With the German algo ID mandatory from 1st April, I was prompted to scan the latest MiFID II texts in this regard. Member states must require exchanges to be able to identify the different algorithms used for generating orders (Art. 51.6) which, on a high level, sounds just like the German HFT Act.

To make things even more complex, MiFIR requires investment firms to identify in their transaction reports the “computer algorithms [.…] responsible for the investment decision” (Art. 23.3). So this includes not just the exchange members we already knew about, but also the buy-side. While it’s not entirely clear that the MiFIR and MiFID II algo IDs are the same, ESMA does at least have a mandate to provide guidance on the former, while it has no such mandate to harmonise the latter across Europe.

Since the EU has 28 member states with around 250 licensed trading venues, let’s see just how many different algo IDs we can collectively define!