MiFID II best execution, refreshed — the new RTS

For the first time in years, the Commission has repealed a piece of MiFID II reporting rather than adding to it — and replaced it with something harder to fake. Commission Delegated Regulation (EU) 2026/825, adopted on 14 April 2026 and published in the Official Journal on 23 July 2026, sets out eleven articles of regulatory technical standards on how investment firms build, monitor and assess their order-execution policies, and repeals RTS 27 and RTS 28. Nothing in it applies until 12 February 2028 — including the repeal. This guide walks the articles in order, names the artefacts a firm has to have, and works through three situations that the new text handles differently from the old one.

1. What the act does

Delegated Regulation (EU) 2026/825 supplements Directive 2014/65/EU (MiFID II) with RTS specifying the criteria to be taken into account in establishing and assessing the effectiveness of order-execution policies. It sits inside the MiFID II Review package alongside Directive (EU) 2024/790, and it leans heavily on Delegated Regulation (EU) 2017/565, which it cross-refers to rather than restates.

Article 10 repeals Delegated Regulation (EU) 2017/575 (RTS 27 — execution-quality data published by venues and systematic internalisers) and Delegated Regulation (EU) 2017/576 (RTS 28 — the annual top-five-venues report). Article 11 gives entry into force on the twentieth day after OJ publication and application from 12 February 2028.

The underlying duty in Article 27 of MiFID II — all sufficient steps to obtain the best possible result — is untouched. What changes is that the evidence of compliance moves from a standardised public table to an internal, auditable set of records.

2. What the execution policy must now contain

Article 2 requires the policy to set out the internal governance procedures for selecting execution venues and the measures taken to ensure selected venues are authorised by a competent authority, or by the third-country authority where the venue sits outside the EU.

It then requires an artefact most firms do not currently keep in this form: an internal list of selected execution venues carrying, for each one, the venue’s name and identifier; the date the firm approved it; the name and function of the person or governance body that approved it; the classes of financial instruments it may be used for; the types of transaction, including securities financing transactions as defined in Article 3(11) of Regulation (EU) 2015/2365; whether it may be used for retail clients, professional clients or both; and any other limitation on its use.

That list is the spine of the whole regime. It converts venue selection from a standing paragraph in a policy document into a dated, attributed decision record. Two further requirements attach to the policy itself: firms must specify the arrangements and valuation systems — including the list of data providers — used for the fairness-of-price checks required by Article 64(4) of Delegated Regulation (EU) 2017/565; and firms offering both execution of orders and reception and transmission of orders must state how they act in clients’ best interests when deciding whether or not to execute.

3. Selecting venues, and routing to them

Article 3 requires selection to reflect client characteristics and needs and the Article 27(1) elements, and then names four specifics: availability of certain order types; typical or relevant client order sizes and frequencies for the size criterion; a comparison of venue execution prices against reference data for the price criterion; and, for costs, execution and other trading fees, membership and connectivity costs, and clearing, settlement, custody and related administration costs.

The reference data has its own conditions: complete and accurate presentation of execution prices obtained in the market for the class assessed, prices from at least the most liquid venues for that class, and, for OTC and bespoke products, data that lets the firm assess the fairness of the price proposed to the client. Consolidated tape provider data may be used where available — a permission, not an obligation.

Article 4 requires the policy to state the routing criteria and their relative importance where an order could go to two or more listed venues, taking in the class of instrument, retail or professional status, all costs directly related to execution including the firm’s own fees and commissions, size and nature of the order, and market data where relevant. For retail clients, only criteria with a direct impact on total consideration count. A firm using an automatic order routing system must describe its main characteristics and the arrangements ensuring it applies those criteria.

4. Client instructions and own-account dealing

Article 5 makes firms state in the policy that specific client instructions may prevent compliance with Article 3 or the obtaining of the best possible result, and how orders with and without instructions are distinguished. A specific instruction is a clear one — a client choosing among options the firm offers, or telling the firm to handle the order differently from the policy. The partial-instruction rule is the sharp edge: where an instruction covers only part or an aspect of the order, only that part is treated as instructed and every other aspect is processed as an uninstructed order.

Where a firm offers a retail client a choice of venue, the policy must say how it prevents inducing the client toward a particular venue, how it complies with Articles 64(3) and 66(5) of Delegated Regulation (EU) 2017/565 where commissions differ by venue, that clients are free not to choose, and that where they do not, the venue choice and the best-execution duty remain the firm’s.

Article 6 governs executing client orders by dealing on own account. The policy must explain how the best possible result is obtained, the conflict-of-interest measures, how client risk is assessed, the steps taken to comply with Articles 67 to 70 of Delegated Regulation (EU) 2017/565, and, for OTC products, how price fairness is ensured. The fairness check follows a waterfall: the market price of the instrument at the time of the transaction; failing a reliable price, the market price of similar, comparable or underlying instruments; failing that, an internal pricing model built on reliable and accurate data reflecting market conditions.

