ESMA has today updated its Q&A topics on best execution and recording of telephone conversations and electronic communications.
MiFID II requires investment firms to take all sufficient steps to obtain the best possible result for the client when executing orders. It also requires trading venues to publish, without charge, data on the quality of the execution of transactions on that trading venue. The reporting requirements are set out in RTS 27 .
The question on this topic was whether the RTS 27 reporting requirements applied to SFTs. Today’s update from ESMA advised that the best execution reporting requirements in RTS 27 should not apply to SFTs. ESMA did emphasise that the best execution requirements would however apply to investment firms when carrying out SFTs.
Recorded telephone conversation and electronic communications
On this topic, there was a question on whether the record keeping requirements of Article 16(7) of MiFID II applied only when, through a given channel, the execution and transmission of the order is allowed in addition to the reception and transmission of the order.
ESMA did not think that Article 16(7) of MiFID II and Article 76 of the MiFID II Delegated Regulation supported such a narrow interpretation, and referred to the first sub paragraph of Article 16(7) of MiFID II. It also mentioned that “reception and transmission” is a separate MiFID II service to execution and therefore the recording requirements must apply separately to situations where investment firms receive and transmit a client order.
The Q&As will continue to be updated by ESMA over the coming months.