# What Are the Primary Differences between MiFID I and MiFID II Best Execution Standards? ▴ Question

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

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## Concept

![A reflective digital asset pipeline bisects a dynamic gradient, symbolizing high-fidelity RFQ execution across fragmented market microstructure. Concentric rings denote the Prime RFQ centralizing liquidity aggregation for institutional digital asset derivatives, ensuring atomic settlement and managing counterparty risk](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-rfq-execution-for-institutional-digital-asset-derivatives-2.jpg)

## From a Mandate of Process to a Mandate of Proof

The transition from the Markets in [Financial Instruments](https://prime.greeks.live/area/financial-instruments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) Directive (MiFID I) to its successor, MiFID II, represents a fundamental re-architecting of the principles governing best execution. This was a shift in regulatory philosophy, moving from a framework that emphasized the establishment of appropriate processes to one that demands demonstrable, data-driven proof of outcomes. MiFID I required firms to take “all reasonable steps” to obtain the best [possible result](https://prime.greeks.live/question/how-does-implied-volatility-skew-affect-the-range-of-possible-strike-prices-for-a-zero-cost-structure/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) for their clients.

This was a principles-based obligation, focused on ensuring a firm had a coherent and sensible [execution policy](https://prime.greeks.live/area/execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) in place. The systemic objective was to promote competition between venues and establish a baseline for [investor protection](https://prime.greeks.live/area/investor-protection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).

[MiFID II](https://prime.greeks.live/area/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) elevated this standard significantly by mandating that firms take “all sufficient steps” to achieve the best outcome. This change in language, from “reasonable” to “sufficient,” is the semantic core of the entire reform. It reframes the obligation from one of intent and process to one of empirical validation. A firm’s execution architecture could no longer simply be well-designed in theory; it had to be proven effective in practice.

This necessitated a profound change in how firms approached data capture, analysis, and the governance of their trading operations. The new framework demands a systematic and quantifiable defense of execution choices, transforming [best execution](https://prime.greeks.live/area/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) from a compliance function into a core operational discipline.

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## The Expanded Definition of Execution Quality

Concurrent with the heightened evidentiary burden, MiFID II broadened the very definition of what constitutes the “best possible result.” While [MiFID I](https://prime.greeks.live/area/mifid-i/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) identified key execution factors ▴ price, costs, speed, and likelihood of execution ▴ it allowed firms considerable latitude in how they prioritized these elements. For retail clients, there was a clear emphasis on the “total consideration,” which combines the price of the instrument and all associated execution costs.

MiFID II formalized and expanded this multi-faceted view for all client types. It explicitly codified that the “best possible result” must be determined by taking into account a comprehensive set of factors ▴ price, costs, speed, likelihood of execution and settlement, size, nature of the order, and any other relevant consideration. This created a more complex analytical challenge. A firm’s execution strategy now had to be calibrated based on the specific characteristics of the client, the order itself, the instrument being traded, and the available [execution venues](https://prime.greeks.live/area/execution-venues/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite).

For instance, for an illiquid, over-the-counter (OTC) derivative, the likelihood of execution and settlement might be a far more critical factor than marginal price improvement, a nuance that the MiFID II framework explicitly requires firms to consider and document. This expansion effectively rendered a simple, price-centric view of best execution obsolete, demanding a more sophisticated, context-aware analytical capability within a firm’s trading infrastructure.

> MiFID II fundamentally shifted the best execution obligation from demonstrating reasonable effort to providing sufficient, data-driven evidence of achieving the best possible client outcome.

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## A Wider Operational Domain

A critical architectural change introduced by MiFID II was the significant expansion of the scope of financial instruments subject to its rigorous standards. MiFID I’s best execution principles were primarily focused on equities traded on regulated markets. While other [asset classes](https://prime.greeks.live/area/asset-classes/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) were technically included, the lack of price transparency and available market data in non-equity markets made it difficult to apply the standards in a meaningful way.

