what is a multilateral trading facility mtf 
a multilateral trading facility mtf is a european term for a trading system that facilitates the exchange of financial instruments between multiple parties mtfs allow eligible contract participants to gather and transfer a variety of securities especially instruments that may not have an official market these facilities are often electronic systems controlled by approved market operators or larger investment banks traders usually submit orders electronically where a matching software engine pairs buyers with sellers understanding a multilateral trading facility mtf mtfs provide retail investors and investment firms with an alternative to traditional exchanges before their introduction investors had to rely on national securities exchanges such as euronext or the london stock exchange lse mtfs have fewer restrictions surrounding the admittance of financial instruments for trading allowing participants to exchange more exotic assets and over the counter otc products for example the lmax exchange offers spot foreign exchange and precious metals trading faster transaction speeds lower costs and trading incentives have helped mtfs become increasingly popular in europe although the nasdaq omx europe was closed in 2010 as mtfs face intense competition with each other and established exchanges 2 the introduction of mtfs has led to greater fragmentation in the financial markets since single securities may now list across multiple venues brokers responded by offering smart order routing sor and other strategies to secure the best price between these many venues mtfs operate under the european union s eu s mifid ii regulatory environment a revised legislative framework designed to protect investors and instill confidence in the financial industry 1mtfs in the united statesin the united states alternative trading systems ats operate similarly to mtfs atss are regulated as broker dealers rather than exchanges in most cases but must still be approved by the securities and exchange commission sec and meet certain restrictions 3in recent years the sec has intensified its enforcement activities surrounding atss in a move that could lead to stricter mtf regulation in europe this is especially true for dark pools and other atss that are relatively obscure and difficult to trade and value the most widely known atss in the united states are electronic communication networks ecns computerized systems that automatically match buy and sell orders for securities in the market in the united states alternative trading facilities atss are similar to the european mtfs benefits of mtfsmultilateral trading facilities offer multiple advantages for buying and selling securities and other assets one key advantage is that the operators cannot pick and choose which trades to execute they must set and follow clear rules allowing transparency in trades and pricing with high speed trading mtfs use computer algorithms to match buyers and sellers this facilitates higher liquidity than over the counter trades resulting in lower bid ask spreads and more effective price discovery moreover mtfs typically operate on a commission basis meaning that they have no conflicts of interest with individual traders real world examplesinvestment banks and financial data companies can leverage economies of scale to compete with traditional securities exchanges and potentially realize synergies with their existing trading operations some investment banks which already ran internal crossing systems have also converted their internal systems into mtfs for example ubs group established its own mtf that works in conjunction with its internal crossing systems 4in 2019 financial data and media company bloomberg announced that it received authorization from the netherlands authority for the financial markets afm to operate an mtf from amsterdam throughout the eu bloomberg s mtf provides quote and trading functionality to eligible participants in products such as cash bonds repos credit default swaps cds interest rate securities irs exchange traded funds etf equity derivatives and forex fx derivatives 5