2026/825 — RTS — Effectiveness of order execution policies of investment firms [in force]

Financial servicesLevel 2RTSMiFID IIIn forceOfficial source

COMMISSION DELEGATED REGULATION (EU) 2026/825 of 14 April 2026 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria to be taken into account in establishing and assessing the effectiveness of order execution policies of investment firms and repealing Commission Delegated Regulations (EU) 2017/575 and (EU) 2017/576 (Text with EEA relevance)

Recitals

To ensure that clients are informed in a clear and comprehensible manner on the way their orders will be executed, investment firms should provide them with certain information on the firms’ internal order execution policy prepared by the firms in line with the requirements set out in Commission Delegated Regulation (EU) 2017/565. The order execution policy should ensure that the selection of execution venues consistently enables investment firms to achieve the best possible result when executing client orders. Investment firms should apply their internal governance procedures on the selection of execution venues and keep an up-to-date list of the execution venues they have selected.
For transparency on the investment firms’ arrangements aiming to warrant the fairness of the price for orders executed on behalf of clients, the order execution policy of the firms should include information on the arrangements and valuation systems, including a list of data providers used for that valuation, that firms will use to achieve the best possible result when executing their client orders.
To avoid any conflict of interest in executing their own and clients’ orders, investment firms that offer both the investment services of execution of orders on behalf of clients and reception and transmission of orders in relation to one or more financial instruments should specify in their order execution policy how they comply with their obligation to act in the best interests of their clients when deciding whether or not to execute the order.
When selecting the execution venues to ensure the best execution of their clients’ orders, investment firms should assess the costs charged to them by the execution venues. Investment firms should only consider costs associated to the selected execution venues to the extent that such costs would be passed on to clients directly or indirectly, when executing their orders.
High-quality reference data, including data provided by consolidated tape providers, where available, should provide a reliable and accurate presentation of execution prices in the market. Investment firms should use such data when selecting execution venues and when monitoring, on a regular basis, the effectiveness of their order execution policy. Investment firms should be allowed to use alternative external data sources where data from such sources are reliable and accurate. Investment firms should make sure that the reference data they use contain the data from the most liquid execution venues, including data from the execution venues that are the most relevant markets in terms of liquidity for the instruments traded within each class of financial instruments.
To ensure transparency and quality of results for their clients, investment firms that select only one execution venue to execute client orders for a given class of financial instruments, or for all client orders, should explain in their order execution policies how the selection of only one execution venue enables them to obtain the best possible result for their clients.
To avoid any adverse impact on the quality of the order execution, investment firms should indicate in their order execution policy the factors that they consider before deciding whether they will use automatic order routing systems.
In order to select, among the different execution venues listed in their order execution policy, the execution venue that would ensure the best possible result for each order of their clients, investment firms should take into account the classification of clients, the class and sub-class of financial instruments, the size and nature of the orders, the costs charged by execution venues and firms that impact the return for the clients, and any market data relevant to such assessment.
To ensure that investment firms can use automatic order routing systems in a way that warrants the best possible result for their clients, investment firms should explicitly mention in their order execution policies the possibility for them to use automatic order routing systems and their obligation to take into account the specific criteria that ensure the best possible result for their clients. In particular, any automatic order routing system should consider all criteria that investment firms apply for the selection of their best execution venue.
Specific instructions from a client for the execution of its order may have significant investor protection consequences. For that reason, the order execution policy of investment firms should indicate the potential negative impact of those specific instructions for the client, in particular when the firm may not be able to apply all the criteria necessary to achieve the best possible execution of that order. For the same reason, the order execution policy should specify what constitutes a specific client instruction.
To limit a possible negative impact of a client’s specific instruction on the quality of execution, resulting from the inability of an investment firm to fully apply all the elements of its order execution policy, investment firms should follow the client’s instruction only in respect of the part or aspect of the order for which the client gave a specific instruction. All other parts and aspects of the order that are not part of the specific instruction should be treated as a regular client order and should then be subject to the best execution rules.
To avoid a bias in the selection of the execution venue, investment firms should, where the choice is offered to clients, have in place procedures that prevent inducing their clients to choose a specific execution venue. In particular, investment firms should not structure their commissions in a way that treats certain execution venues unfairly. Firms should also provide their clients with fair, clear and non-misleading information on each execution venue to avoid that their clients choose an execution venue only on the basis of the investments firm’s pricing policy. To ensure that the ultimate responsibility for achieving the best execution result remains with investment firms, the order execution policy should also clearly specify that clients are free not to select a specific execution venue and, in those cases, can rely on the investment firm’s responsibility to select the execution venue for achieving the best result for those clients.
It follows from Article 27(1) of Directive 2014/65/EU that the order execution policy should also enable investment firms to obtain the best possible result for their clients when executing client orders while dealing on own account, including when engaging in matched principal trading (back-to-back trading) or dealing against the investment firm’s proprietary capital. The order execution policy of an investment firm should therefore specify how it aims to obtain the best possible result for its clients when executing client orders by dealing on own account and explain the procedures in place to assess and avoid detrimental risks for clients in those cases. For the same reason, the order execution policy of an investment firm should (i) contain measures that are appropriate to identify, manage and prevent conflicts of interest between the investment firm and its clients, as required by Article 23 of Directive 2014/65/EU and Articles 33 and 34 of Delegated Regulation (EU) 2017/565, (ii) explain the procedures in place to ensure a prompt, fair and expeditious execution of client orders where the client limit orders cannot not be immediately executed under prevailing market conditions, and (iii) specify, when clients’ orders are executed over-the-counter, how the firm ensures the fairness of the price in compliance with applicable Union law.
To ensure the fairness of the price proposed to the client where his or her order is executed by the firm dealing on own account and to ensure the best possible result for the client, investment firms should consider, where available, the existing price of the financial instrument in the market or, where not available, the price of similar or comparable instruments. To avoid abuse, an investment firm should only use internal pricing models where there are no reliable data on the existing market price of the financial instrument or on that of a similar or comparable instrument.
For the effectiveness of the investment firms’ execution policy and to ensure that investment firms consistently deliver on their obligation to achieve the best possible result for their clients, it is appropriate to further specify the general obligation set out in Article 27(7) of Directive 2014/65/EU on how investment firms should monitor the ongoing compliance with their order execution policy.
To enable investment firms to continuously assess whether they obtain the best possible result for their clients on a consistent basis, thus delivering on the best execution requirement, investment firms should assess the relevance of the thresholds that they have determined to ensure such best possible result, including minimum targets and acceptable deviations, per class of financial instrument. To perform a holistic assessment of deviations, investment firms should also account for any relevant differences in execution costs between the venue where the order is executed and the venues included in the reference data.
To ensure that the investment firms’ order execution policy remains effective over time and adequately reflects market developments, investment firms should assess the effectiveness of their order execution policy at least annually. Investment firms should also do that whenever the monitoring of the order execution policy indicates non-compliance with the order execution policy or the requirements laid down in Article 27(1) of Directive 2014/65/EU, or whenever any material change in the cost, price, speed or likelihood of the execution and settlement, or the size or nature of an order, or any other parameter relevant to the execution of the order affects the ability of the investment firm to continue to obtain the best possible result for its clients as referred to in Article 65(7) of Delegated Regulation (EU) 2017/565.
To ensure the effectiveness of the order execution policy also where investment firms select only one execution venue to execute client orders, investment firms should periodically compare the result obtained on that selected execution venue with the results they could have obtained on available alternative execution venues, and assess whether, by continuing to execute on that single execution venue, the investment firm concerned continues to comply with its obligation to obtain the best possible result for its clients.
To ensure that investment firms continue to comply with their obligation to obtain the best possible result for their clients, investment firms that conclude, based on their assessment, that their order execution policy presents deficiencies should correct those deficiencies as soon as possible after that assessment.
Grouping heterogenous financial instruments into a single class may render it difficult to detect potentially insufficient execution quality for certain financial instruments within that class. For that reason, and to ensure that the execution quality can be effectively assessed for homogenous groups of financial instruments, investment firms should identify classes of financial instruments at a granular level, and in certain circumstances, identify separate subclasses of financial instruments.
Directive (EU) 2024/790 of the European Parliament and of the Council amended Directive 2014/65/EU by (i) deleting the obligations for execution venues to make available to the public data relating to the quality of execution of transactions and the place of execution of the transaction and (ii) changing the content and format of information to be published by investment firms that execute client orders. It follows that Commission Delegated Regulation (EU) 2017/575, which laid down the requirements concerning the data to be published by execution venues on the quality of execution of transactions, and Commission Delegated Regulation (EU) 2017/576, which set out obligations for investment firms to publish information on the identity of execution venues and the quality of execution obtained, should be repealed.
Given the need for investment firms to adjust their order execution policy, order execution procedures and related IT infrastructure to become compliant with the new requirements, this Regulation should start to apply 18 months after its date of entry into force.
This Regulation is based on the draft regulatory technical standards submitted by the European Securities and Markets Authority (ESMA) to the Commission.
ESMA has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the opinion of the Securities and Markets Stakeholder Group established by Article 37 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council,

