Market Makers and Liquidity Providers

LuxSE has adjusted its internal framework to ensure that it complies with the new MiFID II/MiFIR framework, entering into force on 3 January 2018.

Market Makers and Liquidity Providers

Market Makers


Investment firms engaged in algorithmic trading and pursuing market making strategies on any LuxSE tradable instrument are required to enter into a Market Making Agreement with LuxSE by submitting the complete Registration Form.

LuxSE also offers Market Making Schemes on the following instruments, if there is a liquid market: equities and ETFs.

As a reminder, Market Makers (whether under a Scheme or only under the Agreement) will be required, amongst other things, to post firm, simultaneous two-way quotes of comparable size and competitive prices, and deal on their own account for 50% of the daily trading hours over a single calendar month period, as a minimum.
 

Registration process


All LuxSE members acting as Market Makers must complete the Registration Form thus confirming their understanding and acceptance of the General Terms and Conditions that apply to all LuxSE instruments. All documents are available below.
 
Upon entering into the Market Making Agreement through the completion of the Registration Form, members are eligible to apply for a Market Making Scheme for each specific product individually, except where indicated otherwise. 

For further details, please contact the Market & Surveillance (M&S) Department.
 

Schemes

 
LuxSE has implemented a range of Market Making Schemes to be compliant with MiFID II framework:


Market Makers under the different Market Making Schemes or under the Agreement will be required to flag all relevant orders and quotes on the LuxSE Order Entry systems as follows:

  • Account code on LuxSE Cash Markets, combined with Algorithm flagged for the MiFID II field "ExecutionWithinFirmShortCode".

Stressed Market Conditions


In a situation constituting Stressed Markets Conditions (SMC), the obligation of the participant under the Market Making Scheme to provide liquidity on a regular and predictable basis will be amended to double the spread requirements and half the size obligations.

During SMC, presence will continue to be monitored.

SMC are considered to arise, in relation to a financial instrument that is subject to a contractual Market Making Scheme with LuxSE and that is declared to be ‘liquid security’ by ESMA, in the following situations:

  • When a trading halt is triggered during continuous trading: the 10 minute period following the resumption of trading will be considered as SMC.
     
  • Other events where LuxSE (M&S Department) anticipates there will be significant short-term changes in price or volume. In such cases, members who participate in a Market Making Scheme will be notified.

Detailed information on LuxSE’s market making adjustments under MiFID II will be available in due course.

LuxSE will inform market participants of SMC market status via email.

Exceptional Market Circumstances


Exceptional Market Circumstances (EMC)

Extreme volatility If volatility halt is triggered for 50% of financial instruments traded on a segment in relation to which the obligation to sign a Market Making Agreement applies. Manually triggered by M&S in case of such an event. Duration: 60 minutes.
War, industrial action, civil unrest, cyber sabotage M&S triggers a management decision.
Disorderly trading conditions If 50% of the most active trading members (based on number of trades) lose their connectivity. M&S triggers a management decision.
Technological and risk management issues, or inability to hedge positions due to short selling ban If a member informs immediately LuxSE about technical problems which make him impossible to process Market Making activities, and these problems are justified, LuxSE may suspend the Market Making obligations.


Under EMC, there will be no quoting obligations and the performance monitoring will be suspended.

Liquidity Providers


In addition to the MiFID II Market Making framework, LuxSE will maintain Liquidity Provider Provisions on some specific instruments to accommodate product and participant requirements. These Liquidity Providers Provisions are not subject to MiFID II framework.


All Liquidity Providers under the different Liquidity Provider Provisions will be required to flag all relevant orders and quotes on the LuxSE systems as follows:

  • Account code on LuxSE Markets.
     

Registration process


All LuxSE members acting as Liquidity Providers must complete the Registration Form thus confirming their understanding and acceptance of the General Terms and Conditions that apply to all LuxSE instruments. All documents are available below.
 
For further details, please contact the Market & Surveillance (M&S) Department.

 


Disclaimer
The information contained herein is provided for information purposes only. Although the Luxembourg Stock Exchange (LuxSE) has made reasonable efforts to ensure that the information is accurate and not misleading, LuxSE does not accept any responsibility or liability of any kind whether for the accuracy, reliability or completeness of the information or for any action refrained or taken or results obtained from the use of the information. The information does not constitute and is not construed as any advice, recommendation, undertaking or commitment from or on behalf of LuxSE. The information shall not be substitute for your own researches, investigations, verifications or consultation for professional or legal advice.

Documents

If you need more information

Contact us




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Guy Weymeschkirch

Head of Markets & Surveillance

+352 47 79 36 236 gwe@bourse.lu



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Trading

Markets & Surveillance Department

+352 47 79 36 200 dms@bourse.lu