# How Does an Si Demonstrate Best Execution When Trading as Principal? ▴ Question

**Published:** 2025-08-07
**Categories:** Question

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![Polished, intersecting geometric blades converge around a central metallic hub. This abstract visual represents an institutional RFQ protocol engine, enabling high-fidelity execution of digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-market-microstructure.jpg)

![A deconstructed mechanical system with segmented components, revealing intricate gears and polished shafts, symbolizing the transparent, modular architecture of an institutional digital asset derivatives trading platform. This illustrates multi-leg spread execution, RFQ protocols, and atomic settlement processes](https://options.greeks.live/wp-content/uploads/2025/07/deconstructed-principal-trading-system-revealing-core-mechanics-of-digital-asset-derivatives-execution.jpg)

## Concept

![A metallic, modular trading interface with black and grey circular elements, signifying distinct market microstructure components and liquidity pools. A precise, blue-cored probe diagonally integrates, representing an advanced RFQ engine for granular price discovery and atomic settlement of multi-leg spread strategies in institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-system-facilitating-high-fidelity-execution-price-discovery.jpg)

## The SI Mandate a Dual Function

A [Systematic Internaliser](https://prime.greeks.live/area/systematic-internaliser/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (SI) operates under a unique and demanding mandate within the European financial landscape, a structure codified by the second Markets in Financial Instruments Directive (MiFID II). An SI is an investment firm that engages in [principal trading](https://prime.greeks.live/area/principal-trading/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), dealing on its own account, by executing client orders outside of traditional trading venues like a Regulated Market (RM) or a Multilateral Trading Facility (MTF). This dual function creates a specific set of obligations.

The firm acts not only as a proprietary trader managing its own risk but simultaneously as an execution venue for its clients. This structure is designed to bring activity that would otherwise occur in opaque over-the-counter (OTC) markets into a regulated and transparent framework.

The core of the SI’s operational challenge lies in reconciling these two roles. When an SI fills a [client order](https://prime.greeks.live/question/how-do-dealers-quantify-client-toxicity-in-a-disclosed-rfq-system/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) from its own book, it is a bilateral engagement. The SI is the counterparty. This reality necessitates a robust and verifiable framework to demonstrate that the client received a fair outcome.

The regulatory requirement for demonstrating “[best execution](https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)” is the mechanism that ensures the SI’s proprietary interests do not compromise client outcomes. The directive moves beyond a simple “reasonable steps” approach to a more stringent “all sufficient steps” standard, demanding a higher level of diligence and proof from the firm. This framework compels the SI to build and maintain a sophisticated execution system capable of substantiating its performance against objective criteria.

![A sleek blue and white mechanism with a focused lens symbolizes Pre-Trade Analytics for Digital Asset Derivatives. A glowing turquoise sphere represents a Block Trade within a Liquidity Pool, demonstrating High-Fidelity Execution via RFQ protocol for Price Discovery in Dark Pool Market Microstructure](https://options.greeks.live/wp-content/uploads/2025/07/advanced-institutional-digital-asset-derivatives-rfq-execution-system-for-optimal-price-discovery-and-high-fidelity-execution.jpg)

## Beyond Price the Dimensions of Execution Quality

Demonstrating best execution for a Systematic Internaliser transcends a singular focus on the headline price of a transaction. While price is a critical component, the [MiFID II](https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) framework defines [execution quality](https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) through a multi-dimensional lens. The regulation explicitly identifies several execution factors that firms must consider.

These factors include not just price, but also the costs associated with a transaction, the speed of execution, the likelihood of execution and settlement, and the size and nature of the order. For an SI, this means proving that the outcome delivered to a client was optimal when all these factors are weighed.

> A Systematic Internaliser’s demonstration of best execution is the verifiable output of an integrated system designed to manage proprietary risk while delivering superior, multi-faceted execution outcomes to clients.

Consider a large, potentially market-moving order in an illiquid security. Executing this order on a public exchange might lead to significant [market impact](https://prime.greeks.live/area/market-impact/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), a form of implicit cost where the trading activity itself adversely moves the price. An SI, by taking the other side of this trade as principal, can provide the client with a single price for the entire block, effectively absorbing the market impact risk. In this context, the [execution price](https://prime.greeks.live/area/execution-price/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) might be slightly different from the last traded price on a lit venue, but it can represent a superior result once the implicit cost of market impact is factored in.

The SI’s task is to quantify and report this comprehensive value, proving that its principal capacity delivered a better outcome than alternative execution methods would have. The entire process is about building a defensible, data-driven case for the quality of the execution provided.

