# How Does the Si Regime Alter Best Execution Obligations for Asset Managers? ▴ Question

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

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![Glowing teal conduit symbolizes high-fidelity execution pathways and real-time market microstructure data flow for digital asset derivatives. Smooth grey spheres represent aggregated liquidity pools and robust counterparty risk management within a Prime RFQ, enabling optimal price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-market-microstructure-prime-os.jpg)

![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)

## Concept

The introduction of the [Systematic Internaliser](https://prime.greeks.live/area/systematic-internaliser/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (SI) regime under the second Markets in [Financial Instruments Directive](https://prime.greeks.live/question/how-can-firms-quantitatively-demonstrate-best-execution-for-rfq-trades-under-the-directive/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (MiFID II) fundamentally re-calibrated the operational environment for asset managers. It was a deliberate architectural intervention designed to bring a significant volume of over-the-counter (OTC) trading into a more transparent framework. For an asset manager, whose core fiduciary duty is to secure the best possible outcome for client orders, this was not a minor adjustment. It represented the formalization of a new type of execution venue that could not be ignored.

An SI is an investment firm that deals on its own account by executing client orders outside of a regulated market or multilateral trading facility (MTF) on an organized, frequent, and systematic basis. This process effectively brings [principal trading](https://prime.greeks.live/area/principal-trading/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), where the firm acts as the counterparty to its client, under a specific set of regulatory requirements.

The existence of the SI regime directly intersects with an asset manager’s [best execution obligations](https://prime.greeks.live/area/best-execution-obligations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The directive compels firms to take all sufficient steps to obtain the best possible result for their clients, considering factors like price, cost, speed, and likelihood of execution. Prior to the SI framework, a bilateral trade with a bank’s trading desk was a purely OTC transaction. With the introduction of the SI regime, that same bank, if it meets certain quantitative thresholds for the volume of its principal trading activity, is classified as an [execution venue](https://prime.greeks.live/area/execution-venue/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).

This classification carries significant implications. It means an [asset manager](https://prime.greeks.live/question/what-is-the-strategic-impact-of-research-unbundling-on-an-asset-managers-business-model/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)’s best [execution policy](https://prime.greeks.live/area/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) must explicitly acknowledge SIs as a distinct category of venue and articulate the conditions under which trading with an SI is consistent with their overarching duty to their clients.

This shift compels the asset manager to move from a relationship-driven model of OTC trading to a data-driven, systematic evaluation of a new class of liquidity provider. The SI is not merely another counterparty; it is a formal part of the market structure. Consequently, the asset manager’s process for demonstrating compliance with [best execution](https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) has to evolve.

It requires a framework for comparing the quality of execution available from an SI against the prices and liquidity available on traditional lit exchanges and MTFs. The core challenge introduced by the SI regime is the integration of this formalized, principal-trading liquidity source into a rigorous, evidence-based best execution framework that can withstand regulatory scrutiny.

![Central mechanical pivot with a green linear element diagonally traversing, depicting a robust RFQ protocol engine for institutional digital asset derivatives. This signifies high-fidelity execution of aggregated inquiry and price discovery, ensuring capital efficiency within complex market microstructure and order book dynamics](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-best-execution.jpg)

![A sleek, high-fidelity beige device with reflective black elements and a control point, set against a dynamic green-to-blue gradient sphere. This abstract representation symbolizes institutional-grade RFQ protocols for digital asset derivatives, ensuring high-fidelity execution and price discovery within market microstructure, powered by an intelligence layer for alpha generation and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-institutional-digital-asset-derivatives-rfq-execution-terminal-system.jpg)

## Strategy

![A central toroidal structure and intricate core are bisected by two blades: one algorithmic with circuits, the other solid. This symbolizes an institutional digital asset derivatives platform, leveraging RFQ protocols for high-fidelity execution and price discovery](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-execution-hub-integrating-algorithmic-intelligence-for-high-fidelity-price-discovery-and-liquidity-aggregation.jpg)

## Recalibrating the Execution Policy

The primary strategic response for any asset manager to the SI regime is the comprehensive overhaul of their [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 text that governs how a firm achieves and demonstrates best execution. With the introduction of SIs, this policy must be updated to explicitly recognize SIs as a legitimate and distinct execution venue category. This involves more than simply adding a new definition.

