# How Does MiFID II Specifically Impact RFQ Best Execution Policies? ▴ Question

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

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![Precision-engineered beige and teal conduits intersect against a dark void, symbolizing a Prime RFQ protocol interface. Transparent structural elements suggest multi-leg spread connectivity and high-fidelity execution pathways for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/insti-grade-digital-asset-derivatives-rfq-protocols-multi-leg-execution-junction.jpg)

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## Concept

The implementation of the Markets in Financial Instruments Directive II (MiFID II) represents a fundamental recalibration of the regulatory landscape governing institutional trading. At its core, the directive elevates the standard for [best execution](https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) from the principle of “all reasonable steps” under its predecessor to the more demanding mandate of “[all sufficient steps](https://prime.greeks.live/area/all-sufficient-steps/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)”. This linguistic shift codifies a higher standard of care, compelling investment firms to construct and evidence a systematic and data-driven process for achieving the optimal outcome for their clients.

The directive’s reach is extensive, encompassing a broad spectrum of financial instruments, with a particular focus on bringing transparency to [Over-the-Counter](https://prime.greeks.live/area/over-the-counter/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (OTC) markets. This includes derivatives and other bespoke products, for which firms are now required to check the fairness of the price proposed to the client by gathering market data and, where possible, comparing it with similar products.

For Request for Quote (RFQ) workflows, MiFID II’s impact is particularly pronounced. The directive scrutinizes the nature of the relationship between the client and the firm, especially when the firm is dealing on its own account. The “[legitimate reliance test](https://prime.greeks.live/area/legitimate-reliance-test/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite),” a carryover from MiFID I, remains a pivotal framework for determining whether [best execution obligations](https://prime.greeks.live/area/best-execution-obligations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) apply in an RFQ context. This test assesses whether a client is justifiably relying on the firm to protect its interests.

The assessment is based on a four-fold criteria ▴ which party initiates the transaction, the market practice of “shopping around,” the relative price transparency of the market, and the information provided by the firm in its agreements. In essence, [MiFID II](https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) compels firms to look beyond the mere provision of a quote and to consider the systemic context of the interaction.

> MiFID II’s elevation of the best execution standard to “all sufficient steps” necessitates a complete re-evaluation of how firms approach RFQ workflows, demanding a more rigorous and evidence-based approach to demonstrating optimal client outcomes.

The directive’s application is segmented by client classification, with distinct requirements for retail, professional, and eligible counterparties. While the core principles of best execution apply to both retail and [professional clients](https://prime.greeks.live/area/professional-clients/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), the emphasis on different execution factors varies. For retail clients, the “total consideration” ▴ the combination of the price of the [financial instrument](https://prime.greeks.live/area/financial-instrument/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and the costs of execution ▴ is paramount.

For professional clients, a broader range of factors, including speed, likelihood of execution, and [market impact](https://prime.greeks.live/area/market-impact/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), can be given greater weight, provided this is justified and documented in the firm’s [execution policy](https://prime.greeks.live/area/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). Eligible counterparties, on the other hand, are generally exempt from best execution requirements, unless they elect to be treated as professional clients.

A significant operational change introduced by MiFID II is the requirement for detailed public reporting on [execution quality](https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This is manifested in two key regulatory technical standards ▴ RTS 27 and RTS 28. RTS 27 mandates that [execution venues](https://prime.greeks.live/area/execution-venues/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), including systematic internalisers and other liquidity providers, publish quarterly reports on execution quality.

[RTS 28](https://prime.greeks.live/area/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), in turn, requires investment firms to publish annual reports detailing their top five execution venues for each class of financial instrument. These reporting obligations create a feedback loop, providing firms with the data necessary to assess the quality of their execution arrangements and to make informed decisions about their choice of venues.

