ERDEM-NEWSLETTER-2018-metin

199 CAPITAL MARKETS LAW Strict Disclosure Requirements In order to give all relevant information to investors, invest- ment firms providing investment advice should disclose the cost of the advice, they must clarify the basis and reasons of the advice they provide, in particular, the range of products they consider in provid- ing personal recommendations to clients, and whether they provide investment advice on an independent basis, and whether they provide the clients with a periodic assessment of the suitability of the financial instruments recommended to them. The disclosure requirement is to be fulfilled at least once in a year, not just at the investment point. Market Structures Organized Trading Facilities (“OTF”) MiFID II has introduced a new trading venue category of orga- nized trading facility (“OTF”) for bonds, structured finance products, emissions allowances and derivatives to ensure that the off-exchange markets are appropriately regulated. The OTF is broadly defined and complements existing types of trading venues. Restrictive Regime for Algorithmic Trading and Direct Electronic Access (“DEA”) MiFID II aims to regulate risks arising from algorithmic trading where a computer algorithm automatically determines aspects of an order with minimal or no human intervention. Third country firms engaging in algorithmic trading are subject to different regulations in each member state, and in some cases, they are required to be locally licensed to access an exchange in some member states. The competent authority of the member state may also require the investment firm to provide, on a regular or ad-hoc basis, a description of the nature of its algorithmic trading strategies, details of the trading parameters, or limits to which the system is subject, the key compliance and risk controls that it has in place, and details of the testing of its systems. On the other hand, DEA means an arrangement where a member or participant or client of a trading venue permits a person to use its