Multilateral trading facility
A facility for trading which is less formal than a fully established exchange.
Operating a Multilateral trading facility is an investment service to which MiFID regulation applies.
An MTF is defined for MiFID purposes as:
- 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 multilateral system
- In accordance with non-discretionary rules
- In a way that results in a contract.
MTFs are required under MiFID to comply with regulations about:
- Transparency and
- Market surveillance.
The regulations for MTFs are similar to those applying to larger and more formal regulated markets (RMs).
However, the regulatory requirements for MTFs are lighter than the requirements for regulated markets.
MiFID Level 1 Directive. Articles 4(15), 13, 14, 25, 26, Annex I, Section A.
MTFs were formerly known as Alternative Trading Systems (ATSs).
The MTF system is sometimes also known as a 'venue'. In practice the venue would normally be a virtual venue, rather than a physical location.