In Europe (inter alia), an increasing part of trading in financial instruments takes place through electronic trading systems operated by market operators or investment firms. On 24 February 2012, ESMA published guidelines that clarify the application of the MiFID in relation to such trading platforms.
The implications of the Markets in Financial Instruments Directive (“MiFID”) in relation to automated trading are not always clear. In order to provide clarity in that regard, the European Securities and Markets Authority (“ESMA”) has published on 24 February 2012 the final version of its guidelines on automated trading environment for trading platforms, investment firms and competent authorities. The guidelines describe the arrangements market operators (regulated markets or investment firms operating a multilateral trading facility) should have in place in relation to automated trading, as well as specific organisational requirements for investment firms providing direct market access facilities to clients or using algorithms for trading or client order execution purposes. The new guidelines will enter into force on 1 May 2012.