United Kingdom (and EU regulation)

FCA update on MiFID II systematic internaliser and electronic trading notification guide

The FCA has updated its webpage concerning the systematic internaliser (SI) and electronic trading notification guide.

With regard to SIs, the FCA notes that:

firms must monitor their trading levels and calculate whether their activities bring them into the SI regime in the various instruments they trade. Firms need to notify the FCA when they become an SI and when they cease to be an SI;
where a firm is already acting as an SI and notifies the FCA that it is either adding or removing a class of financial instrument, the information provided to the regulator should reflect the firm’s on-going SI activity after allowing for the change;
firms should only notify the FCA that it is ceasing to act as an SI if it is discontinuing activity in all the classes of financial instrument it has previously notified the regulator about;
firms can also opt-in by notifying the FCA that they will operate an SI in specified financial instruments, as long as they do not exceed the pre-defined thresholds. If a firm opts into the regime and then ceases to be an SI, it must notify the FCA; and
firms can access the ‘Systematic Internaliser Notification’ form via the FCA’s Connect portal.

With regard to direct electronic access (DEA) and algorithmic trading, the FCA notes:

authorised firms and certain firms exempt from MiFID II must notify the FCA if they are providing DEA or undertaking algorithmic trading (as defined in Article 4 of MiFID II and further specified by MiFID II Delegated Regulation (EU) 2017/565). The firm must notify the FCA where the UK is their home Member State and where a non-UK firm is a member or participant of a UK trading venue;
firms who intend to carry out one or more of these activities from 3 January 2018 may submit a notification to the FCA in advance;
investment firms need to send the FCA a notification when they commence activity as a DEA provider and/or undertakes algorithmic trading and, thereafter, when it ceases any of these activities;
where a firm has previously notified the FCA of its activity as a DEA provider and algorithmic trading and then ceased to act as a DEA provider, it should notify the change by confirming it is undertaking algorithmic trading only; and
firms can access the ‘Electronic Trading Notification’ form via the FCA’s Connect portal.