Use of robots on financial markets

L e x i n g ® | G l o b a l n e t w o r k o f a t t o r n e y s s p e c i a l i z e d i n d i g i t a l a n d e m e r g i n g t e c h n o l o g y l a w

L e x i n g ® | SWITZERLAND| Sébastien Fanti | sebastien.fanti@sebastienfanti.ch
SEBASTIEN FANTI
SWITZERLAND
Page 3
1. Context and perspective
2. International legal framework
3. Swiss legal framework
4. Expected evolutions
5. Conclusions
6. Questions and answers
Sommaire

SEBASTIEN FANTI
SWITZERLAND
Page 4
• Today, High-Frequency Trading (HFT) represents
between 40% and 60% of the exchanges on the
financial marketplaces.
• HFT is characterized by high-speed purchases and
sales of shares, faster than a blink.
• The number and the number of orders have
exploded.
• Today, 90% of the transactions are carried out by
sophisticated algorithms.

SEBASTIEN FANTI
SWITZERLAND
Page 5
• HFT is subject to lots of controversies; in France
bill is being drafted in order to forbid HFT
(Bompard’s legislation).
• The French Financial Markets Authority
condemned for the first time in December 2015
an HFT player and the trader Euronext Paris… 5
million euros!
• There is a debate between experts regarding the
safeguards (smart circuit breaker, taxes…)

SEBASTIEN FANTI
SWITZERLAND
Page 6
• The International Organization of Securities
Commissions (IOSCO) came up with
recommendations in a report published in
October 2011 ("Regulatory Issues Raised by the
Impact of Technological Changes on Market
Integrity and Efficiency").
• These recommendations aim at encouraging
markets’ integrity and efficiency and reducing
risks.

SEBASTIEN FANTI
SWITZERLAND
Page 7
• In its Markets in Financial Instruments Directive
(MiFID II), EU introduced measures to fight the
negative impacts of algorithmic trade and high-
frequency negotiations (cf. art. 17 et 48).
• Careful attention was paid to the definition of the
different concepts and a quantitative threshold
was determined.

SEBASTIEN FANTI
SWITZERLAND
Page 8
• Swiss Government considers that the current legal
framework is sufficient to prevent abuses.
• Legislation matches the international regulations
and takes account of European law.
• The Financial Market Infrastructure Act (FMIA)
and the Financial Market Infrastructure Ordinance
(FMIO) represent the current legal framework.
3. Swiss legal framework

SEBASTIEN FANTI
SWITZERLAND
Page 9
• By article 30 of the Financial Market Infrastructure
Act (FMIA), the trading platform that operates a
technical system must have a system that
guarantees an ordered treatment also in the
event of an intense activity.
• This provision aims at allowing to introduce
measures in order to limit the perverse effects of
algorithmic trade and high-frequency
transactions.
3. Swiss legal Framework :

SEBASTIEN FANTI
SWITZERLAND
Page 10
• Market manipulations are punishable under Swiss
law.
• Offences can be committed by using algorithmic
trade software, in particular as part of high-
frequency algorithmic trade.
• Articles 30 and 45 FMIA protect clients from
cheating.
• To date, there has been no trial on this matter in
Switzerland.
3. Swiss legal Framework

SEBASTIEN FANTI
SWITZERLAND
Page 11
• The IOSCO consists of 34 securities markets
regulators around the globe
• Only a few providers in the world produce high-
frequency trading (HFT) cables, which connect
traders to exchanges
• If these providers are breached in some way,
numerous firms would be vulnerable
• High frequency trading could contribute to more
volatility in markets and aggravated sudden
market crashes
4. Expected evolutions (Securities Markets Risk Outlook 2016 – IOSCO)

SEBASTIEN FANTI
SWITZERLAND
Page 12
• This could be seen as a risk to the financial
system.
• HFT is a risk that continues to concern
respondents as a potential threat to fair, efficient,
and transparent markets.
• Although major events such as the flash crash
have not occurred recently, regulators continue to
assess whether price formation is fair and the
market is sufficiently protected against glitches.
4. Expected evolutions (Securities Markets Risk Outlook 2016 – IOSCO)

SEBASTIEN FANTI
SWITZERLAND
Page 13
• HFT involves evident risks and moral issues
(complete parasitism of high-frequency
predators).
• Inability of regulators to carry out checks in order
to prevent abuses
• Unless these checks are carried out, there is a
systemic risk!
5. Conclusions

