# What Are the Key Differences in Best Execution Obligations under FINRA and MiFID II? ▴ Question

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

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![Intersecting multi-asset liquidity channels with an embedded intelligence layer define this precision-engineered framework. It symbolizes advanced institutional digital asset RFQ protocols, visualizing sophisticated market microstructure for high-fidelity execution, mitigating counterparty risk and enabling atomic settlement across crypto derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-execution-system-microstructure-dynamics.jpg)

![An abstract digital interface features a dark circular screen with two luminous dots, one teal and one grey, symbolizing active and pending private quotation statuses within an RFQ protocol. Below, sharp parallel lines in black, beige, and grey delineate distinct liquidity pools and execution pathways for multi-leg spread strategies, reflecting market microstructure and high-fidelity execution for institutional grade digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-protocol-displaying-multi-leg-execution-status-and-optimal-liquidity-pathways.jpg)

## Concept

The obligation to deliver “best execution” to a client is a foundational principle of financial markets, yet its interpretation and implementation diverge significantly across jurisdictions. For a global institution, navigating the distinct requirements of the [Financial Industry Regulatory Authority](https://prime.greeks.live/question/what-regulatory-frameworks-govern-the-use-of-opaque-models-in-the-financial-industry/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (FINRA) in the United States and the Markets in [Financial Instruments](https://prime.greeks.live/area/financial-instruments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) Directive II (MiFID II) in the European Union presents a complex operational challenge. The core idea is to ensure that a firm acts in the best interest of its client when executing an order, securing the most favorable terms reasonably available.

However, the pathways to demonstrating this duty diverge based on differing regulatory philosophies, market structures, and historical contexts. FINRA’s regime is rooted in a “[reasonable diligence](https://prime.greeks.live/area/reasonable-diligence/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)” standard, while MiFID II imposes a more prescriptive “[all sufficient steps](https://prime.greeks.live/area/all-sufficient-steps/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)” approach, a linguistic nuance that translates into substantial differences in process, data collection, and governance.

Understanding these differences begins with appreciating their scope. FINRA’s Rule 5310 has historically focused on equities, with developing applications to other [asset classes](https://prime.greeks.live/area/asset-classes/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) like fixed income. In contrast, MiFID II casts a much wider net from the outset, explicitly applying its [best execution](https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) standards to all financial instruments, including equities, bonds, derivatives, and structured products.

This broader scope [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 immediately escalates the complexity for firms, requiring them to establish, document, and defend their execution policies across a vast and varied landscape of asset classes, many of which trade in less transparent, over-the-counter (OTC) markets. The European framework demands a systematic approach to best execution that is instrument-agnostic, compelling firms to build a universal compliance architecture.

> The fundamental divergence lies in MiFID II’s shift from a principle of diligence to a mandate of demonstrable proof across all asset classes.

This divergence in scope is mirrored in the definition of what constitutes the “best possible result.” FINRA’s framework traditionally emphasizes price as the primary determinant, supplemented by factors like the speed and likelihood of execution. [MiFID II](https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), however, formalizes a broader set of execution factors. It mandates that firms consider price, costs, speed, likelihood of execution and settlement, size, nature, or any other consideration relevant to the execution of the order. For retail clients, the “[total consideration](https://prime.greeks.live/area/total-consideration/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite),” representing the price of the instrument and all associated costs, becomes the paramount factor.

For professional clients, other factors can be prioritized, but the firm must justify this decision. This creates a more multifaceted analytical challenge under MiFID II, requiring firms to weigh a wider array of variables and to document the logic behind their chosen execution strategy for different client types and financial instruments.

![A metallic rod, symbolizing a high-fidelity execution pipeline, traverses transparent elements representing atomic settlement nodes and real-time price discovery. It rests upon distinct institutional liquidity pools, reflecting optimized RFQ protocols for crypto derivatives trading across a complex volatility surface within Prime RFQ market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-trade-execution-pipeline-optimizing-rfq-protocols-for-best-execution-and-capital-efficiency.jpg)

![An abstract metallic circular interface with intricate patterns visualizes an institutional grade RFQ protocol for block trade execution. A central pivot holds a golden pointer with a transparent liquidity pool sphere and a blue pointer, depicting market microstructure optimization and high-fidelity execution for multi-leg spread price discovery](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-market-microstructure-optimization.jpg)

## Strategy

![Abstract spheres and a sharp disc depict an Institutional Digital Asset Derivatives ecosystem. A central Principal's Operational Framework interacts with a Liquidity Pool via RFQ Protocol for High-Fidelity Execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-framework.jpg)

## A Unified Compliance Framework

For global financial institutions, operating under both FINRA and MiFID II necessitates a strategic approach that harmonizes these distinct regulatory regimes into a coherent, global best [execution policy](https://prime.greeks.live/area/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite). A common tactic is to adopt the more stringent requirements of MiFID II as the firm’s global standard. This “highest-bar” approach can streamline compliance by creating a single, robust framework that, by design, satisfies the requirements of less prescriptive regimes like FINRA’s.

