# How Does MiFID II Define the Scope of Best Execution for OTFs? ▴ Question

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

---

![A sophisticated teal and black device with gold accents symbolizes a Principal's operational framework for institutional digital asset derivatives. It represents a high-fidelity execution engine, integrating RFQ protocols for atomic settlement](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-core-engine-for-best-execution.jpg)

![A central rod, symbolizing an RFQ inquiry, links distinct liquidity pools and market makers. A transparent disc, an execution venue, facilitates price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-protocol-execution-optimization.jpg)

## Concept

The Markets in Financial Instruments Directive II (MiFID II) defines the scope of best execution for [Organised Trading Facilities](https://prime.greeks.live/area/organised-trading-facilities/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (OTFs) by embedding the principle within a framework that acknowledges and regulates the venue’s core operational feature ▴ execution discretion. An OTF is a multilateral system, distinct from Regulated Markets (RMs) and Multilateral Trading Facilities (MTFs), in which multiple third-party buying and selling interests in [non-equity instruments](https://prime.greeks.live/area/non-equity-instruments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) like bonds, structured finance products, and derivatives can interact. The defining characteristic of an OTF is that its operator exercises discretion at two potential junctures.

The first is in deciding whether to place or retract an order on the facility. The second, and more operationally significant, is in deciding how to match potential transactions, bringing two or more compatible trading interests together.

This grant of discretion fundamentally shapes the [best execution](https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) obligations. For RMs and MTFs, which operate on non-discretionary, rule-based systems, best execution is primarily a client-side duty for the investment firm sending the order. The venue itself provides a framework for fair and orderly trading. For an OTF, the obligation is dual.

The investment firm sending an order to an OTF must still adhere to its overarching duty to take all sufficient steps to achieve the best possible result for its client. Concurrently, the OTF operator, in exercising its discretion, assumes direct conduct-of-business duties to its clients, including a specific and binding obligation to act in their best interests and adhere to best execution principles. This creates an integrated system where the OTF operator’s execution methodology becomes a critical component of the end client’s outcome.

> The best execution framework for an OTF is uniquely characterized by the regulatory requirement to manage the inherent discretion of the venue operator, making the operator a direct participant in the execution quality chain.

The directive mandates that this discretion is channeled through a clear and transparent [order execution policy](https://prime.greeks.live/area/order-execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) established by the OTF operator. This policy must explain how discretion will be used to the benefit of the client, ensuring that decisions to match, or not match, orders are systematic and justifiable. The operator is prohibited from trading against its own proprietary capital, except in limited cases of matched principal trading with client consent and for instruments not subject to a clearing obligation.

This structural safeguard is designed to align the operator’s incentives with the client’s [execution quality](https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) objectives. The result is a regulatory architecture where best execution is a shared responsibility, with the OTF operator’s discretionary actions being a formal, regulated input into the final execution quality received by the end investor.

Therefore, [MiFID II](https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)’s definition of best execution for OTFs is an answer to the challenge of regulating hybrid market models that blend features of traditional bilateral (voice-brokered) trading with multilateral electronic systems. It extends the principle of best execution into the very operational logic of the trading venue itself, making the operator’s judgment a regulated and auditable part of the process. The framework ensures that even in less liquid, more complex markets typical for OTFs, the principles of fairness, transparency, and acting in the client’s best interest are structurally enforced.

![A meticulously engineered mechanism showcases a blue and grey striped block, representing a structured digital asset derivative, precisely engaged by a metallic tool. This setup illustrates high-fidelity execution within a controlled RFQ environment, optimizing block trade settlement and managing counterparty risk through robust market microstructure](https://options.greeks.live/wp-content/uploads/2025/08/precision-engineered-institutional-digital-asset-derivatives-rfq-execution.jpg)

![A transparent blue sphere, symbolizing precise Price Discovery and Implied Volatility, is central to a layered Principal's Operational Framework. This structure facilitates High-Fidelity Execution and RFQ Protocol processing across diverse Aggregated Liquidity Pools, revealing the intricate Market Microstructure of Institutional Digital Asset Derivatives](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-execution-system-microstructure-principal-framework.jpg)

## Strategy

A robust strategy for engaging with Organised [Trading Facilities](https://prime.greeks.live/question/how-have-organised-trading-facilities-changed-the-landscape-for-fixed-income-execution-protocols/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) under MiFID II hinges on a firm’s ability to integrate the OTF’s discretionary execution model into its own Order [Execution Policy](https://prime.greeks.live/area/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (OEP). The primary strategic objective is to leverage the unique liquidity and execution methods of OTFs while maintaining a compliant and demonstrable best execution process. This requires a shift from a purely quantitative assessment of venues to a qualitative and quantitative evaluation framework.

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

## Integrating OTF Discretion into the Order Execution Policy

An investment firm’s OEP must explicitly detail how it approaches OTF execution. This involves identifying the factors that make an OTF a suitable, or even optimal, execution venue for certain types of orders, particularly large or illiquid blocks of non-equity instruments. The policy should articulate the methodology for selecting one OTF over another, considering the specific nature of their discretionary models.

For instance, some OTFs may operate primarily on a voice-brokered basis with electronic confirmation, while others may offer more automated request-for-quote (RFQ) systems to a select group of [liquidity providers](https://prime.greeks.live/area/liquidity-providers/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The strategy must account for these differences.

The core of the strategy is to establish a process that can justify the choice of an OTF, even if a purely price-based comparison with a lit market might appear unfavorable at first glance. The execution factors outlined in MiFID II provide the necessary toolkit.

- 
**Price and Costs** ▴ These remain primary considerations. The strategy must define how the firm will assess the fairness of the price proposed by the OTF, especially for OTC products. This involves gathering market data and, where possible, comparing with similar or comparable products.

- 
**Likelihood of Execution and Settlement** ▴ This is a critical factor for OTFs. For an illiquid bond, the probability of finding a counterparty on an OTF may be substantially higher than on a lit exchange, minimizing market impact and [information leakage](https://prime.greeks.live/area/information-leakage/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The strategy must document this rationale.

