# 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 (Text with EEA relevance) (revoked) EU Regulation 2017/565 ยท adopted 25 April 2016 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 (Text with EEA relevance) ## Introductory text 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 (Text with EEA relevance) (revoked) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Chapter I: SCOPE AND DEFINITIONS ## A1 Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 1 Subject-matter and scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 3 Conditions applying to the provision of information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 4 Provision of investment service in an incidental manner ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 5 Wholesale energy products that must be physically settled ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 6 Energy derivative contracts relating to oil and coal and wholesale energy products ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 7 Other derivative financial instruments ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 8 Derivatives under paragraph 10 of Part 1 of Schedule 2 to the Regulated Activities Order ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 9 Investment advice ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 10 Characteristics of other derivative contracts relating to currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 11 Money-market instruments ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 12 Systematic internalisers for shares, depositary receipts, ETFs, certificates and other similar financial instruments ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 13 Systematic internalisers for bonds ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 14 Systematic internalisers for structured finance products ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 15 Systematic internalisers for derivatives ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 16 Systematic internalisers for emission allowances ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 16ZA Transitional period: data for calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 16a Participation in matching arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 17 Relevant assessment periods ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 18 Algorithmic trading ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 19 High frequency algorithmic trading technique ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 20 Direct electronic access ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Chapter II: ORGANISATIONAL REQUIREMENTS ### Section 1: Organisation ## 21 General organisational requirements ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 22 Compliance ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 23 Risk management ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 24 Internal audit ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 25 Responsibility of senior management ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 26 Complaints handling ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 27 Remuneration policies and practices ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 28 Scope of personal transactions ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 29 Personal transactions ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Section 2: Outsourcing ## 30 Scope of critical and important operational functions ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 31 Outsourcing critical or important operational functions ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 32 Service providers located in third countries ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Section 3: Conflicts of interest ## 33 Conflicts of interest potentially detrimental to a client ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 34 Conflicts of interest policy ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 35 Record of services or activities giving rise to detrimental conflict of interest ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 36 Investment research and marketing communications ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 37 Additional organisational requirements in relation to investment research or marketing communications ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 38 Additional general requirements in relation to underwriting or placing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 39 Additional requirements in relation to pricing of offerings in relation to issuance of financial instruments ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 40 Additional requirements in relation to placing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 41 Additional requirements in relation to advice, distribution and self-placement ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 42 Additional requirements in relation to lending or provision of credit in the context of underwriting or placement ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 43 Record keeping in relation to underwriting or placing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Chapter III: OPERATING CONDITIONS FOR INVESTMENT FIRMS ### Section 1: Information to clients and potential clients ## 44 Fair, clear and not misleading information requirements ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 45 Information concerning client categorisation ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 46 General requirements for information to clients ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 47 Information about the investment firm and its services for clients and potential clients ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 48 Information about financial instruments ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 49 Information concerning safeguarding of client financial instruments or client funds ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 50 Information on costs and associated charges ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 51 Information provided in relation to units in collective investment undertakings or PRIIPs ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Section 2: Investment advice ## 52 Information about investment advice ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 53 Investment advice on an independent basis ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Section 3: Assessment of suitability and appropriateness ## 54 Assessment of suitability and suitability reports ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 55 Provisions common to the assessment of suitability or appropriateness ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 56 Assessment of appropriateness and related record-keeping obligations ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 57 Provision of services in non-complex instruments ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 58 Retail and Professional Client agreements ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Section 4: Reporting to clients ## 59 Reporting obligations in respect of execution of orders other than for portfolio management ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 60 Reporting obligations in respect of portfolio management ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 61 Reporting obligations in respect of eligible counterparties ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 62 Additional reporting obligations for portfolio management or contingent liability transactions ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 63 Statements of client financial instruments or client funds ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Section 5: Best execution ## 64 Best execution criteria ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 65 Duty of investment firms carrying out portfolio management and reception and transmission of orders to act in the best interests of the client ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 66 Execution policy ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Section 6: Client order handling ## 67 General principles ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 68 Aggregation and allocation of orders ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 69 Aggregation and allocation of transactions for own account ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 70 Prompt fair and expeditious execution of client orders and publication of unexecuted client limit orders for shares traded on a trading venue ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Section 7: Eligible counterparties ## 71 Eligible counterparties ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Section 8: Record-keeping ## 72 Retention of records ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 73 Record keeping of rights and obligations of the investment firm and the client ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 74 Record keeping of client orders and decision to deal ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 75 Record keeping of transactions and order processing ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 76 Recording of telephone conversations or electronic communications ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Section 9: SME growth markets ## 77 Qualification as an SME ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 78 Registration as an SME growth market ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 79 Deregistration as an SME growth market ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Chapter IV: OPERATING OBLIGATIONS FOR TRADING VENUES ## 80 Circumstances constituting significant damage to investors' interests and the orderly functioning of the market ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 81 Circumstances where significant infringements of the rules of a trading venue or disorderly trading conditions or system disruptions in relation to a financial instrument may be assumed ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 82 Circumstances where a conduct indicating behaviour that is prohibited under Regulation (EU) No 596/2014 may be assumed ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Chapter V: POSITION REPORTING IN COMMODITY DERIVATIVES ## 83 Position reporting ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Chapter VI: DATA PROVISION OBLIGATIONS FOR DATA REPORTING SERVICE PROVIDERS ## 84 Obligation to provide market data on a reasonable commercial basis ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 85 Provision of market data on the basis of cost ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 86 Obligation to provide market data on a non-discriminatory basis ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 87 Per user fees ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 88 Unbundling and disaggregating market data ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 89 Transparency obligation ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Chapter VII: COMPETENT AUTHORITIES AND FINAL PROVISIONS ## 90 Determination of the substantial importance of the operations of a trading venue in a host Member State(Article 79(2) of Directive 2014/65/EU) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Chapter VIII: FINAL PROVISIONS ## 91 Entry into force and application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Annex I: Record-keeping ## Minimum list of records to be kept by investment firms depending upon the nature of their activities . References to provisions in Directive 2014/65/EU are to be read as references to the provisions in the UK law on markets in financial instruments which implemented those provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Annex II: Costs and charges ## Identified costs that should form part of the costs to be disclosed to the clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Annex III: Requirement for operators of trading venues to immediately inform their national competent authority ### Division SECTION A: Signals that may indicate significant infringements of the rules of a trading venue or disorderly trading conditions or system disruptions in relation to a financial instrument ### Division: Significant infringements of the rules of a trading venue ## 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Disorderly trading conditions ## 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: System disruptions ## 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division SECTION B: Signals that may indicate abusive behaviour under Regulation (EU) No 596/2014 ### Division: Signals of possible insider dealing or market manipulation ## 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Division: Signals of possible insider dealing ## 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Signals of possible market manipulation The signals described below in points 18 to 23 are particularly relevant in an automated trading environment. ## 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## Signals for cross-product market manipulation, including across different trading venues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Section 1: Record keeping of client orders and decision to deal ## 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ### Section 2: Record keeping of transactions and order processing ## 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 38 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ## 40 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --- Source: https://www.legislation.gov.uk/eur/2017/565 (the official version) Page: https://openlegislation.uk/eu-regulation-2017-565 Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.