Responding to CESR’s call for evidence the Zentraler Kreditausschuß (ZKA) is concerned that the Commission wishes to use Regulations also for those forthcoming provisions which will directly regulate relations between an investment firm and its clients or employees. This decision implicates for
CESR to carefully assess whether its advice is compatible with those national provisions in existence under, e.g. civil law or labour law that have not been harmonised.
According to the ZKA level 1 requires that all “reasonable steps” need to be taken in order to achieve best execution of client orders. Since this would involve a considerable amount of additional time and technical effort and lead to a considerable increase of execution costs, the implementing measures need to ensure that the best execution obligation is complied with, so that – in line with the Level 1 provisions – there will be no case by case assessment.
Furthermore, any wide-ranging review obligation would collide with the duty of immediate trade execution. Especially in the case of volatile securities, such a kind of obligation may lead to a situation where, once the review has been completed, prices may already have undergone fundamental change.
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