MiCA best execution requires the company to substantiate that routing decision and retain control over it. The recommended model is an Irish-controlled execution service with independently assessed affiliate liquidity, usable access to an unaffiliated alternative, and contracts that expose the complete execution and settlement chain.
The affiliate can remain a candidate execution counterparty. Its allocation should follow evidence about customer outcomes, without a promised share of order flow. Before launch, the Irish CASP should classify the actual service, verify permissions and custody arrangements, and replace generic consent wording with identifiable consent to the execution policy and express consent to off-platform execution. A general agreement can satisfy the latter requirement. It cannot remove execution, conflicts or authorisation duties. (MiCA, Articles 59, 72, 75(9) and 78; ESMA Q&A 2711.)
Classify the customer service and both transaction legs
Start with the customer promise, order messages, contracts and the moment each trade becomes binding. Record who acts for the customer, who becomes the counterparty and who decides where execution occurs.
If the Irish company concludes purchase or sale agreements on the customer's behalf, it provides execution. If it only transmits orders to another firm that concludes those agreements or transmits them onward, it provides reception and transmission. If it trades with customers using proprietary capital, exchange services must be considered. Exchange providers must establish a non-discriminatory commercial policy, publish a firm price or pricing method and applicable limits, and execute at the displayed price when the order becomes final. (MiCA, Article 3(1)(19)–(23), Articles 77–80.)
Principal status alone does not exclude execution. ESMA requires an assessment of operational reality and the customer's reasonable understanding. Its Q&A presumes execution where a retail relationship remains doubtful. A firm-price exchange product is an alternative only if the customer promise and actual conduct support that classification. (ESMA Q&A 2653, answer updated 14 October 2025; MiCA, recital 87.)
Classify the UAE leg separately. An affiliate's principal fill against the Irish executing CASP is bilateral execution. Its subsequent hedge is different from transmitting the customer's still-unfilled order elsewhere. The contract and records must distinguish those events. The distinction also explains why proprietary market making does not determine the EU firm's customer-service obligations.
Confirm that the Irish firm's permission covers every service actually performed, including custody where relevant. A previous Irish virtual asset service provider registration cannot support a new launch under the expired transition. (MiCA, Article 59(1), (6) and (8); European Union (Markets in Crypto-Assets) Regulations 2024, S.I. No. 607/2024, regulation 20.)
Keep the Irish business in control of routing
MiCA does not impose a general prohibition on third-country execution. Whether the affiliate itself provides a MiCA service to an EU client, including the Irish CASP, requires separate assessment under Article 59. A UAE licence alone does not resolve that question. ESMA expressly applies this perimeter to business-to-business arrangements. Any reliance on the intra-group exclusion or reverse solicitation must satisfy the conditions of Article 2(2)(a) or Article 61 respectively. (ESMA Statement ESMA75-113276571-1679, 17 April 2026, p. 2.)
ESMA nevertheless scrutinises structures that channel EU customers systematically to a non-EU group business. Its broker-model opinion treats predetermined affiliate routing, weak examination of independent alternatives and merely theoretical access to other venues as warning signs. The Central Bank of Ireland applies that opinion case by case. (ESMA Opinion ESMA75-453128700-1048, paragraphs 19–36; Central Bank, MiCAR FAQs, non-EU trading and execution venues.)
For this arrangement, establish an unaffiliated route that staff can actually use. The board should approve asset-specific venue criteria and give the Irish execution function authority to reject affiliate quotes, reduce allocations or suspend routing. The recommendation follows from the proposed concentration and group conflict; Article 78 does not prescribe a universal minimum number of venues.
The Irish entity must also perform the service attributed to it. Outsourced functions remain subject to its supervision and responsibility. The allocation of the customer mandate requires the same care as copy trading through an EU partner or an Irish CASP. (MiCA, Articles 59(2), 68(5)–(6) and 73.)
An offshore execution consent does not establish reverse solicitation. If the Irish business solicits customers for the UAE firm, Article 61's exclusive-customer-initiative exception cannot be created by contractual wording. The intra-group exclusion concerns services provided exclusively within the relationships specified in Article 2(2)(a); it does not exempt the Irish company's service to outside customers. (MiCA, Articles 2(2)(a) and 61(1).)
Obtain the two consents with the correct scope
Article 78(3) requires prior consent to the execution policy. Article 78(5) additionally requires information and prior express consent where orders may execute outside a trading platform. ESMA Q&A 2711 interprets that platform reference as a platform authorised under Article 59. It therefore covers over-the-counter execution, third-country platforms and decentralised exchanges. UAE regulation does not turn a UAE venue into a MiCA-authorised platform.
