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 Market Infrastructure and Custody 

Legal Excellence

Market infrastructure is the vital foundation of the securities industry. It is divided into trading and post-trading structures. On the one hand, trading structures are characterised by institutions through which market participants execute securities transactions, i.e. marketplaces such as stock exchanges and other trading venues in the multilateral sector and OTC counterparties such as systematic internalisers (SI) in the bilateral sector. On the other hand, intermediaries that optimise access to execution venues, such as brokers, providers of (smart) order routing systems, providers of direct electronic access (DEA providers) and technical IT system providers play an important role in internationally linked securities trading.

Post-trading structures are less conspicuous, but no less important. These are used for the settlement of closed transactions, i.e. the transfer of purchased securities and the money owed for them, and subsequent custody. The settlement process can take place via central securities depositories (CSD) or settlement internalisers or, depending on the case, comparable third-country institutions. Clearing by a central counterparty (CCP) often takes place prior to settlement in order to increase settlement efficiency. Finally, the legal or economic entitlement of the acquirer is established via a custody chain.

Market structure law is characterised by a large number of laws, ordinances and regulatory statements, whereby German stock exchange law is only one area of market structure law. In the trading sector, these include in particular the German Stock Exchange Act (BörsG), the German Securities Trading Act (WpHG) and Regulation (EU) No. 600/2014 (Markets in Financial Instruments Regulation, MiFIR) and in the post-trading sector in particular the German Securities Depositories Act (DepotG), Regulation (EU) No. 909/2014 (Central Securities Depositories Regulation, CSDR) and Regulation (EU) No. 648/2012 (European Market Infrastructure Regulation, EMIR).

Kronsteyn is your partner for the legal modelling of market infrastructure and custody solutions under German law – whether for the interbank market or the private client business.

Publications Relating to German Market Infrastructure Law

Müller-Lankow, Disruptions in securities transactions and their regulation under CSDR, SSR, stock exchange law, ICMA and BGB (German: Leistungsstörungen bei Wertpapiergeschäften und deren Regulierung nach CSDR, SSR, Börsenrecht, ICMA und BGB), in: Wertpapier-Mitteilungen (WM) 2024, pp. 1641-1649. Müller-Lankow, Market-making in the scope of collective asset management – a paradox? – At the same time comment on the judgement of the VGH Kassel of 21.11.2023 - 6 A 1658/18 (German: Market-Making im Rahmen der kollektiven Vermögensverwaltung – Ein Widerspruch? – Zugleich Anmerkung zum Urteil des VGH Kassel v. 21.11.2023 – 6 A 1658/18), in: Zeitschrift für Bank- und Kapitalmarktrecht (BKR) 2024, pp. 601-607. Müller-Lankow, How the regulation of settlement delays is putting securities trading to the test (German: Wie die Regulierung von Lieferverzögerungen den Wertpapierhandel auf die Probe stellt), in: Zeitschrift für Bank- und Kapitalmarktrecht (BKR) 2024, pp. 567-568. Müller-Lankow/Liebscher, Legal differences between e-money and asset-backed tokens (German: Rechtliche Unterschiede zwischen E-Geld- und vermögenswertereferenzierten Token), in: Wertpapier-Mitteilungen (WM) 2024, pp. 1152-1160. Kumpan/Müller-Lankow, Commentary on § 26b (Tick size) and 26c (Market making systems) of the German Stock Exchange Act (BörsG), in: Eberhard Schwark / Daniel Zimmer (eds.), Kapitalmarktrechts-Kommentar, 5th ed., München (C.H. Beck) 2020. Kumpan/Müller-Lankow, The Multilateral Single-dealer System – An Oxymoron under MiFID II?, in: Journal of International Banking Law and Regulation 34 (2019), issue 9, pp. 301-310. Müller-Lankow, Market-making: A regulatory analysis of market-making in multilateral and bilateral systems (German: Market-Making: Eine aufsichtsrechtliche Analyse des Market-Makings im Rahmen multilateraler und bilateraler Systeme), Baden-Baden (Nomos) 2018. Müller-Lankow, Differentiation between proprietary trading by market makers and proprietary trading by other liquidity providers (German: Abgrenzung des Eigenhandels durch Market-Maker vom Eigengeschäft durch sonstige Liquiditätsgeber), in: Wertpapier-Mitteilungen (WM) 2017, pp. 2335-2345. Kumpan/Müller-Lankow, Single-market maker systems in the new capital market regulation – differentiation between multilateral and bilateral systems (German: Ein-Market-Maker-Systeme in der neuen Kapitalmarktregulierung – Abgrenzung zwischen multilateralen und bilateralen Systemen) (together with Prof Dr Christoph Kumpan), in: Wertpapier-Mitteilungen (WM) 2017, pp. 1777-1786.

Legal Services

The law firm advises on German market infrastructure and custody law. The range of legal services includes

 

  • Drafting and preparation of contracts (e.g. outsourcing and co-operation agreements)

  • Drafting and preparation of general terms and conditions (GTC) and accompanying documents in the mass customer business

  • Preparation of statements and legal opinions on complex legal issues in the trading and post-trading sector

  • Coordination with BaFin, the Bundesbank and the ECB

  • Defence against consumer actions

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