06 March 2007

Equiduct White paper on MiFID Equity Best Execution

Equiduct released a first out of six White Papers on MiFID aimed at helping organisations to clearly identify their equity Best Execution obligations under the Market in Financial Instruments Directive (MiFID), which becomes law in November this year. The paper provides the first clear implementation analysis of MiFID Level 1 and Level 2 texts to help organisations identify their Best Execution requirements and includes five key MiFID Best Execution recommendations.

This white paper takes a slightly different approach to analysing and demystifying best execution. It considers the fundamental best execution requirements through direct reference to MiFID text. The main content of this paper avoids speculation or interpretation when discussing what best execution requirements will exist under MiFID.

Some interpretation is introduced and important best execution side issues are identified for firms to consider in the context of their actual trading practices and operational environments, including some example scenarios to explain how best execution is expected to work in real-life trading situations.

The analysis intentionally simplifies many aspects of best execution and in doing so it does not attempt to consider every aspect of MiFID’s extensive rules, or every waiver, exception or caveat available to investment firms. The analysis mostly considers markets where information is reasonably open and available, and of course this tends to be the equity trading markets.

White paper

© Equiduct