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ESMA and FCA Suspends RTS 27

2021-03-26 01:03:43

In light of the Covid-19 pandemic, ESMA issued a Public Statement on 31 March 2020 to clarify issues regarding the publication by execution venues and firms of the general best execution reports required under RTS 27 and 28 of MiFID II. ESMA and competent authorities are aware of difficulties encountered by execution venues and firms in preparing these reports due to the COVID-19 pandemic and the related actions taken by the Member States to prevent contagion.

EU and UK Suspension of RTS 27 Reports whilst RTS 28 remains due for publication

Suspension of RTS 27

Both in the EU and the UK, investment firms are no longer required to publish the RTS 27 quarterly reports in 2021. As per ESMA’s Directive (EU) 2021/338 published on 26 February 2021, the two-year suspension of publishing quarterly best execution reports has been applicable since 27 February 2021 and will continue until 28 February 2023. Last Friday, 19 March 2021, FCA announced that it will not take action against firms who do not produce RTS 27 for the rest of 2021. At the same time, the FCA will review the RTS 27 reporting obligation, with a view to abolishing it, given concerns that have been expressed around the value these reports bring to the market and to consumers, and the burdens involved in producing them.

RTS 28 Remains

RTS 28 is still in force for EU and UK investment firms which have until the 30th of April 2021 to publish these reports. Investment firms are required to summarise and publish their top five execution venues in terms of trading volume and information on the quality of execution obtained for each class of their financial instruments.

Point Nine Comments

Unprecedented times, like the Covid-19 pandemic, tend to bring to light inefficiencies in the market. In our opinion, RTS 27 and RTS28 are some of those inefficiencies. We strongly believe that RTS27 and RTS28 reporting do not add any considerable value to consumers and the market as a whole. Furthermore, it burdens firms with excessive costs and unnecessary reporting obligations that are challenging to handle.

What is RTS 27?

RTS 27 is a quarterly report published by execution venues ( trading venues, systematic internalisers, market makers, or other liquidity providers) in accordance with Article 27 of the MiFID II framework that governs Best Execution requirements. RTS 27 defines a set of 9 standardized quarterly reports required to be created by Execution Venues.

What is RTS 28?

RTS 28 is a yearly report that investment firms need to publish in relation to client orders executed on trading venues, systematic internalisers, market makers or other liquidity providers or entities that perform a similar function to those performed by any of the foregoing in a third
country. It includes the top 5 venues where investment firms fill their client executions based on %’s.

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