5. Monitoring and the annual assessment — the real replacement for RTS 27/28

Article 7 is where the published tables have gone. Firms must monitor policy effectiveness covering compliance of executions with the policy, the quality obtained, the price of execution against reference data, and all other Article 27(1) factors. And, per class of instrument, on a representative sample, whether execution quality is obtained consistently — measured against thresholds the firm itself pre-determines for three indicators:

• the accepted deviation of client-order execution prices from the relevant value in the reference data;
• the minimum percentage of total executed volume meeting those reference values;
• the minimum number of executed client orders meeting those reference values.

Article 8 then requires a periodic assessment at least annually, and additionally whenever monitoring shows non-compliance with the policy or with Article 27(1), or a material change occurs within the meaning of Article 65(7), fourth subparagraph, of Delegated Regulation (EU) 2017/565. The assessment must take in the firm’s own costs and fees, the monitoring results, market developments including liquidity dry-ups, the emergence of new venues (functionality, fee cost-efficiency, price-formation transparency, liquidity) and the disappearance of selected venues through merger or bankruptcy. Deficiencies are corrected “as soon as possible within a reasonable period”, weighted by seriousness.

Article 9 and the Annex fix the classes the sampling runs on: shares and depositary receipts; ETFs, ETNs and ETCs; certificates and other equity-like instruments; bonds and money-market instruments; structured finance products; options and futures admitted to trading; other derivatives; financial contracts for differences; emission allowances; and a residual “other instruments” class. Firms must split a class into subclasses where a significant number of orders is executed with different execution methods inside it, or where the Annex classes do not permit effective monitoring.

6. Three worked cases

Case A — the firm that routes everything to one venue

A retail broker sends all equity orders to a single venue. Under Article 3(3) it must justify in the policy itself how one venue obtains the best possible result consistently. Under Article 8(3) it must additionally assess that question periodically and make a comparison with available alternative venues.

What the firm does: builds a documented alternatives comparison into the annual cycle, with named candidate venues and the price, cost, size and order-type data behind the decision to stay. A single-venue arrangement is not prohibited; an unexamined one is.

Case B — the payments firm with an investing feature

An e-money institution offers share dealing alongside its core product and passes client orders to a third party. If it both executes and receives-and-transmits, Article 2(4) requires the policy to state how it acts in clients’ best interests when deciding whether to execute an order at all.

What the firm does: stops treating best execution as the third party’s problem. It writes the venue list under Article 2(2) for the venues actually reached through that arrangement, records who approved each, and sets its own Article 7 thresholds — proportionate to a small order book, but pre-determined and written down before the sample is measured against them.

Case C — the firm letting retail clients pick a venue

A platform lets retail clients choose between two venues with different commissions. Article 5(4) requires four statements in the policy: how the design avoids inducing a choice, how differing commissions are squared with Articles 64(3) and 66(5) of Delegated Regulation (EU) 2017/565, that clients need not choose, and that the duty stays with the firm when they do not.

What the firm does: treats the venue-selection screen as a policy artefact. Default selection, ordering and any pre-ticked option are inducement questions, and the answer has to be written in the execution policy rather than owned by the product team alone.

7. Sequencing the work to February 2028

Eighteen months is enough only if the order is right. The venue list under Article 2(2) comes first, because Articles 3, 4, 8 and 9 all reference it. Class identification under Article 9 comes next, since the Article 7 sampling is per class. Reference-data sourcing follows — it determines what the price indicators can even be measured against, and the decision whether to consume consolidated tape data is a procurement question with a lead time. Threshold-setting under Article 7 comes last, because a threshold set before the firm has seen its own distribution is a guess.

Firms that built pipelines around RTS 27 feeds should not retire them before checking whether the same data serves the Article 7 price comparison. The publication obligation is going; the underlying need for market-wide execution-price data is not.

8. What to do, today

• Build the Article 2(2) venue list now, with approval dates and the name and function of the approver for each venue — reconstructing historic approvals gets harder every quarter.
• Map your order flow onto the ten Annex classes and decide, with evidence, where a subclass split is needed because execution methods differ inside a class.
• Measure your current execution-price distribution per class before setting any Article 7 threshold, so the threshold describes achievable quality rather than an aspiration.
• If you route to a single venue, start the alternatives comparison this year; Articles 3(3) and 8(3) both require it and neither is satisfied by a sentence.
• Check whether your retail venue-choice screen, if you have one, would survive the Article 5(4) inducement test as currently designed.
• Do not switch off RTS 27/28 data ingestion until you know whether it feeds your Article 7 price comparison.

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