1.

Where an investment firm deals on own account by executing client orders outside a regulated market or an MTF, it shall be treated as a systematic internaliser if it meets the following criteria indicating that it performs that activity on an organised, frequent and systematic basis:

(a)

the activity has a material commercial role for the firm and is carried on in accordance with non-discretionary rules and procedures;

(b)

the activity is carried on by personnel, or by means of an automated technical system, assigned to that purpose, irrespective of whether those personnel or that system are used exclusively for that purpose;

(c)

the activity is available to clients on a regular or continuous basis.

2.

An investment firm will cease to be a systematic internaliser in one or more shares if it ceases to carry on the activity specified in paragraph 1 in respect of those shares, provided that it has announced in advance that it intends to cease that activity using the same publication channels for that announcement as it uses to publish its quotes or, where that is not possible, using a channel which is equally accessible to its clients and other market participants.

3.

The activity of dealing on own account by executing client orders shall not be treated as performed on an organised, frequent and systematic basis where the following conditions apply:

(a)

the activity is performed on an ad-hoc and irregular bilateral basis with wholesale counterparties as part of business relationships which are themselves characterised by dealings above standard market size;

(b)

the transactions are carried out outside the systems habitually used by the firm concerned for any business that it carries out in the capacity of a systematic internaliser.

[Note: Article 21(1) to (3) of the MiFID Regulation]

An activity should be considered as having a material commercial role for an investment firm if the activity is a significant source of revenue, or a significant source of cost. An assessment of significance for these purposes should, in every case, take into account the extent to which the activity is conducted or organised separately, the monetary value of the activity, and its comparative significance by reference both to the overall business of the firm and to its overall activity in the market for the share concerned in which the firm operates. It should be possible to consider an activity to be a significant source of revenue for a firm even if only one or two of the factors mentioned is relevant in a particular case.

[Note: Recital 15 to the MiFID Regulation]

A systematic internaliser shall, for each liquid share for which it is a systematic internaliser, maintain the following:

(a)

a quote or quotes which are close in price to comparable quotes for the same share in other trading venues; and

(b)

a record of its quoted prices, which it shall retain for a period of 12 months or such longer period as it considers appropriate.

The obligation laid down in point (b) is without prejudice to the obligation of the investment firm under Article 25(2) [implemented at SUP 17.4.6 G] of [the MiFID] Directive 2004/39/EC to keep at the disposal of the competent authority for at least 5 years the relevant data relating to all transactions it has carried out.[Note: Article 24 of the MiFID Regulation]

Shares not traded daily should not be considered as having a liquid market for the purposes of [the MiFID] Directive 2004/39/EC. However, if, for exceptional reasons, trading in a share is suspended for reasons related to the preservation of an orderly market or force majeure and therefore a share is not traded during some trading days, this should not mean that the share cannot be considered to have a liquid market.

[Note: Recital 16 to the MiFID Regulation]

1.

The most relevant market in terms of liquidity for a financial instrument which is admitted to trading on a regulated market, hereinafter "the most relevant market", shall be determined in accordance with paragraphs 2 to 8.

2.

In the case of a share or other transferable security covered by Article 4(1)(18)(a) of [the MiFID] Directive 2004/39/EC or of a unit in a collective investment undertaking, the most relevant market shall be the Member State where the share or the unit was first admitted to trading on a regulated market. ...

8.

Where a financial instrument covered by paragraphs 2 ... was first admitted to trading on more than one regulated market simultaneously, and all those regulated markets share the same home Member State, that Member State shall be the most relevant market.

Where the regulated markets concerned do not share the same home Member State, the most relevant market in terms of liquidity for that instrument shall be the market where the turnover of that instrument is highest.

For the purposes of determining the most relevant market where the turnover of the instrument is highest, each competent authority that has authorised one of the regulated markets concerned shall calculate the turnover for that instrument in its respective market for the previous calendar year, provided that the instrument was admitted to trading at the beginning of that year.

Where the turnover for the relevant financial instrument cannot be calculated by reason of insufficient or non-existent data and the issuer has its registered office in a Member State, the most relevant market shall be the market of the Member State where the registered office of the issuer is situated.

However, where the issuer does not have its registered office in a Member State, the most relevant market for that instrument shall be the market where the turnover of the relevant instrument class is the highest. For the purposes of determining that market, each competent authority that has authorised one of the regulated markets concerned shall calculate the turnover of the instruments of the same class in its respective market for the preceding calendar year.

The relevant classes of financial instrument are the following:

(a)

shares; ...

[Note: Article 9(1),(2) and (8) of the MiFID Regulation]

1.

A share admitted to trading on a regulated market shall be considered to have a liquid market if the share is traded daily, with a free float of less than EUR 500 million, and one of the following conditions is satisfied:

(a)

the average daily number of transactions in the share is not less than 500;

(b)

the average daily turnover for the share is not less that EUR 2 million.

However, a Member State may, in respect of shares for which it is the most relevant market, specify by notice that both those conditions are to apply. That notice shall be made public.

2.

A Member State may specify the minimum number of liquid shares for that Member State. The minimum number shall be no greater than five. The specification shall be made public.

3.

Where, pursuant to paragraph 1, a Member State would be the most relevant market for fewer liquid shares than the minimum number specified in accordance with paragraph 2, the competent authority for that Member State may designate one or more additional liquid shares, provided that the total number of shares which are considered in consequence to be liquid shares for which that Member State is the most relevant market does not exceed the minimum number specified by that Member State.

The competent authority shall designate the additional liquid shares successively in decreasing order of average daily turnover from among the shares for which it is the relevant competent authority that are admitted to trading on a regulated market and are traded daily.

