# How Does MiFID II Define Best Execution for RFQ Workflows? ▴ Question

**Published:** 2025-08-05
**Categories:** Question

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![Intersecting concrete structures symbolize the robust Market Microstructure underpinning Institutional Grade Digital Asset Derivatives. Dynamic spheres represent Liquidity Pools and Implied Volatility](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-framework-optimizing-rfq-execution-and-liquidity-for-principal-trading.jpg)

![Stacked geometric blocks in varied hues on a reflective surface symbolize a Prime RFQ for digital asset derivatives. A vibrant blue light highlights real-time price discovery via RFQ protocols, ensuring high-fidelity execution, liquidity aggregation, optimal slippage, and cross-asset trading](https://options.greeks.live/wp-content/uploads/2025/08/next-gen-institutional-digital-asset-derivatives-rfq-protocol-system.jpg)

## Concept

The Markets in Financial Instruments Directive II (MiFID II) articulates [best execution](https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) as a continuous, demonstrable obligation for an investment firm to seek the best possible result for its clients. This mandate extends unequivocally to [Request for Quote](https://prime.greeks.live/area/request-for-quote/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (RFQ) workflows, transforming what was once a bilateral conversation into a structured, evidence-based process. The core of the regulation is the requirement for firms to take “all sufficient steps” to achieve this outcome, a standard that elevates the requirement from simple effort to a provable, data-driven discipline. This principle applies across all financial instruments covered by the directive, irrespective of whether the transaction occurs on a lit exchange or through off-book protocols like RFQs. 

For [RFQ](https://prime.greeks.live/area/rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) systems, this means the architecture of price discovery itself falls under regulatory scrutiny. A firm engaging in a quote solicitation protocol must systematically prove that its actions were designed to produce the optimal result for the end client. This is assessed through a multi-dimensional lens of [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 the explicit price and costs but also the speed of execution, the likelihood of execution and settlement, the size and nature of the order, and any other consideration pertinent to the transaction. The directive effectively compels firms to build an operational framework where every stage of the RFQ lifecycle ▴ from the selection of [liquidity providers](https://prime.greeks.live/area/liquidity-providers/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) to the final execution decision ▴ is recorded, justified, and available for audit.

![A sleek, institutional-grade Prime RFQ component features intersecting transparent blades with a glowing core. This visualizes a precise RFQ execution engine, enabling high-fidelity execution and dynamic price discovery for digital asset derivatives, optimizing market microstructure for capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-engine-for-best-execution-microstructure.jpg)

## What Are the Core Execution Factors in RFQ Workflows?

The best execution obligation requires a holistic assessment of all elements that contribute to a quality outcome for the client. Within the RFQ process, these execution factors must be calibrated according to the client’s status (retail or professional), the specific objectives of the order, the characteristics of the financial instrument, and the available execution venues. For professional clients, firms possess the discretion to determine the relative importance of these factors, a decision that must be codified within 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).

The primary factors are:

- **Price** ▴ The headline price at which the transaction is executed. In an RFQ context, this is the winning quote provided by a [liquidity provider](https://prime.greeks.live/area/liquidity-provider/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).

- **Costs** ▴ All expenses incurred by the client that are directly related to the execution of the order. This includes execution venue fees, clearing and settlement fees, and any other charges passed on to the client. 

- **Speed** ▴ The velocity at which the transaction can be completed from the moment the request is sent to the final confirmation. This factor’s importance varies significantly with market volatility and the underlying asset.

- **Likelihood of Execution and Settlement** ▴ The probability that the trade will be successfully completed at the quoted price and settled without failure. This involves assessing counterparty risk and market depth.

- **Size and Nature of the Order** ▴ The specific characteristics of the order, including its volume relative to average market turnover. A large, illiquid block trade executed via RFQ will have a different set of priorities than a small, standard-sized order.

> The MiFID II framework redefines best execution as a verifiable process of optimizing multiple factors, compelling firms to architect auditable and data-centric RFQ workflows.

