This CP concerns the report on the functioning of OTFs required under Article 90(1)(a) of the Markets in Financial Instruments Directive II. The paper provides an overview of the functioning of the OTF regime and discusses the definition of OTFs, the use of discretion in the execution of orders and the current practice concerning the use of matched principal trading.

In addition, the CP also at the trading venue perimeter including a discussion on the definition of multilateral systems and the boundaries of trading venues’ authorisation, which are essential to a well-functioning OTF regime.

Next steps

Respondents are encouraged to provide relevant information, including quantitative data, to support their views or proposals. Based on the feedback received, ESMA will prepare its final review report for submission to the European Commission.

Responses should be submitted by 25 November 2020.