![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)

![A precision-engineered metallic institutional trading platform, bisected by an execution pathway, features a central blue RFQ protocol engine. This Crypto Derivatives OS core facilitates high-fidelity execution, optimal price discovery, and multi-leg spread trading, reflecting advanced market microstructure](https://options.greeks.live/wp-content/uploads/2025/08/precision-engineered-institutional-digital-asset-derivatives-execution-core-facilitating-rfq-protocol-driven-optimal-price-discovery-and-multi-leg-spread-trading-for-capital-efficiency.jpg)

## Strategy

![Four sleek, rounded, modular components stack, symbolizing a multi-layered institutional digital asset derivatives trading system. Each unit represents a critical Prime RFQ layer, facilitating high-fidelity execution, aggregated inquiry, and sophisticated market microstructure for optimal price discovery via RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/modular-institutional-crypto-derivatives-trading-system-components.jpg)

## The Internalization Decision System

The strategic core of a Systematic Internaliser’s operation is its decision-making system for internalization. Before an SI commits its own capital to fill a client order, a sophisticated internal process evaluates whether doing so aligns with both its risk parameters and its best execution duty. This is not an arbitrary choice; it is a calculated determination based on a predefined [execution policy](https://prime.greeks.live/area/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) that is disclosed to clients.

The policy outlines the factors affecting the choice of execution, providing transparency into the SI’s operational logic. The strategy involves a continuous assessment of incoming orders against the firm’s current inventory, risk appetite, and real-time [market conditions](https://prime.greeks.live/area/market-conditions/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).

The decision framework functions as a complex filter. Key inputs include:

- **Order Characteristics** ▴ The size, liquidity profile, and specific instructions of the client order are primary considerations. Large or illiquid orders are often strong candidates for internalization, as the SI can prevent the information leakage and market impact associated with working the order on a lit market.

- **Market State** ▴ The system constantly ingests market data, analyzing volatility, bid-ask spreads, and depth across multiple trading venues. In highly volatile or thin markets, offering a firm quote from the principal book can provide price certainty that is otherwise unavailable.

- **Internal Risk Position** ▴ The SI’s existing inventory in the specific instrument is a critical factor. An incoming client buy order for a stock the SI is looking to sell represents a clear opportunity for efficient [risk management](https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and a competitive quote for the client.

This systematic approach ensures that the decision to internalize is consistent, repeatable, and auditable. The strategy is to use the principal book as a strategic liquidity and risk management tool that, when deployed correctly, creates a superior execution outcome for the client which can be quantitatively demonstrated.

![Abstract depiction of an advanced institutional trading system, featuring a prominent sensor for real-time price discovery and an intelligence layer. Visible circuitry signifies algorithmic trading capabilities, low-latency execution, and robust FIX protocol integration for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-high-fidelity-rfq-protocols.jpg)

## Quantitative Proof the Benchmarking Framework

A strategy is only as effective as its measurement system. For an SI, demonstrating best execution requires a rigorous quantitative framework to compare the execution quality against relevant benchmarks. This process, known as [Transaction Cost Analysis](https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (TCA), forms the foundation of the SI’s proof of performance.

The strategy involves moving beyond simple comparisons to provide a holistic analysis of execution quality. The SI must select appropriate benchmarks based on the nature of the order and the client’s objectives.

The selection of benchmarks is a strategic choice articulated in the firm’s execution policy. Different benchmarks illuminate different aspects of execution quality. A robust TCA framework will utilize several, allowing for a comprehensive evaluation. The goal is to provide a clear, data-driven narrative that justifies the execution outcome in the context of the prevailing market conditions at the time of the trade.

### Table 1 ▴ Comparison of Common TCA Benchmarks

| Benchmark | Description | Strategic Application for an SI |
| --- | --- | --- |
| Arrival Price | The mid-market price at the moment the order is received by the firm. This benchmark measures the pure cost of execution, including market impact and fees. | This is a fundamental benchmark for demonstrating the value of internalization. An SI aims to show minimal slippage against the arrival price, especially for large orders where execution on a lit market would likely cause significant adverse price movement. |
| Volume-Weighted Average Price (VWAP) | The average price of a security over a specific time period, weighted by volume. It is often used for orders that are worked over a day. | For orders executed via internalization, comparing the execution price to the daily VWAP can demonstrate that the client received a price consistent with, or better than, the average market participant’s price for that day. |
| Time-Weighted Average Price (TWAP) | The average price of a security over a specific time period, calculated as a simple average. It is less susceptible to large volume spikes than VWAP. | Useful for demonstrating consistent execution quality for smaller orders or in markets where trading volume is erratic. It shows the price was fair relative to the market over the execution period. |
| Quoted Spread | The SI’s own bid and offer prices published at the time of the trade request. Execution quality is measured by how consistently the SI trades at or within its quoted spread. | This is a direct measure of the SI’s performance against its own stated prices. It provides clear evidence of the competitiveness and reliability of the SI’s quoting engine, a key part of its obligation. |

![A precision optical system with a reflective lens embodies the Prime RFQ intelligence layer. Gray and green planes represent divergent RFQ protocols or multi-leg spread strategies for institutional digital asset derivatives, enabling high-fidelity execution and optimal price discovery within complex market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-intelligent-core-driving-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-across-diverse-liquidity-pools-for-optimal-price-discovery.jpg)

## The Price Formation Engine

The price an SI quotes to a client is not arbitrary; it is the output of a sophisticated [price formation engine](https://prime.greeks.live/question/how-can-an-organization-prevent-inadvertent-contract-formation-during-an-rfp/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This engine is a core piece of the SI’s infrastructure, designed to generate quotes that are both competitive for the client and reflective of the true market risk for the firm. The strategy is to create a “fair value” price derived from a wide array of data inputs, ensuring the quote is grounded in prevailing market conditions. This obligation is central to the SI regime, as quotes must reflect market conditions at the time of the request.

