In this interpretation, the AFM indicates how it determines whether a regulated market, a multilateral trading facility (MTF) or organised trading facility (OTF) is managed or operated in the Netherlands. For the definitions of a regulated market, an MTF and OTF, we refer to the definitions in Section 1:1 of the Financial Supervision Act ('Wft').
Section 5:26(1) of the Wft stipulates that it is prohibited to operate or manage a regulated market in the Netherlands without a licence granted by Our Minister for that purpose.
Section 2:96(1) of the Wft determines that it is prohibited to provide investment services or to perform investment activities in the Netherlands without a licence granted by the Netherlands Authority for the Financial Markets (AFM) for that purpose. According to the definitions of Section 1:1 of the Wft, operating an MTF or OTF in the course of a profession or business is 'performing an investment activity'.
How does the AFM determine whether a regulated market, an MTF or an OTF is managed or operated in the Netherlands?
A regulated market, an MTF or an OTF is managed or operated in the Netherlands when:
- direct access is offered, including direct electronic access (DEA), to the venue (without using a local broker) to Dutch natural persons or legal entities (connectivity test), and
- potential customers/members or participants of the trading venue are actively approached in the Netherlands by the venue or by other members of the venue to participate in or become a member of the trading venue (initiative test). (This can be done by holding information meetings, road shows, mailings, use of the Dutch language, providing information regarding or referring to Dutch laws or the Dutch tax regime, etc.)
Pursuant to Section 5:26(2) of the Wft, regulated markets from other Member States may provide 'appropriate arrangements' in the Netherlands to better enable the members established in the Netherlands or remote participants to access this market and to trade on the market.
Based on their European passport, investment firms from other Member States may also provide investment services or perform investment activities in the Netherlands and can therefore operate an MTF or an OTF in the Netherlands.
A trading venue with an office in a non-member state that fulfils a function comparable to a regulated market and that wants to manage or operate a regulated market in the Netherlands will have to apply for a licence pursuant to Section 5:26(1) of the Wft or an exemption pursuant to Section 5:26(3) of the Wft from the Ministry of Finance.
A trading platform with an office in a non-member state that fulfils a function comparable to an MTF or OTF and that wants to operate in the Netherlands will have to apply for a licence pursuant to Section 2:96(1) of the Wft or an exemption pursuant to Section 2:96(2) of the Wft from the Netherlands Authority for the Financial Markets.
The exemption from the licence requirement as referred to in Section 2:96 of the Wft pursuant to Article 10 of the Exemption Regulation under the Financial Supervision Act for investment firms from the US, Switzerland and Australia provides for the provision of investment services and proprietary trading in the course of a profession or business. Investment firms from these countries that wish to operate an MTF or an OTF in the Netherlands can therefore not rely on this exemption.