New trading venue category - OTF
MiFIR and MiFID II introduce a new type of trading venue for bonds, structured finance products, emissions allowances and derivatives. These organised trading facilities (OTF) aim to increase transparency and efficiency of EU financial markets. Every multilateral system which is not a regulated market or an MTF and in which multiple third-party buying and selling will be considered an OTF under the new requirements.
Transparency requirements
for trading venues:
- Pre-trading transparency: Indication of quotes and depth of trading offers
- Post-trading transparency: Display of traded quotes and volume near time
- Publication of the data to the public within 15 minutes
- Stricter exception regime
for investment firms:
- Publication of offers
- Publication of trade details through an Approved Publication Arrangement
- Obligation to report data to national competent authorities allowing the determination of the pre- and post-trade transparency
- Trading obligation to regulated market or trading venues
Transaction reporting
- Record keeping of trade transactions for operators and users of MTFs and OTFs
- Reporting obligation of conducted trade transactions including trade decision information to the national competent authorities for operators of MTFs, OTFs and investment firms
Derivatives trading
- Trading obligation on organised trading venues, MTFs or OTFs
- Stricter clearing obligation for derivatives traded on regulated markets
- Exemption for portfolio compression transactions
Non-discriminatory clearing access
- Access to CCPs for trading venues
- Access to trading venues for CCPs
Supervision
- Market monitoring by ESMA and national competent authorities
- Product intervention power by competent authorities
- Position limitation power by ESMA
