Complying with the MiFID II Reporting Obligations of RTS 27 & RTS 28

For European Investment Firms, 2018 was a year with many challenges, new regulations and new procedures, with the main objective to keep up and remain compliant. Still to this day, many firms find it challenging to interpret and apply the new regulations of; Markets in Financial Instruments Directive (MiFID) II and Markets in Financial Instruments Regulation (MiFIR).

What are the necessary steps firms must follow and the difficulties they face to ensure Compliance?
– The interpretation of the regulation must to be specific and applicable to the operations of the investment firm,
– The implementation of the interpretation of the regulation is then the challenge for the project owners and the technology teams,
– While, many firms seek outside professionals to help with the interpretation and implementation of the newly formed regulation, the firm and its stakeholders still own the responsibility fully. Acquiring knowledge and instilling best practices are necessary to ensure Compliance.

This article focuses on the Best Execution responsibilities derived from of the two Regulatory Technical Standards (RTS) 27 & 28. We showcase the scope of the regulatory standards, highlighting who needs to comply with the regulation and explain what needs to be reported.

The scope of the public reports of RTS 27 & RTS 28 is to provide guidance to Clients (retail and professional) regarding;
1. the execution venues the firm cooperates with,
2. the firms to which orders were routed, if any, and
3. the quality of execution of all transactions.

Investment firms licensed to provide the following investment services must make public their RTS 27 and/or RTS 28 reports;
1. Dealing on Own Account,
2. Reception and Transmission of Orders,
3. Execution of Orders.

Under the RTS 27 reporting obligations, the investment firms must publish on a quarterly basis explicit information of the quality of execution of the transactions including;
– Details of the traded financial instruments from the International Organization for Standardization (ISO), such as ISIN and CFI codes,
– Intraday price information on specific time frames, including the executed price, the best bid and ask on execution time and the executed values of the transactions,
– Daily price information for the executed transactions,
– Costs and charges information as per the investment firms’ Key Information Documents (KIDs),
– Information of the daily likelihood of execution, including the number of orders received and executed,
– Detailed information of the intra-day likelihood of execution, including best bid and offer prices and size of transactions.

Under the RTS 28 reporting obligations, the investment firms must publish information of the top five execution venues they executed Client orders for each financial instrument, during the preceding year. Additionally, the investment firm must publish a summary of the performed analysis they draw from the monitoring of the quality of execution of transactions and the effectiveness of the firms’ execution policies and procedures.

Please feel free to contact us at info@salvusfunds.com if you have any questions.

The information provided in this article is for general information purposes only. You should always seek for professional advice suitable to your needs.

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