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Article 1: Amendments to Directive 2009/65/EC
Article 12 of UCITS is amended as follows:
1
in the second subparagraph of paragraph 1, point (a) is replaced by the following: ( *1 ) DORA of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector and amending Regulations CRAR, OTC, MIFIR, ISSCSDR and Regulation 2016/1011 ( OJ L333, 27.12.2022, p.1 ).’;"
‘a
has sound administrative and accounting procedures, control and safeguard arrangements for electronic data processing, including with regard to network and information systems that are set up and managed in accordance with DORA of the European Parliament and of the Council ( *1 ) , as well as adequate internal control mechanisms, including, in particular, rules for personal transactions by its employees or for the holding or management of investments in financial instruments in order to invest on its own account and ensuring, at least, that each transaction involving the UCITS may be reconstructed according to its origin, the parties to it, its nature, and the time and place at which it was effected and that the assets of the UCITS managed by the management company are invested according to the fund rules or the instruments of incorporation and the legal provisions in force;
2
paragraph 3 is replaced by the following:
Article 2: Amendments to Directive 2009/138/EC
SII is amended as follows:
1
in Article 41, paragraph 4 is replaced by the following: ( *2 ) DORA of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector and amending Regulations CRAR, OTC, MIFIR, ISSCSDR and Regulation 2016/1011 ( OJ L333, 27.12.2022, p.1 ).’;"
2
in Article 50(1), points (a) and (b) are replaced by the following:
‘a
the elements of the systems referred to in Article 41, Article 44, in particular the areas listed in Article 44(2), and Articles 46 and 47, other than the elements concerning information and communication technology risk management;
Article 3: Amendment to Directive 2011/61/EU
Article 18 of AIFMD is replaced by the following:
‘Article 18
General principles
General principles
Article 4: Amendments to Directive 2013/36/EU
Directive 2013/36 is amended as follows:
1
in Article 65(3), point (a)(vi) is replaced by the following: ( *4 ) DORA of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector and amending Regulations CRAR, OTC, MIFIR, ISSCSDR and Regulation 2016/1011 ( OJ L333, 27.12.2022, p.1 ).’;"
‘vi
third parties to whom the entities referred to in points (i) to (iv) have outsourced functions or activities, including ICT third-party service providers referred to in Chapter V of DORA of the European Parliament and of the Council ( *4 ) ;
2
in Article 74(1), the first subparagraph is replaced by the following: ‘Institutions shall have robust governance arrangements, which include a clear organisational structure with well-defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks they are or might be exposed to, adequate internal control mechanisms, including sound administration and accounting procedures, network and information systems that are set up and managed in accordance with DORA, and remuneration policies and practices that are consistent with and promote sound and effective risk management.’;
3
in Article 85, paragraph 2 is replaced by the following:
4
in Article 97(1), the following point is added:
‘d
risks revealed by digital operational resilience testing in accordance with Chapter IV of DORA.’.
Article 5: Amendments to Directive 2014/59/EU
Directive 2014/59 is amended as follows:
1
Article 10 is amended as follows:
a
in paragraph 7, point (c) is replaced by the following:
‘c
a demonstration of how critical functions and core business lines could be legally and economically separated, to the extent necessary, from other functions so as to ensure continuity and digital operational resilience upon the failure of the institution;’;
b
in paragraph 7, point (q) is replaced by the following: ( *5 ) DORA of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector and amending Regulations CRAR, OTC, MIFIR, ISSCSDR and Regulation 2016/1011 ( OJ L333, 27.12.2022, p.1 ).’;"
‘q
a description of essential operations and systems for maintaining the continuous functioning of the institution’s operational processes, including network and information systems as referred to in DORA of the European Parliament and of the Council ( *5 ) ;
c
2
the Annex is amended as follows:
a
in Section A, point (16) is replaced by the following:
‘16
arrangements and measures necessary to maintain the continuous functioning of the institution’s operational processes, including network and information systems that are set up and managed in accordance with DORA;’;
b
Section B is amended as follows:
i
point (14) is replaced by the following:
‘14
an identification of the owners of the systems identified in point (13), service level agreements related thereto, and any software and systems or licenses, including a mapping to their legal entities, critical operations and core business lines, as well as an identification of critical ICT third-party service providers as defined in Article 3, point (23), of DORA;’;
ii
the following point is inserted:
‘14a
the results of institutions’ digital operational resilience testing under DORA;’;
c
Section C is amended as follows:
i
point (4) is replaced by the following:
‘4
the extent to which the service agreements, including contractual arrangements on the use of ICT services, that the institution maintains are robust and fully enforceable in the event of resolution of the institution;’;
ii
the following point is inserted:
‘4a
the digital operational resilience of the network and information systems supporting critical functions and core business lines of the institution, taking into account major ICT-related incident reports and the results of digital operational resilience testing under DORA;’.
