PORTUGAL Law and Practice Contributed by: João G Gil Figueira, Rodrigue Devillet Lima and Catarina Andrade Miranda, GFDL Advogados
7.4 Regulation of Programmers and Programming The Portuguese legislation closely follows Com - mission Delegated Regulation (EU) 2017/589, delineating the regulatory technical standards that are the organisational requisites for invest - ment firms involved in algorithmic trading. As per these standards, an investment firm must ensure it has an adequate workforce equipped with the requisite skills and technical proficiency to oversee: • the pertinent trading systems and algorithms; • the monitoring and testing of those systems and algorithms; • the trading strategies implemented through those trading systems and algorithms; and • compliance with its legal obligations. The investment firm bears full responsibility for its regulatory obligations, even in outsourc - ing or procuring software or hardware utilised in algorithmic trading activities. It is worth not - ing that these regulations do not directly apply to programmers responsible for developing or creating trading algorithms or other electronic trading tools. The insurance industry uses several underwrit - ing processes, which will significantly depend on the type of business model developed by the industry participant. It should be noted that insurance activity is regu - lated in Portugal under Law No 147/2015 of 9 September and that various types of authorisa - tions are available under this legal framework depending on the intended business model. 8. Insurtech 8.1 Underwriting Processes
Before initiating HFAT operations, any interme - diary must communicate this intention to the CMVM and must provide the following: • information about investment strategy; • detailed information about the system metrics and limits; • detailed information about security measures to avoid faulty orders; and • detailed information proving that the system does not create a risk of market manipulation or abuse. 7.2 Requirement to Be Licensed or Otherwise Register as Market Makers When Functioning in a Principal Capacity A financial intermediary can operate as a mar - ket maker through algorithmic trading provided it has informed the CMVM. Still, it must ensure that the market-making activity is conducted continuously during the platform’s negotiation period and that market liquidity is periodically and predictably. A written agreement must be entered into with the trading platform establishing the conditions regarding how the liquidity and continuity of the market activity are to be ensured. Additionally, security and control systems must be designed and put in place, allowing the moni - toring of whether the conditions set out in the agreement entered into by the market makers and the platform are being consistently fulfilled. 7.3 Regulatory Distinction Between Funds and Dealers No distinction is made between funds and deal - ers engaged in these activities in the Portuguese jurisdiction.
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