# How Does MiFID II Define the Scope of Best Execution for Different Asset Classes? ▴ Question

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

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## Concept

The Markets in [Financial Instruments](https://prime.greeks.live/area/financial-instruments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) Directive II (MiFID II) establishes a comprehensive and demanding framework for best execution. It mandates that investment firms must take all sufficient steps to obtain the best possible result for their clients when executing orders. This obligation is a core pillar of [investor protection](https://prime.greeks.live/area/investor-protection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), designed to ensure fairness and efficiency in financial markets.

The directive’s reach is extensive, covering a wide array of financial instruments, a significant expansion from its predecessor, MiFID I, which primarily focused on equities. Under MiFID II, [asset classes](https://prime.greeks.live/area/asset-classes/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) such as bonds, derivatives, structured finance products, and even emission allowances are brought into the [best execution](https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) fold, reflecting the modern complexity of investment portfolios.

The directive requires firms to consider a range of [execution factors](https://prime.greeks.live/area/execution-factors/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). These include not just the headline price of an instrument, but also the associated costs, the speed of execution, the likelihood of both execution and settlement, and the size and nature of the order. The relative importance of these factors is dynamic, shifting based on the specific context of the trade. The directive acknowledges that what constitutes the “best possible result” is a nuanced determination, influenced by the client’s status (retail or professional), the characteristics of the order, the nature of the [financial instrument](https://prime.greeks.live/area/financial-instrument/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), and the available execution venues.

> MiFID II’s best execution principle is an overarching mandate for firms to design and implement a systematic process that consistently seeks the optimal outcome for a client’s order across a wide spectrum of financial instruments.

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## What Is the Core Obligation

At its heart, the best execution obligation is about process. Firms must establish and implement an [order execution policy](https://prime.greeks.live/area/order-execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) that is both detailed and transparent. This policy must clearly explain to clients how their orders will be handled. For each class of financial instrument, the policy must identify the [execution venues](https://prime.greeks.live/area/execution-venues/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) the firm will use and the factors that drive the choice of a particular venue.

These venues can include regulated markets, multilateral trading facilities (MTFs), organised trading facilities (OTFs), and systematic internalisers (SIs). The selection of venues must be based on their ability to consistently deliver the best possible results for clients.

The directive moves beyond a simple “check-the-box” exercise. It requires firms to demonstrate the effectiveness of their execution arrangements. This involves monitoring [execution quality](https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), regularly reviewing the [execution policy](https://prime.greeks.live/area/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), and being prepared to make changes when necessary.

The introduction of detailed reporting requirements, such as the RTS 27 reports from execution venues and RTS 28 reports from [investment firms](https://prime.greeks.live/area/investment-firms/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), provides the data infrastructure for this monitoring and review process. [These reports](https://prime.greeks.live/question/can-these-realistic-simulations-be-used-to-predict-the-market-impact-of-new-financial-regulations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) are intended to increase transparency and allow both firms and their clients to assess the quality of execution achieved.

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## Expansion across Asset Classes

The extension of the best execution scope beyond equities is one of [MiFID II](https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)’s most significant enhancements. This expansion recognizes that investors are active across a diverse range of asset classes, each with its own unique market structure and liquidity profile. For example, the execution of a corporate bond, which often trades in a less centralized, over-the-counter (OTC) market, presents different challenges than executing a trade in a highly liquid, exchange-traded equity. Similarly, the complexities of a multi-leg derivative transaction require a different approach to best execution than a simple stock trade.

By encompassing these different asset classes, MiFID II forces firms to develop more sophisticated and tailored execution strategies, moving away from a one-size-fits-all approach. This ensures that the principles of investor protection and market integrity are applied consistently across the entire financial landscape.

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![Abstractly depicting an Institutional Digital Asset Derivatives ecosystem. A robust base supports intersecting conduits, symbolizing multi-leg spread execution and smart order routing](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-optimization.jpg)

## Strategy

Developing a robust best execution strategy under MiFID II requires a granular, asset-class-specific approach. A single, monolithic policy is insufficient to address the diverse market structures and liquidity dynamics inherent across equities, [fixed income](https://prime.greeks.live/area/fixed-income/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), and derivatives. The directive compels firms to move beyond a compliance-driven mindset and adopt a strategic framework where execution quality is a measurable and managed outcome. This involves a careful calibration of the execution factors and a sophisticated approach to [venue selection](https://prime.greeks.live/question/how-does-an-rfq-platform-differentiate-between-on-venue-and-off-venue-reporting-obligations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and analysis.

