The European Securities and Markets Authority (ESMA) has invited firms to give their input regarding order execution policies as part of reviewing and amending the original Markets in Financial Instruments Directive II (MiFID II).
ESMA Opens Consultation On Order Execution Policies Under MiFID II
This call came on Tuesday 16 July 2024, and the financial watchdog indicated that financial institutions and investment platforms have until 16 October 2024 to comment on the proposed amendments. Investment firms must specifically address the classification of financial instruments in terms of which they execute client orders.
These companies must also indicate how they monitor and “regularly assess the effectiveness” of order execution practices and client instructions. The European Commission adopted the proposed MiFID II in January 2018, intending to make investment processes more transparent.
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ESMA wants to create a culture of investor protection with the review of these technical standards, which are meant to improve order execution throughout investment firms in the EU. According to media reports, the regulator recently published new consultations with the goal of “reducing reporting burden and promoting convergence in the supervisory approach”.
Once finalised, these amendments and measures will establish a legislative framework for consolidated tape providers (CTPs), which will collect data from trading venues about financial instruments, among others. According to ESMA, this will become a “continuous electronic live stream made available to the public”. On its website, the authority noted:
ESMA … is performing a thorough assessment of the provision that may merit further guidance and clarification for contributing to a smooth transition of the revised framework.
