Commission Delegated Regulation (EU) 2026/825 — New Criteria for Order Execution Policies under MiFID II

Commission Delegated Regulation (EU) 2026/825 has been published in the Official Journal of the European Union, further specifying the best execution obligations set out in Article 27 of MiFID II. This instrument, which repeals Commission Delegated Regulations (EU) 2017/575 and (EU) 2017/576, replaces the previous regime on the publication of execution quality data with a new framework focused on how investment firms design, monitor and assess their order execution policies. The Regulation applies from 12 February 2028.

Among the key developments, the Regulation sets out detailed criteria for the selection of execution venues, which must now take into account not only the fees charged by the venues themselves, but also the investment firm’s own costs that affect the return to clients, such as execution commissions, connectivity costs, and clearing and settlement costs. Firms that use only one venue for a given class of financial instruments or for all orders will be required to expressly justify that choice. The Regulation also introduces specific requirements for dealing on own account, requiring firms to demonstrate how they manage conflicts of interest and to verify the fairness of the price offered to the client, using, where necessary, the price of similar instruments or internal pricing models.

Another significant change concerns the treatment of specific client instructions: the execution policy must now clearly identify the effects of such instructions, both on venue selection and on achieving the best possible result, and must distinguish between orders with and without such instructions, applying the instruction only to the part of the order to which it relates. Finally, the Regulation requires ongoing monitoring of the execution policy, based on predetermined price and volume deviation thresholds, and an annual periodic assessment of its effectiveness, with firms required to remedy any identified deficiencies within the shortest possible timeframe.

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[Photo by: Lara Jaeger, available at unsplash.com]