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ARTICLE · 03 JUNE 2013

New Regulatory Requirements For Algorithmic And High Frequency Trading

Freshfields Bruckhaus Deringer
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The German Parliament adopted new regulatory requirements for algorithmic and high frequency trading.

GermanyFinance and Banking
Gunnar Schuster
Gunnar Schuster
Alexandra Dreibus
Alexandra Dreibus

Summary

The German Parliament adopted new regulatory requirements for algorithmic and high frequency trading. In the future, high frequency traders on German regulated markets or MTFs will be subject to a license requirement.

On 28 February 2013 the German Parliament adopted the High Frequency Trading Act (Hochfrequenzhandelsgesetz, the HFT Act). The HFT Act introduces a license requirement for high frequency traders, imposes conduct of business rules and organisational requirements for algorithmic trading and specifies the definition of market abuse. To a large extent these regulatory requirements anticipate regulations that are currently discussed on the European level in the context of the revision of the Markets in Financial Instruments Directive (MiFID II) and the Market Abuse Directive. Most of the provisions in the HFT Act will come into force following its publication in the German Federal Gazette which we expect within the next weeks.

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