The temporary intervention powers of the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) are mentioned in general terms in Article 9(5) of their respective founding regulations and are subject to the conditions and assessment criteria detailed in the relevant EU legislation. Therefore, apart from a few, limited exceptions, these powers are compliant with the Meroni prohibition. To the extent that no discretion is given to the said authorities, there is no need to limit their liability. Though encroaching on the freedom to carry out a banking or financial activity, temporary intervention powers are compliant with Article 52 of the EU Charter of Fundamental Rights and the conditions laid down therein.
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As regards the European Banking Authority (EBA), see Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC  OJ L 331/12. As regards the European Securities and Markets Authority (ESMA), see Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC  OJ L 331/84.
Thus far, EBA and ESMA have issued warnings on, amongst others: Investments in Foreign Exchange (Forex) (ESMA 2011/412—December 2011); the Pitfalls of Online Investments (ESMA 2012/557—September 2012); Contracts for Difference (CfD) (EBA/ESMA 2013/267—April 2013); Virtual Currencies (EBA/WRG/2013/01—December 2013); Risk of Investing in Complex Products (ESMA 2014/154—February 2014); and CFDs, Binary Options and other speculative products (ESMA 2016/1166—July 2016). All the above acts are available on the EBA and ESMA websites. In some Member States, tasks related to consumer protection are traditionally conferred on the national competent authorities (NCAs). For instance, under Art. 117(8) of Italy’s Consolidated Law on Banking (Legislative Decree 385/1993), the Bank of Italy is vested with the power to ‘establish that certain contracts or securities, designated by a particular name or on the basis of specific qualifying criteria, shall have a standardised content […]’. Similar powers are conferred on Consob (the Italian Companies and Stock Exchange Commission) under Art. 95(4) of the Italian Consolidated Law on Financial Intermediation (Legislative Decree No. 58/1998). According to this provision, Consob ‘shall determine which financial instruments or products, admitted for trading on regulated markets or widely distributed among the public […] and identified by a particular denomination or on the basis of specific qualifying criteria, must have a typical determined content’. The power to determine the types of contract admissible to a Stock Exchange, once conferred on Consob under Article 3, lit. f), of the Law 216/1974, is currently under the remit of the market operator managing a regulated market, by virtue of Article 62(2) of the Italian Consolidated Law on Financial Intermediation.
Under Art. 129 of the Italian Consolidated Law on Banking, as amended by the Legislative Decree 415/1996, the Bank of Italy enjoyed the powers to postpone or prohibit the offer of debt securities where—due to their features or amount—the efficiency or stability of the financial market might be threatened. The current text of Art. 129 has been significantly altered by Art. 1(7) of Legislative Decree 303/2006 and the Bank of Italy is now allowed only to ‘require issuers and offerers to provide periodic reports, data and information on the financial instruments issued or offered in Italy or issued or offered abroad by Italian companies and entities, in order to acquire information on developments in financial products and markets’.
Though Art. 9(5) generically refers to the ‘legislative acts referred to in Art. 1(2)’, including both directives and regulations, it goes without saying that only directly applicable EU law may confer powers on an EU authority.
In the same vein, recital 12 of each ESA’s founding regulation stipulates, amongst others, that the EU Authority should (i) ‘be able to temporarily prohibit or restrict certain financial activities that threaten the orderly functioning and integrity of financial markets or the stability of the whole or part of the financial system in the Union in the cases specified and under the conditions laid down in the legislative acts referred to in this Regulation’ and (ii) ‘if required to make such temporary prohibition in the case of an emergency situation, […] should do so in accordance with and under the conditions laid down in this Regulation’.
See the Commission’s Report on the reform of the ESAs of 8 August 2014, COM(2014) 509 final, p. 8. Available at: http://ec.europa.eu/internal_market/finances/docs/committees/140808-esfs-review_en.pdf.
See COM(2017) 536 final, available at: https://ec.europa.eu/transparency/regdoc/rep/1/2017/EN/COM-2017-536-F1-EN-MAIN-PART-1.PDF.
Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps  OJ L 86/1.
