Concept
It is not “the best price”, it is the best result
“Best execution weighs several factors: price, costs, speed, likelihood of execution and settlement, size and nature of the order. The best result is an overall one.”
Best execution under MiFID II
Best execution is the obligation under MiFID II to take all sufficient steps to obtain the best possible result for the client when executing their orders. We help you design the execution policy, the factors and the controls that hold up in a CNMV inspection.
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- Source of the obligation
- MiFID II Art. 27
- Key Spanish law
- Law 6/2023
- MiFID II review
- Dir. 2024/790
Services
What you need to comply with best execution
Six building blocks that turn the best execution obligation into a documented system you can defend before the CNMV: policy, factors, execution venues, monitoring and evidence.
Policy
Order execution policy
We draft the execution policy: classes of instruments, selected execution venues, factors and their weighting, client information and cases where the client gives specific instructions.
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MiFID IIArt. 27VenuesFactors
Control
Monitoring and assessment of effectiveness
We design the control mechanisms: periodic review of the policy, assessment of execution quality and traceability, in line with ESMA’s new harmonized criteria.
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MonitoringAnnual reviewEvidence
Client
Retail and professional clients
For retail clients, the best result is measured by total consideration (price plus costs). We tailor the policy and the information to the type of client.
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RetailTotal cost
RTO
Reception and transmission of orders
Best execution also applies when you transmit orders to intermediaries: you must select and monitor those firms to ensure the best result.
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RTOIntermediaries
Conflicts
Conflicts of interest and inducements
We review payment for order flow, inducements and conflicts that could compromise best execution, and build this into your compliance framework.
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InducementsPFOF
Conduct
Fit with the other conduct rules
Best execution does not stand alone: we integrate it with suitability, client information, order handling and market abuse prevention.
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ConductMiFID II
Profiles
A cross-cutting obligation for every firm that executes or transmits orders
Broker-dealers and securities brokers, portfolio managers, investment platforms and firms that transmit orders to third parties: all of them must show that they seek the best possible result for the client.
Retail clients
For retail clients, total cost is what counts
“When the client is a retail client, the best result is determined by total consideration: the price of the instrument plus all execution costs.”
Evidence
You have to be able to prove it
“A nice-looking policy is not enough: the firm must be able to show, to the CNMV and to the client, that it takes sufficient steps to obtain the best result.”
What’s new
Goodbye to the RTS 27/28 reports
“The MiFID II review removed the quarterly execution quality reports (RTS 27 and RTS 28). The underlying obligation remains; the assessment criteria change.”
Why it matters
Why is best execution critical?
A generic execution policy, with no justified venues, no monitoring and no evidence, is a common focus of CNMV conduct supervision and a source of client complaints.
The most common mistake: copying a template execution policy without really analyzing the instruments, execution venues and factors that apply to the firm’s actual business.
The CNMV checks the evidence, not the paperwork: it requires the firm to show, with data and controls, that it consistently obtains the best possible result, not just that it has a written document.
Inducements taint execution: payment for order flow, retrocessions or arrangements with execution venues can clash with best execution and with conflicts of interest management.
MiFID II · Art. 27
Sufficient steps
The rule requires “all sufficient steps” to obtain the best result: a stricter standard than the old “reasonable steps”.
Conduct
Sanctions
A breach of the MiFID II conduct rules can lead to requests for information, sanctions and an obligation to compensate clients.
MiFID II review
Sep 29, 2025
From that date the RTS 27/28 reports disappear, but the criteria for assessing the effectiveness of the policy are strengthened.
Would your best execution policy withstand an inspection?
Before the CNMV reviews it, you should check that your execution policy reflects your actual business, that the execution venues and factors are justified, that monitoring works and that you can prove the best result for your clients with data.
Frequently asked questions
Best execution: common questions
What is best execution of orders?
Best execution is the obligation of an investment firm to take all sufficient steps to obtain the best possible result for its clients when executing their orders, taking into account a range of execution factors.
It is one of the core conduct of business rules of MiFID II (Art. 27 of Directive 2014/65/EU), transposed into Spanish law by Law 6/2023 on Securities Markets.
Does it always mean getting the best price?
Not exactly. The best result is assessed by weighing several execution factors: price, costs, speed, likelihood of execution and settlement, size, nature of the order and any other relevant consideration.
For retail clients, however, the best result is determined by total consideration: the price of the instrument plus all costs related to execution.
What is the order execution policy?
