Exemption from authorisation requirement for third-country firms intending to conduct proprietary trading as Exchange Participant of a German trading venue

Release date: 28 May 2020

039/2020 Exemption from authorisation requirement for third-country firms intending to conduct proprietary trading as Exchange Participant of a German trading venueXetra Circular 039/20

1. Introduction

Since 28 March 2020, third-country firms conducting proprietary trading (Eigengeschäft) as an Exchange Participant on a German trading venue or exchange do no longer incur a license requirement under German regulation.

2. Required measures

There are no measures required by Exchange Participants.

Third-country firms, who are interested to join Frankfurter Wertpapierbörse (FWB®, the Frankfurt Stock Exchange) as Exchange Participants, are invited to contact the relevant Sales or Key Account Management Team.

3. Details of the inititative

As part of the German CCP Recovery & Resolution law (Gesetz zur Einführung von Sondervorschriften für die Sanierung und Abwicklung von zentralen Gegenparteien und zur Anpassung des Wertpapierhandelsgesetzes an die Unterrichtungs- und Nachweispflichten nach den Artikeln 4a und 10 der Verordnung (EU) Nr. 648/2012), the German legislator introduced a change to the German Banking Act (Kreditwesengesetz) regarding the license requirements for third-country proprietary trading firms seeking access to a German trading venue or exchange.

According to the newly introduced section 32 para. 1a sentence 3 no. 4 of the German Banking Act, third-country firms who are exclusively conducting proprietary trading as a participant of a German exchange or trading venue do not require a license from the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin). This applies until the respective firm has been registered by ESMA to provide investment services in the European Union in accordance with article 48 MiFIR, based on an equivalence decision of the third country legal framework. Third countries are defined as jurisdictions which are not part of the European Union.

The exemption only applies to proprietary trading (Eigengeschäft) and does not cover own account trading (Eigenhandel) in the form of:

  • Market-making (meaning the continuous offering to purchase and sell financial instruments in one’s own name and for one’s own account on the basis of self-determined prices),
  • Systematic internalisation,
  • Purchasing and selling of financial instruments on one’s own account as service to others, and
  • High-frequency trading.

Third-country firms already operating on Frankfurter Wertpapierbörse (FWB®, the Frankfurt Stock Exchange) under existing exemptions may continue to do so. 

Eligible third-country firms applying to become Exchange Participants will benefit from the exemption by operation of law and do not need to submit an application in this regard to BaFin.

Further information

Recipients: All Xetra® Members and Vendors
Target groups: Traders, Nominated Persons, General
Contact: client.services@deutsche-boerse.com, sales.cashmarket@deutsche-boerse.com
Authorised by: Cord Gebhardt, Annette Czypull (on behalf of the Management Board)

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