Article 78(5) expressly permits consent through a general agreement or for individual transactions. The proposed general agreement can therefore work if its content and capture establish informed, express consent before relevant execution. One onboarding document may address both requirements. Separate affirmative controls are a recommended way to evidence their distinct scope.
After identifying the affiliate and permitted routes, the policy should explain:
We may execute orders with our UAE group liquidity provider or other execution venues identified in this policy. Our group relationship creates an incentive to retain execution revenue within the group. We select and review routes using the execution factors and controls described in this policy.
The off-platform consent can state:
I expressly consent to my orders being executed outside trading platforms authorised under MiCA, including with the UAE group liquidity provider and on the third-country venues identified in the execution policy supplied to me.
Retain the policy version, disclosure shown, affirmative response and timestamp. Define which routes remain available if the customer declines. Notify ongoing customers of material policy changes and obtain fresh consent where the existing authorisation does not cover the proposed execution. (MiCA, Article 78(3), (5)–(6).)
A customer's specific execution instruction has a different function. Record what it directs and warn how it constrains best execution for the elements covered. General acceptance of affiliate routing should not be repackaged as a specific instruction relieving the CASP of its duties. (MiCA, Article 78(1); Delegated Regulation (EU) 2025/305, Article 15(f).)
Test executable outcomes and retain the evidence
Article 78(1) requires all necessary steps to obtain the best possible result, considering price, costs, speed, execution and settlement likelihood, size, nature, custody conditions and other relevant considerations. The policy must explain how those factors apply to the orders the company accepts. A displayed quote alone does not establish an executable result for a particular customer order.
Build comparisons for the same asset, order size, time and settlement assumptions. Include the affiliate's spread, commissions, conversion costs and charges passed to customers. Record quote validity, available depth, partial fills, rejections, slippage and settlement failures. A favourable quote with unreliable delivery may produce a worse result once those factors are considered. These are proposed evidence controls for applying Article 78, rather than fixed statutory scoring weights.
The Irish CASP should obtain independently sourced comparisons and review actual outcomes against the selection rationale. Distinguish a quote available to the firm from an indicative price it could not trade. Where an affiliate routes onward, obtain the underlying destination, timestamps, charges and fill records. Where the affiliate fills as principal, distinguish its fill for the Irish CASP from its subsequent hedge.
Review effectiveness regularly and after changes affecting execution quality, including new assets, fee changes, deteriorating fills or outages. Article 78(6) specifies regular assessment without imposing an annual-only timetable. Article 72(4) separately requires at least annual review of the conflicts policy.
The record must support explanations to customers and the regulator. MiCA requires five-year retention, extendable to seven years on a timely competent-authority request. The records regulation also specifies order and transaction data and requires retention of contractual rights and obligations for five years after the service agreement ends, with the corresponding extension mechanism. (MiCA, Articles 68(9) and 78(4); Delegated Regulation (EU) 2025/1140, Articles 2–4, 6–7 and Annex.)
Remove incentives that distort the decision
Identify the affiliate's spread, group profit transfers, staff incentives, common directors and any minimum-flow commitments. Give the conflicts function access to the economics and the authority to challenge allocations. Separate oversight of conflicting activities and address remuneration links that could prejudice customers. Directors must disclose relevant conflicts and abstain from affected votes under the applicable policy controls. (MiCA, Article 72; Delegated Regulation (EU) 2025/1142, Articles 3–5.)
Routing payments require particular care. ESMA Q&A 2087 interprets Article 80(2)'s prohibition on remuneration, discounts and non-monetary benefits for routing as applying to both reception/transmission and execution. Authorisation applicants must also confirm the absence of benefits received for routing to particular trading platforms. Remove prohibited incentives rather than relying on customer agreement. (Delegated Regulation (EU) 2025/305, Article 15(c).)
Describe the group relationship, each firm's capacity, the resulting risks and the controls in prominent, current disclosures. Disclosure alone is expressly insufficient to manage conflicts. If the commercial model prevents impartial routing, the model must change. (Delegated Regulation (EU) 2025/1142, Article 7.)
Make the liquidity agreement enforceable in operation
The agreement should translate the chosen model into obligations that the Irish CASP can monitor and enforce:
- Define the affiliate's capacity for each route, the binding-trade point, quote validity, rejection rights, settlement duties and responsibility for failed delivery. Specify the permitted assets and onward destinations.