SEBASTIEN FANTI
SWITZERLAND
Page 14
5. Q & A :

SEBASTIEN FANTI
SWITZERLAND
Page 15
Thank you for your attention
Follow me on:
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Linkedin: http://ch.linkedin.com/in/sebastienfanti/
Un grand homme est celui qui ne perd
pas son cœur d’enfant (Mencius)

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GERMANY
Beiten Burkhardt
Andreas (Dr.) Lober & Tim Caesar
Westhafen Tower,
Westhafenplatz 1
60327 Frankfurta.M.
T. +49 69 756095-0
F. +49 69 756095-512
bblaw-frankfurt@bblaw.com
www.beiten-burkhardt.com
BELGIUM
Philippe & Partners
Jean-François Henrotte
jfhenrotte@philippelaw.eu
www.philippelaw.eu
Liege
Boulevard d’Avroy, 280
4020 Liege
T. +32 4 229 20 10
F. +32 78 15 56 56
Brussels
Avenue Louise, 240
1050 Bruxelles
T. +32 2 250 39 80
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CANADA
Langlois avocats, S.E.N.C.R.L.
Jean-François De Rico
jean-francois.derico@langlois.ca
www.langlois.ca
Montreal
1002, rue Sherbrooke Ouest, 28th Floor
H3A3L6 Montreal
T. +15 148 42 95 12
F. +15 148 45 65 73
Quebec
Complexe Jules-Dallaire, T3
2820, Laurier Bld, 13th Floor
G1V 0C1 Quebec City
T. +14 186 50 70 00
F. +14 186 50 70 75
SPAIN
Lexing Spain
Marc Gallardo
Ronda General Mitre, 164
08006 Barcelona
T. +34 93 476 4048
F. +34 93 476 4038
marc.gallardo@lexing.es
www.lexing.es
U.S.A
Françoise Gilbert
Palo Alto, CA 94303
USA
T. +1-650-804-1235
gilbertf@gtlaw.com
FRANCE
Alain BensoussanAvocats
Alain Bensoussan
& Frédéric Forster
58, Boulevard Gouvion Saint-Cyr
75017 Paris
T. +33 182 73 05 05
F. +33 182 73 05 06
alain-bensoussan@lexing.law
frederic-forster@lexing.law
www.alain-bensoussan.com
ISRAEL
Livnat, Mayer & Co
Russell D. Mayer
Jérusalem Technology Park
Building 9, 4th Floor
P.O. Box 48193 Malcha
91481 Jerusalem
T. +97 226 79 95 33
F. +97 226 79 95 22
mayer@lmf.co.il
www.lmf.co.il
ITALY
Studio Legale Zallone
Raffaele Zallone
31 Via Dell’Annunciata
20121 Milan
T. +39 229 01 35 83
F. +39 229 01 03 04
r.zallone@studiozallone.it
www.studiozallone.it
LUXEMBOURG
Philippe & Partners
Marc Gouden, François Cautaerts
& Jean-François Henrotte
41 avenue de la Liberté
1931 Luxembourg
T. +352 266 886
F. +352 266 887 00
luxembourg@philippelaw.eu
www.philippelaw.eu
MEXICO
Langlet, Carpio y Asociados
Enrique Ochoa
Torre Punta Santa Fe
ProlongaciónPaseo de la Reforma
#1015, Torre B,
Piso 3, Desp. 303
Col. Desarrollo Santa Fe
C.P. 01376, México, D.F.
T. +52 55 25 91 070
eochoa@lclaw.com.mx
www.lclaw.com.mx
NORWAY
Føyen Advøkatfirma DA
Arve Føyen
Postboks 7086 St. Olavs pl.
0130 Oslo
T. +47 21 93 10 00
F. +47 21 93 10 01
arve.foyen@foyen.no
www.foyen.no
U.K
Preiskel & Co LLP
Danny Preiskel
4 King’s Bench Walk
Temple
London EC4Y 7DL
T. +44 20 7332 5640
F. +44 20 7332 5641
dpreiskel@preiskel.com
www.preiskel.com
SWITZERLAND
Sébastien Fanti Avocat & Notaire
8B rue de Pré-Fleuri, CP 497
1951 Sion
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F. +41 27 322 15 70
sebastien.fanti@sebastienfanti.ch
www.sebastienfanti.ch
SOUTH AFRICA
Michalsons Attorneys
John Giles
john@michalsons.co.za
www.michalsons.co.za
Johannesburg
Ground Floor
Twickenham Building
The Campus, 57 Sloane & Cnr Main Road
2021 Bryanston
T. +27 11 568 0331
F. +27 86 529 4276