- 
**Speed, Size, and Nature of the Order** ▴ An OTF allows for the negotiation of large block trades that would be impossible to execute on a [central limit order book](https://prime.greeks.live/area/central-limit-order-book/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) without severe price dislocation. The OEP should specify the order characteristics (e.g. size thresholds) that would direct flow toward an OTF.

![Abstract layers and metallic components depict institutional digital asset derivatives market microstructure. They symbolize multi-leg spread construction, robust FIX Protocol for high-fidelity execution, and private quotation](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-protocol-high-fidelity-execution.jpg)

## How Does Venue Discretion Alter Execution Strategy?

The discretionary nature of OTFs requires a more dynamic and interactive [execution strategy](https://prime.greeks.live/area/execution-strategy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). A firm cannot simply route an order and await a passive fill. The strategy must involve active engagement with the OTF operator or the liquidity providers on the platform.

This is particularly true in RFQ-based systems, where the firm solicits quotes from multiple dealers. The strategic consideration is not just about selecting the best price from the returned quotes; it also involves managing the information leakage associated with the RFQ process itself.

> Effective OTF strategy requires treating the venue’s discretionary model as a feature to be leveraged for accessing unique liquidity, rather than a variable to be minimized.

The following table compares the strategic considerations for best execution across different MiFID II venue types, highlighting the unique position of the OTF.

| Venue Type | Execution Method | Primary Best Execution Challenge | Strategic Approach |
| --- | --- | --- | --- |
| Regulated Market (RM) | Non-discretionary, central limit order book | Minimizing market impact and timing execution correctly | Use of algorithmic execution strategies (e.g. VWAP, TWAP) to work the order |
| Multilateral Trading Facility (MTF) | Non-discretionary, often a central limit order book | Sourcing liquidity across fragmented venues | Smart Order Routing (SOR) to find the best price across multiple MTFs and RMs |
| Organised Trading Facility (OTF) | Discretionary (voice, RFQ, hybrid) | Assessing execution quality beyond price; managing information leakage | Qualitative and quantitative venue selection; active engagement with OTF operator; post-trade TCA |
| Systematic Internaliser (SI) | Bilateral, principal trading | Ensuring price improvement over public quotes | Comparison against prevailing market conditions; use of SI quotes to benchmark other venues |

![Intersecting abstract geometric planes depict institutional grade RFQ protocols and market microstructure. Speckled surfaces reflect complex order book dynamics and implied volatility, while smooth planes represent high-fidelity execution channels and private quotation systems for digital asset derivatives within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-protocols-digital-asset-microstructure-execution.jpg)

## Monitoring and Evidencing Best Execution

A critical component of the strategy is the framework for monitoring and evidencing best execution. This is not merely a compliance exercise; it is a feedback loop for refining the execution strategy. Firms must leverage the post-trade data provided by OTFs under Regulatory Technical Standard (RTS) 27, which details execution quality metrics.

They must also use their own transaction data to produce [RTS 28](https://prime.greeks.live/area/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) reports, which disclose the top five execution venues used for each class of financial instrument. The strategy involves analyzing this data to answer key questions:

- 
Did the chosen OTFs consistently deliver outcomes aligned with the OEP?

- 
For a given instrument type, which OTF model provided the best balance of price, cost, and likelihood of execution?

- 
How did execution outcomes on OTFs compare to other available venues, considering the specific characteristics of the orders?

By systematically analyzing this data, a firm can demonstrate to regulators and clients that its reliance on specific OTFs is part of a deliberate and effective strategy to achieve the best possible results, fully accounting for the unique, discretionary nature of these venues.

![A sphere split into light and dark segments, revealing a luminous core. This encapsulates the precise Request for Quote RFQ protocol for institutional digital asset derivatives, highlighting high-fidelity execution, optimal price discovery, and advanced market microstructure within aggregated liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-execution-framework-for-institutional-digital-asset-derivatives-request-for-quote-protocol-optimization.jpg)

![Two reflective, disc-like structures, one tilted, one flat, symbolize the Market Microstructure of Digital Asset Derivatives. This metaphor encapsulates RFQ Protocols and High-Fidelity Execution within a Liquidity Pool for Price Discovery, vital for a Principal's Operational Framework ensuring Atomic Settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-high-fidelity-execution-liquidity-aggregation-optimizing-market-microstructure-principal-trading-best-execution-atomic-settlement.jpg)

## Execution

The execution of a MiFID II-compliant best [execution framework](https://prime.greeks.live/area/execution-framework/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) for [Organised Trading](https://prime.greeks.live/question/can-an-investment-firm-operate-both-a-multilateral-trading-facility-and-an-organised-trading-facility/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) Facilities is a complex operational undertaking. It requires the integration of policy, technology, and quantitative analysis to create a system that is both effective in practice and demonstrably compliant. This system must translate the strategic objectives defined in the Order Execution Policy into concrete, repeatable, and auditable workflows for the trading desk and compliance functions.

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

## The Operational Playbook

Constructing a functional playbook for OTF best execution involves a series of distinct, procedural steps. This playbook serves as the day-to-day guide for all personnel involved in the execution lifecycle.

- 
**Order Classification and Venue Pre-Selection** ▴ 

<li>Develop a clear matrix within the Execution Management System (EMS) to classify incoming client orders based on instrument type, size, liquidity profile, and specific client instructions.

- For orders identified as suitable for OTF execution (e.g. illiquid corporate bonds, large derivatives blocks), the system should present a pre-vetted list of appropriate OTFs.

- This pre-vetting process must be documented, outlining why each OTF is included (e.g. specific liquidity, unique counterparty access, efficiency of its RFQ protocol).