This multi-factor approach necessitates a sophisticated internal methodology. A firm must be able to articulate why, for a particular transaction, securing a high likelihood of execution for a large block order might have taken precedence over achieving the absolute best price available for a smaller size. This justification must be rooted in the firm’s established policies and supported by empirical data captured during the RFQ process. The regulation thereby transforms the RFQ from a simple tool for price discovery into an integral part of a firm’s documented and defensible execution strategy.

![A central control knob on a metallic platform, bisected by sharp reflective lines, embodies an institutional RFQ protocol. This depicts intricate market microstructure, enabling high-fidelity execution, precise price discovery for multi-leg options, and robust Prime RFQ deployment, optimizing latent liquidity across digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/08/institutional-rfq-digital-asset-derivatives-execution-engine-core-microstructure.jpg)

![A dynamically balanced stack of multiple, distinct digital devices, signifying layered RFQ protocols and diverse liquidity pools. Each unit represents a unique private quotation within an aggregated inquiry system, facilitating price discovery and high-fidelity execution for institutional-grade digital asset derivatives via an advanced Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/dynamic-rfq-protocol-stacks-powering-institutional-digital-asset-derivatives-liquidity-aggregation-and-best-execution.jpg)

## Strategy

A compliant strategy for RFQ workflows under MiFID II is built upon a foundation of procedural rigor and data-centric analysis. The central pillar of this strategy is the Order [Execution Policy](https://prime.greeks.live/area/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), a formal document that details how the firm will achieve the best possible result for its clients. This policy must be specific, providing clear information on how the firm selects and interacts with liquidity providers within its RFQ pool and how it prioritizes the various execution factors for different instrument classes and client types. Developing this strategy requires a firm to move beyond mere compliance and architect a system that generates consistently superior and demonstrable [execution quality](https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).

![Sleek, intersecting planes, one teal, converge at a reflective central module. This visualizes an institutional digital asset derivatives Prime RFQ, enabling RFQ price discovery across liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-engine-optimizing-institutional-liquidity-aggregation-and-best-execution.jpg)

## Designing a Compliant Order Execution Policy

The [Order Execution](https://prime.greeks.live/area/order-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) Policy is the strategic blueprint for achieving best execution. For [RFQ workflows](https://prime.greeks.live/area/rfq-workflows/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), it must address the unique characteristics of bilateral trading. The policy should explicitly name the liquidity providers the firm relies upon, which can include other investment firms, market makers, or Systematic Internalisers (SIs). The firm must also disclose the criteria used to select these counterparties, which often involves an assessment of their creditworthiness, settlement efficiency, and historical pricing quality.

A critical strategic component is the methodology for weighing the execution factors. The policy must articulate the logic behind how these factors are balanced. For instance, for a highly liquid government bond, price and cost may be the overwhelmingly dominant factors.

For a complex, multi-leg derivative or an illiquid corporate bond, the likelihood of execution and the expertise of the counterparty might receive a higher strategic weighting. These decisions must be made in advance and applied consistently.

![A sleek, institutional-grade system processes a dynamic stream of market microstructure data, projecting a high-fidelity execution pathway for digital asset derivatives. This represents a private quotation RFQ protocol, optimizing price discovery and capital efficiency through an intelligence layer](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-digital-asset-derivatives-execution-microstructure-prime-os.jpg)

## How Does Data Inform Strategic Venue Selection?

[MiFID II](https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) introduced two key regulatory technical standards, [RTS 27](https://prime.greeks.live/area/rts-27/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and RTS 28, to increase transparency around execution quality. While the reporting obligations for these standards have since been suspended or removed in both the EU and UK due to questions about their utility, the data points they prescribed remain the strategic benchmark for a firm’s internal analysis. RTS 27 required venues to publish detailed quarterly data on execution quality, and RTS 28 required firms to publish an annual summary of their top five execution venues and the quality achieved. 

