The European Securities and Markets Authority wrote a letter to the European Commission to note its concern that certain investment firms currently operating brokercrossing networks may be seeking to circumvent requirements under the Markets in Financial Instruments Directive II that if they operate an internal matching system and execute client orders on a multilateral basis, such system needs to be authorized as a trading venue. ESMA says some investment firms may be trying to exploit an apparent loophole in regulatory requirements by setting up networks of interconnected systematic internalizers to cross thirdparty buying and selling interests through principal trading, or other backtoback trading. ESMA says it is monitoring this activity and may issue questions and answers in the future to clarify the permitted activities of systematic internalizers.
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ESMA Raises Concerns to EC Regarding Systematic Internalizers Operating Broker-Crossing Networks
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