The Irish Presidency of the EU Council submitted a consolidated compromise text to Member States on Friday 2 October on the broad ‘MISP’ package, which aims to integrate the European financial market infrastructure and its supervisory structure. Member States’ ambassadors to the EU (Coreper) will examine the proposal on Wednesday 7 October to prepare for the meeting of finance ministers that is scheduled two days later, a meeting at which they could reach an initial general approach on the legislative package.
According to the compromise texts seen by Agence Europe, and a working document prepared by Dublin, the EU27 have moved closer to an agreement on many of the issues left unresolved at the end of the Cyprus Presidency (see EUROPE 13897/21). The Irish Presidency is now of the opinion that only two political decisions are needed to finalise the EU Council’s position: the funding of the European Securities and Markets Authority (ESMA) and the criteria for defining “significant” trading platforms.
With regard to the latter point, Dublin proposes focusing the criteria for “significance” on the market share and cross-border activity of the platforms. In particular, the Presidency has dropped the possibility of placing a platform under ESMA’s direct supervision solely because it belongs to the same group as a significant Central Counterparty (‘CCP’) or Central Securities Depository (‘CSD’) in another Member State.
According to the European Commission, around eight trading platform operators would be affected. At the same time, the compromise preserves a role for national authorities in monitoring market abuse.
“The Presidency’s compromise text maintains the bulk of the Commission’s proposal and delivers on the core objectives while reflecting significant negotiations and trade-offs. (...) Reflecting Member States’ views, a compromise text across the entire package is now presented for final agreement”, the Presidency notes in its working document.
Post-trade. Dublin proposes, in particular, to ease the transition to the future Settlement Finality Regulation, which will replace the current directive. European and third country systems that are already recognised could avoid repeating the entire designation or registration procedure if they meet the new requirements.
The Presidency also clarifies the protections that European participants in a system established in a third country would enjoy in the event of insolvency.
Asset management. Dublin proposes assisting the operation of asset management groups active in several EU countries so that they can more easily share staff, systems and expertise. Managers would, however, remain responsible for activities entrusted to other entities in their group.
The compromise also provides for better coordination between supervisors of large cross-border groups and simplified authorisation and passport procedures. Member States could also allow their funds to choose a depositary established in another EU country.
“They were the three most contentious issues, and we found a very balanced compromise, which Member States have supported. We’re therefore very confident on that side of the package”, a senior European diplomat said on Tuesday afternoon.
DLT. In response to the limited take-up of the DLT pilot regime, Dublin proposes substantially raising the activity thresholds for infrastructure operating under it. The main threshold would rise to €300 billion, compared with €10 billion for the simplified regime and €50 billion for specific services provided separately.
The compromise also broadens the range of eligible instruments and operators, including certain crypto-asset trading platforms. At the same time, Dublin proposes applying identical activity thresholds across the EU, without allowing Member States to set different ones.
See the Presidency’s working document: https://aeur.eu/f/ns8; the consolidated text of the ‘master directive’: https://aeur.eu/f/ns9; the consolidated text of the ‘master regulation’: https://aeur.eu/f/nsa; and that of the future Settlement Finality Regulation: https://aeur.eu/f/nsb (Original version in French by Bernard Denuit)