# What Are the Best Execution Documentation Requirements When Choosing between an OTF and an SI? ▴ Question

**Published:** 2025-08-01
**Categories:** Question

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## Concept

The decision between executing through an [Organised Trading Facility](https://prime.greeks.live/area/organised-trading-facility/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (OTF) or a [Systematic Internaliser](https://prime.greeks.live/area/systematic-internaliser/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (SI) represents a fundamental choice in market engagement philosophy. This selection is a declaration of how a firm intends to interact with liquidity, manage principal risk, and ultimately, fulfill its fiduciary duty to its clients under the MiFID II framework. The documentation that underpins this choice is the architectural blueprint of a firm’s execution strategy, a formal articulation of its operating principles within the European market structure. It codifies the analytical process that justifies why, for a specific instrument and a particular client order, one model of interaction is structurally superior to another.

At its core, the distinction is one of system design. An OTF is a multilateral system, a regulated environment where multiple third-party buying and selling interests are brought together. Its defining characteristic for non-equity instruments is the element of discretion afforded to the venue operator in matching orders. This introduces a human or intelligent algorithmic overlay designed to navigate complex or illiquid markets, facilitating [price discovery](https://prime.greeks.live/area/price-discovery/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) where a purely automated central limit order book might fail.

The documentation justifying the use of an OTF, therefore, must validate the necessity of this discretionary framework. It must demonstrate an understanding that for certain transactions, value is best achieved not through raw speed, but through managed, negotiated [liquidity sourcing](https://prime.greeks.live/area/liquidity-sourcing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).

Conversely, a Systematic Internaliser operates on a bilateral principle. An SI is an [investment firm](https://prime.greeks.live/area/investment-firm/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) that deals on its own account by executing client orders outside of a regulated market, MTF, or OTF. Here, the firm acts as the principal counterparty to the client’s trade. The system is designed for internalization; the SI absorbs the client’s order, taking on the market risk itself.

The documentation supporting the use of an SI is an attestation of the firm’s capacity to provide fair and competitive pricing, even in the absence of a multilateral competitive environment. It must prove, through verifiable data, that the firm’s internal liquidity and pricing engine can consistently meet [best execution](https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) criteria and that this method is in the client’s best interest, particularly by mitigating the [market impact](https://prime.greeks.live/area/market-impact/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) of an order.

> The core of best execution documentation is to provide a transparent and defensible rationale for the chosen execution venue, grounded in quantitative evidence and aligned with client objectives.

The overarching mandate of [MiFID II](https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is the obligation for firms to take “all sufficient steps” to obtain the best possible result for their clients. This is a significant elevation from the previous “all reasonable steps” standard. “Sufficient” implies a higher, more demonstrable standard of care, one that requires a robust, evidence-based process. The documentation is the evidence.

It is the formal record that proves the firm has architected a system of [venue selection](https://prime.greeks.live/area/venue-selection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), monitoring, and review that is not arbitrary but is instead a calculated, data-driven process. The choice between an OTF and an SI is never a matter of simple preference; it is a conclusion reached through a rigorous analysis of the execution factors ▴ price, costs, speed, likelihood of execution and settlement, size, and the specific nature of the order itself. The documentation must articulate how the unique characteristics of either an OTF or an SI align with the prioritized factors for a given trade, thereby serving the client’s ultimate interest.

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## Strategy

Architecting a robust execution strategy [under MiFID](https://prime.greeks.live/question/what-are-the-operational-consequences-of-misreporting-under-mifid-ii-versus-a-reporting-failure-under-emir/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) II requires the creation of a comprehensive governance framework. This framework is not a single document but a system of interconnected policies and procedures, with the firm’s [Order Execution Policy](https://prime.greeks.live/area/order-execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) at its center. This policy is the strategic declaration of how the firm will consistently deliver best execution. When it comes to choosing between OTFs and SIs, the policy must articulate a clear, factor-based methodology that guides the decision-making process, ensuring it is repeatable, auditable, and defensible.

![A sleek device showcases a rotating translucent teal disc, symbolizing dynamic price discovery and volatility surface visualization within an RFQ protocol. Its numerical display suggests a quantitative pricing engine facilitating algorithmic execution for digital asset derivatives, optimizing market microstructure through an intelligence layer](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-for-digital-asset-rfq-execution-system-with-smart-liquidity-routing.jpg)

## The Execution Policy the Central Governance Document

The [Execution Policy](https://prime.greeks.live/area/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) is the cornerstone of best execution compliance. It is a public-facing document that explains to clients, regulators, and internal stakeholders how the firm achieves the best possible results. It must provide a detailed account of the [execution venues](https://prime.greeks.live/area/execution-venues/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) the firm relies upon and, critically, the logic behind their selection.

