REGULATION

JP Morgan joins ESMA’s systematic internaliser database

The EU financial regulator’s systematic internaliser database is seemingly growing as the MiFID II deadline looms.

By Hayley McDowell hayley.mcdowell@strategic-i.com August 02, 2017 11:25 AM GMT

JP Morgan is the latest investment bank to show up on the EU regulator’s database of systematic internalisers (SI) ahead of MiFID II.

The European Securities and Markets Authority’s (ESMA) register reveals JP Morgan will operate as an SI for cash equities as of 21 August this year, having updated its application last month.

The investment bank joins Goldman Sachs, Credit Suisse, UBS, Deutsche Bank and others, some of which have been listed on the register since MiFID in 2007.

Morgan Stanley and Denmark’s Spar Nord Bank also registered to operate as an SI prior to MiFID II in May this year, according to the regulator’s market identifier code database.

A surge in the number of sell-side firms registering as SIs post-MiFID II is widely expected among market participants.

Speaking to The TRADE earlier this year, Rob Boardman, CEO at ITG Europe, explained the removal of broker-crossing networks means there are likely to be fewer choices for banks to interact directly with investors away from exchanges and MTFs.

“It doesn’t take a genius to figure out there are therefore likely going to be far more SIs than there have been previously, because there are fewer choices now,” he said.

An SI is an investment firm that deals on its own account by executing client orders outside of a regulated market, multilateral trading facility (MTF) or organised trading facility (OTF) under MiFID and MiFID II.

The regime has proved to be controversial following warnings from regulatory authorities prohibiting the use of SIs to form ulterior networks, which could operate in a similar way to broker crossing networks.