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Notifying algorithmic trading and effective systems

If you as a market participant use algorithms, you will need to notify ACM thereof. You also need to create systems that ensure the resilience of the trading systems. These systems must have sufficient capacity, and must comply with the relevant trading rules.

Notifying algorithmic trading

Algorithmic trading is a form of trading without or with limited human intervention. A computer algorithm automatically sets trading parameters of orders, or the algorithm places orders.

If you are registered as a market participant with ACM, and you use algorithms, notify the algorithmic trading in the CEREMP trading system. Indicate that you use algorithmic trading. And give other market participants access to an organized marketplace using Direct Electronic Access.

Effective systems and checks

Market participants that use algorithms must have effective systems and risk checks in place. This means that they need to ensure that:

  • The trading systems are resilient, have sufficient capacity, and have trading thresholds and limits;
  • They do not send erroneous trading orders or that the trading systems do not contribute to a disorderly market in any other way;
  • They guarantee that the trading systems comply with this regulation and with the rules of the exchange with which the participant is affiliated.

In addition, market participants that use algorithms must be able to handle any disruption to the systems.

Testing and keeping of documentation

As a market participant, you must ensure that you fully test and check your systems. You must keep all documents that prove this for five years.

ACM may request documentation

ACM may request, regularly or incidentally, the market participant to provide information about:

  • The trading strategy with regard to algorithmic trading, including information about trading parameters and trading limits;
  • Your checks that ensure that the algorithm complies with the relevant rules;
  • The testing of your trading systems;
  • The systems and risk checks that were used, including proof that you have conducted them.

Sources

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