</li>
- 
**Execution Protocol Selection** ▴ 

<li>For a chosen OTF, the trader must select the appropriate execution protocol. If the OTF supports both voice and electronic RFQ, the playbook must provide guidance on which to use. For example, highly sensitive orders may be better suited for a high-touch voice interaction, while more standardized requests can leverage an electronic RFQ to multiple dealers.

- The decision process must be logged, with the trader providing a concise justification for the chosen method (e.g. “Voice protocol selected to minimize information leakage for this large, sensitive order”).

</li>
- 
**Quote Solicitation and Management (for RFQ)** ▴ 

<li>The playbook must define the standard number of liquidity providers to include in an RFQ for a given instrument type to ensure competitive pricing without creating excessive market noise.

- It must detail the process for evaluating the quotes received. This evaluation must consider not just the price, but also any conditions attached to the quote and the historical performance of the quoting dealer.

</li>
- 
**Execution Justification and Record Keeping** ▴ 

<li>The moment of execution is a critical data point. The EMS must capture a snapshot of all relevant information, including the quotes received, the chosen counterparty, the final execution price, and a timestamp.

- For discretionary executions, the trader must log a “best execution note” that succinctly explains the rationale. For example ▴ “Executed with Dealer B despite Dealer A showing a marginally better price, due to Dealer B’s higher certainty of settlement and larger size appetite, which was critical for this order.”

</li>
- 
**Post-Trade Monitoring and Review** ▴ 

<li>Compliance teams must have a workflow for regularly reviewing a sample of OTF trades. This involves comparing the execution record against the firm’s policies and the market conditions at the time of the trade.

- This review feeds into a quarterly Best Execution Committee meeting, where systemic issues or opportunities for improvement are identified and addressed.

</li>

![A metallic disc intersected by a dark bar, over a teal circuit board. This visualizes Institutional Liquidity Pool access via RFQ Protocol, enabling Block Trade Execution of Digital Asset Options with High-Fidelity Execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-principal-operational-framework-market-microstructure-high-fidelity-execution.jpg)

## Quantitative Modeling and Data Analysis

Demonstrating best execution on OTFs requires a robust quantitative framework. This relies on the analysis of both internal execution data and external data provided by the venues themselves. The goal is to move beyond anecdotal evidence to a data-driven justification of the firm’s execution strategy.

A core component of this is the internal analysis that supports the annual RTS 28 report. This report requires firms to disclose their top five execution venues for each class of financial instrument. The analysis behind this report is a critical part of the execution framework.

The following table provides a simplified example of the quantitative analysis a firm might perform to rank its OTF venues for executing European corporate bonds.

| OTF Venue | Total Volume Executed (€M) | Average Price Improvement vs. Benchmark | Average Execution Cost (bps) | RFQ Hit Rate (%) | Qualitative Score (1-5) | Overall Rank |
| --- | --- | --- | --- | --- | --- | --- |
| OTF Alpha | 1,250 | +2.5 bps | 1.5 | 85% | 4.5 | 1 |
| OTF Beta | 800 | +1.0 bps | 2.0 | 70% | 3.0 | 3 |
| OTF Gamma | 950 | +3.0 bps | 1.8 | 65% | 5.0 | 2 |
| OTF Delta | 400 | -0.5 bps | 2.5 | 90% | 2.5 | 4 |

This analysis allows the firm to justify why OTF Alpha is its top-ranked venue for corporate bonds, using a combination of price, cost, and likelihood of execution metrics. It also highlights potential issues, such as the negative [price improvement](https://prime.greeks.live/area/price-improvement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) on OTF Delta, which would trigger a review of that venue relationship.

![A central illuminated hub with four light beams forming an 'X' against dark geometric planes. This embodies a Prime RFQ orchestrating multi-leg spread execution, aggregating RFQ liquidity across diverse venues for optimal price discovery and high-fidelity execution of institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-orchestrating-high-fidelity-execution-and-optimal-price-discovery.jpg)

## Predictive Scenario Analysis

To understand the practical application of this framework, consider a detailed case study. A portfolio manager at an asset management firm, “AMF Capital,” needs to sell a €50 million position in a 7-year bond issued by a non-benchmark French industrial company. The bond is relatively illiquid, and a large sale on a lit market would likely cause significant price depression and signal the firm’s intent to the wider market.

The firm’s OEP, guided by its pre-trade classification matrix, flags this order as a candidate for OTF execution due to its size and liquidity profile. The head trader, referencing the firm’s internal venue analysis (similar to the table above), decides to use “OTF Gamma,” which, despite a slightly lower RFQ hit rate, has historically provided the best price improvement for this type of credit and has a high qualitative score for handling sensitive, high-touch orders.

The trader initiates a voice-assisted RFQ process through the OTF Gamma platform. The OTF operator, exercising their regulated discretion, helps the trader identify a small, targeted group of five liquidity providers known to have an axe in this or similar credits. This curated approach is a key feature of the OTF model, preventing a broad, market-moving RFQ blast.

The RFQ is sent out with a 5-minute response window. The quotes return as follows:

- 
**Dealer 1** ▴ Price 98.50 for €25M

- 
**Dealer 2** ▴ Price 98.48 for €50M

- 
**Dealer 3** ▴ Price 98.52 for €15M

- 
**Dealer 4** ▴ No bid

- 
**Dealer 5** ▴ Price 98.45 for €50M, but with a 15-minute time limit for acceptance

The trader is now faced with a complex decision. Dealer 3 has the best price, but only for a small portion of the required size. Splitting the order would mean going back out for the remaining €35M, risking that the other dealers lower their price after seeing part of the trade go through. Dealer 1 offers a decent price for half the size.

Dealer 2 offers a slightly lower price but can take the full size in a single block, guaranteeing execution and minimizing complexity. Dealer 5’s offer is inferior in price and has an inconvenient time constraint.

The trader, in consultation with the OTF operator via a recorded voice line, decides to execute the full €50M block with Dealer 2 at 98.48. The trader immediately logs a best execution note in the firm’s EMS ▴ “Executed full block with Dealer 2. While Dealer 3 offered a price 4 cents higher, this was for a partial fill only.

