What Are the Core Differences between RTS 27 and RTS 28 Reporting Requirements? ▴ Question

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Concept

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A Tale of Two Perspectives

In the complex ecosystem of financial markets, understanding the flow of information is paramount to achieving superior execution. The Markets in Financial Instruments Directive II (MiFID II) introduced two key reporting mechanisms, RTS 27 and RTS 28, to illuminate the previously opaque world of trade execution. These are not redundant, overlapping requirements; they are two distinct lenses, each designed to provide a unique perspective on the same fundamental process ▴ the execution of a client’s order.

One provides a public account of an execution venue’s performance capabilities, while the other details an investment firm’s choices in navigating those venues. Together, they form a feedback loop intended to elevate the principles of best execution from a theoretical obligation to a data-driven, verifiable practice.

RTS 27 operates from the perspective of the “supplier” of liquidity and execution services. It is a granular, quantitative disclosure mandated for execution venues themselves ▴ entities such as stock exchanges, Multilateral Trading Facilities (MTFs), Systematic Internalisers (SIs), and other liquidity providers. The core function of an RTS 27 report is to publish standardized data points on the quality of execution offered by that venue.

This includes detailed metrics on price, cost, speed, and the likelihood of execution for specific financial instruments. Published quarterly and in a machine-readable format, these reports were designed to be the raw material for analysis, allowing market participants to objectively compare the performance of different venues.

RTS 27 is the venue’s public disclosure of its execution quality, providing raw performance data to the market.

Conversely, RTS 28 represents the perspective of the “consumer” of those execution services. This annual report is the obligation of the investment firm ▴ the entity making decisions on behalf of clients, such as an asset manager or broker. Its purpose is twofold. First, it quantitatively identifies the top five execution venues the firm used for each class of financial instrument, based on trading volumes.

Second, and more critically, it provides a qualitative summary of how the firm monitored and achieved the best possible results for its clients. This narrative component explains the firm’s venue selection strategy, its assessment of execution quality, and how it managed any potential conflicts of interest. It is the firm’s public attestation of its commitment to its clients’ best interests.

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The Core Structural Divergence

The fundamental distinction lies in accountability. RTS 27 holds the marketplace accountable for its performance, transforming execution quality from a marketing claim into a set of verifiable statistics. RTS 28 holds the investment firm accountable for its decisions, requiring it to justify its choice of venues and demonstrate a rigorous process for achieving best execution.

The former is a disclosure of capability; the latter is a disclosure of policy and outcome. Understanding this structural divergence is the first step in appreciating the complementary roles they were designed to play within the MiFID II framework.

It is also important to note the evolving regulatory landscape. Regulators in both the UK and EU have suspended these reporting requirements, citing that the reports were rarely used in practice and the costs of production outweighed the benefits to investors. This development itself provides insight into the practical challenges of translating regulatory intent into market utility, a central concern for any systems architect.

High-Level Comparison of RTS 27 and RTS 28
Attribute	RTS 27	RTS 28
Reporting Entity	Execution Venues (Exchanges, MTFs, SIs, Market Makers)	Investment Firms (Asset Managers, Brokers)
Core Purpose	To publish standardized, quantitative data on execution quality offered by the venue.	To disclose the top venues used and explain how best execution was achieved for clients.
Frequency	Quarterly	Annually
Primary Content	Granular data on price, costs, speed, and likelihood of execution per instrument.	Top five venues by volume and a qualitative summary of the execution process.
Audience	Investment firms, investors, and regulators seeking to compare venue performance.	Clients, investors, and regulators seeking to evaluate a firm’s execution practices.
Data Format	Machine-readable (e.g. XML, CSV).	Human and machine-readable public disclosure.
Systemic Role	Provides the raw data for execution quality analysis (the “supply” side).	Provides context and justification for execution choices (the “demand” side).

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Strategy

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Harnessing Transparency for Execution Alpha

From a strategic standpoint, the RTS 27 and RTS 28 framework represents a systemic attempt to weaponize transparency. For the sophisticated investment firm, these reports were intended to be more than a compliance exercise; they were tools to refine execution strategy and generate what can be termed “execution alpha.” The effective use of this data hinges on viewing the reporting dynamic as a continuous feedback loop, where the outputs of one system become the inputs for another, driving iterative improvement in the firm’s execution policy.