For each class of financial instrument, the policy must identify the venues ▴ including specific OTFs and SIs ▴ that the firm has assessed and deemed capable of consistently [providing high-quality outcomes](https://prime.greeks.live/question/what-metrics-best-indicate-a-dealers-true-liquidity-providing-capacity-in-volatile-markets/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). The documentation must go beyond a simple list; it needs to explain the factors that affect the choice of venue, thereby linking the firm’s strategic decisions directly to its regulatory obligations.

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## What Are the Key Differentiating Factors in Venue Selection?

The strategic assessment of an OTF versus an SI hinges on a multi-dimensional analysis. The firm’s documentation must show a sophisticated understanding of how the structural differences between these venues serve different execution objectives. A granular comparison is essential for building a defensible strategy.

### Table 1 ▴ Strategic Comparison of OTF and SI Execution Venues

| Execution Factor | Organised Trading Facility (OTF) Strategic Implications | Systematic Internaliser (SI) Strategic Implications | Primary Documentation Requirement |
| --- | --- | --- | --- |
| Liquidity Interaction Model | Engages with a multilateral pool of diverse third-party liquidity. This model is advantageous for discovering price in instruments that lack a continuous, deep market, as it aggregates fragmented interest. | Interacts with a single, bilateral liquidity source ▴ the SI’s own principal book. This is effective for immediate execution and minimizing information leakage, as the order is not exposed to a wider market. | The Execution Policy must detail for which instrument types the firm prioritizes multilateral price discovery versus principal liquidity access. |
| Price Discovery Mechanism | Price is discovered through a competitive process, often facilitated by the OTF operator’s discretion (e.g. voice brokerage or request-for-quote systems). This allows for negotiation and context-based pricing. | Price is provided directly by the SI as a firm quote upon request. The quality of this price is dependent on the SI’s own modeling, risk appetite, and inventory. | Documentation must include procedures for how the fairness of SI quotes is checked against available market data, satisfying Article 64(4) of the MiFID II Delegated Regulation. |
| Counterparty Risk Profile | While trades are arranged on the OTF, settlement risk is typically with the ultimate counterparty, though this can be mitigated by the OTF’s rules or a central clearing arrangement. | Counterparty risk is concentrated entirely on the SI. The client is exposed to the creditworthiness and operational stability of the investment firm acting as the SI. | The firm’s due diligence records for selected SIs, including assessments of their financial stability and operational resilience, must be maintained. |
| Execution Control and Discretion | The firm cedes a degree of control to the OTF operator, who exercises discretion in matching orders. This is a strategic choice to leverage the operator’s market expertise, especially for large or complex orders. | The firm and client retain control up to the point of execution, but the SI has full discretion on whether to offer a quote and at what price. The execution itself is a discrete, bilateral event. | The Execution Policy must specify the conditions under which leveraging an OTF operator’s discretion is considered a “sufficient step” toward achieving best execution. |
| Market Impact and Information Leakage | Exposing an order in a multilateral system, even a discretionary one, carries a risk of information leakage, which could lead to adverse price movements. The OTF’s structure is designed to mitigate this, but the risk exists. | Offers a high degree of protection against information leakage. The order is known only to the SI, making it a preferred channel for large trades where market impact is a primary concern. | Internal TCA (Transaction Cost Analysis) reports must be documented to compare the realized market impact of trades on OTFs versus SIs for similar orders. |

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## Pre-Trade Documentation and Transparency Obligations

The strategic framework extends into the pre-trade environment, where documentation requirements are designed to ensure price fairness and transparency. An OTF is subject to pre-trade transparency rules, meaning it must make public current bid and offer prices and the depth of trading interests at those prices. The documentation must show that the firm understands and leverages this transparency. When using an SI, the primary pre-trade obligation falls on the SI itself, which must provide firm quotes to its clients when requested.

The investment firm using the SI must have a documented process for evaluating the “fairness” of these quotes. This process often involves gathering market data from other sources or comparing the SI’s quote to comparable products to ensure it is reasonable, and this entire evaluation process must be recorded and auditable.

