Mostly… fixed income and cross product eTrading

October 12, 2006

Good news on benchmarking and best execution

Filed under: Mifid — holky @ 6:14 am

Chief Exec of FSA John Tiner made a speech 11/10/06 clearly indicating that a one-size-fits-all benchmarking issue is no-more, and also that the customer-side of each trade holds ultimate responsibility for “shopping around” for best execution, rather than the dealers having a duty to provide it (unless asked to do so) –

“Overall, industry response to our benchmarking idea was quite negative although many conceded that benchmarks are already used to price instruments in some OTC markets. In any event, this feedback has convinced us that any guidance on benchmarks would be unhelpful so we will not be proposing any ….”,

and, “I am now satisfied that we have found an approach to implementing the best execution provisions of MiFID which will maintain the positive aspects of the UK’s trading markets. In particular, we are clear that dealers giving quotes will remain free to do so on the basis of their own books and internal models and that it will remain possible in dealer markets for fund managers to obtain best execution by shopping around themselves, if they wish and forming their own judgements about who to deal with, without that lucky dealer then being subject to a duty to provide best execution. It will of course be the case that fund managers will continue to be expected to obtain best execution for their funds and that if a fund manager wants a dealer to provide him with best execution, the dealer must do so or decline to trade. It is important to recognise that while these proposals will, we believe, enable current market practices to continue, it is possible that the Directive requirements for greater clarity around best execution may lead to the industry itself developing new business models.”

Full speech available here


1 Comment »

  1. […] …thanks to Holky for the good news on MiFID. Guess we won’t be reengineering that tiering system after all Posted in trading | […]

    Pingback by Mostly good news on MiFID… « Coding the markets — October 12, 2006 @ 5:10 pm

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