How Do Regulators Audit a Systematic Internaliser's Decision to Declare Exceptional Market Conditions after the Fact? ▴ Question

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References

European Securities and Markets Authority. (2020). MiFIR report on systematic internalisers in non-equity instruments. ESMA70-156-2756.
Financial Conduct Authority. (2017). Markets in Financial Instruments Directive II Implementation ▴ Policy Statement II. PS17/14.
International Capital Market Association. (2017). MiFID II SI Regime Workshops ▴ A summary report.
Clifford Chance. (2014). MiFID II and MiFIR ▴ What you need to know.
BaFin. (2017). Systematic internalisers ▴ Main points of the new supervisory regime under MiFID II.

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A New Era of Transparency

The introduction of the Systematic Internaliser regime under MiFID II has ushered in a new era of transparency in financial markets. While the “exceptional market conditions” clause provides a necessary safety valve for SIs, it is not a loophole to be exploited. Regulators are increasingly sophisticated in their use of data and analytics, and they will not hesitate to take action against firms that are deemed to be abusing the system. The message from regulators is clear ▴ transparency is not optional, it is a fundamental requirement of a fair and orderly market.