FINLAND Law and Practice Contributed by: Olli Kiuru, Mia Rintasalo and Essi Hietaoja, Waselius
investment firm shall execute comparable cli - ent orders sequentially and in a prompt, fair and expeditious manner. The obligation of the invest - ment firm to publish a limit order issued by the client shall be governed by the provisions of the Act on Trading in Financial Instruments. 6.6 Rise of Peer-to-Peer Trading Platforms Traditionally, the Finnish market has been domi - nated by P2P platforms, which require registra - tion with the FIN-FSA as a P2P intermediary. Online lenders may facilitate P2P lending by, for instance, providing a platform for the parties involved in the P2P transaction; in other words, the borrower and the lender engage in an elec - tronic money transfer via an intermediary – in this case, the online lender. The legal and regulatory consequences depend on whether the online lender merely connects the P2P parties with its platform or whether it also administers the payments between the par - ties. Both cases require registration with the FIN- FSA as a P2P intermediary. Administering the payments may, in turn, amount to money remit - tance, which, pursuant to the PSA, is a payment service and thereby renders the online lender a payment service provider. In this case, the PIA will also apply, and the online lender will be required to seek authorisation from the FIN-FSA. 6.7 Rules of Payment for Order Flow In the EU, payment for order flow (PFOF) is con - sidered to be in contrast to the requirements set out in MiFID II. ESMA has considered that PFOF causes a clear conflict of interest between the firm and its clients, because it incentivises the firm to choose the third party offering the highest payment rather than the best possible outcome for its clients when executing their orders. There - fore, ESMA has advised market participants
under the MiFID II regime to thoroughly assess whether they are able to comply with MiFID II when receiving PFOF. This advice is also fol - lowed in Finland. 6.8 Market Integrity Principles As financial markets have become increasingly global, giving rise to new trading platforms and technologies, the EU has aimed to strengthen its market abuse regime. The Act on Trading in Financial Instruments sets out the basic princi - ples and requirements for using the central secu - rities depository and the central counterparty, aiming to ensure that the co-operation does not endanger trading integrity. Besides, there are no fintech-specific principles on market integrity or market abuse. 7. High-Frequency and Algorithmic Trading 7.1 Creation and Usage Regulations Algorithmic trading is regulated under Chapter 7a of the ISA, and there is no distinction between asset classes. 7.2 Requirement to Be Licensed or Otherwise Register as Market Makers When Functioning in a Principal Capacity In principle, there is no regulation according to which market makers should be licensed or otherwise register as market makers in Finland. However, if a market maker begins to trade on its own account, it becomes subject to provi - sions under the ISA and should be licensed as an investment company. The provisions of the ISA do not apply if the market maker trades on its own account as an ancillary activity.
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