 OJ L 274/1. Art. 24(3) stipulates that ‘for the purposes of Art. 28(2)(a), 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 shall mean: (a) any threat of serious financial, monetary or budgetary instability concerning a Member State or the financial system within a Member State when this may seriously threaten the orderly functioning and integrity of financial markets or the stability of the whole or part of the financial system in the Union; (b) the possibility of a default by any Member State or supranational issuer; (c) any serious damage to the physical structures of important financial issuers, market infrastructures, clearing and settlement systems, and supervisors which may seriously affect cross-border markets in particular where such damage results from a natural disaster or terrorist attack when this may seriously threaten the orderly functioning and integrity of financial markets or the stability of the whole or part of the financial system in the Union; (d) any serious disruption in any payment system or settlement process, in particular when it is related to interbank operations, that causes or may cause significant payments or settlement failures or delays within the Union’s cross-border payment systems, especially when these may lead to the propagation of financial or economic stress in the whole or part of the financial system in the Union’.
Under Art. 4b(2) and (3) of the Italian Consolidated Law on Financial Intermediation: (i) Consob is the national competent authority for receiving the notifications, implementing the measures and exercising the functions and powers provided for in the EU short-selling regulation in relation to shares and financial instruments other than sovereign debt and sovereign Credit Default Swaps (CDS); (ii) the Bank of Italy and Consob are the competent authorities for exercising the ordinary functions and powers provided for in said EU regulation in relation to sovereign debt and sovereign CDS.
 OJ L 352/1. Indeed, under Art. 16 of the said regulation, EIOPA may temporarily prohibit or restrict the marketing, distribution or sale of certain insurance-based investment products or insurance-based investment products with certain specified features or a type of financial activity or practice of an insurance or reinsurance undertaking, ‘where 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’.
Temporary intervention powers by national competent authorities are provided for under Art. 42 of MiFIR and Art. 69(2)(o) and (p) of MiFID II. Moreover, recital 29 of MiFIR refers to ‘the exercise of such powers by competent authorities and, in exceptional cases, by ESMA or EBA’. Under Art. 7a, para. 1 to 3, of the Italian Consolidated Law on Financial Intermediation, the Bank of Italy and Consob are the national authorities competent, amongst others, for adopting the supervisory measures provided for by Art. 39, para. 3, Art. 42 and Art. 43, para. 3, of MiFIR: Consob is competent as regards the protection of investors, the orderly functioning and soundness of the financial markets or of the commodity markets; the Bank of Italy is competent in relation to the stability of the whole or part of the financial system. Consob’s powers concerning the limits to the positions in derivatives on commodities are provided for under Art. 68 of the Italian Consolidated Law on Financial Intermediation. A historical overview of the powers conferred to the Italian competent authorities on stock market contracts can be found in D’Ambrosio R. , pp. 278, 285, 316 and 356. For an overview of pre-MiFIR product intervention measures in Member States’ jurisdictions, see the Securities and Markets Stakeholder Group (SMSG)’s ‘Own initiative report on product intervention under MiFIR’ of 16.6.2017, available on ESMA’s website.
Powers of national competent authorities are provided for under Art. 17 of Regulation 1286/2014. According to Art. 4e, para. 2 and 3, of the Italian Consolidated Law on Financial Intermediation, powers under Art. 17 of the EU regulation mentioned above are shared between Consob and the Italy’s Institute for the Supervision of Insurance (IVASS): Consob is the competent authority as regards investor protection or the integrity and orderly functioning of the markets, without prejudice to IVASS’s powers vis-à-vis insurance intermediaries; IVASS is the competent authority (i) as regards investor protection or the integrity and orderly functioning of the markets in the case of products distributed by insurance intermediaries; and (ii) as regards the profiles involved in the stability of the financial and insurance system or a part of the same, and regarding the risks inherent to the stability of the insurance companies.
Including commodity derivative markets in accordance with the objectives listed in Art. 57(1) of MiFID II and including in relation to delivery arrangements for physical commodities.
In the case under MiFIR Art. 45, also for determining the reduction of a position or an exposure and situations where a risk of regulatory arbitrage may arise from the measure adopted by the authority.
