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Vedder Thinking | News Sam Tyfield Comments on the Effect of German Algo-Flags in FOW Intelligence

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On April 1, 2014, Germany introduced algo-flagging, a measure designed to regulate practices conducted by high-frequency trading (HFT) firms. The regulation (which requires derivative traders to identify each individual algorithmic order with a key or flag) has produced little protest from traders and Eurex alike, raising the question of whether a European-wide algo-flagging requirement will soon be implemented. Sam Tyfield, a London-based member of Vedder Price's Investment Services and Finance & Transactions groups, spoke to FOW Intelligence regarding the German algo-flagging regulation.

In regard to Germany's preparation prior to the algo-flagging implementation, Mr. Tyfield commented, "It was a challenge from a technological point of view to get everything up and running in time. There was also a whole bunch of additional work that was needed to be done by the compliance people in these firms." Mr. Tyfield went on to address the possibility of a European-wide algo-flagging requirement, stating, "Until we see the results of the consultation and the next round at the end of the year, we won't know where they [ESMA] are going with algo-flagging and everything that rolls into it. In my opinion the Germany exercise has been quite useful to prepare ESMA and market participants for the challenges ahead."

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Sam Tyfield