Vedder Thinking | News Sam Tyfield Quoted in Recent Financial News Article
June 10, 2013
Sam Tyfield, a Partner in Vedder Price’s London office and a member of the firm’s Investment Services and Finance & Transactions groups, was quoted in the June 10, 2013, issue of Financial News. The article, titled “Germany Lays Out High-Frequency Trading Hurdles,” discusses recent European legislation designed to curb high-frequency trading (HFT). The rules went into effect on May 15, 2013, but firms have six to nine months to comply with the elements dealing with authorization and regulation. The article focuses on Germany, which is being closely watched by the financial industry as one of the first jurisdictions to impose the new rules. Elements of the legislation are similar to proposed rules to be included in a revised version of the EU’s trading rulebook, Markets in Financial Instruments Directive (Mifid II), which could go into effect as soon as late 2015.
The final version of the recent legislation omitted a minimum holding period for trades, which some experts feel is a measure to slow the pace of computerized trading. Additionally, the rules include a licensing requirement whereby all HFT firms that are direct or indirect of German markets must be authorized by German regulator BaFin (or obtain either an EU passport or an exemption under the law). Traditionally, regulatory approval is required of banks and other investment firms, but not proprietary trading firms, which are now the biggest proponents of HFT.
Mr. Tyfield comments in the article, “The rules are disruptive because they are based on BaFin’s current understanding of algorithmic trading and the existing state of technology, which are both subject to change. This makes firms unsure how to comply fully with the rules, all the more so given they could soon be superseded by proposals in Mifid II.”
In addition to laying out why the new legislation has brought about controversy, the article discusses the effect of the rules on foreign firms that trade in Germany and how the German rules compare with Mifid II.
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