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United Kingdom
United Kingdom
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CASE STUDY
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Organised trading facility or OTF meaning
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What does Organised trading facility or OTF mean?
An organised trading facility (OTF) is a trading venue used in practice for discretionary, multilateral trading of non-equity instruments—principally bonds, structured finance products, emission allowances and derivatives—often via voice, request-for-quote or hybrid systems operated by an investment firm or market operator. It is defined in legislation (the UK’s onshored MiFID/MiFIR regime and EU MiFID II as implemented in Ireland) and sits alongside, but is distinct from, a regulated market and a multilateral trading facility (MTF). By definition, equities cannot be traded on an OTF.
Key features include:
- a multilateral system in which multiple third-party buying and selling interests can interact within the system to result in a contract;
- operator discretion in how orders are placed and executed (unlike an MTF), subject to best execution, conflicts and transparency rules;
- limits on dealing on own account, with matched principal trading permitted in specified instruments.
OTF authorisation and ongoing requirements (access, conduct, pre- and post-trade transparency and transaction reporting) are set by the FCA under UK MiFIR and by the Central Bank of Ireland under MiFID II. Usage and legal effect are broadly consistent across England and Wales, Scotland, Northern Ireland and Ireland, though supervisory guidance may differ.
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View the related Practice Notes about Organised trading facility or OTF
PRACTICE NOTES
UK Market Abuse Regulation: Instruments and Activities in Scope—Financial Instruments, Emission Allowances, Commodity Contracts, Benchmarks, Off-Venue Conduct and Territorial Scope
This FLASHCARD sets out the instruments captured by the UK Market Abuse Regulation (Assimilated Regulation (EU) 596/2014). Categories of Instrument within the scope of the UK Market Abuse Regulation Four categories of instrument fall within scope: traded financial instruments emission allowances and related auctioned products commodity derivatives and associated spot commodity contracts benchmarks In addition, the UK Market Abuse Regulation applies to certain activities conducted away from a trading venue. Traded financial instruments The UK Market Abuse Regulation applies to: financial instruments admitted to trading on a UK-regulated market, Gibraltar-regulated market or EU-regulated market, or where a request for admission to trading has been made financial instruments traded on a UK multilateral trading facility (MTF), Gibraltar MTF or EU MTF, admitted to trading on a UK MTF, Gibraltar MTF or EU MTF, or where a request for admission to trading on a UK MTF, Gibraltar MTF or EU MTF has been made ...
22 May
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PRACTICE NOTES
EU Market Abuse Regulation (MAR): Instruments, Emission Allowances, Commodity/Spot Contracts, Benchmarks, Off-venue Activities and Territorial Scope
This FLASHCARD outlines the instruments that fall within the EU Market Abuse Regulation (Regulation (EU) 596/2014) Categories of instrument within the scope of the EU Market Abuse Regulation Four categories fall within scope: traded financial instruments emission allowances and related auctioned products commodity derivatives and related spot commodity contracts benchmarks Additionally, the EU Market Abuse Regulation covers certain off‑trading venue activities. Traded financial instruments The Regulation applies to: financial instruments admitted to trading on an EU‑regulated market, or where an application for admission to trading has been made financial instruments traded on an EU multilateral trading facility (MTF), admitted to trading on an EU MTF, or where an application for admission to an EU MTF has been made financial instruments traded on an EU organised trading facility (OTF) other financial instruments whose price or value depends on, or affects, the price or value of any of the above; this includes, but...
21 May
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PRACTICE NOTES
Exclusions from UK regulated investment activities under FSMA/RAO: general prohibition, MiFID override, and carve‑outs for dealing, arranging, managing, safeguarding, MTFs/OTFs, UCITS/AIF, advising and funeral plans
This Practice Note outlines various exclusions that may apply to particular regulated activities connected with investments. It provides a concise overview of the key principles of financial services regulation. In particular, it introduces the concept of the ‘general prohibition’ in section 19 of the Financial Services and Markets Act 2000 (FSMA 2000), which states that a person must not undertake regulated activities in the UK unless that person is authorised or exempt... The general prohibition Under FSMA 2000, s 19, carrying on regulated activities in the UK is not permitted unless the person is authorised or exempt; this is known as the general prohibition. For details on the territorial reach of the general prohibition, see Practice Note: Territorial scope of the prohibition... According to FSMA 2000, s 31, an authorised person is someone who: has been granted permission by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) under FSMA 2000, Part 4A to carry on specified regulated activities is a...
21 May
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