Germany Introduces Limited-Scope Exemption for Non-European Proprietary Trading Firms Trading on German Trading Venues
On May 28, the German government introduced an amendment to the German Banking Act regarding the license requirements for “third-country” (i.e., non-European) proprietary trading firms seeking access to, or membership of, German trading venues (the Amendment).
Under the Amendments, third-country firms exclusively conducting proprietary trading as an exchange participant on a German trading venue or exchange do not require a license from the German Federal Financial Supervisory Authority (BaFin). However, significantly, this exemption does not cover any such firms that are performing the following activities:
acting as a systematic internalizer;
principal trading as a service to clients; or
high frequency trading.
Eligible third-country proprietary trading firms applying to become exchange participants will benefit from the exemption by operation of law and are not required to submit an application to BaFin.