RTS · European Commission
Commission Delegated Regulation (EU) 2017/578 of 13 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards specifying the requirements on market making agreements and schemes
RTS 8 on market making: specifies when algorithmic traders pursuing a market making strategy must sign a market making agreement with a trading venue, the agreement's minimum content and the exceptional circumstances that suspend obligations, and requires venues to run fair and non-discriminatory market making schemes for specified liquid instruments.
Details
| Reference | Delegated Regulation (EU) 2017/578 |
|---|---|
| Issuer | European Commission |
| Published | 31 Mar 2017 |
| CELEX | 32017R0578 |
| In force / applies from | 20 Apr 2017, 3 Jan 2018 |
Provisions it relates to
- Article 17 MiFID II · Algorithmic tradingLegal basis
- Article 48 MiFID II · Systems resilience, circuit breakers and electronic tradingLegal basis
UK version: UK Delegated Regulation (EU) 2017/578.
Documents that refer to it
- Q&AAnsweredExplicit reference
AI summaryTrading venues allowing algorithmic trading must be able to cancel or revoke transactions when volatility mechanisms or trading systems malfunction (Article 18 RTS 7), and their rulebooks may set out other exceptional cases for cancellation, provided these are transparent and non-discriminatory.
- Q&AAnsweredExplicit reference · 90%
AI summaryOrders should be flagged as part of a market making strategy under RTS 24 (and RTS 6) only once the firm has concluded a market making agreement with the venue, since the flag distinguishes agreed market making from the firm's discretionary order flow.
- Q&AAnsweredExplicit reference
AI summaryA market maker in a securitised derivative whose whole issue has been sold and cannot be increased meets the RTS 8 two-way quote requirement by posting bid quotes only; this limited exception is separate from the exceptional circumstances in Article 3 of RTS 8.
- Q&AAnsweredExplicit reference
AI summaryThe RTS 8 requirement for market makers to post simultaneous two-way quotes of comparable size does not stop them voluntarily adding liquidity on either side; only the quotes posted to meet the market making agreement are flagged as such.
- Q&AAnsweredExplicit reference
AI summaryVenues allowing algorithmic trading must publish a maximum bid-ask range for every instrument they trade (they may group instruments), so firms can tell whether they are pursuing a market making strategy requiring an agreement, while market making schemes are needed only for the instruments listed in Article 5 of RTS 8.
- Q&AAnsweredExplicit reference · 90%
AI summaryUnder Article 6 of RTS 8, venues must offer incentives, monetary or not, that reward market makers who actually provide liquidity (presence, size and spread) in stressed conditions; schemes that reward all market makers regardless, or favour normal over stressed conditions, do not comply.
FCA Handbook
Handbook provisions whose source note cites it:
- MAR 5.3A.3R · Market making agreements
- MAR 5.3A.4R · Market making agreements
- MAR 5A.5.3R · Market making agreements
- MAR 5A.5.4R · Market making agreements
- MAR 7A.3.4R · Market making
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