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May 2009


Response to IOSCO’s Consultation on Direct Electronic Access (“DEA”)

The LSE Group has responded to IOSCO’s consultation, in which it outlines possible principles for DEA. We broadly agree with IOSCO’s proposed principles, which are in line with the principles underpinning Order Routing and MAC.

The key messages conveyed in our response are as follows:

  • Member firms should be held accountable for all activity carried out under their names on an order book, irrespective of whether that activity is carried out by the member firm or one of its DEA customers.
  • Exchanges should set out rules on areas such as controls, but should give their member firms a degree of flexibility with respect to their detail.
  • Controls for DEA and non-DEA business should be broadly equivalent. 
  • Pre- and post trade controls both play important roles.    
  • A member firm must be able to distinguish between its own order flow and orders submitted by each of its DEA customers.
  • Retaining a straightforward exchange-to-member bilateral relationship ensures clarity and it is therefore not necessary or appropriate for DEA customers to enter into contracts with the market.

Downloads
Response to IOSCO’s Consultation on Direct Electronic Access (“DEA”) (pdffile pdf - 49 KB)

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