MiFID II directly addressed this limitation by extending its framework to cover a much broader array of instruments, including bonds, structured finance products, derivatives, and emission allowances. This extension was a direct response to the increasing complexity of financial markets and the need to provide consistent investor protection across all asset classes. Operationally, this presented a substantial challenge. Firms could no longer confine their best execution monitoring systems to the equities domain.

They were now required to develop and implement a robust framework for capturing and analyzing execution data for instruments traded OTC, where liquidity is often fragmented and pre-trade price discovery is less straightforward. This necessitated new data sourcing strategies, analytical models for comparing disparate quotes, and a more holistic view of [execution quality](https://prime.greeks.live/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) that could function across the entire spectrum of a firm’s trading activity.

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## Strategy

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## Decoupling Research from Execution

One of the most profound strategic shifts mandated by MiFID II was the [unbundling](https://prime.greeks.live/area/unbundling/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) of payments for research from execution commissions. Under the previous regime, it was common practice for asset managers to receive research services from brokers as part of a bundled commission payment for executing trades. This created a potential conflict of interest, where execution decisions could be influenced by the desire to access valuable research rather than the sole objective of achieving the best outcome for the client.

MiFID II sought to dismantle this arrangement by requiring firms to pay for research and execution services separately. This forced a complete strategic reassessment of how firms source, value, and pay for investment research.

From a systems perspective, this required a fundamental re-engineering of internal cost allocation and vendor management processes. Firms had to establish clear budgets for research, distinct from their trading commissions. They needed to implement mechanisms to assess the quality and value of the research they consumed, creating a more disciplined and accountable procurement process.

This regulatory intervention had a direct and lasting impact on the market for investment research, leading to more transparent pricing and forcing firms to make explicit strategic decisions about what information was essential to their investment process. The result was a clearer, more defensible link between the costs incurred and the services received, reinforcing the core MiFID II principle of acting in the client’s best interest.

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## The Evolution of the Execution Policy

MiFID II transformed the [order execution policy](https://prime.greeks.live/area/order-execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) from a static, high-level compliance document into a dynamic and detailed strategic disclosure. Under MiFID I, the requirement was to establish a policy and make it available to clients. MiFID II elevated this, demanding that the policy be customized for each class of financial instrument and provide clients with clear, detailed, and easily understandable information about how their orders would be executed.

This strategic shift [required firms](https://prime.greeks.live/question/what-are-the-specific-pre-trade-risk-controls-required-for-hft-firms-under-mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) to move beyond generic statements and articulate the specific methodologies used to achieve best execution for different asset types. For example, the policy for executing liquid equities on a continuous auction order book would look very different from the policy for sourcing liquidity for an illiquid corporate bond via competing quotes. The policy had to name the specific execution venues the firm relied upon and explain the factors that guided the choice of venue for a given order. This level of detail serves two strategic purposes ▴ it provides clients with unprecedented transparency into the firm’s execution practices, and it forces the firm itself to codify and justify its strategic choices, creating a stronger internal governance framework.

> The mandate to unbundle research payments and create detailed, instrument-specific execution policies forced firms to adopt a more transparent and deliberate strategic posture.

The following table illustrates the strategic evolution of the best execution framework from MiFID I to MiFID II, highlighting the systemic changes firms were required to implement.