> A firm’s Execution Policy serves as the strategic blueprint, justifying its choice of execution venues by linking them to specific client needs and market conditions.

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## Monitoring and Review the Living Document

The Execution Policy is not a static document. MiFID II requires firms to monitor the effectiveness of their execution arrangements and policy at least annually and whenever a material change occurs that could affect their ability to obtain the best possible result. This means the strategic documentation must be part of a dynamic loop of review and enhancement. The firm must document its monitoring process, which should include analyzing [execution quality data](https://prime.greeks.live/area/execution-quality-data/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) from its chosen venues.

If this analysis reveals that a particular OTF or SI is no longer providing high-quality outcomes, the firm is obligated to document the reasons for this and, if necessary, amend its Execution Policy and venue selection. This creates a perpetual, evidence-based cycle of strategic refinement.

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## Execution

The execution phase of the MiFID II best execution framework translates strategic decisions into a series of precise, data-intensive, and auditable operational protocols. The documentation requirements in this phase are granular and non-negotiable, forming the evidentiary backbone of compliance. They are designed to create a transparent record of [execution quality](https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) that can be scrutinized by clients, management, and regulators. The core components of this operational playbook are post-trade reporting, the public disclosure of execution quality data by venues, and the firm’s own summary analysis of its execution practices.

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## The Operational Playbook Post-Trade Reporting and Monitoring

Once a trade is executed on either an OTF or an SI, a cascade of reporting and data disclosure obligations is triggered. These are not merely administrative tasks; they are fundamental to the market’s transparency and the firm’s ability to prove it is meeting its obligations.

- 
**Transaction Reporting** ▴ Under Article 26 of [MiFIR](https://prime.greeks.live/area/mifir/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), [investment firms](https://prime.greeks.live/question/what-are-the-primary-operational-burdens-the-si-regime-places-on-investment-firms/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) are required to submit a detailed report of every transaction to their national competent authority, typically by the end of the following working day. This applies to trades on both OTFs and SIs. The report is exceptionally detailed, with up to 65 data fields, covering everything from the precise identification of the instrument and counterparties to the specific venue of execution and the capacity in which the firm acted. This documentation creates a comprehensive regulatory record of all trading activity.

- 
**Public [Post-Trade Transparency](https://prime.greeks.live/area/post-trade-transparency/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ This obligation falls on the execution venue itself. Both OTFs and SIs must make public the price, volume, and time of the transactions they have concluded as close to real-time as is technologically possible. This data provides a public benchmark for market prices.
For certain large-in-scale (LIS) transactions, the rules permit a deferral of publication to avoid undue market impact. The firm’s documentation must show an awareness of these transparency requirements and how they are used to benchmark its own executions.

- 
**Quarterly Execution Quality Reports ([RTS 27](https://prime.greeks.live/area/rts-27/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite))** ▴ This is a critical [documentation requirement](https://prime.greeks.live/question/what-are-the-consequences-of-failing-to-comply-with-the-annual-ceo-certification-requirement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) placed upon execution venues, including OTFs and SIs. Each quarter, these venues must publish a detailed, machine-readable report containing granular data about the quality of execution that occurred on their platform. This is a foundational piece of evidence that investment firms must use to evaluate their venue choices. The documentation is extensive and provides a standardized basis for comparing venue performance.

- 
**Annual Top-5 Venue Reports ([RTS 28](https://prime.greeks.live/area/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite))** ▴ This is the capstone documentation requirement for the investment firm itself. Annually, the firm must publish a report for each class of financial instruments, detailing the top five execution venues where it executed client orders in the preceding year. This report must include the volume and percentage of orders executed on each venue.
Crucially, it must also be accompanied by a qualitative summary of the execution quality obtained, explaining the firm’s analysis and the conclusions it has drawn. This document synthesizes all the underlying data into a public attestation of the firm’s best execution performance and the effectiveness of its venue selection strategy.

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## Quantitative Modeling and Data Analysis RTS 27

The RTS 27 reports published by OTFs and SIs are the raw material for quantitative analysis. Investment firms are required to ingest and analyze this data as part of their venue monitoring process. The level of detail required in these reports is immense, designed to provide a multi-faceted view of execution quality.