The policy needs to articulate the specific circumstances under which routing an order to an SI is deemed to provide the best possible result for a client. This requires a detailed analysis of the asset classes in which the firm is active and an identification of the SIs that are relevant for those instruments.

The updated policy must detail the factors that will be considered when selecting an SI for a particular trade. These factors extend beyond the simple quoted price and must include an assessment of the likelihood of execution, the potential for [price improvement](https://prime.greeks.live/area/price-improvement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), and the costs associated with the transaction. For example, for a large block trade in a corporate bond, an SI might offer a competitive price with a high certainty of execution, minimizing the [market impact](https://prime.greeks.live/area/market-impact/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) that would occur if the order were placed on a lit exchange. The execution policy must provide a clear rationale for making such a determination and must be supported by empirical data.

> The SI regime necessitates that asset managers evolve their best execution policies from a simple venue list to a dynamic framework for evaluating principal liquidity sources.

![A sleek metallic teal execution engine, representing a Crypto Derivatives OS, interfaces with a luminous pre-trade analytics display. This abstract view depicts institutional RFQ protocols enabling high-fidelity execution for multi-leg spreads, optimizing market microstructure and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/advanced-institutional-digital-asset-derivatives-rfq-protocol-engine-for-high-fidelity-execution-and-market-microstructure-analysis.jpg)

## Data and Analytics the New Foundation

A critical component of any strategy involving SIs is the enhancement of data and analytics capabilities, particularly in the realm of [Transaction Cost Analysis](https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (TCA). To satisfy the best execution obligation, an asset manager must be able to prove that the execution obtained from an SI was competitive. This requires the ability to compare the SI’s quoted price against a range of benchmarks at the time of the trade. These benchmarks could include the prevailing price on lit markets, the prices quoted by other SIs, and the prices available on various MTFs.

This necessitates a robust data infrastructure capable of capturing and analyzing high-frequency market data from multiple sources. The asset manager’s TCA process must be adapted to incorporate executions with SIs and to generate reports that clearly demonstrate the quality of execution achieved. These reports are not just for internal review; they are a key piece of evidence for demonstrating compliance to both clients and regulators. The ability to produce detailed, data-rich reports that justify the use of an SI is a cornerstone of a successful strategy in the [MiFID II](https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) environment.

![Intersecting metallic structures symbolize RFQ protocol pathways for institutional digital asset derivatives. They represent high-fidelity execution of multi-leg spreads across diverse liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-framework-optimizing-multi-leg-spreads-and-liquidity-aggregation-for-best-execution.jpg)

## Comparative Analysis of Execution Venues

The decision to route an order to an SI, a lit market, or an MTF is a complex one that depends on the specific characteristics of the order and the prevailing market conditions. [Asset managers](https://prime.greeks.live/question/what-are-the-primary-challenges-for-asset-managers-in-complying-with-mifid-iis-transparency-regimes/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) must develop a systematic approach for making this decision. This often involves the use of a [Smart Order Router](https://prime.greeks.live/area/smart-order-router/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (SOR) that is programmed with the firm’s execution policy and is capable of dynamically selecting the optimal venue for each trade. The logic underpinning the SOR must be carefully designed and regularly reviewed to ensure that it is aligned with the firm’s best execution obligations.

- **Lit Markets** ▴ These venues, such as traditional stock exchanges, offer a high degree of pre-trade transparency. They are generally well-suited for smaller, more liquid orders where market impact is less of a concern.

- **Multilateral Trading Facilities (MTFs)** ▴ MTFs provide a platform for multiple parties to interact and trade. They can offer a deep pool of liquidity and are often used for a wide range of asset classes.

