Liquidity Providers and Market Makers

Summary

Liquidity Providers/Prime Liquidity Providers

In addition to the MiFID II Market Making framework, we will maintain Liquidity Provider Provisions on some specific instruments to accommodate product and participant requirements. These Liquidity Providers Provisions are not subject to the 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 6 on LuxSE Markets

List of Liquidity Providers per security

Market Making and Liquidity Provision conditions

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.

Liquidity Provision - General terms and conditions

Liquidity Provision - Operating terms

Liquidity Provision - Registration form

Liquidity Provision - Appendix 1

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 a filled in Registration Form (see below).

If there is a liquid market for equities and ETFs, LuxSE offers Market Making Schemes.

As a reminder, market makers - whether under a scheme or only under an 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 during at least half of the daily trading hours over a single calendar month period.

List of Market Makers per security

Market Makers Registration Process

All our members acting as market makers must complete the Registration Form within which they confirm their understanding and acceptance of the General Terms and Conditions that apply to all instruments admitted to trading. 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, unless indicated otherwise.

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

Market Making - General terms and conditions

Market Making - Operating terms

Market Making - Registration form

Market Making - Appendix 1

Market Making Schemes

In order to comply with the framework, set out under MiFID II, we have implemented a range of Market Making Schemes. To find out more, please consult the below document Market Making and Liquidity Provision condition.

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

Account code 6 on LuxSE Cash Markets, combined with Algorithm flagged for the MiFID II field "ExecutionWithinFirmShortCode"

Market Making and Liquidity Provision conditions

Stressed market conditions

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

During SMC, market makers’ 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.

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

Exceptional market circumstances

Please see below examples of Exceptional Market Circumstances (EMC):

Extreme volatility	Happens when 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. It is manually triggered by the M&S Department in case of such an event. Duration: 60 minutes.
War, industrial action, civil unrest, cyber sabotage	The M&S Department triggers a LuxSE management decision.
Disorderly trading conditions	Apply if half or more of the most active trading members (based on the number of trades) lose their connectivity. The M&S Deparment triggers a LuxSE management decision.
Technological and risk management issues, or inability to hedge positions due to short selling ban	If a member immediately informs LuxSE about technical problems impeding it from processing Market Making activities, and these problems are justified, we may suspend the Market Making obligations.

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

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.

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