EU · MiFID II · TITLE III REGULATED MARKETS
Article 48 MiFID IISystems resilience, circuit breakers and electronic trading
Requires regulated markets (and, via Article 18, MTFs and OTFs) to have resilient trading systems in line with DORA, market making agreements and schemes, controls to reject erroneous or excessive orders, circuit breakers to halt or constrain trading, the ability to cancel trades, controls on algorithmic trading, direct electronic access and co-location, fair fee structures, order-to-trade ratio limits, minimum order sizes and flagging of algorithmic orders; mandates related RTS.
Amendments and application dates
| Amending act | Change | Applies from |
|---|---|---|
| Directive (EU) 2022/2556 | Text amended | 17 Jan 2025 |
| Directive (EU) 2024/790 | Text deleted; Text inserted; Text amended | 29 Sept 2025 |
Level 2: delegated and implementing acts
- RTSIn forceLegal basis
AI summaryRTS 9 requiring trading venues operating electronic continuous auction order book, quote-driven or hybrid systems to calculate, at least at the end of each trading session, each member's ratio of unexecuted orders to transactions and to set maximum ratios to prevent disorderly trading conditions; voice trading systems are excluded.
- RTSIn forceLegal basis
AI summaryRTS determining which trading venue counts as a material market in terms of liquidity for each type of financial instrument, so that it must notify its competent authority of temporary trading halts and allow other venues to coordinate under Article 48(5) MiFID II.
- RTSIn forceLegal basis
AI summaryRTS 10 on fair and non-discriminatory co-location services and fee structures at trading venues: venues may set their own co-location policy on objective, transparent criteria (including for third-party data centres), must publish their co-location and fee terms, and must not use fee structures that encourage disorderly trading; volume discounts are allowed only where the reduced fee applies to trades after the threshold is reached.
- RTSIn forceLegal basis
AI summaryRTS 8 on market making: specifies when algorithmic traders pursuing a market making strategy must sign a market making agreement with a trading venue, the agreement's minimum content and the exceptional circumstances that suspend obligations, and requires venues to run fair and non-discriminatory market making schemes for specified liquid instruments.
- RTSIn forceLegal basis
AI summaryRTS 7 on organisational requirements of trading venues that permit or enable algorithmic trading: covers governance, compliance, staffing and outsourcing, member due diligence, conformance and algorithm testing, capacity, monitoring, business continuity, volatility mechanisms, pre- and post-trade controls, and conditions for direct electronic and sponsored access.
Level 3: ESMA Q&As, guidelines and opinions
- Q&AAnsweredInferred · 90%
AI summaryRTS 7 applies to any trading venue where order submission and matching are facilitated electronically, including RFQ systems without auto-matching and venues that prohibit algorithmic trading, though some organisational requirements may be applied proportionately to such trading models.
- Q&AAnsweredInferred · 85%
AI summaryUnder Article 6 of RTS 8, venues must offer incentives, monetary or not, that reward market makers who actually provide liquidity (presence, size and spread) in stressed conditions; schemes that reward all market makers regardless, or favour normal over stressed conditions, do not comply.
- Q&AAnsweredInferred · 90%
AI summaryPayments or rebates from a trading venue for providing liquidity do not always require a formal RTS 8 market making agreement, but recipients must be subject to appropriate market making obligations; maker/taker schemes are therefore open to other market makers as well as to firms required to sign agreements.
- Q&AAnsweredInferred · 85%
AI summaryFor the RTS 9 ratio of unexecuted orders to transactions, each quote within a bulk quote is counted individually, per financial instrument, as two orders (one buy, one sell), following the most similar order type in the RTS 9 Annex.
- Q&AAnsweredInferred · 85%
AI summaryTrading venues must publish their fee criteria, structures and other conditions under Article 4 of RTS 10 in one comprehensive document on their website that anyone can download immediately; requiring an email request or online form does not comply.
- Q&AAnsweredInferred · 90%
AI summaryOnly MiFID II investment firms or CRD credit institutions may provide direct electronic access to EU trading venues under Article 48(7) MiFID II, so non-EU firms (even from equivalent jurisdictions) and unlicensed EU firms cannot, wherever their clients are.
- Q&AAnsweredInferred · 85%
AI summaryWhere a member submits many orders without any trade, so the RTS 9 order-to-trade ratio cannot be computed, venues should treat the maximum ratio as breached once the orders exceed the number allowed per executed transaction (for example more than 10 orders with no trade where the limit is 10).
