 48f.’;

(17)

in Article 46, paragraphs 1 and 2 are replaced by the following:

‘1. Within 30 working days from the inclusion of a benchmark referred to in points (a) and (c) of Article 20(1) in the list of critical benchmarks, with the exception of benchmarks where the majority of contributors are non-supervised entities, the competent authority of the administrator shall establish a college and lead the college.

2. The college shall comprise representatives of the competent authority of the administrator, ESMA, unless it is the competent authority of the administrator, and the competent authorities of supervised contributors.’;

(18)

in Article 47, paragraphs 1 and 2 are replaced by the following:

‘1. The competent authorities referred to in Article 40(2) shall cooperate with ESMA for the purposes of this Regulation, in accordance with Regulation (EU) No 1095/2010.

2. The competent authorities referred to in Article 40(2) shall, without undue delay, provide ESMA with all information necessary to carry out its duties, in accordance with Article 35 of Regulation (EU) No 1095/2010.’;

(19)

in Title VI, the following Chapter is added:

‘
CHAPTER 4

ESMA powers and competences

Amendments to Regulation (EU) 2016/1011