Criteria and factors to be taken into account by EIOPA in determining when there is 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 of the Union are listed in the Commission Delegated Regulation (EU) 2016/1904 of 14 July 2016 supplementing Regulation (EU) No 1286/2014 of the European Parliament and of the Council with regard to product intervention  OJ L 295/11.
For the case under MiFIR Art. 45, the criteria and factors shall take into account the regulatory technical standards referred to in Art. 57(3) of MiFID II (Directive 2014/65/EU published in  OJ L 173/349) and shall differentiate between situations where ESMA takes action because a competent authority has failed to act and those where ESMA addresses an additional risk which the competent authority is not sufficiently able to address pursuant to Art. 69(2)(j) or (o) of MiFID II (Art. 45(10) MiFIR).
In  OJ L 87/90.
The same holds true for the EIOPA’s powers under Art. 16 of Regulation No 1286/2014.
See Art. 1(5a) MiFIR, as per Art. 6 of the draft regulation on the ESAs’ reform.
See Art. 41(8), according to which the 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 are basically related to structured deposits.
Cross-selling identifies any investment services offered together with other services or products as part of a package or as a condition for the same agreement or package: see Art. 4, n. 42, of MiFID II.
Case C-270/12 United Kingdom vs Parliament and the Council, EU:C:2014:18.
See paras. 44–54.
See ECJ, Case C-9/56 Meroni vs High Authority, EU:C:1958:7.
See, for example, the conditions laid down in Art. 24(3)(a) of Commission Delegated Regulation No 918/2012—‘any threat of serious financial, monetary or budgetary instability concerning a Member State or the financial system within a Member State when this may seriously threaten the orderly functioning and integrity of financial markets or the stability of the whole or part of the financial system in the Union’; in Articles 19(2)(u) and 20(2)(u) of Commission Delegated Regulation No 2017/567—in consideration of ‘whether a financial instrument, financial activity or financial practice may threaten investors’ confidence in the financial system’; and in Art. 1(2)(q) of Commission Delegated Regulation No 1904/ 2016—in consideration of ‘whether an insurance-based investment product, financial activity or financial practice may threaten investors’ confidence in the financial system’.
Indeed, they are the same as those specifically conferred on national competent authorities in accordance with the EU legislative acts and may be used only after (i) a request has been addressed to the relevant competent authorities and (ii) the latter has failed to comply with such a request.
On the subject, see D’Ambrosio .
See Case C-352/98 Laboratoires Pharmaceutiques Bergaderm SA v Commission, EU:C:2000:361, paras. 39–47.
‘Institutions’ include both credit institutions and investment firms: Art. 4, para. 1, No. 3, CRR, i.e. Regulation No 575/2013  OJ L 176/1.
Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC  OJ L 176/338. See also Art. 16(2)(e) of Regulation No 1024/2013  OJ L 287/63.
Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council  OJ L 173/90.
See also Art. 13 of Regulation No 806/2014  OJ L 225/1.
See Case C-604/11 Genil 48 SL v Bankinter, EU:C:2013:344, para. 39 and Case C-248/11 Nilaş and Others, EU:C:2012:166, para. 48.
See Case C-526/14 Tadej Kotnik and others v Državni zbor Republike Slovenije, EU:C:2016:767, paras. 69 and 91; Case C-41/15 Gerard Dowling and others v Minister for Finance, EU:C:2016:836, para. 50; Joined Cases C-8/15 P to C-10/15 P Ledra Advertising Ltd and others v Commission and ECB, EU:C:2016:701, para. 74.
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D’Ambrosio, R.: Storia della legislazione bancaria, finanziaria e assicurativa. Dall’Unità d’Italia al 2011. In: Galanti, E. (ed.) La Borsa e la Finanza, Collana storica della Banca d’Italia, Marsilio, Venezia (2012)
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The author is a lawyer at the Bank of Italy. Views expressed by the author are his own and do not necessarily represent those of the Bank of Italy.
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D’Ambrosio, R. The temporary intervention powers of the European Banking Authority and the European Securities and Markets Authority: content and limits. ERA Forum 19, 33–47 (2018). https://doi.org/10.1007/s12027-018-0501-z
- Orderly functioning and integrity of the financial markets
- Stability of financial system
- Investors protection concern
- Meroni prohibition
- Freedom to carry out a business