Best execution is the achievement to provide clients with the best possible outcome for their transactions. Investment Firms need to take all necessary and sufficient steps to obtain the best possible result for the execution of the client orders, having due regard to the wider market in any relevant instrument.
“When establishing its execution policy in accordance with Article 27(4) of Directive 2014/65/EU, an investment firm should determine the relative importance of the factors mentioned in Article 27(1) of that Directive, or at least establish the process by which it determines the relative importance of these factors, so that it can deliver the best possible result to its clients.” – Recital 99 – DR 2017/565
The execution process must be reflected in an execution policy, which must specify the execution venues, and, where derivatives are concerned, must address and distinguish between Exchange Traded products and Over-The-Counter (OTC) products.
Best Execution as part of the Markets in Financial Instruments Directive Recast (MiFID II) aims to strengthen investor protection by making markets more efficient and transparent. In April 2018 the first set of reporting was delivered by firms.
Introduction to Best Execution
The requirements deriving from MiFID II
- Reasonable Steps vs Sufficient Steps
- Article 27 on the obligation to execute orders on terms most favourable to the client
Best Execution as per CySEC Law 87(i)/2017
- Recognize the major components of Best execution
- Measure the major factors of Best Execution
- Detect major deficiencies related to Best execution arrangements and measures
Best Execution criteria
- Client categorization requirements
- Client Characteristics and preferences
- Orders characteristics
- Execution Venues characteristics
The regulatory developments and priorities, impact of RTS 27, RTS 28 and Professional Execution Policy
- Explanation of Article 66 of EU Delegated Regulation 2017/565
- Introduction to RTS 27 – quality of execution report
- Introduction to RTS 28 – top 5 execution venues
Circular C343 Thematic review of best execution obligations of Cyprus Investment Firms
- Objective of the Review – Sample reviewed
- Observations identified
- Good practices
- Next Steps
Elaborating technology to monitor Best Execution
- Presentation of a Comprehensive solution
- Price monitoring
- Cost monitoring
- Speed of execution monitoring
- Likelihood of execution monitoring
- Price Continuity monitoring
- The need to check all the components by taking in mind the size of the orders, the monetary values and generally a total consideration of the transactions executed and have a balance providing the execution
- Finding where the data resides and ways for providing the relevant data
- How you prove/document that your monitoring and documenting your actions for corrective measures
The training style will include the presentation of all the material using slides and handouts. The trainer will use practical examples to elaborate various concepts and encourage class discussion.
Participants will engage in exchange of ideas and sharing of knowledge on the subject matter. Participants will also be able to ask questions and obtain clarifications from the trainer on all the material covered. Then a practical workshop will be conducted for the participants to understand in practice how you have to monitor Best Execution.
An automated solution will be presented and be explained thoroughly with all the checks necessary to meet regulatory requirements. Participants will practise on how to deliver sufficient monitoring. There will be ample opportunity for delegates to benchmark experiences with industry peers and raise issues of most concern to their organisation, either confidentially or in open session.
This programme may be approved for up to 5 CPD units in Financial Regulation. Eligibility criteria and CPD Units are verified directly by your association, regulator or other bodies which you hold membership.
Who Should Attend
The programme is ideal for:
- Mangers and Senior Managers in Investment Firms
- Compliance Officers and Front office professionals
- Internal Auditors
- Internal Lawyers
- External Auditors, Lawyers and Financial Consultants
- Dealing room seniors