Find out what permissions you'll need to apply to us for authorisation, how much you'll need to pay and what we expect to see in your application.
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Multilateral trading facilities (MTFs) and organised trading facilities (OTFs) are types of businesses that operate trading facilities or venues, similar to recognised exchanges.
MTFs and OTFs facilitate the arranging and execution of transactions in financial instruments on a ‘multilateral system’, which means any system or facility in which multiple third-party buying and selling trading interests in financial instruments are able to interact.
|MTFs||An MTF is an investment firm or market operator that operates a multilateral system in accordance with non-discretionary rules.|
An OTF means a multilateral system which isn't 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 contrast with how an MTF operates, order execution must be carried out on an OTF on a discretionary basis.
Defining your users
It's important to be clear on how you refer your users.
Users of an:
- MTF are defined as members, not clients or customers
- OTF are clients, not members
When your firm is looking to select its permissions, your 'client types' will likely be professionals and eligible counterparties.
Permissions you'll need
Typically, these are the permissions required:
- operating a Multilateral Trading Facility (MTF) – A8 MiFID Investment Activity
- operating an Organised Trading Facility (OTF) – A9 MiFID Investment Activity
- making arrangements with a view to transactions
- arranging deals in investments
- dealing in investments as agent
- dealing in investments as principal (an OTF may apply a match principal limitation)
Refer to MIFIDPRU (our prudential sourcebook for MiFID investment firms) to determine what Own Funds Requirement and K-factors you need for your business model.
If your firm satisfies all the conditions of MIFIDPRU 1.2.1 R it will be classed as a small and non-interconnected (SNI) firm, meaning the Permanent Minimum Requirement (PMR) is £150,000.
If you're an OTF dealing on your own account without a limitation, you'll be classed as a non-small and non-interconnected (non-SNI) firm, meaning the PMR is £750,000.