- **Systematic Internalisers (SIs)** ▴ SIs are ideal for larger orders or for instruments that are less liquid. They can provide price improvement and reduce market impact by allowing the asset manager to trade directly with a single counterparty.

### Execution Venue Selection Criteria

| Factor | Lit Market | MTF | Systematic Internaliser (SI) |
| --- | --- | --- | --- |

![A high-fidelity institutional digital asset derivatives execution platform. A central conical hub signifies precise price discovery and aggregated inquiry for RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-high-fidelity-digital-asset-derivatives-execution-1.jpg)

![A precise system balances components: an Intelligence Layer sphere on a Multi-Leg Spread bar, pivoted by a Private Quotation sphere atop a Prime RFQ dome. A Digital Asset Derivative sphere floats, embodying Implied Volatility and Dark Liquidity within Market Microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-7.jpg)

## Execution

![A central precision-engineered RFQ engine orchestrates high-fidelity execution across interconnected market microstructure. This Prime RFQ node facilitates multi-leg spread pricing and liquidity aggregation for institutional digital asset derivatives, minimizing slippage](https://options.greeks.live/wp-content/uploads/2025/08/high-fidelity-rfq-execution-for-institutional-crypto-derivatives.jpg)

## Operationalizing SI Engagement

The practical execution of a strategy that includes SIs requires significant operational adjustments for an asset manager. The first step is to establish the necessary connectivity with the relevant SI venues. This may involve direct technical integration or leveraging the services of a third-party technology provider.

Once connectivity is established, the asset manager must ensure that their order management system (OMS) and execution management system (EMS) are configured to properly handle orders routed to SIs. This includes the ability to send and receive the required data messages and to track the status of orders throughout their lifecycle.

The firm’s trading desk procedures must also be updated to reflect the new execution options. Traders need to be trained on the specific characteristics of each SI venue and on the firm’s policies for when and how to use them. This includes understanding the quoting conventions of different SIs and the process for requesting and accepting quotes. The goal is to create a seamless workflow that allows traders to efficiently access SI liquidity while adhering to the firm’s best execution policies.

> Effective execution in an SI environment hinges on the seamless integration of technology, data, and trader expertise.

![A precision institutional interface features a vertical display, control knobs, and a sharp element. This RFQ Protocol system ensures High-Fidelity Execution and optimal Price Discovery, facilitating Liquidity Aggregation](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-execution-platform-interface.jpg)

## The Mandate for Monitoring and Review

A crucial aspect of executing trades with SIs is the ongoing monitoring and review of execution quality. MiFID II requires firms to regularly assess the effectiveness of their execution arrangements and to make changes where necessary. For SIs, this means continuously evaluating the quality of the prices and liquidity they provide.

This involves a quantitative analysis of execution data, as well as a qualitative assessment of the SI’s performance. Asset managers must be prepared to challenge their SIs on the quality of their execution and to shift their order flow to other venues if an SI is consistently failing to provide competitive outcomes.

This monitoring process should be formalized and documented, with clear metrics for what constitutes good execution. The findings of these reviews should be used to refine the firm’s execution policy and to inform decisions about which SIs to include in their list of approved venues. This continuous feedback loop is essential for ensuring that the asset manager is consistently meeting its best execution obligations in a dynamic and evolving market environment.

- **Venue Selection** ▴ The process begins with the identification of an order that may be suitable for execution with an SI. This is typically a large or illiquid order where minimizing market impact is a key consideration.

- **Quote Request** ▴ The asset manager’s trader will then request a quote from one or more SIs. This is often done through an electronic platform that allows for the simultaneous solicitation of quotes from multiple venues.

- **Quote Evaluation** ▴ Upon receiving the quotes, the trader will evaluate them against the prevailing market conditions and the firm’s best execution criteria. This includes comparing the quoted prices to the prices available on lit markets and other venues.

- **Order Execution** ▴ If a quote is deemed to be competitive, the trader will accept it and the trade will be executed with the SI. The details of the trade are then captured in the asset manager’s systems for post-trade analysis.

