SERBIA Law and Practice Contributed by: Željka Motika, Ivana Bulatović and Jovana Spasojević Gligorijević, Motika i partneri
6.5 Order Handling Rules Investment firms executing client orders in tradi - tional financial instruments are required to comply with the obligations set out under the Capital Market Law, which is broadly aligned with MiFID II. These obligations include executing orders in the sequence in which they are received and taking all reasonable steps to achieve the best possible outcome for the cli - ent. Relevant factors include price, costs, speed, and the likelihood of execution. Clients must also receive confirmation of executed transactions no later than the end of the following business day. Firms may refuse to execute an order if there is a justi - fied suspicion of money laundering or terrorist financ - ing. Additionally, investment firms must ensure that orders are executed fairly, both in relation to other cli - ents and in relation to the firm’s own trading interests. The Law on Digital Assets establishes specific require - ments for platforms trading cryptocurrencies and tokens. Digital asset service providers must imple - ment systems and measures to ensure prompt, fair, and efficient execution of client orders relative to other orders, with execution carried out in the order of receipt. Providers are required to maintain an elec - tronic order book that records all purchase and sale orders, as well as cancellations, with precise times - tamps, in a manner that prevents subsequent altera - tions without client consent. Execution must be refused where there is a reason - able suspicion that fulfilling the order would contra - vene legal requirements, anti-money laundering or counter‑terrorist financing regulations, or would con - stitute a criminal offence. 6.6 Rise of Peer-to-Peer Trading Platforms Pursuant to the Law on Digital Assets, secondary trading conducted through a multilateral trading plat - form may be carried out exclusively by a platform operator that is incorporated in the Republic of Serbia as a commercial company and licensed by the com - petent authority. The mere availability of such plat - forms – including foreign platforms – to users in the Republic of Serbia does not, in itself, mean that they operate lawfully. To operate legally, these platforms must establish a legal entity in Serbia and obtain the
relevant licence required for operating a digital asset trading platform. Banks, as traditional participants in the financial mar - ket, are prohibited from organising trading platforms and from providing any digital asset-related services, except for the custody of cryptographic keys. At the same time, despite these restrictions, the traditional banking sector in Serbia continues to play a dominant role in deposit‑taking and lending, as these are activi - ties exclusively reserved for banks under applicable law. 6.7 Rules of Payment for Order Flow There is currently no specific regulation that explicitly addresses payment for order flow (PFOF) practices, whether in relation to traditional financial instruments or digital assets. However, the general rules set out in the Capital Markets Act – including best execution obligations, conflict of interest provisions, and cli - ent protection requirements – effectively prohibit the receipt of fees or inducements that could undermine a client’s interests. Similarly, the Law on Digital Assets, through its over - arching principles, creates practical limitations on the application of PFOF. In particular, the law requires that the interests of users take precedence, which restricts practices that could compromise fair treatment or the quality of execution. 6.8 Market Integrity Principles In the Serbian market, the core principles of market integrity and the prohibition of market abuse apply equally to both traditional financial instruments and digital assets. In each of these areas, investment firms and providers of digital asset services are required to act fairly and in the best interests of their clients, with insider trading and market manipulation strictly prohibited. With respect to the technical integrity of the market, client orders must be executed promptly, fairly, and in the order in which they are received. Firms must also maintain complete and accurate transaction records. To further safeguard market integrity, investment firms and digital asset service providers are obliged to iden -
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