Related provisions for MAR 5A.2.3

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1A firm must:(1) execute orders on a discretionary basis in accordance with MAR 5A.3.2R;(2) unless permitted in MAR 5A.3.5R, not execute any client orders against its proprietary capital or the proprietary capital of any entity that is part of the same group or legal person as the firm; and (3) ensure that the operation of an OTF and of a systematic internaliser does not take place within the same legal entity, and that the OTF does not connect with another OTF or with a systematic
The discretion which the firm must exercise in executing a client order must be either, or both, of the following: (1) the first discretion is whether to place or retract an order on the OTF;(2) the second discretion is whether to match a specific client order with other orders available on the OTF at a given time, provided the exercise of such discretion is in compliance with specific instructions received from the client and in accordance with the firm’s obligations under article
Where the OTF crosses client orders, the firm may decide if, when and how much of two or more orders it wants to match. In addition, subject to the requirements of this section, the firm may facilitate negotiation between clients so as to bring together two or more potentially comparable trading interests in a transaction.[Note: article 20(6) of MiFID]
MAR 5A.3 does not prevent a firm from engaging another investment firm to carry out market making on an independent basis on an OTF operated by it provided the investment firm does not have close links with the firm.[Note: article 20(5) of MiFID]
A firm must not engage in:(1) matched principal trading on an OTF operated by it except in bonds, structured finance products, emission allowances and derivatives which have not been declared subject to the clearing obligation in accordance with article 5 of EMIR, and where the client has consented; or(2) dealing on own account on an OTF operated by it, excluding matched principal trading, except in sovereign debt instruments for which there is not a liquid market.[Note: article
A firm engaging in matched principal trading in accordance with MAR 5A.3.5R(1) must establish arrangements to ensure compliance with the definition of matched principal trading.[Note: article 20(1) and (7) of MiFID]
Matched principal trading does not exclude the possibility of settlement risk, and, accordingly, firms should take appropriate steps to minimise this risk. For guidance relating to the treatment of matched principal trading for the purposes of IFPRU prudential categorisation, see PERG 13 Q61 and Q64.
A firm must comply with the obligations under the following provisions of MiFID, in the course of operating an OTF:(1) articles 16(2), 16(3) (first subparagraph), 16(4), 16(5), 16(6), 16(7), 16(8), 16(9), and 16(10);(2) articles 24(1), (3), (4), (5), (9), (10) and (11);(3) articles 25(3) (except to the extent that article 25(4) applies), 25(5), and 25(6) (to the extent applicable);(4) article 27; and(5) article 28. [Note: article 20(8) of MiFID. The above MiFID provisions are
MAR 5A.3.10RRP
A firm must:(1) in respect of an OTF operated by it, or such a facility it proposes to operate, provide to the FCA a detailed explanation of:(a) why the OTF does not correspond to, and cannot operate as, an MTF, a regulated market or a systematic internaliser;(b) how discretion will be exercised in executing client orders; and(c) its use of matched principal trading; and(2) supply the information in (1) to the FCA in writing, by electronic mail to an address for the usual supervisory
MAR 5A.3.11GRP
A person operating an organised trading facility cannot also provide the service of a systematic internaliser, irrespective of whether the systematic internaliser trades different financial instruments or types of financial instruments to those traded on the OTF.
