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Best execution: Difference between revisions
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Extract from Commission Opinion on the scope of best execution under {{tag|MiFID}} and the implementing directive: Working Document ESC-07-2007: | Extract from Commission Opinion on the scope of best execution under {{tag|MiFID}} and the implementing directive: Working Document ESC-07-2007: | ||
{{box|4. In our view, the key concept to focus on in interpreting Article 21 is the execution of orders on behalf of clients. This is consistent with the definition in Article 4(1)(5) of {{tag|MiFID}}, which refers specifically to a firm acting to conclude agreements to buy or sell financial instruments on behalf of clients, and the description of the relevant investment service in Annex I to {{tag|MiFID}} as the | {{box|4. In our view, the key concept to focus on in interpreting Article 21 is the execution of orders on behalf of clients. This is consistent with the definition in Article 4(1)(5) of {{tag|MiFID}}, which refers specifically to a firm acting to conclude agreements to buy or sell financial instruments on behalf of clients, and the description of the relevant investment service in Annex I to {{tag|MiFID}} as the “execution of orders on behalf of clients”. Both provisions support the idea that the requirement that an order is being executed on behalf of a client is integral to the concept of {{tag|best execution}}. <br> | ||
… <br> | … <br> | ||
8. The application or otherwise of {{tag|best execution}} will depend on whether the execution of the client’s order can be seen as truly done on behalf of the client. This is a question of fact in each case and '''ultimately depends on whether the client legitimately relies on the firm to protect his or her interests in relation to the pricing and other elements of the transaction – such as speed or likelihood of execution and settlement – that may be affected by the choices made by the firm when executing the order.''' | 8. The application or otherwise of {{tag|best execution}} will depend on whether the execution of the client’s order can be seen as truly done on behalf of the client. This is a question of fact in each case and '''ultimately depends on whether the client legitimately relies on the firm to protect his or her interests in relation to the pricing and other elements of the transaction – such as speed or likelihood of execution and settlement – that may be affected by the choices made by the firm when executing the order.''' | ||
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# '''Initiation''': Which party initiates the transaction; <br> | # '''Initiation''': Which party initiates the transaction; <br> | ||
# '''Market Practice''': Questions of market practice and the existence of a convention to | # '''Market Practice''': Questions of market practice and the existence of a convention to “shop around”; <br> | ||
# '''Price Transparency''': The relative levels of price transparency within a market; <br> | # '''Price Transparency''': The relative levels of price transparency within a market; <br> | ||
# '''Available information''': The information provided by the firm and any agreement reached. <br> | # '''Available information''': The information provided by the firm and any agreement reached. <br> | ||