RE: The SP5 Jun 2018 10:55
WW ... Fund managers have three ways to keep trading in the dark: They can bundle their orders together to qualify for the waiver, take part in auctions rather than normal trading, or switch to a new type of dark market -- the systematic internalizer. Fund managers have plenty of orders that are large enough for speed traders to trade against yet too small to qualify for the large-in-scale waiver. “There will always be a need to trade in less than large-in-scale without signaling to the market,” says David Howson, the chief operating officer of Bats Europe, a dark-pool operator.
The SI replaces the bank-run networks that currently account for about half of dark trading in European equities. MiFID II bans these "broker-crossing networks," because they allow brokers to sidestep public stock exchanges, but the European Commission sees a role for banks that are prepared to use their own capital to trade with their customers’ orders. So SIs will be permitted to carry out unlimited dark trading as long as the bank is putting its capital at risk. Proprietary trading firms can also choose to become SIs because they too trade on their own capital. SIs do not display the size of orders, making them effectively dark markets. Virtu Financial Inc. and Tower Research Capital LLC, two giant U.S. algorithmic traders, have already announced that they will become SIs.
So the SIND code is linked to the above ie a bank etc using its own capital etc. Now, I reckon the EU then thought about the problem of what happens if smaller orders move dark via SIND trying to keep them dark (+ still stopping flash traders of course) If I.m not mistaken, I think theres some Mifid2 rules
which are linked to having to declare the trades and average daily trade volume of the share. It.s about transparency /price knowledge/best execution. So a new System Integrator overstepoing the boundaries. Please add if you know more detail ...
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