MAR 5A.5.1R applies in particular to systems and controls concerning: (1) the resilience of the firm’s trading systems;(2) its capacity to deal with peak order and message volumes;(3) the ability to ensure orderly trading under conditions of severe market stress;(4) the effectiveness of business continuity arrangements to ensure the continuity of the OTF’s services if there is any failure of its trading systems, including the testing of the OTF’s systems and controls;(5) the ability
A firm must:(1) have written agreements with all investment firms pursuing a market making strategy on trading venues operated by it (market making agreements);(2) have schemes, appropriate to the nature and scale of a trading venue, to ensure that a sufficient number of investment firms enter into market making agreements which require them to post firm quotes at competitive prices with the result of providing liquidity to the market on a regular and predictable basis; (3) monitor
A market making agreement in MAR 5A.5.3R(1) must specify:(1) the obligations of the investment firm in relation to the provision of liquidity;(2) where applicable, any obligations arising, or rights accruing, from the participation in a liquidity scheme mentioned in MAR 5A.5.3R(2); and(3) any incentives in terms of rebates or otherwise offered by the firm to the investment firm in order for it to provide liquidity to the OTF on a regular and predictable basis and, where applicable,
A firm must have the ability to:(1) temporarily halt or constrain trading on the OTF if there is a significant price movement in a financial instrument on the OTF or a related trading venue during a short period; and(2) in exceptional cases, cancel, vary, or correct, any transaction.[Note: article 48(5) of MiFID]
For the purposes of MAR 5A.5.5R, and to avoid significant disruptions to the orderliness of trading, a firm must calibrate the parameters for halting trading in a way which takes into account the following: (1) the liquidity of different asset classes and subclasses;(2) the nature of the trading venue market model; and(3) the types of users.[Note: article 48(5) of MiFID]
A firm must have systems and procedures to notify the FCA if:(1) an OTF operated by it is material in terms of the liquidity of the trading of a financial instrument in the EEA; and(2) trading is halted in that instrument.[Note: article 48(5) of MiFID]
A firm which permits direct electronic access to an OTF it operates must:(1) not permit members or participants of the OTF to provide such services unless they are:(a) investment firms authorised under MiFID; or(b) CRD credit institutions; or(c) third country firms providing the direct electronic access in the course of exercising rights under article 46.1 of MiFIR; or(d) third country firms providing the direct electronic access in the course of exercising rights under article
MAR 5A.5.10RRP
Where a firm permits co-location in relation to the OTF, its rules on co-location services must be transparent, fair and non-discriminatory. [Note: article 48(8) of MiFID and MiFID RTS 10]
MAR 5A.5.11RRP
A firm’s fee structure, for all fees it charges and rebates it grants in relation to the OTF, must:(1) be transparent, fair and non-discriminatory; (2) not create incentives to place, modify or cancel orders, or execute transactions, in a way which contributes to disorderly trading or market abuse; and(3) impose market making obligations in individual financial instruments or suitable baskets of financial instruments for any rebates that are granted. [Note: article 48(9) of
MAR 5A.5.13RRP
A firm must require members and participants of an OTF operated by it to flag orders generated by algorithmic trading in order for the firm to be able to identify the following:(1) different algorithms used for the creation of orders; and (2) the persons initiating those orders. [Note: article 48(10) of MiFID]
1A firm must have:(1) transparent rules and procedures for fair and orderly trading; [Note: article 18(1) of MiFID](2) objective criteria for the efficient execution of orders2;[Note: article 18(1) of MiFID](3) arrangements for the sound management of the technical operations of the facility, including the establishment of effective contingency arrangements to cope with the risks of systems disruption;[Note: article 18(1) of MiFID](4) transparent rules regarding the criteria for
A firm must:(1) ensure the OTF has at least three materially active members or users who each have the opportunity to interact with all the others in respect of price formation;[Note: article 18(7) of MiFID](2) provide the following to the FCA: (a) a detailed description of the functioning of the OTF, including any links to or participation by a regulated market, an MTF or OTF or systematic internaliser owned by the same firm; and(b) a list of its members, participants and users;
Where a transferable security, which has been admitted to trading on a regulated market, is also traded on an OTF without the consent of the issuer, the firm operating the OTF must not make the issuer subject to any obligation relating to initial, ongoing or ad hoc financial disclosure with regard to that OTF.[Note: article 18(8) of MiFID]
REC 3.14A.1GRP
1The purpose of REC 3.14A is to ensure that the FCA3is informed of planned changes to a UK RIE’s4 markets and their regulatory status as either a regulated market, MTF or OTF4. [Note:MiFID RTS 3 and MiFID ITS 4, Annex IV provide for the format for notification by the operator of an MTF or OTF to its Home State competent authority of any arrangements to facilitate access to and trading on the trading venue by remote users, members or participants within the territory of another
REC 3.14A.4RRP
Where a UK RIE proposes to operate a new MTF or OTF4 or close an existing MTF or OTF4 it must give the FCA3notice of that event and the information specified for the purposes of this rule in REC 3.14A.5 R, at the same time as that proposal is first formally communicated to its members or shareholders (or any group or class of them).3
REC 3.14A.5RRP
The following information is specified for the purposes of REC 3.14A.4 R:(1) [Note: REC 2.16A.1(2) requires the FCA to be provided with a detailed description of the operation of an MTF or OTF. The description must be provided in the form set out in MiFID ITS 19.]4(2) Where4 the UK RIE proposes to close a MTF or OTF4, the name of that MTF or OTF4.
