# How Can a Firm Quantitatively Demonstrate Best Execution When Using a Systematic Internaliser? ▴ Question

**Published:** 2025-08-10
**Categories:** Question

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![Sharp, transparent, teal structures and a golden line intersect a dark void. This symbolizes market microstructure for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-precision-execution-leveraging-granular-market-microstructure-intelligence.jpg)

![Precision-engineered modular components display a central control, data input panel, and numerical values on cylindrical elements. This signifies an institutional Prime RFQ for digital asset derivatives, enabling RFQ protocol aggregation, high-fidelity execution, algorithmic price discovery, and volatility surface calibration for portfolio margin](https://options.greeks.live/wp-content/uploads/2025/07/firm-fx-options-rfq-trade-system-key-microstructure-data-flow-core-engine.jpg)

## Concept

A firm’s engagement with a [Systematic Internaliser](https://prime.greeks.live/area/systematic-internaliser/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (SI) introduces a distinct execution pathway, one that operates adjacent to the continuous order books of lit exchanges. The quantitative demonstration of best execution within this bilateral environment is an exercise in constructing an empirical proof of value. It requires a firm to translate its [execution policy](https://prime.greeks.live/question/what-is-the-role-of-a-firms-execution-policy-in-demonstrating-compliance-with-best-execution-rules/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) from a statement of principles into a verifiable, data-driven narrative.

The core of this process involves establishing a coherent evidential link between the price, costs, speed, and certainty of an SI execution and the spectrum of available alternatives at that precise moment in time. The central challenge lies in illuminating the [execution quality](https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) achieved in a venue characterized by private liquidity with the clarity and objectivity demanded by regulators and clients alike.

The function of a Systematic Internaliser under the second Markets in Financial Instruments Directive ([MiFID II](https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)) is to formalize principal-trading activities. An investment firm that deals on its own account by executing client orders outside a regulated market or multilateral trading facility on an organized, frequent, systematic, and substantial basis meets the criteria to become an SI. This structure provides a valuable source of liquidity, particularly for larger orders that might otherwise cause [significant market impact](https://prime.greeks.live/guide/why-institutional-traders-use-private-rfqs-for-all-significant-crypto-options-trades/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) on a public exchange.

The SI absorbs the trade onto its own book, offering a price based on its internal risk models and market view. This bilateral interaction, however, moves the price formation process away from the public gaze of the [lit market](https://prime.greeks.live/area/lit-market/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), placing the onus of proof squarely on the executing firm to validate the outcome for its client.

> The quantitative validation of SI performance hinges on a rigorous, multi-faceted comparison against contemporaneous public market data.

Demonstrating [best execution](https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) for SI flow transcends a simple price check. The regulatory mandate requires firms to take all sufficient steps to obtain the best possible result, considering a holistic set of execution factors. These factors ▴ price, costs, speed, likelihood of execution and settlement, size, and the nature of the order ▴ form the pillars of the analytical framework. For professional clients, these factors must be weighed and balanced according to the specific context of the order and the client’s objectives.

For retail clients, the framework is more prescriptive, focusing on the total consideration, which is the sum of the instrument’s price and all explicit costs associated with the execution. The task for the firm is to build a systematic process that captures the necessary data points, computes the relevant metrics, and presents a compelling case that the chosen SI execution was, under the circumstances, the optimal path.

![Symmetrical teal and beige structural elements intersect centrally, depicting an institutional RFQ hub for digital asset derivatives. This abstract composition represents algorithmic execution of multi-leg options, optimizing liquidity aggregation, price discovery, and capital efficiency for best execution](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-protocol-for-multi-leg-options-execution.jpg)

## The Evidential Burden in Bilateral Trading

The architecture of proof for SI best execution rests on the principle of comparability. Since the SI does not contribute to the public, pre-trade price discovery process in the same way a lit market does, its value must be demonstrated through post-trade analysis against reliable external benchmarks. The primary benchmark is the European Best Bid and Offer ([EBBO](https://prime.greeks.live/area/ebbo/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)), representing the best available price on lit markets at the time of execution.

A firm must be able to show, with time-stamped evidence, where its SI [execution price](https://prime.greeks.live/question/what-are-the-primary-differences-between-a-first-price-and-a-second-price-auction-in-an-rfq-context/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) stood in relation to the EBBO. This forms the foundational layer of the quantitative argument.

Beyond this, a sophisticated analysis will incorporate a broader set of data. This includes the depth of the lit market [order book](https://prime.greeks.live/area/order-book/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), the transaction fees on alternative venues, and the potential [market impact](https://prime.greeks.live/question/what-are-the-key-differences-in-market-impact-between-an-anonymous-rfq-and-a-lit-market-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) of executing the order on a public exchange. The firm’s analytical system must reconstruct the market landscape at the moment of execution to justify its choice.

This is a technological and data-intensive undertaking, requiring robust infrastructure to capture, store, and process high-frequency market data alongside its own execution records. The resulting analysis provides the substance behind the attestation of best execution, transforming it from a compliance statement into a quantifiable measure of the firm’s execution capability.