### Table 1 ▴ Strategic Framework Evolution from MiFID I to MiFID II

| Feature | MiFID I Standard | MiFID II Standard | Systemic and Strategic Implication |
| --- | --- | --- | --- |
| Core Obligation | Take all “reasonable steps” to obtain the best possible result. | Take all “sufficient steps” to obtain the best possible result. | Shift from a process-oriented approach to an evidence-based, outcome-oriented framework requiring quantifiable proof of execution quality. |
| Instrument Scope | Primarily focused on equities due to data availability. | Explicitly extended to non-equity instruments, including bonds, derivatives, and structured products. | Required firms to build data capture and analysis systems for OTC and less liquid markets, demanding a holistic, cross-asset execution strategy. |
| Execution Factors | Price, costs, speed, likelihood of execution. Emphasis on “total consideration” for retail clients. | Formalized and expanded list ▴ price, costs, speed, likelihood of execution/settlement, size, nature, and any other relevant consideration. | Demanded more sophisticated, multi-factor analysis (TCA) and context-specific execution strategies tailored to the order’s characteristics. |
| Execution Policy | A high-level policy outlining the firm’s approach to best execution. | A detailed policy, customized by asset class, naming top venues and explaining venue selection factors in a clear manner for clients. | Transformed the policy from a compliance document into a core strategic disclosure, enhancing client transparency and internal governance. |
| Research Payments | Research costs could be bundled with execution commissions. | Strict unbundling of research payments from execution commissions, requiring separate payment mechanisms. | Eliminated a key conflict of interest, forcing firms to create explicit budgets for research and evaluate its value independently from execution services. |
| Public Disclosure | No requirement for public reporting on execution quality. | Mandated detailed annual reports on the top five execution venues used and the quality of execution obtained (RTS 28). | Introduced a new layer of public accountability, allowing clients and regulators to compare execution performance between firms. |

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## Enhanced Governance and Monitoring

A cornerstone of the MiFID II strategy is the requirement for firms to establish a more robust and continuous system of monitoring and governance. It was no longer sufficient to simply have a policy; firms had to demonstrate that they were actively monitoring the effectiveness of their execution arrangements and policies to identify and remedy any deficiencies. This involves both ex-ante and ex-post analysis.

This continuous oversight loop represents a significant strategic undertaking. It requires the integration of data feeds, analytical tools, and a formal governance process capable of reviewing the outputs and enacting change. The strategic objective is to create a self-correcting system where execution quality is constantly measured, evaluated against benchmarks, and optimized. This proactive stance on governance is a defining feature of the MiFID II era, embedding the discipline of best execution into the firm’s operational DNA.

- **Ex-ante controls** involve pre-trade checks to ensure that orders are being routed according to the firm’s execution policy. This could include checks on venue eligibility, algorithm selection, and cost estimates.

- **Ex-post analysis** involves a post-trade review of execution quality, typically through [Transaction Cost Analysis](https://prime.greeks.live/area/transaction-cost-analysis/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (TCA). This analysis compares the execution achieved against various benchmarks to measure performance and identify areas for improvement.

- **Formal governance** requires the establishment of a committee or function with the responsibility and authority to review monitoring reports, challenge poor outcomes, and approve changes to the firm’s execution policy and arrangements.

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## Execution

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## The Operational Playbook for Public Transparency

The execution of MiFID II’s best execution mandate crystalized into a set of highly specific, data-intensive reporting requirements known as [Regulatory Technical Standards](https://prime.greeks.live/area/regulatory-technical-standards/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) (RTS). Two of these standards, [RTS 27](https://prime.greeks.live/area/rts-27/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) and RTS 28, formed the operational bedrock of the new transparency regime, translating the directive’s principles into concrete data outputs. Although the requirement to produce these specific reports has since been suspended or deprioritized by regulators in both the UK and EU, understanding their architecture is essential to grasping the level of detail and operational capability that MiFID II originally envisioned.

RTS 27 was a report on execution quality published quarterly by the execution venues themselves (including stock exchanges, multilateral trading facilities, and systematic internalisers). Its purpose was to provide the public with standardized data to compare the quality of execution across different venues. [RTS 28](https://prime.greeks.live/area/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) was an annual report published by the [investment firms](https://prime.greeks.live/area/investment-firms/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) executing client orders.

It required firms to disclose their top five execution venues for each class of financial instrument and provide a qualitative summary of the execution quality achieved. Together, these reports created a two-way flow of information designed to make the entire execution chain transparent and accountable.

