Published

Letter to ESMA Regarding MIFID II/MIFIR Review on the Functioning of Organized Trading Facilities

On November 20, 2020, MFA sent a letter to ESMA in response to its consultation on “MIFID II/MIFIR Review on the Functioning of Organized Trading Facilities (OTF).” The consultation covers the operations of a specialized trading arrangement that allows firms to conduct internal cross trading as a way to increase efficiency and decrease costs for investors. This takes place between two separate funds/accounts within the same firm. The firm aggregates trades to be executed in each fund, then identifies which trades can be crossed between funds.

MFA respectfully disagrees with ESMA’s proposal that this action constitutes designation as a “trading venue,” which would trigger other obligations including further reporting requirements.