Strategically, firms should still capture and analyze this type of data internally. A robust RFQ system architecture will log every quote from every provider, including response times, quote sizes, and rejection rates. This internal data repository allows a firm to conduct its own rigorous, evidence-based assessment of its liquidity pool. It enables the firm to strategically add or remove counterparties based on their performance and to justify its execution decisions with a rich dataset, fulfilling the core principle of the best execution obligation even without the public reporting mandate.

> A firm’s strategic advantage lies in its ability to translate regulatory requirements into a dynamic, data-driven system for optimizing and evidencing execution quality in every RFQ.

The following table illustrates how a firm might strategically weigh execution factors for different RFQ scenarios, as would be detailed in its Order Execution Policy.

### Table 1 ▴ Strategic Weighting of Execution Factors in RFQ Workflows

| Scenario | Price | Costs | Speed | Likelihood of Execution | Size & Nature |
| --- | --- | --- | --- | --- | --- |
| Liquid Govt. Bond (EUR 5m) | Very High | High | Medium | High | Low |
| Illiquid Corp. Bond (EUR 500k) | High | Medium | Low | Very High | High |
| Large FX Swap (USD 100m) | High | High | High | Very High | Medium |
| Multi-Leg Options Spread | Medium | Medium | Medium | Very High | Very High |

This strategic framework ensures that the firm’s actions are consistent, repeatable, and aligned with the overarching goal of achieving the best possible result. It provides a defensible structure for traders to operate within and a clear audit trail for compliance and client review. The ultimate strategy is one of continuous improvement, where post-trade data analysis feeds back into pre-trade decisions, refining the selection of liquidity providers and the weighting of execution factors over time.

![A polished, dark teal institutional-grade mechanism reveals an internal beige interface, precisely deploying a metallic, arrow-etched component. This signifies high-fidelity execution within an RFQ protocol, enabling atomic settlement and optimized price discovery for institutional digital asset derivatives and multi-leg spreads, ensuring minimal slippage and robust capital efficiency](https://options.greeks.live/wp-content/uploads/2025/08/quantitative-finance-driven-rfq-workflow-for-best-execution-in-digital-assets.jpg)

![A central institutional Prime RFQ, showcasing intricate market microstructure, interacts with a translucent digital asset derivatives liquidity pool. An algorithmic trading engine, embodying a high-fidelity RFQ protocol, navigates this for precise multi-leg spread execution and optimal price discovery](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-navigating-digital-asset-derivative-liquidity.jpg)

## Execution

The execution of the MiFID II best execution mandate within RFQ workflows demands a highly structured and technologically sophisticated operational environment. It is here that the strategic principles outlined in the Order Execution Policy are translated into tangible, auditable actions. This requires a seamless integration of trading protocols, data capture mechanisms, and analytical systems to create a complete, end-to-end record of the execution process.

![Intersecting metallic components symbolize an institutional RFQ Protocol framework. This system enables High-Fidelity Execution and Atomic Settlement for Digital Asset Derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-system-specialists.jpg)

## The Operational Playbook for a Compliant RFQ

Executing an RFQ in a compliant manner involves a series of distinct, procedural steps. Each step must be logged and time-stamped to create an unassailable audit trail that can be used to demonstrate that “all sufficient steps” were taken. The following playbook outlines this process from a systems-architecture perspective.

- **Order Ingestion and Pre-Trade Check** ▴ Upon receiving a client order, the system ingests its parameters (instrument, size, client instructions). The first operational step is an automated check against the firm’s Order Execution Policy to determine the predefined strategy for this type of trade, including the appropriate liquidity providers to query and the designated weighting of execution factors.

- **Counterparty Selection and Justification** ▴ The system or trader selects a number of counterparties from the approved list to include in the RFQ. The rationale for this selection must be clear. For competitive RFQs, this typically involves querying a sufficient number of providers to ensure a competitive outcome. For single-dealer or limited-dealer RFQs, a justification must be recorded (e.g. the dealer is a known axe for that instrument, or the trade is too large or sensitive for broad dissemination).

