Equiduct has released the last in the series of six free MiFID white papers it has sponsored. The sixth white paper is entitled, ‘Post MiFID: Execution Policy and Building an Execution Venue List’ and can be downloaded for free from www.equiduct.eu . Written by Andrew Simpson, the paper sets out what is needed to build a MiFID execution policy and addresses some of the complexities that a firm may be faced with. Andrew also looks at the wider concept of best execution and its impact on the industry, explains the concept of an execution venue list and demonstrates how critical this will be for both clients and banks as they search for a better understanding of best execution under MiFID.
Simpson has also included a venue selection checklist that provides firms with a series of practical guidelines to help them choose the right execution policy. Some of the key questions raised here include whether the execution policy will be static or dynamic, which instruments will be traded on the venue, how important latency is in terms of venue selection, what types of orders are expected, what type of order book will be important, whether the venue has a clear set of rules, how important cost of trading is and whether Pan European settlement is important.
“In sponsoring this series of MiFID white papers, Equiduct has been keen to shed some light on some of they key MiFID complexities, and nowhere is this more necessary than with best execution, an area littered with ambiguities about MiFID directive interpretations, what look like prescriptive measurements as well as the need to develop and follow clearly documented policies,” comments Equiduct¹s CEO, Bob Fuller. “In his execution policy paper Andrew Simpson quite rightly also highlights how, as venues compete post MiFID for market share, factors other than liquidity will also be important.”
“Andrew quite rightly concludes that despite all the complexity and debate around MiFID, the clear directive goals of protecting retail customers and promoting increased competition are bringing a new dynamic to the industry,” continues Bob Fuller. “That is why at Equiduct we have created a new execution venue that will enable firms to deliver on the MiFID vision and help organisations trade efficiently across current borders and deliver best execution in the pan-European market.”
“Although the November 2007 MiFID deadline is approaching fast, firms have quite rightly taken time to understand all the implications of the relevant texts before positioning themselves to address the challenges and opportunities of MiFID,” adds Andrew Simpson. “In this latest white paper I have tried to clearly set out just what organisations need to understand about the MiFID obligation to deliver best results, execution policy criteria and the creation of execution venue lists. In studying these areas, it has become increasingly clear that best execution is not just about price, costs and latency. Organisations really do need to have well defined execution policies if they are to make the most of MiFID.”