ESMA public statement on the publication of best execution reports

On 31 March 2020, the European Securities and Markets Authority (“ESMA”) issued a public statement clarifying issues regarding the publication by execution venues and firms of the best execution reports required under RTS 27 (Commission Delegated Regulation 2017/575) and RTS 28 (Commission Delegated Regulation 2017/576) of MiFID II (Directive 2014/65/EU).

The information published in accordance with:

  • RTS 27 is intended to provide the public and firms with relevant data to measure the quality of execution on execution venues; and
  • RTS 28 is intended to enable the public and investors to evaluate the quality of a firm’s execution practices by requiring publication of valuable information about how and where the firm has executed client orders.

ESMA issued this statement to promote coordinated action by national competent authorities (“NCAs”) in response to the adverse events that execution venues and MiFID firms are experiencing due to the COVID-19 outbreak. Through this statement, it invited NCAs (such as the Malta Financial Services Authority) to consider the possibility of extending the reporting deadlines as follows:

Reports and Reporting Entity Original Deadline ESMA Recommended Extended Deadline
Execution Venues in respect of RTS 27 reports on the quarterly information regarding the reporting period from 1 October to 31 December 2019. 31 March 2020 As soon as reasonably practicable after 31 March 2020 and no later than the following reporting deadline, that is, 30 June 2020.

Firms in respect of RTS 28 reports on the annual information regarding the reporting period of 2019, as indicated in Q&A 5 of the ESMA Q&A on MiFID II Investor Protection and Intermediaries Topics (ESMA35-43-349).

30 April 2020 On or before 30 June 2020.

ESMA encouraged NCAs not to prioritise their supervisory action against execution venues and firms in respect of the general best execution reports deadlines for the periods referred to above. NCAs should apply a risk-based approach in the exercise of their supervisory powers.

ESMA recommended that firms and execution venues keep records of the internal decisions taken in relation to the expected delay and it reminded them of their core obligations to achieve the best execution for clients and to ensure fair order handling and allocations during current market volatility.