AUSTRIA Law and Practice Contributed by: Oliver Völkel and Philipp Ley, CERHA HEMPEL
For crypto-assets, MiCA does not explicitly regu - late algorithmic or high-frequency trading. However, CASPs operating trading platforms must ensure fair and orderly trading and act honestly and profession - ally.
Investment funds (eg, undertakings for collective investment in transferable securities – UCITS, or alternative investment funds – AIFs), by contrast, are not licensed under MiFID II but regulated under fund- specific regimes (UCITS Directive, AIFMD). Their trad - ing is part of portfolio management and they cannot provide MiFID services unless through a separately licensed manager. 7.4 Regulation of Programmers and Programming Programmers are not directly regulated for writing trading algorithms. However, if they work for an invest - ment firm, their code (the activity of the investment firm) must comply with regulatory standards. If they use the algorithm themselves for trading, they may require authorisation. While insurtech companies in Austria leverage advanced technologies for automated underwriting and risk assessment, these processes are not explic - itly dictated by regulation. They must comply with the overarching legal framework governing insurance operations, which includes the: • Insurance Supervision Act 2016 – this establishes the regulatory framework for insurance companies, including licensing requirements and operational standards; • Insurance Contract Act – this governs the contrac - tual relationships between insurers and policyhold - ers, outlining obligations and rights; 8. Insurtech 8.1 Underwriting Processes • GDPR – this ensures the protection of personal data, which is particularly relevant when insurtech companies process customer information for underwriting purposes; and • Insurance Distribution Directive (IDD) – this sets out standards for the distribution of insurance prod - ucts, ensuring that customers receive appropriate advice and information. 8.2 Treatment of Different Types of Insurance Different types of insurance, such as life, annuities, property and casualty are treated differently by both
7.2 Requirement To Be Licensed or Registered as a Market Maker When Functioning in a Principal Capacity
Operating in a principal capacity means a firm trading using its own capital and taking positions for its own account rather than acting as an agent for clients. In Austria and the EU, firms engaging in this activity must be authorised as investment firms under the Securities Supervisory Act and MiFID II. Under MiFID II, a firm operating in a principal capacity, ie, trading on its own account using its own capital, must obtain authorisation for the investment service of “dealing on own account” (MiFID II, Annex I, Sec - tion A, point 3). If the firm engages in market making, providing con - tinuous liquidity by quoting buy and sell prices, it must also obtain authorisation for this activity and notify the relevant trading venue and the FMA in Austria. This includes meeting additional obligations such as maintaining quote presence and ensuring orderly mar - ket conduct. In some cases, depending on the firm’s broader oper - ations, it may also need authorisation for other ser- vices like “execution of orders on behalf of clients” or “operation of an MTF/OTF”. 7.3 Regulatory Distinction Between Funds and Dealers Regulations in Austria do not make a distinction between investment funds and dealers engaging in trading activities. Dealers (eg, broker-dealers or market makers) are typ - ically authorised as MiFID II investment firms, trading on their own account or executing client orders. They are subject to conduct, capital and organisational requirements.
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