The Committee of European Securities Regulators (CESR) has published new common standards for alternative trading systems (ATS) operating in Europe.
The new guidelines set out standards for regulation of investment firms operating ATSs under the current Investment Services Directive. It builds on Fesco’s report to the European Commission on the regulation of ATSs in Europe, which was published in September 2000.
The standards identify particular areas in which CESR believes that additional regulation is required to ensure market integrity and investor protection:
* Notification: the investment firm running an ATS should provide the competent authorities with information about the price formation process, rules of the system, system participants and the types of instruments traded;
* Transparency: ATSs should comply with minimum transparency requirements;
* Reporting Rules: additional reporting requirements should be imposed on ATSs to the extent needed to enable competent authorities to monitor market share of ATSs and changes to the information initially notified; and
* Prevention of Market Abuse: requirements placed on ATSs should make it possible to detect, deter and punish market abuse.
CESR has decided to establish an informal contact group to monitor the application of the guidelines across Europe, and to open lines of communication with investment firms operating qualifying systems.
Arthur Docters van Leewen, chairman of CESR, says the standard should help to clarify the appropriate regulatory regime in the period before the revised ISD enters into force. "The standards will provide an efficient interim regime tackling the issues raised by multilateral ATSs," he says. "It will also help to ensure a level playing field."
Seperately, the European Central Bank has set out revised standards for the operation of retail payments systems in the euro area. The ECB is looking to tighten up existing standards and extend their application to non-systemic payment systems. A draft document has been issued for public consultation with an end-September deadline for comment.