[ N E W S R E V I E W | T R A D E T E C H 2 0 1 8 ] 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”.