What do best execution and client order handling require?

A firm executing client orders takes all sufficient steps so that the client gets the best possible result, taking into account price, costs, speed, the likelihood of execution and settlement, size, nature and anything else relevant. How much weight each factor gets depends on the characteristics of the client, including whether it is retail or professional, of the order, including whether it involves securities financing, of the instruments and of the execution venues, which include regulated markets, MTFs, OTFs, systematic internalisers, market makers and other liquidity providers.

For retail clients the best result is judged on total consideration: the price of the instrument plus all costs directly related to execution, such as venue fees, clearing and settlement fees and fees paid to third parties. Where several venues compete, the firm's own commissions and costs for each venue count in the comparison, and the firm may not structure its commissions to discriminate unfairly between venues. If a client gives specific instructions, following them satisfies the duty for the aspect covered. For OTC products, including bespoke ones, the firm checks that the price is fair by gathering market data and, where possible, comparing similar products.

The firm sets an execution policy covering each class of instruments and the venues it uses, including those that consistently give the best result. Clients receive appropriate information on it, with a prominent warning that specific instructions may prevent the best result, and must give their prior consent; execution outside a trading venue needs their express consent, generally or per transaction. Retail clients receive a summary of the policy centred on the total costs they pay. Where fees differ by venue, the firm explains the differences. It monitors the policy's effectiveness, reviews the policy and arrangements at least annually and whenever a material change occurs, notifies clients with whom it has an ongoing relationship of material changes and must show clients and CySEC on request that it followed the policy.

The exam material still says that the retail summary links to venues' execution-quality data. That venue data, and executing firms' annual reports on their top five execution venues, are no longer required: publication of the venue data was suspended from 28 February 2022 to 28 February 2023, ESMA then asked supervisors to deprioritise both reports (the venue data after 28 February 2023, the top-five reports from 13 February 2024), and both duties were deleted from Law 87 on 17 October 2025, when Cyprus transposed the EU's 2024 MiFID review. Firms now tell clients after execution where orders in instruments subject to the trading obligation were executed. Since 28 March 2024, MiFIR has also banned payment for order flow: a firm acting for retail or elective professional clients may not receive any fee, commission or non-monetary benefit from a third party for routing their orders to a particular venue, except public tariff rebates that benefit only the client.

Orders are executed promptly, fairly and expeditiously. They are recorded and allocated promptly and accurately, and otherwise comparable orders are executed in turn and promptly unless the order or market conditions make that impracticable or the client's interests require otherwise. Retail clients are told promptly of any material difficulty, settlement proceeds are delivered promptly and correctly, and information on pending orders may not be misused. An unexecuted limit order in shares that trade on a trading venue or are admitted to a regulated market is made public immediately unless the client instructs otherwise; it counts as public once submitted to a regulated market or MTF, or published by a data reporting service provider.

A firm may aggregate a client's order with other clients' orders or its own trades only if aggregation is unlikely to work to the overall disadvantage of any client, each client is told that it may work to their disadvantage for a particular order, and a fair allocation policy is in place covering volume, price and partial executions. Client consent is not required. Where own-account trades are aggregated with client orders, allocation may not harm clients, and a partial fill goes to clients first unless the firm can show it could not have executed the order on such good terms, or at all, without the aggregation.