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Germany

The German Securities Act contains requirements relating to the securities market including abusive conduct in on-exchange and OTC trading in financial instruments.

Overview: This law contains requirements relating to the securities market including 
abusive conduct in on-exchange and OTC trading in financial instruments.

Part 2: Federal Financial Supervisory Authority (BaFin)
Section 17: Cooperation with other authorities in Germany

  • (1) The stock exchange supervisory authorities act on behalf of BaFin in implementing urgent measures as part of monitoring compliance with the prohibition of insider dealing under Article 14 of Regulation (EU) No. 596/2014 and the prohibition of market manipulation under Article 15 of Regulation (EU) No 596/2014 on the stock exchanges that they supervise.

Section 18: Cooperation with competent authorities outside Germany; power to issue statutory orders 

  • (7) With the consent of the competent authorities, BaFin can conduct investigations outside Germany and engage auditors or experts to do this. … Any other use of the information is only permitted with the consent of the authority providing that information. With the exception of information related to insider trading and market manipulation, such consent may be waived in exceptional and justified cases if the authority providing the information is informed about this without undue delay, giving the reasons.

Part 3: Monitoring market abuse 
Section 25: Application of Regulation (EU) No. 596/2014 to commodities and foreign currencies 
Section 26: Provision of inside information and own account transactions; power to issue statutory orders

  • (4) The Federal Ministry of Finance may, by way of a statutory order not requiring the consent of the Bundesrat, adopt more detailed requirements governing … 5. the method of providing an insider list under Article 18(1)(c) of Regulation (EU) No. 596/2014, … 

Section 27: Record-keeping obligations 
Section 28: Monitoring transactions of persons employed by BaFin

Part 9: Position limits and position management controls in commodity derivatives and reporting 
Section 54: Position limits and position management controls 

  • (2) The position limit must be set in order to 1. prevent market abuse within the meaning of Article 1 of Regulation (EU) No. 596/2014, 2. support orderly price formation and settlement conditions. 

Part 10: Organizational requirements for data reporting services providers
Section 58: Organizational requirements for approved publication arrangements 

  • (4) An approved publication arrangement must establish mechanisms that ensure the security of the means of transfer of information, minimize the risk of unauthorized data manipulation and unauthorized access, and prevent information from becoming known before publication. 2It must have adequate resources and back-up facilities in order to offer and maintain its services at all times. 

Section 60: Organizational requirements for approved reporting mechanisms 

  • (3) An approved reporting mechanism must establish effective mechanisms that ensure the security of the means of transfer of information in order to minimize the risk of unauthorized data manipulation and unauthorized access, and prevent information from becoming known before publication. 

Part 11: Conduct of business obligations, organizational requirements, transparency requirements 
Section 65: Special rules of conduct applicable to the provision of investment advice and portfolio management; power to issue statutory orders 

  • (2) If it provides investment advice, an investment services enterprise must provide a retail client with the following information in good time before carrying out a transaction in financial instruments for which no key information document has to be prepared under Regulation (EU) No. 1286/2014: … 1. for each financial instrument to which a buy recommendation refers, a brief and easily understandable information sheet. The information provided in the information sheets under sentence 1 must not be false or misleading and must match the information given in the prospectus.

Section 72: Operation of a multilateral trading facility or an organized trading facility 

  • (2) 1. Fee structures, including execution fees, ancillary fees and any rebates must be transparent and non-discriminatory. 2. Fees may not create incentives to place, modify or cancel orders or to execute transactions in a way that contributes to disorderly trading conditions or market abuse. 

