# How Do Firms Evidence Best Execution for Illiquid Bonds under MiFID II? ▴ Question

**Published:** 2025-08-06
**Categories:** Question

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## Concept

Evidencing [best execution](https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) for [illiquid bonds](https://prime.greeks.live/area/illiquid-bonds/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) under MiFID II is a complex analytical challenge that extends far beyond a simple price-matching exercise. For these instruments, which lack a continuous, observable market price, the entire operational framework of a firm becomes the evidence. It is an exercise in demonstrating a repeatable, systematic, and data-driven process designed to achieve the optimal outcome for a client within a structurally opaque market.

The core of the task lies in constructing a defensible narrative, supported by auditable data points, that substantiates the firm’s execution strategy in the absence of a centralized, transparent price formation process. This requires a fundamental shift from relying on a single data point ▴ the final execution price ▴ to meticulously documenting a sequence of judgments made before, during, and after the trade.

The architecture of this evidence is built upon the principle of “all sufficient steps,” a cornerstone of the [MiFID II](https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) regulation. For illiquid instruments, these steps are inherently more qualitative and judgment-based. The focus moves from simply identifying the ‘best price’ to proving that the firm has navigated the available liquidity pools and counterparty relationships in a manner that intelligently balances the key [execution factors](https://prime.greeks.live/area/execution-factors/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). These factors include not only price and cost but also the likelihood of execution, settlement finality, and the potential market impact of the order.

The evidence, therefore, is the documented output of a system designed to weigh these often-competing factors logically and consistently for each transaction. It is a testament to the firm’s institutional capability to manage the inherent uncertainties of the over-the-counter (OTC) bond markets.

> A firm’s ability to prove best execution for illiquid assets is a direct reflection of the sophistication of its internal data gathering and analytical frameworks.

This process is fundamentally about creating a proxy for the transparent, data-rich environment of liquid markets. Where an exchange-traded equity provides a constant stream of quotes and trades against which to benchmark performance, an illiquid corporate bond may not trade for weeks or months. Consequently, firms must build their own pricing context. This involves gathering data from multiple sources, such as indicative quotes from several dealers, [evaluated pricing](https://prime.greeks.live/area/evaluated-pricing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) from specialized vendors, and analysis of comparable bonds with similar credit quality, duration, and sector characteristics.

The ability to systematically gather, normalize, and analyze this disparate data is the foundational layer of the evidentiary process. Without this capability, any claim to achieving best execution rests on assertion rather than verifiable proof, a position that is untenable under the rigorous scrutiny of the MiFID II regime.

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## Strategy

A robust strategy for evidencing best execution in illiquid bonds requires a multi-layered approach that integrates pre-trade analytics, intelligent venue selection, and comprehensive post-trade review. The strategic objective is to create a complete audit trail that justifies every decision made throughout the trade lifecycle. This moves the process from a reactive, post-trade justification to a proactive, pre-trade plan designed to secure the best possible outcome for the client.

![A split spherical mechanism reveals intricate internal components. This symbolizes an Institutional Digital Asset Derivatives Prime RFQ, enabling high-fidelity RFQ protocol execution, optimal price discovery, and atomic settlement for block trades and multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-revealing-rfq-execution-core-mechanics.jpg)

## Defining the Execution Factors for Illiquid Instruments

[Under MiFID](https://prime.greeks.live/question/what-are-the-key-differences-in-best-execution-obligations-for-rfqs-under-mifid-i-vs-mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) II, firms must consider a range of execution factors, but their relative importance shifts dramatically when dealing with illiquid bonds. While price and cost remain paramount, other factors often take precedence. A successful strategy involves explicitly defining and weighting these factors based on the specific characteristics of the order and the prevailing market conditions.

- **Likelihood of Execution and Settlement** ▴ For a bond that trades infrequently, the certainty of completing the trade without failure or delay can be more valuable than achieving a marginally better price. The strategy must document why securing a firm quote from a reliable counterparty was prioritized.

- **Size and Market Impact** ▴ Executing a large order in an illiquid bond can significantly move the price. The strategy must demonstrate consideration of this risk, potentially justifying the use of a single dealer to avoid information leakage or breaking the order into smaller pieces over time.

- **Counterparty Selection** ▴ The choice of dealer is a critical strategic decision. A firm’s strategy should involve maintaining and systematically reviewing a panel of approved counterparties, assessing them not just on pricing but also on their reliability, settlement efficiency, and historical performance in specific market segments.