- **Quote Solicitation and Data Capture** ▴ The RFQ is sent to the selected counterparties. The system must capture all returned quotes, including price, size, and the time of response. Critically, it must also log any rejections or quotes that time out, as this data is vital for assessing the reliability of a liquidity provider.

- **Execution Analysis and Decision** ▴ All received quotes are presented for analysis. The trader, guided by the firm’s policy, makes an execution decision. The system must record which quote was chosen and, importantly, the justification for that choice, referencing the relevant execution factors. If the best-priced quote was not selected, a clear reason must be documented (e.g. the better-priced dealer has poor settlement performance, or the quote was for a smaller size than required).

- **Post-Trade [Transaction Cost Analysis](https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) ([TCA](https://prime.greeks.live/area/tca/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite))** ▴ After execution, the trade data is fed into a TCA system. The execution quality is measured against a range of benchmarks, such as the arrival price, the volume-weighted average price (VWAP), or the median of all quotes received. This analysis provides the quantitative evidence of the execution quality achieved.

- **Systematic Monitoring and Review** ▴ On a periodic basis (e.g. quarterly), all captured RFQ data is aggregated and analyzed. This review assesses the performance of individual liquidity providers and the effectiveness of the overall execution policy. This feedback loop is essential for making adjustments, such as removing underperforming providers from the approved list or modifying the weighting of execution factors.

![A sleek, institutional-grade Crypto Derivatives OS with an integrated intelligence layer supports a precise RFQ protocol. Two balanced spheres represent principal liquidity units undergoing high-fidelity execution, optimizing capital efficiency within market microstructure for best execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform-3.jpg)

## Quantitative Modeling and Data Analysis

The ability to demonstrate best execution rests on robust quantitative analysis. Firms must maintain detailed records that allow for a granular reconstruction and evaluation of every RFQ trade. The table below provides a simplified example of a post-trade TCA report for a series of RFQ transactions in corporate bonds.

### Table 2 ▴ Post-Trade RFQ Transaction Cost Analysis

| Trade ID | Instrument | Notional (EUR) | # LPs Queried | Winning Quote | Median Quote | Spread to Arrival Mid | Price Improvement vs Median |
| --- | --- | --- | --- | --- | --- | --- | --- |
| T-001 | VOD 4.875 27 | 5,000,000 | 5 | 101.50 | 101.48 | +12 bps | +2 bps |
| T-002 | BAYN 3.125 25 | 1,000,000 | 5 | 99.85 | 99.85 | +15 bps | 0 bps |
| T-003 | RACE 1.500 26 | 250,000 | 3 | 98.10 | 98.05 | +35 bps | +5 bps |
| T-004 | VOD 4.875 27 | 10,000,000 | 3 | 101.55 | 101.52 | +17 bps | +3 bps |

This data allows a firm to quantify its execution performance. For example, Trade T-003, an illiquid bond, was only sent to three dealers, and the TCA shows a significant price improvement over the median quote, providing a strong justification for the execution decision. Trade T-004, a large block, was sent to a smaller, targeted group of dealers, and still achieved a positive result.

![A sleek, dark reflective sphere is precisely intersected by two flat, light-toned blades, creating an intricate cross-sectional design. This visually represents institutional digital asset derivatives' market microstructure, where RFQ protocols enable high-fidelity execution and price discovery within dark liquidity pools, ensuring capital efficiency and managing counterparty risk via advanced Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-market-microstructure.jpg)

## What Does the Required Technological Architecture Look Like?

Implementing this playbook requires a specific technological architecture. An Execution Management System (EMS) or Order Management System (OMS) with sophisticated RFQ capabilities is the central component. This system must integrate seamlessly with various modules:

- **Connectivity** ▴ Robust FIX protocol connectivity to a wide range of liquidity providers is essential for sending RFQs and receiving quotes in a structured, machine-readable format.

