A new mechanism, called “Best of Book”, has been operating silently in the heart of Borsa Italiana since November 2025, potentially distorting the rules of the game, especially for mid and small cap companies on the Euronext, which includes Piazza Affari, as well as Paris, Amsterdam, and Lisbon. The “Best of Book” was developed by Euronext on its Optiq technological platform with the goal of offering retail investors better execution conditions than those available on the ordinary market, or the negotiation book.
The goal has been largely achieved, inducing other European circuits, such as Xetra, to adopt a similar solution for their systems. However, the cost of “technical evolution” is being paid by independent traders. This is possible due to the technical details of a mechanism that, despite good intentions, produces asymmetric effects among the various market players.
How Best of Book Works
The mechanism involves two institutional entities and the Optiq architecture: the Retail Member Organization (RMO), or the broker adhering to the circuit, and the Retail Liquidity Provider (RLP), a market maker specializing in operating exclusively with certified retail orders. The RMO receives the retail customer’s order, marks it as an RMO order, and directs it to the Best of Book channel instead of the ordinary book.
The regulation is categorical on one point: the RMO cannot alter the price, size, or direction of the order, either manually or through algorithms. The RLP, on the other hand, receives a structural advantage, which is the heart and problem of the new way of proceeding with retail orders “at best”: at equal prices, the Optiq platform matches this retail order before any other order already present in the book with the same quotation.
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Effects of Best of Book
This means that the traditional temporal priority is derogated in favor of the RLP when a retail order without a price limit is presented. Among the different RLPs, priority is managed with the ordinary temporal criterion. The matching mechanism on Optiq is described in a clear manner in the regulatory text: proposals are ordered based on temporal priority, “except for a Retail Liquidity Firm Quote that has precedence when matched with a Retail Order”.
Translated into operational terms, the functioning is as follows: an investor enters an order with a price limit on a title equal to the best bid or best ask of the moment, which enters the book respecting the pre-existing temporal queue. So far, the process is ordinary: the short circuit occurs when another retail investor inserts an order “at best” through a broker adhering to the Best of Book circuit.
Implications and Concerns
At that point, Optiq does not allow this second order to enter the ordinary book but directs it to the RLP, which will be executed by the market maker, while the first limit order may remain unexecuted in certain circumstances, especially in non-very liquid books, because it has secondary priority. The first order is not directly skipped by the RLP: it is indirectly bypassed because the second order is captured before it can arrive on the ordinary book, resulting in the limit order potentially remaining “hung”.
On titles that trade a lot, this inconvenience is not even perceived, but on titles with minor trades, it is evident, so much so that this methodology has been avoided for the Egm segment. The problem is that in Italy, titles with low trading volumes are the vast majority. This system also produces a consequence: those who contribute to “price discovery” are penalized at the time of execution, while the benefit of best execution goes to those who did not participate in price formation, who could even benefit from a better price than the European Best Bid and Offer, if the RLP decides to improve its quotation.
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The article 3 of MiFIR, the EU regulation on financial markets, imposes pre-trade transparency on regulated markets, i.e., the publication of the best buying and selling offers and the depth of the book. However, the Best of Book operates on a parallel channel: the liquidity made available by the RLPs does not appear in the central book visible to all investors but is accessible only to RMO brokers adhering to the circuit. Whoever looks at the book of a title sees only a partial picture of market reality.
Euronext’s legal justification is based on a derogation from MiFIR: Retail Trading Facility systems can enjoy an exemption from ordinary pre-trade transparency, as they are classified as bilateral execution structures between RLP and retail, not as a multilateral book. ESMA has recognized this structure as compatible with the MiFID II framework. The issue is still on the table, given that to avoid potential macro-asymmetries, Borsa Italiana has decided not to introduce the Best of Book on the Euronext Growth Milan, the segment of listed SMEs. Perhaps, in light of the low volumes on mid and small caps, it might be the case to extend this limitation.
Borsa Italiana has decided not to introduce the Best of Book on the Euronext Growth Milan, the segment of listed SMEs.
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