Entire section
2.7.3. Direct electronic access – criteria, standards and arrangements
2.8. Financial Crime and Market Abuse

2.7.4. Direct electronic access rules

An Authorised Market Institution operating a trading venue which permits Direct Electronic Access through it systems must set out and publish the rules and conditions pursuant to which its Members specified in AMI 2.6.1(1)(a) and (b) may provide Direct Electronic Access to their clients. Those rules and conditions must at least cover the specific requirements set out below:

  • (a) A Member must retain responsibility for the orders and trades executed by the clients who are using Direct Electronic Access.
  • (b) A Member must have adequate mechanisms to prevent the clients placing or executing orders using Direct Electronic Access in a manner that would result in the Member exceeding its position or margin limits.
  • (c) A Member must conduct annually or on request from AFSA a due diligence assessment of its prospective Direct Electronic Access clients to ensure they meet the rules of the trading venue to which it offers access.
  • (d) The due diligence assessment referred to in sub-paragraph (c) above must cover:
  • (i) the governance and ownership structure of the prospective Direct Electronic Access client;
  • (ii) the types of strategies to be undertaken by the prospective Direct Electronic Access client;
  • (iii) the operational set-up, the systems, the pre-trade and post-trade controls and the real-time monitoring of the prospective Direct Electronic Access client;
  • (iv) the responsibilities within the prospective Direct Electronic Access client for dealing with actions and errors;
  • (v) the historical trading pattern and behaviour of the prospective Direct Electronic Access client;
  • (vi) the level of expected trading and order volume of the prospective Direct Electronic Access client;
  • (vii) the ability of the prospective Direct Electronic Access client to meet its financial obligations to the Direct Electronic Access provider; and
  • (viii) the disciplinary history of the prospective Direct Electronic Access client, where available.
  • (e) A Member offering Direct Electronic Access allowing clients to use third-party trading software for accessing trading venues must ensure that the software includes pre-trade controls.

The requirements in AMI 2.7 do not apply to an Authorised Crowdfunding Platform.