- **Post-Trade Analysis** ▴ The final step is a thorough post-trade analysis of the execution. This involves using TCA tools to measure the quality of the execution against a range of benchmarks and to generate a report that documents the findings.

### TCA Report Key Data Fields for SI Executions

| Data Field | Description | Importance for Best Execution |
| --- | --- | --- |

![A modular, institutional-grade device with a central data aggregation interface and metallic spigot. This Prime RFQ represents a robust RFQ protocol engine, enabling high-fidelity execution for institutional digital asset derivatives, optimizing capital efficiency and best execution](https://options.greeks.live/wp-content/uploads/2025/08/principals-institutional-digital-asset-derivatives-prime-os-for-optimized-rfq-protocol-best-execution-system.jpg)

## References

- Autorité des marchés financiers. “Summary document on SPOT inspections of the best execution and best selection obligations applicable to asset management companies.” 2021.

- Planet Compliance. “In a nutshell ▴ Best Execution under MiFID II/MiFIR.” 2024.

- Bovill. “Best Execution Under MiFID II.” 2017.

- International Capital Market Association. “MiFID II implementation ▴ the Systematic Internaliser regime.” 2017.

- Goldman Sachs. “MiFID – Markets in Financial Instruments Directive.” 2018.

- European Securities and Markets Authority. “Questions and Answers on MiFID II and MiFIR investor protection and intermediaries topics.” 2017.

- Financial Conduct Authority. “Markets in Financial Instruments Directive II.” 2021.

![A vertically stacked assembly of diverse metallic and polymer components, resembling a modular lens system, visually represents the layered architecture of institutional digital asset derivatives. Each distinct ring signifies a critical market microstructure element, from RFQ protocol layers to aggregated liquidity pools, ensuring high-fidelity execution and capital efficiency within a Prime RFQ framework](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-execution-stack.jpg)

## Reflection

The integration of the [Systematic Internaliser regime](https://prime.greeks.live/question/how-does-the-systematic-internaliser-regime-for-bonds-differ-from-the-regime-for-equities/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) into the European market structure represents a fundamental shift in the landscape of execution. For asset managers, it has elevated the practice of best execution from a compliance exercise to a source of competitive advantage. The ability to effectively navigate this new environment, to source liquidity from SIs in a way that is both compliant and beneficial to clients, is a hallmark of a sophisticated investment operation.

The challenge is not simply to connect to these new venues, but to develop the analytical and operational capabilities to harness their potential. The question for every asset manager is whether their current framework is sufficiently robust to meet this challenge and to transform a regulatory obligation into a strategic asset.

![A sleek, multi-layered device, possibly a control knob, with cream, navy, and metallic accents, against a dark background. This represents a Prime RFQ interface for Institutional Digital Asset Derivatives](https://options.greeks.live/wp-content/uploads/2025/07/precision-control-interface-for-institutional-digital-asset-derivatives-rfq-protocols-and-prime-os.jpg)

## Glossary

<a href="https://prime.greeks.live/question/how-can-firms-quantitatively-demonstrate-best-execution-for-rfq-trades-under-the-directive/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A crystalline sphere, representing aggregated price discovery and implied volatility, rests precisely on a secure execution rail. This symbolizes a Principal's high-fidelity execution within a sophisticated digital asset derivatives framework, connecting a prime brokerage gateway to a robust liquidity pipeline, ensuring atomic settlement and minimal slippage for institutional block trades](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-execution-platform-optimizing-liquidity-and-risk-management-through-advanced-protocols.jpg)

## Financial Instruments Directive

A firm quantitatively demonstrates RFQ best execution by architecting a data-driven system that proves its process is optimal. </a><a href="https://prime.greeks.live/area/systematic-internaliser/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Prime RFQ visualizes institutional digital asset derivatives RFQ protocol and high-fidelity execution. Glowing liquidity streams converge at intelligent routing nodes, aggregating market microstructure for atomic settlement, mitigating counterparty risk within dark liquidity](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-high-fidelity-digital-asset-derivatives-rfq-protocol.jpg)