The engine continuously synthesizes multiple data streams in real-time. These inputs typically include:

- **Consolidated Market Data** ▴ Real-time Level 1 and Level 2 data from all relevant RMs and MTFs. This provides the foundational view of the current bid, offer, and depth in the market.

- **Internal Flow Data** ▴ Analysis of the firm’s own order flow can provide short-term predictive signals about supply and demand imbalances, allowing the SI to refine its pricing.

- **Risk Model Outputs** ▴ The engine integrates with the firm’s central risk management system. The price quoted will reflect the cost of taking on the position, including factors like the firm’s existing inventory, funding costs, and the instrument’s volatility.

- **Third-Party Analytics** ▴ Some SIs may incorporate data from third-party vendors, such as news sentiment analysis or short-term volatility forecasts, to further refine their pricing models.

By synthesizing these diverse inputs, the SI constructs a price that is robust and defensible. The strategy ensures that the SI can meet its pre-trade transparency obligations to publish firm quotes while managing its own market risk effectively. This systematic approach to [price formation](https://prime.greeks.live/area/price-formation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is fundamental to proving that the execution offered to the client was not just a convenient offload of risk but a competitively priced liquidity solution.

![Precisely engineered circular beige, grey, and blue modules stack tilted on a dark base. A central aperture signifies the core RFQ protocol engine](https://options.greeks.live/wp-content/uploads/2025/07/core-prime-os-rfq-engine-digital-asset-derivatives-trading-system-execution.jpg)

![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)

## Execution

![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)

## The Operational Playbook for Demonstrating Compliance

The execution of a best execution policy within a Systematic Internaliser is a highly procedural and data-intensive process. It culminates in a series of reports designed to provide transparent, quantitative evidence of the firm’s performance. The primary reporting obligations under MiFID II were historically the [RTS 27](https://prime.greeks.live/area/rts-27/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and [RTS 28](https://prime.greeks.live/area/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) reports.

While the requirement for these specific reports has been de-emphasized or removed in some jurisdictions like the UK post-Brexit, the underlying obligation to monitor and prove best execution remains firmly in place. Therefore, the internal machinery built to produce these reports continues to be the operational backbone for demonstrating compliance.

An SI’s operational playbook for evidencing best execution follows a clear, auditable sequence:

- **Pre-Trade Data Publication** ▴ The process begins with pre-trade transparency. For liquid instruments, an SI must make firm quotes public when requested by a client. This is typically done through an [Approved Publication Arrangement](https://prime.greeks.live/area/approved-publication-arrangement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (APA). This step creates a public, time-stamped record of the SI’s offered price before any transaction occurs.

- **Execution Data Capture** ▴ At the point of execution, the system captures a granular set of data points. This includes the precise timestamp of the trade, the client identifier, the instrument identifier, the exact quantity, and the execution price. For trades filled by the SI’s principal book, the venue is recorded as “SI”.

- **Post-Trade Reporting** ▴ The SI is responsible for the public reporting of the trade’s details (price, volume, time) as soon as possible. This post-trade transparency ensures that the market is aware of the transaction, contributing to overall price discovery even though the trade occurred off-venue.

- **Internal [Transaction Cost](https://prime.greeks.live/area/transaction-cost/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) Analysis (TCA)** ▴ The executed trade data is fed into the firm’s internal TCA engine. Here, the execution price is compared against a variety of benchmarks ([Arrival Price](https://prime.greeks.live/area/arrival-price/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), VWAP, etc.) that are relevant for the specific order type and instrument class. The resulting slippage metrics are calculated and stored.

- **Periodic Policy Review and Reporting** ▴ The firm must systematically aggregate this data to monitor the effectiveness of its execution arrangements. This involves producing summary statistics and reports for internal governance committees and, upon request, for regulators. The reports analyze execution quality across different asset classes, client types, and market conditions, proving that the firm is consistently delivering on its best execution promise.

![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)

## Quantitative Modeling and Data Analysis

The claim of providing best execution rests entirely on robust quantitative analysis. An SI must maintain a sophisticated data infrastructure capable of performing detailed TCA and generating the evidence to support its execution quality. This involves not only capturing the data but modeling it in a way that provides clear, unambiguous insights. The following tables illustrate the type of granular data analysis that underpins an SI’s best execution framework.

> The integrity of an SI’s best execution claim is a direct function of the granularity and transparency of its supporting data.

This first table provides a simplified example of a post-trade TCA report for a series of equity trades. It is this level of detail that allows an SI to dissect its performance and demonstrate to clients and regulators where it has added value, for instance by minimizing the [slippage](https://prime.greeks.live/area/slippage/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) that might have occurred on a lit exchange for a large order.

