By Christian Voigt, regulatory advisor at Fidessa

The draft technical standards for Mifid II require exchangesto publish quarterly execution quality reports (RTS 6). 

Sell-side firms areexpected to digest these and update their best execution policies accordingly.Additionally, sell-sides must publish their own execution quality reportsannually (RTS 7), which obviously should be digested by the buy-side. Whilesceptics might argue that the biggest impact will be an increased demand forpaper, outright opponents point to some details which could drive significantchanges in market structure.

Firstly, the exchange report under RTS 6 is extensive,covering all trading activity that an execution venue undertakes in a specificinstrument. Interestingly, all execution venues – not just trading venues –must publish the report, putting market makers for instruments without atrading obligation (such as exchange-traded funds) in scope too. 

Secondly, RTS 7 requiresinvestment firms to quantify for their top five execution venues the clientorder volume, the execution costs, the rebates, and more. All that togethercould 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 sharesof all exchange members, Mifid II will potentially take this a lot further.

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