On 7 March 2023, the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten) published a news item on the concept of multilateral systems. Recently, the European Securities and Markets Authority (ESMA) published an opinion on the trading venue perimeter, in which ESMA describes whether certain systems and facilities qualify as ‘multilateral’ and, as a result, are required to obtain authorisation as a trading venue.

In the opinion, ESMA explains when a system qualifies as a multilateral system and thus whether it is required to obtain a licence as a regulated market, multilateral trading facility (MTF) or organised trading facility (OTF). Among others, ESMA clarifies that buying and selling interests ‘interact’ when the system displays different buying and selling intentions and allows others to respond to these interests. The opinion also addresses three specific types of systems, which are (i) technology providers, (ii) request for quote systems and (iii) systems where transactions can be negotiated that are formalised on another trading venue (pre-arranged/negotiated transactions).

ESMA has requested that Member State national competent authorities ensure that their market participants assess their systems against the opinion and verify that these market participants operate under the correct authorisation. In the news item, the AFM states that it will apply the opinion in its supervision and that it will assess whether market participants meet the requirements.

The ESMA opinion can be found here.

For further information on the concept of multilateral system, please also be referred to the article of Floortje Nagelkerke titled ‘What is multilateral trading?’ (Wat is multilaterale handel?) which has been published in the Dutch journal Financial Law in Practice (Financieel Recht in de Praktijk), available upon request.