![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)

## Calibrating Execution Factors by Asset Class

The relative importance of the MiFID II execution factors (price, costs, speed, likelihood of execution and settlement, size, nature) is the primary strategic lever for firms. The weighting of these factors must be thoughtfully determined for each [asset class](https://prime.greeks.live/area/asset-class/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and client type.

For professional clients, firms have more discretion to prioritize factors other than price and cost, provided this is justified and aligns with the client’s objectives. For retail clients, the concept of “total consideration” is paramount. This represents the price of the financial instrument plus all costs related to execution. While other factors can be considered, they must be instrumental in delivering the best [possible result](https://prime.greeks.live/question/how-does-implied-volatility-skew-affect-the-range-of-possible-strike-prices-for-a-zero-cost-structure/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) in terms of total consideration for the retail client.

> A successful MiFID II strategy translates the regulatory requirements into a dynamic, data-driven process that adapts execution logic to the unique characteristics of each asset class.

The following table illustrates a strategic approach to prioritizing these factors across major asset classes:

### Table 1 ▴ Prioritization of Execution Factors by Asset Class

| Asset Class | Primary Factors | Secondary Factors | Strategic Rationale |
| --- | --- | --- | --- |
| Equities (Liquid) | Price, Costs, Speed | Likelihood of Execution | In highly liquid, transparent markets, competition among venues is fierce. Speed is critical to capture the best price before it moves, and minimizing explicit costs (fees, commissions) is a key component of total consideration. |
| Fixed Income (Bonds) | Price, Likelihood of Execution, Size | Costs | Bond markets are often less liquid and more fragmented (OTC). Securing a good price and ensuring the full size of the order can be filled are often more challenging and therefore more important than minimizing small execution fees. Price discovery is a key challenge. |
| Derivatives (ETD) | Price, Costs | Speed, Likelihood of Settlement | Exchange-Traded Derivatives (ETDs) behave similarly to equities, with transparent pricing on centralized exchanges. Costs and price are therefore dominant factors. Settlement certainty is also a key consideration. |
| Derivatives (OTC) | Price, Size, Likelihood of Execution | Counterparty Risk, Costs | In bilateral OTC markets, finding a counterparty willing to take on the other side of a large or complex trade is the primary challenge. The price is negotiated, and counterparty creditworthiness is a crucial risk management factor that is part of the “nature” of the order. |

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## How Does Venue Selection Vary across Asset Classes?

A firm’s execution policy must list the venues it relies on to consistently achieve the best possible result for each asset class. The strategic selection of these venues is a critical component of the overall best [execution framework](https://prime.greeks.live/area/execution-framework/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The universe of available venues differs significantly from one asset class to another.

- **For Equities**, the venue landscape is highly fragmented. A firm’s strategy must consider a mix of:

<li>**Regulated Markets** ▴ Traditional stock exchanges offering deep liquidity and price transparency.

- **Multilateral Trading Facilities (MTFs)** ▴ These venues provide alternative sources of liquidity and often have different fee structures and rulebooks.

- **Systematic Internalisers (SIs)** ▴ Investment firms that deal on their own account, providing a source of principal liquidity.

- **Dark Pools** ▴ Venues that do not display pre-trade transparency, which can be useful for executing large orders with minimal market impact.

</li>
- **For Fixed Income**, the strategy is different. While new electronic trading platforms (MTFs and OTFs) are growing, a significant portion of trading remains OTC. A firm’s venue strategy must include:

<li>**Request-for-Quote (RFQ) Platforms** ▴ Systems where firms can solicit quotes from multiple dealers simultaneously to improve price discovery.

- **Direct Dealer Relationships** ▴ Maintaining strong relationships with key liquidity providers is essential for sourcing liquidity, especially for less common or large-sized bond issues.

</li>
- **For Derivatives**, the venue choice depends on whether the product is exchange-traded or OTC. For ETDs, the choice is often limited to the exchanges where the product is listed. For OTC derivatives, the strategy mirrors that of fixed income, relying on RFQ systems and direct relationships with counterparties.

