It appears that the high-frequency trading debate in Europe has temporarily moved from Brussels to certain countries in Europe, as nation-specific rules are beginning to pop up that could seriously disrupt the practice.
A harmonized approach to regulation across capital markets in the European Union is one of the main tenets of the much-anticipated MiFID II proposals, but it appears that some countries are beginning to go it alone with regard to market structure as the MiFID II discussions continue to drag on in Brussels.
“I really hope that other nations do not adopt different stances before MiFID II comes out,” said Mark Spanbroek, secretary-general of FIA European Principal Traders Association (FIA Epta), a Brussels-based proprietary trading group.
“We are doing our utmost to make sure it doesn’t happen as then we are back 15 years. We can’t afford this as an industry and it’s not acceptable to us. We came from a world of regulatory arbitrage and side deals with exchanges and we simply cannot go back there. All these rules that throw up hurdles that can allow you to walk back or walk out into the OTC world just open up this can of history again.”
Germany is planning to push through a law demanding that all high-frequency traders have authorization on a par with big investment banks before they can operate in the local markets, as well as forcing all algorithmic traders to set up a branch or subsidiary in Germany before they can register to trade.