![A transparent, multi-faceted component, indicative of an RFQ engine's intricate market microstructure logic, emerges from complex FIX Protocol connectivity. Its sharp edges signify high-fidelity execution and price discovery precision for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimized-for-best-execution.jpg)

![A transparent, teal pyramid on a metallic base embodies price discovery and liquidity aggregation. This represents a high-fidelity execution platform for institutional digital asset derivatives, leveraging Prime RFQ for RFQ protocols, optimizing market microstructure and best execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-prime-os-2.jpg)

## Strategy

The strategic response to MiFID II’s impact on [RFQ best execution](https://prime.greeks.live/area/rfq-best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) policies must be anchored in the development of a robust and dynamic [order execution policy](https://prime.greeks.live/area/order-execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). This document is the foundational element of a firm’s compliance framework, articulating the firm’s approach to achieving the best possible result for its clients. It must be a living document, subject to regular review and adaptation in response to changing market conditions and the availability of new data.

The policy must clearly define the relative importance of the various [execution factors](https://prime.greeks.live/area/execution-factors/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) for different classes of financial instruments and client types. This requires a granular approach, recognizing that the optimal execution strategy for a liquid equity will differ substantially from that for an illiquid, bespoke derivative.

![A sophisticated internal mechanism of a split sphere reveals the core of an institutional-grade RFQ protocol. Polished surfaces reflect intricate components, symbolizing high-fidelity execution and price discovery within digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-system.jpg)

## Crafting a Compliant Order Execution Policy

A [MiFID II-compliant](https://prime.greeks.live/question/what-are-the-core-technology-implications-of-adopting-a-mifid-ii-compliant-execution-framework/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) [order execution](https://prime.greeks.live/area/order-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) policy must be comprehensive and transparent. It should provide clients with a clear understanding of how their orders will be handled. Key components of the policy include:

- **Execution Factors** ▴ A detailed explanation of the execution factors the firm considers, including price, costs, speed, likelihood of execution and settlement, size, and any other relevant considerations. The policy must also articulate the process for determining the relative importance of these factors. 

- **Execution Venues** ▴ A list of the execution venues the firm relies on for each class of financial instrument. This includes regulated markets, multilateral trading facilities (MTFs), organised trading facilities (OTFs), systematic internalisers (SIs), and other liquidity providers. The policy should also outline the criteria for selecting these venues. 

- **Client Consent** ▴ The policy must detail the process for obtaining prior client consent to the execution policy. Crucially, it must also specify the procedure for obtaining express prior consent for executing orders outside of a trading venue. 

- **Specific Instructions** ▴ The policy should address how the firm handles specific client instructions and include a clear warning that such instructions may prevent the firm from following its policy to achieve the best possible result. 

![A sophisticated dark-hued institutional-grade digital asset derivatives platform interface, featuring a glowing aperture symbolizing active RFQ price discovery and high-fidelity execution. The integrated intelligence layer facilitates atomic settlement and multi-leg spread processing, optimizing market microstructure for prime brokerage operations and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-crypto-derivatives-rfq-engine-intelligence-layer.jpg)

## Retail Vs Professional Clients a Comparative Analysis

The strategic approach to best execution must be tailored to the specific client category. The following table illustrates the key distinctions in the application of best execution principles to retail and professional clients:

| Aspect | Retail Clients | Professional Clients |
| --- | --- | --- |
| Primary Execution Factor | Total consideration (price and costs). | A wider range of factors can be prioritized, including speed, likelihood of execution, and market impact, based on the specific circumstances of the order. |
| Policy Information | Must be provided with a summary of the execution policy. | Receive the full execution policy. |
| Legitimate Reliance | Generally assumed to have legitimate reliance on the firm. | Assessed on a case-by-case basis using the four-fold test, particularly for RFQ transactions. |

![A precise, multi-faceted geometric structure represents institutional digital asset derivatives RFQ protocols. Its sharp angles denote high-fidelity execution and price discovery for multi-leg spread strategies, symbolizing capital efficiency and atomic settlement within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-execution-microstructure-framework.jpg)

## What Is the Role of the Legitimate Reliance Test?

The [legitimate reliance](https://prime.greeks.live/area/legitimate-reliance/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) test is a critical strategic consideration for firms engaging in [RFQ](https://prime.greeks.live/area/rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)-based trading, particularly when dealing as principal. The test requires a nuanced assessment of the client relationship to determine if the client is genuinely relying on the firm’s expertise to achieve a fair price. A firm’s strategy should involve training its sales and trading staff to understand and apply the four-fold test consistently.

This includes documenting the rationale for concluding whether or not legitimate reliance exists for a particular transaction or client relationship. This documentation is a vital part of the audit trail required to demonstrate compliance to regulators.

