ANNEX III - Requirement for operators of trading venues to immediately inform their national competent authority
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🔗 Back to Summary. 🇫🇷 French Version: 2017R0565_FR.III. Back to Summary of LVL1. Link to the PDF. Direct link to EUR-LEX.
Article II – Costs and charges ⬅️ | ➡️ Article IIII – Record keeping of client orders and decision to deal
SECTION A
Signals that may indicate significant infringements of the rules of a trading venue or disorderly trading conditions or system disruptions in relation to a financial instrument
Significant infringements of the rules of a trading venue
1.
Market participants infringe rules of the trading venue which aim to protect the market integrity, the orderly functioning of the market or the significant interests of the other market participants; and
2.
A trading venue considers that an infringement is of sufficient severity or impact to justify consideration of disciplinary action.
Disorderly trading conditions
3.
The price discovery process is interfered with over a significant period of time;
4.
The capacities of the trading systems are reached or exceeded;
5.
Market makers/liquidity providers repeatedly claim mis-trades; or
6.
Breakdown or failure of critical mechanisms under EU and its implementing measures which are designed to protect the trading venue against the risks of algorithmic trading.
System disruptions
7.
Any major malfunction or breakdown of the system for market access that results in participants losing their ability to enter, adjust or cancel their orders;
8.
Any major malfunction or breakdown of the system for the matching of transactions, that results in participants losing certainty over the status of completed transactions or live orders as well as unavailability of information indispensable for trading (e.g., index value dissemination for trading certain derivatives on that index);
9.
Any major malfunction or breakdown of the systems for the dissemination of pre- and post-trade transparency and other relevant data published by trading venues in accordance with their obligations under Directive 2014/65/EU and Regulation (EU) No 600/2014;
10.
Any major malfunction or breakdown of the systems of the trading venue to monitor and control the trading activities of the market participants; and any major malfunction or breakdown in the sphere of other interrelated services providers, in particular CCPs and CSDs, that has repercussions on the trading system.
SECTION B
Signals that may indicate abusive behaviour under Regulation (EU) No 596/2014
Signals of possible insider dealing or market manipulation
1.
Unusual concentration of transactions and/or orders to trade in a particular financial instrument with one member/participant or between certain members/participants.
2.
Unusual repetition of a transaction among a small number of members/participants over a certain period of time.
Signals of possible insider dealing
3.
Unusual and significant trading or submission of orders to trade in the financial instruments of a company by certain members/participants before the announcement of important corporate events or of price sensitive information relating to the company; orders to trade/transactions resulting in sudden and unusual changes in the volume of orders/transactions and/or prices before public announcements regarding the financial instrument in question.
4.
Whether orders to trade are given or transactions are undertaken by a market member/participant before or immediately after that member/participant or persons publicly known as linked to that member/participant produce or disseminate research or investment recommendations that are made publicly available.
Signals of possible market manipulation
The signals described below in points 18 to 23 are particularly relevant in an automated trading environment.
5.
Orders to trade given or transactions undertaken which represent a significant proportion of the daily volume of transactions in the relevant financial instrument on the trading venue concerned, in particular when these activities lead to a significant change in the price of the financial instruments.
6.
Orders to trade given or transactions undertaken by a member/participant with a significant buying or selling interest in a financial instrument which lead to significant changes in the price of the financial instrument on a trading venue.
7.
Orders to trade given or transactions undertaken which are concentrated within a short time span in the trading session and lead to a price change which is subsequently reversed.
8.
Orders to trade given which change the representation of the best bid or offer prices in a financial instrument admitted to trading or traded on a trading venue, or more generally the representation of the order book available to market participants, and are removed before they are executed.
9.
Transactions or orders to trade by a market/participant with no other apparent justification than to increase/decrease the price or value of, or to have a significant impact on the supply of or demand for a financial instrument, namely near the reference point during the trading day, e.g. at the opening or near the close.
10.
