Leading MiFID II MEP backs German HFT law
The MEP directing the European Parliament's reading of MiFID II has thrown his weight behind draft German high-frequency trading (HFT) legislation, saying it is in line with
the directive's intention.
Markus Ferber MEP, told theTRADEnews.com
that he was confident the German legislation, released last week, would not conflict with MiFID II, and was further
evidence clear regulation on HFT trading was needed.
“As MiFID is the European law, the revised directive has to be implemented in national law so there will
be no contradictions.
“In the European Parliament there is a strong will to
restrict HFT and to establish proper rules, which can also be stated for
Germany,” Ferber said.
Ferber supported countries
legislating ahead of MiFID II, and noted that a similar situation had occurred with a naked short-selling ban imposed in Germany ahead of European rules, which
ultimately met the same objectives.
In 2010, Germany's regulator BaFin banned naked short selling in a select group of German stocks. The European Commission adopted EU-wide rules on short-selling in July.
“It can make sense in order to avoid temporary
problems if states go ahead themselves, but in the end they have to make sure
that their national rules are in line with MiFID,” Ferber said. “Depending on what we agree upon in the end also the
other countries will have to adapt their HFT policy at the latest when MiFID II
comes into force so it appears logical that there will be changes, for example
when it comes to transparency and fee structures.”
Ferber’s comments were mirrored by Germany-based lawyer
Martin Krause, partner at Norton Rose, who said the legislation would likely be
changed when MiFID II is finalised.
“When the MiFID II regulations are finally agreed Germany
may again change this new legislation – it’s certainly possible that MiFID II
will conflict with this legislation and it would be changed again," said Krause. “It’s simply a German way of dealing with things – there
were some criticisms of the finance sector and Germany has taken a left-wing
approach to regulation."
Similar to current MiFID II proposals, the German law will seek to define HFT, compel HFT firms to apply for a permit to trade on venues that trade the country's stocks and impose order-to-trade ratios. As part of his amendments to MiFID II, Ferber has proposed tougher curbs such as banning direct access to trading venues, a minimum resting time of 500 milliseconds for all orders and market-making obligations for all firms engaged in algorithmic trading.
The German legislation will receive submissions from
interested parties until 17 August, and then cabinet will review it, with a
mid-2013 implementation date.
Meanwhile, a vote on MiFID II was delayed in
July until either September or October after more than 2,000 amends to the
original proposal were submitted.