## Systematic Internaliser

Meaning ▴ A Systematic Internaliser (SI) is a financial institution executing client orders against its own capital on an organized, frequent, systematic basis off-exchange. </a><a href="https://prime.greeks.live/area/principal-trading/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered metallic institutional trading platform, bisected by an execution pathway, features a central blue RFQ protocol engine. This Crypto Derivatives OS core facilitates high-fidelity execution, optimal price discovery, and multi-leg spread trading, reflecting advanced market microstructure](https://options.greeks.live/wp-content/uploads/2025/08/precision-engineered-institutional-digital-asset-derivatives-execution-core-facilitating-rfq-protocol-driven-optimal-price-discovery-and-multi-leg-spread-trading-for-capital-efficiency.jpg)

## Principal Trading

Meaning ▴ Principal Trading defines the operational paradigm where a financial entity engages in market transactions utilizing its own capital and balance sheet, rather than executing orders on behalf of clients. </a><a href="https://prime.greeks.live/area/best-execution-obligations/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A beige, triangular device with a dark, reflective display and dual front apertures. This specialized hardware facilitates institutional RFQ protocols for digital asset derivatives, enabling high-fidelity execution, market microstructure analysis, optimal price discovery, capital efficiency, block trades, and portfolio margin](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-terminal-for-high-fidelity-execution-and-precise-market-microstructure-analysis.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/execution-venue/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract planes illustrate RFQ protocol execution for multi-leg spreads. A dynamic teal element signifies high-fidelity execution and smart order routing, optimizing price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-optimization.jpg)

## Execution Venue

Meaning ▴ An Execution Venue refers to a regulated facility or system where financial instruments are traded, encompassing entities such as regulated markets, multilateral trading facilities (MTFs), organized trading facilities (OTFs), and systematic internalizers. </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">
![Abstract forms representing a Principal-to-Principal negotiation within an RFQ protocol. The precision of high-fidelity execution is evident in the seamless interaction of components, symbolizing liquidity aggregation and market microstructure optimization for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-execution-engine.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/question/what-is-the-strategic-impact-of-research-unbundling-on-an-asset-managers-business-model/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek metallic device with a central translucent sphere and dual sharp probes. This symbolizes an institutional-grade intelligence layer, driving high-fidelity execution for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-platform-precision.jpg)

## Asset Manager

Research unbundling forces an asset manager to architect a transparent, value-driven information supply chain. </a><a href="https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A polished, dark teal institutional-grade mechanism reveals an internal beige interface, precisely deploying a metallic, arrow-etched component. This signifies high-fidelity execution within an RFQ protocol, enabling atomic settlement and optimized price discovery for institutional digital asset derivatives and multi-leg spreads, ensuring minimal slippage and robust capital efficiency](https://options.greeks.live/wp-content/uploads/2025/08/quantitative-finance-driven-rfq-workflow-for-best-execution-in-digital-assets.jpg)

## 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">
![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](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-precision-execution.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/price-improvement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, bi-component digital asset derivatives engine reveals its intricate core, symbolizing an advanced RFQ protocol. This Prime RFQ component enables high-fidelity execution and optimal price discovery within complex market microstructure, managing latent liquidity for institutional operations](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-optimal-execution.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/market-impact/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A dark blue sphere and teal-hued circular elements on a segmented surface, bisected by a diagonal line. This visualizes institutional block trade aggregation, algorithmic price discovery, and high-fidelity execution within a Principal's Prime RFQ, optimizing capital efficiency and mitigating counterparty risk for digital asset derivatives and multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/market-microstructure-driven-institutional-digital-asset-derivatives-rfq.jpg)

## 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/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A dark blue sphere, representing a deep institutional liquidity pool, integrates a central RFQ engine. This system processes aggregated inquiries for Digital Asset Derivatives, including Bitcoin Options and Ethereum Futures, enabling high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-for-optimized-liquidity-aggregation.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/mifid-ii/?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)

