MiFID II—microstructural issues
MiFID II—microstructural issues

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • MiFID II—microstructural issues
  • Overview of MiFID II and microstructural issues
  • Investment firms engaged in algorithmic trading: organisational requirements
  • Direct electronic access
  • General clearing members
  • Trading venues' systems and circuit breakers
  • Tick sizes
  • Market making
  • Scope of Article 17 of MiFID II
  • Algorithmic trading in FICC markets statement of good practice
  • more

BREXIT: As of exit day (31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. This has an impact on this Practice Note. For further guidance, see Practice Note: The impact of Brexit on the MiFID II regime.

Algorithmic trading, and specifically high frequency trading (HFT), attracted significant focus during the review of the Markets in Financial Instruments Directive (Directive 2004/39/EC) (MiFID I) that resulted the revised and recast Markets in Financial Instruments Directive (Directive 2014/65/EU) (MiFID II). HFT was blamed for causing the 'flash crash' in May 2010. Ever since, HFT has been the subject of much debate, and regulators around the world have been investigating the impact of HFT on financial markets. Among other things, MiFID II requires firms and trading venues to establish effective systems and risk controls and ensure that trading systems are resilient and have sufficient capacity. This Practice Note details the requirements introduced by MiFID II for investment firms and trading venues with regard to algorithmic and high frequency trading, market making, direct electronic access (DEA) and tick sizes. It includes a summary of the level 1 legislation, as well as relevant level 2 rules and level 3 guidance