MAR 7A.4 Requirements when providing direct electronic access
Application
1This section applies to a firm which provides the services of DEA to a trading venue.
Systems and controls
A firm must have in place systems and controls which:
- (1)
ensure it conducts an assessment and review of the suitability of clients using the service;
- (2)
prevent clients using the service from exceeding appropriate pre-set trading and credit thresholds;
- (3)
prevent trading by clients which:
- (a)
may create risks to the firm;
- (b)
or may create, or contribute to, a disorderly market; or
- (c)
could be contrary to the Market Abuse Regulation or the rules of the trading venue.
- (a)
[Note: article 17(5) of MiFID]
Client dealings
- (1)
A firm must monitor the transactions made by clients using the service to identify:
- (a)
infringements of the rules of the trading venue; or
- (b)
disorderly trading conditions; or
- (c)
conduct which may involve market abuse and which is to be reported to the FCA.
- (a)
- (2)
A firm must have a binding written agreement with each client which:
- (a)
details the essential rights and obligations of both parties arising from the provision of the service; and
- (b)
states that the firm is responsible for ensuring the client complies with the requirements of MiFID and the rules of the trading venue.
- (a)
[Note: article 17(5) of MiFID] Notifications
Notifications
A firm must immediately notify the FCA2 if it is providing DEA services.2
[Note: article 17(5) of MiFID and MiFID RTS 6 specifying the organisational requirements of investment firms providing direct electronic access]
A firm must provide the following, at the FCA’s request, within 14 days from receipt of the request:
- (1)
a description of the systems mentioned in MAR 7A.4.2R(1);
- (2)
evidence that those systems have been applied; and
- (3)
information stored in accordance with MAR 7A.4.6R.
[Note: article 17(5) of MiFID]
Record keeping
A firm must arrange for records to be kept:
- (1)
on the matters referred to in MAR 7A.4.2R in relation to its systems and controls; and
- (2)
in order to enable it to meet any requirement imposed on it under MAR 7A.4.5R.
[Note: article 17(5) of MiFID]