Article 4 (15) of MiFID describes MTF as a “multilateral system, operated by an investment firm or a market operator, which brings together multiple third-party buying and selling interests in financial instruments – in the system and in accordance with non-discretionary rules – in a way that results in a contract”.
This may involve requirements about the number of shares that are available, standards around how the accounts of the company are maintained or strict rules about how news is released to the market.
MiFID lays out a number of obligations for an MTF to operate: New entrant MTFs have had a considerable impact on European share-trading.
The legacy exchanges largely chose to keep to their existing business models and scope, but new entrant MTFs have made a significant impact.
MTFs have been launched in other asset classes as well, one of the examples is LMAX Exchange an FCA regulated MTF for trading spot FX and precious metals.
This in turn forced traders to make use of more sophisticated trading strategies such as smart order routing.
Many consider the MTF business model unsustainable, although Alisdair Haynes, the Chi-X Europe CEO, said "We are not going to raise prices, though most people expect we have to".