### Table 2 ▴ Example Transaction Cost Analysis (TCA) Report

| Trade Date | Ticker | Side | Quantity | Arrival Price (€) | Execution Price (€) | Slippage vs. Arrival (bps) | Venue |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 2025-08-06 | STM.PA | Buy | 150,000 | 45.205 | 45.215 | -2.21 | SI |
| 2025-08-06 | AIR.PA | Sell | 5,000 | 130.500 | 130.480 | +1.53 | SI |
| 2025-08-06 | MC.PA | Buy | 25,000 | 880.100 | 880.140 | -0.45 | SI |
| 2025-08-06 | CAP.PA | Sell | 75,000 | 195.400 | 195.370 | +1.53 | SI |
| 2025-08-06 | SAN.PA | Buy | 10,000 | 92.750 | 92.750 | 0.00 | SI |

The second table outlines the data architecture of the SI’s price [formation engine](https://prime.greeks.live/question/how-can-an-organization-prevent-inadvertent-contract-formation-during-an-rfp/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The ability to generate a fair and defensible quote is predicated on the quality and breadth of its data inputs. The model’s weighting of these sources is a critical piece of the SI’s intellectual property and a key element of its strategy.

### Table 3 ▴ SI Price Formation Data Inputs

| Data Source Category | Specific Example | Data Type | Weighting Factor |
| --- | --- | --- | --- |
| Lit Market Feeds | Euronext Optiq, Cboe DXE | Level 2 Order Book Data | High |
| MTF Data | Tradeweb, MarketAxess | Traded Prices & Quotes | Medium-High |
| Internal Order Flow | Firm’s Own Client Orders | Aggregated Net Interest | Medium |
| Risk System Data | Internal VaR & Inventory Models | Cost of Carry, Risk Premium | Medium |
| Third-Party Analytics | News Sentiment Feeds | Volatility & Event Flags | Low |

![A light sphere, representing a Principal's digital asset, is integrated into an angular blue RFQ protocol framework. Sharp fins symbolize high-fidelity execution and price discovery](https://options.greeks.live/wp-content/uploads/2025/07/principals-core-asset-rfq-protocol-framework-for-digital-derivatives.jpg)

## System Integration and Technological Framework

The demonstration of best execution is ultimately a technological process. The SI’s trading, risk, and compliance systems must be deeply integrated to provide the seamless flow of data required for monitoring and reporting. The technological framework is built on standardized protocols and a high-performance architecture designed for speed, reliability, and data integrity.

Key components of this technological framework include:

- **Order and Execution Management Systems (OMS/EMS)** ▴ These are the core platforms that manage the lifecycle of a client order. The OMS/EMS must be configured to capture all necessary data points for TCA, including precise arrival timestamps.

- **Financial Information eXchange (FIX) Protocol** ▴ The [FIX protocol](https://prime.greeks.live/area/fix-protocol/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is the universal language of electronic trading. The SI uses FIX messages to receive orders from clients and to send execution reports back. The rich data tags within FIX messages (such as Tag 30 for LastMkt, indicating the execution venue) are essential for accurate record-keeping.

- **Data Warehouse and Analytics Engine** ▴ All execution data is funneled into a central data warehouse. This is where the TCA calculations are performed. This engine must be powerful enough to process vast amounts of data and run complex queries to generate the required reports and insights.

- **APA/ARM Integration** ▴ The SI’s systems must have robust, low-latency connections to Approved Publication Arrangements (for pre- and post-trade transparency) and Approved Reporting Mechanisms (for transaction reporting to regulators). This ensures that the SI can meet its regulatory reporting deadlines without manual intervention.

This integrated system ensures that from the moment a client request is received to the final generation of a compliance report, the entire process is automated, auditable, and designed to uphold the principles of best execution.

![A central, metallic, multi-bladed mechanism, symbolizing a core execution engine or RFQ hub, emits luminous teal data streams. These streams traverse through fragmented, transparent structures, representing dynamic market microstructure, high-fidelity price discovery, and liquidity aggregation](https://options.greeks.live/wp-content/uploads/2025/07/principal-grade-digital-asset-derivatives-rfq-protocol-engine-facilitating-high-fidelity-execution-and-optimal-price-discovery-across-fragmented-market-microstructure.jpg)

## References

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

- SmartStream Technologies. (n.d.). SYSTEMATIC INTERNALISATION UNDER MIFID II ▴ WHAT’S NEEDED NOW.

- Financial Conduct Authority. (2021). Changes to MiFID II research rules and removal of RTS 27 and RTS 28 best execution reporting.

- ICMA. (2017). MiFID II implementation ▴ the Systematic Internaliser regime. International Capital Market Association.

- European Securities and Markets Authority. (2007). Best Execution under MiFID Questions & Answers.

- Cosegic. (2021). RTS 27 and RTS 28 in the FCA Spotlight.

- Almgren, R. & Chriss, N. (2001). Optimal execution of portfolio transactions. Journal of Risk, 3(2), 5-39.

- Hasbrouck, J. (2007). Market Microstructure ▴ A Survey. In R. A. Jarrow, V. Maksimovic, & W. T. Ziemba (Eds.), Handbooks in Operations Research and Management Science ▴ Financial Engineering (Vol. 15, pp. 559-601). Elsevier.

