BELGIUM Law and Practice Contributed by: Joan Carette, Philippe De Prez and Thomas Derval, Simont Braun
7.2 Requirement To Be Licensed or Registered as a Market Maker When Functioning in a Principal Capacity
the MAR. Title VI of MiCA also contains specific rules on market abuse. Under the applicable rules, market manipulation, insider dealing and the unlawful disclosure of non- public information are considered forms of market abuse and are subject to administrative and/or crimi - nal sanctions. 7. High-Frequency and Algorithmic Trading 7.1 Creation and Usage Regulations High-frequency trading (HFT) and algorithmic trad - ing (AT) are regulated in Belgium by the Investment Services Law and Royal Decree of 19 December 2017, partially transposing MiFID II. In addition, the EU Commission Delegated Regulation 2017/589 of 19 July 2016 with regard to RTS specifying the organi - sational requirements of investment firms engaged in algorithmic trading (MiFID II RTS 6) regulates algo - rithmic trading. These regulations apply to trading in financial instruments in general. Regulated firms engaged in algorithmic trading should have adequate and effective internal controls appro - priate to their business activity in place, to ensure that trading systems cannot be used for any purpose contrary to MAR. Alternatively, they should have a connected trading venue, to ensure that their trading systems are resilient, have sufficient capacity and are subject to appropriate trading thresholds and limits, and to prevent erroneous orders from being sent or otherwise operated in such a way that could lead or contribute to the creation of a disorderly market. With DORA’s application, financial institutions using such technologies are required to have a robust ICT risk management framework in place, including effec - tive arrangements to deal with business continuity, testing, internal controls and potential ICT service provider management framework. In general, the FSMA is wary of AT and HFT entities, and there is no tendency to encourage this sector from the regulator’s perspective.
A market maker – or a person who holds themselves out on the financial markets on a continuous basis as being willing to deal on own account by buying and selling financial instruments against that person’s proprietary capital at prices defined by that person – does not have to be licensed or otherwise regis - tered. However, a market maker is required to enter into a binding market making agreement with a trading venue, specifying the obligations of the market maker to provide liquidity on a regular and predictable basis to the trading venue. 7.3 Regulatory Distinction Between Funds and Dealers The applicable regulations do not make a distinction between funds and dealers. 7.4 Regulation of Programmers and Programming Only regulated companies offering investment servic - es with algorithmic trading are targeted by the appli - cable rules of the Belgian Royal Decree of 19 Decem - ber 2017 and MiFID II RTS 6. Therefore, no provisions apply specifically to the programmers developing and creating trading algorithms and other electronic trad - ing tools. However, when an entity outsources these tools to a third party, this qualifies as an ICT services third-party provider under DORA, and therefore the third party will be indirectly subject to DORA requirements covering, amongst others, IT security, continuity and reporting obligations towards the financial institution. Providers designated as critical third-party providers (CTPPs) by the ESAs will be subject to direct regulatory oversight.
8. Insurtech 8.1 Underwriting Processes
Numerous underwriting processes are available to industry participants, and each comes with a different set of regulations. Actors creating their own insurance products will most likely need a full insurance compa - ny licence from the NBB in accordance with the Law
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