Halliday will remain with the Bantams until 15 November 2014.
The 23 year-old, who can also play at left back or in central midfield, will wear squad number 25 during his time at Valley Parade.
Halliday is mainly a left-sided winger but he can also feature from the right flank.
Subject to all of Halliday's paperwork being cleared by the Football Association and the Football League, the Glasgow-born winger could be in contention for a place in City boss Phil Parkinson's squad for this Saturday's Yorkshire derby with Sheffield United.
Prior to his move to Middlesbrough back in 2010, Halliday began his professional career in his native Scotland with Livingston.
Halliday ended last season on loan in the Championship with Blackpool.