ESMA - MiFID II Review Report

MiFID II/MiFIR review report on Algorithmic Trading

1. Executive Summary

Reasons for publication

Directive 2014/65/EU1 (MiFID II) and Regulation (EU) No 600/20142 (MiFIR) provide for a number of review reports requiring the European Commission (EC), after consulting ESMA, to report to the European Parliament and the Council on various provisions. This final report covers the review provision on the impact of requirements regarding algorithmic trading including high-frequency algorithmic trading set out under Article 90(1)(c) of MiFID II.

Contents

Many provisions and requirements of MiFID II relate either directly or indirectly (e.g. direct electronic access or tick sizes) to algorithmic trading. This review report therefore adopts a holistic approach to algorithmic trading and reviews all provisions related directly and indirectly to algorithmic trading with the aim of both simplifying the regime and making it more efficient.

Section 2 provides for an introduction to the report.

Section 3 presents cross-cutting topics regarding algorithmic trading and high frequency trading. ESMA analyses the general provisions relating to algorithmic trading and highfrequency trading and, more specifically, the issues around the concepts of “algorithmic trading”, “Direct Electronic Access”, as well as the authorisation regime for EU and non-EU algorithmic trading firms deploying their strategies on EU trading venues. 

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