- O’Hara, M. (1995). Market Microstructure Theory. Blackwell Publishing.

- European Banking Federation. (2021). Response form for the Consultation Paper on Review of the MiFID II framework on best execution reports.

![A precision metallic instrument with a black sphere rests on a multi-layered platform. This symbolizes institutional digital asset derivatives market microstructure, enabling high-fidelity execution and optimal price discovery across diverse liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-engine-component-digital-asset-derivatives-market-microstructure.jpg)

## Reflection

![A precise RFQ engine extends into an institutional digital asset liquidity pool, symbolizing high-fidelity execution and advanced price discovery within complex market microstructure. This embodies a Principal's operational framework for multi-leg spread strategies and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-engine-interfacing-core-liquidity-system.jpg)

## The System as the Standard

The regulatory framework governing Systematic Internalisers provides a set of parameters, a blueprint for transparency and fairness. Yet, compliance is merely the foundation. The true differentiator lies in viewing the demonstration of best execution not as a reporting burden, but as the natural output of a superior operational system.

The data points, the benchmarks, and the reports are artifacts generated by an underlying engine designed for optimal performance. An institution’s ability to engage effectively with an SI, or for an SI to excel, depends on understanding this systemic view.

The quality of an execution is not a subjective judgment but a measurable property of the system that produced it. Therefore, evaluating an SI partner or one’s own internal capabilities requires looking beyond the surface of individual trade outcomes. It necessitates an inquiry into the architecture of the price formation engine, the sophistication of the TCA models, and the integrity of the data pathways.

When the system itself is engineered for excellence, the demonstration of that excellence becomes an inherent, continuous function. The ultimate strategic potential is unlocked when an institution’s own execution policy becomes a dynamic interface with these high-performance systems, creating a coherent and powerful approach to liquidity and risk management.

![A central, metallic, complex mechanism with glowing teal data streams represents an advanced Crypto Derivatives OS. It visually depicts a Principal's robust RFQ protocol engine, driving high-fidelity execution and price discovery for institutional-grade digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-8.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 sleek, futuristic object with a glowing line and intricate metallic core, symbolizing a Prime RFQ for institutional digital asset derivatives. It represents a sophisticated RFQ protocol engine enabling high-fidelity execution, liquidity aggregation, atomic settlement, and capital efficiency for multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/advanced-institutional-digital-asset-derivatives-rfq-protocol-execution-engine-for-optimal-liquidity-aggregation-and-atomic-settlement.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/area/principal-trading/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, multi-layered institutional crypto derivatives platform interface, featuring a transparent intelligence layer for real-time market microstructure analysis. Buttons signify RFQ protocol initiation for block trades, enabling high-fidelity execution and optimal price discovery within a robust Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-crypto-derivatives-os-precision-execution-rfq-protocol-intelligence-layer.jpg)

## Principal Trading

Meaning ▴ Principal Trading defines the operational paradigm where a financial entity engages in market transactions utilizing its own capital and balance sheet, rather than executing orders on behalf of clients. </a><a href="https://prime.greeks.live/question/how-do-dealers-quantify-client-toxicity-in-a-disclosed-rfq-system/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central, metallic hub anchors four symmetrical radiating arms, two with vibrant, textured teal illumination. This depicts a Principal's high-fidelity execution engine, facilitating private quotation and aggregated inquiry for institutional digital asset derivatives via RFQ protocols, optimizing market microstructure and deep liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/prime-brokerage-digital-asset-rfq-execution-engine-microstructure.jpg)

## Client Order

Dealers quantify client toxicity by systematically measuring post-trade markouts to model and price information asymmetry. </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">
![Sleek metallic structures with glowing apertures symbolize institutional RFQ protocols. These represent high-fidelity execution and price discovery across aggregated liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/precision-digital-asset-derivatives-trading-systems-optimizing-rfq-protocols-for-institutional-block-trade-execution.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-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A dynamic visual representation of an institutional trading system, featuring a central liquidity aggregation engine emitting a controlled order flow through dedicated market infrastructure. This illustrates high-fidelity execution of digital asset derivatives, optimizing price discovery within a private quotation environment for block trades, ensuring capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/principal-os-driving-high-fidelity-execution-for-digital-asset-derivatives-through-optimized-rfq-protocols-and-smart-order-routing.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/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Two sharp, intersecting blades, one white, one blue, represent precise RFQ protocols and high-fidelity execution within complex market microstructure. Behind them, translucent wavy forms signify dynamic liquidity pools, multi-leg spreads, and volatility surfaces](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-optimized-liquidity-aggregation-principal-prime-os-intelligence-layer.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/execution-price/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central, metallic cross-shaped RFQ protocol engine orchestrates principal liquidity aggregation between two distinct institutional liquidity pools. Its intricate design suggests high-fidelity execution and atomic settlement within digital asset options trading, forming a core Crypto Derivatives OS for algorithmic price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-architecture-optimizing-liquidity-aggregation-and-high-fidelity-execution.jpg)