While potentially increasing the compliance burden in the U.S. this strategy minimizes regulatory arbitrage within the firm and simplifies internal controls, training, and technology development. The core of this strategy involves creating a centralized [Best Execution Committee](https://prime.greeks.live/area/best-execution-committee/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) or function responsible for overseeing policy, monitoring, and governance across all jurisdictions.

This unified strategy must be built on a sophisticated data and analytics foundation. Both regimes require firms to monitor the effectiveness of their execution arrangements, but MiFID II’s “all [sufficient steps](https://prime.greeks.live/area/sufficient-steps/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)” mandate imposes a higher standard of proof. A successful strategy, therefore, involves investing in [Transaction Cost Analysis](https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (TCA) systems capable of capturing and analyzing data across all asset classes covered by MiFID II.

These systems must be able to benchmark [execution quality](https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) against a variety of metrics and data sources, including consolidated tape providers where available, and provide the detailed reporting required to justify execution venue and counterparty selection. The strategic decision is not whether to use TCA, but how to configure and deploy it as a global utility that can produce tailored reports for different regulatory and business needs.

![A Principal's RFQ engine core unit, featuring distinct algorithmic matching probes for high-fidelity execution and liquidity aggregation. This price discovery mechanism leverages private quotation pathways, optimizing crypto derivatives OS operations for atomic settlement within its systemic architecture](https://options.greeks.live/wp-content/uploads/2025/08/principals-rfq-engine-driving-optimal-digital-asset-derivatives.jpg)

## Disclosure and Transparency a Comparative Approach

A key strategic divergence emerges in the public disclosure requirements of the two regimes. MiFID II mandates detailed annual disclosures, including reports on the top five execution venues used for each class of financial instrument (known as [RTS 28](https://prime.greeks.live/area/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) reports) and quarterly reports on execution quality from the venues themselves (RTS 27 reports). These disclosures are designed to increase market transparency and allow clients to assess the quality of their provider’s execution services.

FINRA’s requirements, while also emphasizing transparency, are less prescriptive in terms of public reporting. U.S. broker-dealers are subject to [SEC Rule 606](https://prime.greeks.live/area/sec-rule-606/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), which requires quarterly reports on [order routing](https://prime.greeks.live/area/order-routing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) practices, but the level of detail and the scope of instruments covered are less extensive than under MiFID II.

A global firm’s strategy must therefore account for these different disclosure obligations. The data collection and analysis infrastructure built for the unified compliance framework can be leveraged to produce the required reports for both EU and U.S. regulators. The strategic consideration becomes one of communication and client engagement.

The detailed disclosures required by MiFID II can be used proactively as a tool to demonstrate the firm’s commitment to best execution to all clients globally, not just those in the EU. This can turn a compliance obligation into a competitive advantage, showcasing the firm’s sophisticated execution capabilities and transparent practices.

> Strategic alignment to the more rigorous MiFID II disclosure standards can transform a regulatory burden into a global client trust-building tool.

The following table outlines the core differences in the strategic approach required by each regulation:

| Strategic Consideration | FINRA Best Execution (Rule 5310) | MiFID II Best Execution (Article 27) |
| --- | --- | --- |
| Overarching Principle | Use “reasonable diligence” to ascertain the best market. | Take “all sufficient steps” to obtain the best possible result. |
| Scope of Application | Primarily focused on equities, with growing application to other asset classes. | Applies to all financial instruments, including OTC derivatives. |
| Execution Factors | Emphasis on price, with other factors like speed and likelihood of execution considered. | Mandates consideration of price, costs, speed, likelihood of execution, size, and nature of the order. Total consideration is key for retail clients. |
| Internal Governance | Requires policies and procedures for “regular and rigorous” review, at least quarterly. | Requires a formal order execution policy, a Best Execution Committee, and continuous monitoring. |
| Public Disclosure | Governed by SEC Rule 606, requiring quarterly reports on order routing. | Mandates detailed annual RTS 28 reports on top five venues and summary of analysis. |

