The European Guidelines On Systems And Controls For Electronic And Algorithmic Trading

On February 24, 2012, the European Securities and Markets Authority ("ESMA") published guidelines on systems and controls in an automated trading environment for trading platforms, investment firms and competent authorities (the "Guidelines"). The Guidelines interpret existing EU requirements set out in the Markets in Financial Instruments Directive ("MiFID") and Market Abuse Directive. They are intended to come into effect in May 2012.

The May 2010 Flash Crash, which affected U.S. and EU security and derivative markets, provided the principal impetus for the Guidelines. However, the substance of the Guidelines moves beyond the Flash Crash to address generally the reliability, compliance, and proper management of electronic trading systems ("ETSs") used to deal in securities, derivatives and other financial instruments, including large scale trading platforms, individual systems used by specific traders, systems used to execute orders, and systems which