## Execution Price

Meaning ▴ The Execution Price represents the definitive, realized price at which a specific order or trade leg is completed within a financial market system. </a><a href="https://prime.greeks.live/area/market-impact/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Modular institutional-grade execution system components reveal luminous green data pathways, symbolizing high-fidelity cross-asset connectivity. This depicts intricate market microstructure facilitating RFQ protocol integration for atomic settlement of digital asset derivatives within a Principal's operational framework, underpinned by a Prime RFQ intelligence layer](https://options.greeks.live/wp-content/uploads/2025/07/modular-high-fidelity-execution-architecture-for-institutional-digital-asset-derivatives-rfq-protocol-integration-and-principals-operational-framework-optimization.jpg)

## Market Impact

Meaning ▴ Market Impact refers to the observed change in an asset's price resulting from the execution of a trading order, primarily influenced by the order's size relative to available liquidity and prevailing market conditions. </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">
![Robust institutional Prime RFQ core connects to a precise RFQ protocol engine. Multi-leg spread execution blades propel a digital asset derivative target, optimizing price discovery](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-proto-insti-digital-asset-derivs-hi-fi-exec-capital-effi-risk-mgmt.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/market-conditions/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A marbled sphere symbolizes a complex institutional block trade, resting on segmented platforms representing diverse liquidity pools and execution venues. This visualizes sophisticated RFQ protocols, ensuring high-fidelity execution and optimal price discovery within dynamic market microstructure for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/principal-rfq-aggregation-digital-asset-derivative-execution-optimization.jpg)

## Market Conditions

Meaning ▴ Market Conditions denote the aggregate state of variables influencing trading dynamics within a given asset class, encompassing quantifiable metrics such as prevailing liquidity levels, volatility profiles, order book depth, bid-ask spreads, and the directional pressure of order flow. </a><a href="https://prime.greeks.live/area/risk-management/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A dark blue sphere and teal-hued circular elements on a segmented surface, bisected by a diagonal line. This visualizes institutional block trade aggregation, algorithmic price discovery, and high-fidelity execution within a Principal's Prime RFQ, optimizing capital efficiency and mitigating counterparty risk for digital asset derivatives and multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/market-microstructure-driven-institutional-digital-asset-derivatives-rfq.jpg)

## Risk Management

Meaning ▴ Risk Management is the systematic process of identifying, assessing, and mitigating potential financial exposures and operational vulnerabilities within an institutional trading framework. </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 sleek, futuristic apparatus featuring a central spherical processing unit flanked by dual reflective surfaces and illuminated data conduits. This system visually represents an advanced RFQ protocol engine facilitating high-fidelity execution and liquidity aggregation for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-options-rfq-liquidity-aggregation-interface.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/question/how-can-an-organization-prevent-inadvertent-contract-formation-during-an-rfp/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, institutional-grade device, with a glowing indicator, represents a Prime RFQ terminal. Its angled posture signifies focused RFQ inquiry for Digital Asset Derivatives, enabling high-fidelity execution and precise price discovery within complex market microstructure, optimizing latent liquidity](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-execution-terminal-facilitating-high-fidelity-price-discovery-and-optimal-liquidity-aggregation.jpg)

## Price Formation Engine

Engineer the RFP process with explicit, non-binding language and disciplined communication protocols to control legal intent. </a><a href="https://prime.greeks.live/area/price-formation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered, multi-layered system architecture for institutional digital asset derivatives. Its modular components signify robust RFQ protocol integration, facilitating efficient price discovery and high-fidelity execution for complex multi-leg spreads, minimizing slippage and adverse selection in market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-institutional-digital-asset-derivatives-rfq-execution-platform.jpg)

## Price Formation

Meaning ▴ Price formation refers to the dynamic, continuous process by which the equilibrium value of a financial instrument is established through the interaction of supply and demand within a market system. </a><a href="https://prime.greeks.live/area/rts-27/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An Execution Management System module, with intelligence layer, integrates with a liquidity pool hub and RFQ protocol component. This signifies atomic settlement and high-fidelity execution within an institutional grade Prime RFQ, ensuring capital efficiency for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-orchestrating-institutional-digital-asset-derivatives-rfq-protocols-for-optimal-execution.jpg)

## Rts 27

Meaning ▴ RTS 27 mandates that investment firms and market operators publish detailed data on the quality of execution of transactions on their 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">
![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)

## 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/approved-publication-arrangement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central metallic bar, representing an RFQ block trade, pivots through translucent geometric planes symbolizing dynamic liquidity pools and multi-leg spread strategies. This illustrates a Principal's operational framework for high-fidelity execution and atomic settlement within a sophisticated Crypto Derivatives OS, optimizing private quotation workflows](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-facilitating-high-fidelity-price-discovery-and-optimal-capital-efficiency-within-advanced-market-microstructure.jpg)