![A precise, multi-faceted geometric structure represents institutional digital asset derivatives RFQ protocols. Its sharp angles denote high-fidelity execution and price discovery for multi-leg spread strategies, symbolizing capital efficiency and atomic settlement within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-execution-microstructure-framework.jpg)

![A sophisticated mechanism features a segmented disc, indicating dynamic market microstructure and liquidity pool partitioning. This system visually represents an RFQ protocol's price discovery process, crucial for high-fidelity execution of institutional digital asset derivatives and managing counterparty risk within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/advanced-digital-asset-derivatives-rfq-liquidity-aggregation-system.jpg)

## Strategy

A robust strategy for demonstrating best execution when using a Systematic Internaliser is built upon a quantitative measurement framework. This framework serves as the analytical engine that ingests trade data and produces objective evidence of execution quality. It moves the firm beyond mere compliance and into the realm of active performance management, allowing for the systematic evaluation of SIs and the continuous refinement of the firm’s execution policy. The design of this framework must be comprehensive, encompassing all the execution factors mandated by regulation while remaining flexible enough to adapt to different asset classes and client types.

![A detailed view of an institutional-grade Digital Asset Derivatives trading interface, featuring a central liquidity pool visualization through a clear, tinted disc. Subtle market microstructure elements are visible, suggesting real-time price discovery and order book dynamics](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-execution-system-microstructure-display.jpg)

## The Quantitative Measurement Framework

The framework is organized around several categories of metrics, each designed to illuminate a different facet of execution quality. The combination of these metrics provides a multi-dimensional view of performance, preventing over-reliance on any single data point and enabling a more nuanced assessment.

![The abstract metallic sculpture represents an advanced RFQ protocol for institutional digital asset derivatives. Its intersecting planes symbolize high-fidelity execution and price discovery across complex multi-leg spread strategies](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-execution-microstructure-optimization.jpg)

## Price-Based Metrics a Core Evaluation

Price-based metrics are the most direct measure of execution quality. They quantify the performance of the SI execution relative to prevailing market prices. The selection and calculation of these metrics must be precise and well-documented.

- **[Price Improvement](https://prime.greeks.live/area/price-improvement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (PI)** ▴ This metric quantifies the value delivered by the SI compared to the public market benchmark. It is calculated as the difference between the execution price and the contemporaneous EBBO. For a buy order, positive PI occurs when the execution price is lower than the best offer. For a sell order, it occurs when the execution price is higher than the best bid. PI is often expressed in [basis points](https://prime.greeks.live/guide/how-to-systematically-lower-your-stock-cost-basis-with-premiums/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) to allow for comparison across different instruments.

- **Effective Spread** ▴ This measures the cost of executing the trade relative to the mid-point of the EBBO at the time of execution. It is calculated as twice the absolute difference between the execution price and the mid-point price, then expressed as a percentage of the mid-point. A lower effective spread indicates a more favorable execution price.

- **Mid-Point Improvement** ▴ A specific form of price improvement, this metric measures executions that occur at a price better than the mid-point of the EBBO. It is a powerful indicator of significant value delivery, as it shows the SI provided a price that crossed the spread available on lit markets.

![Interconnected teal and beige geometric facets form an abstract construct, embodying a sophisticated RFQ protocol for institutional digital asset derivatives. This visualizes multi-leg spread structuring, liquidity aggregation, high-fidelity execution, principal risk management, capital efficiency, and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-for-multi-leg-spread-execution-and-optimal-liquidity-aggregation.jpg)

## Cost and Liquidity Analytics

This set of metrics expands the analysis beyond the execution price to include other critical aspects of the transaction. They help to quantify the all-in cost and the reliability of the SI as a liquidity source.

- **[Fill Rate](https://prime.greeks.live/area/fill-rate/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ This is the percentage of orders routed to an SI that are successfully executed. A high fill rate indicates that the SI is a reliable source of liquidity for the firm’s order flow. This metric should be analyzed by order size and instrument type to identify patterns.

- **[Adverse Selection](https://prime.greeks.live/area/adverse-selection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) Measurement** ▴ This advanced metric assesses the information leakage associated with trading with a particular SI. It is measured by observing the movement of the market mid-point immediately after a trade is executed. If the market consistently moves against the firm’s position post-trade (i.e. the price goes up after a buy), it may indicate that the SI is trading on information contained in the order flow, a form of implicit cost.

- **Reversion Cost** ▴ Related to adverse selection, this metric quantifies the cost of the market moving back after an initial price impact. It helps to distinguish temporary price movements from permanent ones, providing a clearer picture of the true cost of the trade.

> The ultimate goal of the strategy is to create a feedback loop where quantitative analysis informs and improves future execution decisions.

![Precision-engineered device with central lens, symbolizing Prime RFQ Intelligence Layer for institutional digital asset derivatives. Facilitates RFQ protocol optimization, driving price discovery for Bitcoin options and Ethereum futures](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-institutional-rfq-protocol-engine-for-digital-asset-derivatives-options-trading.jpg)

## Comparative Analytics the Lit Market Benchmark

An SI’s performance cannot be evaluated in a vacuum. The core of the demonstration strategy is a disciplined, systematic comparison of SI executions against what could have been achieved on public markets. This requires the firm to maintain a detailed model of [lit market execution](https://prime.greeks.live/area/lit-market-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) costs, including exchange fees, clearing costs, and estimated market impact. The firm’s [Transaction Cost Analysis](https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (TCA) system must be capable of running a “what-if” scenario for each SI trade, simulating its execution on the primary lit venue and calculating the expected all-in cost.

This comparative analysis provides the definitive evidence required by regulators and clients. It allows the firm to state, for example, that for a specific basket of trades, using a particular SI resulted in an average of 2.5 basis points of price improvement and saved an estimated 0.5 basis points in explicit fees compared to executing on the lit market. This level of quantitative detail is the hallmark of a sophisticated best execution framework.

