Setting an institutional and regulatory framework for trading platforms: Is there a case for a new trading venue under MiFID?
Journal of Financial Regulation and Compliance, 2013, vol. 21, issue 1, 69-83
Purpose - The purpose of this paper is to provide a theoretical framework for the legal classification of trading venues in financial markets. Currently, there is no clear definition of when a trading platform should be classified as multilateral or bilateral. This paper builds a theoretical framework that will allow regulators to define the border (with its regulatory implications) between multilateral and bilateral trading venues. Design/methodology/approach - The approach used for this paper focuses on looking at the different trading models available in financial markets and analyzing their key features in order to bring up recurrent aspects that have helped to build the theoretical framework. Findings - Multilateral trading facilities would not only be systems bringing together multiple interests from third parties, but those systems bringing together multiple interests with “no discretion” ( Originality/value - The value of the paper is in its ability to provide a theoretical framework to something that has not been assessed in these terms previously. Today, only the SEC is trying, for the first time, to have a definition of when a RFQ model can be defined “multilateral”. This topic has been rarely discussed before in financial regulation, while it is extensively discussed in market microstructure (but on the market structure implications, rather than its regulatory and policy implications).
Keywords: Financial markets; Regulation; European directives; Market structure; Markets in Financial Instruments Directive; Trading platforms; Financial regulation; Financial instruments; Trading execution; Derivatives (search for similar items in EconPapers)
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