> The RTS 27 and RTS 28 reports operationalized MiFID II’s transparency goals, requiring a sophisticated data infrastructure to capture, format, and publish granular execution metrics.

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## Quantitative Modeling for Venue Reporting under RTS 27

The operational challenge of RTS 27 was immense, requiring venues to capture and publish a vast array of data points for each financial instrument they traded. The report was structured to provide granular detail on price, costs, and speed of execution. The data had to be published quarterly and made available to the public free of charge in a machine-readable format, facilitating large-scale analysis by market participants and data vendors. Constructing these reports required a robust data warehousing and processing infrastructure capable of handling massive volumes of tick-level data.

The table below provides a simplified, illustrative example of the kind of data a trading venue would have been required to publish under RTS 27 for a single, highly liquid equity. This demonstrates the level of granularity required, covering everything from average spreads to the number of orders executed at different price points relative to the prevailing market quote.

### Table 2 ▴ Illustrative RTS 27 Venue Execution Quality Report (Sample for a single equity)

| Metric | Description | Value |
| --- | --- | --- |
| Intra-Day Price | Average price per transaction during the trading day. | €100.15 |
| Average Transaction Size | The average number of shares per executed order. | 500 shares |
| Average Spread | The average difference between the best bid and offer during continuous trading. | €0.02 |
| Orders Executed at Mid-Point | Number of orders executed at the mid-point of the best bid and offer. | 15,230 |
| Orders Executed at Best Bid/Offer | Number of orders executed at the prevailing best bid or offer (touch). | 45,890 |
| Orders Executed with Price Improvement | Number of passive orders that executed at a better price than the quote at time of receipt. | 8,150 |
| Likelihood of Execution | The probability of an order of a standard market size being executed. | 98.5% |
| Average Execution Time | The average time in milliseconds from order receipt to execution. | 15 ms |

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## System Integration for Firm Reporting under RTS 28

While RTS 27 focused on venues, RTS 28 placed the reporting burden on investment firms, requiring them to provide a public accounting of their execution practices. This annual report had two primary components ▴ a quantitative disclosure of the top five execution venues used for each class of financial instruments, and a qualitative summary of how the firm had monitored and achieved best execution. This required a sophisticated integration of the firm’s Order Management System (OMS), Execution Management System (EMS), and its post-trade TCA systems.

The following steps outline the system integration and technological architecture required to produce an RTS 28 report:

- **Data Aggregation** ▴ The system must first pull all client order and execution data for the preceding year from the firm’s OMS. This data includes the instrument traded, venue of execution, timestamp, volume, and client categorization.

- **Venue and Instrument Classification** ▴ The raw data must be cleaned and categorized. All trades need to be classified according to the MiFID II instrument classes (e.g. Equities ▴ Tick Size Liquidity Band 5 & 6, Debt Instruments ▴ Bonds, etc.). Execution venues must be identified by their unique Market Identifier Code (MIC).

- **Volume Calculation** ▴ The system then calculates the total trading volume for each instrument class and determines the percentage of that volume executed on each venue. This analysis identifies the top five venues for each class.

- **Qualitative Analysis Integration** ▴ The quantitative data is then combined with the outputs of the firm’s TCA and monitoring program. This involves preparing a summary that explains how the firm’s venue and algorithm choices delivered high-quality results for clients, referencing the execution factors of price, cost, speed, and likelihood of execution.

- **Report Generation** ▴ Finally, the system must generate the report in the prescribed format, including the detailed tables of the top five venues and the accompanying qualitative summary, ready for public disclosure.

This process demonstrates that MiFID II compliance was a significant technological undertaking, demanding a cohesive architecture that could connect front-office trading activity with back-office data analysis and reporting functions.

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## References

- European Securities and Markets Authority. (2017). Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive. Official Journal of the European Union.

- Dechert LLP. (2017). MiFID II ▴ Best execution. Dechert.