The table below outlines the key dimensions for a comparative analysis between an SI and a lit market venue.

| Analytical Dimension | Systematic Internaliser (SI) | Lit Market (e.g. Regulated Market) |
| --- | --- | --- |
| Price Formation | Bilateral negotiation or response to a Request for Quote (RFQ). Price is determined by the SI based on its own risk capital. | Multilateral, anonymous central limit order book. Price is discovered through the interaction of many buyers and sellers. |
| Primary Benchmark | European Best Bid and Offer (EBBO) at the time of execution. | Arrival Price (mid-point at the time the order is received by the broker). |
| Key Metric | Price Improvement (PI) vs. EBBO. | Implementation Shortfall (slippage vs. Arrival Price). |
| Cost Structure | Often zero explicit commission, with the cost embedded in the spread provided by the SI. | Explicit exchange fees, clearing fees, and broker commissions. |
| Market Impact | Minimal to zero pre-trade impact, as the order is not displayed publicly. Potential for post-trade information leakage. | Potential for significant market impact, especially for large orders, as the order consumes liquidity from the public order book. |

![A teal and white sphere precariously balanced on a light grey bar, itself resting on an angular base, depicts market microstructure at a critical price discovery point. This visualizes high-fidelity execution of digital asset derivatives via RFQ protocols, emphasizing capital efficiency and risk aggregation within a Principal trading desk's operational framework](https://options.greeks.live/wp-content/uploads/2025/07/precision-institutional-digital-asset-derivatives-rfq-execution-strategy.jpg)

![Interconnected metallic rods and a translucent surface symbolize a sophisticated RFQ engine for digital asset derivatives. This represents the intricate market microstructure enabling high-fidelity execution of block trades and multi-leg spreads, optimizing capital efficiency within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-microstructure-1.jpg)

## Execution

The execution of a best execution policy for Systematic Internalisers is an operational discipline. It requires the integration of technology, data science, and market expertise to create a repeatable and auditable process. This process must be capable of capturing the right data at a granular level, performing complex calculations in a consistent manner, and presenting the results in a format that is both insightful for internal decision-making and satisfactory for external scrutiny. This is where the theoretical framework of best execution is forged into a practical, industrial-scale capability.

![Sleek, modular infrastructure for institutional digital asset derivatives trading. Its intersecting elements symbolize integrated RFQ protocols, facilitating high-fidelity execution and precise price discovery across complex multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-system-optimizing-high-fidelity-block-trade-liquidity-and-multi-leg-spread-precision.jpg)

## The Operational Playbook for Best Execution Reporting

A firm must establish a clear, step-by-step procedure for monitoring and demonstrating the execution quality of its SI flow. This playbook ensures that the analysis is consistent, comprehensive, and defensible.

- **Data Capture and Normalization** ▴ The foundation of the entire process is high-quality data. The system must capture every relevant data point for each order routed to an SI. This includes, at a minimum ▴ the precise timestamp of order creation, routing, and execution (to the millisecond or microsecond); the full details of the order (instrument, size, side); the execution price and quantity; and any associated fees. Simultaneously, the system must capture and timestamp the state of the market, including the full EBBO and the depth of the order book on the primary lit venues. All data must be normalized to a common time zone and format to ensure accurate comparison.

- **Benchmark Calculation** ▴ For each execution, the system must calculate the relevant benchmarks. The primary benchmark is the EBBO at the time of execution. The system must be able to query its stored market data to retrieve the best bid and offer across all relevant lit markets at the exact moment the SI trade was executed. Other benchmarks, such as the Arrival Price (the mid-point of the EBBO when the parent order was first worked) and the Volume-Weighted Average Price (VWAP) over the order’s lifetime, should also be calculated to provide multiple analytical perspectives.

- **Metric Computation** ▴ With the execution data and benchmarks in place, the system can compute the core best execution metrics. This involves the automated calculation of Price Improvement, Effective Spread, and [Implementation Shortfall](https://prime.greeks.live/area/implementation-shortfall/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) for every single trade. The formulas must be implemented precisely as defined in the firm’s methodology documentation. The results of these calculations should be stored alongside the raw trade data for full auditability.

- **Peer Group Analysis and Venue Ranking** ▴ The analysis must extend beyond a simple comparison to the lit market. The firm should categorize its execution venues (including multiple SIs, MTFs, and regulated markets) and perform a comparative analysis. This involves aggregating the performance metrics for each venue over a given period (e.g. monthly or quarterly). The output is a series of league tables that rank venues based on metrics like average Price Improvement, fill rate, and adverse selection. This analysis is critical for the firm’s annual review of its execution policy and for making data-driven decisions about where to route future order flow.

- **Reporting and Visualization** ▴ The final step is to synthesize the vast amount of data and analysis into clear, actionable reports. These reports must be tailored to different audiences. For the regulatory compliance team, the reports must provide detailed, trade-by-trade evidence that can be provided to the regulator on request. For the front office, the reports should be more visual, using dashboards and charts to highlight performance trends and identify opportunities for improvement. For clients, a summary report demonstrating the value delivered through the firm’s execution strategy can be a powerful tool.

![Abstract layers in grey, mint green, and deep blue visualize a Principal's operational framework for institutional digital asset derivatives. The textured grey signifies market microstructure, while the mint green layer with precise slots represents RFQ protocol parameters, enabling high-fidelity execution, private quotation, capital efficiency, and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-layered-rfq-protocol-for-digital-asset-execution-system.jpg)

## Quantitative Modeling and Data Analysis

The core output of the operational playbook is a set of detailed quantitative reports. These reports provide the empirical evidence of best execution. The following tables illustrate the type of analysis a firm must be able to produce.