Executing the full size with Dealer 2 was deemed optimal to ensure certainty of execution and avoid the market risk and information leakage of a partial fill and subsequent re-quote for the remainder. This approach secures a clean exit from the position, which was the primary instruction from the PM.”

In the post-trade phase, AMF Capital’s compliance team reviews the trade. They pull the market data benchmark for the bond at the time of the trade, which was 98.45. The execution at 98.48 represents a +3 basis point price improvement over the composite mid-price. They review the trader’s note and the quotes from the other dealers.

Their conclusion, documented in the monthly compliance report, is that the trader took all sufficient steps to achieve the best possible result. The decision to prioritize size and certainty of execution over the absolute best price on a partial amount was a reasonable and justifiable exercise of judgment, fully compliant with MiFID II’s requirements for best execution on an OTF.

![An abstract, symmetrical four-pointed design embodies a Principal's advanced Crypto Derivatives OS. Its intricate core signifies the Intelligence Layer, enabling high-fidelity execution and precise price discovery across diverse liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine.jpg)

## What Is the Technological Architecture for OTF Integration?

A firm’s ability to execute this strategy is entirely dependent on its technological architecture. This is not simply about having an EMS; it is about how the entire trading and compliance workflow is integrated.

- 
**Order and Execution Management Systems (OMS/EMS)** ▴ The EMS must be configured to handle the specificities of OTF trading. This means it needs to support not just standard electronic order types but also workflows for voice-brokered trades and RFQs. The system must have dedicated fields for logging the qualitative data that justifies execution decisions, such as the best execution notes described in the scenario.

- 
**Connectivity and APIs** ▴ The firm needs robust API integrations with its chosen OTF venues. This is for more than just sending orders. These APIs are critical for receiving post-trade data for [Transaction Cost Analysis](https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (TCA) and for consuming the [RTS 27](https://prime.greeks.live/area/rts-27/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) data that OTFs are required to publish. This data flow must be automated to feed the firm’s quantitative models.

- 
**[FIX Protocol](https://prime.greeks.live/area/fix-protocol/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ The Financial Information eXchange (FIX) protocol is the backbone of electronic trading. For OTFs, firms need to ensure their FIX engines can handle the specific message types used for RFQ workflows (e.g. QuoteRequest, QuoteResponse, QuoteStatusReport) and for booking trades that may have been negotiated via voice but are confirmed and processed electronically.

- 
**Data Warehousing and Analytics** ▴ All execution data, from the initial order to the final settlement, must be captured and stored in a structured manner. This includes the quantitative data (prices, costs, timestamps) and the qualitative data (trader notes, rationale). This data warehouse is the foundation for the firm’s TCA engine and its compliance monitoring tools. It allows the firm to run the analysis needed for its RTS 28 reports and to respond to any regulatory inquiries with a complete, time-sequenced audit trail of any given trade.

This integrated technological system ensures that the principles of the best execution policy are embedded into the daily workflow of the trading desk, making compliance a systematic outcome of a well-designed execution process.

![A precisely engineered system features layered grey and beige plates, representing distinct liquidity pools or market segments, connected by a central dark blue RFQ protocol hub. Transparent teal bars, symbolizing multi-leg options spreads or algorithmic trading pathways, intersect through this core, facilitating price discovery and high-fidelity execution of digital asset derivatives via an institutional-grade Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-facilitating-high-fidelity-multi-leg-options-spread-execution-best-price-discovery-and-latent-liquidity-access-for-prime-brokerage.jpg)

## References

- Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU.

- Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive.

- European Securities and Markets Authority (ESMA). “Questions and Answers on MiFID II and MiFIR market structures topics.” ESMA70-872942901-38, 2021.

- European Securities and Markets Authority (ESMA). “Questions and Answers on MiFID II and MiFIR investor protection and intermediaries topics.” ESMA35-43-349, 2021.

- Gomber, P. et al. “Competition between trading venues ▴ A post-MiFID I perspective.” Journal of Banking & Finance, vol. 78, 2017, pp. 135-153.

- Financial Conduct Authority (FCA). “Markets in Financial Instruments Directive II Implementation ▴ Policy Statement II.” PS17/14, 2017.

- CFA Institute. “Best Execution and the New Market Abuse Regulation ▴ A Guide for Investment Professionals.” 2016.

![The abstract image features angular, parallel metallic and colored planes, suggesting structured market microstructure for digital asset derivatives. A spherical element represents a block trade or RFQ protocol inquiry, reflecting dynamic implied volatility and price discovery within a dark pool](https://options.greeks.live/wp-content/uploads/2025/07/optimized-institutional-digital-asset-derivatives-rfq-protocol-framework-ensuring-principal-best-execution-and-latent-liquidity-capture.jpg)

## Reflection

The regulatory architecture of MiFID II, particularly concerning Organised Trading Facilities, provides a detailed blueprint for compliance. The true challenge, however, lies in transforming this blueprint into a living, dynamic operational system. The knowledge of the rules governing discretion, reporting, and execution factors is the foundational layer.

The next step in institutional development is to critically assess one’s own execution framework. Does the current system merely satisfy the letter of the regulation, or does it embody its spirit by actively leveraging the unique structure of OTFs to achieve a superior execution outcome?

Consider the data flows within your own organization. Are the qualitative notes from traders ▴ the justifications for choosing one path over another in a complex negotiation ▴ treated as ancillary compliance data, or are they integrated into your quantitative models as a vital source of alpha? Answering this question reveals the maturity of an execution system.

The ultimate goal is to build an infrastructure where every piece of information, from a voice comment to a TCA report, becomes a reinforcing input in a cycle of continuous improvement. This transforms the regulatory burden of best execution into a strategic asset for capital efficiency and risk management.

