By Christian Voigt, regulatory advisor at
The draft technical standards for Mifid II
require exchanges to publish quarterly execution quality
reports (RTS 6).
Sell-side firms are expected to digest
these and update their best execution policies accordingly.
Additionally, sell-sides must publish their own execution
quality reports annually (RTS 7), which obviously should be
digested by the buy-side. While sceptics might argue that the
biggest impact will be an increased demand for paper, outright
opponents point to some details which could drive significant
changes in market structure.
Firstly, the exchange report under RTS 6
is extensive, covering all trading activity that an execution
venue undertakes in a specific instrument. Interestingly, all
execution venues – not just trading venues –
must publish the report, putting market makers for instruments
without a trading obligation (such as exchange-traded funds) in
Secondly, RTS 7 requires investment firms
to quantify for their top five execution venues the client
order volume, the execution costs, the rebates, and more. All
that together could represent a valuable set of data, freely
available to the wider market. While it is accepted practice in
the Nordic markets to publish the market shares of all exchange
members, Mifid II will potentially take this a lot further.
What does regulatory reform
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