Case number: OIC-134198-V4R4V9

Note: This decision was appealed to the High Court on 14 July 2023.

 

Whether the Central Bank was justified, under sections 15(1)(a), 41(1)(a), 42(i), and Schedule 1, Part 1(b)(i) of the FOI Act, in refusing the applicant’s request for daily trading volumes of certain securities

 

10 May 2023

 

Background

In a request dated 22 November 2022 the applicant sought access to the daily trading volume of three securities in respect of two named companies from the time they were first registered to trade on FIRDS (Financial Instruments Reference Data System) until the date of the request. In a decision dated 19 December 2022, the Central Bank refused the request. It said that it could generate a report that would hold the type of information sought but that the FOI Act does not apply to such records, pursuant to Schedule 1, Part 1(b)(i) of the Act.

The applicant sought an internal review of that decision following which the Central Bank affirmed its decision to refuse the request. In addition to Schedule 1, Part 1(b)(i), it said that sections 42(i) and 41(1) of the FOI Act, and section 33AK of the Central Bank Act 1942, prohibited the disclosure of the information sought. On 19 January 2023, the applicant applied to this Office for a review of the Central Bank’s decision.

In the course of the review, in response to the applicant’s claim that the Central Bank could provide him with aggregate and anonymous data such that Schedule 1, Part 1(b)(i) would not apply, the Central Bank said that it did not hold such records, citing section 15(1)(a) and 17(4) of the FOI Act. The applicant was informed of this and invited to comment. The applicant provided further comments in response.

I have now completed my review in accordance with section 22(2) of the FOI Act. In carrying out my review, I have had regard to the submissions made by the Central Bank and by the applicant, and to the correspondence summarised above. I have decided to conclude this review by way of a formal, binding decision.

Scope of Review

This review is concerned with:

(i) whether the Central Bank was justified in refusing access to the record it identified as relevant to the request on the basis that the FOI Act does not apply to it, pursuant to Schedule 1, Part 1(b)(i) and section 42(i) of the Act, or alternatively that disclosure of the record is prohibited by law by virtue of section 41(1) and section 33AK of the Central Bank Act 1942, and

(ii) whether the Central Bank was justified in refusing access, under section 15(1)(a) and 17(4) to aggregate and anonymised records containing the trading volumes of the securities at issue for specific time periods, on the grounds that it doesn’t hold such records and that creating them would involve taking steps beyond what is envisaged as reasonable by section 17(4)(a), and furthermore that the FOI Act would not apply to such records further to section 42(i) and that their disclosure would be prohibited by section 41(1) of the FOI Act.

Analysis and Findings

In its submissions to this Office, the Central Bank provided some background to the basis on which it holds the records sought by the applicant. It said that the European Securities and Markets Authority (ESMA) is the EU’s financial markets regulator and supervisor. The financial markets’ supervisory framework is underpinned by a number of EU regulations and directives, including Regulation (EU) No 600/2014 on Markets in Financial Instruments and Amending Regulation (EU) 648/2012 (MiFIR), and Directive 2014/65/EU - Markets in Financial Instruments Directive II (MiFID II). The European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No 375 of 2017) transposed the MiFIR regime into Irish law and appointed the Central Bank as Ireland’s National Competent Authority (NCA) for MiFIR.

The Central Bank said that under article 26 of MiFIR, investment firms submit details of the transactions they execute to their home NCA no later than the close of business the following working day. Files with the transaction reports are created by the home competent authority for each relevant NCA and are uploaded by the home competent authority to ESMA’s Transaction Reporting Exchange Mechanism system (TREM). Each NCA retrieves its files from TREM (e.g. the relevant competent authority for the financial instrument to which the transaction relates and the competent authority that supervises the trading platform on which the transaction was executed). As the NCA in Ireland for MiFIR, the Central Bank receives approximately five million transaction reports in XML (machine readable format) daily from Irish firms.

The record held

The Central Bank said that it holds one record relevant to the applicant’s request, comprising two reports detailing transactions in the specified securities within the specified period which were received by the Central Bank. It said that the first transaction report contains details of the sale of a security by a credit institution to a natural person (including personal details of that person), the date of the sale, the number of shares sold and the price. It said that the second transaction report contains details of the purchase of the same security by a credit institution from a natural person with the date of the purchase, the number of shares purchased and the price also disclosed.