Buying or selling of a financial instrument at the reference time of the trading session (e.g. opening, closing, settlement) in an effort to increase, to decrease or to maintain the reference price (e.g. opening price, closing price, settlement price) at a specific level (usually known as marking the close).
11.
Transactions or orders to trade which have the effect of, or are likely to have the effect of increasing/decreasing the weighted average price of the day or of a period during the session.
12.
Transactions or orders to trade which have the effect of, or are likely to have the effect of, setting a market price when the liquidity of the financial instrument or the depth of the order book is not sufficient to fix a price within the session.
13.
Execution of a transaction, changing the bid-offer prices when this spread is a factor in the determination of the price of another transaction whether or not on the same trading venue.
14.
Entering orders representing significant volumes in the central order book of the trading system a few minutes before the price determination phase of the auction and cancelling these orders a few seconds before the order book is frozen for computing the auction price so that the theoretical opening price might look higher or lower than it otherwise would do.
15.
Engaging in a transaction or series of transactions which are shown on a public display facility to give the impression of activity or price movement in a financial instrument (usually known as painting the tape).
16.
Transactions carried out as a result of the entering of buy and sell orders to trade at or nearly at the same time, with the very similar quantity and similar price by the same or different but colluding market members/participants (usually known as improper matched orders).
17.
Transactions or orders to trade which have the effect of, or are likely to have the effect of bypassing the trading safeguards of the market (e.g. as regards volume limits; price limits; bid/offer spread parameters; etc.).
18.
Entering of orders to trade or a series of orders to trade, executing transactions or series of transactions likely to start or exacerbate a trend and to encourage other participants to accelerate or extend the trend in order to create an opportunity to close out/open a position at a favourable price (usually know as momentum ignition).
19.
Submitting multiple or large orders to trade often away from the touch on one side of the order book in order to execute a trade on the other side of the order book. Once that trade has taken place, the manipulative orders will be removed (usually known as layering and spoofing).
20.
Entry of small orders to trade in order to ascertain the level of hidden orders and particularly used to assess what is resting on a dark platform (usually know as ping order).
21.
Entry of large numbers of orders to trade and/or cancellations and/or updates to orders to trade so as to create uncertainty for other participants, slowing down their process and to camouflage their own strategy (usually known as quote stuffing).
22.
Posting of orders to trade, to attract other market members/participants employing traditional trading techniques (‘slow traders’), that are then rapidly revised onto less generous terms, hoping to execute profitably against the incoming flow of ‘slow traders’ orders to trade (usually known as smoking).
23.
Executing orders to trade or a series of orders to trade, in order to uncover orders of other participants, and then entering an order to trade to take advantage of the information obtained (usually known as phishing).
24.
The extent to which, to the best knowledge of the operator of a trading venue, orders to trade given or transactions undertaken show evidence of position reversals in a short period and represent a significant proportion of the daily volume of transactions in the relevant financial instrument on the trading venue concerned, and might be associated with significant changes in the price of a financial instrument admitted to trading or traded on the trading venue.
Signals for cross-product market manipulation, including across different trading venues
The signals described below should be particularly considered by the operator of a trading venue where both a financial instrument and related financial instruments are admitted to trading or traded or where the above mentioned instruments are traded on several trading venues operated by the same operator.
25.
Transactions or orders to trade which have the effect of, or are likely to have the effect of increasing/decreasing/maintaining the price of a financial instrument during the days preceding the issue, optional redemption or expiry of a related derivative or convertible;
26.
Transactions or orders to trade which have the effect of, or are likely to have the effect of maintaining the price of the underlying financial instrument below or above the strike price, or other element used to determine the pay-out (e.g. barrier), of a related derivative at expiration date;
27.
Transactions which have the effect of, or are likely to have the effect of modifying the price of the underlying financial instrument so that it surpasses/not reaches the strike price, or other element used to determine the pay-out (e.g. barrier), of a related derivative at expiration date;
28.
Transactions which have the effect of, or are likely to have the effect of modifying the settlement price of a financial instrument when this price is used as a reference/determinant, namely, in the calculation of margins requirements;
29.
