29 November 2015


Retired Member

1,294Posts 4,403,326Views 1,543Comments

Wanted: Home for OTC trading

04 September 2014  |  1762 views  |  0

With MiFID II’s stated aim to push OTC trading (where appropriate) onto regulated platforms European market structure is undergoing considerable upheaval. As the first round of Level 2 consultation has just finished it’s now time to define what OTC trading is appropriate and where it can be executed. While double volume caps somewhat restrict the use of transparency waivers, Systematic Internalisers (SIs) appear to be a possible home for some OTC trading. However, reading through the discussion paper and some of the responses, this is not so certain anymore.

For example, under the new SI regime, ESMA considers disclosing the SI’s identity in the post-trade information. It’s uncertain whether a broker, once categorised as an SI, can execute other OTC trades outside that regime. In addition, some market participants argue that riskless principal trades cannot be executed under an SI regime because this contradicts the bilateral nature of SIs.

Adding all that together, and assuming the worst, the attraction of becoming an SI could wane. With all of this uncertainty OTC trading is still seeking a suitable home under MiFID II. Without one markets might lose this liquidity permanently.


TagsTrade executionRisk & regulation

Comments: (0)

Comment on this story (membership required)
Log in to receive notifications when someone posts a comment

Latest posts from Retired

Big Data Pitfalls: The Amateur Data Scientist

26 October 2015  |  1625 views  |  0  |  Recommends 0 TagsInnovation

Reflections on FinovateFall: Mobile, Money and Millennials

24 September 2015  |  1083 views  |  0  |  Recommends 0 TagsPaymentsInnovation

Interoperability: Prerequisite for Next Generation of Mobile Money

08 September 2015  |  1905 views  |  0  |  Recommends 0 TagsPaymentsInnovation

Think More Broadly: Banks CAN Monetize Cash Transactions

31 August 2015  |  1566 views  |  0  |  Recommends 0 TagsPaymentsInnovation

Software development in the retail FX Industry

28 August 2015  |  387 views  |  0  |  Recommends 0 TagsTrade execution

Retired's profile

job title
member since 2014
Summary profile See full profile »

Retired's expertise

What Retired reads
Retired writes about

Who's commenting on Retired's posts

Ketharaman Swaminathan
Brendan Burge
Astrid Mitchell
Balasubramaniam GD
Tony Ballardie
Graham Seel
Bjorn Soland
John Candido
Gregg Weintraub
Stanley Epstein
Charmaine Oak
Roy Vella