Article 1 — Definition of execution venue Article page

For the purposes of this Regulation, ‘execution venue’ means an execution venue as referred to in Article 64(1), second subparagraph of Delegated Regulation (EU) 2017/565.

Article 2 — Contents of an order execution policy Article page

2(1)

1.Investment firms shall ensure that their order execution policy contains the following:

(a)	Shares and depositary receipts	‘Shares and depository receipts’ as referred to Article 4(1), point (44)(a), of Directive 2014/65/EU.
(b)	Exchange traded funds, exchange traded notes and exchange traded commodities	‘Exchange traded funds’ as defined in Article 4(1), point (46), of Directive 2014/65/EU. ‘ETCs’ and ‘ETNs’ as referred to in Table 2, third row, third column of Annex IV to Commission Delegated Regulation (EU) 2017/583 and further specified in Table 2.4 of Section 2 of Annex III thereto.
(c)	Certificates and other equity-like financial instruments	‘Certificates’ as defined in Article 2(1), point (27), of Regulation (EU) No 600/2014 of the European Parliament and of the Council. ‘Other equity-like financial instrument’ as referred to in Table 2, fourth row, second column of Annex III to Commission Delegated Regulation (EU) 2017/587.
(d)	Bonds and money-market instruments	‘Bonds’ as referred to in Article 4(1), point (44)(b), of Directive 2014/65/EU. ‘Money-market instruments’ as defined in Article 4(1), point (17), of Directive 2014/65/EU.
(e)	Structured finance products	‘Structured finance products’ as defined in Article 2(1), point (28), of Regulation (EU) No 600/2014.
(f)	Options and futures admitted to trading on a trading venue	‘Options’ and ‘futures’ as referred to in Section C, points (4) to (7) and (10) of Annex I to Directive 2014/65/EU.
(g)	Other derivatives	Financial instruments as referred to in Section C, points (4) to (8) and (10) of Annex I to Directive 2014/65/EU, except options and futures admitted to trading on a trading venue.
(h)	Financial contracts for differences	‘Financial contracts for differences’ as referred to in Section C (9) of Annex I to Directive 2014/65/EU.
(i)	Emission allowances	‘Emission allowances’ as referred to in Section C (11) of Annex I to Directive 2014/65/EU.
(j)	Other instruments	Financial instruments that do not fall within the definition of the classes as referred to in points (a) to (i).