- European Parliament and Council of the European Union. (2014). Directive 2014/65/EU on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU. Official Journal of the European Union.

- International Capital Market Association. (2016). MiFID II/R Fixed Income Best Execution Requirements. ICMA.

- European Securities and Markets Authority. (2017). Commission Delegated Regulation (EU) 2017/575 of 8 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments with regard to regulatory technical standards concerning the data for publication by execution venues on the quality of execution of transactions. Official Journal of the European Union.

- European Securities and Markets Authority. (2017). Commission Delegated Regulation (EU) 2017/576 of 8 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the annual publication by investment firms of information on the identity of execution venues and on the quality of execution. Official Journal of the European Union.

- Financial Conduct Authority. (2017). Markets in Financial Instruments Directive II Implementation ▴ Policy Statement II. FCA.

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## Reflection

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## Beyond Compliance a System of Intelligence

The architectural evolution from MiFID I to MiFID II provides a critical lesson in regulatory trajectory. The initial framework established a principle, while the successor demanded a system of proof. The extensive data capture, analysis, and reporting infrastructure built to satisfy the RTS 27 and RTS 28 requirements, while no longer mandatory in its original form, should not be dismantled.

Viewing this infrastructure as a sunk cost of compliance is a strategic error. Instead, it must be recognized as the foundational chassis for a modern execution intelligence system.

The capacity to systematically measure execution quality across multiple dimensions, venues, and asset classes is a powerful competitive asset. This data-driven framework allows a firm to move beyond simply meeting a regulatory standard and toward actively optimizing every aspect of its trading function. It provides the quantitative basis for refining algorithmic strategies, negotiating more effectively with liquidity providers, and demonstrating superior performance to clients in a clear and empirical manner. The questions that a firm’s leadership should now ask are not about how to reduce the cost of this infrastructure, but about how to leverage its full potential.

How can this data be used to predict liquidity, minimize information leakage, and ultimately generate superior risk-adjusted returns? The legacy of MiFID II is the recognition that in modern finance, the quality of your execution is a direct function of the quality of your data architecture.

![Abstract clear and teal geometric forms, including a central lens, intersect a reflective metallic surface on black. This embodies market microstructure precision, algorithmic trading for institutional digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-prime-os.jpg)

## Glossary

<a href="https://prime.greeks.live/area/financial-instruments/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstractly depicting an Institutional Digital Asset Derivatives ecosystem. A robust base supports intersecting conduits, symbolizing multi-leg spread execution and smart order routing](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-optimization.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/question/how-does-implied-volatility-skew-affect-the-range-of-possible-strike-prices-for-a-zero-cost-structure/?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)

## Possible Result

Implied volatility skew dictates the trade-off between downside protection and upside potential in a zero-cost options structure. </a><a href="https://prime.greeks.live/area/investor-protection/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision metallic instrument with a black sphere rests on a multi-layered platform. This symbolizes institutional digital asset derivatives market microstructure, enabling high-fidelity execution and optimal price discovery across diverse liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-engine-component-digital-asset-derivatives-market-microstructure.jpg)

## Investor Protection

Meaning ▴ Investor Protection represents a foundational systemic framework designed to safeguard capital and ensure equitable market access and operation for institutional participants. </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">
![A precision instrument probes a speckled surface, visualizing market microstructure and liquidity pool dynamics within a dark pool. This depicts RFQ protocol execution, emphasizing price discovery for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-flow.jpg)

## 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/mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Segmented circular object, representing diverse digital asset derivatives liquidity pools, rests on institutional-grade mechanism. Central ring signifies robust price discovery a diagonal line depicts RFQ inquiry pathway, ensuring high-fidelity execution via Prime RFQ](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-engine-for-high-fidelity-execution.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/best-execution/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstract structure combines opaque curved components with translucent blue blades, a Prime RFQ for institutional digital asset derivatives. It represents market microstructure optimization, high-fidelity execution of multi-leg spreads via RFQ protocols, ensuring best execution and capital efficiency across liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-optimizing-market-microstructure-for-high-fidelity-execution-best-execution-price-discovery-across-liquidity-pools-and-prime-os.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/mifid-i/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Central institutional Prime RFQ, a segmented sphere, anchors digital asset derivatives liquidity. Intersecting beams signify high-fidelity RFQ protocols for multi-leg spread execution, price discovery, and counterparty risk mitigation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-cross-asset-rfq-execution-hub.jpg)

