SECTION 2 Specification of the criteria to consider when establishing accepted market practices

Article 3Transparency1.

In determining whether a market practice can be established as an AMP and whether it fulfils the criterion set out in point (a) of Article 13(2) of Regulation (EU) No 596/2014, competent authorities shall examine whether the market practice ensures that the following information will be disclosed to the public:

(a)

before a market practice is performed as an AMP:

(i)

the identities of the beneficiaries and the persons who will perform it and the one among them that is responsible to fulfil the transparency requirements under points (b) and (c) of this paragraph;

(ii)

the identification of the financial instruments in relation to which the AMP will apply;

(iii)

the period during which the AMP will be performed and situations or conditions leading to the temporary interruption, suspension or termination of its performance;

(iv)

the identification of the trading venues on which the AMP will be carried out, and, where applicable, indication of the possibility to execute transactions outside a trading venue;

(v)

reference to the maximum amounts of cash and of the number of financial instruments allocated to the performance of the AMP, if applicable.

(b)

once the market practice is performed as an AMP:

(i)

on a periodic basis, details of the trading activity relating to the performance of the AMP such as the number of transactions executed, volume traded, average size of the transactions and average spreads quoted, prices of executed transactions;

(ii)

any changes to previously disclosed information on the AMP, including changes relating to available resources in terms of cash and financial instruments, changes to the identity of persons performing the AMP, and any change in the allocation of cash or financial instruments in the accounts of the beneficiary and the persons performing the AMP.

(c)

when the market practice ceases to be performed as an AMP on the initiative of the person who has been performing it, of the beneficiary or of both:

(i)

the fact that the performance of the AMP has ceased;

(ii)

a description of how the AMP has been performed;

(iii)

the reasons or causes for ceasing the performance of the AMP.

For the purposes of point (b)(i), where multiple transactions in a single trading session are performed, daily aggregated figures may be acceptable in relation to the appropriate categories of information.

(a)

before a market practice is performed as an AMP, the arrangements or contracts between the identified beneficiaries and the persons who will perform the market practice once established as an AMP where such arrangements or contracts are needed for its performance;

(b)

once the market practice is performed as an AMP, periodic report to the competent authority providing details about the transactions executed and about the operations of any arrangement or contract between the beneficiary and the persons performing the AMP.

Article 4Safeguards of the operations of the market forces and interplay of the forces of supply and demand1.

In determining whether a market practice proposed to be established as an AMP complies with the criterion set out in point (b) of Article 13(2) of Regulation (EU) No 596/2014, competent authorities shall consider whether the market practice limits the opportunities for other market participants to respond to transactions. Competent authorities shall also consider at a minimum the following criteria relating to the types of persons who will perform the market practice once established as an AMP:

(a)

whether they are supervised persons;

(b)

whether they are members of a trading venue where the AMP will be performed;

(c)

whether they maintain records of orders and transactions relating to the market practice performed in a way that allows it to be easily distinguished from other trading activities, including through the maintenance of separate accounts for the performance of the AMP, in particular to demonstrate that orders introduced are entered separately and individually without aggregating orders from several clients;

(d)

whether they have put in place specific internal procedures allowing:

(i)

immediate identification of the activities relating to the market practice;

(ii)

ready availability of the relevant orders and transaction records to the competent authority upon request;

(e)

whether they possess the compliance and audit resources necessary to be able to monitor and ensure compliance at all times with the conditions set for the AMP;

(f)

whether they keep the records mentioned in point (c) for a period of at least five years.

Competent authorities shall consider the extent to which the market practice establishes an ex ante list of trading conditions for its performance as an AMP, including limits with regard to prices and volumes and limits on positions.

Competent authorities shall assess the extent to which the market practice and the arrangement or contract for its performance:

(a)

enables the person performing the AMP to act independently from the beneficiary without being subject to instructions, information or influence from the beneficiary as regards the manner in which trading is to be conducted;

(b)

allows for the avoidance of conflicts of interest between the beneficiary and the clients of the person performing the AMP.

