A second chance for the SI?

Looking back at MiFID I, the Systematic Internaliser (SI) didn’t really take off, resulting in a meagre 1-2% market share in the FTSE 100 today. Many EU countries had different models to execute or internalise order flow, leaving the SI model on the shelf like a dented can of beans.

Under MiFID II, Brussels will take a stricter approach by introducing quantitative SI thresholds and having a double volume cap for equities dark trading. This leads to the question: what will markets look like in 2017 if more firms opt for the SI route?

It mostly depends on whether firms will truly embrace the SI regime and start to compete on the attractiveness of their quotes, or whether they see the publication of quotes as a regulatory burden that provides no business value.

What might tip the scale and enable SIs to escape their trajectory of low market share and be propelled to new heights, is the MiFID II tick size regime. Whilst all trading venues will be restricted by a harmonised minimum tick size, an SI will be able to offer sub-tick price improvements as a competitive edge. Let’s see whether SIs will capitalise on their second chance.

Leave A Comment

Copyright © 2017 Fidessa group plc. All rights reserved.

The information contained within this website is provided for informational purposes only. Fidessa will use reasonable care to ensure that information is accurate at the time it is made available, and for the duration that it remains on the site. The information may be changed by Fidessa at any time without notice. We also reserve the right to close the website at any time. No representation or warranty, expressed or implied, is given on behalf of Fidessa or any of its respective directors, employees, agents, or advisers as to the accuracy or completeness of the information or opinions contained herein or its suitability for any purpose and, save in the case of fraud, all liability for direct, indirect, special, consequential or other loss or damages of whatever kind that may arise from use of the website is hereby excluded to the fullest extent permitted by law. Any decisions you make based on the information in this website are your sole responsibility and information on the website should not be relied upon in connection with any investment decision.

The copyright of this website belongs to Fidessa. All other intellectual property rights are reserved.

Reproduction or redistribution of this information is prohibited except with written permission from Fidessa.