ESMA has written to the European Commission to express concern about the utilisation of a loophole by brokers designated as Systematic Internalisers (SIs) under MiFID II to enable them to continue to maintain broker-crossing networks.

The concern is the degree to which SIs will seek to undertake matched principal trading with other SIs, in particular to circumvent the trading obligation for shares. The question is what constitutes an ‘occasional basis’ as per Recital 19 of the relevant delegated regulation. ESMA is requesting that the Commission looks into the matter to deduce whether there should be a regulatory response to close any potential loophole. 

If members have any questions or comments, please contact Adam Jacobs-Dean, Oliver Robinson or Adele Rentsch.