Unintended Consequences: Conflicting Regulations, the SEC and MiFID II Requirements

https://tabbforum.com/opinions/unintended-consequences-conflicting-regulations-the-sec-and-mifid-ii-requirements/

Douglas Christensen – Investment firms are moving more and more toward a situation in which they will be paying for research from profit and losses (P&L) instead of using client money. This isn’t necessarily due to firms seeing unjust value in using client money, but more likely a reaction to conflicting regulations across regions and requirements. Inconsistent regulations across regions have forced firms to dip into P&L to pay for research services instead of paying out of expenses of the fund. Investment firms, particularly the large and global, cannot be seen as treating clients differently based on their location. These changes have reverberated across the industry and are potentially doing more harm than good.

Meet Crowdfunding 2.0: Micro-Stock Deals for Small-Fry Investors

https://tabbforum.com/opinions/meet-crowdfunding-2-0-micro-stock-deals-for-small-fry-investors/

By Foster Winans – Meet crowdfunding 2.0, a sophisticated, regulated, entrepreneurial version of platforms like GoFundMe that facilitate donations for people and projects. Instead of donating to a fund to help a local employer whose business was flooded out, it’s now possible for that employer to sell stock which could become more valuable as the firm recovers.

MiFID II Equities: Dark Pools Hit High During Summer Slowdown

https://tabbforum.com/opinions/mifid-ii-equities-dark-pools-hit-high-during-summer-slowdown/

Tim Cave, TABB Group- Dark trading reached its highest level under MiFID II in July, accounting for 9.6% of all on-exchange activity. It is dark pools’ largest market share since April 2019, when they accounted for 9.1% of activity. Block specialist Liquidnet enjoyed a particularly strong month, with total daily notional volumes of €454 million, its third-highest total since January 2017.

The biggest factor affecting dark volumes in Europe is MiFID II’s dark pool caps, which limit the amount of dark trading in a stock to 4% of total on-exchange volumes on any one dark pool and 8% across all dark venues. Volumes are monitored on a retrospective 12-month basis every month, and those stocks breaching the caps are banned from trading in the dark for the next six months.

OMS/EMS Connectivity Fees Remain Shrouded in Secrecy

https://tabbforum.com/opinions/despite-pressure-from-both-sides-of-the-street-oms-ems-connectivity-fees-remain-shrouded-in-secrecy/

Sean Sullivan, LiquidityBook – There is no question that Wall Street is a far more transparent place today than at any point in history. Generally speaking, broker-dealers are well aware of the pricing models employed by the exchanges, investment managers know how and for what their brokerage counterparties charge, and end investors can see exactly what fees they are incurring. For trading in particular, there is now a tremendous amount of data – some of it mandated by regulators, and some driven by market forces – around order routing that only a few years ago would have been nearly impossible to obtain. But even as the industry continues to laudably move forward on this score, one area has remained stubbornly opaque for far too long: the transactional connectivity fees charged by some OMS and EMS vendors.