CZECH REPUBLIC Law and Practice Contributed by: Ondřej Mikula, Jan Šovar and Markéta Klabouchová, FINREG PARTNERS
MiCA Like the CMBA trading venue operators, crypto- asset platform operators under MiCA must have transparent rules ensuring fair access, admis - sion of crypto-assets and orderly trading and efficient execution and settlement of trades. Platforms cannot admit crypto-assets without a white paper or those with an anonymisation function. Operators must ensure crypto-assets comply with their rules before admission to trad - ing. 6.5 Order Handling Rules Entities executing orders for “financial instru - ments” or crypto-assets under MiCA on behalf of their clients must follow order handling rules in the CMBA or MiCA respectively. The CMBA In general, entities that execute orders for “finan - cial instruments” must have procedures and arrangements in place to ensure the prompt, fair and expeditious execution of clients’ orders. Orders will be executed in the order in which they are received unless an exemption applies. If any material difficulty arises which is relevant for the proper prompt execution of orders, the retail client must be informed. In addition, in the absence of any specific client instruction, enti - ties executing clients’ orders must take all rea - sonable steps to achieve the best possible result for their clients. The firm’s order’s execution pol - icy must specify how the best possible result will be achieved when executing client orders. The CMBA also includes specific order handling rules for regulated markets, MTFs and OTFs. MiCA MiCA’s order handling and trade execution rules are largely modelled on MiFID II and are similar to the CMBA rules. Crypto-asset service provid -
ers must prioritise achieving the best result for clients when executing orders, with a best exe - cution policy required. Operators of crypto-asset platforms also follow specific rules for order han - dling and execution. Entities not regulated by the CMBA or MiCA are not subject to specific order handling regulations. 6.6 Rise of Peer-to-Peer Trading Platforms Although peer-to-peer trading platforms are not widespread in the financial market in the Czech Republic, they have grown, particularly in lend - ing and crypto-assets, with fintech companies leading the way. The rise of these platforms in crypto-assets contributed to the introduction of the DLT Pilot. A key regulatory challenge could be aligning the regime of these platforms with payment servic - es, as their activities often involve transferring funds on behalf of clients. Although a licence under the PSA is required to transfer funds, this is not always the case. 6.7 Rules of Payment for Order Flow Investment Services Following the MiFID II/MiFIR revision which came into force in March 2024, investment firms are prohibited from receiving payments or bene - fiting from executing client orders on a particular execution venue or forwarding client orders to a third party for execution on a particular execu - tion venue. This prohibition does not apply to rebates and discounts on transaction fees, pro - vided they benefit the client and are part of the approved public tariff structure. Although there is a grandfathering period that allows member states that already allow pay - ments for order flows to exempt investment firms which serve clients in that member state
189 CHAMBERS.COM
Powered by FlippingBook