FESE Protocol
Trading venue outages standard protocols in fixed income markets
Market structure
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18 Nov 22
- EU financial market infrastructure is robust, stable, and resilient. The Covid-19 crisis in 2020 demonstrated that investors can rely on the European financial ecosystem to trade without disruption during periods of exceptionally high volatility and activity: on 17 March 2020, European financial market infrastructures handled approximately four times as much volume as usual.
- The reliability of trading systems in extreme market conditions is underpinned by the continuous investments of trading venues and market participants in their infrastructure. This serves to ensure orderly trading, provide investors with the best possible service and comply with the applicable regulatory requirements, notably those set out in MiFID II / MiFIR and specifically in Articles 47 and 48 in respect of trading venues.
- While trading venue outages are rare, even more so in fixed income markets, they require an appropriate response. With the objective of a more harmonised framework in Europe that builds on the broad consensus in place and to support market participants, FESE supports the adoption of an industry-wide standard protocol to harmonise communication and outage procedures. This initiative is designed to ensure market participants’ confidence in the underlying procedures that are to be followed in the event of a market outage.
- In short, the adoption of outage standard protocols would give the entire market and its participants the confidence, awareness and transparency needed in these exceptional, yet incredibly rare, circumstances. Our proposed framework for the outage standard protocols in fixed income markets is included in Annex 1. FESE and its members look forward to an ongoing and constructive discussion with all our stakeholders, from our clients, market participants through to regulators and policymakers.
- For additional background information on this FESE exercise, please see the FESE outages standard protocols in equity markets at this link. Given that many exchanges in the EU use the same infrastructure for both equities and fixed income products, the principles applied to these asset classes are largely similar.