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## The Role of Data in Strategic Review

MiFID II mandates a data-driven approach to best execution. Firms cannot simply create a policy and assume it is effective. They must use data to monitor execution quality and review their arrangements at least annually. The primary data sources for this strategic review are 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.

- **RTS 27 Reports** ▴ Published quarterly by execution venues, these reports provide detailed data on execution quality, including information on price, costs, and speed for various financial instruments. Firms must analyze these reports from their chosen venues to verify that they are receiving high-quality execution.

- **RTS 28 Reports** ▴ Published annually by investment firms, these reports summarize the top five execution venues used for each class of financial instrument and provide an assessment of the execution quality obtained. The process of creating the RTS 28 report is a critical part of the strategic review, forcing the firm to quantitatively and qualitatively justify its venue choices and execution strategy.

A forward-looking strategy involves using this data proactively. Firms can analyze RTS 27 data to identify trends, compare the performance of different venues, and dynamically adjust their order routing logic. This transforms the best execution process from a static compliance exercise into a dynamic system for optimizing trading outcomes.

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## Execution

The operational execution of MiFID II’s best execution mandate is a complex undertaking that requires a sophisticated integration of policy, technology, and oversight. Firms must translate their high-level strategy into a concrete, auditable process that functions effectively across the unique operational workflows of each asset class. This involves configuring trading systems, establishing clear procedures for traders, and implementing a robust monitoring framework to ensure and prove compliance.

![A precise metallic central hub with sharp, grey angular blades signifies high-fidelity execution and smart order routing. Intersecting transparent teal planes represent layered liquidity pools and multi-leg spread structures, illustrating complex market microstructure for efficient price discovery within institutional digital asset derivatives RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-for-high-fidelity-execution-across-market-microstructure-dynamics.jpg)

## Operationalizing Best Execution across Asset Classes

The practical steps to achieve best execution vary significantly depending on the market structure of the asset being traded. The following table breaks down the specific operational considerations and technological solutions required for effective execution in different asset classes.

### Table 2 ▴ Asset-Specific Execution Protocols

| Asset Class | Key Operational Challenge | Primary Execution Protocol | Technological Enablers |
| --- | --- | --- | --- |
| Equities | Market Fragmentation & Speed | Smart Order Routing (SOR) to access multiple lit and dark venues simultaneously. Algorithmic execution for large orders to manage market impact. | Execution Management System (EMS), Smart Order Router, Transaction Cost Analysis (TCA) software. |
| Fixed Income | Fragmented Liquidity & Price Discovery | Systematic use of multi-dealer Request-for-Quote (RFQ) platforms. Maintaining and documenting direct dealer interactions for illiquid issues. | Fixed Income EMS, RFQ platforms, internal systems for logging voice trades and rationale. |
| Listed Derivatives | Latency & Spreads | Direct Market Access (DMA) to the exchange. Use of co-location services for latency-sensitive strategies. Algorithmic spreading tools. | Specialized derivatives trading platforms, co-location infrastructure, spreading engines. |
| OTC Derivatives | Counterparty Selection & Documentation | RFQ process to multiple counterparties. Pre-trade credit and risk checks. Post-trade confirmation and reporting workflows. | RFQ platforms, counterparty risk management systems, trade reporting repositories. |

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## Constructing a Monitoring and Oversight Framework

Proving that “all sufficient steps” were taken requires a systematic monitoring framework. This is not a one-time check but an ongoing process of data collection, analysis, and review. The execution of this framework can be broken down into several key stages:

- 
**Pre-Trade Analysis** ▴ Before an order is placed, the system should be configured with the firm’s execution policy logic. For equities, the SOR should be programmed with the list of approved venues and the logic for how to route orders based on price, size, and other factors. For fixed income, traders should have access to tools that show historical pricing data and a clear process for initiating an RFQ to an appropriate set of dealers.

- 
**At-Trade Monitoring** ▴ The execution desk must have real-time oversight. This includes monitoring the performance of algorithms, tracking fill rates, and identifying any exceptions to the standard execution process. If a trader needs to override the system’s logic (for example, to work a large, illiquid order with a specific dealer), the rationale for this decision must be documented contemporaneously.

- 
**Post-Trade Analysis (TCA)** ▴ [Transaction Cost Analysis](https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is the cornerstone of post-trade monitoring. This involves comparing the execution quality against various benchmarks. 