Section 73: Suspension and removal of financial instruments from trading 

  • (1) The operator of a multilateral or organized trading facility can suspend trading in a financial instrument or remove that instrument from trading if this appears to be necessary to safeguard orderly trading or protect the public, in particular if … 
    2. there is a suspicion of market abuse within the meaning of Article 1 of Regulation (EU) No. 596/2014 or the non-disclosure of inside information infringing Article 17 of Regulation (EU) No. 596/2014 in respect of the financial instrument, … 

Section 76: SME growth markets; power to issue statutory orders 

  • (1) The operator of a multilateral trading facility can apply to BaFin to register it as a growth market for small and medium-sized enterprises (SME growth market), provided the following requirements are met: … 7. the operator establishes effective systems and controls aiming to prevent and detect market abuse on that market as required under the Regulation (EU) No. 596/2014. 

Section 77: Direct electronic access

  • (1) An investment services enterprise that provides direct electronic access to a trading venue must … 4. monitor trading by the clients in order to 
    c) identify disorderly market conditions or conduct that may involve market abuse, which must be reported to the competent authority … 

Section 80: Organizational requirements; power to issue statutory orders 

  • (2) An investment services enterprise must additionally comply with the provisions of this subsection if it engages in trading in such a way that a computer algorithm automatically determines individual order parameters, … An investment services enterprise that engages in algorithmic trading must have in place effective systems and risk controls to ensure that … 3. its trading systems cannot be used for any purpose that infringes European and national provisions against market abuse or the rules of the trading venue to which it is connected. 

Section 83: Record-keeping and retention obligations 

  • (4) The records kept under subsections (3) and (6) must be protected from subsequent manipulation and unauthorized use and may not be used for other purposes, in particular not for surveillance of employees by the investment services enterprise. They may only be analyzed under certain conditions, in particular to fulfil a client order, to meet a requirement by BaFin or another supervisory authority or law enforcement agency, and only by one or more employees to be nominated specially by the investment services enterprise. Subsections (3): transactions concluded when dealing on own account and the provision of services relating to the reception, transmission and execution of client orders. Subsection (6): If the client places an order with the investment services enterprise in the course of a face-to-face conversation, the investment services enterprise must document the placing of the order on a durable medium.] 

Part 17: Provisions relating to criminal penalties and administrative fines 
Section 119: Provisions relating to criminal penalties and administrative fines 

  • (2) Persons will also be punished if they infringe the requirements of Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Market Abuse Regulation) … 1. engaging in insider dealing in contravention of Article 14(a), 2. recommending that another person engage in insider dealing or inducing another person to engage in insider dealing, in contravention of Article 14(b), or 3. disclosing inside information in contravention of Article 14(c). 

Section 120: Provisions relating to administrative finds; power to issue statutory orders 

  • (2) Any persons commit an administrative offense if they willfully or negligently 3. Engage in market manipulation in contravention of section 25 in conjunction with Article 15 of Regulation (EU) No. 596/2014 in contravention of … 
  • (8) Any persons commit an administrative offence if they willfully or negligently … 90. do not monitor trading in order to identify infringements of the rules of the trading venue, disorderly trading conditions or conduct that may involve market abuse in contravention of section 77 (1) number 4 c), … 
  • (11) Any persons commit an administrative offence if they contravene the requirements of Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No. 596/2014 (OJ L 171 of 29 June 2016, page 1), if they willfully or negligently … 38. as an administrator do not provide to BaFin all the information referred to in the first subparagraph of Article 14(2), or do not provide it correctly, or completely or promptly after the suspicion of manipulation has arisen, in contravention of the first subparagraph of Article 14(2), … 
  • (15) Any persons commit an administrative offence if they contravene the requirements of Regulation (EU) No. 596/2014 if they willfully or negligently … 2. engage in market manipulation in contravention of Article 15, … 13. do not update an insider list, or do not update it correctly, or completely, or in the prescribed manner or promptly in contravention of Article 18(1)(b) including in conjunction with Article 18(4), 14. do not provide the insider list, or do not do so correctly, or completely, or in the prescribed manner or promptly in contravention of section 18(1)(c), 15. do not take the steps referred to in the first subparagraph of Article 18(2) in contravention of the first subparagraph of Article 18(2), 16. do not keep an insider list after its preparation or updating or do not keep it for at least five years in contravention of Article 18(5), … 

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