AI Summary of Article 23 Trading obligation for investment firms
An investment firm must execute trades in shares with a European Economic Area (EEA) ISIN on appropriate venues, including regulated markets or multilateral trading facilities (MTFs), unless specific exemptions apply. These exemptions include trades executed on third-country venues in local or non-EEA currencies, or trades between eligible and professional counterparties that do not assist in price discovery.
Furthermore, firms operating internal matching systems for client orders in certain financial instruments are required to obtain MTF authorisation. The European Securities and Markets Authority (ESMA) will develop regulatory technical standards to identify transactions that do not contribute to price discovery, considering circumstances like non-addressable liquidity trades.
Article 23 Trading obligation for investment firms
An investment firm shall ensure that the trades it undertakes in shares which have a European Economic Area (EEA) International Securities Identification Number (ISIN), and which are traded on a trading venue, take place on a regulated market, an MTF, a systematic internaliser or a third-country trading venue assessed as equivalent in accordance with Article 25(4), point (a), of Directive 2014/65/EU, as appropriate, unless:
(a) those shares are traded on a third-country venue in the local currency or in a non-EEA currency; or
(b) those trades are carried out between eligible counterparties, between professional counterparties or between eligible and professional counterparties and do not contribute to the price discovery process.
2. An investment firm that operates an internal matching system which executes client orders in shares, depositary receipts, ETFs, certificates and other similar financial instruments on a multilateral basis must ensure it is authorised as an MTF under Directive 2014/65/EU and comply with all relevant provisions pertaining to such authorisations.