- Q&AAnsweredInferred · 85%
AI summaryVenues allowing algorithmic trading must publish a maximum bid-ask range for every instrument they trade (they may group instruments), so firms can tell whether they are pursuing a market making strategy requiring an agreement, while market making schemes are needed only for the instruments listed in Article 5 of RTS 8.
- Q&AAnsweredInferred · 90%
AI summaryTrading venues may set different maximum order-to-trade ratios for different categories of participants, such as market makers under agreements or schemes, provided the limits serve Article 48 MiFID II and rest on statistical analysis of each category's activity and the instruments' liquidity.
- Q&AAnsweredInferred · 70%
AI summaryTrading venues allowing algorithmic trading must be able to cancel or revoke transactions when volatility mechanisms or trading systems malfunction (Article 18 RTS 7), and their rulebooks may set out other exceptional cases for cancellation, provided these are transparent and non-discriminatory.
- Q&AAnsweredInferred · 85%
AI summaryA trading venue whose systems sit in a third-party data centre must ensure that the third party offers proximity hosting to its members fairly and without discrimination, as RTS 10 requires, for example by agreement with the provider.
- GuidelinesPublishedESMA rulebook
AI summaryESMA guidelines (ESMA70-872942901-63), applying from 3 January 2018, for trading venues that allow or enable algorithmic trading on calibrating volatility mechanisms (circuit breakers) under Article 48(5) MiFID II, including the parameters to consider and periodic review, and on communicating trading halts to the market.
- GuidelinesPublishedESMA rulebook
AI summaryESMA guidelines of May 2021 (ESMA50-164-4285) on outsourcing to cloud service providers by a wide range of firms, including fund managers and depositaries, CCPs, trade repositories and MiFID II investment firms and credit institutions providing investment services, covering governance and documentation, pre-outsourcing due diligence, key contract terms, information security, exit strategies, access and audit rights, sub-outsourcing, notifying authorities and supervision.
- Q&ALegacy Q&A documentESMA rulebook
AI summaryESMA's consolidated legacy Q&A document (ESMA70-872942901-38, final version 13 October 2023) on market structure topics, covering data disaggregation, direct electronic access and algorithmic trading, the tick size regime, multilateral and bilateral systems (including OTFs and systematic internalisers) and access to CCPs and trading venues. It is no longer updated; later Q&As are in ESMA's Q&A tool.
Commentary
No law-firm commentary is linked to this provision yet.
393 more documents relate to MiFID II as a whole without naming an article.
UK counterpart
- DivergedExplicit reference · 90%
EU changes after exit: Directive (EU) 2022/2556 (from 17 Jan 2025), Directive (EU) 2024/790 (from 29 Sept 2025).
- MAR 5.3A.2R Systems and controls
- MAR 5.3A.3R Market making agreements
- MAR 5.3A.4R Market making agreements
- MAR 5.3A.5R Measures to prevent disorderly markets
- MAR 5.3A.6R Measures to prevent disorderly markets
- MAR 5.3A.7R Measures to prevent disorderly markets
- MAR 5.3A.8R Measures to prevent disorderly markets
- MAR 5.3A.9R Direct electronic access
- MAR 5.3A.10R Co-location
- MAR 5.3A.11R Fee structures
- MAR 5.3A.12G Fee structures
- MAR 5.3A.13R Flagging orders, tick sizes and clock synchronisation
- MAR 5A.5.2R Systems and controls
- MAR 5A.5.3R Market making agreements
- MAR 5A.5.4R Market making agreements
- MAR 5A.5.5R Measures to prevent disorderly markets
- MAR 5A.5.6R Measures to prevent disorderly markets
- MAR 5A.5.7R Measures to prevent disorderly markets
- MAR 5A.5.8R Measures to prevent disorderly markets
- MAR 5A.5.9R Direct electronic access
- MAR 5A.5.10R Co-location
- MAR 5A.5.11R Fee structures
- MAR 5A.5.12G Fee structures
- MAR 5A.5.13R Flagging orders, tick sizes and clock synchronisation
- MAR 7A.2.1G
- REC 3.15.2R Suspension of services
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Version history
- From 17 Jan 2025
- From 28 Mar 2024 to 17 Jan 2025
- From 17 Sept 2014 to 28 Mar 2024
Each entry is a consolidated version of the act on EUR-Lex in which this provision appears. The text itself is on the official site.