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![Transparent conduits and metallic components abstractly depict institutional digital asset derivatives trading. Symbolizing cross-protocol RFQ execution, multi-leg spreads, and high-fidelity atomic settlement across aggregated liquidity pools, it reflects prime brokerage infrastructure](https://options.greeks.live/wp-content/uploads/2025/07/cross-protocol-rfq-execution-digital-asset-derivatives-microstructure-system.jpg)

## Execution

The execution of a MiFID II-compliant RFQ [best execution policy](https://prime.greeks.live/area/best-execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) requires a significant investment in operational processes, technology, and data analysis. It is a continuous cycle of planning, execution, monitoring, and refinement. Firms must be able to demonstrate, on an ex-post basis, that they took “all [sufficient steps](https://prime.greeks.live/area/sufficient-steps/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)” to achieve the best possible result for their clients. This section provides an operational playbook for implementing a robust and defensible best execution framework.

![A translucent teal layer overlays a textured, lighter gray curved surface, intersected by a dark, sleek diagonal bar. This visually represents the market microstructure for institutional digital asset derivatives, where RFQ protocols facilitate high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-protocols-driving-optimal-execution.jpg)

## The Operational Playbook

Implementing a MiFID II-compliant RFQ best execution policy is a multi-stage process that requires careful planning and execution. The following checklist outlines the key steps:

- **Policy Development and Approval** ▴ Draft a comprehensive order execution policy that addresses all the requirements of MiFID II. This policy should be reviewed and approved by senior management and the firm’s compliance function.

- **Client Onboarding and Consent** ▴ Integrate the execution policy into the client onboarding process. Ensure that clients provide their prior consent to the policy and their express prior consent for executing orders outside of a trading venue.

- **Pre-Trade Analysis** ▴ For each RFQ, conduct a pre-trade analysis to determine the appropriate execution strategy. This should include an assessment of the instrument’s liquidity, the prevailing market conditions, and the client’s specific instructions.

- **Counterparty Selection** ▴ Maintain a list of approved counterparties for RFQ execution. This list should be based on objective criteria, including their historical execution quality, creditworthiness, and the competitiveness of their pricing.

- **Execution and Documentation** ▴ Execute the trade in accordance with the chosen strategy. Document all aspects of the execution process, including the quotes received, the rationale for selecting the winning quote, and any communications with the client.

- **Post-Trade Monitoring and Analysis** ▴ Use [Transaction Cost Analysis](https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (TCA) to measure and benchmark the quality of execution. This should include an analysis of the execution price against relevant benchmarks, as well as an assessment of the other execution factors.

- **Regular Review and Reporting** ▴ Conduct regular reviews of the execution policy and arrangements to identify any deficiencies. Prepare and publish the required [RTS 27](https://prime.greeks.live/area/rts-27/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and RTS 28 reports.

![A luminous central hub, representing a dynamic liquidity pool, is bisected by two transparent, sharp-edged planes. This visualizes intersecting RFQ protocols and high-fidelity algorithmic execution within institutional digital asset derivatives market microstructure, enabling precise price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-execution-protocols-microstructure-engine.jpg)

## Quantitative Modeling and Data Analysis

Data is the lifeblood of a MiFID II-compliant best execution framework. The RTS 27 and RTS 28 reports provide a wealth of data that can be used to inform a firm’s quantitative analysis of execution quality. The following tables provide a simplified overview of the data requirements for these reports:

![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 Execution Venue Report (Quarterly)

| Data Category | Required Information |
| --- | --- |
| Price | Intra-day and daily information on the prices of executed transactions, including simple and volume-weighted average prices. |
| Costs | Detailed information on all costs associated with execution, including fees, commissions, and any rebates or discounts. |
| Speed | Data on the speed of execution, including the time elapsed between order receipt and execution. |
| Likelihood of Execution | Information on the number of orders and RFQs received, executed, and cancelled. |

![A transparent sphere, bisected by dark rods, symbolizes an RFQ protocol's core. This represents multi-leg spread execution within a high-fidelity market microstructure for institutional grade digital asset derivatives, ensuring optimal price discovery and capital efficiency via Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-protocols-high-fidelity-execution.jpg)

## RTS 28 Investment Firm Report (Annually)

This report requires firms to disclose their top five execution venues for each class of financial instrument, based on trading volumes. It also requires a qualitative summary of the analysis and conclusions drawn from the firm’s monitoring of execution quality. 