- **Price and Costs** ▴ Even without a live market price, the firm must construct a “fair value” benchmark. The strategy involves systematically soliciting quotes from multiple dealers (typically a minimum of three for competitive tension) and comparing them against independent, third-party evaluated prices. All direct and indirect costs must be captured and factored into the final assessment.

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## How Should Firms Structure Their Pre-Trade Data Collection?

The core of the evidentiary strategy is the quality and breadth of pre-trade documentation. This is where the firm builds its case for the subsequent execution decision. The process must be systematic and repeatable.

A critical component is the creation of a pre-trade “[price discovery](https://prime.greeks.live/area/price-discovery/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) pack” for each order. This document serves as a snapshot of the available market information at the time of the order. It forms the baseline against which the final execution is judged. The table below outlines the essential components of such a data pack.

| Data Component | Source | Strategic Purpose |
| --- | --- | --- |
| Indicative Dealer Quotes | Request for Quote (RFQ) to multiple dealers | To establish a competitive pricing environment and capture a range of potential execution levels. |
| Evaluated Pricing | Third-party pricing vendors (e.g. Bloomberg BVAL, ICE Data Services) | To provide an independent, model-driven valuation as a reference point against dealer quotes. |
| Comparable Bond Analysis | Internal systems, market data terminals | To benchmark the target bond against similar instruments in terms of credit rating, maturity, and sector, providing context for its valuation. |
| Historical Trade Data | TRACE (in the US), internal trade logs, venue data | To identify recent transaction levels in the same or similar bonds, offering a real-world anchor for pricing expectations. |

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## Post-Trade Review and Transaction Cost Analysis

The strategy must extend beyond the point of execution. A rigorous post-trade review process is necessary to verify the quality of the execution and to refine the firm’s processes over time. [Transaction Cost Analysis](https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (TCA) for illiquid bonds cannot rely on simple benchmarks like Volume-Weighted Average Price (VWAP) common in equity markets. Instead, the analysis is a comparison against the pre-trade data collected.

> For illiquid assets, Transaction Cost Analysis serves less as a measure against a market average and more as a validation of the pre-trade decision-making process.

The primary metric becomes “implementation shortfall” measured against the pre-trade benchmark. For instance, the analysis would compare the final execution price against the mid-point of the dealer quotes received or against the third-party [evaluated price](https://prime.greeks.live/area/evaluated-price/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) at the time of the order. This demonstrates, in quantifiable terms, the value added or cost incurred relative to the available information before the trade was executed. This systematic review not only satisfies the regulatory requirement to monitor execution quality but also creates a valuable feedback loop for improving future trading strategies and counterparty selection.

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## Execution

The execution phase is where the strategic framework is translated into a series of concrete, auditable actions. For illiquid bonds, this requires a highly structured and disciplined operational workflow. The goal is to produce a comprehensive and irrefutable body of evidence demonstrating that all sufficient steps were taken to achieve the best possible result for the client. This is the operational playbook for compliance and performance.

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## The Operational Playbook for Evidencing Best Execution

A firm’s [execution policy](https://prime.greeks.live/area/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) must be more than a high-level document; it must be an operational manual that guides traders through a consistent process. This playbook ensures that regardless of the individual trader, the firm’s approach to price discovery and execution for illiquid instruments remains uniform and defensible.

- **Order Inception and Initial Analysis** ▴ Upon receiving a client order, the first step is to classify the instrument’s liquidity. This classification, based on factors like recent trade frequency, issuance size, and the number of available market makers, dictates the required intensity of the price discovery process. This initial assessment must be documented.

- **Pre-Trade Price Discovery** ▴ For any bond deemed illiquid, the trader initiates a formal RFQ process. This involves sending the inquiry to a pre-approved list of at least three competing dealers. Simultaneously, the trader must pull and record the latest evaluated price from the firm’s designated third-party vendor. This data forms the core of the pre-trade evidence pack.

- **Selection and Justification** ▴ The trader evaluates the responses. The decision to trade is based on an analysis of all execution factors. If the best price is not selected, a clear and concise justification must be recorded. For example, a slightly worse price might be accepted from a dealer offering a larger size or demonstrating higher settlement certainty. This justification is a critical piece of evidence.