![Reflective planes and intersecting elements depict institutional digital asset derivatives market microstructure. A central Principal-driven RFQ protocol ensures high-fidelity execution and atomic settlement across diverse liquidity pools, optimizing multi-leg spread strategies on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-precision.jpg)

## Glossary

<a href="https://prime.greeks.live/area/organised-trading-facilities/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision optical component stands on a dark, reflective surface, symbolizing a Price Discovery engine for Institutional Digital Asset Derivatives. This Crypto Derivatives OS element enables High-Fidelity Execution through advanced Algorithmic Trading and Multi-Leg Spread capabilities, optimizing Market Microstructure for RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-optimal-execution-system-microstructure.jpg)

## Organised Trading Facilities

Meaning ▴ An Organised Trading Facility is a multilateral system, distinct from a regulated market or Multilateral Trading Facility, which facilitates the bringing together of multiple third-party buying and selling interests in bonds, structured finance products, emission allowances, and derivatives, on a discretionary basis. </a><a href="https://prime.greeks.live/area/non-equity-instruments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precise RFQ engine extends into an institutional digital asset liquidity pool, symbolizing high-fidelity execution and advanced price discovery within complex market microstructure. This embodies a Principal's operational framework for multi-leg spread strategies and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-engine-interfacing-core-liquidity-system.jpg)

## Non-Equity Instruments

Meaning ▴ Non-equity instruments are financial contracts or securities that do not confer ownership interest in an issuing entity. </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 blue speckled marble, symbolizing a precise block trade, rests centrally on a translucent bar, representing a robust RFQ protocol. This structured geometric arrangement illustrates complex market microstructure, enabling high-fidelity execution, optimal price discovery, and efficient liquidity aggregation within a principal's operational framework for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/precision-institutional-rfq-execution-framework-optimizing-digital-asset-derivatives-liquidity-aggregation-across-complex-market-microstructure.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/order-execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract spheres and a sharp disc depict an Institutional Digital Asset Derivatives ecosystem. A central Principal's Operational Framework interacts with a Liquidity Pool via RFQ Protocol for High-Fidelity Execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-framework.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-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sharp, intersecting elements, two light, two teal, on a reflective disc, centered by a precise mechanism. This visualizes institutional liquidity convergence for multi-leg options strategies in digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-block-trade-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/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A glossy, segmented sphere with a luminous blue 'X' core represents a Principal's Prime RFQ. It highlights multi-dealer RFQ protocols, high-fidelity execution, and atomic settlement for institutional digital asset derivatives, signifying unified liquidity pools, market microstructure, and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-core-for-best-rfq-digital-asset-derivatives-institutional-trade-flow.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-have-organised-trading-facilities-changed-the-landscape-for-fixed-income-execution-protocols/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Internal hard drive mechanics, with a read/write head poised over a data platter, symbolize the precise, low-latency execution and high-fidelity data access vital for institutional digital asset derivatives. This embodies a Principal OS architecture supporting robust RFQ protocols, enabling atomic settlement and optimized liquidity aggregation within complex market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-precision-execution-system-microstructure.jpg)

## Trading Facilities

OTFs transformed fixed income by mandating electronic, transparent, and discretionary trading venues, creating a data-rich, multi-protocol ecosystem. </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">
![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)

## 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/liquidity-providers/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A transparent glass bar, representing high-fidelity execution and precise RFQ protocols, extends over a white sphere symbolizing a deep liquidity pool for institutional digital asset derivatives. A small glass bead signifies atomic settlement within the granular market microstructure, supported by robust Prime RFQ infrastructure ensuring optimal price discovery and minimal slippage](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-digital-asset-derivatives-rfq-execution-prime-os-intelligence-layer-facilitating-optimal-price-discovery-and-best-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/information-leakage/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Translucent teal glass pyramid and flat pane, geometrically aligned on a dark base, symbolize market microstructure and price discovery within RFQ protocols for institutional digital asset derivatives. This visualizes multi-leg spread construction, high-fidelity execution via a Principal's operational framework, ensuring atomic settlement for latent liquidity](https://options.greeks.live/wp-content/uploads/2025/07/transparent-geometric-structures-visualizing-multi-leg-spread-rfq-protocols-for-high-fidelity-institutional-digital-asset-derivatives-execution.jpg)

## Information Leakage

Meaning ▴ Information leakage denotes the unintended or unauthorized disclosure of sensitive trading data, often concerning an institution's pending orders, strategic positions, or execution intentions, to external market participants. </a><a href="https://prime.greeks.live/area/central-limit-order-book/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Two dark, circular, precision-engineered components, stacked and reflecting, symbolize a Principal's Operational Framework. This layered architecture facilitates High-Fidelity Execution for Block Trades via RFQ Protocols, ensuring Atomic Settlement and Capital Efficiency within Market Microstructure for Digital Asset Derivatives](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-prime-os-execution-protocol.jpg)

## Central Limit Order Book

Meaning ▴ A Central Limit Order Book is a digital repository that aggregates all outstanding buy and sell orders for a specific financial instrument, organized by price level and time of entry. </a><a href="https://prime.greeks.live/area/execution-strategy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A teal-blue textured sphere, signifying a unique RFQ inquiry or private quotation, precisely mounts on a metallic, institutional-grade base. Integrated into a Prime RFQ framework, it illustrates high-fidelity execution and atomic settlement for digital asset derivatives within market microstructure, ensuring capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-prime-os-execution-1.jpg)

