MTF Licensing in the Netherlands: What Investment Firms Need to Know

If you're considering operating a Multilateral Trading Facility in the Netherlands, you already know this isn't a light regulatory lift. An MTF licence from the AFM (Autoriteit Financiële Markten) is one of the more demanding authorisations in the MiFID II framework — and rightly so. An MTF operates as a venue where multiple third-party buying and selling interests interact, and the regulatory expectations reflect that systemic importance.

This article is written for COOs, compliance officers, and founders at firms that are either exploring an MTF licence or are already in the application process. It's practical, not theoretical. The goal is to give you a realistic picture of what's involved.

What qualifies as an MTF?

Under MiFID II (Article 4(1)(22)), a Multilateral Trading Facility is a multilateral system operated by an investment firm or market operator that brings together multiple third-party buying and selling interests in financial instruments in a way that results in a contract.

The key distinguishing features are:

• Multilateral — multiple participants, not bilateral OTC dealing
• Non-discretionary rules — the operator doesn't choose who trades with whom; matching follows transparent, pre-defined rules
• Results in a contract — actual execution, not just price discovery

If your platform matches orders between multiple participants using non-discretionary rules, you likely need an MTF licence. If you exercise discretion in how orders are matched, you may fall under the OTF (Organised Trading Facility) category instead, which carries different obligations.

The AFM application process

The AFM licence application is a formal process governed by the Wft (Wet op het financieel toezicht) and MiFID II. In practice, it works in three phases:

Phase 1: Pre-application (2–4 months)

Before submitting a formal application, most firms benefit from an informal dialogue with the AFM. This isn't a regulatory requirement, but it's strongly recommended. The AFM's licensing team can flag issues early — issues that would otherwise result in months of back-and-forth during the formal review.

During this phase, you should be developing:

• A clear description of your business model and the instruments to be traded
• Your proposed governance structure and organisational chart
• A draft compliance manual and risk management framework
• Technology architecture documentation (trading system, connectivity, resilience)
• Financial projections and capital adequacy calculations

Phase 2: Formal application (4–8 months)

The formal application requires a comprehensive documentation set. The AFM assesses your application against MiFID II requirements and the Wft. Key documentation includes:

• Programme of operations — detailed description of your business activities, target market, revenue model, and organisational structure
• Governance and management structure — board composition, fitness and propriety of key personnel, four-eyes principle implementation
• Compliance and risk management framework — policies, procedures, monitoring arrangements, and reporting lines
• MTF Rulebook — the rules governing access, trading, and conduct on your platform
• Technology and operational resilience — system architecture, business continuity, disaster recovery, and cybersecurity
• Capital adequacy — initial capital and ongoing prudential requirements under IFR/IFD
• AML/CFT framework — anti-money laundering and counter-terrorist financing policies and procedures

The AFM will ask questions — expect multiple rounds of information requests. The quality of your initial submission directly determines how long this phase takes. A well-prepared application can clear in 4–5 months. A poorly prepared one can drag on for 8+ months.

Phase 3: Post-authorisation (ongoing)

Receiving the licence is not the finish line — it's the starting gun. Post-authorisation obligations include:

• Quarterly and annual regulatory reporting to DNB (prudential) and AFM (conduct)
• Transaction reporting under MiFIR RTS 22/23/25
• Market surveillance under MAR (Market Abuse Regulation)
• Annual compliance and risk management reviews
• Incident reporting and ongoing dialogue with both AFM and DNB

Organisational requirements

The AFM expects an MTF operator to have a robust organisational structure — proportionate to the firm's activities but meeting clear minimum standards. The key roles that must be in place:

• Board / management body — at least two managing directors (four-eyes principle). Both must pass AFM fitness and propriety assessments.
• Compliance function — independent, with direct board access. Must be permanent and adequately resourced.
• Risk management function — separate from compliance, responsible for operational risk, IT risk, and capital adequacy monitoring.
• Internal audit — can be outsourced for smaller firms, but must exist as an independent function.
• Market surveillance function — required under MAR. Must be able to detect, investigate, and report suspicious transactions.

DNB prudential requirements

In addition to the AFM conduct-of-business licence, an MTF operator in the Netherlands must also satisfy DNB's prudential requirements under the Investment Firm Regulation (IFR) and Investment Firm Directive (IFD).

This means:

• Initial capital requirement — at least €750,000 for MTF operators
• Ongoing capital adequacy — calculated under K-factor requirements, reported quarterly
• XBRL reporting — quarterly submissions via DNB's DLR portal using their custom XBRL taxonomy
• Liquidity requirements — minimum one-third of fixed overhead requirement held in liquid assets

The XBRL reporting alone is a significant operational build. Most firms that haven't done DNB reporting before underestimate the complexity of the taxonomy, the data quality requirements, and the specifics of the DLR filing portal.

Timeline and costs

A realistic timeline from decision to licensed operation:

• Pre-application preparation: 2–4 months
• Formal application review: 4–8 months
• Post-authorisation readiness: 1–2 months
• Total: 7–14 months, with 9–10 months being typical for well-prepared applicants

Costs vary significantly depending on whether you build in-house or use external advisors, but budget for:

• €150,000–€350,000 in advisory and legal fees
• €50,000–€150,000 in technology setup (trading system, connectivity, surveillance)
• €750,000+ in regulatory capital (held, not spent)
• Ongoing operating costs of €500,000–€1,000,000/year for a small MTF

Common mistakes

Having guided firms through this process, the mistakes I see most frequently are:

1. Starting the build before confirming the licence type. An MTF, OTF, and Systematic Internaliser have fundamentally different requirements. Get the classification right before investing in infrastructure.
2. Underestimating the operational burden. The licence is a commitment to an ongoing compliance operation, not a one-time project. Budget for year-round compliance costs.
3. Treating the rulebook as a formality. The MTF Rulebook is a legally binding document that governs your relationship with every participant. It deserves serious legal and commercial attention.
4. Ignoring DNB from the start. Many firms focus entirely on the AFM licence and scramble to meet DNB prudential requirements afterwards. Engage with both regulators from day one.
5. Insufficient technology documentation. The AFM expects detailed documentation of your trading system, matching engine, and operational resilience. "We use vendor X" is not sufficient — you need to demonstrate understanding and control.