## Mifid I

Meaning ▴ MiFID I, the Markets in Financial Instruments Directive, represents a foundational European regulatory framework implemented in 2007, designed to enhance the efficiency, transparency, and integrity of financial markets across the European Union. </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">
![An abstract composition featuring two overlapping digital asset liquidity pools, intersected by angular structures representing multi-leg RFQ protocols. This visualizes dynamic price discovery, high-fidelity execution, and aggregated liquidity within institutional-grade crypto derivatives OS, optimizing capital efficiency and mitigating counterparty risk](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-optimizing-aggregated-liquidity-and-multi-leg-execution-via-advanced-market-microstructure.jpg)

## Execution Venues

Meaning ▴ Execution Venues are regulated marketplaces or bilateral platforms where financial instruments are traded and orders are matched, encompassing exchanges, multilateral trading facilities, organized trading facilities, and over-the-counter desks. </a><a href="https://prime.greeks.live/area/asset-classes/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A multi-layered, institutional-grade device, poised with a beige base, dark blue core, and an angled mint green intelligence layer. This signifies a Principal's Crypto Derivatives OS, optimizing RFQ protocols for high-fidelity execution, precise price discovery, and capital efficiency within market microstructure](https://options.greeks.live/wp-content/uploads/2025/08/principal-digital-asset-derivatives-rfq-execution-system-intelligence.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/area/execution-quality/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A modular, institutional-grade device with a central data aggregation interface and metallic spigot. This Prime RFQ represents a robust RFQ protocol engine, enabling high-fidelity execution for institutional digital asset derivatives, optimizing capital efficiency and best execution](https://options.greeks.live/wp-content/uploads/2025/08/principals-institutional-digital-asset-derivatives-prime-os-for-optimized-rfq-protocol-best-execution-system.jpg)

## 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/unbundling/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered blue mechanism, symbolizing a high-fidelity execution engine, emerges from a rounded, light-colored liquidity pool component, encased within a sleek teal institutional-grade shell. This represents a Principal's operational framework for digital asset derivatives, demonstrating algorithmic trading logic and smart order routing for block trades via RFQ protocols, ensuring atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/institutional-crypto-derivatives-os-core-algorithmic-execution-engine.jpg)

## Unbundling

Meaning ▴ Unbundling refers to the decomposition of a traditionally integrated service or product offering into its discrete, independently consumable components. </a><a href="https://prime.greeks.live/area/order-execution-policy/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A dark blue, precision-engineered blade-like instrument, representing a digital asset derivative or multi-leg spread, rests on a light foundational block, symbolizing a private quotation or block trade. This structure intersects robust teal market infrastructure rails, indicating RFQ protocol execution within a Prime RFQ for high-fidelity execution and liquidity aggregation in institutional trading](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-framework-multi-leg-spreads-best-execution-capital-efficiency.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-specific-pre-trade-risk-controls-required-for-hft-firms-under-mifid-ii/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Angularly connected segments portray distinct liquidity pools and RFQ protocols. A speckled grey section highlights granular market microstructure and aggregated inquiry complexities for digital asset derivatives](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-efficiency.jpg)

## Required Firms

MiFID II requires HFT firms to embed automated pre-trade controls for price, volume, and flow to ensure systemic market integrity. </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 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)

