Dealing in Securities: The Law and Regulation of Sales and Trading in Europe

The regulation of brokerage and dealing in securities is covered in this book, including the activities of sales, sales trading, trading, and execution, potential conflicts of interest, and regulatory obligations. It also covers dealing commission unbundling, multilateral trading, principal trading, the rise of Systematic Internalisers, electronic trading, algorithmic trading, direct electronic access, and high-frequency trading.

Format: Hardback
Length: 192 pages
Publication date: 30 November 2021
Publisher: Bloomsbury Publishing PLC

The recent liberalisation of national authorisation regimes across Europe in the wake of MiFID II and Brexit, which has resulted in tensions with recent attempts by the EU to harmonise centrally the single market authorisation regime, is fully addressed. It reviews the details of the activities of sales, sales trading, trading and execution, what they each constitute (with reference to established communication and order management systems), the potential conflicts of interest that they bring about for a firm and how such conflicts can be managed. Each of these activities are mapped against specific regulatory obligations, such as best execution, pre- and post-trade transparency, inducements, dealing commissions rules, the short selling regime and shareholder disclosures, depicting the obligations schematically to assist the practitioner. Also covers: - dealing commission unbundling, which has reformed the way the provision and consumption of independent research and corporate access are related to execution services; - the question of multilateral trading, in other words the point at which the activity of a broker becomes exchange-like and needs to be authorised as such; - principal trading and the ability of firms to advance risk to their clients in the wake of the Volcker rule in the United States and similar legislation in Germany and elsewhere; - the rise of Systematic Internalisers and the constraints imposed on them, such as the pre-trade transparency requirements and the tick size regime.

Whether brokerage and dealing in securities is regulated in a jurisdiction is a crucial question that requires careful consideration. The regulation of these activities is essential to ensure the integrity of the financial markets, protect investors, and prevent market abuse. In this essay, we will explore the aspects of the activity that could bring it in scope for authorisation, and how it is determined which regulator has legal competence to supervise the business in scope.

One of the key aspects of the brokerage and dealing in securities activity that could bring it in scope for authorisation is the nature of the transactions involved. Securities transactions can take various forms, including the sale and purchase of stocks, bonds, and other financial instruments. The type of transaction, the size of the transaction, and the parties involved can all impact whether the activity is regulated. For example, transactions involving large sums, complex financial instruments, or high-risk investments may require additional regulatory oversight.

Another aspect that could bring brokerage and dealing in securities in scope for authorisation is the location of the business. Different jurisdictions have different regulatory frameworks in place, depending on the country. For example, the United States has a complex regulatory framework that includes the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). In the European Union, the MiFID II Directive has introduced a single market authorisation regime that applies to all EU member states. However, there are still differences in the regulatory frameworks across different member states, with some countries implementing more stringent rules than others.

The third aspect that could bring brokerage and dealing in securities in scope for authorisation is the nature of the clients involved. Different types of clients may require different levels of regulatory oversight. For example, retail investors may require less regulatory oversight than institutional investors, who may be subject to more stringent rules and regulations. Additionally, clients located in different jurisdictions may require different levels of regulatory oversight, depending on the local laws and regulations.

Once it is determined which regulator has legal competence to supervise the business in scope, the next step is to determine which aspects of the activity require authorisation. Authorisation requirements can vary depending on the jurisdiction and the type of activity involved. In general, however, authorisation requirements may include: - registration with the relevant regulatory authority. - compliance with applicable laws and regulations. - the establishment of internal controls and procedures to prevent market abuse. - the provision of adequate training to staff. - the maintenance of adequate capital and resources. - the implementation of appropriate risk management systems. - the provision of independent research and corporate access. - the implementation of appropriate systems and procedures to prevent insider trading. - the implementation of appropriate systems and procedures to prevent market manipulation. - the implementation of appropriate systems and procedures to prevent conflicts of interest.

In conclusion, the regulation of brokerage and dealing in securities is a complex and multifaceted issue that requires careful consideration. Whether brokerage and dealing in securities is regulated in a jurisdiction is determined by a variety of factors, including the nature of the transactions involved, the location of the business, the nature of the clients involved, and the specific regulatory framework in place. Once it is determined which regulator has legal competence to supervise the business in scope, the next step is to determine which aspects of the activity require authorisation. Authorisation requirements can vary depending on the jurisdiction.

Weight: 680g
Dimension: 248 x 156 (mm)
ISBN-13: 9781526514363