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    Thread: Do You Know what Multilateral Trading Facilities(MTF) Means?

    1. #1
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      Default Do You Know what Multilateral Trading Facilities(MTF) Means?

      This is a term that is related to the forex and stock exchange markets, I am pretty sure this is new to many people, thankfully this is an encyclopedia that is meant to serve as a reference point for anyone seeking to know some terminologies that is not clear to that, when people visit from all over the world MT5 forum will be one of the places they find their answers, have you ever had an encounter with Multilateral Trading Facilities?


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      The idea of Multilateral Trading Facilities was first brought into Europes Markets in Financial Instruments Directive (MiFID) and refers to a particular type of non-exchange financial trading venue. These MTFs are an alternative to traditional exchange venues and are typically built around computerised systems which bring buyers and sellers together, according to a set of pre-defined rules. These rules must never be violated by any participating members or else they will be thrust out of the system.The Markets in Financial Instruments Directive (MiFID) lays out a number of rules governing how MTFs are to be run. MTF has the following responsibilities, one is to ensure that there is pre-trade transparency, with the price of current orders being available on the MTFs market data feed.
      MTFs must also be post-trade transparent, which means any trades carried out must be published in real-time. If this real time information is not displayed, then sanctions will be placed on the defaulter. There is only one forex broker that offers the opportunity to engage in this type of trading which is known as LMAX Exchange, outside ths broker which you might not have heard of before, there is none other that is offering this service because it is highly technical, hence many would prefer to stay with the regular platforms.


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      Actually I have heard about this before but I honestly don't know what its called, Multilateral trading facilities (MTFs) offer traders and investment firms an alternative to traditional exchanges. They allow trading of a wider variety of markets than most exchanges, including assets that may not have an official market.

      I think they are controlled by an approved operator, or sometimes an investment bank, Like an exchange. And they use software to match the buyers and sellers immediately.

      Trading MTF need significantly higher capital requirements than the average forex brokerage, which means trading with an MTF may be out of the reach of many retail traders.


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      Forex trading as we know is done almost anonymously where someone that is buying and pair and someone else that is selling are in different locations and they transact without any need to see each other, this is not what is obtained in the case of Multilateral trading facilities (MTFs). Under this arrangement, the buyers and sellers come together at a location where they can see each other, much like pseudo stock exchange floor in a way. One of the advantages of this type of platform is that there is greater transparency as nothing like broker manipulation and other unhealthy practices that takes place in Forex is present there, the disadvantage is that only large corporation are allowed, meaning a lot of capital is needed before you can participate in this environment.


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      Where you trade in a multilateral trading facility there are some features of the forex market that automatically is taken away, one of them is decentralisation, when this is absent in the trading business there is room for manipulation to take place, there is always weakness in every system irrespective of how tight the security is, after all, it is someone the designed the system.

      Even with the high level of decentralisation of the forex market we still hear cases of how the forex brokers who are mainly market makers are able to manipulate the platform to favour what they want to accomplish from the individual trader, if the regulations of multilateral trading facilities are not tough, it will make sharp practices to be rampant.


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      The idea behind multilateral Trading Facilities is good, it's just that it is an unconventional way of trading which can impact negatively in some of the the greatest features of the forex market, I don't believe in it because very few people are participating there.

      If they say was to be implemented in the forex market, it will remove the rest of us that are retail traders from trading because we might not be able to meet up with ty tough requirements that it will require.

      We trade based on the leverage that needs are given by the forex brokers and in a situation where we are not able to get access to that, it will limit our chances and opportunities, the consequences of this is that we may leave trading completely and then be would be bad.


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      In European market like any other, markets are made in securities and typically with the use of electronic systems. This is the traditional way and it is expected to be under a regulatory body.
      However the alternatives to these are the established self-regulated financial trading venue and are referred to as Multilateral Trading Facilities (MTF) . The process is referred to as Multilateral Trading System
      The main purpose is to facilitate the exchange of financial instruments between multiple parties. It is a welcome development and the term is widely used in European market than any other


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      Multilateral Trading Facilities ( MTF ) : Is An European Regulatory Term Called For a trading system Which Facilitates Exchanging The Financial Instruments Between Multiple Parties And it allow to the participants To gather and transfer a Variety of Securities Especially The Financial Instruments which Doesn't has an Official Market and it always Be electronic Systems Controlled By Some of the approved Market operators Or Large Investment banks And MTF Became Popular Europe Because Some advantages as :
      - Lower Costs .
      - Trading Incentives .
      - The Transactions Faster .
      - The Less Restrictions For the trading .
      So More Investment Banks Converted Their Internal System To Multilateral Trading Facilities ( MTF ) System Because That System has more advantages Help them to compete with the Traditional Securities exchanges .


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      Yes, this will be somehow new to many of us, though it has nothing to with us, but the investors must have come across this in their line.the mtf term is majorly used on the stock market
      Multilateral Trading Facility is known to be the European term for a way of trading that facilitate the exchange of financial or trading instrument between different parties in the market.

      This is a separate trading facility that allow the retail
      investors and the investment organization an alternate access to the formal exchange market.
      With the mtf trading is less restricted when it comes to choosing the right financial instrument for trading.


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      MTF (Multilateral Trading Facilities ) actually refers to the other form of Non exchange Financial trading .It is mainly ruled by the Markets in Financial Instruments Directive . Here actually we can see both the Pre and the Post trade transparency as the data can be available by the feed and the value of trade can be published in appropriate time .

      Actually this method works based on Spot system which is regulated by the FCA .Day by day its gaining the popularity because of the smooth buying and clsoing of trade orders and also we can get good small fixed spread .

      Though its not so suitable for the retail traders because it needs good amount of equity to trade with this system .For that the brokers are making with the same concept the ECN or the STP accounts .


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