Best execution is back at the centre of foreign-exchange (FX) supervision in 2026: the European Union has replaced its scrapped trade-by-trade reporting with a principles-based order-execution-policy regime, the United Kingdom deleted the same reports in 2021, and the United States keeps a more prescriptive duty — leaving brokers running one global book under three divergent rulebooks.
The European Securities and Markets Authority (ESMA) finalised new Regulatory Technical Standards (RTS) on investment firms’ order execution policies on April 10, 2025, and the delegated act introducing them repeals the old RTS 27 and RTS 28 best-execution reports (ESMA35-335435667-6253). The UK’s Financial Conduct Authority (FCA) had already removed both reports from December 1, 2021 under Policy Statement PS21/20, while in the US the duty still runs through Financial Industry Regulatory Authority (FINRA) Rule 5310 and, for retail FX, National Futures Association (NFA) rules. This analysis walks through what the rule now requires, how the EU, UK, US and Australia diverge, the enforcement legacy that still defines the obligation, and what compliance teams must do next.
Key Facts:
• ESMA’s final RTS on order execution policies was published April 10, 2025 and repeals RTS 27 and RTS 28 — ESMA35-335435667-6253
• The UK FCA removed RTS 27 and RTS 28 reporting from December 1, 2021 under PS21/20 — FCA
• The EU’s MiFID II “quick fix” (Directive (EU) 2021/338) first suspended RTS 27 reporting to February 28, 2023, calling the reports “rarely read” — Official Journal of the EU
• The NYDFS fined Barclays an additional $150 million on November 18, 2015 over its “Last Look” FX system — NYDFS
• EU member states must transpose the broader MiFID II review changes, with order-execution measures phasing in through 2026 — ESMA
• Best-execution duties survive in all four jurisdictions even where the reports were scrapped — primary rulebooks
Methodology and sources
This analysis rests on primary regulator documents: ESMA’s April 10, 2025 Final Report and final draft RTS on order execution policies (ESMA35-335435667-6253); the FCA’s Policy Statement PS21/20 (November 30, 2021); the EU MiFID II “quick fix” Directive (EU) 2021/338 and its recitals; FINRA Rule 5310; and the New York State Department of Financial Services (NYDFS) Barclays consent order of November 18, 2015. Secondary sources include bylined law-firm analyses from Linklaters and Ashurst and trade-press reporting. The jurisdictional scope is the EU, UK, US and Australia, covering both wholesale and retail FX and contract-for-difference (CFD) execution. The time window runs from the 2015 FX market-abuse settlements to the 2025–2026 MiFID II review measures. One caveat: spot FX is not a financial instrument under MiFID II in the same way an equity is, so best-execution obligations attach to FX derivatives, CFDs and the order-handling conduct of regulated firms rather than to physical currency delivery.
What the rule actually requires now
Best execution is the duty to take all sufficient steps to obtain the best possible result for a client, weighing price, cost, speed, likelihood of execution and settlement, size and nature of the order. Under Article 27 of MiFID II that obligation never went away; what changed is the evidence regime around it. The old RTS 27 required execution venues to publish quarterly data on execution quality, and RTS 28 required firms to publish their top five venues annually. Both produced large, standardised data dumps that few market participants used; ESMA itself described the RTS 28 reports as “hardly read”.
ESMA’s new RTS shifts the burden from publishing reports to maintaining and demonstrating an effective order execution policy. Firms must now establish, monitor and be able to evidence to their national competent authority that their execution arrangements deliver the best possible result — including when the firm deals on its own account against the client, the exact conflict that “Last Look” rejection raised. For an FX or CFD broker, that means the supervisory question moves from “did you file the report?” to “can you show, order by order, that your policy works and that your dealing desk is not selectively rejecting fills that move against you?”
What does the 2025 RTS change for a retail FX broker in practice? It removes the annual RTS 28 top-five-venue report and the quarterly RTS 27 venue data, but it raises the bar on the order execution policy itself. A broker must now specify, for each class of instrument, the venues and counterparties it uses, the relative importance it assigns to each execution factor, and how it monitors outcomes — and it must be able to produce that evidence on demand. The policy must be reviewed at least annually and whenever a material change affects the firm’s ability to obtain the best result. The practical effect is to move best execution from a disclosure exercise into a live, auditable control, which is harder to fake than a report nobody read.
