Notification requirement for algorithmic trading and direct electronic access: BaFin standard form

Date: 12.01.2018

From 3 January 2018, investment services enterprises engaged in algorithmic trading or offering direct electronic access (DEA) to a trading venue will be required to submit a notification to the competent supervisory authorities.

The notification requirements result from section 77 (2) sentence 1 and section 80 (2) sentence 5 of the new version of the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG), which transpose the first subparagraph of Article 17(2) and the third subparagraph of Article 17(5) of the Markets in Financial Instruments Directive (MiFID II).

The notifications must be submitted to the authority responsible for supervising the enterprise concerned. In addition, they must also be submitted to the authorities responsible for supervising the trading venues concerned.

Notifications must therefore be submitted to BaFin if the investment services enterprises concerned are supervised by BaFin or if multilateral trading facilities or organised trading facilities subject to BaFin's supervision are involved. BaFin has prepared a standard form which can be used by the investment services enterprises concerned to satisfy their notification requirements.

Companies that are engaged in algorithmic trading as trading participants on a German stock exchange or that offer direct electronic access to a German stock exchange must submit their notification to the exchange supervisory office responsible for the relevant stock exchange.

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