Trading facilities: Difference between revisions

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{{a|mifid2|}}Also known as an [[MTF]], defined in the {{tag|FCA}} handbook [http://fshandbook.info/FS/glossary-html/handbook/Glossary/M?definition=G2354 thus]:
{{a|mifid2|}}{{d|Regulated market|ˈrɛɡjəleɪtɪd ˈmɑːkɪt|n}}


{{quote|a multilateral system, operated by an {{fcaprov|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 the provisions of Title II of {{tag|MiFID}}. }}
Defined in Article {{mifid2prov|4.1(22)}} of [[MiFID 2]] thus:
{{quote|‘'''[[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 instrument|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 instrument|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;}}


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.
We would describe this to include stock exchanges, futures exchanges


Compare and contrast with {{cobsprov|regulated market}} (basically a conventional stock market like the LSE) and a {{cobsprov|systematic internaliser}} (an internal crossing system against principal flow in the books of a broker).
{{d|Multilateral trading facility|ˌmʌltɪˈlætərəl ˈtreɪdɪŋ fəˈsɪləti|n|}}
Also known as an [[MTF]]


A subject of some interest is to what extent one needs a client's permission to handle orders outside a {{cobsprov|regulated market}} or {{fcaprov|mtf}}. See COBS {{cobsprov|11.2.26}} for more on that fascinating topic.
Defined in Article {{mifid2prov|4.1(22)}} of [[MiFID 2]] thus:
{{quote|‘'''[[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; }}


Under MiFID there is also an “[[organised trading facility]]” or “[[OTF]]”, but we can’t honestly be bothered writing an article about those. They are not regulatged marketsfor the purposes of [[MiFID]], even though you do need MiFID authorisation to operate one.
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.


{{cobsanatomy}}
 
{{d|Organised trading facility|ˈɔːɡənaɪzd ˈtreɪdɪŋ fəˈsɪləti|n|}}
Also known as an [[OTF]]
 
Defined in Article {{mifid2prov|4.1(23)}} of [[MiFID 2]] thus:
 
{{quote|
‘'''[[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.

Revision as of 10:50, 3 July 2023

MiFID 2 Anatomy™


MiFID 2: Less fondly known as EU Directive 2014/65/EU (EUR Lex) | MiFID 1Articles: 16(7) (Recording of Communications)

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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.

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