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EU MiFID II Delegated Regulation (EU) 2017/589 (RTS 6) - Organisational Requirements for Investment Firms Engaged in Algorithmic Trading

Investment firms and trading venues engaging in algorithmic trading must implement a full lifecycle governance framework under RTS 6: pre-deployment…

What EU MiFID II Delegated Regulation (EU) 2017/589 (RTS 6) - Organisational Requirements for Investment Firms Engaged in Algorithmic Trading requires

Investment firms and trading venues engaging in algorithmic trading must implement a full lifecycle governance framework under RTS 6: pre-deployment testing (conformance, integration, stress), production risk controls (price collars, volume limits, kill functionality), annual self-assessment, market making agreements where applicable, and immediate competent authority notification. Kill functionality enabling immediate order cancellation is mandatory. Records of all algorithmic strategies must be retained for five years.

Pillar: Workflow Automation · Authority: European Securities and Markets Authority (ESMA) · Version: 1.0.0 · Last updated:

Primary source: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32017R0589

SHA-256 integrity: 061ae60aeaeac69e9619b11fc1c8f044cadfd7e1149878634cda6bec2ec1d7d0

Primary Citations — 6 traced to source

  • MiFID II Article 17(1): An investment firm that engages in algorithmic trading shall have in place effective systems and risk controls suitable to the business it operates to ensure that its trading systems are resilient and have sufficient capacity, are subject to appropriate trading thresholds and limits and prevent the sending of erroneous orders or the systems otherwise functioning in a way that may create or contribute to a disorderly market.
  • Commission Delegated Regulation (EU) 2017/589, Article 9(1): Investment firms shall employ pre-trade controls on the orders placed by algorithmic trading systems, including maximum order sizes, maximum messages limits and price and value limits.

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