### Table 2 ▴ Key Data Fields in a Sample RTS 27 Report

| Data Point Category | Specific Information Required | Purpose in Venue Analysis |
| --- | --- | --- |
| Price | Average price, total value of transactions, number of transactions. Data on spreads for RFQ systems (average spread, number of requests). | Allows for direct comparison of the effective price achieved on different venues. Spread data is crucial for assessing the competitiveness of OTF and SI quoting. |
| Costs | Explicit execution costs, including venue fees and clearing charges. Any taxes or levies applied. | Provides a clear picture of the “all-in” cost of trading on a venue, which is a primary best execution factor. |
| Speed of Execution | Average time from order receipt to execution, measured in milliseconds. For RFQ systems, time from RFQ to quote and quote to execution. | Critical for evaluating venue latency and efficiency, especially for strategies where speed is a high-priority factor. |
| Likelihood of Execution | Number and value of orders received versus executed. For RFQ systems, number of quotes requested versus provided and executed. | Measures the reliability and fill rate of a venue, indicating the certainty of execution once an order is sent. |
| Trading Information | Number of orders or RFQs that were cancelled or expired. Average size of orders. Number of transactions executed under pre-trade transparency waivers. | Provides context on trading patterns, venue capacity, and the types of flow the venue specializes in (e.g. large-in-scale orders). |

> The annual RTS 28 report serves as a firm’s public declaration, synthesizing a year’s worth of execution data into a justification for its strategic venue choices.

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## How Should a Firm Document Its Analysis of Execution Quality?

The analysis culminating in the RTS 28 report must be rigorously documented. A firm should maintain internal records that demonstrate how it has processed RTS 27 data from its chosen OTFs and SIs, alongside its own internal Transaction Cost Analysis (TCA). This documentation should include:

- 
**Comparative Analytics** ▴ Spreadsheets or database reports comparing the key RTS 27 metrics (price, cost, speed, likelihood) across all venues used for a specific instrument class.

- 
**Qualitative Assessment** ▴ A written analysis that interprets the quantitative data. For example, it might conclude that for illiquid bonds, an OTF provided superior pricing despite slower execution speeds, justifying its use for large, complex orders. Conversely, it might show that for standard interest rate swaps, an SI consistently provided tighter spreads and faster execution, making it the optimal choice for that flow.

- 
**Monitoring Records** ▴ Evidence of regular (at least quarterly) reviews of this data, not just an annual exercise. This demonstrates a proactive approach to monitoring and ensures that any deterioration in a venue’s performance is identified and acted upon promptly.

Ultimately, the [execution documentation](https://prime.greeks.live/question/can-a-firm-be-penalized-for-deficient-documentation-even-with-favorable-execution-outcomes/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) for OTFs and SIs is not about filing forms. It is about constructing and maintaining a data-driven system of proof. It is the operational manifestation of the firm’s commitment to its clients, demonstrating through verifiable evidence that its choices are the result of a disciplined, analytical, and continuous process of optimization.

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## References

- International Capital Market Association. “MiFID II/MiFIR ▴ Transparency & Best Execution requirements in respect of bonds.” 2016.

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

- Autorité des Marchés Financiers. “Guide to best execution.” 2017.

- Thomson Reuters. “Best Execution Under MiFID II.” 2017.

- Financial Markets Law Committee. “MiFID II ▴ Best Execution.” 2014.

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## Reflection

The architecture of [best execution documentation](https://prime.greeks.live/area/best-execution-documentation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), when properly constructed, becomes more than a compliance exercise. It evolves into a powerful feedback system for the entire trading operation. The rigorous, data-driven analysis required to justify the use of an OTF over an SI, or vice versa, forces a continuous re-evaluation of a firm’s core assumptions about market structure and liquidity. How does your current framework for venue analysis measure up to this standard?

Does it merely satisfy the letter of the regulation, or does it actively contribute to a deeper, more quantitative understanding of your execution footprint? The data streams mandated by MiFID II ▴ RTS 27 and RTS 28 ▴ provide the raw materials. The ultimate strategic advantage lies in architecting an internal system of intelligence that transforms this data from a regulatory burden into a source of competitive edge.