- **Data Warehouse** ▴ A centralized data repository is needed to store all order, quote, and execution data. This database forms the foundation for all subsequent analysis and reporting.

- **Analytics Engine** ▴ A powerful analytics tool is required to perform TCA, generate internal performance reports, and monitor the effectiveness of the execution policy.

- **Compliance and Reporting Tools** ▴ While public [RTS 28](https://prime.greeks.live/area/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) reporting is no longer a priority for regulators, firms still need systems capable of generating detailed best execution reports for internal review, client requests, and potential regulatory inquiries. 

This integrated architecture ensures that data flows automatically from pre-trade to post-trade, creating a complete and auditable record that substantiates the firm’s adherence to its best execution obligations for every client order executed via RFQ.

![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)

## References

- AFME. “Guide for drafting/review of Execution Policy under MiFID II.” 2018.

- Bank of America. “Order Execution Policy 2.” 2022.

- European Securities and Markets Authority. “Questions and Answers on MiFID II and MiFIR investor protection and intermediaries topics.” 2023.

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

- TRAction Fintech. “RTS 27 and 28 ▴ The 2024 Status of These Reports in UK and EU.” 2024.

![A metallic rod, symbolizing a high-fidelity execution pipeline, traverses transparent elements representing atomic settlement nodes and real-time price discovery. It rests upon distinct institutional liquidity pools, reflecting optimized RFQ protocols for crypto derivatives trading across a complex volatility surface within Prime RFQ market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-trade-execution-pipeline-optimizing-rfq-protocols-for-best-execution-and-capital-efficiency.jpg)

## Reflection

The MiFID II best execution framework, particularly as it applies to RFQ workflows, compels a fundamental re-evaluation of a firm’s operational architecture. The principles embedded within the regulation serve as a blueprint for constructing a system of superior execution quality. The true measure of a firm’s capability is found in its ability to transform these regulatory obligations into a source of competitive and operational advantage. The systems you build to capture data, the policies you design to guide decisions, and the analytical frameworks you use to measure outcomes all coalesce into a single, powerful mechanism.

![Central mechanical hub with concentric rings and gear teeth, extending into multi-colored radial arms. This symbolizes an institutional-grade Prime RFQ driving RFQ protocol price discovery for digital asset derivatives, ensuring high-fidelity execution across liquidity pools within market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/precision-institutional-digital-asset-derivatives-rfq-protocol.jpg)

## How Does Your Current Framework Measure Up?

Consider the architecture of your own RFQ process. Does it operate as a series of discrete manual actions or as an integrated, data-driven system? Can you, at a moment’s notice, reconstruct the full history of any given RFQ and provide a quantitative justification for the execution outcome?

The answers to these questions reveal the resilience and sophistication of your operational framework. The directive provides the minimum standard; the opportunity lies in building a system that far exceeds it, creating a platform for consistently delivering and demonstrating the best possible results for your clients.

![A precision mechanism with a central circular core and a linear element extending to a sharp tip, encased in translucent material. This symbolizes an institutional RFQ protocol's market microstructure, enabling high-fidelity execution and price discovery for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-institutional-digital-asset-derivatives-rfq-execution-engine-microstructure-facilitating-optimal-price-discovery-and-best-execution.jpg)

## Glossary

<a href="https://prime.greeks.live/area/request-for-quote/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Stacked, distinct components, subtly tilted, symbolize the multi-tiered institutional digital asset derivatives architecture. Layers represent RFQ protocols, private quotation aggregation, core liquidity pools, and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/layered-institutional-digital-asset-derivatives-rfq-protocols-optimizing-principal-execution-management-systems-for-best-execution.jpg)