![A luminous, multi-faceted geometric structure, resembling interlocking star-like elements, glows from a circular base. This represents a Prime RFQ for Institutional Digital Asset Derivatives, symbolizing high-fidelity execution of block trades via RFQ protocols, optimizing market microstructure for price discovery and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-system.jpg)

## Table 1 Detailed Transaction Cost Analysis Report for SI Flow

This table provides a granular, trade-level view of execution quality for a sample of orders executed via a Systematic Internaliser. It is the foundational evidence layer, demonstrating the calculation of key metrics for each individual execution.

| Trade ID | Instrument | Side | Size | Exec Price | EBBO Bid | EBBO Offer | Reference Price | PI (bps) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| T-001 | VOD.L | Buy | 50,000 | 102.45p | 102.44p | 102.46p | 102.46p | +0.98 |
| T-002 | AZN.L | Sell | 10,000 | 8542.50p | 8541.00p | 8543.00p | 8541.00p | +1.76 |
| T-003 | VOD.L | Sell | 100,000 | 102.44p | 102.44p | 102.46p | 102.44p | 0.00 |
| T-004 | GSK.L | Buy | 25,000 | 1433.20p | 1433.00p | 1433.40p | 1433.40p | +1.39 |

> Systematic, quantitative reporting transforms the best execution obligation from a qualitative statement into a demonstrable, data-backed reality.

![A sleek, multi-layered device, possibly a control knob, with cream, navy, and metallic accents, against a dark background. This represents a Prime RFQ interface for Institutional Digital Asset Derivatives](https://options.greeks.live/wp-content/uploads/2025/07/precision-control-interface-for-institutional-digital-asset-derivatives-rfq-protocols-and-prime-os.jpg)

## Table 2 SI Performance Scorecard Q1 2025

This table provides a high-level, aggregated view of venue performance. It is a critical tool for the firm’s internal governance and for its periodic review of its execution policy. It allows for an objective, data-driven conversation about which venues are consistently delivering the best results.

| Execution Venue | Venue Type | Volume (EUR mn) | Avg. PI (bps) | % PI > 0 | Fill Rate (%) | Adverse Selection (bps, 1min) |
| --- | --- | --- | --- | --- | --- | --- |
| SI-Alpha | Systematic Internaliser | 1,250 | +1.85 | 72% | 91% | -0.25 |
| SI-Beta | Systematic Internaliser | 870 | +1.10 | 65% | 95% | -0.45 |
| Primary Exchange | Regulated Market | 3,500 | N/A | N/A | 100% (for marketable orders) | 0.00 (by definition) |

![A gleaming, translucent sphere with intricate internal mechanisms, flanked by precision metallic probes, symbolizes a sophisticated Principal's RFQ engine. This represents the atomic settlement of multi-leg spread strategies, enabling high-fidelity execution and robust price discovery within institutional digital asset derivatives markets, minimizing latency and slippage for optimal alpha generation and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/inst-digital-asset-deriv-rfq-os-for-optimal-high-fidelity-trade-exec.jpg)

## Predictive Scenario Analysis a Case Study

Consider a portfolio manager at an institutional asset management firm who needs to sell a 250,000 share position in a FTSE 100 company. The stock has an average daily volume of 5 million shares, so this order represents 5% of the daily volume. Executing this entire order on the lit market via a standard market order would likely result in significant market impact, driving the price down and leading to substantial implementation shortfall. The firm’s pre-trade analytics system models the expected impact cost of a lit market execution to be between 8 and 12 basis points.

The firm’s execution policy includes three Systematic Internalisers that provide liquidity in this stock. The execution trader, using the firm’s [smart order router](https://prime.greeks.live/area/smart-order-router/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (SOR), sends a [Request for Quote](https://prime.greeks.live/area/request-for-quote/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (RFQ) to all three SIs simultaneously. The SOR automatically captures the EBBO at the moment the RFQs are sent. The EBBO is 1550.00p / 1550.50p.

Within one second, the SIs respond with firm quotes for the full 250,000 shares:

- SI-Alpha ▴ Bid 1549.90p

- SI-Beta ▴ Bid 1550.10p

- SI-Gamma ▴ Bid 1549.85p

The SOR’s logic immediately identifies SI-Beta’s quote as the best price. It is 0.10p higher than the best bid on the public markets (1550.00p). The system automatically executes the full 250,000 share order with SI-Beta at 1550.10p. The entire process, from sending the [RFQ](https://prime.greeks.live/area/rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) to receiving the execution confirmation, takes less than two seconds.

The post-trade [TCA](https://prime.greeks.live/area/tca/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) system now takes over to generate the quantitative proof of best execution. First, it calculates the Price Improvement. The reference price for this sell order is the EBBO bid of 1550.00p. The execution price was 1550.10p.

The Price Improvement is therefore +0.10p per share. For the entire order, this represents a saving of £250 (0.10p 250,000). In basis points, the PI is calculated as (1550.10 / 1550.00 – 1) 10,000, which equals approximately +0.65 basis points.

Next, the system compares this outcome to the pre-trade estimate for a lit market execution. The SI execution achieved +0.65 bps of price improvement while avoiding an estimated 8-12 bps of negative market impact. The total value delivered by using the SI is therefore in the range of 8.65 to 12.65 basis points. Furthermore, the firm incurred no explicit exchange fees or broker commissions on the SI trade, which might have cost an additional 0.5 bps on the lit market.