- **Execution and Capture** ▴ The trade is executed, and all relevant data points are immediately captured in the firm’s Order Management System (OMS). This includes the executed price, size, counterparty, all quotes received, the time of execution, and the identity of the trader.

- **Post-Trade Monitoring** ▴ The executed trade is automatically flagged for inclusion in the firm’s TCA process. The analysis compares the execution price against the documented pre-trade benchmarks. Any significant deviation is flagged for review by a compliance or oversight function.

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## Quantitative Analysis and Data Framework

The entire process rests on a foundation of robust data management. The ability to systematically capture, store, and analyze data from various sources is non-negotiable. The following table illustrates a sample TCA report for a single illiquid bond trade, demonstrating how different data points are brought together to form a coherent analytical narrative.

| Metric | Value | Source | Analysis |
| --- | --- | --- | --- |
| Client Order Received | 10:05:15 GMT | OMS Timestamp | Establishes the start of the execution process. |
| Pre-Trade Evaluated Price | 98.50 | Vendor Feed (BVAL) | Provides the primary independent benchmark. |
| Dealer Quote 1 (Bank A) | 98.25 / 98.75 | RFQ System | Shows the best bid received. |
| Dealer Quote 2 (Bank B) | 98.15 / 98.65 | RFQ System | Shows the best offer and the tightest spread. |
| Dealer Quote 3 (Bank C) | 98.20 / 98.80 | RFQ System | Provides additional competitive context. |
| Execution Time | 10:15:30 GMT | OMS Timestamp | Records the time of the transaction. |
| Executed Price | 98.60 | Execution Record | The final price achieved for the client’s buy order. |
| Implementation Shortfall vs. Evaluated Price | -10 bps | TCA Calculation | (98.60 – 98.50) / 98.50. Quantifies performance against the independent benchmark. |
| Implementation Shortfall vs. Best Offer | -5 bps | TCA Calculation | (98.60 – 98.65) / 98.65. Quantifies performance against the best available quote. |

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## What Is the Role of Governance and Oversight?

Technology and data are essential, but human oversight provides the final layer of assurance. A formal governance structure is required to ensure the best execution framework is operating effectively. This typically involves a Best Execution Committee, composed of senior members from trading, compliance, and operations.

This committee is responsible for:

- **Policy Review** ▴ Annually reviewing and updating the firm’s [order execution policy](https://prime.greeks.live/area/order-execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) to ensure it remains fit for purpose and reflects changes in market structure or regulation.

- **Counterparty Assessment** ▴ Regularly reviewing the performance of execution venues and counterparties. This includes quantitative analysis of pricing competitiveness and qualitative assessments of service levels and settlement efficiency.

- **Review of Exceptions** ▴ Examining trades that were flagged by the TCA system for significant deviations or where the best-priced quote was not transacted. This ensures that all such instances have a documented and reasonable justification.

- **Reporting** ▴ Overseeing the production of the annual [RTS 28](https://prime.greeks.live/area/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) reports, which require firms to publish information on their top five execution venues for each class of instrument.

Ultimately, the execution of a best execution policy for illiquid bonds is a continuous cycle of planning, data collection, analysis, and review. It is the sum of these parts, all meticulously documented, that constitutes the evidence required to satisfy clients and regulators alike.

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## References

- Bovill. “Best Execution Under MiFID II.” 2018.

- Hogan Lovells. “Achieving best execution under MiFID II.” 31 August 2017.

- International Capital Market Association. “MiFID II/MiFIR ▴ Transparency & Best Execution requirements in respect of bonds.” Q1 2016.

- International Capital Market Association. “MiFID II/R Fixed Income Best Execution Requirements.” 2016.

- Planet Compliance. “In a nutshell ▴ Best Execution under MiFID II/MiFIR.” 2 April 2024.

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## Reflection

The architecture required to evidence best execution for [illiquid assets](https://prime.greeks.live/area/illiquid-assets/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is a powerful reflection of a firm’s core operational philosophy. It moves compliance from a reactive, check-the-box exercise to a proactive driver of performance and client trust. The systems built to satisfy these regulatory obligations create a repository of institutional knowledge, capturing the nuances of market behavior and counterparty performance in a structured, analyzable format.

How might your own framework be evolved to better transform this captured data from a simple audit trail into a predictive tool for future execution strategy? The process itself, when viewed as a system of continuous learning and refinement, becomes a source of competitive advantage in navigating the most opaque corners of the market.

