The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017

Direct electronic access

32.—(1) A member of, or participant in, a regulated market or multilateral trading facility that provides direct electronic access to the market or facility (“M”) must comply with the requirements set out in paragraphs (4) to (9) if condition A or B is met.

(2) Condition A is that—

(a) M’s home Member State is the United Kingdom;

(b) the markets in financial instruments directive does not apply to M as a result of Article 2.1(a), (e), (i), or (j) of the directive; and

(c) M does not have a Part 4A permission for the purposes of the directive.

(3) Condition B is that M provides direct electronic access in accordance with the relevant United Kingdom national regime for the purposes of Article 54.1(transitional provisions) of the markets in financial instruments regulation.

(4) M must have in place effective systems and controls which ensure—

(a) M conducts an assessment and review of the suitability of clients using the service;

(b) clients using the service are prevented from exceeding appropriate pre-set trading and credit thresholds;

(c) trading by clients using the service is properly monitored; and

(d) risk controls prevent trading by clients which—

(i) may create risks to M itself;

(ii) could create, or contribute to, a disorderly market;

(iii) could be contrary to the market abuse regulation; or

(iv) could be contrary to the rules of the regulated market or multilateral facility to which M provides direct electronic access.

(5) M must monitor the transactions made by clients to which it provides direct electronic access to a regulated market or multilateral trading facility to identify—

(a) infringements of the rules of the regulated market or multilateral trading facility;

(b) disorderly trading conditions; or

(c) conduct which may involve market abuse.

(6) If M’s monitoring under paragraph (5) identifies an infringement of the rules of a regulated market or multilateral trading facility, disorderly trading conditions, or conduct which may involve market abuse M must notify the FCA.

(7) M must have a binding written agreement with each client which—

(a) details the rights and obligations of both parties arising from the provision of the service; and

(b) states that M is responsible for ensuring the client complies with the requirements of the markets in financial instruments directive and the rules of the regulated market or a multilateral trading facility; and

(8) M must notify—

(a) the FCA that M is providing direct electronic access services; and

(b) the competent authority of any regulated market or a multilateral trading facility in the EEA to which M provides direct electronic access services that M is doing so.

(9) M must arrange for—

(a) records to be kept on the matters referred to in paragraph (4)(a) to (c); and

(b) records to be kept to enable M to meet any requirement imposed on them under regulation 36.

(10) In this regulation the provision of direct electronic access is in accordance with the relevant United Kingdom national regime for the purposes of Article 54.1 (transitional provisions) of the markets in financial instruments regulation if it is an activity subject to the exclusion in Article 72 (overseas persons) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2000(1).

(1)

S.I. 2001/544; article 72 was amended by S.I. 2003/1476, 2006/2383 and 3384, 2009/1342, 2013/504 and 2015/910.