Multilateral Trading Facilities (MTFs)

DEFINITION of multilateral trading facilities (MTFs)

Multilateral trading facilities (MTFs) is a European regulatory term for a self-regulated financial trading venue. In other words, these are alternatives to traditional stock exchanges. 


The traditional stock exchanges, a market for securities, typically are using electronic systems. While MTF gives traders and investors an alternative to traditional exchanges.

It allows trading of a wider variety of markets than most exchanges. Including assets that may not have an official market, for example.

MTF has the form of electronic systems, controlled by an approved operator. Or sometimes an investment bank.

As an exchange, traders and investors can use the software. In order, to match buyers with sellers as quickly as possible.

It is a type of trading system whereby financial vehicles are exchanged between a number of different parties.

MiFID ( Markets in Financial Instruments Directive) describes MTF as a multilateral system. An investment firm or a market operator is operating with it.

It brings together multiple third-party buying and selling interests. And in accordance with non-discretionary rules in a way that results in a contract.

MTFs have fewer restrictions in connection to the admittance of financial instruments for trading.  It allows participants to exchange more exotic assets.

The introduction of MTFs provides a greater fragmentation in the financial markets. So, it gives possibility single security may be listed across multiple venues.

Brokers are offering smart order routing and other strategies in order to secure the best price between these many venues, above all.


Typically these financial vehicles are those that do not normally have an official market through which to be traded.

The traders can submit their trading orders electronically through a system.  Hence, it helps in pairing the buyers with the sellers of these financial instruments.

This concept of design can harmonize retail investors’ protection. Subsequently, it allows investment firms to provide services throughout the EU.  In connection with this, the United States equivalent is an alternative trading system.

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