It is the document in which the firm explains how it complies with best execution: for each class of instrument, which execution venues it uses, which factors it prioritizes and why. It must be provided to the client, the client’s consent must be obtained and it must be reviewed periodically.
If the firm uses a single execution venue, it must be able to justify that it still obtains the best result.
What happens if the client gives a specific instruction?
When the client gives a specific instruction on how to execute the order (for example, a particular execution venue), the firm must follow that instruction on that point. For that specific aspect, the best execution obligation is satisfied.
Does best execution also apply if I only transmit orders?
Yes. The obligation also covers the service of reception and transmission of orders (RTO). If you transmit your clients’ orders to other intermediaries for execution, you must select and monitor those firms to ensure the best possible result.
Are the RTS 27 and RTS 28 reports still required?
No. The MiFID II review (Directive (EU) 2024/790) removed the obligation to publish the quarterly execution quality reports: RTS 27 (by execution venues) and RTS 28 (by firms, on the main venues they use). The obligation was removed with effect from September 29, 2025.
The substantive best execution obligation remains; what changes is the reporting regime and the criteria for assessing the effectiveness of the policy, now harmonized by ESMA.
Who must comply with it?
All investment firms and entities that execute or transmit orders on behalf of clients: broker-dealers and securities brokers, portfolio management companies, credit institutions that provide investment services and investment platforms, within the scope of the services they provide.
How often must the policy be reviewed?
The policy and execution arrangements must be reviewed periodically, and in any case whenever a material change occurs that affects the ability to obtain the best result. Under the new criteria, a review at least once a year is still required, with a more flexible approach proportionate to the firm’s size and complexity.
What are the risks of not complying properly?
A deficient policy, or one without controls, can lead to requests for information and sanctions from the CNMV for breach of the conduct rules, as well as client complaints and reputational damage. It is a common focus of conduct inspections.
People also ask
Best execution: factors, venues and inducements
What is an execution venue?
It is the place where the order is executed: a regulated market, a multilateral trading facility (MTF), an organized trading facility (OTF), a systematic internalizer, a market maker or another liquidity provider. The policy must list the venues the firm uses for each class of instrument.
What are execution factors?
They are the elements weighed to achieve the best result: price, costs, speed, likelihood of execution and settlement, size and nature of the order. Their weight depends on the type of client, the order, the instrument and the execution venue.
What is payment for order flow (PFOF)?
It is the practice whereby an intermediary receives a payment for routing its clients’ orders to a particular venue or executing party. It can conflict with best execution and is heavily restricted in the European Union following the MiFID II/MiFIR review.
How does “sufficient” differ from “reasonable”?
MiFID II raised the bar: it moved from requiring “all reasonable steps” (MiFID I) to “all sufficient steps”. It is a higher standard, which requires stronger controls and documentation of how the best result is obtained.
How do you prove it to the CNMV?
With evidence: an up-to-date policy consistent with the business, records of venue selection decisions, periodic execution quality controls, review minutes and incident handling. Documentary evidence is what supports the obligation.
Does it also apply to portfolio management?
Yes. When a portfolio manager places orders with other entities for execution on behalf of the portfolios it manages, it must act in the client’s best interest and apply the same best execution principles when selecting those entities.
How it applies
Execution factors and how they are weighted
Best execution is not a fixed formula: the firm weighs the factors according to the client, the order, the instrument and the venue. This is the basis that every policy must build on.
What determines the weighting
The relative weight of each factor is not a free choice: it depends on objective criteria that the firm must identify and document in its execution policy.
- Type of client
- Retail (total consideration prevails) or professional.
- Characteristics of the order
- Size, urgency, order type and specific instructions.
- Type of instrument
- Liquidity and characteristics of the financial instrument.
- Available venues
- Execution venues to which the order can be directed.
How we put it into practice with you
We turn the obligation into a working, verifiable system, not a dead document in a drawer. We work in phases so that the policy reflects your actual business.
- Map of the firm’s instruments, clients and execution venues.
- A tailored execution policy with justified factor weighting.