<li>**Implementation Shortfall** ▴ Measures the total cost of execution from the moment the decision to trade was made.

- **VWAP (Volume-Weighted Average Price)** ▴ Compares the execution price to the average price of the instrument over a specific period.

- **Arrival Price** ▴ Compares the execution price to the market price at the time the order was received by the trading desk.

</li>
- 
**Quarterly and Annual Reviews** ▴ The data gathered from TCA and other monitoring tools must be aggregated and analyzed. This analysis forms the basis of the firm’s formal review of its execution policy and venue selection. This review should assess whether the firm’s execution arrangements have consistently delivered the best possible results and should be used to make concrete improvements to the policy and routing logic for the upcoming period.

> Effective execution is achieved when the firm’s policy is embedded within its trading technology, guiding every order towards the optimal outcome while generating the data necessary to prove it.

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## What Is the Role of the Best Execution Committee?

Many firms establish a Best Execution Committee or a similar governance body to oversee this entire process. This committee is typically composed of senior staff from trading, compliance, risk, and technology. Its mandate is to:

- **Approve and Review the Order Execution Policy** ▴ The committee is responsible for signing off on the initial policy and any subsequent amendments.

- **Oversee Venue Selection** ▴ It reviews the analysis of execution venues and approves the list of venues included in the policy.

- **Analyze Monitoring Reports** ▴ The committee reviews the TCA reports and other monitoring data to assess the firm’s performance and identify any areas of concern.

- **Document Decisions** ▴ The minutes of the committee’s meetings provide a crucial audit trail, demonstrating that the firm has a formal and robust governance process in place for best execution.

By implementing this multi-layered approach ▴ combining asset-specific protocols, continuous monitoring, and formal governance ▴ a firm can move beyond mere compliance and build a true execution management capability that serves both its regulatory obligations and the best interests of its clients.

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## References

- Financial Conduct Authority. “Markets in Financial Instruments Directive II (MiFID II).” FCA, 2018.

- European Securities and Markets Authority. “Questions and Answers on MiFID II and MiFIR investor protection and intermediaries topics.” ESMA35-43-349, 2023.

- Deloitte. “MiFID II ▴ Best Execution.” Deloitte, 2017.

- PwC. “MiFID II ▴ A new world for fixed income, currencies and commodities.” PwC, 2016.

- KPMG. “MiFID II / MiFIR ▴ Best Execution.” KPMG, 2017.

- Norton Rose Fulbright. “MiFID II ▴ Best execution.” 2017.

- AFME. “Best Execution under MiFID II ▴ Putting policy into practice.” 2017.

- Oxera. “The MiFID II best execution framework for fixed income.” 2018.

- Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU.

- Regulatory Technical Standards 27 and 28 (RTS 27, RTS 28) under MiFID II.

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## Reflection

![Central, interlocked mechanical structures symbolize a sophisticated Crypto Derivatives OS driving institutional RFQ protocol. Surrounding blades represent diverse liquidity pools and multi-leg spread components](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-architecture-optimizing-high-fidelity-execution-across-diverse-liquidity-pools.jpg)

## Is Your Execution Framework an Asset or a Liability?

The principles of MiFID II provide a blueprint for a robust execution framework. The exercise of defining policies, selecting venues, and monitoring outcomes forces a level of introspection that is operationally healthy. It moves the concept of execution quality from an abstract goal to a quantifiable metric. The systems and processes built to satisfy this regulatory mandate are the same systems that can provide a durable competitive advantage.

Consider your firm’s current architecture. Does it treat best execution as a compliance burden to be minimally satisfied, or as a central operating principle that drives technological investment and strategic decision-making? The data generated through this process is a strategic asset. It contains insights into liquidity, venue performance, and algorithmic efficiency.

A firm that views its execution framework through this lens is positioned not just to meet its obligations, but to achieve a superior level of capital efficiency and client service. The ultimate question is how this mandated architecture is leveraged within your own system of intelligence.

