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Guidance for Multi Lateral Trading Facilities (MTFs)



Multi-lateral Trading Facilities (MTFs): Good Practice and Guidance

15 April 2015

Further to the FCA’s General Consultation 14/9 last December, they have today released their finalised guidance on Multi-lateral Trading Facilities (MTFs) to help develop industry understanding of good practice in this area.

The regulator’s finalised guidance sets out the key requirements of Market Conduct for MTFs as detailed in MAR 5 of the FCA handbook, as well as the FCA’s Observations of Good Practice within the industry relating to MTF operator rulebooks.

Whilst the guidance summarises the consultation feedback it also amends the “Dear CEO” letter that was contained with the consultation to reflect internal re-organisation at the FCA effective since January.

Key Guidance Areas:

The Regulator covered the following topics in their Finalised Guidance in relation to MTF Market Conduct & good practice observations:

MTF Rulebook - Transparency                         Finalisation (Settlement) of Transactions           Participant Eligibility & Access Criteria

Instrument Eligibility Criteria                         Monitoring Compliance with MTF Rules               Reporting Requirements

MTF Rulebook Requirements:

Trading Process Requirements in MAR 5.3.1 were focussed on in particular whereby any firm operating a Multi-lateral Trading Facility “must have transparent and non-discretionary rules and procedures for fair and orderly trading”.

What is clear from the guidance is that the FCA expects an MTF operator to have a rulebook in place and that should be publicly available on operator’s website.

The FCA have provided a non-exhaustive list of key sections that should be included within the MTF’s rulebook, these being:

The FCA have also clarified that there is scope for commercial provisions, that are not part of the rules, to sit within a document library of supporting information, the publication of which is able to be to made to a closed participant user group only, unlike the MTF rulebook which should be openly available and transparent to the public.

MTF Guidance Overview:

The Guidance from the FCA confirmed that an MTF operator:

Conflicts of Interest:

Furthermore, the FCA expect that staff of an MTF operator understand the applicable internal identification, escalation and reporting process of the firm and that due consideration be given for members of personnel that may face conflicts between their reporting obligations and the commercial objectives of the firm.


As such, MTF’s should ensure that they have internal policies and procedures that do not discourage fulfilment of reporting obligations in situations when there is conflict with commercial objectives.


Monitoring Compliance with MTF Rules:

If you should like assistance in monitoring your compliance with the MTF Rules get in touch with our experienced team of compliance specialists.

The contents of an MTF operator’s rulebook should enable them to demonstrate how they are complying with MAR 5 and their procedures are clear and seek to ensure that participant behaviour is consistent with fair and orderly trading requirements

Finalised Guidance FG 15/6














A firm operating an MTF must have: “transparent rules, based on objective criteria, governing access to its facility, which rules must provide that its members or participants are investment firms, CRD credit institutions or other persons who:

(a) are fit and proper;

(b) have a sufficient level of trading ability and competence;

(c) where applicable have adequate organisational arrangements;

(d) have sufficient resources for the role they are to perform, taking into account the different financial arrangements that the firm operating the MTF may have established in order to guarantee the adequate settlement of transactions.

Finalised Guidance FG 15/6