- Control mechanisms, periodic review and evidence ready for the CNMV.
| Execution factor | What it measures | When it matters most |
|---|---|---|
| Price | The price at which the instrument is executed. | Almost always relevant; key for liquid instruments. |
| Costs | Fees, charges and expenses of execution and settlement. | Decisive for retail clients (total consideration). |
| Speed | How quickly the order is executed. | Volatile markets or time-sensitive orders. |
| Likelihood of execution and settlement | That the order is actually executed and settled. | Illiquid instruments or large orders. |
| Size | The size of the order relative to the market. | Large orders that can move the price. |
| Nature | Particular characteristics of the order or the instrument. | Complex or non-standard transactions. |
Factors under Art. 27 of MiFID II (Directive 2014/65/EU) and its implementing rules. For retail clients, the best result is determined by total consideration (price + costs). The specific weighting of each factor must be justified in each firm’s execution policy and reviewed periodically.
Practical guide
How to comply with best execution: a practical guide
Best execution is not solved with a document: it is a system that must show, with data and controls, that the firm consistently seeks the best possible result for its clients. The key is traceability.
A tailored policy, not a template
The execution policy must reflect the actual instruments, the execution venues used and the factor weighting specific to the business. A generic copy is the first flaw the CNMV spots.
Monitoring is the evidence
Without periodic control mechanisms (assessment of execution quality, records and policy review), the obligation stays on paper. Monitoring is what makes the policy defensible.
Adapting to the MiFID II review
With the end of the RTS 27/28 reports and ESMA’s new criteria, you should review your policy and controls to align them with the current framework, rather than staying tied to obligations that have already been repealed.
Checklist: a robust best execution policy
- Identify the services concerned: execution of orders on behalf of clients, reception and transmission of orders (RTO) and portfolio management.
- Map the classes of financial instruments the firm deals in.
- Select and justify the execution venues for each class of instrument.
- Define and weight the execution factors by client, order and instrument.
- Distinguish the treatment of retail clients (total consideration) from that of professional clients.
- Set rules for specific client instructions and their effects.
- Provide the policy to the client, inform them and obtain their consent.
- Implement monitoring: assessment of execution quality and records.
- Review conflicts with inducements, retrocessions and payment for order flow.
- Review the policy at least once a year and whenever there are material changes, keeping evidence.
If you want to review your execution policy or integrate it into your conduct framework, see our securities market regulation services or our page on MiFID II conduct rules.
Operational best execution
From obligation to control: putting it into practice
An effective best execution policy is not a document: it is a set of consistent decisions (execution venues, factors, monitoring, management of conflicts and inducements) that are proven through traceability. Here is a visual panel to help you understand how it fits together in practice.
1) PolicyPolicy: the decision framework
The starting point is a policy that reflects the actual business: classes of instruments, execution venues and justified factor weighting, not a generic template.
- Classes of instruments
- Execution venues by instrument
- Factor weighting
2) FactorsFactors: the best result is an overall result
Price, costs, speed, likelihood, size and nature. Their weight depends on the client, the order and the instrument; for retail clients, total consideration prevails.
- Price and costs
- Speed and likelihood
- Size and nature
3) MonitoringMonitoring: the living evidence
Periodic assessment of execution quality, records of venue selection and policy review. This is what makes the obligation defensible.
- Quality assessment
- Records and traceability
- Review at least once a year
4) ConflictsConflicts and inducements: the sensitive point
Payment for order flow, retrocessions and arrangements with execution venues can clash with best execution. They must be identified, managed and documented.
Tip: inspections often cross-check the execution policy against the conflicts of interest policy and the inducements policy.
Quick decisionPractical map: how does it apply to your service?
You execute
Execution of orders on behalf of clients: you apply the policy directly and choose the execution venue.
You transmit
RTO: you select and monitor the intermediaries to which you transmit orders.
You manage
Portfolio management: you act in the client’s best interest when placing orders with third parties.
Playbook
Best execution in practice
Execution policy
A tailored document with classes of instruments, execution venues and justified factor weighting.
Approved policy, current version and change log.
Venue selection
Objective criteria for choosing each execution venue; if only one is used, justification of the best result.
Venue analysis, comparisons and decision memos.
Client information
Provision of the policy, consent and handling of specific instructions (limited to retail clients in certain respects).
Proof of delivery, consent and communications to the client.
Monitoring
Periodic assessment of execution quality and of the effectiveness of the policy, at a frequency proportionate to the firm.
Internal control reports, minutes and documented annual review.
Conflicts and inducements
Identification and management of inducements, retrocessions and payment for order flow that affect execution.
Inducements register, conflicts policy and related controls.
Common mistakes the CNMV detects
Spot them before a conduct inspection to avoid requests for information and complaints.
- Execution policy copied from a template, unrelated to the actual instruments and venues.
