On April 15, the Financial Conduct Authority (FCA) published its final guidance (Final Guidance) relating to the operation of multilateral trading facilities (MTFs) pursuant to the FCA’s applicable market conduct rules (MAR 5). On December 1, 2014, the FCA published its initial guidance (Initial Guidance) for market consultation. The consultation period ended on January 16, 2015. Prior to its publication of the Initial Guidance, the FCA undertook a thematic review of the rulebooks of MTF operators and issued a questionnaire regarding compliance with MAR 5 to a sample of UK MTF operators.

The Final Guidance details the primary MAR 5 requirements as well as provides the FCA’s good practice observations relating to the rulebooks of MTF operators. The Final Guidance includes a letter (Letter) from the FCA to the chief executive officers of all UK authorized firms operating MTFs. The Letter states that the FCA expects all MTF operators to be able to demonstrate that they have considered the FCA good practice observations when determining their approach.

The Final Guidance emphasizes the requirement under MAR 5.3.2 that a firm operating an MTF must have transparent and non-discretionary rules and procedures for orderly trading. As part of the transparency requirement, the FCA expects that an MTF operator will have a rulebook in place, which will be publicly available on the MTF operator’s website.

A copy of the Final Guidance, including the FCA good practice guidelines and the Letter can be found here.