MiFID II and MiFIR Level 1 were published in the Official Journal of the European Union on 12 June 2014. ESMA ran Level 2 consultation processes in both 2014 and 2015 with the Final Report
Draft Regulatory and Implementing Technical Standards MiFID II/MiFIR (ESMA/2015/1464) published on 28 September 2015.
RTS27 introduces a new regime for "trading venues, systematic internalisers, market makers, or
other liquidity providers" to report nine different machine-readable tables of segmented information including averaged and point in time execution statistics. It is both a complex task for the liquidity providers to compile and publish this information and also for the Investment firms to make proper use of it.
RTS28 requires Investment Firms to publish significant numerical information on their execution quality across their top five venues including for example their use of passive and aggressive orders. They must also "publish for each class of financial instruments, a summary of
the analysis and conclusions it draws from its detailed monitoring of the quality of execution
obtained on the execution venues where it executed all client orders in the previous year" the contents of this report are highly prescribed and include "an explanation of how the investment firm has used any data or tools relating to the
quality of execution including any data published under 27(10)(a) of Directive 2014/65/EU" (ie/ RTS27 data published by the venues)
MiFID II builds on the original The Markets in Financial Instruments Directive (MiFID), implemented in November 2007, which already placed a number of obligations on investment companies and dealers in respect of the fiduciary responsibility that they owe to their customers to provide them with "Best Execution". In particular, virtually all firms required an Execution Policy, which they must review and monitor, explaining how they may achieve the best possible trading result for their clients. Where a broker operates as a "Systematic Internaliser" for trading the most liquid European equities an obligation was also imposed on them to provide pre- and post-trade transparency. However, under MiFID I Best Execution, it was usually sufficient to put relatively simple paper processes in place in order to comply. Now firms will require tools capable of powerful data processing and analytics to meet the new MiIFID II requirements.