Abstract
This chapter looks at the market environment and regulatory framework applicable to trading platforms in the European Union (EU). It begins by introducing the relevant categories established in EU law. These include regulated markets (RMs), multilateral trading facilities (MTFs), systematic internalisers (SIs) and organised trading facilities for non-equity financial instruments (OTFs). While MTFs, the operation of which qualifies as the provision of an investment service under European law, share many characteristics of traditional exchanges (RMs), the new category of OTFs has only been introduced by the securities laws reforms introduced by the second Markets in Financial Instruments Directive (MiFID II) of 2014, and shares only some of the traditional features of regulated markets and MTFs. By contrast, SIs—the internalisation of trading activities with different parties by a financial intermediary—are not formally regulated as ‘trading venues’, although SIs also fulfil at least some of the economic functions of RMs, MTFs and in particular OTFs.
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