![Modular institutional-grade execution system components reveal luminous green data pathways, symbolizing high-fidelity cross-asset connectivity. This depicts intricate market microstructure facilitating RFQ protocol integration for atomic settlement of digital asset derivatives within a Principal's operational framework, underpinned by a Prime RFQ intelligence layer](https://options.greeks.live/wp-content/uploads/2025/07/modular-high-fidelity-execution-architecture-for-institutional-digital-asset-derivatives-rfq-protocol-integration-and-principals-operational-framework-optimization.jpg)

![A geometric abstraction depicts a central multi-segmented disc intersected by angular teal and white structures, symbolizing a sophisticated Principal-driven RFQ protocol engine. This represents high-fidelity execution, optimizing price discovery across diverse liquidity pools for institutional digital asset derivatives like Bitcoin options, ensuring atomic settlement and mitigating counterparty risk](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-for-prime-os.jpg)

## Execution

![A robust institutional framework composed of interlocked grey structures, featuring a central dark execution channel housing luminous blue crystalline elements representing deep liquidity and aggregated inquiry. A translucent teal prism symbolizes dynamic digital asset derivatives and the volatility surface, showcasing precise price discovery within a high-fidelity execution environment, powered by the Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-intelligence-layer.jpg)

## The Operational Playbook

Constructing a dual-compliant best execution framework requires a granular, operational playbook that translates regulatory principles into concrete actions. This playbook must be embedded within the firm’s trading and compliance infrastructure, guiding every stage of the order lifecycle from receipt to post-trade analysis. The execution of this playbook is a continuous cycle of policy setting, pre-trade analysis, in-flight monitoring, and post-trade review.

![The image depicts two distinct liquidity pools or market segments, intersected by algorithmic trading pathways. A central dark sphere represents price discovery and implied volatility within the market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-multi-leg-spread-execution-microstructure.jpg)

## 1. Establishing the Governance Foundation

- 
**Best [Execution Committee](https://prime.greeks.live/question/how-does-a-best-execution-committee-quantify-and-compare-execution-quality-across-different-venues/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ Form a cross-functional committee with representatives from trading, compliance, legal, technology, and risk. This committee is responsible for approving 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), reviewing monitoring reports, and overseeing any necessary remediation.

- 
**[Order Execution](https://prime.greeks.live/area/order-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) Policy (OEP)** ▴ Develop and maintain a comprehensive OEP. This document is a MiFID II requirement but is a best practice for FINRA compliance as well. The OEP must detail, for each class of financial instrument, the execution venues and factors the firm considers to achieve the best possible result. It must be clear, detailed, and easily understood by clients.

- 
**Record Keeping** ▴ Establish a robust record-keeping system to capture all data relevant to best execution. This includes order details, market data at the time of execution, TCA results, and minutes from Best Execution Committee meetings. This is critical for demonstrating to regulators that “all sufficient steps” or “reasonable diligence” were exercised.

![Stacked concentric layers, bisected by a precise diagonal line. This abstract depicts the intricate market microstructure of institutional digital asset derivatives, embodying a Principal's operational framework](https://options.greeks.live/wp-content/uploads/2025/07/multi-layered-digital-asset-derivatives-rfq-protocol-architecture.jpg)

## 2. Pre-Trade and In-Flight Execution

The core of the execution process lies in the firm’s order management and execution management systems (OMS/EMS). These systems must be configured to support the OEP.

- 
**[Smart Order Routing](https://prime.greeks.live/area/smart-order-routing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (SOR)** ▴ The firm’s SOR logic must be sophisticated enough to consider all the execution factors outlined in the OEP. For MiFID II, this means the SOR cannot be solely price-driven. It must dynamically weigh factors like cost, speed, and likelihood of execution based on the instrument type, order size, and prevailing market conditions. The SOR’s configuration and performance must be reviewed regularly.

- 
**Venue Analysis** ▴ The firm must conduct thorough due diligence on all potential execution venues (exchanges, MTFs, SIs, OTC counterparties). This analysis must be documented and reviewed at least annually. The review should assess not just execution quality but also counterparty risk and settlement efficiency.

- 
**Handling of Specific Orders** ▴ The OEP must define how different order types (e.g. market, limit, algorithmic) are handled. For large or illiquid orders, the playbook should outline the process for sourcing liquidity, which may involve using RFQ (Request for Quote) systems or working orders with specialized counterparties.

![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)

## 3. Post-Trade Monitoring and Review

This is where the firm proves the effectiveness of its execution arrangements. The monitoring process must be systematic and evidence-based.

- 
**Transaction Cost Analysis (TCA)** ▴ Implement a comprehensive TCA program that covers all asset classes. The analysis should compare execution performance against relevant benchmarks (e.g. VWAP, TWAP, implementation shortfall) and against the execution quality available at other venues at the time of the trade.