![An abstract composition of intersecting light planes and translucent optical elements illustrates the precision of institutional digital asset derivatives trading. It visualizes RFQ protocol dynamics, market microstructure, and the intelligence layer within a Principal OS for optimal capital efficiency, atomic settlement, and high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-framework.jpg)

## Glossary

<a href="https://prime.greeks.live/area/financial-instruments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![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)

## Financial Instruments

Meaning ▴ Financial instruments represent codified contractual agreements that establish specific claims, obligations, or rights concerning the transfer of economic value or risk between parties. </a><a href="https://prime.greeks.live/area/investor-protection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A prominent domed optic with a teal-blue ring and gold bezel. This visual metaphor represents an institutional digital asset derivatives RFQ interface, providing high-fidelity execution for price discovery within market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/precision-optic-interface-for-institutional-digital-asset-derivatives-rfq-protocol-execution-and-high-fidelity-price-discovery.jpg)

## Investor Protection

Meaning ▴ Investor Protection represents a foundational systemic framework designed to safeguard capital and ensure equitable market access and operation for institutional participants. </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 sleek, multi-layered system representing an institutional-grade digital asset derivatives platform. Its precise components symbolize high-fidelity RFQ execution, optimized market microstructure, and a secure intelligence layer for private quotation, ensuring efficient price discovery and robust liquidity pool management](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-rfq-execution-digital-asset-derivatives-platform-prime-os.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/asset-classes/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Two sleek, distinct colored planes, teal and blue, intersect. Dark, reflective spheres at their cross-points symbolize critical price discovery nodes](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-multi-leg-execution-liquidity.jpg)

## Asset Classes

Meaning ▴ Asset Classes represent distinct categories of financial instruments characterized by similar economic attributes, risk-return profiles, and regulatory frameworks. </a><a href="https://prime.greeks.live/area/financial-instrument/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, spherical white and blue module featuring a central black aperture and teal lens, representing the core Intelligence Layer for Institutional Trading in Digital Asset Derivatives. It visualizes High-Fidelity Execution within an RFQ protocol, enabling precise Price Discovery and optimizing the Principal's Operational Framework for Crypto Derivatives OS](https://options.greeks.live/wp-content/uploads/2025/07/precision-lens-for-institutional-digital-asset-derivatives-rfq-execution.jpg)

## Financial Instrument

Meaning ▴ A Financial Instrument represents a contractual agreement possessing inherent value, enabling the transfer of economic value or risk between parties. </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 central core represents a Prime RFQ engine, facilitating high-fidelity execution. Transparent, layered structures denote aggregated liquidity pools and multi-leg spread strategies](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-engine-for-institutional-digital-asset-derivatives-execution.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/order-execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, futuristic institutional grade platform with a translucent teal dome signifies a secure environment for private quotation and high-fidelity execution. A dark, reflective sphere represents an intelligence layer for algorithmic trading and price discovery within market microstructure, ensuring capital efficiency for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/precision-rfq-execution-for-institutional-digital-asset-derivatives-1.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/execution-venues/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A segmented, teal-hued system component with a dark blue inset, symbolizing an RFQ engine within a Prime RFQ, emerges from darkness. Illuminated by an optimized data flow, its textured surface represents market microstructure intricacies, facilitating high-fidelity execution for institutional digital asset derivatives via private quotation for multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-intelligence-layer-for-institutional-digital-asset-derivatives-rfq.jpg)

## Execution Venues

Meaning ▴ Execution Venues are regulated marketplaces or bilateral platforms where financial instruments are traded and orders are matched, encompassing exchanges, multilateral trading facilities, organized trading facilities, and over-the-counter desks. </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 central RFQ aggregation engine radiates segments, symbolizing distinct liquidity pools and market makers. This depicts multi-dealer RFQ protocol orchestration for high-fidelity price discovery in digital asset derivatives, highlighting diverse counterparty risk profiles and algorithmic pricing grids](https://options.greeks.live/wp-content/uploads/2025/07/centralized-digital-asset-rfq-orchestration-for-multi-venue-liquidity-aggregation-and-high-fidelity-execution-across-diverse-counterparties.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 central hub with a teal ring represents a Principal's Operational Framework. Interconnected spherical execution nodes symbolize precise Algorithmic Execution and Liquidity Aggregation via RFQ Protocol](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-prime-os-price-liquidity-alpha.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/investment-firms/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision digital token, subtly green with a '0' marker, meticulously engages a sleek, white institutional-grade platform. This symbolizes secure RFQ protocol initiation for high-fidelity execution of complex multi-leg spread strategies, optimizing portfolio margin and capital efficiency within a Principal's Crypto Derivatives OS](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-platform-secure-rfq-protocol-initiation-for-optimal-block-trade-execution.jpg)

