Monitoring of auctions
1. By the end of each month, an auction platform shall report on the implementation of the auctions it conducted in the preceding month, in particular with respect to:
(a)
fair and open access;
(b)
transparency;
(c)
price formation;
(d)
technical and operational aspects of the implementation of the contract appointing the auction platform concerned;
(e)
the relationship between the auction processes and the secondary market in respect of the information referred to in points (a) to (d);
(f)
any evidence of anti-competitive behaviour, market abuse, money laundering, terrorist financing or criminal activity that the auction platform has been made aware of while carrying out its tasks pursuant to Article 27 or Article 30;
(g)
any breach of this Regulation or of Article 10(4) of Directive 2003/87/EC that the auction platform has been made aware of while carrying out its task pursuant to Article 27 or Article 30 of this Regulation;
(h)
follow-up to any information reported in accordance with points (a) to (g).
In addition, by 31 January of each year, the auction platform shall provide a summary and an analysis of the monthly reports of the previous year.
2. The auction platform shall provide the reports and the summary referred to in paragraph 1 to the Commission, to its appointing Member States, to its competent national authority designated in accordance with Article 22 of Regulation (EU) No 596/2014 and to ESMA.
3. The relevant contracting authorities shall monitor the implementation of the contracts appointing the auction platforms. The Member States appointing an opt-out auction platform shall notify the Commission of any failure of that auction platform to comply with the contract appointing it that would be likely to have a significant impact on the auction processes.
4. In accordance with Article 10(4) of Directive 2003/87/EC, the Commission shall, on behalf of the Member States participating in the joint action pursuant to Article 26(1) of this Regulation and the Member States appointing an opt-out auction platform, publish summary reports in respect of the information referred to in paragraph 1, points (a) to (h), of this Article.
5. Auctioneers, auction platforms, the competent national authorities supervising them and ESMA shall actively cooperate with the Commission and between themselves and, upon request, provide the Commission with any information in their possession that relates to the auctions and is reasonably required for the monitoring of the auctions.
6. The competent national authorities supervising credit institutions and investment firms, the competent national authorities supervising persons authorised to submit bids on behalf of others pursuant to Article 18(2) and ESMA shall, within their competence, actively cooperate with the Commission when it is reasonably required for the monitoring of the auctions.
7. When fulfilling their obligations under paragraphs 5 and 6, the competent national authorities shall take into account professional secrecy considerations to which those authorities are subject under Union law.
Monitoring the relationship with bidders
1. An auction platform shall monitor the relationship with bidders by taking the following action:
(a)
scrutinising bids made throughout the course of that relationship to ensure that the bidding behaviour of bidders is consistent with the auction platform’s knowledge of the customer, its business and risk profile, including, where necessary, the source of funds;
(b)
maintaining effective arrangements and procedures for the regular monitoring of the compliance by persons admitted to bid pursuant to Article 18(3) and Article 19 with its market conduct rules;
(c)
monitoring transactions undertaken by persons admitted to bid pursuant to Article 18(3) and Article 19 and by politically exposed persons using its systems in order to identify breaches of the rules referred to in point (b) of this subparagraph, unfair or disorderly auctioning conditions or conduct that may invoke market abuse.
Where scrutinising bids in accordance with the first subparagraph, point (a), the auction platform shall pay particular attention to any activity which it regards as particularly likely, by its nature, to be related to money laundering, terrorist financing or criminal activity.
2. An auction platform shall ensure that the documents, data or information it holds concerning a bidder are kept up-to-date. For this purpose, it may:
(a)
request any information of the bidder, pursuant to Article 18(3), Article 19(2) and Article 20(5) and (7), for the purposes of monitoring the relationship with that bidder following its admission to bid in the auctions, throughout the subsistence of that relationship and for a period of 5 years following the termination of its admission to bid;
(b)
require a bidder to re-submit an application for admission to bid at regular intervals;
(c)
require a bidder to promptly notify the auction platform concerned of any changes to the information submitted to it pursuant to Article 18(3), Article 19(2) and Article 20(5) and (7).
3. An auction platform shall keep records of the following:
(a)
the application for admission to bid submitted by an applicant pursuant to Article 18(3) and Article 19(2), including any amendments thereto;
(b)
the checks carried out in:
(i)
processing the application for admission to bid submitted, pursuant to Articles 19, 20 and 21;
(ii)
scrutinising and monitoring the relationship with the bidder, pursuant to points (a) and (c) of paragraph 1;
(c)
all information relating to a given bid submitted by a given bidder in an auction, including any withdrawal or modification of such bid, pursuant to Article 6(3), second subparagraph, and Article 6(4);
(d)
all information relating to the conduct of each auction in which a bidder has submitted a bid.
