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CHAPTER XVU.K.AUCTION SURVEILLANCE, REMEDIAL MEASURES AND SANCTIONS

[F1Article 53 U.K. Monitoring of auctions

1. By the end of each month, the auction platform appointed pursuant to Article 26(1) or Article 30(1) 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 under 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 while carrying out its functions pursuant to Article 27 or Article 31(1);

(g) any breach of this Regulation or non-conformity with the objectives of Article 10(4) of Directive 2003/87/EC that the auction platform has been made aware while carrying out its functions pursuant to Article 27 or Article 31(1) of this Regulation;

(h) follow-up to any information reported under points (a) to (g).

In addition, by 31 January of each year, the auction platform shall also provide a summary and an analysis of these monthly reports of the previous year.

2. The auction platform appointed pursuant to Article 26(1) or Article 30(1) of this Regulation shall provide the reports under paragraph 1 to the Commission, its appointing Member States and its competent national authority designated in accordance with Article 22 of Regulation (EU) No 596/2014.

3. The relevant contracting authorities shall monitor the implementation of the contracts appointing the auction platforms. The Member States appointing an auction platform pursuant to Article 30(1) 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, on behalf of the Member States participating in the joint action pursuant to Article 26(1), and the Member States appointing an auction platform pursuant to Article 30(1) shall publish summary reports in respect of the elements listed in points (a) to (h) of paragraph 1 of this Article.

5. Auctioneers, auction platforms and the competent national authorities supervising them shall actively cooperate and, upon request, provide the Commission with any information in their possession relating to the auctions, as is reasonably required for the monitoring of the auctions.

6. The competent national authorities supervising credit institutions and investment firms and the competent national authorities supervising persons authorised to submit bids on behalf of others pursuant to Article 18(2) shall, within their competence, actively cooperate with the Commission, as is reasonably required for the monitoring of the auctions.

7. The obligations imposed on the competent national authorities in paragraphs 5 and 6 shall take into account professional secrecy considerations to which they are subject under Union law.]

Textual Amendments

[F2Article 54 U.K. Monitoring the relationship with bidders

1. An auction platform appointed pursuant to Article 26(1) or 30(1) shall monitor the relationship with bidders admitted to bid in its auctions throughout its subsistence, by doing the following:

(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 19(1), (2) and (3) with its market conduct rules;

[F1(c) monitoring transactions undertaken by persons admitted to bid pursuant to Articles 19(1), (2) and (3) and by persons as defined in Article 3(26) 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 point (a) of the first subparagraph, the auction platform concerned 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 appointed pursuant to Article 26(1) or 30(1) shall ensure that the documents, data or information it holds on a bidder are kept up-to-date. For this purpose, such an auction platform may:

[F1(a) request any information of the bidder, pursuant to Article 19(2) and (3) 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 its termination;]

(b) require any person admitted to bid to re-submit an application for admission to bid at regular intervals;

[F1(c) require any person admitted to bid to promptly notify the auction platform concerned of any changes to the information submitted to it pursuant to Article 19(2) and (3) and Article 20(5) and (7).]

3. An auction platform appointed pursuant to Article 26(1) or 30(1) shall keep records of:

(a) the application for admission to bid submitted by an applicant, pursuant to Article 19(2) and (3), 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, pursuant to points (a) and (c) of paragraph 1, following an applicant’s admission to bid;

(c) all information relating to a given bid submitted by a given bidder in an auction, including any withdrawal or modification of such bids, pursuant to the second subparagraph of Article 6(3) 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 appointed pursuant to Article 26(1) or 30(1) 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.]

Textual Amendments

[F1Article 55 U.K. Notification of money laundering, terrorist financing or criminal activity

1. The competent national authorities referred to in Article 48(1) of Directive (EU) 2015/849 shall monitor and take the necessary measures to ensure compliance of an auction platform appointed pursuant to Article 26(1) or 30(1) of this Regulation with the customer due diligence measures referred to in Article 19(2)(e) and Article 20(10) of this Regulation, with the obligation to refuse to grant admission to bid, revoke or suspend any admission to bid already granted pursuant to Article 21(1) and (2) of this Regulation, with the monitoring and record keeping requirements of Article 54 of this Regulation and with the notification requirements of the paragraphs 2 and 3 of this Article.

The competent national authorities referred to in the first subparagraph shall have the powers provided for in the national measures transposing Article 48(2) and (3) of Directive (EU) 2015/849.