## Request for Quote

Meaning ▴ A Request for Quote, or RFQ, constitutes a formal communication initiated by a potential buyer or seller to solicit price quotations for a specified financial instrument or block of instruments from one or more liquidity providers. </a><a href="https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A polished metallic control knob with a deep blue, reflective digital surface, embodying high-fidelity execution within an institutional grade Crypto Derivatives OS. This interface facilitates RFQ Request for Quote initiation for block trades, optimizing price discovery and capital efficiency in digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-control-system-interface.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">
![A precision-engineered metallic component with a central circular mechanism, secured by fasteners, embodies a Prime RFQ engine. It drives institutional liquidity and high-fidelity execution for digital asset derivatives, facilitating atomic settlement of block trades and private quotation within market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-institutional-digital-asset-derivatives-platform-rfq-engine-for-high-fidelity-execution-and-atomic-settlement-of-block-trades.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/rfq/?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)

## Rfq

Meaning ▴ Request for Quote (RFQ) is a structured communication protocol enabling a market participant to solicit executable price quotations for a specific instrument and quantity from a selected group of liquidity providers. </a><a href="https://prime.greeks.live/area/liquidity-providers/?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)

## Liquidity Providers

Meaning ▴ Liquidity Providers are market participants, typically institutional entities or sophisticated trading firms, that facilitate efficient market operations by continuously quoting bid and offer prices for financial instruments. </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 futuristic circular financial instrument with segmented teal and grey zones, centered by a precision indicator, symbolizes an advanced Crypto Derivatives OS. This system facilitates institutional-grade RFQ protocols for block trades, enabling granular price discovery and optimal multi-leg spread execution across diverse liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-platform.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/liquidity-provider/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Intricate dark circular component with precise white patterns, central to a beige and metallic system. This symbolizes an institutional digital asset derivatives platform's core, representing high-fidelity execution, automated RFQ protocols, advanced market microstructure, the intelligence layer for price discovery, block trade efficiency, and portfolio margin](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-core.jpg)

## Liquidity Provider

Meaning ▴ A Liquidity Provider is an entity, typically an institutional firm or professional trading desk, that actively facilitates market efficiency by continuously quoting two-sided prices, both bid and ask, for financial instruments. </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 fractured, polished disc with a central, sharp conical element symbolizes fragmented digital asset liquidity. This Principal RFQ engine ensures high-fidelity execution, precise price discovery, and atomic settlement within complex market microstructure, optimizing capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/principal-rfq-engine-unifying-fragmented-digital-asset-derivatives-liquidity-for-best-execution.jpg)

## Execution Quality

Meaning ▴ Execution Quality quantifies the efficacy of an order's fill, assessing how closely the achieved trade price aligns with the prevailing market price at submission, alongside consideration for speed, cost, and market impact. </a><a href="https://prime.greeks.live/area/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A dark, reflective surface displays a luminous green line, symbolizing a high-fidelity RFQ protocol channel within a Crypto Derivatives OS. This signifies precise price discovery for digital asset derivatives, ensuring atomic settlement and optimizing portfolio margin](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-pathway-optimizing-principal-liquidity-and-capital-efficiency.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/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Close-up reveals robust metallic components of an institutional-grade execution management system. Precision-engineered surfaces and central pivot signify high-fidelity execution for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-digital-asset-derivatives-rfq-execution-precision-optimizing-market-microstructure-for-best-execution-and-prime-os.jpg)

## Order Execution

Meaning ▴ Order Execution defines the precise operational sequence that transforms a Principal's trading intent into a definitive, completed transaction within a digital asset market. </a><a href="https://prime.greeks.live/area/rfq-workflows/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, dark sphere, symbolizing the Intelligence Layer of a Prime RFQ, rests on a sophisticated institutional grade platform. Its surface displays volatility surface data, hinting at quantitative analysis for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-platform-intelligence-layer-optimizing-high-fidelity-execution.jpg)