- 
**[Regular and Rigorous Review](https://prime.greeks.live/area/regular-and-rigorous-review/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite)** ▴ For FINRA, firms must conduct a “regular and rigorous” review of execution quality, at least quarterly. For MiFID II, monitoring is expected to be more frequent and integrated into the daily workflow. The results of this monitoring must be presented to the Best Execution Committee.

- 
**Remediation Process** ▴ The playbook must define a clear process for addressing any deficiencies identified during monitoring. If a particular venue is consistently providing poor execution, the firm must take action, which could involve rerouting order flow or ceasing to use the venue altogether. The justification for any such decision must be documented.

![A stacked, multi-colored modular system representing an institutional digital asset derivatives platform. The top unit facilitates RFQ protocol initiation and dynamic price discovery](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-engine-15.jpg)

## Quantitative Modeling and Data Analysis

Demonstrating best execution in a quantitative world requires robust data and sophisticated modeling. The core of this is TCA, but the specific metrics and their application differ based on the regulatory context. A firm’s quantitative analysis must be capable of producing evidence for both the “reasonable diligence” standard of FINRA and the “all sufficient steps” standard of MiFID II.

The following table provides an example of a TCA dashboard that a global firm might use to review execution quality for a specific security, in this case, a large-cap U.S. equity. This dashboard is designed to provide the data needed for both FINRA’s quarterly reviews and MiFID II’s more continuous monitoring process.

| Metric | Venue A (Exchange) | Venue B (ATS/Dark Pool) | Venue C (Wholesaler) | Internal Benchmark | Commentary |
| --- | --- | --- | --- | --- | --- |
| Price Improvement (bps) | +0.25 bps | +0.75 bps | +1.50 bps | +0.50 bps | Venue C provides significant price improvement, likely due to PFOF arrangements. |
| Execution Speed (ms) | 50 ms | 150 ms | 200 ms | | Venue A offers the fastest execution, critical for latency-sensitive strategies. |
| Likelihood of Execution (%) | 99.5% | 95.0% | 98.0% | 97.5% | Venue B has a lower fill rate, potentially due to its passive nature. |
| Reversion (bps, 5 min) | -0.10 bps | -0.50 bps | -0.80 bps | < -0.25 bps | High reversion at Venue C suggests potential information leakage or adverse selection. |
| Total Cost (Price + Fees, bps) | 1.75 bps | 1.25 bps | 0.50 bps | N/A | Venue C is cheapest on an explicit cost basis, aligning with MiFID II’s “total consideration” for retail. |

> Effective quantitative modeling for best execution integrates multiple metrics to create a holistic view of performance, moving beyond a singular focus on price.

This data-driven approach allows the Best Execution Committee to make informed decisions. For example, while Venue C offers the best [price improvement](https://prime.greeks.live/area/price-improvement/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and lowest explicit cost, the high post-trade reversion is a significant concern, particularly for institutional clients. Under MiFID II, the firm would need to document why it continues to route to Venue C, justifying its decision based on the client type (e.g. for retail clients where total cost is paramount).

Under FINRA, the firm would need to show that it had considered this reversion as part of its “regular and rigorous” review and determined that, on balance, the execution was still as favorable as possible under prevailing conditions. The key is the ability to capture, analyze, and act upon this quantitative data in a systematic and documented manner.

![Two semi-transparent, curved elements, one blueish, one greenish, are centrally connected, symbolizing dynamic institutional RFQ protocols. This configuration suggests aggregated liquidity pools and multi-leg spread constructions](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-price-discovery-engine.jpg)

## References

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

- Financial Industry Regulatory Authority. “FINRA Rule 5310. Best Execution and Interpositioning.” FINRA Manual, 2023.

- European Securities and Markets Authority. “Questions and Answers on MiFID II and MiFIR investor protection and intermediaries topics.” ESMA35-43-349, 2023.

- U.S. Securities and Exchange Commission. “Regulation Best Execution.” Release No. 34-96496; File No. S7-32-22, 2022.

- CFA Institute. “Best Execution.” CFA Institute Standards of Practice Handbook, 2014.

- O’Hara, Maureen. “Market Microstructure Theory.” Blackwell Publishing, 1995.

- Harris, Larry. “Trading and Exchanges ▴ Market Microstructure for Practitioners.” Oxford University Press, 2003.

- Financial Conduct Authority. “Best execution or bust.” FCA, 2017.

