Investment firms in the European Union (EU) will no longer be obliged to publish some best execution reports following amendments to MiFID II, with the European Securities and Markets Authority (ESMA) directing national regulators to “deprioritise” action against these firms for failing to do so.
Article 27(6) MiFID II required investment firms to make public the top five execution venues where they executed client orders in the preceding year and information on the quality of execution obtained.
These ‘RTS 28’ reports were designed to provide investors with information on the execution quality achieved by investment firms. However, feedback suggests that these reports were rarely used and did not provide useful comparative information for investors.
Following the agreement on the MiFID II/MiFIR review between the Council of the European Union and the European Parliament on the 29 June 2023, and adopted by the European Parliament on 16 January 2024, MiFID II/MiFiR review Level 1 texts nixed the reporting obligation for investment firms, set out in Article 27(6) of MiFID II, to publish information on the identity of execution venues and on the quality of execution.
Despite the rule change, firms may still need to publish these reports across 2024 until their home country has adopted the new European Securities and Markets Authority (ESMA) directive, ESMA said.
The ESMA statement, issued 13 February 2024, is designed to ensure the relevant EU regulators “deprioritise” action against investment firms who do not produce these RTS 28 reports.
Despite this latest action, ESMA said investment firms should continue to “strictly adhere” to best execution requirements, and the supranational regulator intends to draft a new RTS on investment firms’ order execution policies in the MiFID II review amending directive.
In addition, ESMA has withdrawn Euronext’s ability to act as a Data Reporting Service Provider (DRSP). Euronext was authorised as both an Approved Reporting Mechanism and an Approved Publication Arrangement under MiFIR since 3 January 2018.
ESMA’s withdrawal decision follows the notification by Euronext of its intention to renounce its authorisation under the conditions set out in Article 27e(a) of MIFIR.
Under Article 27e(a), ESMA, or the relevant national competent authority, may withdraw the authorisation of a data reporting services provider where the latter: does not make use of the authorisation within 12 months, expressly renounces the authorisation or has provided no services for the preceding six months; obtained the authorisation by making false statements or by any other irregular means; no longer meets the conditions under which it was authorised; has seriously and systematically infringed this regulation.
©Markets Media Europe 2024
