European Securities and Markets Authority publishes final technical standards on investment firms’ order execution policies and effectiveness assessments

The European Securities and Markets Authority has published a Final Report containing draft Regulatory Technical Standards specifying how investment firms should establish their order execution policies and assess whether their execution arrangements are effective, with the stated objective of enhancing order execution and investor protection. The draft standards set requirements for designing an order execution policy, including classifying the financial instruments in which firms execute client orders and selecting venues to include in the policy. They also cover the procedures and criteria firms should use to monitor and regularly assess the effectiveness of their order execution arrangements and policy, the execution of client orders through own account dealing, and how firms should handle specific client instructions. The Final Report has been submitted to the European Commission, and ESMA indicated it will provide further advice and technical guidance if requested.