How the EU, UK, US and Australia compare
The four jurisdictions now sit on a spectrum from principles-based supervision to prescriptive duty. The EU and UK have both scrapped the standardised reports but retained — and in the EU’s case sharpened — the underlying policy obligation. The US never adopted the RTS-style reports at all; its duty is rule-based through FINRA Rule 5310 for securities and NFA conduct rules for retail FX. Australia’s ASIC sits closest to the EU model, with a best-execution obligation under its market integrity rules and client-money segregation backed by annual audits.
| Jurisdiction / Regulator | Effective date | Scope | Key requirement | Penalty / sanction |
|---|---|---|---|---|
| EU (ESMA / national CAs, MiFID II) | RTS adopted 2025; phasing 2025–2026 | MiFID II investment firms; FX derivatives, CFDs | Article 27 best execution; new RTS on order execution policies; RTS 27/28 repealed | National CA fines; up to higher of fixed caps or % of turnover |
| UK (FCA) | Reports removed Dec 1, 2021 (PS21/20) | FCA-authorised firms; COBS 11.2A | “All sufficient steps” duty retained; RTS 27/28 reporting deleted | Unlimited fines, restitution, firm closure |
| US (SEC / FINRA / NFA) | FINRA Rule 5310 standing; SEC Reg Best Execution proposed Dec 2022 | Broker-dealers; retail FX under NFA rules | “Reasonable diligence” for best market; NFA price-adjustment limits | FINRA/SEC civil penalties; NFA disciplinary action |
| Australia (ASIC) | Market integrity rules in force; 30:1 retail CFD cap (2021) | AFSL holders; retail OTC derivatives | Best-execution obligation; client-money segregation, annual audit | Civil penalties; AFSL suspension or cancellation |
Sources: ESMA RTS ESMA35-335435667-6253; FCA PS21/20; FINRA Rule 5310; ASIC market integrity rules. Last updated: June 23, 2026.
The divergence creates a documented regulatory-arbitrage question for multi-entity brokers. A firm running EU, UK and offshore books can no longer point to a single uniform report set to evidence best execution across the group; instead it must maintain jurisdiction-specific order execution policies and monitoring that satisfy each supervisor’s standard. That is administratively heavier than the report regime it replaced, even though the headline reporting burden has fallen. The EU’s removal of RTS 27/28 sits alongside our coverage of how CySEC’s tightened CFD caps meet an ESMA supervisory sweep in 2026 — supervisors are substituting live conduct checks for static disclosure.
“The delegated act which introduces the new RTS on order execution policies will also repeal existing RTS 27 (on trading venue best execution reporting) and RTS 28 (on best execution reporting by investment firms).”
— Karen Cooper, Financial Regulation Counsel, Linklaters (Linklaters Financial Regulation Insights)
Enforcement context: why “Last Look” still defines the duty
The reason best execution remains a live supervisory priority — even after the reports were scrapped — is the enforcement legacy of FX market-abuse cases. The defining action is the NYDFS order against Barclays. On November 18, 2015, the regulator announced that the bank would pay an additional $150 million penalty and terminate its global head of electronic fixed income, currencies and commodities over the misuse of “Last Look” on its BARX platform between at least 2009 and 2014, according to the NYDFS consent order.
“Last Look” lets a liquidity provider hold a client’s order for a brief latency window before accepting or rejecting it. The NYDFS found Barclays used the function to reject orders that had become unprofitable for the bank during the hold period, without distinguishing genuinely toxic flow from cases where the price simply moved in the client’s favour — and then gave clients vague or misleading explanations for the rejections. The case crystallised the principle that an FX dealer’s own-account conduct is squarely within the best-execution and market-conduct perimeter, which is exactly the conflict ESMA’s new order-execution-policy RTS forces firms to document.
That enforcement thread runs to the present. The Global Foreign Exchange Committee has since issued detailed guidance requiring disclosure on Last Look practice, and supervisors continue to penalise execution and reporting failures, as in the FINRA action against Janney Montgomery Scott over inaccurate reports. The lesson for compliance teams is that scrapping a report does not scrap the duty it was meant to evidence.
“the need for greater oversight and action to help prevent the misuse of automated, electronic trading platforms on Wall Street, which is a wider industry issue that requires serious additional scrutiny.”
— Anthony J. Albanese, Acting Superintendent of Financial Services, New York State Department of Financial Services (NYDFS)
What this means for brokers, venues and compliance teams
For FX and CFD brokers, the immediate task is to rebuild the order execution policy as an evidenced control rather than a published document. That means specifying execution factors and their relative weighting per instrument class, naming counterparties and venues, and standing up monitoring that can reconstruct execution quality on demand for a national competent authority. Firms that quietly relied on RTS 28 as their best-execution “proof” now have nothing to point to unless they build the monitoring.
For execution venues and systematic internalisers, the removal of RTS 27 ends the quarterly data obligation but not the expectation that the venue can demonstrate execution quality when asked. For dealing desks that run Last Look or any price-improvement-and-rejection logic, the Barclays precedent and the GFXC guidance mean rejection symmetry, hold-time disclosure and client-facing transparency are now baseline compliance, not optional. For legal and compliance teams, the divergence across the EU, UK, US and Australia means the group best-execution framework must be mapped jurisdiction by jurisdiction: a single global policy will not satisfy four supervisors with four different evidentiary standards. The related tightening of the EU’s payment-for-order-flow ban compounds this, because order-routing economics and best-execution evidence are now examined together. Documentation, not disclosure, is the new exam question.