![A multi-faceted crystalline structure, featuring sharp angles and translucent blue and clear elements, rests on a metallic base. This embodies Institutional Digital Asset Derivatives and precise RFQ protocols, enabling High-Fidelity Execution](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-digital-asset-derivatives-rfq-market-microstructure.jpg)

## Glossary

<a href="https://prime.greeks.live/area/illiquid-bonds/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered component, like an RFQ protocol engine, displays a reflective blade and numerical data. It symbolizes high-fidelity execution within market microstructure, driving price discovery, capital efficiency, and algorithmic trading for institutional Digital Asset Derivatives on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-execution-engine-core-for-institutional-digital-asset-derivatives-rfq-protocol-price-discovery.jpg)

## Illiquid Bonds

Meaning ▴ Illiquid bonds are debt instruments not readily convertible to cash at fair market value due to insufficient trading activity or limited market depth. </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">
![Institutional-grade infrastructure supports a translucent circular interface, displaying real-time market microstructure for digital asset derivatives price discovery. Geometric forms symbolize precise RFQ protocol execution, enabling high-fidelity multi-leg spread trading, optimizing capital efficiency and mitigating systemic risk](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-request-for-quote-protocol-high-fidelity-execution-market-microstructure-intelligence-layer.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/execution-factors/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An abstract, angular sculpture with reflective blades from a polished central hub atop a dark base. This embodies institutional digital asset derivatives trading, illustrating market microstructure, multi-leg spread execution, and high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-price-discovery-system.jpg)

## Execution Factors

Meaning ▴ Execution Factors are the quantifiable, dynamic variables that directly influence the outcome and quality of a trade execution within institutional digital asset markets. </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">
![Three interconnected units depict a Prime RFQ for institutional digital asset derivatives. The glowing blue layer signifies real-time RFQ execution and liquidity aggregation, ensuring high-fidelity execution across market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-liquidity-aggregation-os.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/evaluated-pricing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A multi-faceted crystalline form with sharp, radiating elements centers on a dark sphere, symbolizing complex market microstructure. This represents sophisticated RFQ protocols, aggregated inquiry, and high-fidelity execution across diverse liquidity pools, optimizing capital efficiency for institutional digital asset derivatives within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/rfq-protocols-for-institutional-digital-asset-derivatives-price-discovery.jpg)

## Evaluated Pricing

Meaning ▴ Evaluated pricing refers to the process of determining the fair value of financial instruments, particularly those lacking active market quotes or sufficient liquidity, through the application of observable market data, valuation models, and expert judgment. </a><a href="https://prime.greeks.live/question/what-are-the-key-differences-in-best-execution-obligations-for-rfqs-under-mifid-i-vs-mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek, angled structures intersect, reflecting a central convergence. Intersecting light planes illustrate RFQ Protocol pathways for Price Discovery and High-Fidelity Execution in Market Microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-price-discovery-microstructure.jpg)

## Under Mifid

MiFID II transformed RFQ best execution from a procedural policy into a data-driven, provable mandate for optimal outcomes. </a><a href="https://prime.greeks.live/area/price-discovery/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A futuristic system component with a split design and intricate central element, embodying advanced RFQ protocols. This visualizes high-fidelity execution, precise price discovery, and granular market microstructure control for institutional digital asset derivatives, optimizing liquidity provision and minimizing slippage](https://options.greeks.live/wp-content/uploads/2025/07/advanced-rfq-protocols-for-digital-asset-derivatives-price-discovery.jpg)

## Price Discovery

Meaning ▴ Price discovery is the continuous, dynamic process by which the market determines the fair value of an asset through the collective interaction of supply and demand. </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">
![Precision-engineered modular components, with transparent elements and metallic conduits, depict a robust RFQ Protocol engine. This architecture facilitates high-fidelity execution for institutional digital asset derivatives, enabling efficient liquidity aggregation and atomic settlement within market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-optimizing-high-fidelity-execution-and-liquidity-aggregation.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/evaluated-price/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An exposed high-fidelity execution engine reveals the complex market microstructure of an institutional-grade crypto derivatives OS. Precision components facilitate smart order routing and multi-leg spread strategies](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-microstructure-2.jpg)

