LUXEMBOURG Law and Practice Contributed by: Andreas Heinzmann, Valerio Scollo and Angela Permunian, GSK Stockmann
disclose regulated information concerning their business and the listed security. 6.5 Order Handling Rules In accordance with the MiFID II/MiFIR frame - work, the Financial Sector Law requires that investment firms and credit institutions that are authorised to execute orders on behalf of their clients must implement procedures and arrange - ments which provide for the prompt, fair and expeditious execution of client orders, relative to other client orders or their own trading inter - ests. Otherwise, comparable client orders must be executed in accordance with the time of their reception. 6.6 Rise of Peer-to-Peer Trading Platforms There are currently no peer-to-peer trading platforms located in Luxembourg. The regulator has so far not provided specific guidance on the regulatory environment applicable to them, and whether or not specific rules on, eg, AML and loan origination apply, should be checked on a case-by-case basis. 6.7 Rules of Payment for Order Flow The MiFID II legal framework, as transposed into Luxembourg law, in principle prohibits the possibility of routing client orders to a particular trading venue or execution venue to receive any remuneration, discount or non-monetary benefit. In practice, and as clarified by guidance issued by ESMA, payments for order flows between brokers and market makers are in general not permitted. Fees, commissions or non-monetary benefits from a third party may only be accepted if such benefit is designed to enhance the quality of the relevant service to the client and does not impair the service provider’s duty to act honestly, fairly
and professionally in accordance with the best interest of its clients. In addition, the benefits received must be clearly disclosed to the client before providing the relevant service. 6.8 Market Integrity Principles The basic legal framework to preserve market integrity is laid out in the Regulation (EU) No 596/2014 on market abuse (the Market Abuse Regulation), which is directly applicable in Lux - embourg. The Market Abuse Regulation, together with the delegated and implementing acts, imposes rules regarding disclosure, recommending/inducing prohibitions on persons in possession of inside information, ongoing issuer disclosure obliga - tions and prohibition on market manipulation. The CSSF is the competent authority in Lux - embourg for the purposes of the Market Abuse Regulation and has the supervisory and inves - tigatory powers. Non-compliance may lead to administrative sanctions or criminal liability. 7. High-Frequency and Algorithmic Trading 7.1 Creation and Usage Regulations The rules applicable in Luxembourg for the crea - tion and usage of high-frequency and algorith - mic trading have been implemented in the Law of 30 May 2018 on markets in financial instru - ments, transposing MiFID II. These rules apply to trading of all financial instruments, and no differentiation is made between different asset classes within the scope of MiFID II. Investment firms, credit institutions and cer - tain other entities incorporated in Luxembourg that engage in algorithmic trading must have
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