Regulatory Technical Standards (RTS) 27 and 28 were developed by the European Securities and Markets Authority (ESMA) for the enhancement of investor protection. The publication of the RTS 27 and RTS 28 reports constitute part of the best execution obligations of investment firms that provide services in and from the European Union (EU).
Throughout this blog post, our instructor, Evdokia Pitsillidou, discusses about the concept of Best Execution and the RTS 27 and RTS 28 reporting requirements. Learners can further strengthen their knowledge with Evdokia's relevant course available through the IforPE platform, titled The new RTS 27/28 Requirements and Best Execution in Practice in 2023.
At the end of this blog post, we outline important information regarding the competencies gained from the course and how they can be utilised to fulfil your best execution obligations.
What is Best Execution?
Best Execution refers to the responsibility of investment firms to take all sufficient steps to obtain the best possible results when executing orders on behalf of clients. To ensure Best Execution obliged entities like Cyprus Investment Firms (CIF) must consider specific execution factors, such as:
• execution likelihood, and
• any other relevant factor.
Furthermore, CIF regulated entities are required to provide existing and potential clients with clear and sufficiently detailed information. This entails the disclosure of an order execution policy, as well as quarterly and annual reports that enable the assessment of the execution quality offered. More specifically the order execution policy describes the execution arrangements established and the procedures followed by the firm. Regulated entities may utilise robust technological systems to ensure efficient monitoring of the best execution factors.
The RTS 27 report is a quarterly obligation for investment firms acting as a principal to client orders and provide the service of Dealing on Own Account. The report’s objective is to provide detailed data that enable investors to assess the execution quality of orders.
Due to the high volume of data provided through the reports and the inconsistency observed in the format used across the different venues, the report was suspended until the end of February 2023.
The RTS 28 report is an annual obligation for all investment firms and provides information on the top five execution venues preferred by each firm for the execution of their clients’ orders. In this respect, the report must include a summary of the analysis conducted for the year under review and the importance appointed to each factor for the selection of the execution venues.
Although, the expected revision of the reports’ characteristics has not concluded yet, the RTS 27 reporting obligation is expected to re-apply until the new reporting requirements are adopted.
What is the new RTS 27/28 Requirements and Best Execution in practice course and what does it include?
The new RTS 27/28 Requirements and Best Execution in practice course has been developed by SALVUS Funds and is delivered by their Risk & Compliance Director, Evdokia Pitsillidou. The course discusses the new requirements expected to come into force regarding RTS 27/28 reports. Professionals employed by CIF and other CySEC regulated entities are provided with the necessary information about their Best Execution regulatory obligations. In addition, the course guides how to achieve compliance in practice and prepare for a Best Execution inspection by the regulator.
Learners who complete the new RTS 27/28 Requirements and Best Execution in Practice course will be informed about the company’s applicable reporting requirements. Moreover, learners will be able to identify areas of weaknesses within company policies and arrangements and work towards their enhancement. The competencies and skills gained from the course allows you to select and establish appropriate Best Execution monitoring tools considering the firm’s operations scale, nature and complexity.
The syllabus of the new RTS 27/28 Requirements and Best Execution in Practice course includes:
- Best Execution responsibility
- Best Execution responsibility - MiFID I
- Best Execution responsibility - MiFID II
- Best Execution - Q&As
- CySEC's Circular C343 & Best practices to comply with Best Execution
- Creating a sound Order Execution Policy
- Best Execution arrangements in practice
- 'Pre-trade' execution settings
- Bad practices observed
- Monitoring program and record-keeping
- Onsite checks by the Compliance Officers
- Internal Auditor involvement
- Good practices observed
- Best Execution in practice, demonstrating the Best Execution analytics tool provided by FINVUS
- RTS 27 & 28 Reports and the new requirements
- RTS 27 & RTS 28 Reports
- RTS 28 - Execution Quality Summary Statement, existing and new requirements
- RTS 27 - Data Quality of execution of the transactions, existing and new requirements
- RTS 27 & RTS 28 Reports - Q&As
- Preparation for a Best Execution inspection
- Preparation for a Best Execution inspections
- Regulator's potential questions
- The importance of being Compliant
The material of the new RTS 27/28 Requirements and Best Execution in Practice course is delivered both in PDF slides and online video recordings, suited for self-paced learning. Learners who undertake this course have the opportunity to learn wherever and whenever.
At the end of the course, learners can test the knowledge acquired through the course by answering the test questions prepared based on the covered material.
The completion of the new RTS 27/28 Requirements and Best Execution in Practice course counts towards the Continuous Professional Development (CPD) annual requirements of professionals, and holders of the CySEC Advanced and Basic certifications.
If you have any questions about Evdokia's course or any other questions related to your training requirements, please contact us; we would love to help.