How should passive and aggressive orders be understood in the context of portfolio management or of reception and transmission of orders for the purposes of the RTS 28 report to be published under Article 65(6) of the Delegated Regulation?

Answer 14

Investment firms providing portfolio management or reception and transmission of orders services are required to publish information that is consistent with the RTS 28 which includes, among others, data on passive and aggressive orders. The relevance of these descriptive terms in the context of portfolio managers will however vary according to the nature of the activities undertaken, the trading system used and the classes of financial instruments. If a portfolio manager, or a receiver and transmitter of orders, sends an order to an entity for execution (broker), the distinction between passive and aggressive orders as defined in Article 2 of RTS 28 is likely not relevant and will not need to be disclosed in the report to be published in accordance with Article 65(6) of the Delegated Regulation.

An exception to this is where the portfolio manager or transmitter of orders has attached a specific instruction to an order, and that instruction is understood to mean that the broker will execute the order in a fashion that is either passive or aggressive within the meaning of the definition provided under RTS 28.