The final report for this trade would clearly show the execution price, the benchmark price, the calculated PI, and the estimated cost avoidance from mitigating market impact. This single-trade report, when aggregated with thousands of others, forms the backbone of the firm’s ability to demonstrate the consistent value of its SI execution strategy.

![A polished glass sphere reflecting diagonal beige, black, and cyan bands, rests on a metallic base against a dark background. This embodies RFQ-driven Price Discovery and High-Fidelity Execution for Digital Asset Derivatives, optimizing Market Microstructure and mitigating Counterparty Risk via Prime RFQ Private Quotation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-best-execution-protocol.jpg)

## References

- European Securities and Markets Authority. “Best Execution under MiFID Questions & Answers.” 2017.

- Association for Financial Markets in Europe. “Guide for drafting/review of Execution Policy under MiFID II.” 2017.

- The International Capital Market Association. “MiFID II SI Regime Workshops A summary report.” 2017.

- Financial Conduct Authority. “COBS 11.2A Best execution ▴ MiFID provisions.” FCA Handbook.

- Baringa Partners LLP. “Good, Better, “Best” Does your Execution stand up to MiFID II?” 2017.

- Lehalle, Charles-Albert, and Sophie Laruelle. Market Microstructure in Practice. World Scientific Publishing Company, 2013.

- O’Hara, Maureen. Market Microstructure Theory. Blackwell Publishers, 1995.

- Harris, Larry. Trading and Exchanges ▴ Market Microstructure for Practitioners. Oxford University Press, 2003.

![Intersecting muted geometric planes, with a central glossy blue sphere. This abstract visualizes market microstructure for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-5.jpg)

## Reflection

![Two sleek, pointed objects intersect centrally, forming an 'X' against a dual-tone black and teal background. This embodies the high-fidelity execution of institutional digital asset derivatives via RFQ protocols, facilitating optimal price discovery and efficient cross-asset trading within a robust Prime RFQ, minimizing slippage and adverse selection](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-prime-os-microstructure.jpg)

## From Obligation to Advantage

The framework required to quantitatively demonstrate best execution for Systematic Internalisers should be viewed as more than a regulatory necessity. It is a strategic asset. Building the capacity for rigorous, data-driven analysis of execution quality creates a powerful feedback loop that enhances every facet of a firm’s trading operation.

The same data used to satisfy a compliance audit can be used to refine smart order routing logic, to optimize algorithmic trading strategies, and to conduct more effective negotiations with liquidity providers. The process of proving value becomes a mechanism for creating it.

Ultimately, the discipline of quantitative demonstration instills a culture of empirical validation. It moves the assessment of execution quality from the realm of subjective judgment to the domain of objective proof. In doing so, a firm not only secures its regulatory standing but also builds a more intelligent, adaptive, and competitive execution process. The mastery of this domain is a defining characteristic of a modern, sophisticated investment firm.

![Sharp, intersecting geometric planes in teal, deep blue, and beige form a precise, pointed leading edge against darkness. This signifies High-Fidelity Execution for Institutional Digital Asset Derivatives, reflecting complex Market Microstructure and Price Discovery](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-digital-asset-derivatives-rfq-market-microstructure-2.jpg)

## Glossary

<a href="https://prime.greeks.live/area/systematic-internaliser/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated digital asset derivatives RFQ engine's core components are depicted, showcasing precise market microstructure for optimal price discovery. Its central hub facilitates algorithmic trading, ensuring high-fidelity execution across multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimizing-multi-leg-spreads-for-optimal-capital-efficiency.jpg)

## Systematic Internaliser

Meaning ▴ A Systematic Internaliser (SI) is a financial institution executing client orders against its own capital on an organized, frequent, systematic basis off-exchange. </a><a href="https://prime.greeks.live/question/what-is-the-role-of-a-firms-execution-policy-in-demonstrating-compliance-with-best-execution-rules/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![The image depicts two intersecting structural beams, symbolizing a robust Prime RFQ framework for institutional digital asset derivatives. These elements represent interconnected liquidity pools and execution pathways, crucial for high-fidelity execution and atomic settlement within market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-cross-market-execution-architecture-for-digital-assets.jpg)

## Execution Policy

A firm's execution policy is the operational blueprint for translating fiduciary duty into a demonstrable, data-driven compliance framework. </a><a href="https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A metallic disc intersected by a dark bar, over a teal circuit board. This visualizes Institutional Liquidity Pool access via RFQ Protocol, enabling Block Trade Execution of Digital Asset Options with High-Fidelity Execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-principal-operational-framework-market-microstructure-high-fidelity-execution.jpg)

## Execution Quality

Meaning ▴ Execution Quality quantifies the efficacy of an order's fill, assessing how closely the achieved trade price aligns with the prevailing market price at submission, alongside consideration for speed, cost, and market impact. </a><a href="https://prime.greeks.live/guide/why-institutional-traders-use-private-rfqs-for-all-significant-crypto-options-trades/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, conical precision instrument, with a vibrant mint-green tip and a robust grey base, represents the cutting-edge of institutional digital asset derivatives trading. Its sharp point signifies price discovery and best execution within complex market microstructure, powered by RFQ protocols for dark liquidity access and capital efficiency in atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-microstructure-price-discovery-optimization-prime-os-intelligence-layer.jpg)

