Market structure

In accordance with MiFID II-MiFIR, all systems supporting multilateral trading shall be governed by the provisions applicable to trading venues. Carrying out this activity will entail the necessary authorisation as a regulated market, multilateral trading facility (MTF) or organised trading facility (OTF).

In addition to regulated markets and multilateral trading facilities (MTFs), MiFID II introduces a new category of trading venues, organised trading facilities (OTFs), where only fixed-income securities and derivative instruments may be traded.

In OTFs, unlike on regulated markets and MTFs, trading may be carried out under discretionary rules. Furthermore, under certain circumstances, the OTF operator is allowed to carry out matched principal trading in fixed income securities and derivative instruments and to trade on its own account in those sovereign debt instruments for which there is no liquid market.

Unlike the MiFID I regime, under which IFs could voluntarily opt to be considered as systematic internalisers, MiFID II provides for the possibility that under certain circumstances the qualification as systematic internalisers may become mandatory.

Systematic internalisers are those IFs that trade on their own account on an organised, frequent and substantial basis when executing client orders outside trading venues. This form of trading requires that it be notified to the competent authority.

The categorisation of an IF as a systematic internaliser is governed by quantitative criteria, which take into account the volume and frequency of OTC own-account transactions carried out. However, an IF may voluntarily choose to be subject to the systematic internalisation regime.

MiFID II-MiFIR extends the transparency regime applicable to systematic internalisers, so that they must make public firm quotes not only for shares, but also for other financial instruments for which they are systematic internalisers and there is a liquid market.