Anatomy of Systematic Internalizers and Price Efficiency

Posted: 26 May 2021 Last revised: 27 Jun 2022

See all articles by Fatemeh Aramian

Fatemeh Aramian

University of Melbourne - Faculty of Business and Economics; Stockholm University-Stockholm Business School

Date Written: April 30, 2021


This study investigates the characteristics of systematic internalizers (SIs) and the impact of SI operations on price efficiency, which refers to price informativeness about fundamental values. The results show that market making trading firms on exchanges are more likely to operate as SIs. Using high-frequency measures of price efficiency, I find evidence that the trading activity of SIs leads to more informative prices on exchanges. Analyzing individual SIs indicates that the improved price efficiency is driven by those SIs with the highest level of market making activities on exchanges. Understanding the impact of SIs on price efficiency is important, since the increased market share in off-exchange trading through SIs has raised regulatory concerns about their roles in equity markets.

Keywords: Off-exchange trading; Systematic internalizers; Price efficiency; Dealers; Regulation

JEL Classification: G12, G14, G15, L10

Suggested Citation

Aramian, Fatemeh, Anatomy of Systematic Internalizers and Price Efficiency (April 30, 2021). Available at SSRN:

Fatemeh Aramian (Contact Author)

University of Melbourne - Faculty of Business and Economics ( email )

Melbourne, 3010

Stockholm University-Stockholm Business School ( email )

Kräftriket 3
Stockholm, 11419

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