Article 5Impact on market liquidity and efficiency

In determining whether a market practice proposed to be established as an AMP complies with the criterion set out in point (c) of Article 13(2) of Regulation (EU) No 596/2014, competent authorities shall assess the impact the market practice has on at least the following elements:

(a)

volume traded;

(b)

number of orders in the order book (order depth);

(c)

speed of execution of the transactions;

(d)

volume weighted average price of a single session, daily closing price;

(e)

bid/offer spread, price fluctuation and volatility;

(f)

regularity of quotations or transactions.

Article 6Impact on the proper functioning of the market1.

In determining whether a market practice proposed to be established as an AMP complies with the criterion set out in point (d) of Article 13(2) of Regulation (EU) No 596/2014, competent authorities shall consider the following elements:

(a)

the possibility that the market practice could affect price formation processes in a trading venue;

(b)

the extent to which the market practice could facilitate the evaluation of prices and orders entered into the order book and whether the transactions to be carried out or orders to be introduced for its performance as an AMP do not contravene the trading rules of the corresponding trading venue;

(c)

the modalities by which the information referred to in Article 3 is disclosed to the public including where it is disclosed on the website of the relevant trading platform and, when appropriate, where it is simultaneously released on the websites of the beneficiaries;

(d)

the extent to which the market practice establishes an ex ante list of situations or conditions when its performance as an AMP is temporarily suspended or restricted, inter alia, particular trading periods or phases such as auction phases, takeovers, initial public offerings, capital increases, secondary offerings.

For the purposes of point (b) of the first subparagraph, a market practice where transactions and orders are monitored in real time by the market operator or the investment firm or market operators operating a MTF or an OTF shall also be taken into consideration.

Competent authorities shall assess the extent to which a market practice enables:

(a)

orders related to its performance to be submitted and executed during opening or closing auction phases of a trading session;

(b)

orders or transactions related to its performance to be introduced or carried out during periods when stabilisations and buy-back operations are conducted.

Article 7Risks for the integrity of related markets

In determining whether a market practice proposed to be established as an AMP complies with the criterion set out in point (e) of Article 13(2) of Regulation (EU) No 596/2014, competent authorities shall consider:

(a)

whether the transactions related to the performance of the market practice once established as an AMP will be reported to competent authorities on a regular basis;

(b)

whether the resources (cash or financial instruments) to be allocated to the performance of the AMP are proportionate and commensurate with the objectives of the AMP itself;

(c)

the nature and level of the compensation for services provided within the performance of an AMP and whether that compensation is established as a fixed amount; where variable compensation is proposed, it shall not lead to behaviour which may be prejudicial to market integrity or to the orderly functioning of the market and shall be available to the competent authority for assessment;

(d)

whether the type of persons who will perform the AMP ensure, where appropriate to the market under consideration, an adequate separation of the assets dedicated to the performance of the AMP from the assets of its clients, if any, or its own assets;

(e)

whether the respective duties of the beneficiaries and of the persons performing the AMP or, where appropriate, the duties shared by them are clearly defined;

(f)

whether the type of persons who will perform the AMP have in place an organisational structure and adequate internal arrangements to ensure that the trading decisions relating to the AMP remain confidential from other units within that person and independent from orders to trade received from clients, portfolio management or orders placed on its own account;

(g)

whether an adequate reporting process between the beneficiary and the person who will perform the AMP is in place to allow the exchange of the necessary information to fulfil their respective legal or contractual obligations, if applicable.

Article 8Investigation of the market practice

In determining whether a market practice proposed to be established as an AMP complies with the criterion set out in point (f) of Article 13(2) of Regulation (EU) No 596/2014, competent authorities shall in particular take into account the outcome of any investigation in the markets they monitor that might question the AMP to be established.

Article 9Structural characteristics of the market

In taking into account, in accordance with point (g) of Article 13(2) of Regulation (EU) No 596/2014, the participation of retail-investors in the relevant market, competent authorities shall assess at a minimum:

(a)

the impact the market practice might have on retail investors' interests where the market practice concerns financial instruments traded on markets in which retail investors participate;

(b)

whether the market practice increases the probability of retail investors to find counterparties in low-liquidity financial instruments, without increasing the risks borne by them.