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Proving Best Execution Depends On Collecting More Data

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The best way to accomplish all the aspects of ensuring best execution of trades in a manner compliant with Europe’s MiFID II regulation taking effect next year is by gathering all data, market history and relevant information in one place, says Dermot Harriss, senior vice president at OneMarketData, who spoke in a January 26 webinar, “MiFID II: Data for best execution,” hosted by A-Team Group and sponsored by OneMarketData and Thomson Reuters.

“Then, it’s mapping the data into an accessible database structure which you can use to answer the various questions that the transparency regulations ask of your data,” says Harriss.

Collecting all the information and data into one place can be complicated by multiple reporting, monitoring and control requirements that are part of best execution, observes John Mason, global head, regulatory and market structure propositions, in the financial and risk division of Thomson Reuters.

“The breadth and depth of data that’s required that goes into some of the best execution reports, and where that data is going to come from, particularly when we start looking at the more illiquid assets, means asking if proxies are required to ensure that an adequate benchmark was used to prove best execution,” says Mason.

A promising development for best execution support is that front offices and back offices are starting to find common ground on monitoring trade execution quality, according to Harriss. “They realize particularly that what they’re monitoring on a trading desk is the same as what they will be reporting and are beginning to think of those things as being coherent and not necessarily separate activities,” he says.

Having more venues available in a trading operations infrastructure or feeding into a trade data repository, so data ends up in one place with consistency, boosts the ability of the firm with that infrastructure to prove best execution, according to Mason.

“What makes best execution as we see it, is that you need to be able to prove the quality of your execution in the context of the broader market,” he says. “Making sure you have access to all that venue information, not just from a trading perspective but for the perspective it gives of the market as a whole and execution as a whole. We see this as critical for organizations being able to prove the quality of execution they’ve given their clients.

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