The Central Bank said that its primary submission was that it is not a public body for the purposes of the FOI Act insofar as it relates to this record. I will therefore consider Schedule 1, Part 1 first.

Schedule 1, Part 1, paragraph (b)(i)

The Central Bank is a partially included agency for the purposes of the FOI Act. Further to paragraph (b)(i) of Part 1 of Schedule 1 to the FOI Act, it is not an FOI body in so far as it relates to:

“(i) records held by it containing –

(i) confidential personal information relating to the financial or business affairs of any individual, or

(ii) confidential financial, commercial or regulatory information relating to the business affairs of any person who holds or has held or who has applied for a licence, authorisation, approval or registration from the Central Bank of Ireland, or is otherwise regulated by the Central Bank of Ireland, that the Central Bank of Ireland has received for the purposes of performing, or in the discharge of, any of its statutory functions (other than when that information is contained in records in summary or aggregate form, such that persons cannot be identified from the record) …”.

The Central Bank’s submissions

In relation to (I), the Central Bank said that the record it holds contains confidential personal information on an individual relating to his/her financial and business affairs including details of the transactions executed by the individual and more particularly, as regards the individual’s financial affairs, the price paid / received and the quantity of shares bought / sold. It also includes the person’s name and date of birth. The Central Bank said that it received this report in its capacity as the NCA for the purposes of MiFIR, and it therefore received this information for the purposes of carrying out its statutory functions.

Furthermore, in relation to (II), the Central Bank said that the record also contains confidential commercial and regulatory information relating to the investment firm operating the trading venue on which the transactions were carried out. It said that the firm is authorised as an investment firm under Regulation 8(3) and deemed authorised under Regulation 5(2) of S.I. No 375 of 2017, and is thus regulated by the Central Bank. It said that the information at issue was received by the Central Bank in its role as the NCA for the MiFIR regime, which is one of its statutory functions.

In relation to the exception for information “in summary or aggregate form, such that persons cannot be identified from the record”, the Central Bank said the record identifies specific firms and also contains information specific to individuals, and thus the exception is not applicable.

In summary, the Central Bank’s position is that Schedule 1 Part 1(b)(i) of the FOI Act applies to the record at issue. Accordingly, it said the FOI Act does not apply to the record and no right of access exists.

The applicant’s submissions

In his submissions, the applicant said that the Central Bank’s decision did not follow the law, was not in the public interest, and was unreasonable and disproportionate. He said that the information should be disclosed as a fundamental necessity to transparency, accountability and the rule of law. He said that he was not seeking the identity of traders and that daily trading volume for a stock from a trading venue doesn’t identify the traders, and is a summary of trading by its nature.

He said that releasing trading volume is a normal, rational and regular disclosure by trading venues throughout Europe, North America and Ireland and that he has made similar requests across the European Union and has learned that most jurisdictions already post this information online for the public to disseminate, including in Ireland where Euronext Dublin publishes volume on its website for all stocks traded on its exchange.

In support of this argument, the applicant submitted a report by the U.S. Securities and Exchange Commission focused on the January 2021 trading activity of one of the companies in question, the most famous of the "meme stocks", a phenomenon whereby online posts about certain companies can influence investor behaviour and drive peaks and crashes in the company’s share price. He said that this brought the information that he is seeking front and centre into the public interest.

My Analysis

I will address the applicant’s arguments as to whether the Central Bank could have created summary/anonymised reports under my consideration of section 15(1)(a) and 42(i) below; the issue to be addressed here is whether the record that the Central Bank has identified as relevant to the applicant’s request falls for consideration under the FOI Act at all i.e. is the Central Bank an FOI body insofar as it relates to this particular record.

The applicant’s arguments are centred largely on the public interest in favour of release. The question of whether the record is covered by paragraph (b)(i) of Part 1 of Schedule 1 to the FOI Act does not require a consideration of the public interest. If the record falls within the definition at paragraph (b)(i), it falls outside the scope of the FOI Act and that is the end of the matter.

Having carefully considered the matter and having regard to the explanation provided by the Central Bank as to the basis on which it holds the record, I am satisfied that it contains confidential personal information relating to the financial affairs of an individual(s) and confidential financial information relating to a firm(s) regulated by the Central Bank, all of which was received by the Central Bank for the purposes of it performing its statutory functions. I am not satisfied that the information is in summary form such that persons (either natural persons or body corporates) cannot be identified. For these reasons, I find that the record is covered by paragraph (b)(i) of Part 1 of Schedule 1 and that the FOI Act does not apply to it.

