--- title: "ESMA Q&A 1017 — Q&A — Best Execution [Answer Published]" shortTitle: "ESMA Q&A 1017 — Q&A — Best Execution [Answer Published]" answer_id: ESMA_QA_1017 topic: "Best Execution" status: "Answer Published" type: qa instrument_type: qa authority: ESMA binding: false binding_character: non_binding legal_status: in_force regulation: "MiFID II" mifid_level3: true mica_level2: false legal_basis: "MiFID II" date: 10 October 2016 source_link: https://www.esma.europa.eu/publications-data/questions-answers/1017 lifecycle: "Answer Published" text_version: "ESMA Q&A register, 10 October 2016" source_url: "https://www.esma.europa.eu/publications-data/questions-answers/1017" check_status: matched verified: true last_checked: 2026-10-26 checked_against: "the ESMA publication" source: prepared_by: "ESMA" published_by: "ESMA" published_in: "ESMA Q&A tool" evidence: prepared_by: "ESMA Answer" locator: "ESMA Q&A entry ESMA_QA_1017: field 'ESMA Answer', no 'Answer provided by' line" document_type: "qa_answer" legal_nature: "not_legislation" addressees: "not stated in the document" dates: published_on: "2016-10-10" question_submitted_on: "2016-10-10" locators: published_on: "ESMA Q&A Excel export ESMA_QA_1017, column 'Esma responses', date line" question_submitted_on: "ESMA Q&A Excel export ESMA_QA_1017, column 'Date of submission'" lifecycle_label: "Answer Published" --- **Answer by ESMA, published in its Q&A tool · not legislation · published 10 Oct 2016 [Answer Published]** *Answer Published · ESMA Q&A register, 10 October 2016 · Checked against the ESMA publication on 26 Oct 2026 · [Official source](https://www.esma.europa.eu/publications-data/questions-answers/1017)* | | | |---|---| | **Full title** | ESMA Q&A 1017 — Q&A — Best Execution \[Answer Published\] | | **Prepared by** | ESMA | | **Published by** | ESMA, in the ESMA Q&A tool | | **Reference** | ESMA_QA_1017 | | **Document type** | Q&A | | **Legal nature** | Not legislation | | **Addressees** | Not stated in the document | | **Dates** | Published 10 October 2016; question submitted 10 October 2016 | | **Legal basis** | MiFID II | | **Related instruments** | None recorded | | **Text on this page** | Word for word — the full text of the ESMA publication | **Best Execution** ### Question What is meant by checking the fairness of the price proposed to the client when executing orders or decisions to deal in OTC products? *** ### Answer MiFID II strengthens the existing best execution standard in relation to OTC10 products[^1]. In this regard, Article 64 of the MiFID II Delegated Regulation requires firms to check the fairness of the price proposed to the client when executing orders or taking decisions to deal in OTC products, including bespoke products, by gathering market data used in the estimation of the price of such products and, where possible, by comparing with similar or comparable products. Firms, as a matter of practice, may be routinely taking account of external market data and externally verifiable reference prices (where available), when pricing or checking the price of OTC products (including bespoke instruments), in fulfilling their best execution obligations. However, MiFID II now imposes an explicit requirement on firms to ensure that such checks are undertaken on a systematic basis and embedded in their policies and practices. As a consequence, firms need to ensure that they have the necessary procedures and arrangements in place as well as appropriate valuation systems. With greater access to technology and data analytics, firms will be expected to scrutinise the methodologies and inputs underpinning any valuation processes and pricing models utilised with respect to OTC products in order to ensure that they are consistently checking the fairness of the price. Similarly, when placing orders resulting from decisions to deal in OTC products, firms will be expected to undertake the necessary checks on the fairness of the price and ensure that it is reflected in their arrangements. This is an ex-ante assessment by the firm that takes place prior to the execution of the order. However, there is an expectation that any pre-trade checks or processes would be included in the firm’s review and monitoring of its best execution arrangements. Firms would therefore need to have records, documentation in place, to evidence this as part of their ongoing monitoring of best execution. The aim is for firms to be able to justify their pricing decisions, and have systems in place to ensure that any judgements or decisions are taken with the clients’ best interests in mind and are not biased by conflicts of interest. We expect that any checks or controls will be calibrated according to the nature of the financial instrument and the characteristics and circumstances of the individual trade. [^1]: For the purposes of this Q&A, a financial instrument is an Over The Counter or OTC product when it is: (i) not admitted to trading, or, (ii) not traded on a trading venue (i.e. a regulated market, an MTF or OTF). *** **Source:** [ESMA original document](https://www.esma.europa.eu/publications-data/questions-answers/1017)