Article 1(6) of MiFIR contains an exemption from pre- and post-trade transparency rules for transactions where the counterparty is a member of the European System of Central Banks (ESCD) and where that transaction is entered into in performance of monetary, foreign exchange and financial stability policy which that member of the ESCB is legally empowered to pursue and where that member has given prior notification to its counterparty that the transaction is exempt.
Article 1(9) of MiFIR empowers the European Commission (Commission) to adopt delegated acts in accordance with Article 50 to extend the scope of Article 1(6) MiFIR to the other central banks.
In addition, Article 1(9) of MiFIR states:
“To that end, the Commission shall, by 1 June 2015, submit a report to the European Parliament and to the Council assessing the treatment of transactions by third-country central banks which for the purposes of this paragraph includes the Bank for International Settlements. The report shall include an analysis of their statutory tasks and their trading volumes in the Union. The report shall:
- identify provisions applicable in the relevant third countries regarding the regulatory disclosure of central bank transactions, including transactions undertaken by members of the ESCB in those third countries, and
- assess the potential impact that regulatory disclosure requirements in the Union may have on third-country central bank transactions.
If the report concludes that the exemption provided for in paragraph 6 is necessary in respect of transactions where the counterparty is a third-country central bank carrying out monetary policy, foreign exchange and financial stability operations, the Commission shall provide that that exemption applies to that third-country central bank.”
The Commission has now published a report to the European Parliament and the Council of the EU on exemptions for third-country central banks and other entities under MiFIR. The report covers the Bank for International Settlements and central banks in the following third countries:
- Australia (the Reserve Bank of Australia);
- Brazil (the Central Bank of Brazil);
- Canada (the Bank of Canada);
- Hong Kong Special Administrative Region (the Hong Kong Monetary Authority);
- India (the Reserve Bank of India);
- Japan (the Bank of Japan);
- Mexico (the Bank of Mexico);
- Singapore (the Monetary Authority of Singapore);
- South Korea (the Bank of Korea);
- Switzerland (the Swiss National Bank);
- Turkey (the Central Bank of the Republic of Turkey); and
- United States of America (the Federal Reserve Bank of New York).
The Commission has concluded that it is appropriate to grant the BIS and the third country central banks listed above an exemption from the pre- and post-trade transparency requirements in accordance with Article 1(9) of MiFIR.