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The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is publishing today the Final Report on the rules explaining how investment firms should establish their order execution policies and assess their effectiveness.
In the draft Regulatory Technical Standards (RTS) ESMA specifies the rules, with the objective to enhance investment firms’ order execution and foster investor protection.
The RTS includes requirements on:
- the establishment of an investment firm’s order execution policy; this includes the classification of financial instruments in which firms execute client orders and the selection of venues for the order execution policy;
- the investment firm’s procedures and criteria to monitor and regularly assess the effectiveness of its order execution arrangements and order execution policy;
- the investment firm’s execution of client orders through own account dealing; and
- how an investment firm should deal with specific client instructions.
Next Steps
The Final Report has been sent to the European Commission and ESMA will provide further advice and technical guidance in this area, if requested by the EC.
Further information on the MiFID II / MiFIR review and the upcoming consultations and Final Reports can be found here.