Orders to trade given or transactions undertaken by a member/participant with a significant buying or selling interest in a financial instrument which lead to significant changes in the price of the related derivative or underlying asset admitted to trading on a trading venue;
30.
Undertaking trading or entering orders to trade in one trading venue or outside a trading venue (including entering indications of interest) with a view to improperly influencing the price of a related financial instrument in another or in the same trading venue or outside a trading venue (usually known as cross-product manipulation (trading on financial instrument to improperly position the price of a related financial instrument in another or in the same trading venue or outside a trading venue)).
31.
Creating or enhancing arbitrage possibilities between a financial instrument and another related financial instrument by influencing reference prices of one of the financial instruments can be carried out with different financial instruments (like rights/shares, cash markets/derivatives markets, warrants/shares, …). In the context of rights issues, it could be achieved by influencing the (theoretical) opening or (theoretical) closing price of the rights.# Table 1 in anx_I
| Nature of obligation | Type of record | Summary of content | Legislative reference |
|---|---|---|---|
| Client assessment | |||
| Information to clients | Content as provided for under Article 24(4) of Directive 2014/65/EU and Articles 44 to 51 of this Regulation | Article 24(4) of Directive 2014/65/EUArticles 44 to 51 of this Regulation | |
| Client agreements | Records as provided for under Article 25(5) of Directive 2014/65/EU | Article 25(5) Directive 2014/65/EUArticle 58 of this Regulation | |
| Assessment of suitability and appropriateness | Content as provided for under paragraphs 2 and 3 of Article 25 of Directive 2014/65/EU and Articles 54, 55 and 60 of this Regulation | Article 25(2) and (3) of Directive 2014/65/EUArticles 54, 55 and 56 of this Regulation | |
| Order handling | |||
| Client order-handling – Aggregated transactions | Records as provided for under Articles 67 to 70 of this Regulation | Articles 24(1) and 28(1) of Directive 2014/65/EUArticles 67 to 70 of this Regulation | |
| Aggregation and allocation of trans-actions for own account | Records as provided for under Article 69 of this Regulation | Articles 24(1) and 28(1) of Directive 2014/65/EUArticle 69 of this Regulation | |
| Client Orders and transactions | |||
| Record keeping of client orders or decision to deal | Records as provided for under Article 74 of this Regulation | Article 16(6) of Directive 2014/65/EUArticle 74 of this Regulation | |
| Record keeping of transactions and order processing | Records as provided for under Article 75 of this Regulation | Article 16(6) of Directive 2014/65/EUArticle 75 of this Regulation | |
| Reporting to clients | |||
| Obligation in respect of services provided to clients | Contents as provided for under Articles 59 to 63 of this Regulation | Paragraphs 1 and 6 of Article 24 and paragraphs 1 and 6 of Article 25 of Directive 2014/65/EUArticles 59 to 63 of this Regulation | |
| Safeguarding of client assets | |||
| Client financial instruments held by an investment firm | Records as provided for under Article 16(8) of Directive 2014/65/EU and under Article 2 of Commission Delegated Directive (EU) 2017/593 | Article 16(8) of Directive 2014/65/EUArticle 2 of Delegated Directive (EU) 2017/593 | |
| Client funds held by an investment firm | Records as provided for under Article 16(9) of Directive 2014/65/EU and under Article 2 of Delegated Directive (EU) 2017/593 | Article 16(9) of Directive 2014/65/EUArticle 2 of Delegated Directive (EU) 2017/593 | |
| Use of client financial instruments | Records provided for under Article 5 of Delegated Directive (EU) 2017/593 | Paragraphs 8, 9 and 10 of Article 16 of Directive 2014/65/EUArticle 5 of Delegated Directive (EU) 2017/593 | |
| Communication with clients | |||
| Information about Costs and associated charges | Contents as provided for under Article 50 of this Regulation | Article 24(4), point (c) of Directive 2014/65/EUArticle 50 of this Regulation | |
| Information about the investment firm and its services, financial instruments and safe-guarding of client assets | Content as provided for under Articles 47, 48 and 49 of this Regulation | Article 24(4) of Directive 2014/65/EUArticles 47, 48 and 49 of this Regulation | |
