Published on May 30, 2013
Under Article L. 424-1 of the Monetary and Financial Code, a multilateral trading facility (MTF), which does not have regulated market status, may be operated by an investment services provider (ISP) authorised to supply an investment service or by a market operator.
The rules for authorising an MTF depend on whether it is operated by a market operator or an ISP. In the first case, the AMF authorises MTFs after receiving the opinion of the Autorité de Contrôle Prudentiel et de Résolution (ACPR). In the second case, the ACPR grants authorisation after first consulting with the AMF.
The authorities review the MTF’s operating rules, the type of transactions proposed, organisational structure, human and material resources, settlement arrangements, where applicable, mechanisms for clearing trades executed within the system, and internal control arrangements.
The MTF’s rules, and any amendments, must be submitted to the AMF before they come into force. The AMF may prevent these rules from being enforced if it considers that they do not comply with regulatory provisions.
The AMF approves the market rules of organised MTFs (OMTFs). These are trading platforms that are subject to the provisions of Articles 524-1 et seq. AMF General Regulation, which include applying for approval of market rules, being subject to the provisions of the AMF General Regulation on market abuse and establishing a mandatory bid procedure.
The MTF operator must adopt transparent and non-discretionary rules ensuring a fair and orderly trading process and setting objective criteria for efficient order execution (Article L. 424-2 of the Monetary and Financial Code).
The rules set transparent criteria for the admission of financial instruments to trading. Unlike on regulated markets, a security may be admitted to trading without the issuer’s agreement. In this case, the issuer has no financial disclosure obligations towards the MTF operator.
Seven multilateral trading facilities have been authorised in France
> Alternext Paris, Marché Libre and Alternativa, for share trading;
> MTS, NYSE BondMatch and Galaxy, for bond trading;
> Powernext, for CO2 allowance trading.
Only Alternext, NYSE BondMatch and Galaxy have OMTF status.
To meet pre-trade transparency obligations, the MTF operator must publish bid and offer prices and the corresponding number of securities, in the case of shares admitted to trading on a regulated market. To satisfy post-trade transparency obligations, it then publishes the price, volume and time of executed trades in shares admitted to trading on a regulated market
The MTF operator must check that its members comply with the rules and ensure orderly trading in the system. It informs the AMF of any breaches of its rules and of any trading conditions that could impair orderly market operation or, in the case of shares admitted to trading on a regulated market, any behaviour that could potentially signal market abuse. An OMTF operator provides the same oversight for all securities admitted to trading.