## Evaluated Price

Meaning ▴ The Evaluated Price represents a computationally derived valuation for a financial instrument, typically utilized when observable market prices are absent, unreliable, or require systemic consistency for internal accounting and risk management purposes. </a><a href="https://prime.greeks.live/area/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An institutional grade system component, featuring a reflective intelligence layer lens, symbolizes high-fidelity execution and market microstructure insight. This enables price discovery for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-precision-rfq-execution-system-interface.jpg)

## Execution Policy

Meaning ▴ An Execution Policy defines a structured set of rules and computational logic governing the handling and execution of financial orders within a trading system. </a><a href="https://prime.greeks.live/area/order-execution-policy/?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)

## Order Execution Policy

Meaning ▴ An Order Execution Policy defines the systematic procedures and criteria governing how an institutional trading desk processes and routes client or proprietary orders across various liquidity venues. </a><a href="https://prime.greeks.live/area/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek conduit, embodying an RFQ protocol and smart order routing, connects two distinct, semi-spherical liquidity pools. Its transparent core signifies an intelligence layer for algorithmic trading and high-fidelity execution of digital asset derivatives, ensuring atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-execution-engine-bridging-diverse-liquidity-pools-via-high-fidelity-rfq-protocol-orchestration.jpg)

## Rts 28

Meaning ▴ RTS 28 refers to Regulatory Technical Standard 28 under MiFID II, which mandates investment firms and market operators to publish annual reports on the quality of execution of transactions on trading venues and for financial instruments. </a><a href="https://prime.greeks.live/area/illiquid-assets/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, multi-component device with a prominent lens, embodying a sophisticated RFQ workflow engine. Its modular design signifies integrated liquidity pools and dynamic price discovery for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-microstructure-2.jpg)

## Illiquid Assets

Meaning ▴ An illiquid asset is an investment that cannot be readily converted into cash without a substantial loss in value or a significant delay. </a>

**Tags:** [Transaction Cost](https://options.greeks.live/area/transaction-cost/), [Evaluated Price](https://options.greeks.live/area/evaluated-price/), [Illiquid Bonds](https://options.greeks.live/area/illiquid-bonds/), [Cost Analysis](https://options.greeks.live/area/cost-analysis/), [Regulatory Compliance](https://options.greeks.live/area/regulatory-compliance/), [Price Discovery](https://options.greeks.live/area/price-discovery/)	

## Discover More

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### [How Does MiFID II Define the Concept of Best Execution for Different Asset Classes?](https://options.greeks.live/question/how-does-mifid-ii-define-the-concept-of-best-execution-for-different-asset-classes/)
![Abstractly depicting an Institutional Digital Asset Derivatives ecosystem. A robust base supports intersecting conduits, symbolizing multi-leg spread execution and smart order routing. Floating spheres represent diverse liquidity pools and crypto derivatives, emphasizing market microstructure and capital efficiency via RFQ protocols.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-optimization.jpg)

MiFID II defines best execution as a verifiable system for taking all sufficient steps to achieve the optimal result for a client's order.

- 
### [How Should a Best Execution Committee’s Function Differ between Equity and Fixed Income Markets?](https://options.greeks.live/question/how-should-a-best-execution-committees-function-differ-between-equity-and-fixed-income-markets/)
![A precision execution pathway with an intelligence layer for price discovery, processing market microstructure data. A reflective block trade sphere signifies private quotation within a dark pool. This visualizes high-fidelity execution and capital efficiency for institutional digital asset derivatives via RFQ protocols.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-precision-execution.jpg)

A Best Execution Committee's function adapts from quantitative optimization in equities to process-driven oversight in fixed income.

- 
### [How Does Regulatory Scrutiny of Best Execution Change for Illiquid Assets?](https://options.greeks.live/question/how-does-regulatory-scrutiny-of-best-execution-change-for-illiquid-assets/)
![A polished metallic needle, crowned with a faceted blue gem, precisely inserted into the central spindle of a reflective digital storage platter. This visually represents the high-fidelity execution of institutional digital asset derivatives via RFQ protocols, enabling atomic settlement and liquidity aggregation through a sophisticated Prime RFQ intelligence layer for optimal price discovery and alpha generation.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-optimization-for-high-fidelity-execution-and-liquidity-aggregation-via-prime-os-intelligence-layer.jpg)

Regulatory scrutiny for illiquid assets elevates best execution from price optimization to an auditable validation of the price discovery process.

