The European Securities and Markets Authority issued guidance related to the operation of two types of trading venues under the Markets in Investment Directive II – Organized Trading Facilities and Systematic Internalizers. In its guidance, ESMA clarified the type of arrangements that would require authorization as an OTF and when a Systematic Internalizer may engage in activities that would also require authorization. OTFs are trading facilities for bonds, structured finance products and emission allowances where orders are executed on a discretionary basis. Systematic Internalizers are investment firms that deal for their own account, providing bilateral liquidity.