Cyprus enacted the Investment Services and Activities and Regulated Markets Law (Law 144(I)/2007), which implements Mifid, almost a year ago. An aspect of the Investment Services Law that has received surprisingly little attention to date is the ability to establish multilateral trading facilities (MTFs) for the first time in Cyprus.
MTFs are a development of the Alternative Trading Systems that originated in the US and subsequently spread to the UK and other markets. In broad terms, an MTF is a system that brings together multiple parties such as retail investors or other investment firms that are interested in buying and selling financial instruments, and enables them to do so. The Investment Services Law defines an MTF as "a multilateral system operated by an investment firm or a market operator, which brings together or facilitates the bringing together of multiple third-party buying and selling interests in Mifid financial instruments in the system and in accordance with its nondiscretionary rules in a way that results in a contract".
Given Cyprus's position as a regional financial centre and its benign economic and tax climate, it is most likely only a matter of time before MTFs become part of the local financial landscape.
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