8.II.1.5.3 Introduction of the MTF

MiFID I introduced the MTF. The MTF was a reaction to the situation under the ISD where so-called ‘Alternative Trading Systems’ (ATSs) emerged. Following technological developments, ATSs arose as order execution platforms in the EEA.1 The Commission noted that ATSs were vulnerable to the same risks as RMs, including in terms of post-trade transparency. ATSs were not subject to the same regulatory framework as RMs. The Commission argued that there needed to be a level playing field between RMs and other trading systems when competing with each other in respect of order-execution functionality.2 The Commission therefore proposed that MiFID I could allow for an application of provisions to ATSs, including on post-trade transparency, which would closely resemble RMs.3 This proposal later transformed into the development of a new trading venue under MiFID I, being the MTF. The Commission wanted to introduce the MTF in order to have a trading venue in place that could compete with RMs, while representing the same organised trading functionality.4 The Commission proposed MTFs to become subject to the same post-trade transparency obligations as RMs under MiFID I.5

The European Parliament and Council adopted the Commission’s proposal. Accordingly, the European Parliament and Council wanted similar post-trade transparency obligations to apply to RMs and MTFs.6 The latter is evident in the final MiFID I text. MiFID I introduced MTFs, being similar organised trading functionalities as RMs. RMs and MTFs were subject to the same pre-trade transparency requirements.7