## 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/regulatory-technical-standards/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Sleek, intersecting planes, one teal, converge at a reflective central module. This visualizes an institutional digital asset derivatives Prime RFQ, enabling RFQ price discovery across liquidity pools](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-engine-optimizing-institutional-liquidity-aggregation-and-best-execution.jpg)

## Regulatory Technical Standards

Meaning ▴ Regulatory Technical Standards, or RTS, are legally binding technical specifications developed by European Supervisory Authorities to elaborate on the details of legislative acts within the European Union's financial services framework. </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">
![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)

## 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/investment-firms/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A dark blue sphere and teal-hued circular elements on a segmented surface, bisected by a diagonal line. This visualizes institutional block trade aggregation, algorithmic price discovery, and high-fidelity execution within a Principal's Prime RFQ, optimizing capital efficiency and mitigating counterparty risk for digital asset derivatives and multi-leg spreads](https://options.greeks.live/wp-content/uploads/2025/07/market-microstructure-driven-institutional-digital-asset-derivatives-rfq.jpg)

## Investment Firms

Meaning ▴ Investment Firms are institutional entities primarily engaged in the management, deployment, and intermediation of capital within financial markets, operating as critical nodes in the global capital allocation network. </a><a href="https://prime.greeks.live/area/rts-28/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A 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)

## 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>

**Tags:** [MiFID II](https://options.greeks.live/area/mifid-ii/), [Asset Classes](https://options.greeks.live/area/asset-classes/), [RTS 28](https://options.greeks.live/area/rts-28/), [European Union](https://options.greeks.live/area/european-union/), [MiFID I](https://options.greeks.live/area/mifid-i/), [Systematic Internaliser](https://options.greeks.live/area/systematic-internaliser/)	

## Discover More

- 
### [How Does MiFID II’s Best Execution Standard Affect Non-Equity Asset Classes?](https://options.greeks.live/question/how-does-mifid-iis-best-execution-standard-affect-non-equity-asset-classes/)
![A sleek, disc-shaped system, with concentric rings and a central dome, visually represents an advanced Principal's operational framework. It integrates RFQ protocols for institutional digital asset derivatives, facilitating liquidity aggregation, high-fidelity execution, and real-time risk management. A visible sensor highlights market microstructure insights and price discovery.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-engine-digital-asset-derivatives-execution.jpg)

MiFID II's best execution standard mandates a data-driven, multi-factor approach to trading non-equity assets, enhancing transparency.

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

MiFID II defines best execution as a firm's auditable, data-driven obligation to structure its entire trading process to consistently deliver the most favorable outcome for clients.

- 
### [How Does MiFID II Define the Best Execution Requirements for Investment Firms?](https://options.greeks.live/question/how-does-mifid-ii-define-the-best-execution-requirements-for-investment-firms/)
![A stylized spherical system, symbolizing an institutional digital asset derivative, rests on a robust Prime RFQ base. Its dark core represents a deep liquidity pool for algorithmic trading. A blue band signifies high-fidelity execution protocols, ensuring optimal price discovery and capital efficiency within market microstructure, enhancing alpha generation.](https://options.greeks.live/wp-content/uploads/2025/08/institutional-grade-rfq-protocol-engine-facilitating-best-execution-and-liquidity-aggregation-for-digital-asset-derivatives.jpg)

MiFID II defines best execution as a continuous, evidence-based obligation for firms to take all sufficient steps to obtain the best outcome for clients.

- 
### [How Do Regulatory Mandates like Mifid Ii Influence a Firm’s Approach to Proving Best Execution?](https://options.greeks.live/question/how-do-regulatory-mandates-like-mifid-ii-influence-a-firms-approach-to-proving-best-execution/)
![A dark, metallic, circular mechanism with central spindle and concentric rings embodies a Prime RFQ for Atomic Settlement. A precise black bar, symbolizing High-Fidelity Execution via FIX Protocol, traverses the surface, highlighting Market Microstructure for Digital Asset Derivatives and RFQ inquiries, enabling Capital Efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-execution-engine-microstructure-1.jpg)

MiFID II transforms best execution from a qualitative goal into a quantitative, data-driven mandate for demonstrable execution quality.

