CZECH REPUBLIC Law and Practice Contributed by: Ondřej Mikula, Jan Šovar and Markéta Klabouchová, FINREG PARTNERS
and carried out the activity before 28 March 2024 from the prohibition until 30 June 2026, Germany is the only member state that has made use of this discretion. However, these payments must still comply with inducement requirements. This prohibition is expected to enhance market quality by improving execution for retail inves - tors and increasing pre-trade transparency on execution platforms for retail orders. Crypto-Asset Services Like under the revised investment services framework, crypto-asset service providers under MiCA are prohibited from receiving any monetary or non-monetary benefits for routing client orders to any particular trading platform for crypto-assets or any other crypto-asset ser - vice providers. 6.8 Market Integrity Principles Market integrity and market abuse principles are outlined in MAR and complemented by MAD (Directive 2014/57/EU) and delegating and implementing acts, while MiCA and Commission delegated regulation directly addresses crypto- assets. The objective is to ensure EU financial market integrity and investor protection, prohibiting unlawful behaviour. Three types of market abuse practices are banned: insider dealing, unlaw - ful disclosure of inside information and market manipulation. MAR and MiCA contain provisions to prevent and detect these practices, such as systems to report suspicious orders and transactions or disclosure obligations. MAR applies to “financial instruments” traded on regulated markets, MTFs, and OTFs, as well as
products like CFDs. MiCA covers crypto-assets admitted to trading or seeking admission. Viola - tions of market integrity rules may lead to admin - istrative or criminal sanctions. 7. High-Frequency and Algorithmic Trading 7.1 Creation and Usage Regulations The creation and use of high-frequency (HFT) and algorithmic trading (AT) is regulated under the CMBA. The regulation therefore only applies to HFT and AT in relation to “financial instru - ments” . In principle, a person only trading for their own account (and not executing customer orders) using AT does not need an authorisation, unless HFT is applied. For HFT, an authorisation from the CNB is always required. Investment firms and regulated entities using AT and HFT must have effective systems and risk controls to ensure market resilience and prevent abuse. Business continuity arrangements, sys - tem testing and monitoring are required. HFT is also subject to other specific requirements (eg, record-keeping or incorporation of “kill switch” ). Use of these technologies requires notification to the competent authorities. 7.2 Requirement to Be Licensed or Otherwise Register as Market Makers When Functioning in a Principal Capacity A person engaged in AT trading for their own account does not need to be authorised as a market maker unless they are using a market- making strategy. This involves, inter alia, posting a firm, simultaneous bid and offer prices of com - parable size and at competitive prices relating to one or more “financial instruments” on one or
190 CHAMBERS.COM
Powered by FlippingBook