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Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.

You are viewing the version of the document as on 2021-01-01.

Article 6 Conformance testing(Article 17(1) of Directive 2014/65/EU)

  1. (1)

    An investment firm shall test the conformance of its algorithmic trading systems and trading algorithms with:

    1. (a)

      the system of the trading venue in any of the following cases:

      1. (i)

        when accessing that trading venue as a member;

      2. (ii)

        when connecting to that trading venue through a sponsored access arrangement for the first time;

      3. (iii)

        where there is a material change of the systems of that trading venue;

      4. (iv)

        prior to the deployment or material update of the algorithmic trading system, trading algorithm or algorithmic trading strategy of that investment firm.

    2. (b)

      the system of the direct market access provider in any of the following cases:

      1. (i)

        when accessing that trading venue through a direct market access arrangement for the first time;

      2. (ii)

        when there is a material change affecting the direct market access functionality of that provider;

      3. (iii)

        prior to the deployment or material update of the algorithmic trading system, trading algorithm or algorithmic trading strategy of that investment firm.

  2. (2)

    Conformance testing shall verify whether the basic elements of the algorithmic trading system or the trading algorithm operate correctly and in accordance with the requirements of the trading venue or the direct market access provider. For this purpose the testing shall verify that the algorithmic trading system or trading algorithm:

    1. (a)

      interacts with the trading venue's matching logic as intended;

    2. (b)

      adequately processes the data flows downloaded from the trading venue.