France’s stock market watchdog has confirmed that it will not implement regulations on high frequency trading (HFT) that would clash with Europe-wide rules.
Guillaume Eliet, the head of the regulatory policy and international affairs directorate at France’s Autorité des marchés financiers (AMF), has told IFLR that it is not the regulator’s intention to contradict the provisions of the incoming MiFID II (the markets in financial instruments directive).
The new French banking law is set to enter into force at the start of 2015, requiring any firm using a high-frequency trading [HFT] system to document the nature of that system and report it to the AMF.
However, there is uncertainty over what needs to be reported and, until this week, the market has been without an official translation of the original French text.
“The legislation will enter into force in January and the English translation of the text is now available on the AMF’s website,” said Eliet, during an interview with IFLR.
“The regulation on HFT is very brief,” he further confirmed. “It sets out principles saying that the use of an automated processing facility should be disclosed to the AMF, and also that a record must be kept of all algorithms and transactions.”
Eliet sought to reassure market participants that the AMF is not prepared to set out rules for a matter of two years that would have to be changed when the MiFID II implementing measures come into force.
“We have a strong commitment to avoid any gold-plating in the implementation of all European directives and regulations,” he said. “We will not to ask the industry to provide notifications that will not be required under MiFID II.”
To those who have criticised the French securities watchdog for acting in advance of Europe-wide rules on HFT, Eliet said it was parliament that passed the legislation. The AMF, he said, is simply tasked with its implementation.
“Having said that, we understand why the government and parliament decided to go forward with the HFT regime,” he continued. “Since the discussions around MiFID II were quite long and complicated it became important for the French government to try to move forward by proposing legislation on this.”
“At the same time, the government was working on the banking separation law,” he said. “It made sense to address the question of separating banking activities and HFT simultaneously.”
Eliet also emphasised that the French regulation applies to any system relating to transferable securities issued by French-based issuers.
“The question now is whether we need to provide further clarification to market participants before the new rules come into force,” he added. “We are currently in discussions about whether we should publish a standard form for the notification process. This template will likely be published in the coming days.”