## Investment Firms

Meaning ▴ Investment Firms are institutional entities primarily engaged in the management, deployment, and intermediation of capital within financial markets, operating as critical nodes in the global capital allocation network. </a><a href="https://prime.greeks.live/question/can-these-realistic-simulations-be-used-to-predict-the-market-impact-of-new-financial-regulations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A futuristic system component with a split design and intricate central element, embodying advanced RFQ protocols. This visualizes high-fidelity execution, precise price discovery, and granular market microstructure control for institutional digital asset derivatives, optimizing liquidity provision and minimizing slippage](https://options.greeks.live/wp-content/uploads/2025/07/advanced-rfq-protocols-for-digital-asset-derivatives-price-discovery.jpg)

## These Reports

Realistic simulations provide a systemic laboratory to forecast the emergent, second-order effects of new financial regulations. </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, 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)

## 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/question/how-does-an-rfq-platform-differentiate-between-on-venue-and-off-venue-reporting-obligations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered institutional digital asset derivatives execution system cutaway. The teal Prime RFQ casing reveals intricate market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-rfq-protocol-core-engine.jpg)

## Venue Selection

An RFQ platform differentiates reporting by codifying MiFIR's hierarchy, assigning on-venue reports to the venue and off-venue reports to the correct counterparty based on SI status. </a><a href="https://prime.greeks.live/area/fixed-income/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract geometric forms illustrate an Execution Management System EMS. Two distinct liquidity pools, representing Bitcoin Options and Ethereum Futures, facilitate RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-6.jpg)

## Fixed Income

Meaning ▴ Fixed Income refers to a class of financial instruments characterized by regular, predetermined payments to the investor over a specified period, typically culminating in the return of principal at maturity. </a><a href="https://prime.greeks.live/area/asset-class/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A segmented teal and blue institutional digital asset derivatives platform reveals its core market microstructure. Internal layers expose sophisticated algorithmic execution engines, high-fidelity liquidity aggregation, and real-time risk management protocols, integral to a Prime RFQ supporting Bitcoin options and Ethereum futures trading](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-core-microstructure.jpg)

## Asset Class

Meaning ▴ An asset class represents a distinct grouping of financial instruments sharing similar characteristics, risk-return profiles, and regulatory frameworks. </a><a href="https://prime.greeks.live/question/how-does-implied-volatility-skew-affect-the-range-of-possible-strike-prices-for-a-zero-cost-structure/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Visualizing institutional digital asset derivatives market microstructure. A central RFQ protocol engine facilitates high-fidelity execution across diverse liquidity pools, enabling precise price discovery for multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-across-multi-asset-liquidity.jpg)

## Possible Result

Implied volatility skew dictates the trade-off between downside protection and upside potential in a zero-cost options structure. </a><a href="https://prime.greeks.live/area/execution-framework/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract structure combines opaque curved components with translucent blue blades, a Prime RFQ for institutional digital asset derivatives. It represents market microstructure optimization, high-fidelity execution of multi-leg spreads via RFQ protocols, ensuring best execution and capital efficiency across liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-optimizing-market-microstructure-for-high-fidelity-execution-best-execution-price-discovery-across-liquidity-pools-and-prime-os.jpg)

## Execution Framework

Meaning ▴ An Execution Framework represents a comprehensive, programmatic system designed to facilitate the systematic processing and routing of trading orders across various market venues, optimizing for predefined objectives such as price, speed, or minimized market impact. </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">
![Sleek, off-white cylindrical module with a dark blue recessed oval interface. This represents a Principal's Prime RFQ gateway for institutional digital asset derivatives, facilitating private quotation protocol for block trade execution, ensuring high-fidelity price discovery and capital efficiency through low-latency liquidity aggregation](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-portal-optimal-institutional-digital-asset-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">
![A sleek Prime RFQ component extends towards a luminous teal sphere, symbolizing Liquidity Aggregation and Price Discovery for Institutional Digital Asset Derivatives. This represents High-Fidelity Execution via RFQ Protocol within a Principal's Operational Framework, optimizing Market Microstructure](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-execution-for-institutional-digital-asset-derivatives.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/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract visualization of institutional RFQ protocol for digital asset derivatives. Translucent layers symbolize dark liquidity pools within complex market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-6.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>

