Part III Trading, 14 Dark Trading Under MiFID II
Peter Gomber, Ilya Gvozdevskiy
Edited By: Danny Busch, Guido Ferrarini
- Regulation of banks — Transparency Directive — Enforcement — Investment business — Regulated activities — Supervision
This chapter focuses on the concept of dark trading in the context of MiFID II, against the background of the MIFID I regulation and its economic consequences for European equity markets. MiFID II aims to increase market transparency and to bring trading of financial instruments into regulated platforms. Extending the waivers introduced by MiFID I, the new Directive announces the double volume cap regime. An additional trading obligation of shares will reduce the extent of OTC trading in Europe. Some market participants and trading venues recently introduced MiFID II-ready solutions preventing dark executions from being subject to the double volume cap regime either by classifying the orders as large in scale or by introducing trading systems based on auction market models. These models and functionalities that already anticipate the future MIFID II regime are also discussed in this chapter.