4. An auction platform shall keep the records referred to in paragraph 3 for as long as a bidder is admitted to bid in its auctions and for at least 5 years following the termination of the relationship with that bidder.
Notification of money laundering, terrorist financing or criminal activity
1. The competent national authorities referred to in Article 48(1a) of Directive (EU) 2015/849 shall monitor, and take the necessary measures to ensure, compliance of an auction platform with the following:
(a)
the customer due diligence measures referred to in Article 19(2), point (e), and Article 20(8) of this Regulation;
(b)
the obligation to refuse to grant admission to bid or to revoke or suspend any admission to bid already granted pursuant to Article 21(1) and (2) of this Regulation;
(c)
the monitoring and record keeping requirements set out in Article 45 of this Regulation;
(d)
the notification requirements set out in paragraphs 2 and 3.
The competent national authorities shall have the powers referred to in Article 48(2) and (3) of Directive (EU) 2015/849.
An auction platform may be held liable for infringements of paragraphs 2 and 3 of this Article and of Article 20(5) and (8), Article 21(1) and (2), and Article 45 of this Regulation. The sanctions and measures referred to in Articles 58 to 62 of Directive (EU) 2015/849 shall apply to such infringements.
2. An auction platform, its directors and employees, shall cooperate fully with the FIU by promptly acting the following action:
(a)
informing the FIU, including by submitting to it a report, on their own initiative, where they know, suspect or have reasonable grounds to suspect that any funds in relation to the auctions are the proceeds of criminal activity or are related to terrorist financing, and by promptly responding to requests by the FIU for additional information in such cases;
(b)
providing the FIU directly, at its request, with all necessary information to fulfil its tasks.
All suspicious transactions, including attempted transactions, shall be reported.
3. The information referred to in paragraph 2 shall be forwarded to the FIU of the Member State in whose territory the auction platform concerned is situated.
4. The Member State in whose territory an auction platform appointed pursuant to this Regulation is situated shall ensure that the national measures transposing Articles 37, 38, 39 and 42, Article 45(1) and Article 46 of Directive (EU) 2015/849 apply to the auction platform concerned.
Notification of market abuse
1. An auction platform shall report to the national authorities competent under Regulation (EU) No 596/2014 suspicions of market abuse or attempted market abuse by any person admitted to bid in the auctions or by any person on whose behalf the person admitted to bid in the auctions is acting.
2. The auction platform concerned shall notify the Commission and ESMA of the fact that it has made a notification under paragraph 1, stating what remedial action it has taken or proposes to take to counter the market abuse or attempted market abuse referred to in that paragraph.
Maximum bid-size and other remedial measures
1. A maximum bid-size, or any other remedial measures necessary to mitigate an actual or potential discernible risk of market abuse, money laundering, terrorist financing or other criminal activity, as well as anti-competitive behaviour, may be imposed by an auction platform after consulting the Commission and obtaining its opinion thereon, provided that implementation of such bid-size or remedial measures would effectively mitigate the risk in question. The Commission may consult the Member States concerned and obtain their opinion on the proposal made by the auction platform concerned. The auction platform concerned shall take the utmost account of the Commission’s opinion.
2. The maximum bid-size shall either be expressed as a percentage of the total number of auctioned allowances in any given auction or as a percentage of the total number of auctioned allowances in any given year, whichever the auction platforms finds most appropriate to deal with the risk of market abuse.
3. For the purposes of this Article, maximum bid-size means the maximum number of allowances that may be bid for, directly or indirectly, by any group of persons listed in Article 18(1) or (2), which belong to any of the following categories:
(a)
the same group of undertakings including any parent undertakings, its subsidiary undertakings and affiliate undertakings;
(b)
the same business grouping;
(c)
a separate economic unit having an independent power of decision where they are controlled, directly or indirectly, by public bodies or state-owned entities.
Market conduct rules and other contractual arrangements
An auction platform shall be entitled to take any other action under its market conduct rules and other contractual arrangements in place, directly or indirectly, with any bidders admitted to bid in the auctions, provided that such action does not conflict with or undermine the provisions set out in Articles 44 to 48.
Conduct rules for persons authorised to bid on behalf of others
1. This Article shall apply to:
(a)
persons authorised to bid pursuant to Article 18(2);
(b)
investment firms and credit institutions referred to Article 18(1), points (b) and (c).