## Approved Publication Arrangement

Meaning ▴ An Approved Publication Arrangement (APA) is a regulated entity authorized to publicly disseminate post-trade transparency data for financial instruments, as mandated by regulations such as MiFID II and MiFIR. </a><a href="https://prime.greeks.live/area/transaction-cost/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A luminous digital market microstructure diagram depicts intersecting high-fidelity execution paths over a transparent liquidity pool. A central RFQ engine processes aggregated inquiries for institutional digital asset derivatives, optimizing price discovery and capital efficiency within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-principal-operational-framework-price-discovery.jpg)

## Transaction Cost

Meaning ▴ Transaction Cost represents the total quantifiable economic friction incurred during the execution of a trade, encompassing both explicit costs such as commissions, exchange fees, and clearing charges, alongside implicit costs like market impact, slippage, and opportunity cost. </a><a href="https://prime.greeks.live/area/arrival-price/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered interface for institutional digital asset derivatives. A circular system component, perhaps an Execution Management System EMS module, connects via a multi-faceted Request for Quote RFQ protocol bridge to a distinct teal capsule, symbolizing a bespoke block trade](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-interface-for-institutional-digital-asset-derivatives-request-for-quote-protocol-high-fidelity-execution-within-principal-operating-system.jpg)

## Arrival Price

Meaning ▴ The Arrival Price represents the market price of an asset at the precise moment an order instruction is transmitted from a Principal's system for execution. </a><a href="https://prime.greeks.live/area/slippage/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A futuristic metallic optical system, featuring a sharp, blade-like component, symbolizes an institutional-grade platform. It enables high-fidelity execution of digital asset derivatives, optimizing market microstructure via precise RFQ protocols, ensuring efficient price discovery and robust portfolio margin](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-for-high-fidelity-rfq-execution-and-optimal-price-discovery.jpg)

## Slippage

Meaning ▴ Slippage denotes the variance between an order's expected execution price and its actual execution price. </a><a href="https://prime.greeks.live/question/how-can-an-organization-prevent-inadvertent-contract-formation-during-an-rfp/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precisely engineered system features layered grey and beige plates, representing distinct liquidity pools or market segments, connected by a central dark blue RFQ protocol hub. Transparent teal bars, symbolizing multi-leg options spreads or algorithmic trading pathways, intersect through this core, facilitating price discovery and high-fidelity execution of digital asset derivatives via an institutional-grade Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-facilitating-high-fidelity-multi-leg-options-spread-execution-best-price-discovery-and-latent-liquidity-access-for-prime-brokerage.jpg)

## Formation Engine

Engineer the RFP process with explicit, non-binding language and disciplined communication protocols to control legal intent. </a><a href="https://prime.greeks.live/area/fix-protocol/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A luminous central hub with radiating arms signifies an institutional RFQ protocol engine. It embodies seamless liquidity aggregation and high-fidelity execution for multi-leg spread strategies](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-hub-for-optimal-liquidity-aggregation.jpg)

## Fix Protocol

Meaning ▴ The Financial Information eXchange (FIX) Protocol is a global messaging standard developed specifically for the electronic communication of securities transactions and related data. </a>

**Tags:** [Systematic Internaliser](https://options.greeks.live/area/systematic-internaliser/), [Execution Policy](https://options.greeks.live/area/execution-policy/), [Transaction Cost Analysis](https://options.greeks.live/area/transaction-cost-analysis/), [Principal Trading](https://options.greeks.live/area/principal-trading/), [Best Execution](https://options.greeks.live/area/best-execution/), [Approved Publication Arrangement](https://options.greeks.live/area/approved-publication-arrangement/)	

## Discover More

- 
### [How Did Mifid Ii Change the Best Execution Standard for Rfq Platforms?](https://options.greeks.live/question/how-did-mifid-ii-change-the-best-execution-standard-for-rfq-platforms/)
![Intricate metallic components signify system precision engineering. These structured elements symbolize institutional-grade infrastructure for high-fidelity execution of digital asset derivatives. Mechanics highlight RFQ protocol efficiency, atomic settlement, and robust market microstructure for optimal price discovery within a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-precision-engineering-for-high-fidelity-execution-and-latency-optimization.jpg)

MiFID II codified best execution into a data-driven, auditable protocol, transforming RFQ platforms into critical compliance infrastructure.

- 
### [In What Ways Do Regulations like Mifid Ii Mandate Different Evidentiary Requirements for Lit versus Rfq Best Execution?](https://options.greeks.live/question/in-what-ways-do-regulations-like-mifid-ii-mandate-different-evidentiary-requirements-for-lit-versus-rfq-best-execution/)
![A polished disc with a central green RFQ engine for institutional digital asset derivatives. Radiating lines symbolize high-fidelity execution paths, atomic settlement flows, and market microstructure dynamics, enabling price discovery and liquidity aggregation within a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-core-for-optimal-execution.jpg)

MiFID II mandates distinct evidentiary paths: lit markets demand quantitative proof against public data, while RFQ requires procedural proof of a competitive internal process.