- 
### [How Has the MiFID II Best Execution Standard Evolved from the Previous MiFID I Regime?](https://options.greeks.live/question/how-has-the-mifid-ii-best-execution-standard-evolved-from-the-previous-mifid-i-regime/)
![A deconstructed mechanical system with segmented components, revealing intricate gears and polished shafts, symbolizing the transparent, modular architecture of an institutional digital asset derivatives trading platform. This illustrates multi-leg spread execution, RFQ protocols, and atomic settlement processes.](https://options.greeks.live/wp-content/uploads/2025/07/deconstructed-principal-trading-system-revealing-core-mechanics-of-digital-asset-derivatives-execution.jpg)

MiFID II evolved best execution from a procedural principle into a data-driven system demanding quantitative proof of superior outcomes.

- 
### [How Did MiFID II Change the Definition of Best Execution for OTC Markets?](https://options.greeks.live/question/how-did-mifid-ii-change-the-definition-of-best-execution-for-otc-markets/)
![Close-up reveals robust metallic components of an institutional-grade execution management system. Precision-engineered surfaces and central pivot signify high-fidelity execution for digital asset derivatives. This represents the market microstructure supporting RFQ protocols, ensuring best execution and capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-grade-digital-asset-derivatives-rfq-execution-precision-optimizing-market-microstructure-for-best-execution-and-prime-os.jpg)

MiFID II redefined OTC best execution by mandating a shift from reasonable efforts to a provable, data-driven system of "all sufficient steps."

- 
### [What Is the Regulatory Impact of MiFID II on RFQ Best Execution Policies?](https://options.greeks.live/question/what-is-the-regulatory-impact-of-mifid-ii-on-rfq-best-execution-policies/)
![Transparent conduits and metallic components abstractly depict institutional digital asset derivatives trading. Symbolizing cross-protocol RFQ execution, multi-leg spreads, and high-fidelity atomic settlement across aggregated liquidity pools, it reflects prime brokerage infrastructure.](https://options.greeks.live/wp-content/uploads/2025/07/cross-protocol-rfq-execution-digital-asset-derivatives-microstructure-system.jpg)

MiFID II mandates a data-driven, auditable framework for RFQ best execution, transforming it into a quantifiable process.

- 
### [In What Ways Do Best Execution Obligations Differ for Retail versus Professional Clients?](https://options.greeks.live/question/in-what-ways-do-best-execution-obligations-differ-for-retail-versus-professional-clients/)
![Reflective and translucent discs overlap, symbolizing an RFQ protocol bridging market microstructure with institutional digital asset derivatives. This depicts seamless price discovery and high-fidelity execution, accessing latent liquidity for optimal atomic settlement within a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-digital-asset-derivatives-rfq-execution-best-price-discovery.jpg)

Best execution obligations diverge from a protective, cost-focused mandate for retail clients to a flexible, factor-based framework for professionals.

- 
### [How Do Regulatory Frameworks like MiFID II Influence the Structure of a Best Execution Committee?](https://options.greeks.live/question/how-do-regulatory-frameworks-like-mifid-ii-influence-the-structure-of-a-best-execution-committee/)
![Central reflective hub with radiating metallic rods and layered translucent blades. This visualizes an RFQ protocol engine, symbolizing the Prime RFQ orchestrating multi-dealer liquidity for institutional digital asset derivatives. It ensures high-fidelity execution, transparent price discovery, and atomic settlement within complex market microstructure.](https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-digital-asset-rfq-execution-and-liquidity-management.jpg)

MiFID II transforms the Best Execution Committee into a data-driven governance hub ensuring empirically validated execution quality.

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---

**Original URL:** https://options.greeks.live/question/what-are-the-primary-differences-between-mifid-i-and-mifid-ii-best-execution-standards/