## 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/smart-order-router/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A modular, dark-toned system with light structural components and a bright turquoise indicator, representing a sophisticated Crypto Derivatives OS for institutional-grade RFQ protocols. It signifies private quotation channels for block trades, enabling high-fidelity execution and price discovery through aggregated inquiry, minimizing slippage and information leakage within dark liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-system-for-optimal-execution-1.jpg)

## Smart Order Router

Meaning ▴ A Smart Order Router (SOR) is an algorithmic trading mechanism designed to optimize order execution by intelligently routing trade instructions across multiple liquidity venues. </a><a href="https://prime.greeks.live/question/what-are-the-primary-challenges-for-asset-managers-in-complying-with-mifid-iis-transparency-regimes/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A dark, reflective surface features a segmented circular mechanism, reminiscent of an RFQ aggregation engine or liquidity pool. Specks suggest market microstructure dynamics or data latency](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-options-rfq-execution-microstructure-prime-os.jpg)

## Asset Managers

MiFID II compliance demands a systemic re-architecture of data and execution protocols to achieve continuous, high-fidelity transparency. </a><a href="https://prime.greeks.live/question/how-does-the-systematic-internaliser-regime-for-bonds-differ-from-the-regime-for-equities/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract sculpture with intersecting angular planes and a central sphere on a textured dark base. This embodies sophisticated market microstructure and multi-venue liquidity aggregation for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-institutional-digital-asset-derivatives-rfq-execution-2.jpg)

## Systematic Internaliser Regime

The Systematic Internaliser regime for bonds differs from equities in its assessment granularity, liquidity determination, and pre-trade transparency obligations. </a>

**Tags:** [Order Execution Policy](https://options.greeks.live/area/order-execution-policy/), [Execution Venue](https://options.greeks.live/area/execution-venue/), [Transaction Cost Analysis](https://options.greeks.live/area/transaction-cost-analysis/), [Systematic Internaliser](https://options.greeks.live/area/systematic-internaliser/), [Lit Market](https://options.greeks.live/area/lit-market/), [MiFID II](https://options.greeks.live/area/mifid-ii/)	

## Discover More

- 
### [How Does the Choice of an RFQ versus an OTF Impact a Firm’s Best Execution Defense?](https://options.greeks.live/question/how-does-the-choice-of-an-rfq-versus-an-otf-impact-a-firms-best-execution-defense/)
![A metallic, modular trading interface with black and grey circular elements, signifying distinct market microstructure components and liquidity pools. A precise, blue-cored probe diagonally integrates, representing an advanced RFQ engine for granular price discovery and atomic settlement of multi-leg spread strategies in institutional digital asset derivatives. This optimizes capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-system-facilitating-high-fidelity-execution-price-discovery.jpg)

Choosing between RFQ and OTF dictates the trade-off between information control and competitive price discovery in a best execution defense.

- 
### [Could the Rise of Systematic Internalisers Lead to a Permanent Two-Tiered European Equity Market?](https://options.greeks.live/question/could-the-rise-of-systematic-internalisers-lead-to-a-permanent-two-tiered-european-equity-market/)
![Abstract spheres and a translucent flow visualize institutional digital asset derivatives market microstructure. It depicts robust RFQ protocol execution, high-fidelity data flow, and seamless liquidity aggregation. This imagery underscores capital efficiency and atomic settlement within a Prime RFQ framework.](https://options.greeks.live/wp-content/uploads/2025/07/precision-market-microstructure-for-institutional-digital-asset-derivatives-leveraging-rfq-protocols-and-atomic-settlement-across-prime-os.jpg)

The rise of Systematic Internalisers has cemented a permanent, two-tiered European equity market by design.

