Trading facilities

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Regulated market
ˈrɛɡjəleɪtɪd ˈmɑːkɪt (n.)

Defined in Article 4.1(22) of MiFID 2 thus:

‘regulated market’ means a multilateral system operated and/or managed by a market operator, which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments – in the system and in accordance with its non-discretionary rules – in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with Title III of this Directive;

We would describe this to include stock exchanges, futures exchanges

Multilateral trading facility
ˌmʌltɪˈlætərəl ˈtreɪdɪŋ fəˈsɪləti (n.)
Also known as an MTF

Defined in Article 4.1(22) of MiFID 2 thus:

‘multilateral trading facility’ or ‘MTF’ means a multilateral system, operated by an investment firm or a market operator, which brings together multiple third-party buying and selling interests in financial instruments – in the system and in accordance with non-discretionary rules – in a way that results in a contract in accordance with Title II of this Directive;

A multilateral trading facility is an electronic trading system that which brings together multiple third-party buying and selling interests to purchase and sell financial instruments (including those that may not have an official market). MFTs are often operated by established market participants such as investment banks. Orders will usually be submitted electronically and a software engine employing non-discretionary rules will be used to pair buyers with sellers. MTFs must meet certain other criteria prescribed by MiFID. Examples include as Chi-X and Turquoise.

Organised trading facility
ˈɔːɡənaɪzd ˈtreɪdɪŋ fəˈsɪləti (n.)
Also known as an OTF

Defined in Article 4.1(23) of MiFID 2 thus:

‘organised trading facility’ or ‘OTF’ means a multilateral system which is not a regulated market or an MTF and in which multiple third-party buying and selling interests in bonds, structured finance products, emission allowances or derivatives are able to interact in the system in a way that results in a contract in accordance with Title II of this Directive;

Note, OTFs are mutually exclusive with MTFs and regulated markets.

Mifid multilateral facilities compared

Feature	Regulated Market	MTF	OTF
Rules	Non-discretionary	Non-discretionary	Discretionary
Operator	Market operator	investment firm or a market operator	Not stated
Assets	Financial instruments that are admitted to trading	Financial instruments	Bonds, structured finance products, emission allowances or derivatives but not equities
Authorisation	Yes	No	No
Examples	ICE Endex, Eurex, Xetra, Luxembourg Stock Exchange and many others	Chi X-Europe, Liquidnet Europe, Currenex MTF, UBS MTF	Tradeweb EU OTF