ESMA Considers Scrapping Best Execution Reporting

The Financial Commission / Media posts / ESMA Considers Scrapping Best Execution Reporting

The European Securities and Markets Authority (ESMA) has surprised industry participants in its latest publication questioning the need for best execution practices (including RTS 27 and 28 reporting) considering the current disruptions with Coronavirus around the world. The regulator previously gave companies a break by providing an extension of deadlines for submitting the best execution data.

Now ESMA is considering scrapping the reporting requirements altogether saying in its publication that “reports are rarely read by investors, evidenced by very low numbers of downloads from their website. It is, therefore, assumed that investors cannot or do not make any meaningful comparisons between firms on the basis of this data.”

The regulator indicated that in their mind the suspension of RTS reporting requirements will not “lead to a decrease of consumer protection since investors currently do not read the reports at all.”

Considering any possible stoppage to reporting requirements, which will only be considered at some point in 2021 by the European Commission, traders will still have the opportunity to review their execution prices and compare them with the broader market using services like VerifyMyTrade and Tradefora.

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