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## Glossary

<a href="https://prime.greeks.live/area/organised-trading-facility/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek blue and white mechanism with a focused lens symbolizes Pre-Trade Analytics for Digital Asset Derivatives. A glowing turquoise sphere represents a Block Trade within a Liquidity Pool, demonstrating High-Fidelity Execution via RFQ protocol for Price Discovery in Dark Pool Market Microstructure](https://options.greeks.live/wp-content/uploads/2025/07/advanced-institutional-digital-asset-derivatives-rfq-execution-system-for-optimal-price-discovery-and-high-fidelity-execution.jpg)

## Organised Trading Facility

Meaning ▴ An Organised Trading Facility (OTF) represents a specific type of multilateral system, as defined under MiFID II, designed for the trading of non-equity instruments. </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">
![A precision optical system with a reflective lens embodies the Prime RFQ intelligence layer. Gray and green planes represent divergent RFQ protocols or multi-leg spread strategies for institutional digital asset derivatives, enabling high-fidelity execution and optimal price discovery within complex market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-intelligent-core-driving-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-across-diverse-liquidity-pools-for-optimal-price-discovery.jpg)

## 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/price-discovery/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central glowing core within metallic structures symbolizes an Institutional Grade RFQ engine. This Intelligence Layer enables optimal Price Discovery and High-Fidelity Execution for Digital Asset Derivatives, streamlining Block Trade and Multi-Leg Spread Atomic Settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-microstructure-core.jpg)

## Price Discovery

Meaning ▴ Price discovery is the continuous, dynamic process by which the market determines the fair value of an asset through the collective interaction of supply and demand. </a><a href="https://prime.greeks.live/area/liquidity-sourcing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
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## Liquidity Sourcing

Meaning ▴ Liquidity Sourcing refers to the systematic process of identifying, accessing, and aggregating available trading interest across diverse market venues to facilitate optimal execution of financial transactions. </a><a href="https://prime.greeks.live/area/investment-firm/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek, modular infrastructure for institutional digital asset derivatives trading. Its intersecting elements symbolize integrated RFQ protocols, facilitating high-fidelity execution and precise price discovery across complex multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-system-optimizing-high-fidelity-block-trade-liquidity-and-multi-leg-spread-precision.jpg)

## Investment Firm

Meaning ▴ An Investment Firm constitutes a regulated financial entity primarily engaged in the management, trading, and intermediation of financial instruments on behalf of institutional clients or for its own proprietary account. </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 refined object featuring a translucent teal element, symbolizing a dynamic RFQ for Institutional Grade Digital Asset Derivatives. Its precision embodies High-Fidelity Execution and seamless Price Discovery within complex Market Microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-precision-for-optimal-execution-and-deep-liquidity-aggregation.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/market-impact/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision instrument featuring a sharp, translucent teal blade from a geared base on a textured platform. This symbolizes high-fidelity execution of institutional digital asset derivatives via RFQ protocols, optimizing market microstructure for capital efficiency and algorithmic trading on a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-algorithmic-execution-infrastructure-for-institutional-digital-asset-derivatives-request-for-quote-protocols-optimal-liquidity.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/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, abstract system interface with a central spherical lens representing real-time Price Discovery and Implied Volatility analysis for institutional Digital Asset Derivatives. Its precise contours signify High-Fidelity Execution and robust RFQ protocol orchestration, managing latent liquidity and minimizing slippage for optimized Alpha Generation](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-institutional-digital-asset-derivatives-execution-via-optimized-rfq-protocols-enhancing-market-microstructure.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/venue-selection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![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)

## Venue Selection

Meaning ▴ Venue Selection refers to the algorithmic process of dynamically determining the optimal trading venue for an order based on a comprehensive set of predefined criteria. </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">
![Precisely engineered circular beige, grey, and blue modules stack tilted on a dark base. A central aperture signifies the core RFQ protocol engine](https://options.greeks.live/wp-content/uploads/2025/07/core-prime-os-rfq-engine-digital-asset-derivatives-trading-system-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/question/what-are-the-operational-consequences-of-misreporting-under-mifid-ii-versus-a-reporting-failure-under-emir/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, futuristic object with a glowing line and intricate metallic core, symbolizing a Prime RFQ for institutional digital asset derivatives. It represents a sophisticated RFQ protocol engine enabling high-fidelity execution, liquidity aggregation, atomic settlement, and capital efficiency for multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/advanced-institutional-digital-asset-derivatives-rfq-protocol-execution-engine-for-optimal-liquidity-aggregation-and-atomic-settlement.jpg)

