Application of Best Execution - COBS Provision: Difference between revisions

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{{cobsanat|11.2.2}}
{{cobsanat|11|2A|7}}
Guidance as to 11.2.2R provides:
Guidance at 11.2A.7 provides:


{{box|The obligation to deliver the best possible result when executing {{fcaprov|client}} orders applies in relation to all types of {{fcaprov|financial instruments}}. However, given the differences in market structures or the structure of {{fcaprov|financial instruments}}, it may be difficult to identify and apply a uniform standard of and procedure for best execution that would be valid and effective for all classes of instrument. Best execution obligations should therefore be applied in a manner that takes into account the different circumstances associated with the execution of orders related to particular types of {{fcaprov|financial instruments}}. For example, transactions involving a customised OTC {{fcaprov|financial instrument}} that involve a unique contractual relationship tailored to the circumstances of the {{fcaprov|client}} and the {{fcaprov|firm}} may not be comparable for best execution purposes with transactions involving shares traded on centralised execution venues.}}
''The obligation to deliver the best possible result when executing {{fcaprov|client}} orders applies in relation to all types of {{fcaprov|financial instruments}}. However, given the differences in market structures and the structure of {{fcaprov|financial instruments}}, it may be difficult to identify and apply a uniform standard of, and procedure for, [[best execution]] that would be valid and effective for all classes of instrument. [[Best execution]] obligations should therefore be applied to take into account the different circumstances surrounding the execution of orders for particular types of {{fcaprov|financial instrument}}. For example, transactions involving a customised OTC {{fcaprov|financial instrument}} with a unique contractual relationship tailored to the circumstances of the {{fcaprov|client}} and the firm may not be comparable for best execution purposes with transactions involving [[shares]] traded on centralised execution venues. As [[best execution]] obligations apply to all {{fcaprov|financial instruments}}, irrespective of whether they are traded on trading venues or [[OTC]], {{fcaprov|firm}}s should gather relevant market data in order to check whether the [[OTC]] price offered for a client is fair and delivers on the [[best execution]] obligation.''

Latest revision as of 12:25, 20 December 2018

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Guidance at 11.2A.7 provides:

The obligation to deliver the best possible result when executing client orders applies in relation to all types of financial instruments. However, given the differences in market structures and the structure of financial instruments, it may be difficult to identify and apply a uniform standard of, and procedure for, best execution that would be valid and effective for all classes of instrument. Best execution obligations should therefore be applied to take into account the different circumstances surrounding the execution of orders for particular types of financial instrument. For example, transactions involving a customised OTC financial instrument with a unique contractual relationship tailored to the circumstances of the client and the firm may not be comparable for best execution purposes with transactions involving shares traded on centralised execution venues. As best execution obligations apply to all financial instruments, irrespective of whether they are traded on trading venues or OTC, firms should gather relevant market data in order to check whether the OTC price offered for a client is fair and delivers on the best execution obligation.