| Information to clients | Records of communication | Article 24(3) of Directive 2014/65/EUArticle 46 of this Regulation | |
| Marketing communications (except in oral form) | Each marketing communication issued by the investment firm (except in oral form) as provided under Articles 44 and 46 of this Regulation | Article 24(3) of Directive 2014/65/EUArticles 44 and 46 of this Regulation | |
| Investment advice to retail clients | (i) The fact, time and date that investment advice was rendered and (ii) the financial instrument that was recommended (iii) the suitability report provided to the client | Article 25(6) of Directive 2014/65/EUArticle 54 of this Regulation | |
| Investment research | Each item of investment research issued by the investment firm in a durable medium | Article 24(3) of Directive 2014/65/EUArticles 36 and 37 of this Regulation | |
| Organisational requirements | |||
| The firm’s business and internal organisation | Records as provided for under Article 21(1), point (f) of this Regulation | Paragraphs 2 to 10 of Article 16 of Directive 2014/65/EUArticle 21(1), point (f) of this Regulation | |
| Compliance reports | Each compliance report to management body | Article 16(2) of Directive 2014/65/EUArticle 22(2), point (c) and Article 25(2) of this Regulation | |
| Conflict of Interest record | Records as provided for under Article 35 of this Regulation | Article 16(3) of Directive 2014/65/EUArticle 35 of this Regulation | |
| Inducements | The information disclosed to clients under Article 24(9) of Directive 2014/65/EU | Article 24(9) of Directive 2014/65/EUArticle 11, 12 and 13 of Delegated Directive (EU) 2017/593 | |
| Risk management reports | Each risk management report to senior management | Article 16(5) of Directive 2014/65/EUArticle 23(1), point (b) and Article 25(2) of this Regulation | |
| Internal audit reports | Each internal audit report to senior management | Article 16(5) of Directive 2014/65/EUArticle 24 and Article 25(2) of this Regulation | |
| Complaints-handling records | Each complaint and the complaint handling measures taken to address the complaint | Article 16(2) of Directive 2014/65/EUArticle 26 of this Regulation | |
| Records of personal transactions | Records as provided for under Article 29(5), point (c) of this Regulation | Article 16(2) of Directive 2014/65/EUArticle 29(5), point (c) of this Regulation |
Table 1 in anx_II
| Cost items to be disclosed | Examples: |
|---|---|
| One-off charges related to the provision of an investment service | All costs and charges paid to the investment firm at the beginning or at the end of the provided investment service(s). |
| Ongoing charges related to the provision of an investment service | All ongoing costs and charges paid to investment firms for their services provided to the client. |
| All costs related to transactions initiated in the course of the provision of an investment service | All costs and charges that are related to transactions performed by the investment firm or other parties. |
| Any charges that are related to ancillary services | Any costs and charges that are related to ancillary services that are not included in the costs mentioned above. |
| Incidental costs | |
| (1)Switching costs should be understood as costs (if any) that are incurred by investors by switching from one investment firm to another investment firm.(2)Broker commissions should be understood as costs that are charged by investment firms for the execution of orders. |
Table 2 in anx_II
| Cost items to be disclosed | Examples: |
|---|---|
| One-off charges | All costs and charges (included in the price or in addition to the price of the financial instrument) paid to product suppliers at the beginning or at the end of the investment in the financial instrument. |
| Ongoing charges | All ongoing costs and charges related to the management of the financial product that are deducted from the value of the financial instrument during the investment in the financial instrument. |
| All costs related to the transactions | All costs and charges that incurred as a result of the acquisition and disposal of investments. |
| Incidental costs | |
| (1)Structuring fees should be understood as fees charged by manufacturers of structured investment products for structuring the products. They may cover a broader range of services provided by the manufacturer. |