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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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