What Is a Multilateral Trading Facility (MTF) & How It Works in 2025

Australia’s financial markets are evolving, with technology and regulation paving the way for new ways to trade securities. Among the most significant innovations are Multilateral Trading Facilities (MTFs)—platforms that are shaking up the traditional stock exchange model and offering investors more flexibility, transparency, and efficiency. But what exactly is an MTF, and why are they gaining traction in 2025?

Understanding Multilateral Trading Facilities: The Basics

An MTF is an electronic trading platform that brings together multiple buyers and sellers of financial instruments, such as shares or bonds, according to transparent and pre-set rules. Unlike traditional stock exchanges (like the ASX), which are often seen as the default venues for public securities trading, MTFs are typically operated by banks, investment firms, or independent operators, providing an alternative venue for matching orders.

Key features of MTFs include:

• Multilateral nature: They match third-party buy and sell orders, not just those from the platform operator.
• Regulated environment: MTFs are licensed and supervised by financial regulators, ensuring compliance and investor protection.
• Transparency and fairness: Trades are executed based on clear rules, with prices often displayed publicly.

In 2025, Australia’s financial landscape sees MTFs playing a growing role, especially as regulatory reforms and new entrants—such as Chi-X and Cboe Australia—challenge the long-standing dominance of the ASX.

How MTFs Operate: Behind the Screens

MTFs function much like traditional exchanges but offer a few unique twists:

• Order-driven markets: Most MTFs use an electronic order book that matches buy and sell orders in real time.
• Wide instrument coverage: MTFs can list shares, bonds, exchange-traded funds (ETFs), and derivatives, often providing access to markets or products that may not be available on mainstream exchanges.
• Participant-driven: Access to MTFs is typically open to regulated financial firms, including brokers and institutional investors, but some MTFs are expanding retail investor access in 2025, thanks to digital onboarding and compliance automation.

For example, Cboe Australia (formerly Chi-X) is an MTF that competes directly with the ASX by offering trading in many of the same listed equities, but often with lower transaction costs and innovative order types. In Europe, platforms like Turquoise and Aquis have grown rapidly by providing alternative venues with faster execution and sharper pricing.

Regulatory Updates and the 2025 Australian Context

The rise of MTFs in Australia has been closely watched by the Australian Securities and Investments Commission (ASIC). In 2025, ASIC’s updated guidance on market licensing and competition has made it easier for new trading venues to launch, provided they meet stringent standards for transparency, best execution, and surveillance.

Key 2025 policy developments include:

• Streamlined licensing: Faster approval processes for new MTFs, encouraging competition and diversity.
• Enhanced investor protections: Stricter requirements for data reporting, trade transparency, and conflict management.
• Interoperability mandates: Rules ensuring that clearing and settlement systems work seamlessly across MTFs and traditional exchanges, reducing friction for traders and investors.

As a result, Australian investors in 2025 can access a broader range of trading venues and benefit from improved pricing, deeper liquidity, and more robust risk controls. For institutional investors, MTFs offer smart order routing—automatically seeking the best price across multiple venues—while retail investors can enjoy more competitive brokerage fees and greater market choice.

Why MTFs Matter for Australian Investors

The growing presence of MTFs is reshaping how Australians trade and invest:

• Lower costs: Increased competition between venues has driven down brokerage and transaction fees.
• More innovation: MTFs often pioneer new order types, dark pool trading, and advanced analytics, giving savvy investors an edge.
• Better price discovery: With more venues quoting prices, there’s greater transparency and efficiency in how securities are valued.

Take, for instance, the experience of superannuation funds in 2025. With access to both ASX and MTF venues, fund managers can split large trades to minimise market impact and reduce execution costs—benefiting millions of everyday Australians saving for retirement.

Conclusion

Multilateral Trading Facilities are no longer just a niche corner of the finance world—they’re a key driver of competition and innovation in Australia’s markets. As the regulatory landscape continues to evolve in 2025, expect MTFs to become an even more integral part of the trading ecosystem, offering investors greater choice, transparency, and value than ever before.