Royal Decree-law 21/2017, of December 29, on trading venues for financial instruments, adjustments to MIFID II

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Royal Deecree-law 21/2017, of December 29, adapts in extremis the Spanish internal regulations (the Securities Market Law) to the European regulation MIFID II and, in particular to Directive 2014/65/EU, Directive 2016/1034 and Regulation (EU) 600/2014, applying both the RD-law and the Regulation as of January 3, 2018.

RD-law 21/2017 regulates the trading venues for financial instruments, whose purpose is the execution of transactions by investment firms on stock in regulated markets and multilateral trading facilities.

This RD-law also introduces the figure of organized trading facilities (OTF), as a complement to regulated markets and multilateral trading facilities (MTF), referring to the negotiation of public debt and derivative products. OTF are alternative regulated markets (such as the MAB in Spain), with fewer requirements than MTF for its operation.

Spanish regulated markets require prior authorization by the CNMV, each regulated market requires a managing body, which is responsible for administer it. The regulated market can be a legal entity managed by this same legal entity, or its managing body may be another legal entity different to the market itself. In this second case, the requirements are shared among the parties according to its functions. The so-called regulated markets in this RD-law are the official secondary markets Bolsa de Valores and AIAF, among others.

The RD-law 21/2017 in its art. 10 include the rules of operation of orders generated by algorithmic negotiation. The markets that allow direct electronic access must implement effective systems, procedures and mechanisms to ensure that: (i) only allow to provide these services to members that have been authorized as investment firms and (ii) apply adequate standards regarding the suitability of the persons to whom its access is authorized, keeping the responsibility on the authorized member. The algorithmic negotiation regulation responds to the introduction and expansion of the execution of investment orders through computer systems (automatic trading and roboadvisors).