![Abstract geometric structure with sharp angles and translucent planes, symbolizing institutional digital asset derivatives market microstructure. The central point signifies a core RFQ protocol engine, enabling precise price discovery and liquidity aggregation for multi-leg options strategies, crucial for high-fidelity execution and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/principals-operational-framework-optimizing-institutional-digital-asset-derivatives-rfq-protocol-execution-for-alpha-generation.jpg)

## How Does Technology Support Best Execution?

Technology plays a critical role in supporting a firm’s best execution obligations. Key technological components include:

- **Order Management Systems (OMS)** ▴ An OMS is essential for managing the entire lifecycle of an order, from receipt to execution. It should be configured to capture all the data required for MiFID II reporting and to provide a complete audit trail.

- **Execution Management Systems (EMS)** ▴ An EMS provides the tools for executing trades and accessing liquidity from multiple venues. It should incorporate smart order routing (SOR) technology to help firms achieve the best possible execution.

- **Transaction Cost Analysis (TCA)** ▴ TCA tools are used to analyze the quality of execution on a post-trade basis. They allow firms to compare their execution performance against a range of benchmarks and to identify areas for improvement. 

![Sleek Prime RFQ interface for institutional digital asset derivatives. An elongated panel displays dynamic numeric readouts, symbolizing multi-leg spread execution and real-time market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-rfq-options.jpg)

## Predictive Scenario Analysis

Consider a scenario where a buy-side firm needs to execute a large block trade in an illiquid corporate bond. Under MiFID II, the firm’s execution policy would dictate a specific workflow for this type of trade. The portfolio manager would likely initiate an RFQ to a pre-approved list of dealers known for their expertise in this particular asset class. The firm’s EMS would be used to send the RFQ and to capture the responses from the dealers.

The responses would be evaluated not just on price, but also on the dealer’s ability to handle the size of the trade without causing significant market impact. The decision to award the trade to a particular dealer would be documented, along with the rationale for the choice. Post-trade, the execution would be analyzed using TCA, comparing the execution price to relevant benchmarks and assessing the market impact of the trade. This entire process would be recorded in the firm’s systems, providing a complete audit trail that could be used to demonstrate compliance with its best execution obligations.

![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)

## System Integration and Technological Architecture

A robust technological architecture is essential for meeting the demands of MiFID II. This architecture should be designed to ensure seamless integration between the firm’s OMS, EMS, and TCA systems. The use of standardized protocols, such as the Financial Information eXchange (FIX) protocol, can facilitate this integration. The architecture must also be scalable and resilient, capable of handling large volumes of data and providing a high degree of availability.

Data security is another critical consideration, as firms must protect sensitive client and transaction data. The architecture should incorporate strong access controls and encryption to prevent unauthorized access to data. Finally, the architecture should be flexible enough to adapt to future regulatory changes and evolving market structures.

![Abstract bisected spheres, reflective grey and textured teal, forming an infinity, symbolize institutional digital asset derivatives. Grey represents high-fidelity execution and market microstructure teal, deep liquidity pools and volatility surface data](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocols-for-digital-asset-derivatives-execution.jpg)

## References

- Swedish Securities Dealers Association. “Guide for drafting/review of Execution Policy under MiFID II.” 4 December 2018.

- Kennedy, Tom. “Best Execution Under MiFID II.” Thomson Reuters, 28 June 2017.

- Bank of America. “Order Execution Policy.”

- Hill, Andy. “MiFID II/R Fixed Income Best Execution Requirements.” ICMA, September 2016.

- Barclays Investment Bank. “MiFID Best Execution Policy ▴ Client Summary.”

![A symmetrical, multi-faceted structure depicts an institutional Digital Asset Derivatives execution system. Its central crystalline core represents high-fidelity execution and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-microstructure.jpg)

## Reflection

The implementation of MiFID II has fundamentally reshaped the conversation around best execution. It has moved the industry from a principles-based approach to a more prescriptive and data-driven framework. For firms engaged in RFQ-based trading, this has necessitated a profound shift in mindset and a significant investment in technology and processes. The challenge now is to move beyond mere compliance and to leverage the new regulatory framework as a catalyst for improving execution quality and delivering better outcomes for clients.

