CHAPTER 1

In accordance with Article 9(2) of Regulation (EU) No 1095/2010, ESMA shall monitor the market for financial instruments which are marketed, distributed or sold in the Union. In accordance with Article 9(2) of Regulation (EU) No 1093/2010, EBA shall monitor the market for structured deposits which are marketed, distributed or sold in the Union. Competent authorities shall monitor the market for financial instruments and structured deposits which are marketed, distributed or sold in or from their Member State. In accordance with Article 9(5) of Regulation (EU) No 1095/2010, ESMA may, where the conditions in paragraphs 2 and 3 are fulfilled, temporarily prohibit or restrict in the Union: the marketing, distribution or sale of certain financial instruments or financial instruments with certain specified features; or a type of financial activity or practice. A prohibition or restriction may apply in circumstances, or be subject to exceptions, specified by ESMA. ESMA shall take a decision under paragraph 1 only if all of the following conditions are fulfilled: the proposed action addresses a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of the whole or part of the financial system in the Union; regulatory requirements under Union law that are applicable to the relevant financial instrument or activity do not address the threat; a competent authority or competent authorities have not taken action to address the threat or the actions that have been taken do not adequately address the threat. Where the conditions set out in the first subparagraph are fulfilled, ESMA may impose the prohibition or restriction referred to in paragraph 1 on a precautionary basis before a financial instrument has been marketed, distributed or sold to clients. When taking action under this Article, ESMA shall ensure that the action: does not have a detrimental effect on the efficiency of financial markets or on investors that is disproportionate to the benefits of the action; does not create a risk of regulatory arbitrage, and has been taken after consulting the public bodies competent for the oversight, administration and regulation of physical agricultural markets under Regulation (EC) No 1234/2007, where the measure relates to agricultural commodities derivatives. Where a competent authority or competent authorities have taken a measure under Article 42, ESMA may take any of the measures referred to in paragraph 1 without issuing the opinion provided for in Article 43. Before deciding to take any action under this Article, ESMA shall notify competent authorities of the action it proposes. ESMA shall publish on its website notice of any decision to take any action under this Article. The notice shall specify details of the prohibition or restriction and specify a time after the publication of the notice from which the measures will take effect. A prohibition or restriction shall only apply to action taken after the measures take effect. ESMA shall review a prohibition or restriction imposed under paragraph 1 at appropriate intervals and at least every three months. If the prohibition or restriction is not renewed after that three-month period it shall expire. Action adopted by ESMA under this Article shall prevail over any previous action taken by a competent authority. The Commission shall adopt delegated acts in accordance with Article 50 specifying criteria and factors to be taken into account by ESMA in determining when there is a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of the whole or part of the financial system of the Union referred to in paragraph 2(a). Those criteria and factors shall include: the degree of complexity of a financial instrument and the relation to the type of client to whom it is marketed and sold; the size or the notional value of an issuance of financial instruments; the degree of innovation of a financial instrument, an activity or a practice; the leverage a financial instrument or practice provides. In accordance with Article 9(5) of Regulation (EU) No 1093/2010, EBA may where the conditions in paragraphs 2 and 3 are fulfilled, temporarily prohibit or restrict in the Union: the marketing, distribution or sale of certain structured deposits or structured deposits with certain specified features; or a type of financial activity or practice. A prohibition or restriction may apply in circumstances, or be subject to exceptions, specified by EBA. EBA shall take a decision under paragraph 1 only if all of the following conditions are fulfilled: the proposed action addresses a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or to the stability of the whole or part of the financial system in the Union; regulatory requirements under Union law that are applicable to the relevant structured deposit or activity do not address the threat; a competent authority or competent authorities have not taken action to address the threat or the actions that have been taken do not adequately address the threat. Where the conditions set out in the first subparagraph are fulfilled, EBA may impose the prohibition or restriction referred to in paragraph 1 on a precautionary basis before a structured deposit has been marketed, distributed or sold to clients. When taking action under this Article, EBA shall ensure that the action: does not have a detrimental effect on the efficiency of financial markets or on investors that is disproportionate to the benefits of the action; and does not create a risk of regulatory arbitrage. Where a competent authority or competent authorities have taken a measure under Article 42, EBA may take any of the measures referred to in paragraph 1 without issuing the opinion provided for in Article 43. Before deciding to take any action under this Article, EBA shall notify competent authorities of the action it proposes. EBA shall publish on its website notice of any decision to take any action under this Article. The notice shall specify details of the prohibition or restriction and specify a time after the publication of the notice from which the measures will take effect. A prohibition or restriction shall only apply to action taken after the measures take effect. EBA shall review a prohibition or restriction imposed under paragraph 1 at appropriate intervals and at least every three months. If the prohibition or restriction is not renewed after that three-month period it shall expire. Action adopted by EBA under this Article shall prevail over any previous action taken by a competent authority. The Commission shall adopt delegated acts in accordance with Article 50 to specify criteria and factors to be taken into account by EBA in determining when there is a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets and to the stability of the whole or part of the financial system of the Union referred to in paragraph 2(a). Those criteria and factors shall include: the degree of complexity of a structured deposit and the relation to the type of client to whom it is marketed and