About a-team Marketing Services

A-Team Insight Blogs

MiFID II Best Execution Presents Challenges and Opportunities

Subscribe to our newsletter

Markets in Financial Instruments Directive II (MiFID II) raises the bar on best execution, presenting significant data management challenges, but also opportunities to use best execution data to gain competitive edge. Where MiFID required investment managers to show they had taken ‘reasonable’ steps to demonstrate best execution, MiFID II requires ‘sufficient’ steps, suggesting a more absolute requirement.

The issues presented by compliance with the best execution element of MiFID II were discussed during a recent A-Team Group webinar – MiFID II: Data for best execution. The webinar was moderated by Andrew Delaney, chief content officer at A-Team, and joined by Rachel Przybylski, head of market structure at Saxo Capital Markets UK; Gaurav Bansal, MiFID II programme director at Tilney BestInvest Group; John Mason, global head of regulatory and market structure propositions in the financial and risk division at Thomson Reuters; and Dermot Harriss, senior vice president, regulatory solutions at OneMarketData.

Setting the scene for discussion, an early poll of the webinar audience showed 21% of respondents saying their firm is prepared for the best execution provisions of MiFID II, with 30% saying they are not ready, and 49% falling into the ‘maybe’ category.

Considering how MiFID II rules differ from those of MiFID, the webinar speakers noted the change from ‘reasonable’ to ‘sufficient’ steps to demonstrate best execution and a consequent rise in the volume of data that must be sourced, processed and reported. Bansal noted that the extended requirement means investment managers may need to make technology, operational and business changes to ensure they are actively looking at best execution results at different venues and changing venues when necessary.

Highlighting the need to consistently monitor venues’ performance to ensure best execution, Harriss said: “This provides an opportunity to turn the regulatory requirement into a competitive advantage as customers can use the extended transparency around best execution to choose between investment managers.”

The data management challenges of best execution were identified in a second audience poll, which found 48% of respondents saying data sourcing is the toughest challenge, 20% saying records retention and retrieval, 17% cross-asset class transactions, 11% venue onboarding procedures, and 3% raising connectivity levels.

Responding to the poll results, the panel suggested data management for best execution can be supported by a single coherent data store that can handle MiFID II queries on best execution and other aspects of the regulation, such as algo testing, and provide an accurate database for regulatory reporting. From a data vendor’s perspective, Mason said: “Data providers should source all the necessary data in the market and encapsulate it for best execution calculations.”

Listen to the webinar to find out more about:

  • Best execution requirements
  • Extensions of MiFID
  • Data management challenges
  • Best practice solutions
  • Regulatory opportunity
Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Unlock the Future of European Equities & Trading Technology: 2024 and Beyond!

In a world where the financial landscape is perpetually evolving, 2023 has brought widespread discussions around liquidity, regulatory shifts in the EU and UK, and advancements like the consolidated tape in Europe. For the year ahead in 2024, the European market is poised for transformative changes that will influence the future of trading technology and...

BLOG

A-Team Partners The Times on Regulatory Compliance Special Report

A-Team Group is thrilled to be partnering with The Times newspaper on its special report covering Regulatory Compliance. Be sure to pick up your copy this Wednesday 12 July from any good newsstand in the UK. Among the topics the special report explores are the state of KYC in 2023, e-communication risk and compliance, ESG...

EVENT

Buy AND Build: The Future of Capital Markets Technology, London

Buy AND Build: The Future of Capital Markets Technology London on September 21st at Marriott Hotel Canary Wharf London examines the latest changes and innovations in trading technology and explores how technology is being deployed to create an edge in sell side and buy side capital markets financial institutions.

GUIDE

Institutional Digital Assets Handbook 2023

After initial hesitancy, interest in digital assets from institutional market participants has grown over the past three to four years. Early focus inevitably centred on the market opportunities presented by bitcoin and other cryptocurrencies. But this has evolved into a broad acceptance of a potentially meaningful role for digital assets in institutional markets. It’s now...