U.K. regulator proposes local enhancements to EU rules
The Prudential Regulation Authority has proposed rules to implement the Markets in Financial Instruments Directive II and related provisions for entities under its supervisory jurisdiction, including special provisions related to algorithmic trading. PRA said its proposed rules generally mirror those proposed by the U.K.’s Financial Conduct Authority in December 2015, but reflect PRA’s different regulatory emphasis, namely ensuring the “safety and soundness” of firms it oversees, rather than preventing market abuse or disorderly conduct.
PRA said it seeks to ensure that firms engaging in algorithmic trading have systems that are “resilient and have sufficient capacity," use “appropriate thresholds and limits,” and prevent “the sending of erroneous orders or contribute to a disorderly market.” Firms will have additional recordkeeping requirements if they engage in high-frequency trading, and will have other requirements if they provide direct electronic access to trading venues.