The firms that will succeed in this new environment are those that embrace a culture of continuous improvement, using data and analytics to drive their decision-making and to refine their execution strategies. The journey towards a truly optimized execution framework is ongoing, and MiFID II is a critical milestone on that path.

![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)

## Glossary

<a href="https://prime.greeks.live/area/all-sufficient-steps/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![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](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-protocol-multi-leg-spread-execution.jpg)

## All Sufficient Steps

Meaning ▴ All Sufficient Steps denotes a design principle and operational mandate within a system where every component or process is engineered to autonomously achieve its defined objective without requiring external intervention or additional inputs beyond its initial parameters. </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">
![Abstractly depicting an institutional digital asset derivatives trading system. Intersecting beams symbolize cross-asset strategies and high-fidelity execution pathways, integrating a central, translucent disc representing deep liquidity aggregation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-ecosystem-unifying-rfq-protocols-for-high-fidelity-execution-and-deep-liquidity-aggregation-across-multi-leg-spreads.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/over-the-counter/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precise geometric prism reflects on a dark, structured surface, symbolizing institutional digital asset derivatives market microstructure. This visualizes block trade execution and price discovery for multi-leg spreads via RFQ protocols, ensuring high-fidelity execution and capital efficiency within Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-precision-execution.jpg)

## Over-The-Counter

Meaning ▴ Over-the-Counter refers to a decentralized market where financial instruments are traded directly between two parties, bypassing a centralized exchange or public order book. </a><a href="https://prime.greeks.live/area/best-execution-obligations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Central teal-lit mechanism with radiating pathways embodies a Prime RFQ for institutional digital asset derivatives. It signifies RFQ protocol processing, liquidity aggregation, and high-fidelity execution for multi-leg spread trades, enabling atomic settlement within market microstructure via quantitative analysis](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-core-for-institutional-digital-asset-rfq-protocol-execution-engine.jpg)

## Best Execution Obligations

Meaning ▴ Best Execution Obligations define the regulatory and fiduciary imperative for financial intermediaries to achieve the most favorable terms reasonably available for client orders. </a><a href="https://prime.greeks.live/area/legitimate-reliance-test/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precise metallic instrument, resembling an algorithmic trading probe or a multi-leg spread representation, passes through a transparent RFQ protocol gateway. This illustrates high-fidelity execution within market microstructure, facilitating price discovery for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-orchestration-of-institutional-digital-asset-rfq-execution.jpg)

## Legitimate Reliance Test

Meaning ▴ The Legitimate Reliance Test defines a legal and operational framework establishing the validity of actions predicated on a reasonable expectation of another party's performance or adherence to a specified protocol. </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 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)

## Mifid Ii

Meaning ▴ MiFID II, the Markets in Financial Instruments Directive II, constitutes a comprehensive regulatory framework enacted by the European Union to govern financial markets, investment firms, and trading venues. </a><a href="https://prime.greeks.live/area/professional-clients/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A dark, transparent capsule, representing a principal's secure channel, is intersected by a sharp teal prism and an opaque beige plane. This illustrates institutional digital asset derivatives interacting with dynamic market microstructure and aggregated liquidity](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-market-microstructure.jpg)

## Professional Clients

Meaning ▴ Professional Clients represent sophisticated institutional entities, including but not limited to investment firms, hedge funds, asset managers, and corporate treasuries, which possess the requisite expertise, experience, and financial capacity to comprehend and assume the risks associated with complex digital asset derivatives. </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">
![An advanced digital asset derivatives system features a central liquidity pool aperture, integrated with a high-fidelity execution engine. This Prime RFQ architecture supports RFQ protocols, enabling block trade processing and price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-protocol-execution-system-architecture.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-policy/?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)

## Execution Policy

Meaning ▴ An Execution Policy defines a structured set of rules and computational logic governing the handling and execution of financial orders within a trading system. </a><a href="https://prime.greeks.live/area/market-impact/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Robust metallic structures, symbolizing institutional grade digital asset derivatives infrastructure, intersect. Transparent blue-green planes represent algorithmic trading and high-fidelity execution for multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-microstructure-1.jpg)