Cape Town
Boyes Drive
St James
7945 Cape Town
T. +27 21 300 1070
F. +27 86 529 4276
TUNISIA
Cabinet Younsi & Younsi
Yassine Younsi
4, Rue Petite Malte
1001 Tunis
T. +216 71 346 564
cabinetyounsi_younsi@yahoo.fr
www.younsilawyers.com
ARGENTINA
Estudio Millé
Rosario Millé
Suipacha 1111 - piso 11
C1008AAW Buenos Aires
T. +54 11 5297 7000
F. +54 11 5297-7009
estudio@mille.com.ar
www.mille.com.ar
BRAZIL
Melchior, Micheletti e Amendoeira
Advogados
Silvia Regina Barbuy Melchior
Rua do Rócio, 351 cj 102
Vila Olímpia 04552-000
São Paulo SP
T./F. +55 11 3845-1511
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www.mmalaw.com.br
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Jade & Fountain
Jun Yang
jun.yang@jadefountain.com
www.jadefountain.com
Shanghai
31/F Tower B
Far East International Plaza
317 Xian Xia Road,
Zip code: 200051l
T. +86 21 62351488
F. +86 21 62351477
Beijing
Unit 803, Floor 8, Tower E1
Oriental Plaza,
No.1 E.Chang An Avenue,
Zip code: 100738
T. +86 10 85183285
F. +86 10 85183217
COLOMBIA
Marrugo Rivera & Asociados
Ivan Dario Marrugo Jimenez
Cra. 52 No. 45-15 P. 1
La Esmeralda
Bogotá
T. +57 571 4760798 - 3158738
F. +57 571 3244200
imarrugo@marrugorivera.com
www.marrugorivera.com
LEBANON
Kouatly & Associates Attorneys
Rayan Kouatly
63, rue Amine Mneimné, BP 11
2242 Beirut
T. +961 175 17 77
F. +961 175 17 77
info@kouatlylaw.com
www.kouatlylaw.com
JAPAN
Hayabusa Asuka Law Offices
Koki Tada
4ème étage
Kasumigaseki Building
3-2-5 Kasumigaseki
Chiyoda-ku
Tokyo 100-6004
T. +81- ( 3 ) -3595-7070
F. +81- ( 3 ) -3595-7105
koki.tada@halaw.jp
www.halaw.jp
PORTUGAL
Alves Pereira
& Teixeira de Sousa RL
João P. Alves Pereira
Avenida da Liberdade 38
3º 1250-145 Lisbon
T. +351 21 370 01 90
F. +351 21 382 90 03
jpereira@alvespereira.com
www.alvespereira.com
NEW-CALEDONIA
Cabinet Franck Royanez
Franck Royanez
15 rue Edouard Glasser
Motor Pool
98800 Noumea
T. +687 24 24 48
F. +687 20 24 24 49
fr.avocat@cabinetroyanez.com
GREECE
Ballas Pelecanos & Associates L.P.C
George Ballas
& Theodore Konstantakopoulos
10 Solonos Street, Kolonaki,
106 73 Athens
T. +30 210 36 25 943
F. +30 210 36 47 925
george.ballas@balpel.gr
theodore.konstantakopoulos@balpel.gr
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INDIA
Poovayya & Co
Siddhartha George
Dharani Polavaram
siddhartha@poovayya.net
dharani@poovayya.net
www.poovayya.net
Bangalore
The Estate, Level One, 121,
Dickenson Road,
Bangalore 560 042
Karnataka, India.
T. +91 80 4115 6777
F. +91 80 4115 6888
Mumbai
Free Press House, 8th Floor, #83,
Nariman Point,
Mumbai, 400021,
Maharashtra, India.
T. +91 22 3072 2426
F. +91 22 3072 2437
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SCP Faye et Diallo
Cheikh FAYE
40, Avenue Malick SY,
Résidence « Linguère »,
4ème Étage
Dakar
Sénégal
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fayetdiallo@orange.sn
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Lex Investments & Services (Lexis Abogados)
Gabriel Lizama Oliger
Ofiplazadel Este, EdificioA , tercer piso
Distrito de Mercedes
Canton de Montes de Oca,
Provincia de San José
T. : +506 2253-1726
F. : +506 8378-6229
glizama@lexiscostarica.com
www.lexisabogados.com

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