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EFAMA’s response to ESMA’s Review of the MiFID II framework on best execution reports

Capital Markets | MIFID
22 December 2021 | Policy position
Capital Markets
best execution

This is a timely and necessary review to which we hope to contribute in a constructive manner. As already recognised in the consultation paper and in the MiFID Quick Fix proposal, RTS 27 and RTS 28 currently fall short of the objective of providing valuable and comparable datasets for investment managers and the investing public. We appreciate the present effort to revise reporting requirements to produce more meaningful reports.

After wide consultation with our membership, there is firm scepticism that RTS 27 and RTS 28 would add any value under their revised forms. Especially as concerns the RTS 28 report, the man-hours to produce the reports are significant, and in no way justified with the extremely low ‘clicks’ observed on the download of these reports. In the consultation response we point to what we believe are fundamental flaws in the report design: the obligation to report by legal entity therefore gaining (irrelevant) insights on the legal set-ups of companies or their execution infrastructure, but not on the counterparties that are chosen for execution or how concentrated these flows are.

This is why we would strongly advocate for the removal of both reports in the knowledge that there are existing tools that already support best execution. Institutional investors today receive detailed reporting on executed trades in the form of frequent and timely reports, making the RTS28 reports redundant and explaining the extremely low interest in them. Equally, a multi-asset class consolidated tape will provide valuable data for retail and institutional investors to help assess best execution. Finally, there is also a competitiveness angle here which merits mention. In the UK, the FCA recently announced the removal of both RTS 27 and RTS 28 reports. It would seem unfair to continue requiring the production of seldom used reports in this regard for EU firms (not only vis-a-vis UK firms but vis-a-vis global non-EU firms).


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