## Rfq Workflows

Meaning ▴ RFQ Workflows define structured, automated processes for soliciting executable price quotes from designated liquidity providers for digital asset derivatives. </a><a href="https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, cream and dark blue institutional trading terminal with a dark interactive display. It embodies a proprietary Prime RFQ, facilitating secure RFQ protocols for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-terminal-for-best-execution.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/rts-27/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision-engineered institutional-grade Prime RFQ modules connect via intricate hardware, embodying robust RFQ protocols for digital asset derivatives. This underlying market microstructure enables high-fidelity execution and atomic settlement, optimizing capital efficiency](https://options.greeks.live/wp-content/uploads/2025/08/precision-engineered-prime-os-modules-enabling-institutional-digital-asset-derivatives-rfq-protocols-for-best-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/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A complex metallic mechanism features a central circular component with intricate blue circuitry and a dark orb. This symbolizes the Prime RFQ intelligence layer, driving institutional RFQ protocols for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-core-rfq-engine-for-digital-asset-derivatives-best-trade-execution.jpg)

## Transaction Cost Analysis

Meaning ▴ Transaction Cost Analysis (TCA) is the quantitative methodology for assessing the explicit and implicit costs incurred during the execution of financial trades. </a><a href="https://prime.greeks.live/area/tca/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, metallic, X-shaped object with a central circular core floats above mountains at dusk. It signifies an institutional-grade Prime RFQ for digital asset derivatives, enabling high-fidelity execution via RFQ protocols, optimizing price discovery and capital efficiency across dark pools for best execution](https://options.greeks.live/wp-content/uploads/2025/07/advanced-principal-rfq-protocol-architecture-for-institutional-digital-asset-derivatives-optimal-price-discovery-and-execution.jpg)

## Tca

Meaning ▴ Transaction Cost Analysis (TCA) represents a quantitative methodology designed to evaluate the explicit and implicit costs incurred during the execution of financial trades. </a><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 precision-engineered RFQ protocol engine, its central teal sphere signifies high-fidelity execution for digital asset derivatives. This module embodies a Principal's dedicated liquidity pool, facilitating robust price discovery and atomic settlement within optimized market microstructure, ensuring best execution](https://options.greeks.live/wp-content/uploads/2025/08/institutional-rfq-engine-for-digital-asset-derivatives-best-execution.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>

**Tags:** [Transaction Cost](https://options.greeks.live/area/transaction-cost/), [Execution Quality](https://options.greeks.live/area/execution-quality/), [Order Execution Policy](https://options.greeks.live/area/order-execution-policy/), [Transaction Cost Analysis](https://options.greeks.live/area/transaction-cost-analysis/), [Request for Quote](https://options.greeks.live/area/request-for-quote/), [RFQ Workflows](https://options.greeks.live/area/rfq-workflows/)	

## Discover More

- 
### [How Do Electronic RFQ Platforms Facilitate Best Execution Compliance under MiFID II?](https://options.greeks.live/question/how-do-electronic-rfq-platforms-facilitate-best-execution-compliance-under-mifid-ii/)
![A polished, abstract geometric form represents a dynamic RFQ Protocol for institutional-grade digital asset derivatives. A central liquidity pool is surrounded by opening market segments, revealing an emerging arm displaying high-fidelity execution data. This signifies algorithmic trading for private quotation and efficient price discovery within market microstructure.](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-institutional-digital-asset-derivatives-rfq-protocol-system.jpg)

Electronic RFQ platforms systematize price discovery and generate an immutable audit trail, providing the core evidence for MiFID II compliance.

- 
### [What Are the Key Differences between MiFID I and MiFID II Best Execution?](https://options.greeks.live/question/what-are-the-key-differences-between-mifid-i-and-mifid-ii-best-execution/)
![A sleek, metallic instrument with a central pivot and pointed arm, featuring a reflective surface and a teal band, embodies an institutional RFQ protocol. This represents high-fidelity execution for digital asset derivatives, enabling private quotation and optimal price discovery for multi-leg spread strategies within a dark pool, powered by a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-execution-for-optimal-liquidity-discovery.jpg)

MiFID II transformed best execution from a principle of conduct into a data-driven mandate requiring demonstrable proof of optimal outcomes.