![Abstract visualization of institutional digital asset derivatives. Intersecting planes illustrate 'RFQ protocol' pathways, enabling 'price discovery' within 'market microstructure'](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-rfq-execution-liquidity-pool-market-microstructure-protocol.jpg)

## Reflection

![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)

## From Mandate to Mechanism

The assimilation of FINRA and MiFID II best execution standards into a firm’s operational fabric is a complex undertaking. It compels a shift in perspective, viewing [regulatory compliance](https://prime.greeks.live/area/regulatory-compliance/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) not as a static checklist but as a dynamic, data-driven system for optimizing client outcomes. The process of building this system, of defining policies, configuring technology, and interrogating data, yields insights that extend far beyond the immediate goal of satisfying regulators. It provides a granular understanding of market mechanics, liquidity sources, and the true costs of execution.

This journey forces an institution to confront fundamental questions about its own operations. How does it define value for its clients? How does it measure the quality of its own performance? What are the hidden costs and risks in its execution pathways?

The answers to these questions, unearthed through the rigorous process of building a best execution framework, become a source of competitive intelligence. The framework itself becomes more than a compliance tool; it evolves into a central nervous system for the trading function, providing the feedback necessary for continuous improvement and adaptation in ever-changing markets.

Ultimately, the mastery of best execution is not about achieving a perfect trade, an elusive and often undefinable concept. It is about mastering the process. It is about building a robust, transparent, and intelligent execution mechanism that can consistently and demonstrably serve the best interests of the client, regardless of the jurisdiction. The knowledge gained in constructing this mechanism is the true strategic asset, empowering the firm with a deeper understanding of the markets and a more profound capacity to navigate them effectively.

![Two robust modules, a Principal's operational framework for digital asset derivatives, connect via a central RFQ protocol mechanism. This system enables high-fidelity execution, price discovery, atomic settlement for block trades, ensuring capital efficiency in market microstructure](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-protocol-high-fidelity-execution-engine.jpg)

## Glossary

<a href="https://prime.greeks.live/question/what-regulatory-frameworks-govern-the-use-of-opaque-models-in-the-financial-industry/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central, multifaceted RFQ engine processes aggregated inquiries via precise execution pathways and robust capital conduits. This institutional-grade system optimizes liquidity aggregation, enabling high-fidelity execution and atomic settlement for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-protocol-engine-high-fidelity-digital-asset-execution.jpg)

## Financial Industry Regulatory Authority

Regulatory frameworks for opaque models mandate a system of rigorous validation, fairness audits, and demonstrable explainability. </a><a href="https://prime.greeks.live/area/financial-instruments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Intersecting forms represent institutional digital asset derivatives across diverse liquidity pools. Precision shafts illustrate algorithmic trading for high-fidelity execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-optimization-protocol.jpg)

## Financial Instruments

Meaning ▴ Financial instruments represent codified contractual agreements that establish specific claims, obligations, or rights concerning the transfer of economic value or risk between parties. </a><a href="https://prime.greeks.live/area/reasonable-diligence/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Smooth, glossy, multi-colored discs stack irregularly, topped by a dome. This embodies institutional digital asset derivatives market microstructure, with RFQ protocols facilitating aggregated inquiry for multi-leg spread execution](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-engine-for-prime-os-best-execution.jpg)

## Reasonable Diligence

Meaning ▴ Reasonable Diligence denotes the systematic and prudent level of investigation and care an institutional participant is expected to undertake to identify, assess, and mitigate risks associated with financial transactions, market participants, and operational processes within the digital asset ecosystem. </a><a href="https://prime.greeks.live/area/all-sufficient-steps/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A sophisticated metallic mechanism with integrated translucent teal pathways on a dark background. This abstract visualizes the intricate market microstructure of an institutional digital asset derivatives platform, specifically the RFQ engine facilitating private quotation and block trade execution](https://options.greeks.live/wp-content/uploads/2025/07/systemic-framework-for-institutional-digital-asset-derivatives-rfq-price-discovery-and-atomic-settlement.jpg)

## All Sufficient Steps

Meaning ▴ All Sufficient Steps denotes a design principle and operational mandate within a system where every component or process is engineered to autonomously achieve its defined objective without requiring external intervention or additional inputs beyond its initial parameters. </a><a href="https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A metallic, reflective disc, symbolizing a digital asset derivative or tokenized contract, rests on an intricate Principal's operational framework. This visualizes the market microstructure for high-fidelity execution of institutional digital assets, emphasizing RFQ protocol precision, atomic settlement, and capital efficiency](https://options.greeks.live/wp-content/uploads/2025/08/high-fidelity-digital-asset-derivatives-rfq-protocol-system-infrastructure.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/asset-classes/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Metallic hub with radiating arms divides distinct quadrants. This abstractly depicts a Principal's operational framework for high-fidelity execution of institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-execution-prime-os-market-microstructure.jpg)