- Require timely access to complete order, quote, routing, fee, execution and settlement records. Preserve the Irish firm's ability to answer customer and regulatory requests, including after termination. Protect confidential order information against misuse.
- Require notice and Irish approval before material changes to routing logic, downstream providers, pricing methods or custody arrangements. Require immediate notice of permission restrictions and incidents affecting execution.
- Set outage procedures, escalation contacts, recovery arrangements and tested suspension or alternative-routing procedures. Give the Irish firm termination and exit rights if permissions, records or execution quality become inadequate.
- Prohibit routing rewards and unsupported allocation commitments. Require disclosure of relevant affiliate and downstream conflicts, audit access and cooperation with the Irish supervisor.
These are proposed contractual protections. Where the affiliate performs outsourced operational functions, Article 73 additionally requires retained responsibility, effective supervision, direct information access, regulatory cooperation, written rights and duties, contingency planning and termination rights. Its data-protection requirements must also be reflected in the agreement. Resilience arrangements must address the applicable MiCA and Digital Operational Resilience Act requirements. (MiCA, Articles 68(7)–(8) and 73.)
Map custody before prefunding the affiliate. Article 75(9) restricts a custody CASP's use of another custody provider to providers authorised under Article 59. ESMA distinguishes possession solely to settle a specific, already executed order from outsourcing custody; the EU broker retains its custody obligations. Using clients' crypto-assets to prefund future trades is sub-custody: the holder must be authorised under MiCA for custody, and clients must be informed. (MiCA, Article 70; ESMA Q&A 2608, answer dated 9 July 2025; ESMA broker-model Opinion, paragraphs 39–40 and footnote 10.)
Verify the UAE permission and the parent's actual role
The affiliate's location and activities determine the UAE analysis. The regime of Dubai's Virtual Assets Regulatory Authority (VARA) excludes the Dubai International Financial Centre (DIFC). The DIFC and Abu Dhabi Global Market (ADGM) have their respective Dubai Financial Services Authority (DFSA) and Financial Services Regulatory Authority (FSRA) regimes. Federal and local requirements must be checked for other UAE operations. The federal Capital Market Authority replaced the Securities and Commodities Authority from 1 January 2026. (Dubai Law No. 4 of 2022, Articles 3, 15–16; Federal Decree-Law No. 32 of 2025, Articles 2, 5 and 30; FSRA Virtual Asset Guidance, paragraphs 16–19.)
Obtain the actual licence and conditions, or a documented analysis of any applicable exclusion, covering activities, assets and customers. The DFSA's intra-group exclusion has conditions that must be tested against the actual trading and order flow. VARA's broker-dealer rules expressly contemplate principal and riskless-principal fills. In the DIFC, principal dealing, agency dealing and arranging require separate classification; order transmission can constitute arranging. A proprietary-trading label alone establishes neither the applicable permission nor its scope. (VARA Broker-Dealer Services Rulebook, II.B.1; DFSA GEN 2.3.2(1)(b), 2.3.5 and 2.7–2.9.)
Assess the South African parent by its conduct. Ownership alone does not establish financial-service provision. Crypto-asset advice or intermediary activity can engage Financial Advisory and Intermediary Services Act licensing requirements. Document any role in customer orders. If the parent funds the route, confirm the exchange-control treatment of the actual transfer, loan or guarantee through its Authorised Dealer before committing funds. (Financial Advisory and Intermediary Services Act 37 of 2002, sections 1 and 7; General Notice 1350 of 2022; SARB Currency and Exchanges Manual for Authorised Dealers, 8 October 2026, section B.2(C).)
The approved asset list also matters. Financial instruments fall outside MiCA's scope. For stablecoins, ESMA's 8 October 2026 opinion expects CASPs to prevent new exposure to non-compliant asset-referenced tokens and e-money tokens, subject to narrowly limited legacy wind-down services. Offshore liquidity does not resolve those restrictions. (MiCA, Article 2(4)(a); ESMA Opinion ESMA75-113276571-1742, paragraphs 12–14 and 21–27.)
Complete the route before committing order flow
Legal and compliance should approve the service and permission map. Execution staff should document venue selection and test the alternative route. Operations should validate custody and settlement. The board should approve the revised policy, conflicts controls and liquidity agreement before orders are enabled. These documents should fit the wider exchange operating structure.
Proceed with the affiliate only for routes supported by that work. Where records, permissions or custody cannot support the model, use an authorised alternative or postpone the affected route.
Plan the execution review
To review your execution policy, customer consents and affiliated liquidity agreement, contact Licentium.