## Execution Strategy

Meaning ▴ A defined algorithmic or systematic approach to fulfilling an order in a financial market, aiming to optimize specific objectives like minimizing market impact, achieving a target price, or reducing transaction costs. </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 dark central hub with three reflective, translucent blades extending. This represents a Principal's operational framework for digital asset derivatives, processing aggregated liquidity and multi-leg spread inquiries](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-protocol-engine-for-high-fidelity-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/execution-framework/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A spherical Liquidity Pool is bisected by a metallic diagonal bar, symbolizing an RFQ Protocol and its Market Microstructure. Imperfections on the bar represent Slippage challenges in High-Fidelity Execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-optimization-within-principals-market-microstructure-framework.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/question/can-an-investment-firm-operate-both-a-multilateral-trading-facility-and-an-organised-trading-facility/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered blue mechanism, symbolizing a high-fidelity execution engine, emerges from a rounded, light-colored liquidity pool component, encased within a sleek teal institutional-grade shell. This represents a Principal's operational framework for digital asset derivatives, demonstrating algorithmic trading logic and smart order routing for block trades via RFQ protocols, ensuring atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-crypto-derivatives-os-core-algorithmic-execution-engine.jpg)

## Organised Trading

An investment firm may operate both MTF and OTF venues, provided it establishes strict legal and operational separation between them. </a><a href="https://prime.greeks.live/area/price-improvement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central, intricate blue mechanism, evocative of an Execution Management System EMS or Prime RFQ, embodies algorithmic trading. Transparent rings signify dynamic liquidity pools and price discovery for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-institutional-digital-asset-derivatives-framework-driving-high-fidelity-rfq-execution-and-optimized-market-microstructure-for-capital-efficiency.jpg)

## Price Improvement

Meaning ▴ Price improvement denotes the execution of a trade at a more advantageous price than the prevailing National Best Bid and Offer (NBBO) at the moment of order submission. </a><a href="https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An angular, teal-tinted glass component precisely integrates into a metallic frame, signifying the Prime RFQ intelligence layer. This visualizes high-fidelity execution and price discovery for institutional digital asset derivatives, enabling volatility surface analysis and multi-leg spread optimization via RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-for-digital-asset-derivatives-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/rts-27/?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)

## 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/fix-protocol/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central engineered mechanism, resembling a Prime RFQ hub, anchors four precision arms. This symbolizes multi-leg spread execution and liquidity pool aggregation for RFQ protocols, enabling high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-framework-enabling-multi-leg-spread-strategies-for-optimized-liquidity.jpg)

## Fix Protocol

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

**Tags:** [Execution Strategy](https://options.greeks.live/area/execution-strategy/), [RTS 27](https://options.greeks.live/area/rts-27/), [Information Leakage](https://options.greeks.live/area/information-leakage/), [Execution Discretion](https://options.greeks.live/area/execution-discretion/), [Execution Quality](https://options.greeks.live/area/execution-quality/), [Order Execution](https://options.greeks.live/area/order-execution/)	

## Discover More

- 
### [How Does the Best Execution Obligation Change When Dealing with Different Client Categories under Mifid Ii?](https://options.greeks.live/question/how-does-the-best-execution-obligation-change-when-dealing-with-different-client-categories-under-mifid-ii/)
![A precision-engineered, multi-layered system component, symbolizing the intricate market microstructure of institutional digital asset derivatives. Two distinct probes represent RFQ protocols for price discovery and high-fidelity execution, integrating latent liquidity and pre-trade analytics within a robust Prime RFQ framework, ensuring best execution.](https://options.greeks.live/wp-content/uploads/2025/08/digital-asset-derivatives-rfq-protocols-high-fidelity-execution.jpg)

MiFID II calibrates best execution obligations to client sophistication, demanding a tiered operational system.

- 
### [How Does MiFID II Specifically Impact Best Execution Obligations for Automated RFQ Platforms?](https://options.greeks.live/question/how-does-mifid-ii-specifically-impact-best-execution-obligations-for-automated-rfq-platforms/)
![A central core, symbolizing a Crypto Derivatives OS and Liquidity Pool, is intersected by two abstract elements. These represent Multi-Leg Spread and Cross-Asset Derivatives executed via RFQ Protocol. This visual embodies High-Fidelity Execution within an Institutional Trading framework, emphasizing Market Microstructure and Capital Efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-protocol-multi-leg-spread-execution.jpg)

MiFID II compels firms on RFQ platforms to build a data-driven, defensible audit trail, transforming compliance into an execution advantage.

- 
### [How Have Regulatory Changes like MiFID II Influenced the Evolution of RFQ Strategies?](https://options.greeks.live/question/how-have-regulatory-changes-like-mifid-ii-influenced-the-evolution-of-rfq-strategies/)
![A central translucent disk, representing a Liquidity Pool or RFQ Hub, is intersected by a precision Execution Engine bar. Its core, an Intelligence Layer, signifies dynamic Price Discovery and Algorithmic Trading logic for Digital Asset Derivatives. Surrounding elements denote Market Microstructure and High-Fidelity Execution pathways for Block Trades, ensuring Best Execution within a Prime RFQ framework.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-visualizing-microstructure.jpg)

MiFID II transformed RFQ from a relationship-based protocol into a data-driven, auditable system to prove best execution.

- 
### [How Does the Best Execution Obligation Apply to OTFs?](https://options.greeks.live/question/how-does-the-best-execution-obligation-apply-to-otfs/)
![A sleek, multi-component device in dark blue and beige, symbolizing an advanced institutional digital asset derivatives platform. The central sphere denotes a robust liquidity pool for aggregated inquiry. An angled module represents a precise RFQ protocol interface, ensuring high-fidelity execution, best execution, and optimal capital efficiency within the Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-execution-platform-system.jpg)

The best execution obligation for OTFs mandates a systematic, evidence-based process to ensure discretionary trading delivers the optimal client result.

- 
### [How Does MiFID II Define the “Sufficient Steps” for Best Execution in OTC Markets?](https://options.greeks.live/question/how-does-mifid-ii-define-the-sufficient-steps-for-best-execution-in-otc-markets/)
![A sleek, illuminated control knob emerges from a robust, metallic base, representing a Prime RFQ interface for institutional digital asset derivatives. Its glowing bands signify real-time analytics and high-fidelity execution of RFQ protocols, enabling optimal price discovery and capital efficiency in dark pools for block trades.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-system-for-optimal-execution.jpg)

MiFID II's "sufficient steps" for OTC best execution require firms to engineer a dynamic, evidence-based framework that proves optimal client outcomes.