An auction platform appointed pursuant to Article 26(1) or 30(1) may be held liable for infringements of Article 20(7) and (10), Article 21(1) and (2), and Article 54 of this Regulation and paragraphs 2 and 3 of this Article. The national measures transposing Articles 58 to 62 of Directive (EU) 2015/849 shall apply in this regard.

2. An auction platform appointed pursuant to Article 26(1) or 30(1), its directors and employees, shall cooperate fully with the FIU by promptly:

(a) informing the FIU, including by filing a report, on their own initiative, where they know, suspect or have reasonable grounds to suspect that funds in relation to the auctions, regardless of the amount involved, 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.

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.

The national measures transposing the compliance management and communication policies and procedures, referred to in Article 33(2) of Directive (EU) 2015/849, shall designate the person or persons responsible for forwarding information pursuant to this Article.

4. The Member State in whose territory an auction platform appointed pursuant to Article 26(1) or 30(1) of this Regulation is situated shall ensure that the national measures transposing Articles 37 to 39, 42, Article 45(1) and Article 46 of Directive (EU) 2015/849 apply to the auction platform concerned.]

Textual Amendments

Article 56U.K.Notification of market abuse

[F11. An auction platform appointed pursuant to Article 26(1) or 30(1) of this Regulation, shall report to the competent national authorities in accordance with Article 16 of Regulation (EU) No 596/2014 and with the national measures transposing Article 54 of Directive 2014/65/EU, 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 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 wrongdoing referred to in paragraph 1.]

Textual Amendments

Article 57U.K.Maximum bid-size and other remedial measures

[F11. 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 any auction platform after consulting the Commission and obtaining its opinion thereon, provided that implementation of a maximum bid-size or any other 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 a percentage of the total number of auctioned allowances in any given year, whichever may be 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.

Textual Amendments

[F2Article 58 U.K. Market conduct rules or any other contractual arrangements

Articles 53 to 57 shall be without prejudice to any other action that an auction platform appointed pursuant to Article 26(1) or 30(1) is entitled to take under its market conduct rules or any 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 of Articles 53 to 57.]

Textual Amendments

Article 59U.K.Conduct rules for other persons authorised to bid on behalf of others pursuant to Article 18(1)(b) and (c) and Article 18(2)

1.This Article shall apply to:

(a)persons authorised to bid pursuant to Article 18(2)[F1.]

[F3((b)] F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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;

[F1(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. Agreements entered into shall not impose any unfair conditions or restrictions on the client concerned. They shall provide for all the terms and conditions relating to the services offered including in particular 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)(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 who request them to submit bids on their behalf in the auctions;

(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, collect payment and collateral from and transfer allowances to clients for whom they act;

(k)they shall prevent the disclosure of confidential information from that part of their business responsible for receiving, preparing and submitting bids on behalf of their clients to that part of their business responsible for preparing and submitting bids on their own account or to that 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 point (e) shall be calculated on a just and reasonable basis.

The method of calculating the deposit referred to in point (e) shall be set out in the agreements entered into pursuant to point (d).

Any part of the deposit referred to in point (e) not used to satisfy payment for allowances shall be refunded to the payee within a reasonable period after the auction as stated in the agreements entered into pursuant to 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:

[F1(a) they shall provide any information requested by any auction platform where they are admitted to bid to fulfil its functions under this Regulation;]

(b)they shall act with integrity, reasonable skill, care and diligence.

4.The competent national authorities designated 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 provided for 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 the 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 serve the best interests of their clients;

[F1(c) they comply with the requirements of national legislation transposing 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 listed in paragraph 5. The Member State shall ensure that:

(a)its competent national authorities have at their disposal the necessary 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 a person referred to in paragraph 1 has seriously and systematically infringed the provisions of paragraphs 2 and 3.

[F47. Clients of bidders referred to in paragraph 1 may direct any complaints that they may have with regard to compliance with the conduct rules provided for in paragraphs 2 and 3 to the competent authorities mentioned in paragraph 4 in accordance with the procedural rules laid down for the handling of such complaints in the Member State where the persons referred to in paragraph 1 are supervised.]

8.Persons referred to in paragraph 1 that are admitted to bid at an auction platform pursuant to Articles 18, 19 and 20 shall be allowed, without further legal or administrative requirements of the Member States, to provide bidding services to clients referred to in point (a) of Article 19(3).

Textual Amendments