Other anonymised records

It is the applicant’s position that the Central Bank could provide him with records containing the information that he is seeking, but in an aggregated and anonymised form that would not identify any persons. The Central Bank said that it does not hold such a record and that therefore its position is to refuse the request under section 15(1)(a). The FOI Act does not require public bodies to create records if none exist, apart from a specific requirement, under section 17(4), to extract records or existing information held on electronic devices by the taking of ‘reasonable steps’. The Central Bank said that to create such a record would, in its view, require going beyond such reasonable steps as envisaged in section 17(4). The Central Bank also said that, leaving aside the issue of whether or not it could create a report containing the aggregate information sought by the applicant, such a record would still not be released under the FOI Act, as the Act would not apply to it by virtue of section 42(i), as well as its disclosure being prohibited by section 41(1)(a).

Both parties made detailed submissions on section 15(1)(a) and 17(4). However, it seems to me that section 41(1)(a) and 42(i) should be considered first, as they provide that the FOI Act does not apply to certain records held by the Central Bank or that the disclosure of such records is prohibited by law. If section 41(1)(a) or 42(i) applies, the arguments on sections 15(1)(a) and 17(4) will be redundant. I will examine section 42(i) first.

Section 42(i): Restriction of the FOI Act

Section 42(i) provides that the FOI Act does not apply to:

“a record held by the Central Bank of Ireland, the disclosure of which is prohibited by –

  1. the Rome Treaty,
  2. the ESCB Statute, or
  3. any of the Supervisory Directives,

within the meaning of the Central Bank Act 1942”.

I note from the submissions that while the Central Bank regulates the trading venue(s) on which transactions were carried out (as reflected in the consideration of the record above), it does not regulate the securities that are the focus of the applicant’s FOI request. It said that these securities are supervised by another European regulator. Therefore, in order to create a report containing the information sought by the applicant, the Central Bank would have to access data available to it via the TREM system, that was provided by another NCA.

In its internal review decision, as well as in its submissions to this Office, the Central Bank referred to article 76 of MiFID II which sets out obligations of professional secrecy as follows:

“1. Member States shall ensure that competent authorities, all persons who work or who have worked for the competent authorities or entities to whom tasks are delegated pursuant to Article 67(2), as well as auditors and experts instructed by the competent authorities, are bound by the obligation of professional secrecy. They shall not divulge any confidential information which they may receive in the course of their duties, save in summary or aggregate form such that individual investment firms, market operators, regulated markets or any other person cannot be identified, without prejudice to requirements of national criminal or taxation law or the other provisions of this Directive or of Regulation (EU) No 600/2014.”

I am satisfied that the Central Bank is a “competent authority” for the purposes of MiFID II. I am also satisfied that the Central Bank is subject to the obligations of professional secrecy set out in article 76 above in relation to information shared from other NCAs, as is the case in this instance. While the applicant is seeking records without the details of any specific individual traders, I do not accept that such records could be considered to be “in summary or aggregate form such that individual investment firms, market operators, regulated markets or any other person cannot be identified” as they would necessarily identify the specific securities for which the trading volumes are being sought, which would in turn identify the companies.

As MiFID II falls into the category of a Supervisory EU Legal Act in section 33AK(10) of the Central Bank Act 1942, I am satisfied that disclosure of the records sought by the applicant is prohibited by a Supervisory Directive within the meaning of the Central Bank Act 1942, and that section 42(i) applies. This means that, regardless of whether or not the Central Bank could create the type of anonymised report sought by the applicant by the taking of reasonable steps, the FOI Act would not apply to such a record anyway. As no potential right of access exists under the FOI Act, there is no need for me to address the arguments made by the parties under section 15(1)(a) and 17(4). Neither do I need to examine section 41(1).

Decision

Having carried out a review under section 22(2) of the FOI Act, I hereby affirm the Central Bank’s decision. I find that it was justified, pursuant to paragraph (b)(i) of Part 1 of Schedule 1, and section 42(i) of the FOI Act, in refusing access to the records sought on the grounds that the FOI Act does not apply to them.

Right of Appeal

Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.

 

Emer Butler
Investigator