2. Persons referred to in paragraph 1 shall apply the following conduct rules in their relationship with their clients:
(a)
they shall accept instructions from their clients on comparable terms;
(b)
they shall refuse to bid on behalf of a client if they have reasonable grounds to suspect money laundering, terrorist financing, criminal activity or market abuse, subject to national legislation transposing Articles 35 and 39 of Directive (EU) 2015/849;
(c)
they may refuse to bid on behalf of a client if they have reasonable grounds to suspect that the client is unable to pay for the allowances for which it is seeking to bid;
(d)
they shall enter into a written agreement with their clients, which shall not impose any unfair conditions or restrictions on the client concerned and which shall provide for all the terms and conditions relating to the services offered, including payment and delivery of the allowances;
(e)
they may require their clients to make a deposit by way of advance payment for allowances;
(f)
they may not unduly limit the number of bids that a client might submit;
(g)
they may not prevent or restrict their clients from engaging the services of other entities eligible pursuant to Article 18(1), points (b) to (e), and Article 18(2) to bid on their behalf in the auctions;
(h)
they shall pay due regard to the interests of their clients;
(i)
they shall treat clients fairly and without discrimination;
(j)
they shall maintain adequate internal systems and procedures to process requests from clients to act as agent in an auction and to be able to participate effectively in an auction, in particular with regard to the submission of bids on behalf of their clients, the collection of payments and collateral from their clients, and the transfer of allowances to their clients;
(k)
they shall prevent the disclosure of confidential information from the part of their business responsible for receiving, preparing and submitting bids on behalf of their clients to the part of their business responsible for preparing and submitting bids on their own account or to the part of their business responsible for dealing on their own account on the secondary market;
(l)
they shall keep records of information obtained or created in their role as intermediaries handling bids on behalf of their clients in the auctions, for five years from the date of obtaining or creating the information concerned.
The amount of the deposit referred to in the first subparagraph, point (e), shall be calculated on a just and reasonable basis and shall be set out in the agreements referred to in point (d) of that subparagraph. Any part of that deposit not used to satisfy payment for allowances shall be refunded to the client within a reasonable period after the auction as stated in the agreements referred to in the first subparagraph, point (d).
3. Persons referred to in paragraph 1 shall apply the following conduct rules when bidding on their own account or on behalf of their clients:
(a)
they shall provide any information requested by any auction platform where they are admitted to bid;
(b)
they shall act with integrity, reasonable skill, care and diligence.
4. The competent national authorities designated in accordance with Regulation (EU) No 596/2014 and Directive (EU) 2015/849 by the Member States where the persons referred to in paragraph 1 are established shall be responsible for authorising such persons to carry out the activities referred to in that paragraph and for monitoring and enforcing compliance with the conduct rules set out in paragraphs 2 and 3, including the handling of any complaints made for non-compliance with such conduct rules.
5. The competent national authorities referred to in paragraph 4 shall only grant an authorisation to the persons referred to in paragraph 1 where those persons fulfil all of the following conditions:
(a)
they are of sufficiently good repute and sufficiently experienced as to ensure proper respect of the conduct rules provided for in paragraphs 2 and 3;
(b)
they have put in place the necessary processes and checks to manage conflicts of interest and to serve the best interests of their clients;
(c)
they comply with the requirements of Directive (EU) 2015/849;
(d)
they comply with any other measures deemed necessary having regard to the nature of the bidding services being offered and the level of sophistication of the clients in question in terms of their investor or trading profile as well as any risk-based assessment of the likelihood of money laundering, terrorist financing or criminal activity.
6. The competent national authorities of the Member State where the persons referred to in paragraph 1 are authorised shall monitor and enforce the conditions set out in paragraph 5. The Member State shall ensure that:
(a)
its competent national authorities have at their disposal investigative powers and sanctions that are effective, proportionate and dissuasive;
(b)
a mechanism is established for the handling of complaints and the withdrawal of authorisations where the authorised persons are in breach of their obligations pursuant to such authorisation;
(c)
its competent national authorities may withdraw the authorisation granted under paragraph 5 where an authorised person has seriously and systematically infringed the provisions set out in paragraphs 2 and 3.
7. Clients of persons referred to in paragraph 1 may direct any complaints that they may have with regard to compliance with the conduct rules set out in paragraphs 2 and 3 to the competent authorities referred to in paragraph 4 in accordance with the procedural rules laid down for the handling of such complaints.
8. Persons referred to in paragraph 1 shall be allowed, without further legal or administrative requirements of the Member States, to provide bidding services to clients referred to in Article 18(3), first subparagraph, point (a).
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