## Under Mifid

A MiFID II misreport corrupts market surveillance data; an EMIR failure hides systemic risk, creating distinct operational and reputational threats. </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 machinery visualizes an institutional RFQ protocol engine, demonstrating high-fidelity execution of digital asset derivatives. It depicts seamless liquidity aggregation and sophisticated algorithmic trading, crucial for prime brokerage capital efficiency and optimal market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-system-1.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/execution-venues/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sleek, futuristic apparatus featuring a central spherical processing unit flanked by dual reflective surfaces and illuminated data conduits. This system visually represents an advanced RFQ protocol engine facilitating high-fidelity execution and liquidity aggregation for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-options-rfq-liquidity-aggregation-interface.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/question/what-metrics-best-indicate-a-dealers-true-liquidity-providing-capacity-in-volatile-markets/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Robust institutional Prime RFQ core connects to a precise RFQ protocol engine. Multi-leg spread execution blades propel a digital asset derivative target, optimizing price discovery](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-proto-insti-digital-asset-derivs-hi-fi-exec-capital-effi-risk-mgmt.jpg)

## Providing High-Quality Outcomes

A dealer's true liquidity capacity is a function of their resilience, measured by post-trade costs and risk absorption metrics. </a><a href="https://prime.greeks.live/area/information-leakage/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A multifaceted, luminous abstract structure against a dark void, symbolizing institutional digital asset derivatives market microstructure. Its sharp, reflective surfaces embody high-fidelity execution, RFQ protocol efficiency, and precise price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-trading-protocol-architecture-optimizing-high-fidelity-rfq-execution-and-latent-liquidity-discovery.jpg)

## Information Leakage

Meaning ▴ Information leakage denotes the unintended or unauthorized disclosure of sensitive trading data, often concerning an institution's pending orders, strategic positions, or execution intentions, to external market participants. </a><a href="https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An abstract, precisely engineered construct of interlocking grey and cream panels, featuring a teal display and control. This represents an institutional-grade Crypto Derivatives OS for RFQ protocols, enabling high-fidelity execution, liquidity aggregation, and market microstructure optimization within a Principal's operational framework for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/08/integrated-principal-trading-system-modules-for-institutional-digital-asset-derivatives-rfq-execution-and-optimized-market-microstructure.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/execution-quality-data/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Polished metallic disks, resembling data platters, with a precise mechanical arm poised for high-fidelity execution. This embodies an institutional digital asset derivatives platform, optimizing RFQ protocol for efficient price discovery, managing market microstructure, and leveraging a Prime RFQ intelligence layer to minimize execution latency](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-precision-execution-via-advanced-rfq-protocols-and-prime-os-intelligence-layer-for-optimal-market-microstructure.jpg)

## Execution Quality Data

Meaning ▴ Execution Quality Data refers to the comprehensive, granular dataset capturing all relevant parameters of a trade execution event, from order submission through final fill, including timestamps, venue, price, size, 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 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)

## 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/question/what-are-the-primary-operational-burdens-the-si-regime-places-on-investment-firms/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Two high-gloss, white cylindrical execution channels with dark, circular apertures and secure bolted flanges, representing robust institutional-grade infrastructure for digital asset derivatives. These conduits facilitate precise RFQ protocols, ensuring optimal liquidity aggregation and high-fidelity execution within a proprietary Prime RFQ environment](https://options.greeks.live/wp-content/uploads/2025/08/institutional-grade-execution-channels-enabling-private-quotation-and-optimal-liquidity-aggregation-for-high-fidelity-digital-asset-derivatives-rfq-protocols-on-prime-os.jpg)

## Investment Firms

The SI regime imposes significant operational burdens on investment firms, requiring substantial investment in technology, data management, and compliance. </a><a href="https://prime.greeks.live/area/mifir/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central, metallic, multi-bladed mechanism, symbolizing a core execution engine or RFQ hub, emits luminous teal data streams. These streams traverse through fragmented, transparent structures, representing dynamic market microstructure, high-fidelity price discovery, and liquidity aggregation](https://options.greeks.live/wp-content/uploads/2025/07/principal-grade-digital-asset-derivatives-rfq-protocol-engine-facilitating-high-fidelity-execution-and-optimal-price-discovery-across-fragmented-market-microstructure.jpg)

## Mifir

Meaning ▴ MiFIR, the Markets in Financial Instruments Regulation, constitutes a foundational legislative framework within the European Union, enacted to enhance the transparency, efficiency, and integrity of financial markets. </a><a href="https://prime.greeks.live/area/post-trade-transparency/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![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)

