[ESMA 70-872942901-35 MiFIR transparency Q&A, Q&A 7.11]

Article 4(1)(20) of MiFID II specifies that investment firms should comply with the systematic internaliser regime (mandatory systematic internaliser regime) where the pre-set limits established to be considered trading on a frequent and systematic basis and on a substantial basis are crossed.

Article 4(1)(20) of MiFID II as further specified in Articles 12-17 of Commission Delegated Regulation (EU) 2017/565 does not limit the concept of systematic internalisers to instruments that are traded on a trading venue (TOTV) but includes all financial instruments, i.e. TOTV and non-TOTV instruments. Hence, an investment firm may qualify as a systematic internaliser in any financial instrument (i.e. TOTV and non-TOTV instruments).

However, ESMA is only publishing information on TOTV instruments for determining whether an investment firm meets the thresholds to be considered as a systematic internaliser. With respect to non-TOTV instruments, ESMA therefore appreciates that it might be challenging for investment firms to access reliable and comprehensive sources of EU wide information preventing de facto the systematic internaliser test to be carried out.

There are circumstances where an investment firm may still be a systematic internaliser for non-TOTV instruments. This would notably be the case for investment firms that opt voluntarily into the systematic internaliser regime.

In addition, it is possible that an investment firm by virtue of qualifying as a systematic internaliser in a TOTV instrument automatically becomes a systematic internaliser in non-TOTV instruments.  This would notably be the case in the circumstances described below.

An investment firm might be a systematic internaliser for non-TOTV instruments when it meets the threshold for a bond, since it automatically becomes an SI in all bonds (i.e. TOTV and non-TOTV) issued by the same entity or by any entity within the same group for the same bond type.

An investment firm might be a systematic internaliser for non-TOTV instruments when it meets the threshold for a structured finance product (SFP), since it automatically becomes a systematic internaliser in all SFPs (i.e. TOTV and non-TOTV) issued by the same entity or by any entity within the same group.

An investment firm might be a systematic internaliser for non-TOTV instruments when it meets the threshold for a sub-class of derivatives, since it becomes a systematic internaliser for all derivatives (i.e. TOTV and non-TOTV, if any) belonging to that sub-class.

An investment firm might be a systematic internaliser for non-TOTV instruments when it meets the threshold for an emission allowance, since it becomes a systematic internaliser for all emission allowances (i.e. TOTV and non-TOTV, if any) belonging to that emission allowance sub-asset class.

An investment firm might be a systematic internaliser for non-TOTV instruments when it meets the threshold for the asset class of securitised derivatives, since it becomes a systematic internaliser for all securitised derivatives (i.e. TOTV and non-TOTV, if any) belonging to this asset class.