AUSTRIA Law and Practice Contributed by: Oliver Völkel and Philipp Ley, CERHA HEMPEL
need to be approved by the FMA, the white paper must be fair, clear and not misleading. Industry Practice In addition to legal requirements, platforms often apply internal standards such as legal classification, KYC checks, technical audits and business viability assessments to reduce risk and maintain credibility. 6.5 Order Handling Rules Order handling rules apply under MiFID II. Investment firms must handle client orders promptly, fairly and in the client’s best interest. This includes rules on order execution, aggregation, allocation and record-keep - ing. Firms must also have clear internal policies to ensure transparency and prevent conflicts of interest. CASPs operating trading platforms for crypto-assets must, as part of their general conduct obligations, ensure fair and orderly trading, avoid conflicts of inter - est and act honestly and professionally. Unlike MiFID II, MiCA does not impose order handling rules. 6.6 Rise of Peer-to-Peer Trading Platforms The rise of peer-to-peer trading platforms is a chal - lenge for both traditional and fintech players. This is because they bypass intermediaries, reduce costs and increase user control. For traditional firms, it pressures margins and disrupts established business models. Fintechs must adapt by integrating peer-to- peer features as well as complying with increasing regulatory challenges. Regulatory challenges include identifying responsible parties, ensuring AML/KYC compliance, safeguarding users and applying existing financial rules to decen - tralised or disintermediated models, especially where no clear operator exists. 6.7 Rules of Payment for Order Flow On 28 March 2024, the EU implemented a general ban on payment for order flow (PFOF) through Article 39a of the Markets in Financial Instruments Regula - tion (MiFIR). This prohibition applies to investment firms acting on behalf of retail clients and opt-in pro - fessional clients. It prevents them from receiving any fee, commission or non-monetary benefit from third
parties for executing or forwarding client orders to a particular execution venue. Member states where PFOF practices existed before the ban may grant a transitional exemption, allowing these practices to continue domestically until 30 June 2026, provided ESMA was notified by 29 September 2024. 6.8 Market Integrity Principles Trading in Austria and the EU is governed by key prin - ciples under MAR and MiFIR. The regulatory frame - work is aimed at ensuring market integrity and inves - tor protection. MAR prohibits insider trading, market manipulation and unlawful disclosure of inside information. It also sets rules on disclosure, insider lists and suspicious transaction reporting. MiFIR supports integrity through transparency rules requiring pre and post-trade disclosure and transac - tion reporting to regulators for market surveillance. 7. High-Frequency and Algorithmic Trading 7.1 Creation and Usage Regulations For financial instruments, high frequency and algorith - mic trading are regulated under MiFID II, which man - dates that investment firms engaging in algorithmic trading: • implement effective systems and risk controls to ensure their trading systems are resilient, have sufficient capacity and prevent the sending of erroneous orders or any activity that may create or contribute to a disorderly market; • notify their home national competent authority (NCA) and the NCA of each trading venue where they engage in algorithmic trading; • maintain records of their trading algorithms and provide information to NCAs upon request; and • ensure their systems cannot be used for any purpose that is contrary to MAR or the rules of a trading venue.
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