10 February 2023 | As EU policymakers continue their negotiations on the MiFIR review, BETTER FINANCE is increasingly alarmed that the regulation could severely hurt retail investors, by putting in place a market structure further benefitting dark Systematic Internalisers (SIs).
Ignoring the previous plea from BETTER FINANCE and going against the interests of retail investors, MEPs are considering further strengthening the position of dark traders (such as SIs) to execute trades off-exchange – instead of limiting their activity to large orders as we initially called for and they were meant for. This will be driven by a technical, yet critical point currently considered by MEPs, namely, to extend the ability of SIs to match at the midpoint between the best bids and offers for smaller trades than the “large-in-scale” (LIS) size. Such favourable trading terms for SIs would only undermine transparency and rig the playing field further, while distorting trading activity and leaving retail investors with an eroded price formation and offer. A homogenous so-called “tick size regime” must therefore apply across all types of execution platforms except LIS ones. However, MEPs are considering amending this key principle, which was included in the proposal from the European Commission. BETTER FINANCE therefore calls on policymakers to revert to the original ‘Article 17a’ as per the EC proposal on tick size regime.