- 
### [How Does the Rfq Process Contribute to Demonstrating Best Execution under Mifid Ii?](https://options.greeks.live/question/how-does-the-rfq-process-contribute-to-demonstrating-best-execution-under-mifid-ii/)
![Transparent geometric forms symbolize high-fidelity execution and price discovery across market microstructure. A teal element signifies dynamic liquidity pools for digital asset derivatives. An opaque dome embodies principal's capital for private quotation and portfolio margin, depicting RFQ protocols on a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-rfq-execution-for-institutional-digital-asset-derivatives-1.jpg)

The RFQ process provides a structured, competitive, and auditable data trail for demonstrating best execution under MiFID II.

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

MiFID II mandates a systemic shift, transforming counterparty selection into a data-driven process governed by quantifiable best execution.

- 
### [How Do Regulatory Frameworks like MiFID II Address Execution Quality in RFQ Environments?](https://options.greeks.live/question/how-do-regulatory-frameworks-like-mifid-ii-address-execution-quality-in-rfq-environments/)
![A sleek device showcases a rotating translucent teal disc, symbolizing dynamic price discovery and volatility surface visualization within an RFQ protocol. Its numerical display suggests a quantitative pricing engine facilitating algorithmic execution for digital asset derivatives, optimizing market microstructure through an intelligence layer.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-for-digital-asset-rfq-execution-system-with-smart-liquidity-routing.jpg)

MiFID II mandates a shift in RFQ environments from relationship-based discretion to a data-driven, auditable system proving best execution.

- 
### [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 Can a Firm Quantitatively Prove Best Execution When Using a Systematic Internaliser?](https://options.greeks.live/question/how-can-a-firm-quantitatively-prove-best-execution-when-using-a-systematic-internaliser/)
![Precision cross-section of an institutional digital asset derivatives system, revealing intricate market microstructure. Toroidal halves represent interconnected liquidity pools, centrally driven by an RFQ protocol. This Prime RFQ architecture enables high-fidelity execution, optimizing multi-leg spread strategies and capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-architecture-revealing-precision-rfq-protocol-engine-for-optimal-high-fidelity-execution-and-latent-liquidity-aggregation.jpg)

Proving best execution for a Systematic Internaliser requires a data architecture that quantitatively validates bilateral trades against public market benchmarks.

- 
### [How Does MiFID II Specifically Define the “All Sufficient Steps” for Best Execution?](https://options.greeks.live/question/how-does-mifid-ii-specifically-define-the-all-sufficient-steps-for-best-execution/)
![A transparent sphere, representing a granular digital asset derivative or RFQ quote, precisely balances on a proprietary execution rail. This symbolizes high-fidelity execution within complex market microstructure, driven by rapid price discovery from an institutional-grade trading engine, optimizing capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-precision-1.jpg)

MiFID II defines "all sufficient steps" as a continuous, evidence-based obligation to achieve the best possible result for clients.

- 
### [How Do Regulatory Frameworks like MiFID II Define Best Execution?](https://options.greeks.live/question/how-do-regulatory-frameworks-like-mifid-ii-define-best-execution/)
![A metallic, circular mechanism, a precision control interface, rests on a dark circuit board. This symbolizes the core intelligence layer of a Prime RFQ, enabling low-latency, high-fidelity execution for institutional digital asset derivatives via optimized RFQ protocols, refining market microstructure.](https://options.greeks.live/wp-content/uploads/2025/08/precision-rfq-protocol-engine-for-institutional-digital-asset-derivatives.jpg)

MiFID II defines best execution as a verifiable system designed to consistently deliver the optimal client outcome across multiple factors.

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---

**Original URL:** https://options.greeks.live/question/how-does-mifid-ii-define-best-execution-for-rfq-workflows/