Schedule to the Recognition Requirements Regulations, Paragraph 9A-9H31(1)[A UK RIE] operating a multilateral trading facility or an organised trading facility3 must also operate a regulated market3.(2)[A UK RIE] operating a multilateral trading facility or an organised trading facility3 must comply with those requirements of-(a)Chapter I of Title II of [MiFID];3 and(b)any directly applicable EU legislation made under Chapter I;3which are applicable to a market operator3 ... operating
3In paragraphs 9H(1) and (2) of the Schedule to the Recognition Requirements Regulations where the UK RIE must provide information in respect of an organised trading facility operated by it, such information must be provided to the FCA in writing and delivered by any one of the methods set out in REC 3.2.3R.
REC 2.16A.2GRP
1In determining whether a UK RIE operating a multilateral trading facility (including an SME growth market) or organised trading facility)3 complies with this chapter3, the FCA will have regard to the compliance of the UK RIE with equivalent recognition requirements. A UK RIE operating such facilities should also have regard to the guidance set out in MAR 5 (Multilateral trading facilities (MTFs)) and MAR 5A (Organised trading facilities (OTFs))3. 22
1Under section 312B of the Act, the FCA5 may prohibit an EEA market operator from making or, as the case may be, continuing arrangements in the United Kingdom, to facilitate access to, or use of, a regulated market,6multilateral trading facility or organised trading facility6 operated by the operator if:5(1) the FCA5 has clear and demonstrable grounds for believing that the operator has contravened a relevant requirement;6 and5(2) the FCA5 has first complied with sections 312B(3)
The operator's right to make arrangements in the United Kingdom, to facilitate access to, or use of, a regulated market,6multilateral trading facility or organised trading facility6, operated by the operator may be reinstated (together with its exempt person status) if the FCA5 is satisfied that the contravention which led the FCA5 to exercise its prohibition power has been remedied.55
REC 3.15.2RRP
Where, for any reason, an RIE halts trading in a financial instrument on a trading venue which is material in terms of liquidity in that financial instrument,4it must immediately give the FCA3notice of that event, particulars of that financial instrument4, and the reasons for the action taken.[Note: article 48(5) of MiFID and MiFID RTS 12]43
REC 3.15.2ARRP
1When a UK RIE suspends trading on a trading venue4 in any financial instrument, it must immediately give the FCA3notice of that event and relevant information including particulars of that financial instrument and the reasons for the action taken. [Note: articles 32(2) and 52(2), paragraph 14 of MiFID. REC 2.6.6UK(4)5 requires that the FCA be notified when a trading suspension for a financial instrument is lifted or a financial instrument is re-admitted to trading. MiFID ITS
1A firm must: (1) not exercise any power under its rules to suspend or remove from trading any financial instrument which no longer complies with its rules, where such a step would be likely to cause significant damage to the interest of investors or the orderly functioning of the trading venue; (2) where it does suspend or remove from trading a financial instrument, also suspend or remove derivatives that relate or are referenced to that financial instrument, where necessary
1A firm must: (1) clearly inform its users of their respective responsibilities for the settlement of transactions executed in its OTF; and (2) have in place the arrangements necessary to facilitate the efficient settlement of the transactions concluded under its systems. [Note: article 18(6) of MiFID] [Note: in relation to derivative transactions, MiFID RTS 26 contains requirements on the systems for clearing of such transactions]
REC 3.16.1GRP
The purpose of REC 3.16 is to ensure that the FCA1receives a copy of the UK recognised body's plans and arrangements for ensuring business continuity if there are major problems with its computer systems. The FCA1does not need to be notified of minor revisions to, or updating of, the documents containing a UK recognised body's business continuity plan (for example, changes to contact names or telephone numbers). [Note:MiFID RTS 7 requires that the operator of a trading venue assess