An investment firm’s strategic engagement begins with the consumption of RTS 27 data. These quarterly reports from a multitude of venues provide a rich dataset for quantitative analysis. A firm’s trading and compliance functions can systematically ingest this information to build a multi-dimensional view of the execution landscape. This allows for an objective, data-driven approach to venue selection, moving beyond simple metrics like commission rates to incorporate a more holistic view of execution quality.

For instance, a venue might offer low explicit costs, but its RTS 27 data could reveal high implicit costs in the form of price slippage or low likelihood of execution for certain order sizes. This insight is a critical component of a robust best execution policy.

Strategically, RTS 27 data provides the empirical foundation for a defensible and optimized venue selection process.

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The Strategic Application of Venue Data

The process of integrating RTS 27 data into a firm’s strategy can be broken down into several distinct phases:

Data Aggregation and Normalization ▴ The first operational challenge is to collect the RTS 27 reports from all relevant execution venues. Since the data is machine-readable, this process can be automated. The subsequent step involves normalizing the data to allow for accurate, like-for-like comparisons across venues that may have different reporting nuances.
Quantitative Analysis and Venue Scoring ▴ With a clean dataset, the firm can develop a proprietary scoring model. This model would weigh various execution factors based on the firm’s specific trading strategy and client profile. For a high-frequency strategy, speed of execution might be the highest-weighted factor. For a pension fund executing large block orders, likelihood of execution and price impact would be more significant.
Informing the Order Execution Policy ▴ The output of the venue scoring model provides a quantitative basis for the firm’s Order Execution Policy. It allows the firm to define, with evidence, which venues are best suited for different types of orders and asset classes. This data-driven policy is far more robust and defensible to regulatory scrutiny than one based on qualitative assessments alone.
Ongoing Monitoring and Review ▴ The quarterly nature of RTS 27 reporting allows for a dynamic strategy. The firm should continuously update its analysis to detect any degradation in a venue’s performance or to identify new venues that are offering superior execution quality. This creates a competitive environment among venues, who are aware that their performance is being publicly tracked and analyzed.

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RTS 28 as a Governance and Communication Protocol

While RTS 27 is an analytical tool, the RTS 28 report is fundamentally a governance and communication protocol. It is the mechanism through which the firm articulates its execution strategy and demonstrates its fulfillment of its fiduciary duty to clients. The strategic value of RTS 28 lies in the qualitative summary.

This narrative provides the context that the raw numbers in the “top five venues” table cannot. It is the firm’s opportunity to explain why it made certain choices and how its process adds value.

A well-crafted qualitative summary can be a powerful tool for client retention and acquisition. It demonstrates a sophisticated and diligent approach to managing client orders, reinforcing trust and confidence. The summary should detail the specific governance structures in place for overseeing best execution, including the roles of any execution committees, the process for reviewing venue performance, and the methods used to manage conflicts of interest.

It transforms a regulatory requirement into a statement of the firm’s operational excellence and client-centric philosophy. The process shows a clear flow ▴ public venue data informs private firm strategy, which is then justified through public firm disclosure, completing the cycle of transparency and accountability.

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Execution

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The Mechanical Core of Reporting Protocols

At the execution level, the differences between RTS 27 and RTS 28 manifest in their highly specific data structures and content requirements. The operational task of producing these reports requires distinct data sourcing, calculation, and formatting protocols. An examination of these mechanics reveals the true depth of the divergence between the venue-centric and firm-centric reporting paradigms.

The production of an RTS 27 report is a significant data engineering challenge for an execution venue. It requires the capture and processing of vast amounts of pre-trade and post-trade data for every financial instrument traded on the venue. The regulation specifies a series of detailed tables that must be completed, each focusing on a different aspect of execution quality.

The level of granularity is immense, often requiring calculations at the level of individual orders and transactions, aggregated up into standardized buckets for comparison. The entire process must be automated and robust enough to be repeated every quarter without fail.

The operational reality of RTS 27 is a large-scale data aggregation and calculation task for venues, while RTS 28 is a task of analysis and articulation for firms.

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Deconstruction of an RTS 27 Report

The RTS 27 framework is built around a series of nine distinct tables, each with a specific purpose. These tables provide a comprehensive, multi-faceted view of a venue’s performance. The operational lift involves populating these tables accurately from the venue’s internal data streams.

