What constitutes a trading venue? ESMA clarifies the term ‘multilateral system’


INSIGHT
Published
Mar 8th '23
Share
Facebook

The European Securities and Markets Authority (ESMA) has recently published an opinion that provides clarity as to when systems operated by market parties qualify as multilateral systems. Based on this ESMA opinion, market parties can check whether their systems qualify as multilateral systems and whether they are operating under the appropriate authorisation. The Dutch Authority for the Financial Markets (AFM) assesses whether market parties meet the requirements and applies this opinion in its supervision.

 

The new opinion provides guidance on when authorisation is required for the operation of a regulated market, multilateral trading facility (MTF) or organised trading facility (OTF). ESMA has asked the national authorities to ensure that market parties assess their systems against the ESMA opinion and reflect whether they are operating under the appropriate authorisation. With reference to the full text of this opinion, the AFM will highlight a number of elements below.

 

ESMA opinion

The term ‘multilateral system’ has been defined in law as ‘any system or facility in which multiple third-party buying and selling trading interests in financial instruments are able to interact in the system’. The opinion discusses the various elements of this definition. Among other things, ESMA explains in this opinion that interaction occurs if the system not only allows the communication of the different trading interests but also allows users to react to those trading interests.

 

In addition, the opinion addresses three different kinds of existing systems: technology providers (including communication tools and execution management systems), request for quote systems and systems in which transactions can be negotiated that are subsequently formalised on a different trading venue (pre-arranged/negotiated transactions).

 

 

Source: AFM

 

About us

LS Consultancy are experts in Compliance, and work with a range of firms to assist with improving their documents, processes and systems to help mitigate risk.

 

Our range of innovative solutions can be tailored to suit your unique requirements, no matter whether you’re currently working from home, or are continuing to go into the office. Our services can be deployed individually or combined to form a broader solution to release your energies and focus on your clients.

 

Contact us today for a chat or send us an email to find out how we can support you in meeting your current and future compliance challenges with confidence.

 

Explore our full range today

 

Contact us

 

Why Not Download our FREE Brochures! Click here.

 

Call Us Today on 020 8087 2377 or send us an email.

 

Contact us