AMF has issued positions and recommendations for investment services providers to ensure reliable, high-quality financial intermediation. The texts have been incorporated into a guide outlining the AMF's expectations for best execution of investors' orders. The consultation is open until 31.1.14.
One of the goals set by the AMF in its 2013-2016 Strategic Plan, aimed among other things at restoring investor confidence, is to promote reliable, high-quality financial intermediation. The Markets in Financial Instruments Directive (MiFID) made order execution more complicated and, as a result, harder to understand by the public at large.
To offset the effects of market liquidity being fragmented across multiple trading venues, MiFID laid down best-endeavours requirements for best execution of orders but did not specify precisely what was expected of ISPs. For that reason, the AMF has sought to explain how it interprets the current rules and, in particular, how the best execution rule should be applied.
The guide gives details about:
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preparing and reviewing order execution policy, with emphasis on policy content and review and the choice of execution venues
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adopting and reviewing a best selection policy when a third party is tasked with executing client orders
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applying inducement rules to the remuneration practices adopted by trading platforms in return for order flow from ISPs (e.g. non-public fee discounts, system connection offers, bonus share awards
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informing clients about how their orders will be executed.
The draft guide is out to public consultation until 31 January, 2014.
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© AMF - Autorité des Marchés Financiers
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