sold; the size or the notional value of an issuance of structured deposits; the degree of innovation of a structured deposit, an activity or a practice; the leverage a structured deposit or practice provides. A competent authority may prohibit or restrict the following in or from that Member State: the marketing, distribution or sale of certain financial instruments or structured deposits or financial instruments or structured deposits with certain specified features; or a type of financial activity or practice. A competent authority may take the action referred to in paragraph 1 if it is satisfied on reasonable grounds that: either a financial instrument, structured deposit or activity or practice gives rise to significant investor protection concerns or poses a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of whole or part of the financial system within at least one Member State; or a derivative has a detrimental effect on the price formation mechanism in the underlying market; existing regulatory requirements under Union law applicable to the financial instrument, structured deposit or activity or practice do not sufficiently address the risks referred to in point (a) and the issue would not be better addressed by improved supervision or enforcement of existing requirements; the action is proportionate taking into account the nature of the risks identified, the level of sophistication of investors or market participants concerned and the likely effect of the action on investors and market participants who may hold, use or benefit from the financial instrument, structured deposit or activity or practice; the competent authority has properly consulted competent authorities in other Member States that may be significantly affected by the action; the action does not have a discriminatory effect on services or activities provided from another Member State; and it has properly consulted public bodies competent for the oversight, administration and regulation of physical agricultural markets under Regulation (EC) No 1234/2007, where a financial instrument or activity or practice poses a serious threat to the orderly functioning and integrity of the physical agricultural market. Where the conditions set out in the first subparagraph are fulfilled, the competent authority may impose the prohibition or restriction referred to in paragraph 1 on a precautionary basis before a financial instrument or structured deposit has been marketed, distributed or sold to clients. A prohibition or restriction may apply in circumstances, or be subject to exceptions, specified by the competent authority. The competent authority shall not impose a prohibition or restriction under this Article unless, not less than one month before the measure is intended to take effect, it has notified all other competent authorities and ESMA in writing or through another medium agreed between the authorities the details of: the financial instrument or activity or practice to which the proposed action relates; the precise nature of the proposed prohibition or restriction and when it is intended to take effect; and the evidence upon which it has based its decision and upon which it is satisfied that each of the conditions in paragraph 2 are met. In exceptional cases where the competent authority deems it necessary to take urgent action under this Article in order to prevent detriment arising from the financial instruments, structured deposits, practices or activities referred to in paragraph 1, the competent authority may take action on a provisional basis with no less than 24 hours’ written notice, before the measure is intended to take effect, to all other competent authorities and ESMA or, for structured deposits, EBA, provided that all the criteria in this Article are met and that, in addition, it is clearly established that a one month notification period would not adequately address the specific concern or threat. The competent authority shall not take action on a provisional basis for a period exceeding three months. The competent authority shall publish on its website notice of any decision to impose any prohibition or restriction referred to in paragraph 1. The notice shall specify details of the prohibition or restriction, a time after the publication of the notice from which the measures will take effect and the evidence upon which it is satisfied each of the conditions in paragraph 2 are met. The prohibition or restriction shall only apply in relation to actions taken after the publication of the notice. The competent authority shall revoke a prohibition or restriction if the conditions in paragraph 2 no longer apply. The Commission shall adopt delegated acts in accordance with Article 50 specifying criteria and factors to be taken into account by competent authorities in determining when there is a significant investor protection concern or a threat to the orderly functioning and integrity of financial markets or commodity markets or to the stability of the of the financial system within at least one Member State referred to in paragraph 2(a). Those criteria and factors shall include: the degree of complexity of a financial instrument or structured deposit and the relation to the type of client to whom it is marketed, distributed and sold; the degree of innovation of a financial instrument or structured deposit, an activity or a practice; the leverage a financial instrument or structured deposit or practice provides; in relation to the orderly functioning and integrity of financial markets or commodity markets, the size or the notional value of an issuance of financial instruments or structured deposits. ESMA or, for structured deposits, EBA shall perform a facilitation and coordination role in relation to action taken by competent authorities under Article 42. In particular ESMA or, for structured deposits, EBA shall ensure that action taken by a competent authority is justified and proportionate and that where appropriate a consistent approach is taken by competent authorities. After receiving notification under Article 42 of any action that is to be imposed under that Article, ESMA or, for structured deposits, EBA shall adopt an opinion on whether the prohibition or restriction is justified and proportionate. If ESMA or, for structured deposits, EBA considers that the taking of a measure by other competent authorities is necessary to address the risk, it shall state this in its opinion. The opinion shall be published on ESMA’s or, for structured deposits, EBA website. Where a competent authority proposes to take, or takes, action contrary to an opinion adopted by ESMA or EBA under paragraph 2 or declines to take action contrary to such an opinion, it shall immediately publish on its website a notice fully explaining its reasons for so doing.

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Source: EUR-Lex (Cellar) · retrieved 2026-09-25 · Text as adopted (Official Journal); later amendments are not incorporated in this text.