- No monitoring: execution quality is not assessed and the policy is not reviewed.
- Inducements or payment for order flow not analyzed against best execution.
- Still citing the RTS 27/28 reports as mandatory when they have already been repealed.
- Not distinguishing the treatment of retail clients (total consideration) from that of professional clients.
Working glossary
Key concepts: best execution and MiFID II
If you are reviewing your best execution obligation, these terms appear in the policy, in the controls and in your dealings with the CNMV. Understanding them well helps you build a consistent system.
Best executionCore
Best execution of orders
The obligation to take all sufficient steps to obtain the best possible result for the client when executing or transmitting their orders, weighing the execution factors.
Art. 27 of MiFID II (Directive 2014/65/EU).
PolicyDocument
Order execution policy
A document explaining how the firm complies with best execution: venues by class of instrument, factors and their weighting. It is provided to the client and reviewed periodically.
Requires the client’s consent.
FactorsCriteria
Execution factors
Price, costs, speed, likelihood of execution and settlement, size and nature of the order. Their weight varies by client, order, instrument and venue.
Retail: total consideration.
VenueExecution
Execution venue
The place where the order is executed: regulated market, MTF, OTF, systematic internalizer, market maker or other liquidity provider.
Listed in the policy by instrument.
RTOService
Reception and transmission of orders
A service by which the firm transmits client orders to other intermediaries. It also requires the firm to ensure best execution by selecting and monitoring those third parties.
It does not only apply to firms that execute directly.
PFOFConflict
Payment for order flow
A payment an intermediary receives for routing orders to a particular executing party. It can clash with best execution and is heavily restricted in the EU.
Abbreviated as PFOF.
RTS 28Repealed
Execution venues report
An annual report on the top execution venues used and the quality obtained. The MiFID II review removed this obligation (together with RTS 27).
Removed since September 29, 2025.
Sufficient stepsStandard
Standard of diligence
MiFID II raised the bar from “reasonable steps” (MiFID I) to “all sufficient steps”, requiring stronger controls and documentation.
A higher burden of proof.
MiFID II reviewCurrent framework
Directive (EU) 2024/790
It amended MiFID II as part of the Capital Markets Union: it removed the RTS 27/28 reports and mandated new harmonized ESMA criteria for assessing the effectiveness of the policy.
ESMA criteria: final report of April 10, 2025.
Contact
Book a call
Tell us about your case and we will review your best execution policy so that it reflects your actual business and withstands CNMV supervision.
Best execution regulatory framework in Spain: MiFID II and the LMV
The best execution obligation stems from Article 27 of MiFID II (Directive 2014/65/EU) and is incorporated into Spanish law through Law 6/2023 on Securities Markets and Investment Services. Compliance is supervised by the CNMV, as part of the conduct of business rules that apply to investment firms.
What the obligation requires
The firm must take all sufficient steps to obtain the best possible result for its clients, weighing factors such as price, costs, speed, likelihood of execution and settlement, size and nature of the order. For retail clients, the best result is determined by total consideration (the price of the instrument plus execution costs). All of this must be set out in an order execution policy provided to the client.
The MiFID II review: the end of the RTS 27 and RTS 28 reports
Directive (EU) 2024/790, adopted as part of the Capital Markets Union, removed the obligation to publish the quarterly execution quality reports known as RTS 27 (by execution venues) and RTS 28 (by firms), with effect from September 29, 2025. The substantive best execution obligation remains intact; what changes is the reporting regime and the criteria for assessing the effectiveness of the policy, now harmonized by ESMA through new technical standards (final report of April 10, 2025).
An obligation worth reviewing
Many execution policies still cite obligations that have already been repealed, or do not reflect the firm’s actual business. Reviewing the policy, the execution venues, the factor weighting and the control mechanisms is the best way to avoid CNMV requests for information and client complaints. It ties in directly with the MiFID II conduct rules and with conflicts of interest management.
Securities markets
Related areas
Resources and blog
Official sources
Key legislation, linked to the official text:
- Directive 2014/65/EU of May 15, 2014 on markets in financial instruments (MiFID II)EUR-Lex · Official Journal of the EU
- Law 6/2023 of March 17 on Securities Markets and Investment ServicesBOE · consolidated text
- Directive (EU) 2024/790 of February 28, 2024 amending Directive 2014/65/EUEUR-Lex · Official Journal of the EU
Legislation and links reviewed in .