ROMANIA Law and Practice Contributed by: Sergiu-Traian Vasilescu, Luca Dejan, Bogdan Rotaru and Ana-Maria Bută, VD Law Group
Impact Under MiCA CASPs facilitating order execution need to disclose any inducements or third-party arrangements and ensure that such relationships do not compromise execution quality. In effect, MiCA creates a regula - tory environment that is hostile to PFOF practices, reinforcing investor protection and market integrity principles. 6.8 Market Integrity Principles Trading activity in Romania is governed by fundamen - tal principles of market integrity and the prohibition of market abuse, as set out under EU law and imple - mented in national legislation. The key legal framework is Regulation (EU) No 596/2014 on Market Abuse (MAR), directly applicable in Romania, and supplemented by Law No 24/2017 on issuers of financial instruments and market opera - tions. The core principles include the following: • Prohibition of insider dealing – trading based on material non-public information is strictly forbid - den. This includes using such information for one’s own account or disclosing it unlawfully. • Prohibition of market manipulation – practices that give false or misleading signals about the supply, demand, or price of financial instruments (such as spoofing, wash trades or spreading false informa - tion) are prohibited. • Obligation to disclose inside information – issuers must promptly disclose inside information to the public in a manner that ensures equal and non- discriminatory access. • Fair and transparent trading – market participants must act honestly and professionally, ensuring fair access to information and avoiding manipulative or deceptive conduct. • Surveillance and reporting – investment firms and trading venues must monitor trading activity and report suspicious transactions to the ASF via Sus - picious Transaction and Order Reports (STORs). These rules are designed to maintain investor con - fidence, ensure efficient price formation and protect market integrity. Similar principles are expected to
apply under MiCA, particularly in relation to the trad - ing of crypto-assets on regulated platforms.
7. High-Frequency and Algorithmic Trading 7.1 Creation and Usage Regulations In the Romanian legal landscape, high-frequency trad - ing (HFT) and algorithmic trading are mainly regulated by a set of Romanian and EU laws and overseen by the ASF and the Bucharest Stock Exchange (BVB). This key regulatory framework includes the following: • MiFID II (Markets in Financial Instruments Direc - tive II) – this EU directive, implemented in Roma - nia through Law No 126/2018, regulates trading activities, including HFT and algorithmic trading. It requires firms to implement risk controls, ensure market fairness, and monitor pre- and post-trade activities. • Market Abuse Regulation (MAR) – this applies to all asset classes and focuses on preventing market manipulation and insider trading in algorithmic and high-frequency trading. • ESMA Guidelines – these guidelines focus on transparency, fairness and risk management in algorithmic trading systems. While MiFID II applies broadly across asset classes, there are differences based on the type of asset. For example, in the case of: • equities and derivatives, there are more stringent reporting and risk management requirements; • commodities, there are additional rules like position limits to curb speculation; and • cryptocurrencies, there is lighter regulation, mainly focused on AML and CFT compliance, with less
emphasis on HFT or algorithmic trading. 7.2 Requirement To Be Licensed or Registered as a Market Maker When Functioning in a Principal Capacity
In Romania, firms operating in a principal capacity must be licensed under Law No 126/2018 on Mar - kets in Financial Instruments. However, not all princi -
684 CHAMBERS.COM
Powered by FlippingBook