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T. Rowe Price’s trading head
dubious on MiFID II and the
emergence of new venues
GLOBAL HEAD OF SYSTEM-
ATIC TRADING AND MARKET
STRUCTURE AT US FIRM
THROWS DOUBT ON SYSTEM-
ATIC INTERNALISERS AND
PERIODIC AUCTIONS.
M
ehmet Kinak, global head of
systematic trading and market
structure at US-based asset manager
T. Rowe Price, has thrown significant
doubt at the new European trading
landscape under MiFID II.
During a panel discussion with with
Instinet Europe’s chief executive
Richard Parsons at this year’s Tra-
deTech conference, Kinak pointed to
the emergence and increasing pop-
ularity of new trading venues such
as systematic internalisers (SIs) and
periodic auctions as evidence that
the new environment has changed
in name only since the removal of
broker crossing networks (BCNs).
“They are the same thing but with
a different name and more complexi-
ty. As an institution, we cannot show
our hand,” he said.
“The notion that lit liquidity is the
best liquidity is not right, because
there are too many market partici-
pants that take information and use
it to their benefit. I urge regulators
to speak with the buy-side more.
Returning good performance to asset
owners via this complexity is very
14 // TheTrade // Summer 2018
difficult. If we need to use periodic
auctions and SIs for anonymity, then
that’s what we’ll do.”
The delayed introduction of the
double volume caps on dark pool
trading has meant a shift in broker
behaviour, as some are engag-
ing with SIs, while using periodic
auctions to source liquidity is more
challenging, according to Kinak.
“A lot of brokers are saying now they
cannot source liquidity, but they can
provide it and that’s a big differenti-
ation. Some will do that very well but
others will fail. For me, in terms of the
current winners and losers, agency
brokers have won early on because it’s
about sourcing liquidity and the buy-
side is reluctant to use the SI regime
and principle liquidity,” he added.
Kinak did not hold back when
addressing the wider subject of the
new regulatory regime, describing
the early days so far under MiFID II as
“a mess”.
“When it comes to MiFID II, who is
better off? I don’t think lit markets
would say they are better off, and
the buy-side and asset owners aren’t
either. In US markets, you could
tell early on we were going to be a
principle driven market, like with the
SI regime,” he said.
Pointing out that while the new
regulation has increased transparen-
cy for asset owners and managers,
which he described as “very ideal”,
Kinak said that the idea of moving
markets to lit venues doesn’t provide
asset managers “anything palpable”.