Organised trading facility at an exchange

(1) The operation of an organised trading facility at an exchange requires the written licence of the exchange supervisory authority. The exchange operator submits to the exchange supervisory authority a detailed description of the functioning of the organised trading facility, including any connections to another organised or multilateral trading facility or a systematic internaliser in its ownership, together with a list of trading participants. The exchange supervisory authority makes this information available to BaFin and, on its request, to the European Securities and Markets Authority, and notifies them of every authorisation of an organised trading facility. Unless subsections (2) to (9) provide otherwise, the provisions of this Act applicable to the open market apply accordingly.
(2) The exchange operator, as operator of an organised trading facility, must take suitable precautions to prevent the execution of client orders in the organised trading facility using the operator's own capital or that of a member of the same group of undertakings.
(3) The exchange operator, as operator of an organised trading facility, may have recourse to the matching of corresponding client orders within the meaning of section 2(29) of the Securities Trading Act for bonds, structured finance products, emission allowances and certain derivatives, where the client has consented to this. It may not have recourse to the matching of corresponding client orders for derivatives that are subject to the clearing obligation under Article 4 of Regulation (EU) No 648/2012.
(4) Dealing on own account is permitted to the exchange operator as operator of an organised trading facility only insofar as it does not constitute the matching of corresponding client orders within the meaning of section 2(29) of the Securities Trading Act, and only in respect of sovereign debt instruments for which there is no liquid market.
(5) The exchange operator may not operate an organised trading facility within the same legal entity as a systematic internalisation business. An organised trading facility may not establish a connection to a systematic internaliser or another organised trading facility in a way that enables orders in the organised trading facility to interact with the orders or quotes of the systematic internaliser or in the organised trading facility.
(6) The exchange operator, as operator of an organised trading facility, may engage another investment services enterprise to carry out market making independently on that organised trading facility. Independent market making exists only where the investment services enterprise has no close links to the exchange operator.
(7) The exchange operator, as operator of the organised trading facility, must exercise discretion when deciding to execute an order in the organised trading facility, where it decides 1. to place an order in, or withdraw an order from, the organised trading facility it operates, or 2. not to match a particular client order with other orders present in the system at a given point in time. In the case of the first sentence, no. 2, matching may be withheld only where this is consistent with any instructions given by the client and with the obligation of best execution of client orders within the meaning of section 82 of the Securities Trading Act. In a system that crosses client orders, the operator may decide if, when and how much of two or more orders it wants to match within the system. In accordance with subsections (2), (3), (5) and (6), and without prejudice to subsection (4), for a system that arranges transactions in non-equity instruments, the operator may facilitate negotiation between clients so as to bring together two or more potentially compatible trading interests in a transaction.
(8) The exchange supervisory authority may, at any time, in particular on application for a licence to operate, require from the exchange operator, as operator of an organised trading facility, a detailed explanation of why it does not correspond to, and cannot operate as, a regulated market, a multilateral trading facility or a systematic internaliser. The explanation must include a detailed description of how discretion is exercised, in particular when an order may be withdrawn from the organised trading facility, and when and how two or more corresponding client orders are matched within the organised trading facility. The exchange operator, as operator of an organised trading facility, must further provide the exchange supervisory authority with information explaining the recourse to the matching of corresponding client orders. The exchange supervisory authority makes this information available to BaFin and, on its request, to the European Securities and Markets Authority.
(9) The exchange supervisory authority monitors trading by matching of corresponding orders by the exchange operator as operator of the organised trading facility, to ensure that it complies with the applicable requirements and that the trading by matching of corresponding orders it operates does not give rise to conflicts of interest between the operator and its clients.
(10) Section 63(1), (3) to (7) and (9), section 64(1), and sections 69, 70 and 82 of the Securities Trading Act apply accordingly to transactions concluded through an organised trading facility at an exchange.