## Post-Trade Transparency

Meaning ▴ Post-Trade Transparency defines the public disclosure of executed transaction details, encompassing price, volume, and timestamp, after a trade has been completed. </a><a href="https://prime.greeks.live/question/what-are-the-consequences-of-failing-to-comply-with-the-annual-ceo-certification-requirement/?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)

## Documentation Requirement

Failure to comply with CEO certification invites severe personal and corporate penalties, from criminal charges to market delisting. </a><a href="https://prime.greeks.live/area/rts-27/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Precision cross-section of an institutional digital asset derivatives system, revealing intricate market microstructure. Toroidal halves represent interconnected liquidity pools, centrally driven by an RFQ protocol](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-architecture-revealing-precision-rfq-protocol-engine-for-optimal-high-fidelity-execution-and-latent-liquidity-aggregation.jpg)

## Rts 27

Meaning ▴ RTS 27 mandates that investment firms and market operators publish detailed data on the quality of execution of transactions on their venues. </a><a href="https://prime.greeks.live/area/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Three sensor-like components flank a central, illuminated teal lens, reflecting an advanced RFQ protocol system. This represents an institutional digital asset derivatives platform's intelligence layer for precise price discovery, high-fidelity execution, and managing multi-leg spread strategies, optimizing market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-for-optimal-execution.jpg)

## Rts 28

Meaning ▴ RTS 28 refers to Regulatory Technical Standard 28 under MiFID II, which mandates investment firms and market operators to publish annual reports on the quality of execution of transactions on trading venues and for financial instruments. </a><a href="https://prime.greeks.live/area/rfq-systems/?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)

## Rfq Systems

Meaning ▴ A Request for Quote (RFQ) System is a computational framework designed to facilitate price discovery and trade execution for specific financial instruments, particularly illiquid or customized assets in over-the-counter markets. </a><a href="https://prime.greeks.live/question/can-a-firm-be-penalized-for-deficient-documentation-even-with-favorable-execution-outcomes/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![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)

## Execution Documentation

Yes, firms are penalized for deficient documentation because regulations mandate proof of a diligent process, not just a favorable result. </a><a href="https://prime.greeks.live/area/best-execution-documentation/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated metallic and teal mechanism, symbolizing an institutional-grade Prime RFQ for digital asset derivatives. Its precise alignment suggests high-fidelity execution, optimal price discovery via aggregated RFQ protocols, and robust market microstructure for multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-precision-execution.jpg)

## Best Execution Documentation

Meaning ▴ Best Execution Documentation constitutes the verifiable record of an institution's adherence to its best execution policy, encompassing pre-trade analysis, real-time decision-making, and post-trade validation. </a>

**Tags:** [Regulatory Reporting](https://options.greeks.live/area/regulatory-reporting/), [Execution Venues](https://options.greeks.live/area/execution-venues/), [RFQ Systems](https://options.greeks.live/area/rfq-systems/), [RTS 27](https://options.greeks.live/area/rts-27/), [Information Leakage](https://options.greeks.live/area/information-leakage/), [MiFIR](https://options.greeks.live/area/mifir/)	

## Discover More

- 
### [How Does MiFID II Influence RFQ Best Execution Requirements in Europe?](https://options.greeks.live/question/how-does-mifid-ii-influence-rfq-best-execution-requirements-in-europe/)
![A sleek, futuristic apparatus featuring a central spherical processing unit flanked by dual reflective surfaces and illuminated data conduits. This system visually represents an advanced RFQ protocol engine facilitating high-fidelity execution and liquidity aggregation for institutional digital asset derivatives. It embodies precise price discovery, multi-leg spread processing, and atomic settlement within a Prime RFQ framework.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-options-rfq-liquidity-aggregation-interface.jpg)

MiFID II transforms RFQ best execution from a relationship-based art into a data-driven, auditable science of systemic process.

- 
### [How Do Regulatory Frameworks like MiFID II Influence the Measurement of Best Execution and Leakage?](https://options.greeks.live/question/how-do-regulatory-frameworks-like-mifid-ii-influence-the-measurement-of-best-execution-and-leakage/)
![A precisely engineered central blue hub anchors segmented grey and blue components, symbolizing a robust Prime RFQ for institutional trading of digital asset derivatives. This structure represents a sophisticated RFQ protocol engine, optimizing liquidity pool aggregation and price discovery through advanced market microstructure for high-fidelity execution and private quotation.](https://options.greeks.live/wp-content/uploads/2025/08/prime-os-digital-asset-derivatives-rfq-execution-core-systemic-hub.jpg)

MiFID II mandates a shift to a data-driven, evidence-based system for proving optimal execution and managing information leakage.