- 
### [How Can a Firm Quantitatively Prove Best Execution without a Public Benchmark Price?](https://options.greeks.live/question/how-can-a-firm-quantitatively-prove-best-execution-without-a-public-benchmark-price/)
![A central processing core with intersecting, transparent structures revealing intricate internal components and blue data flows. This symbolizes an institutional digital asset derivatives platform's Prime RFQ, orchestrating high-fidelity execution, managing aggregated RFQ inquiries, and ensuring atomic settlement within dynamic market microstructure, optimizing capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-trading-system-facilitating-high-fidelity-rfq-protocol-optimization-for-best-execution-and-atomic-settlement.jpg)

A firm proves best execution without a public benchmark by architecting a defensible, data-driven process of internal valuation and systematic comparison.

- 
### [How Do Firms Evidence the “Sufficient Steps” Taken for Best Execution?](https://options.greeks.live/question/how-do-firms-evidence-the-sufficient-steps-taken-for-best-execution/)
![Central polished disc, with contrasting segments, represents Institutional Digital Asset Derivatives Prime RFQ core. A textured rod signifies RFQ Protocol High-Fidelity Execution and Low Latency Market Microstructure data flow to the Quantitative Analysis Engine for Price Discovery.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-core-system-high-fidelity.jpg)

Firms evidence best execution by creating a robust, auditable system of policies, monitoring, and quantitative analysis.

- 
### [What Are the Regulatory Requirements for Demonstrating Best Execution in RFQ Processes?](https://options.greeks.live/question/what-are-the-regulatory-requirements-for-demonstrating-best-execution-in-rfq-processes/)
![A macro view of a precision-engineered metallic component, representing the robust core of an Institutional Grade Prime RFQ. Its intricate Market Microstructure design facilitates Digital Asset Derivatives RFQ Protocols, enabling High-Fidelity Execution and Algorithmic Trading for Block Trades, ensuring Capital Efficiency and Best Execution.](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-core-system-for-institutional-digital-asset-derivatives-rfq-protocol-execution-and-advanced-market-microstructure-optimization.jpg)

Demonstrating best execution in RFQs requires an engineered system for data capture and analysis to prove optimal outcomes.

- 
### [How Do MiFID II Best Execution Requirements Apply to Automated RFQ Systems?](https://options.greeks.live/question/how-do-mifid-ii-best-execution-requirements-apply-to-automated-rfq-systems/)
![A sleek, light-colored, egg-shaped component precisely connects to a darker, ergonomic base, signifying high-fidelity integration. This modular design embodies an institutional-grade Crypto Derivatives OS, optimizing RFQ protocols for atomic settlement and best execution within a robust Principal's operational framework, enhancing market microstructure.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-core-principal-system.jpg)

MiFID II mandates that RFQ systems create a competitive, auditable environment to prove best execution was achieved.

- 
### [What Are the Core Components of a MiFID II Compliant Best Execution Policy for Bonds?](https://options.greeks.live/question/what-are-the-core-components-of-a-mifid-ii-compliant-best-execution-policy-for-bonds/)
![A modular, dark-toned system with light structural components and a bright turquoise indicator, representing a sophisticated Crypto Derivatives OS for institutional-grade RFQ protocols. It signifies private quotation channels for block trades, enabling high-fidelity execution and price discovery through aggregated inquiry, minimizing slippage and information leakage within dark liquidity pools.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-system-for-optimal-execution-1.jpg)

A MiFID II bond execution policy is an operational system for ensuring optimal client outcomes through data-driven venue selection and continuous monitoring.

- 
### [How Does MiFID II Influence TCA and Best Execution Requirements?](https://options.greeks.live/question/how-does-mifid-ii-influence-tca-and-best-execution-requirements/)
![A central RFQ engine orchestrates diverse liquidity pools, represented by distinct blades, facilitating high-fidelity execution of institutional digital asset derivatives. Metallic rods signify robust FIX protocol connectivity, enabling efficient price discovery and atomic settlement for Bitcoin options.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-liquidity-orchestration.jpg)

MiFID II codifies best execution as a multi-factor, data-driven discipline, making TCA the core engine for proving compliance.

---

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---

**Original URL:** https://options.greeks.live/question/how-do-firms-evidence-best-execution-for-illiquid-bonds-under-mifid-ii/
