Background
3.1 Under MiFID II, a Systematic Internaliser (SI) is an investment firm that deals on its own account when executing clients' orders outside of a trading venue on a 'organised, frequent, systematic and substantial basis'. Unlike trading venues, SIs use proprietary capital rather than that of clients or counterparties and are therefore considered a counterparty of the trade and take on risk.
3.2 The SI regime was originally determined on a qualitative basis and limited to equity markets. Its objective was to ensure that over-the-counter (OTC) trading in the form of systematic internalisation of order flows by investment firms could contribute to price formation. It also sought to maintain a fair balance between investment firms dealing OTC and regulated venues. The regime was expanded in 2018 to cover fixed income instruments and equity-like instruments (such as depositary receipts and exchange-traded funds).
3.3 SIs are currently determined on an instrument basis. At presen
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