ESMA · ESMA_QA_1066 Answer Published
Best Execution
- Regulation
- Markets in Financial Instruments Directive II (MiFID II) Directive 2014/65/EU- Investor Protection and Intermediaries
- Topic
- Best Execution
- Submitted
- 2019-05-29
- Answered
- 2019-05-29
Question
Does the categorisation of ‘passive’ and ‘aggressive’ orders apply to investment firms which use quote-driven trading systems to have client orders executed?
Answer
[ESMA35-43-349 Investor protection Best execution Q&A 23] The definitions of Article 2(a) and (b) of RTS 28 for aggressive and passive orders both refer to “orders entered into an order book”. However, quote-driven trading systems do not operate order books (see also the typology and descriptions set out in Annex I of RTS 2). Therefore, as part of their RTS 28 reporting, investment firms which use quote-driven trading systems to have client orders executed should insert a ‘N/A’ (i.e. ‘not applicable’) reference in the fields referring to passive and aggressive orders of the relevant reporting template.
This Q&A is published by European Securities and Markets Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.
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