Key Data Tables within the RTS 27 Reporting Mandate
Table Identifier	Article Reference	Description of Content	Operational Significance
Table 1	Article 3.1	General instrument information and trading activity summary.	Provides context, identifying the financial instrument and giving a high-level overview of trading volumes and frequency.
Table 2	Article 3.2	Price information for consummated transactions.	Details the simple, average, highest, and lowest prices for the instrument, forming the baseline for price quality assessment.
Table 3	Article 4a	Intra-day price information.	Captures pre-trade and post-trade price data at specific, standardized time intervals throughout the trading day, allowing for analysis of price volatility and execution costs relative to a benchmark.
Table 4	Article 4b	Daily price information.	Aggregates the price data to a daily level, including opening, closing, high, and low prices, both pre-trade and post-trade.
Table 5	Article 5	Costs associated with execution.	Details all explicit costs, such as execution fees, clearing fees, and any applicable taxes, providing a clear picture of the total cost of trading.
Table 6	Article 6	Likelihood of execution data.	A critical table that shows the number of orders received, executed, and cancelled, often broken down by order size, giving insight into the reliability of the venue.
Tables 7 & 8	Article 7	Data for specific venue types (e.g. order book venues).	Includes metrics like speed of execution for different order types and sizes, and information on order book depth.
Table 9	Article 8	Data for Request for Quote (RFQ) venues.	Captures specific metrics relevant to RFQ protocols, such as the time taken to respond to quotes.

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The Anatomy of an RTS 28 Report

The execution of an RTS 28 report is less about massive data processing and more about analysis and qualitative explanation. While there is a quantitative component, the main operational effort for the investment firm lies in synthesizing information from its execution monitoring process and articulating it clearly.

Quantitative Component – The Top 5 Venues ▴ The firm must first analyze its trading data for the preceding year. This involves identifying all executed client orders and aggregating them by financial instrument class. For each class, the firm must then calculate the total volume and number of orders sent to each execution venue. The output is a simple table listing the top five venues, showing the percentage of volume and orders directed to each. This table must also disclose the percentage of aggressive and passive orders.
Qualitative Component – The Execution Summary ▴ This is the most demanding part of the report. The firm’s compliance and trading functions must collaborate to produce a comprehensive summary that addresses a specific list of points mandated by the regulation. This requires a thorough review of the firm’s execution policies, monitoring procedures, and the results of its venue analysis for the year.

The summary must provide a clear explanation of how the firm has assessed and acted upon the key factors of best execution ▴ price, costs, speed, likelihood of execution and settlement, size, nature, or any other consideration relevant to the execution of the order. It is a detailed justification of the firm’s performance of its fiduciary duty, transforming the quantitative data of the top five table into a coherent strategic narrative.

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References

Hill, Andy. “MiFID II/R Fixed Income Best Execution Requirements.” International Capital Market Association (ICMA), September 2016.
European Securities and Markets Authority. “Consultation Paper on MiFID II/MiFIR review report on the best execution reporting.” ESMA35-43-2836, 24 September 2021.
TRAction Fintech. “RTS 27 and 28 ▴ The 2024 Status of These Reports in UK and EU.” 14 February 2024.
Cappitech. “RTS 27 Best Execution for Forex/CFD Brokers.” 14 May 2018.
Barclays Investment Bank. “MiFID II RTS 27 Quality of Execution Reporting.” Accessed August 15, 2025.
Ranmore Fund Management. “MiFID II Regulatory Technical Standard 28 (RTS28).” 2018.
Global Compliance News. “UK ▴ FCA makes changes to MiFID II research rules and removes RTS 27 and RTS 28 best execution reporting.” 5 January 2022.
SEB Group. “RTS28 ▴ Execution Quality Reports.” Accessed August 15, 2025.

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Reflection

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From Mandated Reports to Embedded Intelligence

The formal suspension of the RTS 27 and RTS 28 reporting mandates does not negate the underlying principle. The systemic need for execution transparency and demonstrable diligence remains a constant. The true lesson from this regulatory chapter is not about the failure of specific report formats, but about the challenge of converting raw data into actionable intelligence. The architecture of a truly effective execution framework cannot be outsourced to a regulatory filing.

It must be an embedded, dynamic system within the firm itself ▴ a system that continuously ingests market data, analyzes execution quality against defined parameters, and informs trading decisions in real time. The spirit of these regulations persists, demanding a move from periodic, static reporting to a state of perpetual, intelligent oversight.