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Vedder Thinking | News Sam Tyfield Discusses Mifid II’s Systematic Internaliser Loophole in Financial Times Article

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Sam Tyfield, a Partner in Vedder Price’s London office and member of the firm’s Finance & Transactions and Investment Services groups, spoke to Financial Times about the possible Mifid II loophole pertaining to share-trading rules. According to Mifid II regulations, investment firms, banks and high-frequency traders (HFT) can be recognized as “systematic internalisers,” which are firms that can match “buy” and “sell” orders from clients in-house, provided that they conform to certain criteria. Therefore, instead of sending orders to a central public exchange, banks can handle transactions in private, to selected clients, on their own books. Regulators fear this loophole in the Mifid II legislation will create lightly regulated private networks and increase the number of dark-pool transactions instead of promoting public exchange trading transparency.

While many have mixed feelings towards the potential loophole, there does appear to be an overall general desire for clarification on the rule. Mr. Tyfield weighs in on this point, stating “Clarity this way…would be welcomed not only to avoid uncertainty this close to the Mifid II go-live date but also any unintended consequences if there was a political compromise to the main Mifid text.”

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Sam Tyfield