## Market Impact

Meaning ▴ Market Impact refers to the observed change in an asset's price resulting from the execution of a trading order, primarily influenced by the order's size relative to available liquidity and prevailing market conditions. </a><a href="https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![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)

## 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-venues/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precise mechanical instrument with intersecting transparent and opaque hands, representing the intricate market microstructure of institutional digital asset derivatives. This visual metaphor highlights dynamic price discovery and bid-ask spread dynamics within RFQ protocols, emphasizing high-fidelity execution and latent liquidity through a robust Prime RFQ for atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineering-driving-institutional-digital-asset-derivatives-execution-across-advanced-rfq-protocols-and-prime-brokerage-frameworks.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/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A luminous blue Bitcoin coin rests precisely within a sleek, multi-layered platform. This embodies high-fidelity execution of digital asset derivatives via an RFQ protocol, highlighting price discovery and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-precision-3.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/order-execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Translucent, multi-layered forms evoke an institutional RFQ engine, its propeller-like elements symbolizing high-fidelity execution and algorithmic trading. This depicts precise price discovery, deep liquidity pool dynamics, and capital efficiency within a Prime RFQ for digital asset derivatives block trades](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-14.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/rfq-best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central circular element, vertically split into light and dark hemispheres, frames a metallic, four-pronged hub. Two sleek, grey cylindrical structures diagonally intersect behind it](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-for-digital-asset-derivatives-execution-1.jpg)

## Rfq Best Execution

Meaning ▴ RFQ Best Execution defines the systematic process of obtaining the most advantageous execution for a trade through a Request for Quote mechanism, considering factors such as price, size, speed, likelihood of execution, and settlement efficiency. </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 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)

## 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/question/what-are-the-core-technology-implications-of-adopting-a-mifid-ii-compliant-execution-framework/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A gleaming, translucent sphere with intricate internal mechanisms, flanked by precision metallic probes, symbolizes a sophisticated Principal's RFQ engine. This represents the atomic settlement of multi-leg spread strategies, enabling high-fidelity execution and robust price discovery within institutional digital asset derivatives markets, minimizing latency and slippage for optimal alpha generation and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/inst-digital-asset-deriv-rfq-os-for-optimal-high-fidelity-trade-exec.jpg)

## Mifid Ii-Compliant

A MiFID II framework mandates a re-architecture of trading systems for total data transparency and verifiable execution control. </a><a href="https://prime.greeks.live/area/order-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, institutional-grade Prime RFQ component features intersecting transparent blades with a glowing core. This visualizes a precise RFQ execution engine, enabling high-fidelity execution and dynamic price discovery for digital asset derivatives, optimizing market microstructure for capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-engine-for-best-execution-microstructure.jpg)

## Order Execution

Meaning ▴ Order Execution defines the precise operational sequence that transforms a Principal's trading intent into a definitive, completed transaction within a digital asset market. </a><a href="https://prime.greeks.live/area/legitimate-reliance/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision instrument probes a speckled surface, visualizing market microstructure and liquidity pool dynamics within a dark pool. This depicts RFQ protocol execution, emphasizing price discovery for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-flow.jpg)

## Legitimate Reliance

Meaning ▴ Legitimate reliance in the context of institutional digital asset derivatives denotes the justifiable expectation that a system, protocol, or counterparty will perform consistently according to its designed specifications and explicit or implicit commitments. </a><a href="https://prime.greeks.live/area/rfq/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Intersecting opaque and luminous teal structures symbolize converging RFQ protocols for multi-leg spread execution. Surface droplets denote market microstructure granularity and slippage](https://options.greeks.live/wp-content/uploads/2025/07/rfq-protocols-for-digital-asset-derivatives-high-fidelity-execution.jpg)

## Rfq

Meaning ▴ Request for Quote (RFQ) is a structured communication protocol enabling a market participant to solicit executable price quotations for a specific instrument and quantity from a selected group of liquidity providers. </a><a href="https://prime.greeks.live/area/best-execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A modular system with beige and mint green components connected by a central blue cross-shaped element, illustrating an institutional-grade RFQ execution engine. This sophisticated architecture facilitates high-fidelity execution, enabling efficient price discovery for multi-leg spreads and optimizing capital efficiency within a Prime RFQ framework for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/principal-prime-os-rfq-engine-for-digital-asset-derivatives.jpg)