## Significant Market Impact

Mastering private RFQs gives traders direct access to institutional liquidity, ensuring best execution for large crypto options trades. </a><a href="https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A curved grey surface anchors a translucent blue disk, pierced by a sharp green financial instrument and two silver stylus elements. This visualizes a precise RFQ protocol for institutional digital asset derivatives, enabling liquidity aggregation, high-fidelity execution, price discovery, and algorithmic trading within market microstructure via a Principal's operational framework](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-high-fidelity-execution-via-rfq-protocols-optimizing-market-microstructure-and-price-discovery.jpg)

## Mifid Ii

Meaning ▴ MiFID II, the Markets in Financial Instruments Directive II, constitutes a comprehensive regulatory framework enacted by the European Union to govern financial markets, investment firms, and trading venues. </a><a href="https://prime.greeks.live/area/lit-market/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A large textured blue sphere anchors two glossy cream and teal spheres. Intersecting cream and blue bars precisely meet at a gold cylinder, symbolizing an RFQ Price Discovery mechanism](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-architecture-and-multi-leg-execution.jpg)

## Lit Market

Meaning ▴ A lit market is a trading venue providing mandatory pre-trade transparency. </a><a href="https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract geometric forms, including overlapping planes and central spherical nodes, visually represent a sophisticated institutional digital asset derivatives trading ecosystem. It depicts complex multi-leg spread execution, dynamic RFQ protocol liquidity aggregation, and high-fidelity algorithmic trading within a Prime RFQ framework, ensuring optimal price discovery and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-liquidity-aggregation-market-microstructure-high-fidelity-execution-alpha-generation-prime-os-capital-efficiency.jpg)

## Best Execution

Meaning ▴ Best Execution is the obligation to obtain the most favorable terms reasonably available for a client's order. </a><a href="https://prime.greeks.live/area/ebbo/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Engineered object with layered translucent discs and a clear dome encapsulating an opaque core. Symbolizing market microstructure for institutional digital asset derivatives, it represents a Principal's operational framework for high-fidelity execution via RFQ protocols, optimizing price discovery and capital efficiency within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-protocol-execution-intelligence-engine.jpg)

## Ebbo

Meaning ▴ EBBO, or Exchange Best Bid and Offer, denotes the highest bid price and the lowest offer price currently available on a single, specific trading venue. </a><a href="https://prime.greeks.live/question/what-are-the-primary-differences-between-a-first-price-and-a-second-price-auction-in-an-rfq-context/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, dark, metallic system component features a central circular mechanism with a radiating arm, symbolizing precision in High-Fidelity Execution. This intricate design suggests Atomic Settlement capabilities and Liquidity Aggregation via an advanced RFQ Protocol, optimizing Price Discovery within complex Market Microstructure and Order Book Dynamics on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-prime-os-high-fidelity-execution-protocol-liquidity-market-microstructure.jpg)

## Execution Price

In an RFQ, a first-price auction's winner pays their bid; a second-price winner pays the second-highest bid, altering strategic incentives. </a><a href="https://prime.greeks.live/question/what-are-the-key-differences-in-market-impact-between-an-anonymous-rfq-and-a-lit-market-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Two intertwined, reflective, metallic structures with translucent teal elements at their core, converging on a central nexus against a dark background. This represents a sophisticated RFQ protocol facilitating price discovery within digital asset derivatives markets, denoting high-fidelity execution and institutional-grade systems optimizing capital efficiency via latent liquidity and smart order routing across dark pools](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-execution-system-architecture.jpg)

## Market Impact

Anonymous RFQs contain market impact through private negotiation, while lit executions navigate public liquidity at the cost of information leakage. </a><a href="https://prime.greeks.live/area/order-book/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Two abstract, segmented forms intersect, representing dynamic RFQ protocol interactions and price discovery mechanisms. The layered structures symbolize liquidity aggregation across multi-leg spreads within complex market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-microstructure.jpg)

## Order Book

Meaning ▴ An Order Book is a real-time electronic ledger detailing all outstanding buy and sell orders for a specific financial instrument, organized by price level and sorted by time priority within each level. </a><a href="https://prime.greeks.live/area/price-improvement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract spheres and linear conduits depict an institutional digital asset derivatives platform. The central glowing network symbolizes RFQ protocol orchestration, price discovery, and high-fidelity execution across market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-high-fidelity-execution-4.jpg)

## Price Improvement

Meaning ▴ Price improvement denotes the execution of a trade at a more advantageous price than the prevailing National Best Bid and Offer (NBBO) at the moment of order submission. </a><a href="https://prime.greeks.live/guide/how-to-systematically-lower-your-stock-cost-basis-with-premiums/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A golden rod, symbolizing RFQ initiation, converges with a teal crystalline matching engine atop a liquidity pool sphere. This illustrates high-fidelity execution within market microstructure, facilitating price discovery for multi-leg spread strategies on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-systemic-core.jpg)

## Basis Points

Transform equity holdings into dynamic income engines by systematically harvesting premiums to lower your cost basis. </a><a href="https://prime.greeks.live/area/fill-rate/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, white, semi-spherical Principal's operational framework opens to precise internal FIX Protocol components. A luminous, reflective blue sphere embodies an institutional-grade digital asset derivative, symbolizing optimal price discovery and a robust liquidity pool](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-5.jpg)

