Q&A · ESMA

Automated Order Router (AOR) and algorithmic trading

Answered

Read the official text on the ESMA website(opens in a new tab)

AI-generated Summary

An automated order router that sends the same unmodified order to several venues, and cancels the unexecuted copies once one is filled, is not algorithmic trading, because it only chooses venues and changes no other order parameter.

Details

Reference	ESMA_QA_1599
Issuer	ESMA
Published	19 Dec 2016
Answered	19 Dec 2016
Submitted	19 Dec 2016
ESMA topics	Direct Electronic Access and algorithmic trading
Earlier Q&A document	ESMA 70-872942901-38 MiFID II MiFIR market structures Q&A, Q&A 3.3

Provisions it relates to

Article 4 MiFID II · Definitions
MiFID II
Inferred · 80%
Article 17 MiFID II · Algorithmic trading
MiFID II
Inferred · 75%
MiFID II (whole act)
Explicit reference

Documents it refers to

Delegated actIn forceExplicit reference
Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
European Commission · 31 Mar 2017 · EUR-Lex
AI summaryThe main MiFID II Delegated Regulation: defines key terms (such as investment advice, systematic internaliser, algorithmic and high-frequency trading, and direct electronic access) and sets detailed organisational requirements and operating conditions for investment firms, including compliance, conflicts of interest, remuneration, client information, suitability and appropriateness, best execution, client order handling, reporting to clients, record keeping and transaction-level obligations.