- 
### [What Are the Systemic Challenges of Applying a Single Best Execution Policy across Different Asset Classes under MiFID II?](https://options.greeks.live/question/what-are-the-systemic-challenges-of-applying-a-single-best-execution-policy-across-different-asset-classes-under-mifid-ii/)
![Four sleek, rounded, modular components stack, symbolizing a multi-layered institutional digital asset derivatives trading system. Each unit represents a critical Prime RFQ layer, facilitating high-fidelity execution, aggregated inquiry, and sophisticated market microstructure for optimal price discovery via RFQ protocols.](https://options.greeks.live/wp-content/uploads/2025/07/modular-institutional-crypto-derivatives-trading-system-components.jpg)

A unified MiFID II best execution policy requires a modular system architecture to manage divergent asset class liquidity and data structures.

- 
### [How Does MiFID II Redefine the Concept of Best Execution for Algorithmic Strategies?](https://options.greeks.live/question/how-does-mifid-ii-redefine-the-concept-of-best-execution-for-algorithmic-strategies/)
![A sleek, futuristic mechanism showcases a large reflective blue dome with intricate internal gears, connected by precise metallic bars to a smaller sphere. This embodies an institutional-grade Crypto Derivatives OS, optimizing RFQ protocols for high-fidelity execution, managing liquidity pools, and enabling efficient price discovery.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-facilitating-high-fidelity-execution-and-optimal-market-microstructure-with-prime-os-intelligence.jpg)

MiFID II transforms best execution for algorithms into a continuous, evidence-based duty to prove optimal outcomes across all execution factors.

- 
### [How Do Firms Now Demonstrate Best Execution Compliance to Regulators?](https://options.greeks.live/question/how-do-firms-now-demonstrate-best-execution-compliance-to-regulators/)
![A smooth, off-white sphere rests within a meticulously engineered digital asset derivatives RFQ platform, featuring distinct teal and dark blue metallic components. This sophisticated market microstructure enables private quotation, high-fidelity execution, and optimized price discovery for institutional block trades, ensuring capital efficiency and best execution.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-system-microstructure-core.jpg)

Firms demonstrate best execution by engineering a data-driven system that transforms regulatory compliance into a quantifiable operational advantage.

- 
### [How Do Regulatory Frameworks like MiFID II View the Use of Hybrid Models for Achieving Best Execution?](https://options.greeks.live/question/how-do-regulatory-frameworks-like-mifid-ii-view-the-use-of-hybrid-models-for-achieving-best-execution/)
![A metallic structural component interlocks with two black, dome-shaped modules, each displaying a green data indicator. This signifies a dynamic RFQ protocol within an institutional Prime RFQ, enabling high-fidelity execution for digital asset derivatives. Internal mechanisms underscore algorithmic trading and pre-trade analytics for capital efficiency and best execution.](https://options.greeks.live/wp-content/uploads/2025/07/modular-rfq-protocol-engine-for-digital-asset-derivatives-prime-os.jpg)

MiFID II views hybrid models as the necessary architectural response to its mandate for evidence-based, multi-factor best execution.

- 
### [How Do MiFID II Best Execution Requirements Alter TCA Strategies?](https://options.greeks.live/question/how-do-mifid-ii-best-execution-requirements-alter-tca-strategies/)
![A complex central mechanism, akin to an institutional RFQ engine, displays intricate internal components representing market microstructure and algorithmic trading. Transparent intersecting planes symbolize optimized liquidity aggregation and high-fidelity execution for digital asset derivatives, ensuring capital efficiency and atomic settlement.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-engine-optimizing-digital-asset-derivative-execution.jpg)

MiFID II transforms TCA from a compliance report into a dynamic, multi-factor system for optimizing the entire trading lifecycle.

- 
### [How Do Regulatory Frameworks like MiFID II Influence the Use of RFQ for Best Execution?](https://options.greeks.live/question/how-do-regulatory-frameworks-like-mifid-ii-influence-the-use-of-rfq-for-best-execution/)
![A metallic, cross-shaped mechanism centrally positioned on a highly reflective, circular silicon wafer. The surrounding border reveals intricate circuit board patterns, signifying the underlying Prime RFQ and intelligence layer. This setup symbolizes high-fidelity execution within market microstructure, enabling algorithmic trading for institutional-grade digital asset derivatives and RFQ protocols with atomic settlement.](https://options.greeks.live/wp-content/uploads/2025/08/the-core-institutional-digital-asset-derivatives-rfq-os-engine-for-high-fidelity-market-microstructure.jpg)

MiFID II transforms the RFQ into a data-driven, auditable process, mandating a systematic approach to proving best execution.

- 
### [How Can a Firm Quantitatively Prove It Is Meeting Its Best Execution Obligations?](https://options.greeks.live/question/how-can-a-firm-quantitatively-prove-it-is-meeting-its-best-execution-obligations/)
![A symmetrical, intricate digital asset derivatives execution engine. Its metallic and translucent elements visualize a robust RFQ protocol facilitating multi-leg spread execution. This system optimizes market microstructure and price discovery, ensuring high-fidelity execution and aggregated inquiry for capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-best-execution.jpg)

A firm proves best execution by building a quantitative, auditable system that measures trade performance against objective benchmarks.

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---

**Original URL:** https://options.greeks.live/question/how-does-an-si-demonstrate-best-execution-when-trading-as-principal/
