Section 2

In these Regulations— “the Act” means the Financial Services and Markets Act 2000 ; “algorithmic trading” means trading in financial instruments where a computer algorithm automatically determines individual parameters of orders such as whether to initiate the order, the timing, price or quantity of the order or how to manage the order after its submission, with limited or no human intervention, and does not include any system that is only used for the purpose of routing orders to one or more trading venues or for the processing of orders involving no determination of any trading parameters or for the confirmation of orders or the post-trade processing of executed transactions; “ancillary services” means any of the services and activities listed in Part 3A of Schedule 2 to the Regulated Activities Order; “appropriate regulator” has the meaning given in section 55A of the Act; “authorised person” has the same meaning as in section 31(2) (authorised persons) of the Act; “branch” has the meaning given by Article 2.1.20 of the markets in financial instruments regulation; “client” has the meaning given by Article 2.1.7 of the markets in financial instruments regulation; “the Commission” means the Commission of the European Union; “commodity derivative” has the meaning given by Article 2.1.30 of the markets in financial instruments regulation; “competent authority” means the authority designated by regulation 3; “credit institution” has the meaning given by Article 2.1.19 of the markets in financial instruments regulation; “derivative” means a financial instrument referred to in paragraphs 4 to 10 of Part 1 of Schedule 2 to the Regulated Activities Order; “direct electronic access” means an arrangement where a member or participant or client of a trading venue permits a person to use its trading code so the person can electronically transmit orders relating to a financial instrument directly to the trading venue and includes arrangements which involve the use by a person of the infrastructure of the member or participant or client, or any connecting system provided by the member or participant or client, to transmit the orders (direct market access) and arrangements where such an infrastructure is not used by a person (sponsored access); “EEA” means the European Economic Area created by the EEA agreement; “emission allowance” means an emission allowance as described in paragraph 11 of Part 1 of Schedule 2 to the Regulated Activities Order; ... “the FCA” means the Financial Conduct Authority; “financial instrument” means those instruments specified in Part 1 of Schedule 2 to the Regulated Activities Order, read with Part 2 of that Schedule; “high-frequency algorithmic trading technique” means an algorithmic trading technique characterised by— infrastructure intended to minimise network and other types of latencies, including at least one of the following facilities for algorithmic order entry— co-location; proximity hosting; or high-speed direct electronic access; system-determination of order initiation, generation, routing or execution without human intervention for individual trades or orders; and high message intraday rates (see regulation 2B) which constitute orders, quotes or cancellations; “investment activity” means an activity listed in Part 3 of Schedule 2 to the Regulated Activities Order relating to a financial instrument; “investment firm” has the meaning given by Article 2.1A of the markets in financial instruments regulation; “investment service” means any service listed in Part 3 of Schedule 2 to the Regulated Activities Order relating to a financial instrument; “investment services and activities” means any of the services and activities listed in Part 3 of Schedule 2 to the Regulated Activities Order relating to a financial instrument; “market abuse” means a contravention of Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or 15 (prohibition of market manipulation) of the market abuse regulation; “market abuse regulation” means Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) ; “markets in financial instruments directive” means Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (recast) ; “markets in financial instruments regulation” means Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments ; “multilateral trading facility” or “MTF”, “UK multilateral trading facility” or “UK MTF” and “EU multilateral trading facility” or “EU MTF” have the meanings given in Article 2.1.14, 2.1.14A and 2.1.14B respectively of the markets in financial instruments regulation; “OTF” has the meaning given in Article 2.1.15 of the markets in financial instruments regulation; “the PRA” means the Prudential Regulation Authority; “Part 4A permission” has the meaning given by section 55A(5) (application for permission) of the Act; “recognised investment exchange” has the meaning given by section 285(1)(a) (exemption for recognised investment exchanges and clearing houses) of the Act; “regulated activity” has the meaning given by section 22 (regulated activities) of the Act; “Regulated Activities Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; “Regulation (EU) 2017/578” means Commission Delegated Regulation (EU) 2017/578 supplementing Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards specifying the requirements on market making agreements and schemes; “Regulation (EU) 2017/589” means Commission Delegated Regulation (EU) 2017/589 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the organisational requirements of investment firms engaged in algorithmic trading; “Regulation (EU) 2017/591” means Commission Delegated Regulation (EU) 2017/591 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the application of position limits to commodity derivatives; “SME growth market” means a MTF that is registered as an SME growth market in accordance with Part 5.10 of the Market Conduct sourcebook containing rules made by the FCA under the Act; “regulated market”, “UK regulated market” and “EU regulated market” have the meanings given in Article 2.1.13, 2.1.13A and 2.1.13B respectively of the markets in financial instruments regulation; “trading venue”, “UK trading venue” and “EU trading venue” have the meanings given in Article 2.1.16, 2.1.16A and 2.1.16B respectively of the markets in financial instruments regulation; “the Tribunal” means the Upper Tribunal. For the purposes of the definition of “algorithmic trading” in paragraph (1), a system is to be considered as having limited or no human intervention where, for any order or quote generation process or any process to optimise order-execution, an automated system makes decisions at any of the stages of initiating, generating, routing or executing orders or quotes according to pre-determined parameters. For the purposes of the definition of “direct electronic access” in paragraph (1), a person is to be considered not capable of electronically transmitting orders relating to a financial instrument directly to a trading venue where either or both of the following apply— that person cannot exercise discretion regarding— the exact fraction of a second of order entry, and the lifetime of the order within that timeframe; the electronic transmission of orders takes place through arrangements for optimisation of order execution processes that determine the parameters of the order other than the trading venue where the order should be submitted, unless these arrangements are embedded into that person’s systems and not into those of— the member or participant of a regulated market or of an MTF, or a client of an OTF. In these Regulations any reference to the markets in financial instruments directive or the markets in financial instruments regulation includes any EU legislation made under the directive or the regulation. Unless the context otherwise requires, all references in these Regulations to— a trading venue are to a UK trading venue; a regulated market are to a UK regulated market; an MTF are to a UK MTF; an OTF are to a UK OTF; and an EU regulated market, EU MTF or EU OTF include EU regulated markets, MTFs and OTFs in EEA countries. References in these Regulations to a “third country” (including in expressions including the words “third country”) are, except where the context otherwise requires, to be read as references to a country other than the United Kingdom. Any reference in these Regulations to a sourcebook is to a sourcebook in the Handbook of Rules and Guidance published by the FCA containing rules made by the FCA under the Act, as the sourcebook has effect on IP completion day.

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Source: legislation.gov.uk · retrieved 2026-09-04