EMARKET MAKERS DEAL WITH MIFID II – Virtu Financials and Instinet Europe have struck up a deal which has become the first indication of how market makers will adapt to MiFID II. Virtu, who spoke publicly on Monday, plan to supply price quotes to underpin off-exchange equities deals for Instinet. The deal also fills the gap in the market for trades that clients do not want to disclose publicly for fear of affecting the price, but were not big enough under EU requirements to qualify as a “large” trade. An alternative, legally defined as “systematic internaliser” (SI), grant exemptions from rules on minimum quoting and trading increments. Despite being highly controversial, banks, proprietary high-frequency traders and electronic market makers are expected to convert to SI as it would allow them to negotiate private agreements, in the same way as Virtu and Instinet. With that being the case under new European legislation, we expect to see a number of joint ventures arise before MiIFD II kicks in. #SpartanInternational