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MiFID II

MiFID II best execution: Are firms ready for RTS 27 and 28?

John Mason

10 Apr 2018

Best execution requirements will be a crucial element of complying with RTS 27 and 28 under MiFID II. Photography: Toby Melville
Best execution requirements under RTS 27 and 28 will be a crucial requirement of complying with MiFID II. Photography: Toby Melville

Having met the initial demands of MiFID II, financial organizations are now dealing with the directive’s best execution requirements under regulatory standards RTS 27 and 28. What do they need to know?


  1. The MiFID II standards RTS 27 and 28 will provide clients with an ongoing view of the execution they are receiving in the marketplace.
  2. Compliance should mean better protection for investors, as well as enable firms to show prospective clients the value of their services.
  3. Systems that offer robust analytics and the ability to mine massive amounts of data will place firms at an advantage under RTS 27 and 28.

The European Union’s MiFID II regulations significantly increase the scope of pre-trade and post-trade transparency requirements for financial instruments.

Among the most talked-about aspects are regulations that come into effect in the next few months: Regulatory Technical Standards (commonly known as RTS) articles 27 and 28, which deal with best execution.

Under RTS 27 and 28, firms face new standards on publishing data regarding execution quality that may also have consequences for their order execution policies.

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RTS 27 and 28 explained

RTS 28 is the more immediate concern for financial firms and investment managers in particular. It is due by 30 April and requires firms to disclose their top 5 execution venues or brokers and summarizes execution quality achieved.

It is geared primarily towards buy-side investment firms and is intended to enable the public and investors to evaluate the quality of a firm’s execution practices by requiring publication of key information about how and where the firm has executed client orders.

It requires investment firms to publish annual information on the quality of execution obtained on their top five trading venues.

RTS 27 i a quarterly requirement, for execution venue, a well a market maker and systematic internalizers (I), to publish et execution report. It needs to be reported from 30 June.

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Ongoing view of best execution

These regulatory statutes affect firms globally, not just in the EU.

Given the new focus on transparency, non-EU firms must be prepared to provide exhaustive detail to regulators about trading and fulfillment of execution orders on behalf of their EU clients.

Both of these statutes are starting to come into view now.

It’s important for firms to note this should not just be a rote exercise, like producing a tax return once per year.

Organizations have to demonstrate a continual aptitude in how they are supplying best execution to their clients, who in turn can expect to have an ongoing view of the execution they are receiving in the marketplace.

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Making use of the RTS data

It’s been said that MiFID II is largely a data exercise, and indeed firms will need to examine data at a granular level when it comes to RTS 27 and 28.

Data will be critical, but that doesn’t mean it has to be a burden as it can actually provide benefits to financial organizations.

Complying with RTS 27 and 28 means there will be better protection for investors, sustainability of the integrity of price formation and better choices.

Watch the video: Best Execution obligations of MiFID II in action

In time, it won’t just mean simply complying with a regulatory standard. It can enable firms to provide information they can use for prospective clients to demonstrate the value of their services.

However, it will be critical for firms to have the technology in place to mine and analyze all the data needed to support this underlying information.

Robust data analytics

There is some thought that these new rules on best execution will lead to a change in the marketplace, with large firms getting larger and the small firms going niche in order to compete.

Beyond MiFID II – Market structure "barbell" effect

Those that invest in technology and systems that offer robust analytics and the ability to effectively mine their massive amounts of data will be the winners going forward as RTS 27 and 28 become the new normal.

There will be a gravity pull towards these firms that can offer the most diverse liquidity to clients.

Thomson Reuters is ideally positioned to support your best execution needs by being a market leader in real-time and end-of-day data, as well as providing class leading best execution solutions such as BestX for foreign exchange and Thomson Reuters Velocity Analytics for cross-asset classes. 

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