Article 6: Amendments to Directive 2014/65/EU
MIFID is amended as follows:
1
Article 16 is amended as follows:
a
b
in paragraph 5, the second and third subparagraphs are replaced by the following: ‘An investment firm shall have sound administrative and accounting procedures, internal control mechanisms and effective procedures for risk assessment. Without prejudice to the ability of competent authorities to require access to communications in accordance with this Directive and MIFIR, an investment firm shall have sound security mechanisms in place to ensure, in accordance with the requirements laid down in DORA, the security and authentication of the means of transfer of information, to minimise the risk of data corruption and unauthorised access and to prevent information leakage, thereby maintaining the confidentiality of the data at all times.’;
2
Article 17 is amended as follows:
a
paragraph 1 is replaced by the following:
b
in paragraph 7, point (a) is replaced by the following:
‘a
the details of organisational requirements laid down in paragraphs 1 to 6, other than those related to ICT risk management, which are to be imposed on investment firms providing different investment services, investment activities, ancillary services or combinations thereof, whereby the specifications in relation to the organisational requirements laid down in paragraph 5 shall set out specific requirements for direct market access and for sponsored access in such a way as to ensure that the controls applied to sponsored access are at least equivalent to those applied to direct market access;’;
3
in Article 47, paragraph 1 is amended as follows:
a
point (b) is replaced by the following:
‘b
to be adequately equipped to manage the risks to which it is exposed, including to manage ICT risk in accordance with Chapter II of DORA, to implement appropriate arrangements and systems for identifying significant risks to its operation, and to put in place effective measures to mitigate those risks;’;
b
point (c) is deleted;
4
Article 48 is amended as follows:
a
paragraph 1 is replaced by the following:
b
paragraph 6 is replaced by the following:
c
paragraph 12 is amended as follows:
i
point (a) is replaced by the following:
‘a
the requirements to ensure trading systems of regulated markets are resilient and have adequate capacity, except the requirements related to digital operational resilience;’;
ii
point (g) is replaced by the following:
‘g
the requirements to ensure appropriate testing of algorithms, other than digital operational resilience testing, so as to ensure that algorithmic trading systems including high-frequency algorithmic trading systems cannot create or contribute to disorderly trading conditions on the market.’.
Article 7: Amendments to Directive (EU) 2015/2366
PSD2 is amended as follows:
1
in Article 3, point (j) is replaced by the following:
‘j
services provided by technical service providers, which support the provision of payment services, without them entering at any time into possession of the funds to be transferred, including processing and storage of data, trust and privacy protection services, data and entity authentication, information and communication technology (ICT) and communication network provision, provision and maintenance of terminals and devices used for payment services, with the exclusion of payment initiation services and account information services;’;
2
Article 5(1) is amended as follows:
a
the first subparagraph is amended as follows:
i
‘e
a description of the applicant’s governance arrangements and internal control mechanisms, including administrative, risk management and accounting procedures as well as arrangements for the use of ICT services in accordance with DORA of the European Parliament and of the Council ( *7 ) , which demonstrates that those governance arrangements and internal control mechanisms are proportionate, appropriate, sound and adequate;
ii
point (f) is replaced by the following:
‘f
a description of the procedure in place to monitor, handle and follow up a security incident and security related customer complaints, including an incident reporting mechanism which takes account of the notification obligations of the payment institution laid down in Chapter III of DORA;’;
iii
point (h) is replaced by the following:
‘h
a description of business continuity arrangements including a clear identification of the critical operations, effective ICT business continuity policy and plans and ICT response and recovery plans and a procedure to regularly test and review the adequacy and efficiency of such plans in accordance with DORA;’;
b
the third subparagraph is replaced by the following: ‘The security control and mitigation measures referred to in point (j) of the first subparagraph shall indicate how they ensure a high level of digital operational resilience in accordance with Chapter II of DORA, in particular in relation to technical security and data protection, including for the software and ICT systems used by the applicant or the undertakings to which it outsources the whole or part of its operations. Those measures shall also include the security measures laid down in Article 95(1) of this Directive. Those measures shall take into account EBA’s guidelines on security measures as referred to in Article 95(3) of this Directive, when in place.’;
