Eligibility criteria for lead mandates for syndicated transactions
Members of the primary dealer network are eligible to serve as lead managers for syndicated transactions, subject to the fulfilment of the following criteria:
(a)
having bought a minimum share of auctioned volumes by the Union and the Euratom, on weighted average based on the last auctions on a rolling basis;
(b)
having provided evidence, based on the transaction data reported in accordance with this Decision, of having a minimum market share among primary dealers in Union and Euratom debt securities on the secondary markets on a rolling basis;
(c)
having complied with the minimum requirements of the quoting arrangements during the observation period;
(d)
having agreed, as part of the GTC, with the general terms and conditions for mandates for syndicated transactions and with the fee schedule.
The minimum shares referred to in first paragraph, points (a) and (b), the minimum requirements referred to in the first paragraph, point (c), as well as other detailed rules for lead mandates shall be based on best market practices in particular of peer issuers and shall reflect the balance of benefits and obligations for the members of the primary dealer network. Where the criterion includes relative shares, the percentages shall take into account the total number of primary dealers.
Eligibility criteria for co-lead mandates for syndicated transactions
Members of the primary dealer network are eligible to serve as co-lead managers for syndicated transactions, subject to the fulfilment of the following criteria:
(a)
having agreed, as part of the GTC, with the general terms and conditions for co-lead mandates for syndicated transactions and with the fee schedule;
(b)
having complied with the minimum requirements of the quoting arrangements during the observation period; and
(c)
not having been awarded the lead mandate during the observation period.
The minimum requirements referred to in the first paragraph, point (b) and the observation period referred to in first paragraph, points (b) and (c), as well as other detailed rules for co-lead mandates shall be based on best market practices including those of peer issuers and shall reflect the balance of benefits and obligations for the members of the primary dealer network.
Fee schedule
The fee schedule referred to Article 8, first paragraph, point (d) and Article 9, point (a) shall apply to borrowing and debt management operations. The fee schedule shall establish a remuneration commensurate with the costs and risks born by the eligible primary dealers in carrying out Union and Euratom borrowing and debt management operations, while ensuring cost-efficiency for the Union and taking into account specificities of the Union’s debt issuances, in particular volumes and maturities. The fee schedule shall be referred to in an annex to the general terms and conditions for lead and co-lead mandates for syndicated transactions.
Quoting arrangements
The minimum requirements of the quoting arrangements referred to under Article 8, first paragraph, point (c) and Article 9, first paragraph, point (b) shall refer to trading time, number of quotes and spreads quoted for specified Union debt securities and on a recognised interdealer platform during the observation period.
Additional commitments for lead mandates
Members of the primary dealer network fulfilling the criteria laid down in Article 8 may be awarded a mandate for lead manager for syndicated transactions on the basis of the assessment of their commitment to carry out any of the following activities:
(a)
on a best effort basis, to promote the liquidity of Union and Euratom debt securities with a market-making activity, thereby contributing to price discovery, to the efficiency of the secondary market and to an orderly execution of trading;
(b)
to provide fair advice and market intelligence to the Commission in order to design and implement the borrowing programmes, and, in particular, to provide advice prior to the publication of the funding programme and in the context of the preparation of the debt management transactions under the borrowing programmes;
(c)
to provide the Commission with regular information on market trends, analysis and research on functioning of fixed-income markets and, in particular, the sovereigns, supranationals and agencies;
(d)
to promote and develop the placement of Union and Euratom debt securities within a diversified and broad investor community as part of their business strategy.
Selection of the syndicate
1. Syndicates shall be selected pursuant to Chapter 1, Section 2, point 11.1, point (j), of Annex I to Regulation (EU, Euratom) 2018/1046 in a negotiated procedure without prior publication of a contract notice.
2. The Commission shall send the requests for proposals to a subgroup of eligible members of the primary dealer network fulfilling the criteria laid down in Articles 8 and 12, soliciting an offer for participation as lead managers.
3. The selection of the subgroup of eligible primary dealers to whom the request for proposals shall be sent by the Commission, shall be based on objective qualitative and quantitative criteria, relating to the proven capacity of eligible primary dealers in supporting sovereign and supranational issuance in primary and secondary markets, and their ability to distribute debt securities to investors. Those criteria shall also include an assessment of the performance of the activities listed in Article 12. The Commission shall implement a rotation criterion to ensure that all eligible members of the primary dealer network are regularly invited to respond to requests for proposals.
4. The proposals received from eligible members referred to in paragraph 2 shall be evaluated on the basis of an additional set of objective qualitative and quantitative criteria and in view of the establishment of a syndicate, whose composition is the best possible combination of managers for the optimal performance of a given transaction.
5. The criteria for the transmission of requests for proposals and for the evaluation of the received proposals shall be communicated to the subgroup of members of the primary dealer network together with the request for proposals.
6. The Commission may invite primary dealers to express their interest in a mandate as co-lead managers to a syndicated transaction, in addition to joint lead manager or managers, based on the market circumstances and with a view to ensure the optimal performance of a given transaction. The Commission may invite either all primary dealers eligible in accordance with Article 8 or a subgroup of them based on alphabetical order and a rotation mechanism. Such invitation shall be considered for at least one syndication transaction within the period covered by a funding plan established in accordance with Article 4 of Implementing Decision (EU, Euratom) 2022/2544.
7. The Commission shall award all primary dealers, who accepted the invitation referred to in paragraph 6, with the mandate for co-lead managers.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
