EFAMA response to consultation on Best Execution under MiFID

22 March 2007

EFAMA published its response to the CESR consultation on best execution criticizing the Consultation’s lack of clarity and specificity regarding the obligations of the various market players and functions with reference to best execution. In particular, the obligations arising from Art. 21 Level 1 and Art. 45 Level 2 are neither “analogous” nor the same and should therefore be clearly defined, whereas CESR’s prevailing aim seems to be the search for commonalities between them. Such approach leads to uncertainty and potential misunderstandings, and in some cases to interpretations by CESR that exceed MiFID requirements.

Furthermore, critical issues are still unclear: how far an asset manager can rely on an intermediary and how the asset manager can satisfy itself that the intermediary’s execution arrangements will enable the manager to comply with its own obligations. While any solution must be sufficiently flexible to adapt to a multitude of different market situations, more clarity from CESR would be appreciated, possibly through the use of examples.

Finally, EFAMA would encourage CESR to re-consult on this paper taking into account stakeholder comments, while consulting on the addendum regarding Best Execution scope. EFAMA would also appreciate the disclosure by CESR of the questions posed to the European Commission on the scope of Best Execution.

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