3
in Article 19(6), the second subparagraph is replaced by the following: ‘Outsourcing of important operational functions, including ICT systems, shall not be undertaken in such way as to impair materially the quality of the payment institution’s internal control and the ability of the competent authorities to monitor and retrace the payment institution’s compliance with all of the obligations laid down in this Directive.’;
4
in Article 95(1), the following subparagraph is added: ‘The first subparagraph is without prejudice to the application of Chapter II of DORA to:
a
payment service providers referred to in points (a), (b) and (d) of Article 1(1) of this Directive;
b
account information service providers referred to in Article 33(1) of this Directive;
c
payment institutions exempted pursuant to Article 32(1) of this Directive; and
d
electronic money institutions benefitting from a waiver as referred to in Article 9(1) of Directive 2009/110.’;
5
in Article 96, the following paragraph is added:
6
in Article 98, paragraph 5 is replaced by the following:
Article 8: Amendment to Directive (EU) 2016/2341
Article 21(5) of Directive 2016/2341 is replaced by the following:
‘5. Member States shall ensure that IORPs take reasonable steps to ensure continuity and regularity in the performance of their activities, including the development of contingency plans. To that end, IORPs shall employ appropriate and proportionate systems, resources and procedures, and shall, in particular, set up and manage network and information systems in accordance with DORA of the European Parliament and of the Council ( *8 ) , where applicable.
Article 9: Transposition
1
By 17 January 2025, Member States shall adopt and publish the measures necessary to comply with this Directive. They shall immediately inform the Commission thereof.
They shall apply those measures from 17 January 2025.
When Member States adopt those measures, they shall contain a reference to this Directive or shall be accompanied by such reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States.
They shall apply those measures from 17 January 2025.
When Member States adopt those measures, they shall contain a reference to this Directive or shall be accompanied by such reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States.
2
Member States shall communicate to the Commission the text of the main measures of national law which they adopt in the field covered by this Directive.
Article 10: Entry into force
This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union . Official Journal of the European Union
Article 11: Addressees
This Directive is addressed to the Member States.
Recital 1
The Union needs to adequately and comprehensively address digital risks to all financial entities stemming from an increased use of information and communication technology (ICT) in the provision and consumption of financial services, thereby contributing to the realisation of the potential of digital finance, in terms of boosting innovation and promoting competition in a secure digital environment.
Recital 2
Financial entities are heavily reliant on the use of digital technologies in their daily business. It is therefore of utmost importance to ensure the operational resilience of their digital operations against ICT risk. This need has become even more pressing due to the growth of breakthrough technologies in the market, in particular technologies enabling digital representations of value or of rights to be transferred and stored electronically, using distributed ledger or similar technology (crypto-assets), and of services related to those assets.
Recital 3
At Union level, the requirements related to the management of ICT risk in the financial sector are currently provided for in Directives 2009/65/EC ( 4 ) , 2009/138/EC ( 5 ) , 2011/61/EU ( 6 ) , 2013/36/EU ( 7 ) , 2014/59/EU ( 8 ) , 2014/65/EU ( 9 ) , (EU) 2015/2366 ( 10 ) and (EU) 2016/2341 ( 11 ) of the European Parliament and of the Council. Those requirements are diverse and occasionally incomplete. In some cases, ICT risk has been addressed only implicitly as part of operational risk, and in other cases it has not been addressed at all. Those issues are remedied by the adoption of DORA of the European Parliament and of the Council ( 12 ) . Those Directives should therefore be amended to ensure consistency with that Regulation. This Directive enacts a set of amendments that are necessary to bring legal clarity and consistency in relation to the application, by financial entities authorised and supervised in accordance with those Directives, of various digital operational resilience requirements that are necessary in the pursuit of their activities and in the provision of services, thereby guaranteeing the smooth functioning of the internal market. It is necessary to ensure the adequacy of those requirements in relation to market developments, while encouraging proportionality in particular with regard to the size of financial entities and the specific regimes to which they are subject, with the aim of reducing compliance costs.