- 
### [How Did MiFID II Redefine the Concept of Best Execution?](https://options.greeks.live/question/how-did-mifid-ii-redefine-the-concept-of-best-execution/)
![A precision execution pathway with an intelligence layer for price discovery, processing market microstructure data. A reflective block trade sphere signifies private quotation within a dark pool. This visualizes high-fidelity execution and capital efficiency for institutional digital asset derivatives via RFQ protocols.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-precision-execution.jpg)

MiFID II redefined best execution by shifting it from a principle to a data-driven, evidence-based obligation of process.

- 
### [What Are the Key Technological Requirements for Integrating an RFQ System into an Institutional Trading Desk?](https://options.greeks.live/question/what-are-the-key-technological-requirements-for-integrating-an-rfq-system-into-an-institutional-trading-desk/)
![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)

An RFQ system's integration requires a secure, low-latency architecture for discreet, auditable liquidity sourcing.

- 
### [How Does MiFID II Regulation Impact the Choice between RFQ and CLOB Protocols?](https://options.greeks.live/question/how-does-mifid-ii-regulation-impact-the-choice-between-rfq-and-clob-protocols/)
![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. A metallic button suggests precise private quotation control.](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)

MiFID II codifies best execution, making the RFQ/CLOB choice a strategic, data-driven decision based on order size and information risk.

- 
### [How Does the Concept of Matched Principal Trading Affect Best Execution on an Otf?](https://options.greeks.live/question/how-does-the-concept-of-matched-principal-trading-affect-best-execution-on-an-otf/)
![Precision-engineered multi-vane system with opaque, reflective, and translucent teal blades. This visualizes Institutional Grade Digital Asset Derivatives Market Microstructure, driving High-Fidelity Execution via RFQ protocols, optimizing Liquidity Pool aggregation, and Multi-Leg Spread management on a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-multi-vane-system-illustrating-institutional-digital-asset-derivatives-rfq-protocols-market-microstructure-optimized-liquidity-aggregation-prime-os-high-fidelity-execution.jpg)

Matched principal trading on an OTF reframes best execution by enabling controlled access to fragmented liquidity, prioritizing impact mitigation.