1A firm must:(1) have effective arrangements and procedures relevant to its OTF for the regular monitoring of the compliance by its users with its rules; and (2) monitor the transactions undertaken by its users under its systems in order to identify breaches of those rules, disorderly trading conditions, system disruptions in relation to a financial instrument, or conduct that may involve market abuse. [Note: article 31(1) of MiFID]
A firm (other than the Society or8 an MTF or OTF8 operator in relation to its MTF or OTF8 business5) must notify to the FCA (in its own capacity and, if applicable, in its capacity as collection agent for the PRA) the value (as at the valuation date specified in Part 5 of FEES 4 Annex 1AR6) of each element of business on which the periodic fee payable by the firm is to be calculated.12
3To the extent that a firm4 has provided the information required by FEES 4.4.7 D to the FCA as part of its compliance with another provision of the Handbook, it is deemed to have complied with the provisions of that direction.444
Table of application, notification, vetting and other fees payable to the FCA3231Part 1: Application, notification and vetting fees3131(1) Fee payer(2) Fee payable (£)37Due date(a) Any applicant for Part 4A permission (including an incoming firm applying for top-up permission) whose fee is not payable pursuant to sub- paragraph (zza)52 of this table26(1) Unless (2),41 (3) or (4)41 applies, in1 respect of a particular application, the highest of the tariffs set out in FEES 3 Annex
REC 3.18.1GRP
(1) The purpose of REC 3.18 is to enable the FCA4 to monitor changes in the types of member admitted by UK recognised bodies and to ensure that the FCA4has notice of foreign jurisdictions in which the members of UK recognised bodies are based. UK recognised bodies may admit persons who are not authorised persons or persons who are not located in the United Kingdom, provided that the recognition requirements2or (for RAPs) RAP recognition requirements continue to be met.44(2) REC
REC 6.1.1GRP
The Act prohibits any person from carrying on, or purporting to carry on, regulated activities in the United Kingdom unless that person is an authorised person or an exempt person. If an overseas investment exchange wishes to undertake regulated activities in the United Kingdom, it will need to:2(1) obtain a Part 4A permission2 from the FCA2; 22(2) (in the case of an EEA firm or a Treaty firm) qualify for authorisation under Schedule 3 (EEA Passport Rights) or Schedule 4 (Treaty
1Under section 312C of the Act, if a UK RIE wishes to make arrangements in an EEA State other than the UK to facilitate access to or use of a regulated market,2multilateral trading facility, organised trading facility4 or auction platform2 operated by it, it must give the FCA3written notice of its intention to do so. The notice must:3(1) describe the arrangements; and(2) identify the EEA State in which the UK RIE intends to make them.[Note:MiFID RTS 3 and MiFID ITS 4, Annex
4A firm must:(1) ensure the MTF has at least three materially active members or users who each have the opportunity to interact with all the others in respect of price formation;[Note: article 18(7) of MiFID](2) have arrangements to ensure it is adequately equipped to manage the risks to which it is exposed, to implement appropriate arrangements and systems to identify all significant risks to its operation and put in place effective measures to mitigate those risks;[Note: article
REC 3.14.2ARRP
1When a UK RIE removes a financial instrument from trading on a trading venue4, it must immediately give the FCA3notice of that event and relevant information including particulars of that financial instrument, any derivative that is also removed from trading that relates or is referenced to that financial instrument,4 and the reasons for the action taken.[Note: articles 32(2) and 52(2), paragraph 14 of MiFID. REC 2.6.6UK(4)5 requires that the FCA be notified when a trading suspension
MAR 10.3.3RRP
(1) This rule applies to a UK firm operating a multilateral trading facility or an OTF and a UK branch of a third country investment firm operating a multilateral trading facility or an OTF.(2) A firm must apply position management controls which enable an MTF or OTF at least to: (a) monitor the open interest positions of persons;(b) access information, including all relevant documentation, from persons about: (i) the size and purpose of a position or exposure entered into;(ii)