## Fill Rate

Meaning ▴ Fill Rate represents the ratio of the executed quantity of a trading order to its initial submitted quantity, expressed as a percentage. </a><a href="https://prime.greeks.live/area/adverse-selection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract forms on dark, a sphere balanced by intersecting planes. This signifies high-fidelity execution for institutional digital asset derivatives, embodying RFQ protocols and price discovery within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-platform-microstructure-execution-prime-os.jpg)

## Adverse Selection

Meaning ▴ Adverse selection describes a market condition characterized by information asymmetry, where one participant possesses superior or private knowledge compared to others, leading to transactional outcomes that disproportionately favor the informed party. </a><a href="https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sharp, multi-faceted crystal prism, embodying price discovery and high-fidelity execution, rests on a structured, fan-like base. This depicts dynamic liquidity pools and intricate market microstructure for institutional digital asset derivatives via RFQ protocols, powered by an intelligence layer for private quotation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-price-discovery-execution.jpg)

## Transaction Cost Analysis

Meaning ▴ Transaction Cost Analysis (TCA) is the quantitative methodology for assessing the explicit and implicit costs incurred during the execution of financial trades. </a><a href="https://prime.greeks.live/area/lit-market-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Polished opaque and translucent spheres intersect sharp metallic structures. This abstract composition represents advanced RFQ protocols for institutional digital asset derivatives, illustrating multi-leg spread execution, latent liquidity aggregation, and high-fidelity execution within principal-driven trading environments](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-protocol-optimal-execution-orchestration.jpg)

## Lit Market Execution

Meaning ▴ Lit Market Execution refers to the process of executing trades on transparent, publicly visible order books hosted by regulated exchanges or electronic communication networks. </a><a href="https://prime.greeks.live/area/implementation-shortfall/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Intersecting metallic components symbolize an institutional RFQ Protocol framework. This system enables High-Fidelity Execution and Atomic Settlement for Digital Asset Derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-system-specialists.jpg)

## Implementation Shortfall

Meaning ▴ Implementation Shortfall quantifies the total cost incurred from the moment a trading decision is made to the final execution of the order. </a><a href="https://prime.greeks.live/area/smart-order-router/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A complex, multi-faceted crystalline object rests on a dark, reflective base against a black background. This abstract visual represents the intricate market microstructure of institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-execution-architecture.jpg)

## Smart Order Router

Meaning ▴ A Smart Order Router (SOR) is an algorithmic trading mechanism designed to optimize order execution by intelligently routing trade instructions across multiple liquidity venues. </a><a href="https://prime.greeks.live/area/request-for-quote/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sharp, teal blade precisely dissects a cylindrical conduit. This visualizes surgical high-fidelity execution of block trades for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-precision-execution-microstructure.jpg)

## Request for Quote

Meaning ▴ A Request for Quote, or RFQ, constitutes a formal communication initiated by a potential buyer or seller to solicit price quotations for a specified financial instrument or block of instruments from one or more liquidity providers. </a><a href="https://prime.greeks.live/area/rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered teal metallic mechanism, featuring springs and rods, connects to a light U-shaped interface. This represents a core RFQ protocol component enabling automated price discovery and high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/rfq-execution-engine-component-for-institutional-digital-asset-derivatives.jpg)

## Rfq

Meaning ▴ Request for Quote (RFQ) is a structured communication protocol enabling a market participant to solicit executable price quotations for a specific instrument and quantity from a selected group of liquidity providers. </a><a href="https://prime.greeks.live/area/tca/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract geometric planes in teal, navy, and grey intersect. A central beige object, symbolizing a precise RFQ inquiry, passes through a teal anchor, representing High-Fidelity Execution within Institutional Digital Asset Derivatives](https://options.greeks.live/wp-content/uploads/2025/07/rfq-protocols-for-digital-asset-derivatives-high-fidelity-execution-liquidity-aggregation-price-discovery-market-microstructure.jpg)

## Tca

Meaning ▴ Transaction Cost Analysis (TCA) represents a quantitative methodology designed to evaluate the explicit and implicit costs incurred during the execution of financial trades. </a>

**Tags:** [EBBO](https://options.greeks.live/area/ebbo/), [TCA](https://options.greeks.live/area/tca/), [Order Book](https://options.greeks.live/area/order-book/), [PI](https://options.greeks.live/area/pi/), [RFQ](https://options.greeks.live/area/rfq/), [Systematic Internaliser](https://options.greeks.live/area/systematic-internaliser/)	

## Discover More

- 
### [How Does the Use of LIS Waivers Impact the Measurement of Best Execution for Institutional Traders?](https://options.greeks.live/question/how-does-the-use-of-lis-waivers-impact-the-measurement-of-best-execution-for-institutional-traders/)
![Sleek, dark grey mechanism, pivoted centrally, embodies an RFQ protocol engine for institutional digital asset derivatives. Diagonally intersecting planes of dark, beige, teal symbolize diverse liquidity pools and complex market microstructure. This highlights high-fidelity execution, price discovery, and atomic settlement via Prime RFQ for block trades.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-powering-high-fidelity-execution-for-multi-leg-spreads-portfolio-margin-and-atomic-settlement-via-prime-os-for-block-trades.jpg)

LIS waivers complicate best execution measurement by moving large trades off-lit markets, requiring a shift to counterfactual TCA models.

