(1)

In accordance with Article 48f and 48g of Regulation (EU) 2016/1011 the European Securities and Markets Authority (‘ESMA’) is empowered to impose fines and periodic penalty payments under certain conditions on the benchmark administrators under its supervision. Article 48i(10) of Regulation (EU) 2016/1011 requires the Commission to specify the rules of procedure for the exercise of the power to impose these fines or periodic penalty payments including the rights of the defence, the collection of fines or periodic penalty payments and the limitation periods for the imposition and enforcement of penalties.

(2)

When ESMA finds that there are serious indications of possible existence of facts liable to constitute one or more infringements of the requirements set out in Article 42 of (EU) 2016/1011 for benchmark administrators under its supervision, ESMA appoints an independent investigation officer within ESMA to investigate the matter. Upon completion of its work, the investigation officer should transmit a complete file to ESMA. Being informed of these findings and having the opportunity to respond to them is integral to the right of defence. Therefore, the person under investigation should be informed of the investigation officer’s findings, and should have the opportunity to respond to these findings within a reasonable time limit. The persons subject to the investigation should be allowed to be assisted by a counsel of their choice. The investigation officer should consider, whether, as a result of the submissions made by the person subject to the investigation, it is necessary to amend the statement of findings before submitting it to ESMA.

(3)

ESMA should assess the completeness of the file submitted by the investigation officer based on a list of documents. To ensure that the person subject to the investigation is able to adequately prepare their defence, before adopting a final decision with regard to fines or supervisory measures, ESMA should make sure that they are given the opportunity to provide further written comments.

(4)

In order to ensure that the person subject to the investigation cooperates with an investigation, ESMA should be able to take certain coercive measures. When ESMA has taken a decision requiring a person to bring an infringement to an end, or has requested to supply complete information or to submit complete records, data or any other material, or has taken a decision to conduct an on-site inspection, it may impose periodic penalty payments in order to compel the person subject to the investigation to comply with the decision taken. Before imposing periodic penalty payments ESMA should provide the person the opportunity to provide written submissions.

(5)

As the investigation officer carries out their work independently, ESMA should not be bound by the file they prepared. However, to ensure that the person subject to the investigation is able to adequately prepare their defence, where ESMA disagrees, they should, be informed and should be given the opportunity to respond.

(6)

To ensure that the person subject to the investigation is able to adequately prepare their defence, they should be informed and should have the opportunity to respond where ESMA agrees with all or part of the findings of the investigation officer.

(7)

The right to be heard should be weighed against the need, under specific circumstances, for urgent action by ESMA. Where urgent action pursuant to Article 48e of Regulation (EU) 2016/1011 is warranted, the right to be heard of the person subject to the investigation should not be an impediment to ESMA taking urgent measures. In such cases, the right to be heard of the person subject to the investigation should be assured as soon as possible after taking the decision. The procedure should nonetheless grant the right of the person subject to the investigation to be heard by the investigation officer.

(8)

ESMA’s power to impose a periodic penalty payment should be exercised with due regard for the right to defence and should not be maintained beyond the period necessary. Where ESMA makes a decision to impose a periodic penalty payment, the person concerned should therefore have the opportunity to be heard and any penalty payment should no longer be due as of the moment the person concerned complies with ESMA’s order to which it relates.

(9)

The files prepared by ESMA and the investigation officer contain information that is indispensable to the person concerned in preparing for judicial or administrative proceedings. After a person subject to investigation has received the notification of statement of finding either from the investigation officer or from ESMA, the person should be entitled to have access to the file subject to the legitimate interest of other persons in the protection of their business secrets. The use of file documents accessed should only be permitted for judicial or administrative procedures in relation to infringements of Article 42 of Regulation (EU) 2016/1011.

(10)

Both the power to impose fines and periodic penalty payments and the power to enforce fines and periodic penalties should be exercised within a reasonable time, and should therefore be subject to a limitation period. For reasons of consistency, limitation periods for the imposition and enforcement of fines or periodic penalty payments should take into account existing Union legislation applicable to the imposition and enforcement of penalties on supervised entities and ESMA’s experience in applying such legislation. In order for ESMA to ensure safekeeping of collected fines and periodic penalties, ESMA should deposit them on interest-bearing accounts that are opened exclusively for the purpose of a single fine or periodic penalty payments aiming at ending a single infringement. As a matter of budgetary prudence, ESMA should only transfer the amounts to the Commission once the decisions are final due to the rights to appeal being exhausted or lapsed.

(11)

In accordance with Regulation (EU) 2021/168 of the European Parliament and of the Council (2) third country benchmarks can be used in the Union without the need for the relevant administrators to seek equivalence, recognition or endorsement in a transitional period extended until 2023. During this transitional period, recognition in the Union is an opt-in regime for benchmark administrators located in third countries, which indicates that their benchmarks will remain available for use in the Union after the transitional period ends. As a consequence, during such period, provisions on fines should apply only to administrators located in third countries which have voluntarily applied for recognition before the expiry of the transitional period introduced by Regulation (EU) 2021/168 and where the relevant national competent authority or ESMA has granted recognition.

(12)

In order to ensure the smooth application of the new supervisory powers attributed to ESMA, this Regulation should enter into force as a matter of urgency,