What’s a Trading Venue?

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MiFIR applies to the financial instruments where the underlying instrument is ToTV (Traded on Trading Venue). What’s a trading venue? See below the 3 categories of trading venue:

  1. Regulated Market (RM)
  2. Multilateral Trading Facility (MTF)
  3. Organised Trading Facility (OTF)

We’ve also designed an explanatory infographic to help you grasp the concept easier! Many people have enquired about whether a systematic internaliser is trading venue. We’ve got an answer for you too.

Regulated Market (RM)Organised Trading Facility (OTF)Multilateral Trading Facility (MTF)
Features- Operated by market operator
- Authorised by NCA under MiFID II (Title III) as regulated market
- No discretion in execution
- Examples: London Stock Exchange, Euronext London, Cyprus Stock Exchange
- Not an RM or MTF
- Authorised by NCA under MiFID II (Title III) as investment firm
- Interests in bonds, structured finance products, emission allowances or derivatives
- Has discretion in execution
- Examples: Cube Investing, Mariana Capital, Reyker
- Operated by investment firm or market operator
- Authorised by NCA under MiFID II (Title III) as investment firm
- No discretion in execution
- Examples: UBS MTF, Sigma X
Restrictions- Cannot deal on own account
- Cannot act as matched principal
- Cannot deal on own account
- Cannot act as matched principal in limited circumstances
- Need to be licensed
- Conduct of business requirements
- Cannot deal on own account
- Cannot act as matched principal

Regulated Market (RM)

It’s 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 accordance with non-discretionary rules.

Multilateral Trading Facility (MTF)

It’s 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 in accordance with non-discretionary rules.

Organised Trading Facility (OTF)

It’s 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. Unlike RMs and MTFs, operators of an OTF have some discretion in execution.

Are Systematic Internalizers a type of trading venue?

No, Systematic Internalizers are counterparty, not a trading venue. Systematic Internalizers are firms which, on an organised, frequent, systematic and substantial basis, deal on own account when executing client orders outside a regulated market, an MTF or an OTF.

MiFID II does not allow an SI to bring together third party buying and selling interests in functionally the same way as a trading venue.

What about OTC transactions?

Financial instruments whose immediate underlying is admitted to trading on a trading venue are also subject to MiFID II requirements, even when these instruments are traded off-venue e.g. OTC derivative contracts that are deemed to be ‘economically equivalent’ to the venue-listed instruments.

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