**Tags:** [Investor Protection](https://options.greeks.live/area/investor-protection/), [Fixed Income Execution](https://options.greeks.live/area/fixed-income-execution/), [Transaction Cost Analysis](https://options.greeks.live/area/transaction-cost-analysis/), [Multilateral Trading Facility](https://options.greeks.live/area/multilateral-trading-facility/), [RTS 28](https://options.greeks.live/area/rts-28/), [Execution Venues](https://options.greeks.live/area/execution-venues/)	

## Discover More

- 
### [What Are the Key Differences between FINRA and MiFID II Best Execution Rules?](https://options.greeks.live/question/what-are-the-key-differences-between-finra-and-mifid-ii-best-execution-rules/)
![Prime RFQ visualizes institutional digital asset derivatives RFQ protocol and high-fidelity execution. Glowing liquidity streams converge at intelligent routing nodes, aggregating market microstructure for atomic settlement, mitigating counterparty risk within dark liquidity.](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-high-fidelity-digital-asset-derivatives-rfq-protocol.jpg)

FINRA's "reasonable diligence" and MiFID II's "all sufficient steps" represent two distinct paths to the common goal of best execution.

- 
### [What Are the Best Execution Requirements for Systematic Internalisers under MiFID II?](https://options.greeks.live/question/what-are-the-best-execution-requirements-for-systematic-internalisers-under-mifid-ii/)
![The abstract visual depicts a sophisticated, transparent execution engine showcasing market microstructure for institutional digital asset derivatives. Its central matching engine facilitates RFQ protocol execution, revealing internal algorithmic trading logic and high-fidelity execution pathways. This metaphor underscores capital efficiency and best execution within a Prime RFQ framework.](https://options.greeks.live/wp-content/uploads/2025/07/principal-rfq-engine-for-institutional-digital-asset-derivatives.jpg)

Systematic Internaliser best execution requires a verifiable, data-driven framework where principal trading is architected to deliver superior client outcomes.

- 
### [What Are the Key Differences between a US and EU Best Execution Policy?](https://options.greeks.live/question/what-are-the-key-differences-between-a-us-and-eu-best-execution-policy/)
![Sleek metallic components with teal luminescence precisely intersect, symbolizing an institutional-grade Prime RFQ. This represents multi-leg spread execution for digital asset derivatives via RFQ protocols, ensuring high-fidelity execution, optimal price discovery, and capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-best-execution-system.jpg)

US best execution emphasizes a principles-based fiduciary duty, while the EU's MiFID II mandates a prescriptive, rules-driven process for demonstrating optimal client outcomes.

- 
### [How Does MiFID II Redefine the Responsibility for Best Execution in OTC Markets?](https://options.greeks.live/question/how-does-mifid-ii-redefine-the-responsibility-for-best-execution-in-otc-markets/)
![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)

MiFID II elevates best execution in OTC markets from a procedural obligation to a data-driven, demonstrable commitment to client outcomes.

- 
### [How Has MiFID II Specifically Altered Best Execution Requirements for Fixed Income RFQs?](https://options.greeks.live/question/how-has-mifid-ii-specifically-altered-best-execution-requirements-for-fixed-income-rfqs/)
![An intricate, transparent cylindrical system depicts a sophisticated RFQ protocol for digital asset derivatives. Internal glowing elements signify high-fidelity execution and algorithmic trading. A central angular structure represents atomic settlement and multi-leg spread capabilities, ensuring best execution within institutional trading.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-protocol-architecture.jpg)

MiFID II transformed fixed income RFQ best execution from a qualitative duty into a quantitatively provable, data-driven process.

- 
### [How Did MiFID II Change the Definition of Best Execution for Professional Clients?](https://options.greeks.live/question/how-did-mifid-ii-change-the-definition-of-best-execution-for-professional-clients/)
![A sleek, metallic platform features a sharp blade resting across its central dome. This visually represents the precision of institutional-grade digital asset derivatives RFQ execution. It symbolizes high-fidelity execution and atomic settlement within market microstructure, ensuring capital efficiency and mitigating counterparty risk.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-precision-1.jpg)

MiFID II transformed best execution for professionals into a data-driven mandate requiring demonstrable proof of process across multiple execution factors.

