Eligibility criteria for the primary dealer network
Credit institutions and investment firms fulfilling the following criteria shall be eligible for membership of the primary dealer network:
(a)
being a legal entity established and having its head office in the Union or in a European Economic Area country;
(b)
being supervised by a Union competent authority and being authorised to carry out the business as either of the following:
(i)
a credit institution in accordance with Directive 2013/36/EU of the European Parliament and of the Council ( 10 ) ; or
(ii)
an investment firm authorised to carry out the activity of underwriting of financial instruments or placing of financial instruments on a firm commitment basis in accordance with Directive 2014/65/EU; and
(c)
being a member of a European sovereign or supranational primary dealer network established for the purpose of serving as counterparty of a Member State or of a European supranational issuer. For the purpose of this Decision a European sovereign or supranational primary dealer network shall be understood as either of the following entities:
(i)
a network, group or organised system of financial institutions that is appointed by a sovereign or supranational issuer to serve as market counterparty in the framework of public debt management, whose membership typically entails participation in public debt securities issuances through auctions;
(ii)
a primary dealership mechanism that is substantially equivalent to the network, group or organised system referred to in point (i).
Commitments
1. Members of the primary dealer network shall undertake the following commitments:
(a)
to buy a minimum weighted average of 0,05 % of volumes auctioned by the Union and/or the Euratom on a semi-annual basis in accordance with part 1 of the Annex I;
(b)
to comply with the obligation to accurately, timely and integrally report on a monthly basis to the Commission the traded volumes on Union and Euratom debt securities, according to the harmonised reporting format for trading on the secondary European sovereign debt market established by the Sub-Committee on EU Sovereign Debt Markets of the European Union Economic and Financial Committee;
(c)
to submit a signed copy of the ‘General terms and conditions for European Union primary dealers (‘GTC’);
(d)
to ensure that the trading authorisations provided to its trading personnel are quarterly reviewed and validly in force;
(e)
to comply with market practices and ethics, in particular:
(i)
ensure compliance with conduct rules and highest standards in market practices applicable to their operations on EUR-fixed income business;
(ii)
primary dealers and their parent entities shall apply measures relating to anti-money laundering (AML) and counterterrorism financing (CTF) in accordance with applicable national and Union laws and regulations in force;
(iii)
each primary dealer immediately shall notify the Commission of any proceedings initiated against it by a competent authority of a Member State concerning the activity carried out by the primary dealer as credit institution or investment firm. Each primary dealer shall notify the Commission of any measure or decision taken as a result of these proceedings;
(iv)
each primary dealer shall immediately notify the Commission if the primary dealer or its parent entity is convicted of a criminal charge, including tax evasion, or subjected to administrative or disciplinary sanctions, or suspended or excluded from an industry organisation in any Member State;
(v)
If a competent authority of a Member State identifies any AML or CTF deficiencies or imposes any AML or CTF sanction, the primary dealers shall notify the Commission immediately and report on their remedial measures;
(vi)
The primary dealer shall ensure not to conclude transactions concerning Union and Euratom debt securities, which would involve any counterparty incorporated or established in a country included in the EU list of non-cooperative jurisdictions for tax purposes or identified as high risk third countries pursuant to Article 9(2) of Directive (EU) 2015/849 and listed in Delegated Regulation (EU) 2016/1675 or that do not effectively comply with Union or internationally agreed tax standards on transparency and exchange of information or breaches sanction regimes, in particular restrictive measures under Article 215 TFEU;
(f)
to treat all information received from the Commission confidentially.
2. For the purposes of the paragraph 1, point (b), the quality of the reporting shall be regularly assessed and the results notified the interested primary dealer. The primary dealer shall be notified if the data provided are not accurate.
3. For the purposes of the first paragraph 1, point (e), the Commission shall evaluate the primary dealers’ conduct during the execution of syndicated transaction and other debt management operations in terms of readiness, market neutrality and, orderly and efficient execution.
General terms and conditions
1. The GTC shall apply to any borrowing and debt management activity carried out by the Commission under the borrowing programmes under this Decision.
2. The GTC shall, in accordance with this Decision:
(a)
establish the details of the obligations for the duration of the participation in the primary dealer network and the details of the eligibility criteria for lead and co-lead mandates;
(b)
establish the content of and procedure for the annual review;
(c)
establish the detailed rules for reporting obligations;
(d)
establish rules on controls;
(e)
establish the details of the rules and procedure for the suspension of membership, lifting of that suspension, and exclusion from the primary dealer network; and
(f)
regulate the possibility to withdraw from the primary dealer network;
(g)
establish the detailed rules for the quoting arrangements, including the observation period and requirements and the process for recognition of interdealer platform;
3. Any time limit shall be calculated as follows:
(a)
where a time limit is expressed in days or months from a certain date or event, the day or month on which that date falls or that event occurs is not to be counted as falling within the time limit;
(b)
time limits expressed in days shall include business days only. Business days are to be determined in accordance with Luxembourgish calendar of public and bank holidays (https://www.abbl.lu/fr/topic/bank-holidays/);
(c)
a time limit expressed in months is to end with the expiry of the day in the last month corresponding to the same day on which the date or the event, from which the time-limit is calculated, fell or occurred;
(d)
if, in a time limit expressed in months, the day on which it should expire does not occur in the last month, the time limit is to end with the expiry of the last day of that month;
(e)
if a time expressed in months expires on a public or bank holiday day, it is to be extended until the end of the first subsequent business day.
Rights of members of the primary dealer network
Members of the primary dealer network shall have the following rights:
(a)
to advertise themselves as ‘Member of the European Union Primary Dealer Network’;
(b)
to participate and bid in any auction of debt securities of the Union or Euratom;
(c)
to receive on a regular basis, at least yearly, feedback on its performance, especially in relation to its ranking in the auctions and in the secondary markets; this feedback shall be based on the internal evaluation process referred to under Article 13 with objective criteria to be communicated to the primary dealers;
(d)
without prejudice to Chapter 3, to be eligible for debt management operations, including the following operations:
(i)
private placements;
(ii)
repurchase transactions as defined in Article 3(9) of Regulation (EU) 2015/2365 of the European Parliament and of the Council ( 11 ) ;
(iii)
swaps as defined in Section 1, point 10, of Annex III to Commission Delegated Regulation (EU) 2017/583 ( 12 ) ;
(e)
to resign at any moment its membership of the primary dealer network by notifying such resignation to the Commission; such a resignation shall take effect the first business day of the first month following the date of the notification.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