- 
### [What Is the Regulatory Framework Governing Venue Selection and Best Execution?](https://options.greeks.live/question/what-is-the-regulatory-framework-governing-venue-selection-and-best-execution/)
![A smooth, off-white sphere rests within a meticulously engineered digital asset derivatives RFQ platform, featuring distinct teal and dark blue metallic components. This sophisticated market microstructure enables private quotation, high-fidelity execution, and optimized price discovery for institutional block trades, ensuring capital efficiency and best execution.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-system-microstructure-core.jpg)

The regulatory framework for best execution is a mandate for firms to use reasonable diligence to secure the most favorable terms for a client's order.

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

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

- 
### [How Does MiFID II Define the Best Execution Factors for Investment Firms?](https://options.greeks.live/question/how-does-mifid-ii-define-the-best-execution-factors-for-investment-firms/)
![Translucent spheres, embodying institutional counterparties, reveal complex internal algorithmic logic. Sharp lines signify high-fidelity execution and RFQ protocols, connecting these liquidity pools. The reflective surface depicts digital asset derivatives market microstructure, facilitating optimal price discovery.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-optimal-execution-engine.jpg)

MiFID II defines best execution as a mandate for firms to use all sufficient steps to obtain the optimal outcome across a range of factors.

- 
### [How Does SI Price Improvement Affect Best Execution Obligations?](https://options.greeks.live/question/how-does-si-price-improvement-affect-best-execution-obligations/)
![A focused view of a robust, beige cylindrical component with a dark blue internal aperture, symbolizing a high-fidelity execution channel. This element represents the core of an RFQ protocol system, enabling bespoke liquidity for Bitcoin Options and Ethereum Futures, minimizing slippage and information leakage.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-digital-asset-derivatives-rfq-engine-core-precision-component.jpg)

SI price improvement provides quantifiable evidence of best execution by delivering a superior price, which is a core component of the multi-faceted regulatory mandate.

- 
### [How Does MiFID II Quantify the “Sufficient Steps” for Best Execution?](https://options.greeks.live/question/how-does-mifid-ii-quantify-the-sufficient-steps-for-best-execution/)
![Polished metallic disks, resembling data platters, with a precise mechanical arm poised for high-fidelity execution. This embodies an institutional digital asset derivatives platform, optimizing RFQ protocol for efficient price discovery, managing market microstructure, and leveraging a Prime RFQ intelligence layer to minimize execution latency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-precision-execution-via-advanced-rfq-protocols-and-prime-os-intelligence-layer-for-optimal-market-microstructure.jpg)

MiFID II quantifies best execution by mandating a data-driven system proving optimal outcomes through policy, monitoring, and reporting.

- 
### [How Do Best Execution Obligations Differ between Systematic Internalisers and Mtfs?](https://options.greeks.live/question/how-do-best-execution-obligations-differ-between-systematic-internalisers-and-mtfs/)
![A precision-engineered metallic cross-structure, embodying an RFQ engine's market microstructure, showcases diverse elements. One granular arm signifies aggregated liquidity pools and latent liquidity. The opposing perforated arm represents high-fidelity execution and algorithmic trading parameters. Its central pivot symbolizes atomic settlement within institutional digital asset derivatives.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-engine-microstructure-for-atomic-settlement.jpg)

Systematic Internalisers and MTFs possess distinct best execution duties rooted in their core operational models—bilateral principal versus multilateral agency—shaping strategic liquidity access.

- 
### [How Does the RFQ Process Help Institutions Comply with Best Execution Mandates like MiFID II?](https://options.greeks.live/question/how-does-the-rfq-process-help-institutions-comply-with-best-execution-mandates-like-mifid-ii/)
![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. Spheres denote aggregated inquiry and price discovery within a robust Prime RFQ, optimizing capital efficiency and mitigating systemic risk.](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)

The RFQ process provides a structured, competitive, and auditable framework for sourcing liquidity, enabling institutions to demonstrably comply with MiFID II's best execution mandate.

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---

**Original URL:** https://options.greeks.live/question/what-are-the-best-execution-documentation-requirements-when-choosing-between-an-otf-and-an-si/
