POLAND Law and Practice Contributed by: Wojciech Ługowski, Lawarton Lugowski Kapica Spolka Komandytowa
6.8 Market Integrity Principles Market integrity and market abuse regulations fall under the European Market Abuse Regula - tion (the “MAR” ), which is enforced alongside the Act on Trading in Financial Instruments and the Penal Code. KNF oversees compliance and sanctions. Prohibited practices include insider trading and market manipulation, such as inflating volumes or spreading misleading price signals. UOKiK also monitors abuses affecting retail investors. The Regulation ensures fair competition, inves - tor protection and market stability. KNF actively supervises trading and issues public warnings about suspected market abuse. 7. High-Frequency and Algorithmic Trading 7.1 Creation and Usage Regulations High-frequency (HFT) and algorithmic trading are regulated under MiFID II regulations, requir - ing firms to register with KNF and meet market- making obligations for transparent trading. Firms must implement risk controls, trading thresholds and continuity plans to ensure com - pliance. Trading venues must provide fair access and monitor market abuses linked to HFT strate - gies. Regulations apply across equities, bonds and derivatives, although risk controls vary by mar - ket structure and liquidity, with bond markets requiring different safeguards than equities.
7.2 Requirement to Be Licensed or Otherwise Register as Market Makers When Functioning in a Principal Capacity Under the Act on Trading in Financial Instru - ments, investment firms acting as market mak - ers must obtain a broker licence from KNF. Their role is to provide continuous liquidity by regularly offering buy and sell prices at competitive levels on one or more trading venues. Market makers must comply with best execution principles, risk management requirements and transparency obligations. They are also subject to transaction reporting and state supervision to prevent market manipulation. Failure to meet market-making obligations can result in regula - tory sanctions, including fines or loss of licence. 7.3 Regulatory Distinction Between Funds and Dealers Under MiFID II regulations, algorithmic trading regulations apply uniformly to investment firms, regardless of whether they are dealers or invest - ment funds. Both must implement risk controls to prevent disorderly trading. However, dealers and funds may operate under different regimes. Dealers trade on their own account, often as market makers, and usu - ally require an investment firm licence. Invest - ment funds manage client assets under UCITS or AIFMD, focusing on portfolio management rather than liquidity provision. Despite structural differences, regulations focus on trading activities rather than entity type, ensuring market integrity across both models. 7.4 Regulation of Programmers and Programming Regulations focus on firms, not individual pro - grammers, developing trading algorithms.
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