Tue, Mar 31, 2020

ESMA Provides Clarifications for Best Execution Reports Under MiFID II

In light of the COVID-19 pandemic, ESMA issued a Public Statement to clarify issues regarding the publication by execution venues and firms of the best execution reports required under RTS 27 and 28 of MiFID II. 

ESMA and national competent authorities (“NCA”) are aware of the current difficulties encountered by execution venues and firms in preparing these reports. As such, ESMA has recommended that NCAs consider the possibility that:

  • execution venues unable to publish RTS 27 reports due by 31 March 2020 may publish them as soon as reasonably practicable after that date, but by no later than 30 June 2020; and 
  • firms may publish the RTS 28 reports due by April 30, 2020 on or before June 30, 2020.

ESMA is encouraging NCAs to:

  • not prioritize supervisory action against execution venues and firms in respect of the deadlines of the general best execution reports for the periods referred to above; and 
  • apply a risk-based approach in the exercise of supervisory powers in their day-to-day enforcement of RTS 27 and 28 concerning these deadlines. 

ESMA recommends that firms and execution venues keep records of the internal decisions taken in respect of any expected delay and reminds firms of their obligations to achieve best execution for clients and to ensure fair order handling and allocations during current market volatility.

The FCA has worked with ESMA on this and agreed to the supervisory forbearance.

The full public statement can be found here.

Our client alerts can be found here and here

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