MiFID II between European rule-making and national market surveillance: the case of high-frequency trading

This chapter analyses how the revised ‘Markets in Financial Instruments Directive’ (MiFID II) extends public oversight of previously unregulated areas of financial markets. More precisely, the chapter looks into how MiFID II seeks to regulate high-frequency trading (HFT), a form of electronic trading that has traditionally remained outside the scope of regulators because of its technological sophistication. The chapter first illustrates how the European Commission and the European Parliament used the global financial crisis as a window of opportunity to advance the centralisation of HFT regulation, thereby extending the G20 Pittsburgh agenda on the better regulation of financial markets. Second, the chapter illustrates how these regulatory efforts stumbled on divergent member state interests. The chapter reveals patterns of both centralisation and decentralisation in the EU’s regulation of HFT: a centralisation of rule-making and defining technical standards; a decentralisation of the implementation and surveillance of compliance with the new rules.