- 
### [How Does MiFID II Influence the Choice between RFQ and SI Venues?](https://options.greeks.live/question/how-does-mifid-ii-influence-the-choice-between-rfq-and-si-venues/)
![Abstract structure combines opaque curved components with translucent blue blades, a Prime RFQ for institutional digital asset derivatives. It represents market microstructure optimization, high-fidelity execution of multi-leg spreads via RFQ protocols, ensuring best execution and capital efficiency across liquidity pools.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-optimizing-market-microstructure-for-high-fidelity-execution-best-execution-price-discovery-across-liquidity-pools-and-prime-os.jpg)

MiFID II mandates a data-driven choice between SI immediacy and RFQ price discovery to prove best execution.

- 
### [How Do Regulatory Frameworks like MiFID II Affect the Leakage Profiles of Dark Pools and RFQs?](https://options.greeks.live/question/how-do-regulatory-frameworks-like-mifid-ii-affect-the-leakage-profiles-of-dark-pools-and-rfqs/)
![Visualizing institutional digital asset derivatives market microstructure. A central RFQ protocol engine facilitates high-fidelity execution across diverse liquidity pools, enabling precise price discovery for multi-leg spreads. The connecting element signifies smart order routing for atomic settlement.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-across-multi-asset-liquidity.jpg)

MiFID II systemically re-architected leakage profiles by capping dark pools and forcing a quantifiable, data-driven approach to RFQ execution.

- 
### [What Are the Key Differences in Demonstrating Best Execution for Equities versus Fixed Income?](https://options.greeks.live/question/what-are-the-key-differences-in-demonstrating-best-execution-for-equities-versus-fixed-income/)
![Precisely engineered abstract structure featuring translucent and opaque blades converging at a central hub. This embodies institutional RFQ protocol for digital asset derivatives, representing dynamic liquidity aggregation, high-fidelity execution, and complex multi-leg spread price discovery.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-multi-leg-execution-protocol.jpg)

Demonstrating best execution requires two systems: a quantitative engine for equities and a procedural audit system for fixed income.

- 
### [Can Algorithmic Trading Strategies Be Integrated with RFQ Platforms for Enhanced Execution?](https://options.greeks.live/question/can-algorithmic-trading-strategies-be-integrated-with-rfq-platforms-for-enhanced-execution/)
![A transparent, multi-faceted component, indicative of an RFQ engine's intricate market microstructure logic, emerges from complex FIX Protocol connectivity. Its sharp edges signify high-fidelity execution and price discovery precision for institutional digital asset derivatives. This Prime RFQ module optimizes algorithmic trading and capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimized-for-best-execution.jpg)

Integrating algorithmic logic with RFQ protocols creates an adaptive execution system that minimizes impact while sourcing deep liquidity.

- 
### [What Are the Practical Steps to Ensure Best Execution in a Post-MiFID II RFQ Market?](https://options.greeks.live/question/what-are-the-practical-steps-to-ensure-best-execution-in-a-post-mifid-ii-rfq-market/)
![A macro view reveals the intricate mechanical core of an institutional-grade system, symbolizing the market microstructure of digital asset derivatives trading. Interlocking components and a precision gear suggest high-fidelity execution and algorithmic trading within an RFQ protocol framework, enabling price discovery and liquidity aggregation for multi-leg spreads on a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-system-precision-engine.jpg)

Mastering post-MiFID II RFQ markets requires engineering a data-driven, auditable system for quantifiable best execution.

- 
### [How Does the SI Regime Impact a Buy-Side Firm’s Best Execution Policy?](https://options.greeks.live/question/how-does-the-si-regime-impact-a-buy-side-firms-best-execution-policy/)
![A conceptual image illustrates a sophisticated RFQ protocol engine, depicting the market microstructure of institutional digital asset derivatives. Two semi-spheres, one light grey and one teal, represent distinct liquidity pools or counterparties within a Prime RFQ, connected by a complex execution management system for high-fidelity execution and atomic settlement of Bitcoin options or Ethereum futures.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-market-microstructure-2.jpg)

The SI regime forces a buy-side firm’s best execution policy to evolve into a data-driven, multi-venue analytical framework.

- 
### [How Do Regulatory Frameworks like MiFID II Impact the Strategic Choice between RFQ and Algorithmic Execution Protocols?](https://options.greeks.live/question/how-do-regulatory-frameworks-like-mifid-ii-impact-the-strategic-choice-between-rfq-and-algorithmic-execution-protocols/)
![A precision mechanism, symbolizing an algorithmic trading engine, centrally mounted on a market microstructure surface. Lens-like features represent liquidity pools and an intelligence layer for pre-trade analytics, enabling high-fidelity execution of institutional grade digital asset derivatives via RFQ protocols within a Principal's operational framework.](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-microstructure.jpg)

MiFID II mandates a data-driven protocol choice, making execution a function of auditable proof over procedural habit.

- 
### [How Should an Asset Manager’s Best Execution Policy Evolve to Incorporate Systematic Internalisers?](https://options.greeks.live/question/how-should-an-asset-managers-best-execution-policy-evolve-to-incorporate-systematic-internalisers/)
![Abstract visualization of institutional RFQ protocol for digital asset derivatives. Translucent layers symbolize dark liquidity pools within complex market microstructure. A central channel ensures high-fidelity execution and atomic settlement. Green nodes denote private quotation endpoints, enabling aggregated inquiry and price discovery.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-6.jpg)

Evolving best execution requires architecting a dynamic policy that integrates SIs as high-capacity, bilateral liquidity nodes within a quantitative, multi-venue evaluation framework.

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---

**Original URL:** https://options.greeks.live/question/how-can-a-firm-quantitatively-demonstrate-best-execution-when-using-a-systematic-internaliser/
