In the context of our routine regulatory compliance reviews, we are aware that a number of trading participants are currently not providing the exchange with fully correct, complete or consistent data whilst trading on the T7 trading platform.
This relates to - in particular - the field entries for:
- the investment decision maker, algorithm or investment decision qualifier
- the executing trader, algorithm or executing trader qualifier
- the liquidity provision indicator
- the client identification code
- the account type (Agent, Principal or Market Maker)
The quality of this data is mandatory for monitoring and reporting obligations.
Therefore, we hereby kindly urge all trading participants to ensure that they are familiar and compliant with their respective obligations required by the Rules and Regulations of EEX, as well as under applicable laws and regulations.
The regulatory requirements are listed below. The EEX account managers shall shortly be following up with the respective trading companies to provide more details about known deficiencies.
A) Requirement for using an algorithmic tool to trade on the EEX
All trading participants that intent to use algorithmic trading tools have to notify the exchange prior to the use of such systems and must comply with the further requirements laid out in the Exchange Rules and Technical Implementation Regulation; in particular the testing requirement (see Article 19 paragraph 5 f of the Exchange Rules in conjunction with Sections 1.10 and 2.3 of the Technical Implementation Regulation). The notification and testing obligations apply irrespective of whether the algorithmic system will be used to trade financial instruments, OTF contracts, Gas Spot products or other non-financial instruments.
The use of an algorithmic system will require the completion of the EEX T11 form.
B) Investment decision maker, algorithm or investment decision qualifier
To identify if it is a person or algorithm responsible for the investment decision whilst trading, all exchange members are required to provide the respective identifier with the order, quote or entry into the T7 trading system.
The requirement is for a national ID for a natural person “{NATIONAL_ID}” or a numerical code “{INTEGER-19}” for an algorithm.
The {NATIONAL_ID} must be set up, as defined in Article 6 of Delegated Regulation (EU) 2017/590 (“RTS22”). For this purpose, you have to upload corresponding short/long code mapping data sets to the EEX member portal (details are described here: https://www.eex.com/fileadmin/EEX/Downloads/Regulatory_Reporting/MiFID_II_Downloads/Downloads/mifid-eex-overview-short-code-mapping-data.pdf). The {INTEGER-19} identifier must comply with the conditions stipulated in Article 8 paragraph 3 of RTS22. The {INTEGER-19} code identifying the algorithm must be identical to the one submitted to the EEX using form T11. The same applies in case short or long codes are used, they have to match the mapping information provided to EEX.
Please see Article 25 paragraph 2 in conjunction with Article 26 paragraph 3 Regulation (EU) 600/2014 (“MiFIR”) and Article 2 paragraph 1 lit. (b) of Delegated Regulation (EU) 2017/580 (“RTS24”)) for this legal requirement.
C) Executing trader, algorithm or executing trader qualifier
To identify if it is a person or algorithm responsible for the execution of a transaction in the T7 trading system, all exchange members are required to provide the respective identifier with the order, quote or entry into the T7 trading system.
The requirement is for a national ID for a natural person “{NATIONAL_ID}” or a numerical code “{INTEGER-19}” for an algorithm.
The {NATIONAL_ID} must be set up, as defined in Article 6 of Delegated Regulation (EU) 2017/590 (“RTS22”). For this purpose, you have to upload corresponding short/long code mapping data sets to the EEX member portal (details are described here: https://www.eex.com/fileadmin/EEX/Downloads/Regulatory_Reporting/MiFID_II_Downloads/Downloads/mifid-eex-overview-short-code-mapping-data.pdf). The {INTEGER-19} identifier must comply with the conditions stipulated in Article 8 paragraph 3 of RTS22. The {INTEGER-19} code identifying the algorithm, has to be identical to the one submitted to the EEX using form T11. The same applies in case short or long codes are used, they have to match the mapping information provided to EEX.
Please see Article 25 paragraph 2 in conjunction with Article 26 paragraph 3 Regulation (EU) 600/2014 (“MiFIR”) and Article 2 paragraph 1 lit. (b) of Delegated Regulation (EU) 2017/580 (“RTS24”)) for this legal requirement.
Please also be aware of the changed status of UK due to Brexit. In consequence you are requested to replace any “insurance numbers” used, with “passport numbers” as national IDs for UK persons. A dedicated customer information was sent out for this purpose.
D) Liquidity provision indicator
Orders that are submitted into the T7 trading system as part of a market-making strategy or as any other liquidity provision activity must be identified as such. The liquidity provision identifier has to be set to “true” in these cases and to “false” otherwise. Please see Article 3 paragraph 2 of RTS24 for this legal requirement.
E) Client identification code
Exchange members dealing on behalf of their clients must provide the respective short code (stands for the client identification code) with the orders, quotes or entries submitted into the T7 trading system (field client ID).
In case the Exchange Member provides its clients with direct electronic access (“DEA”), the code of the DEA user has to be used. The client identification code must be the {LEI} of the client in case the client is a legal entity or the {NATIONAL_ID} if the client is not a legal entity but a natural person. If several client orders are submitted to the T7 trading system together as an aggregated order, the flag “AGGR” has to be used. If an order has not yet been allocated to a client at the time of submission, the flag “PNAL” has to be used.
The short code used, must match the mapping information provided to EEX. For this purpose, you have to upload corresponding short/long code mapping data sets to the EEX member portal (details are described here: https://www.eex.com/fileadmin/EEX/Downloads/Regulatory_Reporting/MiFID_II_Downloads/Downloads/mifid-eex-overview-short-code-mapping-data.pdf).
Please see Article 25 paragraph 2 in conjunction with Article 26 paragraph 3 MiFIR and Article 2 paragraph 1 lit. (e) of RTS24 for this legal requirement.
F) Account type (Agent, Principal or Market Maker)
The account type that is to be specified with an order, quote or entry into the trading systems of EEX - pursuant to Article 42 paragraph 2 of the Trading Conditions of EEX - must correspond to the data and information provided upon submission of orders, quotes or entries. Use of an agent account (dealing on behalf of a client) requires insertion of the client ID accordingly.
Please note that the EEX Account Managers have been instructed to follow up and advise each member individually about their obligations to respect MiFIR compliance.
Should you have any further questions, please do not hesitate to contact sales@eex.com