The European Securities and Markets Authority (ESMA) has initiated a consultation regarding draft technical standards. These standards aim to define how investment firms should establish and assess the effectiveness of their order execution policies. The primary goal of these proposed standards is to enhance investor protection by improving the order execution practices of investment firms.

Order Execution Policy Standards

ESMA is seeking input from stakeholders on several key areas. First, the establishment of an investment firm's order execution policy. This involves classifying the financial instruments used for executing client orders and selecting venues for the order execution policy.

Second, the investment firm's procedures for monitoring and regularly assessing the effectiveness of their order execution arrangements and policies. Third, the execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term of client orders through the firm’s own account dealing. Lastly, how an investment firm should deal with client instructions during order execution.

ESMA and EC Coordination

The revised texts of the Markets in Financial Instruments Directive II (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR) came into effect on 28 March 2024. The deadline for transposing the MiFID II MiFID II MiFID II stands for the Markets in Financial Instruments Directive, and is the second iteration of a sweeping directive. As such it is known as MiFID II. The original Markets in Financial Instruments Directive (MiFID) became effective in November 2007. It was intended as the foundation of the EU’s Financial Services Action Plan, a comprehensive project to create a single European market in financial services. MiFID is intended to create a level playing field for firms to compete in the EU’s fina MiFID II stands for the Markets in Financial Instruments Directive, and is the second iteration of a sweeping directive. As such it is known as MiFID II. The original Markets in Financial Instruments Directive (MiFID) became effective in November 2007. It was intended as the foundation of the EU’s Financial Services Action Plan, a comprehensive project to create a single European market in financial services. MiFID is intended to create a level playing field for firms to compete in the EU’s fina Read this Term amendments is set for 29 September 2025.

The amendments include many Level 2 measures that will be developed over the next six to eighteen months. Additionally, these regulatory changes will necessitate updates to ESMA's IT systems and relevant MiFIR registers.

ESMA is working with the European Commission (EC) to evaluate which provisions require further guidance and clarification. The EC has published a communication and an interpretative notice regarding the transitional provisions, supplemented by an ESMA statement.

Feedback Deadline and Report

Throughout the implementation phase of the MiFID II/MiFIR review, ESMA will consult the public on a series of technical standards. These will be released in consolidated consultation paper packages. The timeline for the adoption of Level 2 measures will depend on approval from the European Commission, the European Parliament, and the Council of the EU. An implementation period will also be provided where necessary.

ESMA will accept comments until 16 October 2024. Following this period, ESMA will prepare a final report based on the feedback received, which will then be submitted to the European Commission for the final draft of the technical standards.