## Asset Classes

Meaning ▴ Asset Classes represent distinct categories of financial instruments characterized by similar economic attributes, risk-return profiles, and regulatory frameworks. </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">
![Precision-engineered modular components, resembling stacked metallic and composite rings, illustrate a robust institutional grade crypto derivatives OS. Each layer signifies distinct market microstructure elements within a RFQ protocol, representing aggregated inquiry for multi-leg spreads and high-fidelity execution across diverse liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-multi-layered-algorithmic-rfq-liquidity-aggregation.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/total-consideration/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![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)

## Total Consideration

Meaning ▴ Total Consideration represents the comprehensive economic value exchanged in a transaction, encompassing all components of payment, fees, and other direct or indirect value transfers. </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">
![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)

## 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/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract geometric planes, translucent teal representing dynamic liquidity pools and implied volatility surfaces, intersect a dark bar. This signifies FIX protocol driven algorithmic trading and smart order routing](https://options.greeks.live/wp-content/uploads/2025/07/optimized-institutional-digital-asset-derivatives-rfq-liquidity-aggregation.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/best-execution-committee/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A luminous digital market microstructure diagram depicts intersecting high-fidelity execution paths over a transparent liquidity pool. A central RFQ engine processes aggregated inquiries for institutional digital asset derivatives, optimizing price discovery and capital efficiency within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-principal-operational-framework-price-discovery.jpg)

## Best Execution Committee

Meaning ▴ The Best Execution Committee functions as a formal governance body within an institutional trading framework, specifically mandated to define, implement, and continuously monitor policies and procedures ensuring optimal trade execution across all asset classes, including institutional digital asset derivatives. </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 central Principal OS hub with four radiating pathways illustrates high-fidelity execution across diverse institutional digital asset derivatives liquidity pools. Glowing lines signify low latency RFQ protocol routing for optimal price discovery, navigating market microstructure for multi-leg spread strategies](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-intelligence.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/sufficient-steps/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Luminous central hub intersecting two sleek, symmetrical pathways, symbolizing a Principal's operational framework for institutional digital asset derivatives. Represents a liquidity pool facilitating atomic settlement via RFQ protocol streams for multi-leg spread execution, ensuring high-fidelity execution within a Crypto Derivatives OS](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-pathways-optimized.jpg)

## Sufficient Steps

Meaning ▴ Sufficient Steps constitute the minimum, verifiable sequence of operations required to achieve a defined, deterministic outcome within a financial protocol or system, ensuring operational closure and state transition. </a><a href="https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An abstract visualization of a sophisticated institutional digital asset derivatives trading system. Intersecting transparent layers depict dynamic market microstructure, high-fidelity execution pathways, and liquidity aggregation for RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-institutional-digital-asset-derivatives-rfq-execution.jpg)

## Execution Quality

Meaning ▴ Execution Quality quantifies the efficacy of an order's fill, assessing how closely the achieved trade price aligns with the prevailing market price at submission, alongside consideration for speed, cost, and market impact. </a><a href="https://prime.greeks.live/area/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![An intricate, transparent cylindrical system depicts a sophisticated RFQ protocol for digital asset derivatives. Internal glowing elements signify high-fidelity execution and algorithmic trading](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-protocol-architecture.jpg)

## Rts 28

Meaning ▴ RTS 28 refers to Regulatory Technical Standard 28 under MiFID II, which mandates investment firms and market operators to publish annual reports on the quality of execution of transactions on trading venues and for financial instruments. </a><a href="https://prime.greeks.live/area/order-routing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A central metallic mechanism, an institutional-grade Prime RFQ, anchors four colored quadrants. These symbolize multi-leg spread components and distinct liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-digital-asset-derivatives-rfq-engine-prime-os.jpg)

## Order Routing

Meaning ▴ Order Routing is the automated process by which a trading order is directed from its origination point to a specific execution venue or liquidity source. </a><a href="https://prime.greeks.live/area/sec-rule-606/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precise stack of multi-layered circular components visually representing a sophisticated Principal Digital Asset RFQ framework. Each distinct layer signifies a critical component within market microstructure for high-fidelity execution of institutional digital asset derivatives, embodying liquidity aggregation across dark pools, enabling private quotation and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/principal-digital-asset-rfq-protocol-layers-for-high-fidelity-execution.jpg)

