With the separation of EU and UK requirements and the continuing divergence, determining whether your firm needs to complete RTS 27 and 28 reports can be very confusing. We summarise the current status of each report across both regimes.
| Current Status | UK | EU |
| RTS27 | Investment firms are currently not required to publish the RTS 27 quarterly reports. Other best execution requirements under RTS27 remain in force. | ESMA has published a statement confirming that NCAs should not prioritise enforcement of RTS27 quarterly reports whilst the recent European Parliament Directive goes live and is transposed into national laws. Other best execution requirements under RTS27 remain in force and ESMA expects these to be adhered to. |
| RTS28 | Investment firms are currently not required to publish the RTS 28 annual reports. | ESMA has published a statement confirming that NCAs should not prioritise enforcement of RTS28 obligations whilst the recent European Parliament Directive goes live and is transposed into national laws. |
EU Status
ESMA is in the process of making necessary legislative amendments to remove RTS 27 and 28 entirely.
ESMA has published a statement confirming that NCAs should not prioritise enforcement of RTS27 and 28 reporting obligations whilst the recent European Parliament Directive comes into force and thereafter is transposed into national laws for each EU state.
The statement clarified that ‘…from today until the forthcoming transposition in national law in all Member States, ESMA expects NCAs not to prioritise supervisory actions towards investment firms relating to the periodic reporting obligation to publish the RTS 28 reports.’
Removal of the RTS27 and 28 reports under ESMA has been a longer journey than in the UK. ESMA previously published a statement in December 2022 for NCAs to deprioritise supervisory actions on the obligation to publish RTS 28 in light of the agreement on the MiFID II/MiFIR review. NCAs were advised to deprioritise supervisory actions with respect to the obligation after 28 February 2023 when it technically began to reapply. ESMA noted that “re-application will only be temporary” whilst the legislative process is finalised through an amendment to Article 27(3) of MiFID II. A Directive in 2020 had amended MiFID II, under the Capital Markets Recovery Package (CMRP), to temporarily suspend the RTS 27 reporting requirement until 28 February 2023.
A proposal from Members of the European Parliament’s Committee on Economic and Monetary Affairs stated:
“Factual evidence and feedback from stakeholders has shown that those reports are rarely read and do not enable investors or any users of those reports to make meaningful comparisons based on the information provided in those reports. As a consequence, Directive (EU) 2021/338 of the European Parliament and of the Council suspended the reporting requirement for two years in order for that requirement to be reviewed… The reporting requirement laid down in Article 27(3) of Directive 2014/65/EU will therefore no longer be relevant and should therefore be deleted.”
UK Status
Since 1 December 2021, UK firms and execution venues have not been required to prepare RTS 27 and RTS 28 reports.
Preparation of RTS 27 and RTS 28 reports was difficult and many CFD providers found the process particularly difficult. The root cause of the complexity involved in these reports is ESMA’s guidance on RTS 27 which likens CFD providers’ platforms and services to that of Trading Venues. As a result, in applying and complying with RTS 27, CFD providers were expected to collect, collate and report on information, which they do not have access to and from a perspective which they do not operate in.
Best Execution
ESMA’s most recent statement notes:
“ESMA stresses the importance of the best execution requirements under both the current and the reviewed MiFID II framework… investment firms are required to strictly adhere to best execution requirements and NCAs are expected to supervise their compliance. The importance of the best execution requirements is also witnessed by the inclusion of a mandate for ESMA to develop a new draft RTS on investment firms’ order execution policies in the MiFID II review amending Directive”.
Likewise, the FCA’s handbook still implements these components of the RTS 27 under COBS 11.2A.
Background
RTS 27 – the obligation for investment firms to publish a report on a variety of execution quality metrics to enable market participants to compare execution quality at different venues (known as RTS 27 reports).
RTS 28 – the obligation for investment firms to produce an annual report setting out the top 5 venues used for executing client orders and a summary of the execution outcomes achieved (known as RTS 28 reports). This obligation was applicable to firms engaged in the provision of portfolio management services, reception and transmission of orders, and execution of client orders.
