ESMA_QA_1066

Status: ✅ Answer Published

Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1066

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Regulatory Context

Regulation : MIF2

Level 1 Regulation: Markets in Financial Instruments Directive II (MiFID II) Directive 2014/65/EU- Investor Protection and Intermediaries

Level 2 Regulation: No information available

Level 3 Regulation: No information available

Topic: Best Execution

Subject Matter: Best Execution

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Question

Submission Date: 29 May 2019

Does the categorisation of ‘passive’ and ‘aggressive’ orders apply to investment firms which use quote-driven trading systems to have client orders executed?

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ESMA Answer

Answer Date: 29-05-2019

[ESMA35-43-349 Investor protection Best execution Q&A 23] The definitions of Article 2(a) and (b) of RTS 28 for aggressive and passive orders both refer to “orders entered into an order book”. However, quote-driven trading systems do not operate order books (see also the typology and descriptions set out in Annex I of RTS 2). Therefore, as part of their RTS 28 reporting, investment firms which use quote-driven trading systems to have client orders executed should insert a ‘N/A’ (i.e. ‘not applicable’) reference in the fields referring to passive and aggressive orders of the relevant reporting template.

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This document was automatically extracted from the ESMA EMIR Q&A database.