Recital 4
In the area of banking services, Directive 2013/36 currently sets out only general internal governance rules and operational risk provisions containing requirements for contingency and business continuity plans which implicitly serve as a basis for addressing ICT risk. However, in order to address ICT risk explicitly and clearly, the requirements for contingency and business continuity plans should be amended to also include business continuity plans and response and recovery plans concerning ICT risk, in accordance with the requirements laid down in DORA. Furthermore, ICT risk is only implicitly included, as part of operational risk, in the supervisory review and evaluation process (SREP) performed by competent authorities and the criteria for its assessment are currently defined in the Guidelines on ICT Risk Assessment under the Supervisory Review and Evaluation process (SREP), issued by the European Supervisory Authority (European Banking Authority) (EBA), established by ESAEBAR of the European Parliament and of the Council ( 13 ) . In order to provide legal clarity and ensure that bank supervisors effectively identify ICT risk, and monitor its management by financial entities, in line with the new framework on digital operational resilience, the scope of the SREP should also be amended to explicitly refer to the requirements laid down in DORA and to cover in particular the risks revealed by major ICT-related incident reports and by the results of the digital operational resilience testing performed by financial entities in accordance with that Regulation.
Recital 5
Digital operational resilience is essential to preserve the critical functions and core business lines of a financial entity in the event of its resolution, and thereby to avoid disruption to the real economy and to the financial system. Major operational incidents can hamper the capacity of a financial entity to continue operating and can jeopardise resolution objectives. Certain contractual arrangements on the use of ICT services are essential to ensure operational continuity and to provide the necessary data in the event of resolution. In order to be aligned with the objectives of the Union framework for operational resilience, Directive 2014/59 should be amended accordingly, with a view to ensuring that information relating to operational resilience is taken into account in the context of resolution planning and the assessment of financial entities’ resolvability.
Recital 6
MIFID sets out more stringent ICT risk rules for investment firms and trading venues that are engaging in algorithmic trading. Less detailed requirements apply to data reporting services and to trade repositories. Also, MIFID contains only limited references to control and safeguard arrangements for information processing systems and to the use of appropriate systems, resources and procedures to ensure continuity and regularity of business services. Furthermore, that Directive should be aligned with DORA as regards continuity and regularity in the provision of investment services and in the performance of investment activities, operational resilience, the capacity of trading systems, and the effectiveness of business continuity arrangements and risk management.
Recital 7
PSD2 sets out specific rules on ICT security controls and mitigation elements for the purposes of obtaining an authorisation to provide payment services. Those authorisation rules should be amended to align them with DORA. Furthermore, in order to reduce the administrative burden and to avoid complexity and duplicative reporting requirements, the incident reporting rules in that Directive should cease to apply to payment service providers which are regulated under that Directive and also subject to DORA, thus allowing those payment service providers to benefit from a single, fully harmonised incident reporting mechanism with regard to all operational or security payment-related incidents, irrespective of whether such incidents are ICT-related.
Recital 8
Directives 2009/138/EC and (EU) 2016/2341 partially capture ICT risk within their general provisions on governance and risk management, leaving certain requirements to be specified through delegated acts with or without specific references to ICT risk. Similarly, only very general rules apply to managers of alternative investment funds subject to AIFMD and management companies subject to UCITS. Those Directives should therefore be aligned with the requirements laid down in DORA with regard to the management of ICT systems and tools.
Recital 9
In many cases, further ICT risk requirements have already been laid down in delegated and implementing acts, adopted on the basis of draft regulatory technical standards and draft implementing technical standards developed by the competent European Supervisory Authority. Since the provisions of DORA henceforth constitute the legal framework for ICT risk in the financial sector, certain empowerments to adopt delegated and implementing acts in Directives 2009/65/EC, 2009/138/EC, 2011/61/EU and 2014/65/EU should be amended to remove the ICT risk provisions from the scope of those empowerments.
Recital 10
To ensure a consistent implementation of the new framework on digital operational resilience for the financial sector, Member States should apply the provisions of national law transposing this Directive from the date of application of DORA.
Recital 11
Directives 2009/65/EC, 2009/138/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU, 2014/65/EU, (EU) 2015/2366 and (EU) 2016/2341 have been adopted on the basis of Article 53(1) or Article 114 of the Treaty on the Functioning of the European Union (TFEU) or both. The amendments in this Directive have been included in a single legislative act due to the interconnectedness of the subject matter and objectives of the amendments. Consequently, this Directive should be adopted on the basis of both Article 53(1) and Article 114 TFEU.
Recital 12
Since the objectives of this Directive cannot be sufficiently achieved by the Member States as they entail the harmonisation of requirements already contained in Directives but can rather, by reason of the scale and effects of the action, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.
Recital 13
In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents ( 14 ) , Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the legislator considers the transmission of such documents to be justified,
Footnote p0: Done at Strasbourg, 14 December 2022.