---

## Raw Schema Data

```json
{
    "@context": "https://schema.org",
    "@type": "BreadcrumbList",
    "itemListElement": [
        {
            "@type": "ListItem",
            "position": 1,
            "name": "Home",
            "item": "https://options.greeks.live"
        },
        {
            "@type": "ListItem",
            "position": 2,
            "name": "Question",
            "item": "https://options.greeks.live/question/"
        },
        {
            "@type": "ListItem",
            "position": 3,
            "name": "How Does MiFID II Define the Scope of Best Execution for OTFs?",
            "item": "https://options.greeks.live/question/how-does-mifid-ii-define-the-scope-of-best-execution-for-otfs/"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Organization",
    "@id": "https://greeks.live/#organization",
    "name": "Greeks.Live",
    "url": "https://greeks.live/",
    "description": "Greeks.live is the definitive toolkit for the professional options trader, dedicated to empowering our users with institutional-grade data, advanced analytics, and a comprehensive suite of trading tools designed to provide a decisive edge in the market. Every article and guide published under the Greeks.live name is a product of our deep commitment to data-driven analysis and our mission to support the global trading community.",
    "email": "support@greeks.live",
    "logo": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/Greeks.Live-Logo-Icon.svg"
    },
    "hasPart": [
        {
            "@type": "WebSite",
            "name": "About Us",
            "url": "https://about.greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "App Download Page",
            "url": "https://about.greeks.live/#/download/basic_trade"
        },
        {
            "@type": "WebSite",
            "name": "Newcomers' Guide",
            "url": "https://twisty-sign-c8b.notion.site/Guide-for-Greeks-live-X-Deribit-Newbies-5a08a3052822427d800af6eaf3704c8d"
        },
        {
            "@type": "WebSite",
            "name": "Knowledge Base",
            "url": "https://linktr.ee/greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "Option Terminology",
            "url": "https://greekslive.notion.site/88dfc00e7c584d4d8969b6302a79a12f?pvs=4"
        },
        {
            "@type": "WebSite",
            "name": "Terms of Service",
            "url": "https://greeks.live/#/tos"
        },
        {
            "@type": "WebSite",
            "name": "Disclaimer",
            "url": "https://greeks.live/#/disclaimer"
        }
    ],
    "sameAs": [
        "https://x.com/greekslive",
        "https://youtube.com/@greeks_live?si=-KjT0Lkw4WUCI0tD",
        "https://t.me/greekslive_notifications",
        "https://t.me/greekslive",
        "https://pinterest.com/greekslive/"
    ],
    "makesOffer": [
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "RFQ Platform",
                "url": "https://rfq.greeks.live",
                "description": "Execute institutional-grade block trades for crypto options and futures. This platform provides deep, over-the-counter (OTC) liquidity via a professional Request for Quote system.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Lending Tools",
                "url": "https://lend.greeks.live",
                "description": "Manage crypto lending and borrowing activities to earn yield or secure loans. This suite of tools helps users analyze interest rates and manage collateralized debt positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Data Lab",
                "url": "https://greeks.live/#/deribit/tools/datalab/BTC",
                "description": "Analyze historical and real-time options data with advanced metrics. This tool is designed for backtesting strategies and identifying market trends through comprehensive data visualization.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Profit & Loss Analysis (PnL)",
                "url": "https://greeks.live/#/deribit/tools/pnl_analysis",
                "description": "Track and analyze the Profit and Loss (PnL) of your options portfolio. This tool provides detailed performance metrics to help traders evaluate and refine their strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Position Visualization",
                "url": "https://greeks.live/#/deribit/tools/pv/BTC",
                "description": "Visualize complex options positions and their corresponding risk profiles. This tool generates payoff diagrams to help traders intuitively understand potential profit, loss, and exposure.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Options Calculator",
                "url": "https://greeks.live/#/deribit/tools/calculator",
                "description": "Calculate the theoretical price and risk parameters ('the Greeks') of crypto options. An essential tool for pricing new trades and analyzing the sensitivity of existing positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live Main Platform",
                "url": "https://greeks.live/",
                "description": "The central hub for the Greeks.live suite of professional cryptocurrency options and derivatives trading tools. Access analytics, manage positions, and explore the ecosystem.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Community Forum",
                "url": "https://t.greeks.live",
                "description": "Join the official Greeks.live community. Connect with other traders, share insights, and receive the latest updates directly from the team.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for Deribit",
                "url": "http://deribit.greeks.live",
                "description": "A dedicated interface for trading on the Deribit exchange. This platform leverages Greeks.live's advanced analytics and tools specifically for users of Deribit's options and futures markets.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for OKX",
                "url": "http://okx.greeks.live",
                "description": "A dedicated interface for trading on the OKX exchange. This platform integrates Greeks.live's powerful analytics with the OKX marketplace, focusing on its options and derivatives products.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "GLVS.AI Trading Platform",
                "url": "https://www.glvs.ai/",
                "description": "An AI-powered platform for automated crypto options trading. Leverage advanced algorithms and data-driven signals to develop and deploy sophisticated, hands-free trading strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "API Testnet & Sandbox",
                "url": "https://test.greeks.live",
                "description": "A dedicated testnet environment for developers to test their API integrations and automated trading strategies. This sandbox allows for full functionality testing without risking real funds.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        }
    ],
    "subOrganization": [
        {
            "@type": "Organization",
            "name": "GreeksLive HK Co., Limited",
            "email": "support@greeks.live",
            "telephone": "+852-56418949",
            "address": {
                "@type": "PostalAddress",
                "streetAddress": "Unit 11, 27/F, K. Wah Centre, 191 Java Road",
                "addressLocality": "Hong Kong",
                "addressRegion": "North Point",
                "addressCountry": "CN",
                "postalCode": "0000"
            },
            "geo": {
                "@type": "GeoCoordinates",
                "latitude": "22.2932357",
                "longitude": "114.2022026"
            },
            "image": "https://options.greeks.live/wp-content/uploads/2025/08/Wah-Centre-Hong-Kong.jpg"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Article",
    "mainEntityOfPage": {
        "@type": "WebPage",
        "@id": "https://options.greeks.live/question/how-does-mifid-ii-define-the-scope-of-best-execution-for-otfs/"
    },
    "headline": "How Does MiFID II Define the Scope of Best Execution for OTFs? \u25b4 Question",
    "description": "MiFID II defines OTF best execution by embedding the operator's discretion into a regulated, auditable framework of client-centric duties. \u25b4 Question",
    "url": "https://options.greeks.live/question/how-does-mifid-ii-define-the-scope-of-best-execution-for-otfs/",
    "datePublished": "2025-08-06T00:12:19+00:00",
    "dateModified": "2025-08-06T00:12:21+00:00",
    "articleSection": [
        "Question"
    ],
    "author": {
        "@id": "https://greeks.live/#organization"
    },
    "publisher": {
        "@id": "https://greeks.live/#organization"
    },
    "image": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/modular-high-fidelity-execution-architecture-for-institutional-digital-asset-derivatives-rfq-protocol-integration-and-principals-operational-framework-optimization.jpg",
        "caption": "This image portrays a modular institutional-grade execution system, its components revealing intricate internal structures and luminous green data pathways. It symbolizes the precise market microstructure and high-fidelity execution crucial for RFQ protocol integration in Digital Asset Derivatives trading. This highlights a Principal's operational framework optimized for capital efficiency, enabling atomic settlement and seamless multi-leg spread orchestration via an advanced Prime RFQ, ensuring best execution across latent liquidity pools, mitigating counterparty risk."
    },
    "keywords": [
        "Best Execution",
        "Central Limit Order Book",
        "Execution Discretion",
        "Execution Framework",
        "Execution Policy",
        "Execution Quality",
        "Execution Strategy",
        "FIX Protocol",
        "Illiquid Bonds",
        "Information Leakage",
        "Limit Order Book",
        "Liquidity Providers",
        "Market Microstructure",
        "MiFID II",
        "Non-Equity Instruments",
        "Order Execution",
        "Order Execution Policy",
        "Organised Trading Facilities",
        "Organised Trading Facility",
        "Price Improvement",
        "Regulatory Technical Standards",
        "Request for Quote",
        "RTS 27",
        "RTS 28",
        "Transaction Cost Analysis"
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebSite",
    "url": "https://options.greeks.live/",
    "potentialAction": {
        "@type": "SearchAction",
        "target": "https://options.greeks.live/?s=search_term_string",
        "query-input": "required name=search_term_string"
    }
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "FAQPage",
    "mainEntity": [
        {
            "@type": "Question",
            "name": "How Does Venue Discretion Alter Execution Strategy?",
            "acceptedAnswer": {
                "@type": "Answer",
                "text": "The discretionary nature of OTFs requires a more dynamic and interactive execution strategy. A firm cannot simply route an order and await a passive fill. The strategy must involve active engagement with the OTF operator or the liquidity providers on the platform. This is particularly true in RFQ-based systems, where the firm solicits quotes from multiple dealers. The strategic consideration is not just about selecting the best price from the returned quotes; it also involves managing the information leakage associated with the RFQ process itself."
            }
        },
        {
            "@type": "Question",
            "name": "What Is The Technological Architecture For OTF Integration?",
            "acceptedAnswer": {
                "@type": "Answer",
                "text": "A firm's ability to execute this strategy is entirely dependent on its technological architecture. This is not simply about having an EMS; it is about how the entire trading and compliance workflow is integrated."
            }
        }
    ]
}
```


---

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