4.

For the purposes of the first subparagraph of paragraph 1, the calculation of the free float of a share shall exclude holdings exceeding 5% of the total voting rights of the issuer, unless such a holding is held by a collective investment undertaking or a pension fund.

Voting rights shall be calculated on the basis of all the shares to which voting rights are attached, even if the exercise of such a right is suspended.

5.

A share shall not be considered to have a liquid market for the purposes of Article 27 of [the MiFID] Directive 2004/39/EC until six weeks after its first admission to trading on a regulated market, if the estimate of the total market capitalisation for that share at the start of the first day's trading after that admission, provided in accordance with Article 33(3) [of the MiFID Regulation], is less than EUR 500 million.

6.

Each competent authority shall ensure the maintenance and publication of a list of all liquid shares for which it is the relevant competent authority.

It shall ensure the list is current by reviewing it at least annually.

The list shall be made available to the Committee of European Securities Regulators. It shall be considered as published when it is published by the Committee of European Securities Regulators in accordance with Article 34(5) [of the MiFID Regulation].

[Note: Article 22 of the MiFID Regulation]

In order to determine the standard market size for liquid shares, those shares shall be grouped into classes in terms of the average value of orders executed in accordance with Table 3 in Annex II [of the MiFID Regulation].

[Note: Article 23 of the MiFID Regulation]

Class in terms of average value of transactions (AVT)

AVT< €10 000

€10 000 <AVT< €20 000

€20 000 <AVT< €30 000

€30 000 <AVT< €40 000

€40 000 <AVT< €50 000

€50 000 <AVT< €70 000

€70 000 <AVT< €90 000

Etc

Standard market size

€7 500

€15 000

€25 000

€35 000

€45 000

€60 000

€80 000

Etc

[Note: Table 3 of Annex II of the MiFID Regulation]

1.

A regulated market, MTF or systematic internaliser shall be considered to publish pre-trade information on a continuous basis during normal trading hours if that information is published as soon as it becomes available during the normal trading hours of the regulated market, MTF or systematic internaliser concerned, and remains available until it is updated.

2.

Pre-trade information, and post-trade information relating to transactions taking place within normal trading hours, shall be made available as close to real time as possible. Post-trade information relating to such transactions shall be made available in any case within three minutes of the relevant transaction.

3.

Information relating to a portfolio trade shall be made available with respect to each constituent transaction as close to real time as possible, having regard to the need to allocate prices to particular shares. Each constituent transaction shall be assessed separately for the purposes of determining whether deferred publication in respect of the transaction is available under Article 28 [of the MiFID Regulation].

[Note: Article 29(1) to (3) of the MiFID Regulation]

Information which is required to be made available as close to real time as possible should be made available as close to instantaneously as technically possible, assuming a reasonable level of efficiency and of expenditure on systems on the part of the person concerned. The information should only be published close to the three minute maximum limit in exceptional cases where the systems available do not allow for a publication in a shorter period of time.

[Note: Recital 18 to the MiFID Regulation]

For the purposes of Articles 27, 28, 29, 30, 44 and 45 of [the MiFID] Directive 2004/39/EC and of this Regulation, pre- and post-trade information shall be considered to have been made public or available to the public if it is made available generally through one of the following to investors located in the Community:

(a)

the facilities of a regulated market or an MTF;

(b)

the facilities of a third party;

(c)

proprietary arrangements.

[Note: Article 30 of the MiFID Regulation]

Any arrangement to make information public, adopted for the purposes of Articles 30 and 31 [of the MiFID Regulation] shall satisfy the following conditions:

(a)

it must include all reasonable steps necessary to ensure that the information to be published is reliable, monitored continuously for errors, and corrected as soon as errors are detected;

(b)

it must facilitate the consolidation of the data with similar data from other sources;

(c)

it must make the information available to the public on a non-discriminatory commercial basis at a reasonable cost.

[Note: Article 32 of the MiFID Regulation]

For the purposes of the fourth subparagraph of Article 27(3) of [the MiFID] Directive 2004/39/EC, an order shall be regarded as being of a size bigger than the size customarily undertaken by a retail investor if it exceeds EUR 7 500.

[Note: Article 26 of the MiFID Regulation]

1.

For the purposes of the fifth sub-paragraph of Article 27(3) of [the MiFID] Directive 2004/39/EC, execution in several securities shall be regarded as part of one transaction if that one transaction is a portfolio trade that involves 10 or more securities.

For the same purposes, an order subject to conditions other than the current market price means any order which is neither an order for the execution of a transaction in shares at the prevailing market price, nor a limit order.

[Note: Article 25(1) of the MiFID Regulation]

2.

For the purposes of Article 27(6) of [the MiFID] Directive 2004/39/EC, the number or volume of orders shall be regarded as considerably exceeding the norm if a systematic internaliser cannot execute those orders without exposing itself to undue risk.

In order to identify the number and volume of orders that it can execute without exposing itself to undue risk, a systematic internaliser shall maintain and implement as part of its risk management policy under Article 7 of Commission Directive 2006/73/EC [the MiFID implementing Directive] a non-discriminatory policy which takes into account the volume of the transactions, the capital that the firm has available to cover the risk for that type of trade, and the prevailing conditions in the market in which the firm is operating.

3.

Where, in accordance with Article 27(6) of [the MiFID] Directive 2004/39/EC, an investment firm limits the number or volume of orders it undertakes to execute, it shall set out in writing, and make available to clients and potential clients, the arrangements designed to ensure that such a limitation does not result in the discriminatory treatment of clients.

[Note: Article 25(2) and (3) of the MiFID Regulation]