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German Market Access for Non-EU/EEA Trading Venues

Updated: Jan 25

Stock exchange in Germany

Non-EU/EEA operators of trading venues (e.g., stock exchanges) will need a special BaFin license (BaFin authorization) if they grant trading participants domiciled in Germany direct market access via an electronic system. This post gives you a brief overview of the key entry barriers to the German market for third-country market operators.

Operating a trading venue (e.g., stock exchange) in Germany requires a license either within the meaning of the German Stock Exchange Act (Börsengesetz, BörsG) or within the meaning of the German Securities Institutions Act (Wertpapierinstitutsgesetz, WpIG). 'Operating a trading venue' in this sense means the operation of a multilateral system that brings together the interests of a large number of persons in the purchase and sale of financial instruments within the system and in accordance with specified provisions of that system in a manner that results in a contract for the purchase of these financial instruments. However, the operator of a trading venue would not need a German license in cases of reverse solicitation, i.e. trading participants situated in Germany request trading participation on their own initiative. Additionally, the operator of a trading venue could request BaFin for an individual relieve from the German license (authorization) requirement, in particular if it is situated in USA, Canada, Australia, Switzerland, or Singapore (as of 2022). So there are constellations in which offering to German market participants the cross-border participation in a non-EU/EEA trading venue (stock exchange) do not require a license (authorization) under the regular MiFID license regime.

However, German supervisory law provides for a special license regime. Such operators of markets for financial instruments domiciled outside the European Union (EU) and the European Economic Area (EEA) that do not require a general license require a special BaFin license if they grant trading participants domiciled in Germany direct market access via an electronic system. BaFin will reject the application, if there are facts indicating that the management is not reliable, direct market access is to be granted to trading participants domiciled in Germany who do not act in the course of their business, the supervision of the market or investor protection in the home country is not equivalent to German law, or the exchange of information with the authorities responsible for market surveillance in the home country does not appear to be guaranteed. The license application shall include several information and documents, such as name and address of the management of the store or operator, information required to assess the reliability of the management, a business plan indicating the type of market access planned for trading participants, the organizational structure and the internal control procedures of the market, the name and address of an authorized agent for service of process in Germany, details of the home state authorities responsible for monitoring the market and its trading participants and their monitoring and intervention powers, the type of financial instruments to be traded by trading participants via direct market access, and the names and addresses of the trading participants domiciled in Germany to which direct market access is to be granted. BaFin issued a decree with further details on the application procedure.

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Attorney-at-law, LL. M. (UCL)

Hendrik Müller-Lankow German Attorney-at-law BaFin licence

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