What’s next: the forward view
The order-execution-policy RTS phases into application through 2026 as the broader MiFID II/MiFIR review measures are transposed, and ESMA and national competent authorities are expected to test firms’ policies in supervisory reviews rather than wait for filed reports. In the UK, the FCA has signalled continued interest in wholesale execution quality and has been gathering information from large institutions on their approaches — a sign that the deletion of RTS 27/28 reflected a change in method, not a retreat from the duty. In the US, the SEC’s proposed Regulation Best Execution, floated in December 2022, remains the open question; if it is not finalised, FINRA Rule 5310 and NFA conduct rules continue to govern, leaving the US duty more litigation-driven than supervisory. The contested issues are whether principles-based supervision can be applied consistently across member states without the comparability the old reports were meant to provide, and whether retail FX brokers operating across onshore and offshore entities will face convergent or divergent expectations. The trajectory is clear: less reporting, more demonstrable control.
TL;DR
Best execution is back on the FX supervisory agenda in 2026. ESMA’s order-execution-policy RTS, finalised April 10, 2025, repeals the old RTS 27 and RTS 28 reports and shifts the burden to maintaining a demonstrable, monitored execution policy; the UK FCA removed the same reports from December 1, 2021. The duty under Article 27 of MiFID II never lapsed — and the NYDFS’s $150 million Barclays “Last Look” penalty of November 18, 2015 still defines why dealing-desk conduct is in scope. The EU, UK, US and Australia now apply divergent standards, so multi-entity brokers must evidence best execution jurisdiction by jurisdiction. The exam question is documentation, not disclosure.
FAQ
What is best execution in FX trading?
Best execution is the regulatory duty to take all sufficient steps to obtain the best possible result for a client, weighing price, cost, speed, likelihood of execution and settlement, and order size. Under Article 27 of MiFID II it applies to FX derivatives and CFDs offered by regulated firms, and it governs how a broker routes, fills or rejects client orders.
Were RTS 27 and RTS 28 abolished?
Yes. The UK FCA removed both reports from December 1, 2021 under PS21/20. In the EU, the MiFID II “quick fix” first suspended RTS 27 reporting, and ESMA’s 2025 RTS on order execution policies repeals RTS 27 and RTS 28. The underlying best-execution duty remains in force in both jurisdictions.
What replaced the best-execution reports in the EU?
ESMA’s final RTS on order execution policies, published April 10, 2025, replaces the reports with a requirement to establish, monitor and evidence an effective execution policy per instrument class. Firms must demonstrate to their national competent authority that their arrangements deliver the best possible result, including when dealing on own account.
Why does the Barclays “Last Look” case still matter?
The NYDFS fined Barclays $150 million on November 18, 2015 for using Last Look to reject client FX orders that moved against the bank, then giving misleading explanations. The case established that a dealer’s own-account rejection logic is within the best-execution and market-conduct perimeter — the precise conflict ESMA’s new RTS now requires firms to document.
How does US best execution differ from the EU and UK?
The US never used RTS-style reports. Best execution runs through FINRA Rule 5310’s “reasonable diligence” standard for securities and through NFA conduct rules for retail FX, with the SEC’s proposed Regulation Best Execution still unresolved. The US model is more rule- and enforcement-driven than the EU’s supervisory, policy-based approach.
What must FX brokers do now to comply?
Brokers should rebuild their order execution policy as an auditable control: specify execution factors and venues per instrument class, stand up monitoring that can reconstruct execution quality on demand, disclose any Last Look or rejection logic, and maintain separate policies that satisfy each jurisdiction’s supervisor. A single global policy will not meet divergent EU, UK, US and Australian standards.
This article is informational analysis only and does not constitute legal, regulatory, tax, or investment advice. Regulatory frameworks change frequently and interpretation depends on facts and circumstances; primary documents and official regulator guidance always supersede summaries. Firms should consult qualified legal counsel and their relevant supervisory authority before taking any action based on the analysis above.
Rick Steves
Rick Steves has seen business and economics through many lenses. He joined the financial services industry in 2009, and has been a financial journalist since 2011. He holds a degree in Business Administration and has experience producing real-time news, from both buy-side and sell-side, as well as for retail traders, brokers and service providers. Steves' work has appeared in a variety of online publications including FX Street, NewsBTC, FinanceFeeds, and The Industry Spread. Rick has great interest in the dynamics of the trading industry. The never-ending clash between technology, economics, regulation, and more importantly, the people.