- 
### [How Does the Choice of RFQ Counterparties Affect the Demonstrability of Best Execution?](https://options.greeks.live/question/how-does-the-choice-of-rfq-counterparties-affect-the-demonstrability-of-best-execution/)
![Two intertwined, reflective, metallic structures with translucent teal elements at their core, converging on a central nexus against a dark background. This represents a sophisticated RFQ protocol facilitating price discovery within digital asset derivatives markets, denoting high-fidelity execution and institutional-grade systems optimizing capital efficiency via latent liquidity and smart order routing across dark pools.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-execution-system-architecture.jpg)

Counterparty selection architects the competitive environment, making its strategic design the core of demonstrable best execution.

- 
### [How Can Firms Effectively Demonstrate Best Execution without RTS 28 Reports?](https://options.greeks.live/question/how-can-firms-effectively-demonstrate-best-execution-without-rts-28-reports/)
![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)

Firms demonstrate best execution by building an internal system of governance, data analysis, and documented justification.

- 
### [What Are the Primary Risks Associated with Over-Reliance on SI Liquidity for Best Execution?](https://options.greeks.live/question/what-are-the-primary-risks-associated-with-over-reliance-on-si-liquidity-for-best-execution/)
![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)

Over-reliance on Systematic Internaliser liquidity creates hidden costs through information asymmetry and market fragmentation.

- 
### [What Are the Key Differences in Best Execution Obligations between an OTF and a Systematic Internaliser?](https://options.greeks.live/question/what-are-the-key-differences-in-best-execution-obligations-between-an-otf-and-a-systematic-internaliser/)
![Central polished disc, with contrasting segments, represents Institutional Digital Asset Derivatives Prime RFQ core. A textured rod signifies RFQ Protocol High-Fidelity Execution and Low Latency Market Microstructure data flow to the Quantitative Analysis Engine for Price Discovery.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-core-system-high-fidelity.jpg)

An SI's best execution is proven by its price competitiveness; an OTF's is proven by the quality of its discretionary process.

- 
### [What Are the Key Differences in Best Execution Obligations between an SI and a Traditional Broker?](https://options.greeks.live/question/what-are-the-key-differences-in-best-execution-obligations-between-an-si-and-a-traditional-broker/)
![A metallic precision tool rests on a circuit board, its glowing traces depicting market microstructure and algorithmic trading. A reflective disc, symbolizing a liquidity pool, mirrors the tool, highlighting high-fidelity execution and price discovery for institutional digital asset derivatives via RFQ protocols and Principal's Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocols-driving-high-fidelity-execution-and-market-microstructure-optimization-via-principal-prime-os.jpg)

The primary difference is agency versus principal: a broker must search all venues for the best result, while an SI must provide a fair price from its own book.

- 
### [What Are the Regulatory Requirements for Ensuring Best Execution with an SOR?](https://options.greeks.live/question/what-are-the-regulatory-requirements-for-ensuring-best-execution-with-an-sor/)
![A polished, abstract geometric form represents a dynamic RFQ Protocol for institutional-grade digital asset derivatives. A central liquidity pool is surrounded by opening market segments, revealing an emerging arm displaying high-fidelity execution data. This signifies algorithmic trading for private quotation and efficient price discovery within market microstructure.](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-institutional-digital-asset-derivatives-rfq-protocol-system.jpg)

A firm must deploy a dynamically calibrated and rigorously monitored Smart Order Router to systematically prove it is achieving the most favorable client outcome.

- 
### [How Does MiFID II Define the “All Sufficient Steps” Requirement for Best Execution?](https://options.greeks.live/question/how-does-mifid-ii-define-the-all-sufficient-steps-requirement-for-best-execution/)
![A multi-layered electronic system, centered on a precise circular module, visually embodies an institutional-grade Crypto Derivatives OS. It represents the intricate market microstructure enabling high-fidelity execution via RFQ protocols for digital asset derivatives, driven by an intelligence layer facilitating algorithmic trading and optimal price discovery.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-facilitating-high-fidelity-execution-and-optimal-price-discovery.jpg)

MiFID II's "all sufficient steps" requirement mandates a provable, data-driven process to ensure best client outcomes.

---

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**Original URL:** https://options.greeks.live/question/how-does-the-si-regime-alter-best-execution-obligations-for-asset-managers/
