Application for membership and list of primary dealers
1. Interested credit institutions shall submit to the Commission an application for membership to the primary dealer network by filling in and submitting the application form and the annexed checklist in respect of admission criteria available on Commission website.
2. Applications for admission to the primary dealer network shall include proof of compliance with Articles 4 and 5. To such end, evidence and supporting documents to be enclosed are detailed in the application form and its annexes.
3. In case of an incomplete application form, incomplete information or insufficient data, the applicant may be requested to submit necessary additional information. Failure to provide the necessary additional information within a specified deadline shall result in rejection of the application form.
4. Provision of false, misleading or incorrect information or documents during the application process shall result in non-admission to the primary dealer network or, as the case may be, may lead to an exclusion from the primary dealer network in accordance with Article 15 of this Decision.
5. In the application form each primary dealer shall declare to accept the GTC, thereby acknowledging their binding nature and committing to them.
6. The application form and the GTC shall be signed and the GTC shall also be paraphed on each page by a duly authorised representative of the primary dealer who, based on applicable laws of the relevant jurisdiction and on the relevant corporate documents is empowered to validly commit such primary dealer for the purpose of the performance of the obligations and activities under the GTC. To such end, an extract from the relevant company register shall be provided when submitting the application form.
7. Any communication, notice or information relating to this Decision and the GTC shall be made at the address for notice elected by primary dealers in their application form and shall be addressed to the person therein designated as ‘coordinator’.
Admission to primary dealer network
1. The decision on whether to include an applicant in the list of the primary dealer network shall be adopted, at the latest, within two months of the submission of the relevant application. If an applicant is requested to submit additional information in accordance with paragraph 3 of Article 12, the time limit for a decision relating to that applicant shall be suspended until the date of submission of that additional information. If the applicant informs the Commission that it considers the application to be complete, the decision shall be adopted within two months. The decision shall be notified to the applicant.
The non-admission decision shall state reasons on which it is based.
2. The up-dated list of members of the primary dealer network shall be published once a year in the Official Journal of the European Union .
3. In view of performing the annual review the primary dealers shall be invited to represent and declare to the Commission that they still fulfil all the eligibility criteria for the membership laid down in Article 4.
Monitoring
The Commission may conduct, or may appoint a third party to conduct, verifications to check the compliance of members of the primary dealer network with this Decision. Members of the primary dealer network shall cooperate with and facilitate the conduct of those verifications, especially by providing necessary information and data as well as access thereto.
Each member of the primary dealer network shall:
(a)
provide the Commission with the risk limit set for the trading activity of the debt securities of the Union and the Euratom in accordance with the General terms and conditions for Union primary dealers referred to in Article 5, point (c);
(b)
notify the Commission of any downgrade by the European Securities and Markets Authority recognised rating agencies in the Union;
(c)
promptly notify the Commission of any supervening non-compliance with any eligibility criterion laid down in Article 4.
By accepting the GTC, the primary dealer gives its consent to possible audits and verification related to the data transmitted to the Commission in the framework of its reporting obligations, in particular with regard to the data to be used to assess its performance on the secondary market.
Suspension and exclusion from the primary dealer network
1. The membership of the primary dealer in the primary dealer network may be suspended in the following cases:
(a)
initiation of proceedings against a primary dealer as referred to in point (iii) of paragraph (e) of Article 5;
(b)
initiation of procedure, which may result in the cessation of membership in the network or the mechanism referred to in point (c) of Article 4;
Primary dealer shall be invited by a pre-suspension notice to submit its observations within a time limit of no less than 7 days from the receipt of the notice. The suspension decision shall take effect the first business day following the date of the notification to the non-compliant primary dealer.
The suspension may be lifted upon request from the suspended primary dealer. The primary dealer shall submit sufficient evidence that, as applicable, either the proceedings referred to under point (a) of the first subparagraph are no longer pending and have not resulted in a sanction of whichever nature against the suspended dealer, or the procedure referred to under point (b) of the first subparagraph is no longer pending and has not resulted in the cessation of membership in the network or the mechanism referred to in point (c) of Article 4. The presented evidence shall be assessed and decision taken within 15 working days as of the request.
2. Primary dealer shall be excluded from the primary dealer network in the following cases:
(a)
primary dealer ceases to fulfil any of the conditions referred to in Article 4;
(b)
exclusion of the primary dealer pursuant to Articles 135 to 142 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council ( 18 ) .
3. The following procedure shall apply to the exclusion from the primary dealer network in cases laid down under paragraph 2:
(a)
the primary dealer shall be invited with a pre-exclusion notice to submit its observations within a time-limit of no less than 7 days from the receipt of the notice;
(b)
the exclusion decision shall be notified to the primary dealer. The exclusion decision takes effect the first business day following the date of its notification to the excluded primary dealer.
4. Primary dealer may be excluded from the primary dealer network in the case of:
(a)
non-compliance with obligations laid down under Article 5;
(b)
commitment of an infringement referred to in Article 30 of Regulation (EU) 596/2014 of the European Parliament and of the Council ( 19 ) , as decided in a final decision adopted by relevant competent authority;
(c)
a final decision by the competent authority taken as a result of any proceeding referred to under subparagraph (v) of point (e) of Article 5, or relating to AML and CTF laws and regulations;
(d)
non-compliance with subparagraph (vi) of point (e) of Article 5; or
(e)
disclosure of information, which is subject to confidentiality obligation under point (f) of Article 5.
5. The following procedure shall apply in cases laid down under paragraph 4:
(a)
The primary dealer concerned shall receive a notice specifying the grounds for non-compliance and setting a time-limit to submit observations of no less than 7 days from the receipt by the primary dealer of the notice.
(b)
Taking into account the submitted observations, if any, the primary dealer shall receive a warning notice, inviting it to take relevant corrective measures to restore and/or ensure compliance with the relevant criteria and/or obligations.
(c)
The primary dealer shall communicate the corrective measures that it intends to adopt, within a set deadline, which is no shorter than one week from the date receipt of the warning notice.
(d)
If no information has been communicated within the time limit referred to under paragraph (c), the primary dealer shall receive a second warning notice, inviting it to take the corrective measures referred to in paragraph (b). Paragraph (c) shall apply mutatis mutandis .
(e)
The primary dealer shall provide sufficient evidence of the implementation of the corrective measures within a set deadline set which is not shorter than one month from the date of the communication of the warning notice referred to in point (b). Where no or insufficient evidence is provided, the pre-exclusion notice shall be addressed to the primary dealer with an invitation to submit observations within a time-limit of no less than 7 days from the receipt of the notice. Taking into account the submitted observations, if any, the decision to exclude the non-compliant primary dealer from the primary dealer network may be taken.
(f)
The exclusion decision shall state reasons on which the exclusion is based.
(g)
The exclusion decision shall take effect the first business day following the date of its notification to the excluded primary dealer.
6. Suspension of membership pursuant to paragraph 1, exclusion from a membership pursuant to paragraphs 2 to 6 and resignation on membership in primary dealer network pursuant to point (e) of Article 7 shall have no effect on the rights and obligations of the primary dealer in question in respect of contracts concluded prior to the effective date of exclusion, suspension or resignation respectively.
7. Suspension shall not entail the suspension of obligations under point (f) of Article 5 and under Article 14.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