## Sec Rule 606

Meaning ▴ SEC Rule 606 mandates broker-dealers to publicly disclose information regarding their routing of non-directed customer orders. </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">
![An abstract metallic cross-shaped mechanism, symbolizing a Principal's execution engine for institutional digital asset derivatives. Its teal arm highlights specialized RFQ protocols, enabling high-fidelity price discovery across diverse liquidity pools for optimal capital efficiency and atomic settlement via Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-for-digital-asset-derivatives-trading.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/how-does-a-best-execution-committee-quantify-and-compare-execution-quality-across-different-venues/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A crystalline sphere, symbolizing atomic settlement for digital asset derivatives, rests on a Prime RFQ platform. Intersecting blue structures depict high-fidelity RFQ execution and multi-leg spread strategies, showcasing optimized market microstructure for capital efficiency and latent liquidity](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-8.jpg)

## Execution Committee

A Best Execution Committee systematically architects superior trading outcomes by quantifying performance against multi-dimensional benchmarks and comparing venues through rigorous, data-driven analysis. </a><a href="https://prime.greeks.live/area/order-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![The abstract image features angular, parallel metallic and colored planes, suggesting structured market microstructure for digital asset derivatives. A spherical element represents a block trade or RFQ protocol inquiry, reflecting dynamic implied volatility and price discovery within a dark pool](https://options.greeks.live/wp-content/uploads/2025/07/optimized-institutional-digital-asset-derivatives-rfq-protocol-framework-ensuring-principal-best-execution-and-latent-liquidity-capture.jpg)

## Order Execution

Meaning ▴ Order Execution defines the precise operational sequence that transforms a Principal's trading intent into a definitive, completed transaction within a digital asset market. </a><a href="https://prime.greeks.live/area/smart-order-routing/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract layers and metallic components depict institutional digital asset derivatives market microstructure. They symbolize multi-leg spread construction, robust FIX Protocol for high-fidelity execution, and private quotation](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-protocol-high-fidelity-execution.jpg)

## Smart Order Routing

Meaning ▴ Smart Order Routing is an algorithmic execution mechanism designed to identify and access optimal liquidity across disparate trading venues. </a><a href="https://prime.greeks.live/area/regular-and-rigorous-review/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A textured spherical digital asset, resembling a lunar body with a central glowing aperture, is bisected by two intersecting, planar liquidity streams. This depicts institutional RFQ protocol, optimizing block trade execution, price discovery, and multi-leg options strategies with high-fidelity execution within a Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-optimized-rfq-execution-protocol-dynamic-liquidity-management.jpg)

## Regular and Rigorous Review

Meaning ▴ Regular and Rigorous Review refers to the systematic, periodic, and in-depth evaluation of operational processes, system configurations, and strategic algorithms to ensure sustained performance, adherence to regulatory mandates, and effective risk mitigation within complex financial infrastructures. </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">
![An abstract, multi-component digital infrastructure with a central lens and circuit patterns, embodying an Institutional Digital Asset Derivatives platform. This Prime RFQ enables High-Fidelity Execution via RFQ Protocol, optimizing Market Microstructure for Algorithmic Trading, Price Discovery, and Multi-Leg Spread](https://options.greeks.live/wp-content/uploads/2025/08/institutional-grade-digital-asset-derivatives-trading-platform-powering-high-fidelity-execution-via-advanced-rfq-protocol-prime-os-intelligence-layer.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/regulatory-compliance/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A transparent glass bar, representing high-fidelity execution and precise RFQ protocols, extends over a white sphere symbolizing a deep liquidity pool for institutional digital asset derivatives. A small glass bead signifies atomic settlement within the granular market microstructure, supported by robust Prime RFQ infrastructure ensuring optimal price discovery and minimal slippage](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-digital-asset-derivatives-rfq-execution-prime-os-intelligence-layer-facilitating-optimal-price-discovery-and-best-execution.jpg)

## Regulatory Compliance

Meaning ▴ Adherence to legal statutes, regulatory mandates, and internal policies governing financial operations, especially in institutional digital asset derivatives. </a>

**Tags:** [Price Improvement](https://options.greeks.live/area/price-improvement/), [Sufficient Steps](https://options.greeks.live/area/sufficient-steps/), [Smart Order Routing](https://options.greeks.live/area/smart-order-routing/), [Execution Policy](https://options.greeks.live/area/execution-policy/), [Asset Classes](https://options.greeks.live/area/asset-classes/), [Order Execution](https://options.greeks.live/area/order-execution/)	

## Discover More

- 
### [How Does the Concept of Best Execution Differ between MiFID II and Other Regulatory Frameworks for RFQ Trades?](https://options.greeks.live/question/how-does-the-concept-of-best-execution-differ-between-mifid-ii-and-other-regulatory-frameworks-for-rfq-trades/)
![Abstract depiction of an institutional digital asset derivatives execution system. A central market microstructure wheel supports a Prime RFQ framework, revealing an algorithmic trading engine for high-fidelity execution of multi-leg spreads and block trades via advanced RFQ protocols, optimizing capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-prime-os-rfq-execution-system-1.jpg)

MiFID II codifies RFQ best execution as a prescriptive data-driven process, while other frameworks prioritize a principles-based defense of diligence.