## Best Execution Policy

Meaning ▴ The Best Execution Policy defines the obligation for a broker-dealer or trading firm to execute client orders on terms most favorable to the client. </a><a href="https://prime.greeks.live/area/sufficient-steps/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central metallic bar, representing an RFQ block trade, pivots through translucent geometric planes symbolizing dynamic liquidity pools and multi-leg spread strategies. This illustrates a Principal's operational framework for high-fidelity execution and atomic settlement within a sophisticated Crypto Derivatives OS, optimizing private quotation workflows](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-facilitating-high-fidelity-price-discovery-and-optimal-capital-efficiency-within-advanced-market-microstructure.jpg)

## Sufficient Steps

Meaning ▴ Sufficient Steps constitute the minimum, verifiable sequence of operations required to achieve a defined, deterministic outcome within a financial protocol or system, ensuring operational closure and state transition. </a><a href="https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A transparent, angular teal object with an embedded dark circular lens rests on a light surface. This visualizes an institutional-grade RFQ engine, enabling high-fidelity execution and precise price discovery for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-engine-high-fidelity-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">
![Metallic, reflective components depict high-fidelity execution within market microstructure. A central circular element symbolizes an institutional digital asset derivative, like a Bitcoin option, processed via RFQ protocol](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-high-fidelity-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>

**Tags:** [Execution Factors](https://options.greeks.live/area/execution-factors/), [RFQ](https://options.greeks.live/area/rfq/), [Systematic Internaliser](https://options.greeks.live/area/systematic-internaliser/), [Execution Policy](https://options.greeks.live/area/execution-policy/), [Legitimate Reliance](https://options.greeks.live/area/legitimate-reliance/), [Over-the-Counter](https://options.greeks.live/area/over-the-counter/)	

## Discover More

- 
### [How Do Regulatory Requirements for Best Execution Differ between the U.S. and Europe?](https://options.greeks.live/question/how-do-regulatory-requirements-for-best-execution-differ-between-the-u-s-and-europe/)
![A central RFQ engine orchestrates diverse liquidity pools, represented by distinct blades, facilitating high-fidelity execution of institutional digital asset derivatives. Metallic rods signify robust FIX protocol connectivity, enabling efficient price discovery and atomic settlement for Bitcoin options.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-liquidity-orchestration.jpg)

U.S. best execution demands proof of the best price, while Europe requires proof of the best process.

- 
### [How Does MiFID II Differ from U.S. Best Execution Standards?](https://options.greeks.live/question/how-does-mifid-ii-differ-from-u-s-best-execution-standards/)
![Precision instrument with multi-layered dial, symbolizing price discovery and volatility surface calibration. Its metallic arm signifies an algorithmic trading engine, enabling high-fidelity execution for RFQ block trades, minimizing slippage within an institutional Prime RFQ for digital asset derivatives.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-trading-platform-calibrating-rfq-protocols-for-high-fidelity-execution-and-market-microstructure-optimization.jpg)

MiFID II imposes a granular, "all sufficient steps" process, while U.S. standards focus on the principle of "most favorable terms."

- 
### [How Do Regulatory Frameworks like MiFID II Impact Venue Selection Strategy?](https://options.greeks.live/question/how-do-regulatory-frameworks-like-mifid-ii-impact-venue-selection-strategy/)
![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 transforms venue selection into a data-driven, systematic process for evidencing the best possible multi-factor execution outcome.

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

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

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

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

- 
### [How Does MiFID II Define the Scope of Best Execution for RFQ Protocols?](https://options.greeks.live/question/how-does-mifid-ii-define-the-scope-of-best-execution-for-rfq-protocols/)
![A sleek, cream-colored, dome-shaped object with a dark, central, blue-illuminated aperture, resting on a reflective surface against a black background. This represents a cutting-edge Crypto Derivatives OS, facilitating high-fidelity execution for institutional digital asset derivatives. Its central aperture symbolizes intelligent price discovery and real-time market microstructure analysis, crucial for optimal RFQ protocol management and multi-leg spread strategies, embodying prime brokerage capabilities.](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-prime-os-high-fidelity-rfq-execution-engine-intelligence-layer.jpg)

MiFID II mandates a systematic, evidence-based process to ensure the best possible result for clients in RFQ protocols.

