Hi all, on the MiFID Best Execution Subgroup Recommended Practices for Best Execution Reporting document Page 36 it states:- Timing of Reports (RTS28) …As such, the first set of reports would be expected to be published in April 2018, covering all orders executed or placed during 2017. This, despite MiFID II not applying during 2017 and, therefore, firms not receiving a wide range of necessary information, including RTS 27 reports, for that period. In mitigation of this situation, the FCA agreed that this first report should be completed on a ‘best efforts’ basis. It was agreed that, as ESMA would not have produced its tables setting out information on tick sizes for equities, that asset managers need not subdivide equities into three classes based on tick sizes, for this first set of reports.
I can’t find where the FCA have said this, is there any publication to support this statement please? Thanks
Mark Holloway
11 July 2017 9:28am
Hi James,
I don’t have the FCA reference to hand, but here’s what ESMA says in its Q&A on investor protection topics (Section 1, Answer 6):
"ESMA recognises that for the first set of RTS 28 reports, investment firms may not be able to fully report on information which is not available or applicable in relation to the preceding year e.g. where it is tied to new provisions stemming from MiFID II or MiFIR.
As a practical matter, this might mean that the first year’s report may lack some of the detail that would be available for subsequent reports, given that firms may not have data published under RTS 27 for the preceding year. Specifically, ESMA wishes to clarify that unless the firm is using a specific tool or the services of a third party data provider to assess execution quality, it will most likely be unable to provide, in the first annual report, any information required under Article 3(3)(g) of RTS 28. Another possible example of where the first set reports required by RTS 28 may lack some granularity in comparison to subsequent reports is in relation to the lack of data on the identification of the subclasses of the classes of financial instruments based on liquidity, in accordance with the MiFID II tick size regime. Similarly, investment firms may not necessarily have complete information on the exact proportion of passive and aggressive orders executed on each of the execution venues it used in the previous year, since they may not have been collecting such detailed information under their existing MiFID I best execution obligations.
Nonetheless, information on the top five venues and a summary of the outcomes achieved, such as it is in line with investment firms’ MiFID I best execution obligations, will still provide useful information to investors."
Regards,
Mark
James Karat
11 July 2017 10:30am
Many thanks Mark very much appreciated! Best James