- 
### [What Is the Role of a Best Execution Committee in the US versus the EU?](https://options.greeks.live/question/what-is-the-role-of-a-best-execution-committee-in-the-us-versus-the-eu/)
![A sleek, institutional-grade system processes a dynamic stream of market microstructure data, projecting a high-fidelity execution pathway for digital asset derivatives. This represents a private quotation RFQ protocol, optimizing price discovery and capital efficiency through an intelligence layer.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-digital-asset-derivatives-execution-microstructure-prime-os.jpg)

A Best Execution Committee operationalizes fiduciary duty by translating divergent US and EU regulatory philosophies into a unified, data-driven execution policy.

- 
### [How Does the Best Execution Committee Handle Conflicts of Interest like PFOF?](https://options.greeks.live/question/how-does-the-best-execution-committee-handle-conflicts-of-interest-like-pfof/)
![Geometric planes and transparent spheres represent complex market microstructure. A central luminous core signifies efficient price discovery and atomic settlement via RFQ protocol. This visualizes multi-leg spread execution across diverse liquidity pools for institutional digital asset derivatives on a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-microstructure-4.jpg)

A Best Execution Committee systematically manages PFOF conflicts by using data-driven reviews to ensure routing decisions prioritize client outcomes over broker incentives.

- 
### [What Are the Key Differences in Best Execution Requirements between the US and European Regulations?](https://options.greeks.live/question/what-are-the-key-differences-in-best-execution-requirements-between-the-us-and-european-regulations/)
![A dark, precision-engineered module with raised circular elements integrates with a smooth beige housing. It signifies high-fidelity execution for institutional RFQ protocols, ensuring robust price discovery and capital efficiency in digital asset derivatives market microstructure.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-rfq-system-core-high-speed-price-discovery-module.jpg)

US and EU best execution rules differ in the EU's prescriptive data demands versus the US's principles-based diligence standard.

- 
### [What Are the Key Differences between Best Execution Obligations in the US and Europe?](https://options.greeks.live/question/what-are-the-key-differences-between-best-execution-obligations-in-the-us-and-europe/)
![A translucent sphere with intricate metallic rings, an 'intelligence layer' core, is bisected by a sleek, reflective blade. This visual embodies an 'institutional grade' 'Prime RFQ' enabling 'high-fidelity execution' of 'digital asset derivatives' via 'private quotation' and 'RFQ protocols', optimizing 'capital efficiency' and 'market microstructure' for 'block trade' operations.](https://options.greeks.live/wp-content/uploads/2025/07/precision-rfq-engine-for-digital-asset-derivatives-best-execution.jpg)

US best execution prioritizes principles-based diligence, while the EU's MiFID II mandates a prescriptive, data-driven demonstration of all sufficient steps.

- 
### [What Are the Key Differences between MiFID II and SEC Best Execution Standards?](https://options.greeks.live/question/what-are-the-key-differences-between-mifid-ii-and-sec-best-execution-standards/)
![Central teal-lit mechanism with radiating pathways embodies a Prime RFQ for institutional digital asset derivatives. It signifies RFQ protocol processing, liquidity aggregation, and high-fidelity execution for multi-leg spread trades, enabling atomic settlement within market microstructure via quantitative analysis.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-core-for-institutional-digital-asset-rfq-protocol-execution-engine.jpg)

MiFID II mandates a prescriptive process to prove "all sufficient steps," while the SEC requires disclosure to ensure "most favorable terms."

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

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

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

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

- 
### [What Are the Practical Differences in Best Execution Documentation between the US and EU?](https://options.greeks.live/question/what-are-the-practical-differences-in-best-execution-documentation-between-the-us-and-eu/)
![A sleek, metallic algorithmic trading component with a central circular mechanism rests on angular, multi-colored reflective surfaces, symbolizing sophisticated RFQ protocols, aggregated liquidity, and high-fidelity execution within institutional digital asset derivatives market microstructure. This represents the intelligence layer of a Prime RFQ for optimal price discovery.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-system-architecture-for-optimal-price-discovery-and-high-fidelity-execution.jpg)

US best execution documentation proves diligence, while EU documentation evidences quantifiable outcomes.

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---

**Original URL:** https://options.greeks.live/question/what-are-the-key-differences-in-best-execution-obligations-under-finra-and-mifid-ii/
