Best Execution Regulations

US Capital Markets

FINRA Rule 5310

While FINRA Rule 5310 states that firms must use reasonable due diligence when executing client orders proving that the trader followed best execution rules is extremely challenging in some markets where analytics and data may create ambiguous scenarios. Dealers also what to use best execution technology to evaluate how well they are executing orders for maximum profit without violating regulatory rules. To accomplish these two somewhat conflicting objectives firms should include best execution in their strategic plans to address:

• Modified definitions and criteria on trading accounts and trading desks
• Significant trading threshold raised from $10b to $20b
• New reportable metrics on transaction volume and positions
• New Foreign Banking Organization covered activities

FINRA Rule 5310
FINRA Rule 2232

FINRA Rule 2232

The intra-day liquidity rules imposed on banks by US and foreign regulators will have a direct impact on a bank's ROI the bank liquidity management program is not efficient and optimized for capital usage and FTP. Banks will need to:

• Develop an effective working model for liquidity management that optimizes capital usage and funding costs
• Invest in new technology that integrating trading, treasury and collateral management activities in real-time
• Monitor intraday liquidity as part of the firm's intraday risk management activities

Federal Reserve Supervisory Rule SR14-1
Basel Committee on Banking Supervision (BCBS) 248
FDIC Resolution Plans

Europe, Middle East, Africa (EMEA)

The UK and European financial markets have been undergoing dramatic changes in oversight and reporting beginning first with MiFID I and then MiFID II. MiFID II imposed the most direct best execution reporting requirements to date by requiring firms report on the quality of the executions across all asset classes via two reports defined by RTS 27 and RTS 28.


RTS 27 requires firms to report client orders details on a quarterly basis where the firm acts as a trading venue, systematic internaliser, market maker or liquidity provider.

Each RTS 27 report includes nine tables covering average execution prices, high and low prices, costs, rebates, spreads, likelyhood of execution data, mean and median time between order acceptance and execution.

• Average execution price and total value of all executions withing the two minutes after T where T is 9:30, 11:30, 13:30, 15:30
• If no trades were executed in the first two minutes after T then the firm must report the first trade after T including price, time, size, trading system, trading mode, trading platform and best bid/ask

ICMA MiFID II/RFixed Income Best Execution RequirementsRTS 27 & 28


RTS 28 requires firms to report annually on the top five venues where they execute client orders. This includes venues, other dealers, systematic internalisers including themselves.

Each RTS 28 report consists of tables where firms report for each class of security the top five venues by volume separated by asset class and retail or professional client

ICMA MiFID II/RFixed Income Best Execution RequirementsRTS 27 & 28