Systematic internaliser and Systematic risk: Difference between pages

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imported>Doug Williamson
(Create the page. Source: EC Europa Glossary: http://ec.europa.eu/internal_market/securities/docs/glossary_en.pdf)
 
imported>Doug Williamson
(Expand first definition.)
 
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(SI).
1. ''Capital Asset Pricing Model (CAPM)''.


The concept of Systematic internalisers was introduced by [[MiFID]] regulations in 2007.
Systematic risk is an important concept in the Capital asset pricing model.


SIs are institutions large enough to match client orders internally, or against their own books.
Systematic risk means the element of total risk which cannot be eliminated by holding a diversified portfolio of investments.  


SIs differ from broker crossing networks, which may route client orders between a number of different institutions.  
Under the CAPM, only systematic risk is rewarded with additional returns.


(Because rational investors are assumed to have already fully diversified away all diversifiable risks).


An SI is defined in MiFID as:


#An investment firm which
Systematic risk is often quantified by Beta.
#On an organised, frequent and systematic basis,
#Deals on own account by executing client orders outside a [[regulated market]] (RM) or an MTF ([[Multilateral trading facility]]).  




A firm does not need specific authorisation from its competent authority to carry out systematic internalisation.
Systematic risk is also known as 'market risk' or 'non-diversifiable risk'.


However, similarly to MTFs and RMs, they are required to conform to some transparency requirements,
such as providing public price quotes.


2.


Only a few (generally large) firms have set up SIs.
''Financial markets supervision''.
 
The same as ''systemic risk''.






== See also ==
== See also ==
*[[MiFID]]
* [[Beta]]
*[[Regulated market]]
* [[Capital asset pricing model]]
*[[Multilateral trading facility]]
* [[Gearing]]
* [[Market risk]]
* [[Non-diversifiable risk]]
* [[Systemic risk]]
* [[Unsystematic risk]]


[[Category:Equity]]
[[Category:Manage_risks]]
[[Category:Regulation_and_Law]]
[[Category:FX_Risk]]

Revision as of 14:05, 16 May 2020

1. Capital Asset Pricing Model (CAPM).

Systematic risk is an important concept in the Capital asset pricing model.

Systematic risk means the element of total risk which cannot be eliminated by holding a diversified portfolio of investments.

Under the CAPM, only systematic risk is rewarded with additional returns.

(Because rational investors are assumed to have already fully diversified away all diversifiable risks).


Systematic risk is often quantified by Beta.


Systematic risk is also known as 'market risk' or 'non-diversifiable risk'.


2.

Financial markets supervision.

The same as systemic risk.


See also

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