- 
### [What Are the Core Components of a Defensible Best Execution Policy after the Repeal of RTS 28?](https://options.greeks.live/question/what-are-the-core-components-of-a-defensible-best-execution-policy-after-the-repeal-of-rts-28/)
![A sophisticated institutional-grade system's internal mechanics. A central metallic wheel, symbolizing an algorithmic trading engine, sits above glossy surfaces with luminous data pathways and execution triggers. This abstract visualizes high-fidelity execution for digital asset derivatives, optimizing market microstructure and RFQ protocol efficiency within a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-core.jpg)

A defensible best execution policy post-RTS 28 is a dynamic, data-driven framework embedded in a firm's culture, focused on demonstrable client outcomes.

- 
### [How Do Firms Quantitatively Measure and Compare Different MiFID II Best Execution Factors?](https://options.greeks.live/question/how-do-firms-quantitatively-measure-and-compare-different-mifid-ii-best-execution-factors/)
![A slender metallic probe extends between two curved surfaces. This abstractly illustrates high-fidelity execution for institutional digital asset derivatives, driving price discovery within market microstructure. It represents Prime RFQ protocol precision navigating dark liquidity for best execution and capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/precision-instrument-navigating-institutional-digital-asset-derivatives-rfq-protocols-for-optimal-price-discovery-and-high-fidelity-execution.jpg)

Firms quantitatively measure MiFID II factors via Transaction Cost Analysis, comparing execution against benchmarks to prove "all sufficient steps" were taken.

- 
### [How Does MiFID II Differentiate Best Execution for Different Client Types?](https://options.greeks.live/question/how-does-mifid-ii-differentiate-best-execution-for-different-client-types/)
![A precise stack of multi-layered circular components visually representing a sophisticated Principal Digital Asset RFQ framework. Each distinct layer signifies a critical component within market microstructure for high-fidelity execution of institutional digital asset derivatives, embodying liquidity aggregation across dark pools, enabling private quotation and atomic settlement.](https://options.greeks.live/wp-content/uploads/2025/07/principal-digital-asset-rfq-protocol-layers-for-high-fidelity-execution.jpg)

MiFID II architects best execution by client tier, mandating total cost priority for retail and flexible factor weighting for professionals.

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    "headline": "How Does MiFID II Specifically Impact RFQ Best Execution Policies? \u25b4 Question",
    "description": "MiFID II mandates a shift to \"all sufficient steps\" for RFQ best execution, requiring data-driven policies and transparent reporting. \u25b4 Question",
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        "caption": "The image prominently displays two intersecting, sharp, teal-colored forms with embedded circular nodes, positioned atop layered, muted structures. This visual metaphor embodies advanced institutional trading strategies for digital asset derivatives, specifically highlighting RFQ protocols for block trade execution. It signifies the precision of algorithmic trading and smart order routing across latent liquidity pools, ensuring best execution and portfolio margin optimization. The design reflects a sophisticated Crypto Derivatives OS engineered for alpha generation and systemic risk mitigation, delivering unparalleled capital efficiency through private quotation and atomic settlement."
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        "All Sufficient Steps",
        "Best Execution",
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        "Execution Factors",
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        "Execution Venues",
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        "Legitimate Reliance",
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                "text": "The legitimate reliance test is a critical strategic consideration for firms engaging in RFQ-based trading, particularly when dealing as principal. The test requires a nuanced assessment of the client relationship to determine if the client is genuinely relying on the firm's expertise to achieve a fair price. A firm's strategy should involve training its sales and trading staff to understand and apply the four-fold test consistently. This includes documenting the rationale for concluding whether or not legitimate reliance exists for a particular transaction or client relationship. This documentation is a vital part of the audit trail required to demonstrate compliance to regulators."
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---

**Original URL:** https://options.greeks.live/question/how-does-mifid-ii-specifically-impact-rfq-best-execution-policies/
