The European Securities and Markets Authority
(ESMA).has proposed
procedural rules allowing it to fine derivatives trade repositories under its
jurisdiction pursuant to the European Markets Infrastucture Regulation (EMIR),
which gives ESMA direct supervision of trade repositories. ESMA must assess and examine the
applications of trade repositories for registration and, once the registration
is granted, carry out their on-going supervision.
When the conditions in EMIR are fulfilled, ESMA may
also recognize trade repositories authorized and subject to effective
supervision in the U.S. or other non-E.U. third countries which have been
recognized by the European Commission as
having an equivalent and enforceable regulatory
framework and which have entered
into an international agreement with the E.U.,
as well as into cooperation arrangements.
Pursuant to Article 65 of EMIR, when ESMA finds that a
trade repository has intentionally or negligently committed one of the infringements listed in
Annex I of EMIR, it must impose a fine in accordance with the relevant
provisions of Article 65. The Commission
must approve the procedural rules proposed by ESMA for imposing such a fine.
ESMA proposes that a person subject
to investigation would have the right to
be heard at different stages of the procedure.
One of the stages at which the person subject to investigation has the
right to be heard is during and after the completion of the investigation by
the investigating officer. After the
completion of the investigation, the investigating officer has to produce a
statement of findings setting out the facts and the reasons for which they are
liable to constitute one or more of the infringements listed in the Annex I of
EMIR, including any aggravating or mitigating factors of these infringements.
The person subject to investigation must be given the
right to comment on the
statement of findings. In its written submissions, the
person subject to investigation should be allowed to comment on the facts set
out in the statement of findings, including to set out all the facts known to
it which are relevant to its defense.
ESMA considers that another stage where the right to
be heard should be guaranteed is where the complete file of the investigation
is submitted to the ESMA Board of Supervisors
for deliberation and the adoption of a decision. On the basis of the
statement of findings and the written submissions and, if relevant, the minutes
of the submissions made at an oral hearing, ESMA must decide whether to close
the case or impose a fine or a periodic
penalty payment relating to a fine on the person subject to investigation.
If ESMA introduces a material change to the statement
of findings, it must give the person subject to investigation another
opportunity to exercise its rights of defense by way of written submissions. If
ESMA adopts a decision imposing a penalty on the person subject to
investigation, it must notify the person of that decision. In the case of a
fine, this notification must be done immediately.