- 
### [How Does MiFID II Define Best Execution for Different Venue Types?](https://options.greeks.live/question/how-does-mifid-ii-define-best-execution-for-different-venue-types/)
![A luminous conical element projects from a multi-faceted transparent teal crystal, signifying RFQ protocol precision and price discovery. This embodies institutional grade digital asset derivatives high-fidelity execution, leveraging Prime RFQ for liquidity aggregation and atomic settlement.](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-rfq-protocol-orchestration-for-institutional-digital-asset-derivatives-high-fidelity-execution.jpg)

MiFID II defines best execution as a data-driven process of taking all sufficient steps to optimize outcomes across a multi-venue system.

- 
### [What Are the Practical Steps for Conducting a MiFID II Compliant Annual Panel Review?](https://options.greeks.live/question/what-are-the-practical-steps-for-conducting-a-mifid-ii-compliant-annual-panel-review/)
![A sleek conduit, embodying an RFQ protocol and smart order routing, connects two distinct, semi-spherical liquidity pools. Its transparent core signifies an intelligence layer for algorithmic trading and high-fidelity execution of digital asset derivatives, ensuring atomic settlement.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-execution-engine-bridging-diverse-liquidity-pools-via-high-fidelity-rfq-protocol-orchestration.jpg)

A MiFID II panel review is a systematic, data-driven validation of a firm's execution venues to ensure demonstrable best outcomes for clients.

- 
### [How Do the Best Execution Requirements for Otc Derivatives under Mifid Ii Differ from Those in Other Jurisdictions?](https://options.greeks.live/question/how-do-the-best-execution-requirements-for-otc-derivatives-under-mifid-ii-differ-from-those-in-other-jurisdictions/)
![A transparent sphere, representing a digital asset option, rests on an aqua geometric RFQ execution venue. This proprietary liquidity pool integrates with an opaque institutional grade infrastructure, depicting high-fidelity execution and atomic settlement within a Principal's operational framework for Crypto Derivatives OS.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-system-prime-os.jpg)

MiFID II's data-centric "all sufficient steps" standard for OTC derivatives demands a more robust operational framework than the principles-based "reasonable diligence" approach in the U.S.

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    "headline": "How Does MiFID II Define the Scope of Best Execution for Different Asset Classes? \u25b4 Question",
    "description": "MiFID II mandates a systematic process to secure the best possible client result across all asset classes. \u25b4 Question",
    "url": "https://options.greeks.live/question/how-does-mifid-ii-define-the-scope-of-best-execution-for-different-asset-classes/",
    "datePublished": "2025-08-05T18:07:27+00:00",
    "dateModified": "2025-08-05T18:07:28+00:00",
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        "url": "https://options.greeks.live/wp-content/uploads/2025/07/precision-rfq-execution-for-institutional-digital-asset-derivatives-1.jpg",
        "caption": "This abstract representation illustrates a Prime RFQ for institutional digital asset derivatives trading. Its sleek, contained design embodies a secure, low-latency environment for RFQ protocols, enabling block trade execution and atomic settlement. The translucent teal dome signifies a protected private quotation zone. An internal dark sphere represents the intelligence layer driving quantitative analysis and smart order routing across diverse liquidity pools, ensuring best execution and optimized capital efficiency for multi-leg spread strategies."
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```

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            "name": "How Does Venue Selection Vary Across Asset Classes?",
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                "@type": "Answer",
                "text": "A firm's execution policy must list the venues it relies on to consistently achieve the best possible result for each asset class. The strategic selection of these venues is a critical component of the overall best execution framework. The universe of available venues differs significantly from one asset class to another."
            }
        },
        {
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            "name": "What Is The Role Of The Best Execution Committee?",
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                "@type": "Answer",
                "text": "Many firms establish a Best Execution Committee or a similar governance body to oversee this entire process. This committee is typically composed of senior staff from trading, compliance, risk, and technology. Its mandate is to:"
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                "text": "The principles of MiFID II provide a blueprint for a robust execution framework. The exercise of defining policies, selecting venues, and monitoring outcomes forces a level of introspection that is operationally healthy. It moves the concept of execution quality from an abstract goal to a quantifiable metric. The systems and processes built to satisfy this regulatory mandate are the same systems that can provide a durable competitive advantage."
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---

**Original URL:** https://options.greeks.live/question/how-does-mifid-ii-define-the-scope-of-best-execution-for-different-asset-classes/
