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The European Securities and Markets Authority (ESMA) has conducted a peer review on how national regulators (national competent authorities or NCAs) supervise and enforce the MiFID provisions relating to investment firms’ obligation to provide best execution, or obtain the best possible result, for their clients when executing their orders.
ESMA found that the level of implementation of best execution provisions, as well as the level of convergence of supervisory practices by NCAs, is relatively low. In order to address this situation a number of improvements were identified, including:
The review was conducted on the basis of information provided by 29 NCAs and complemented by on-site visits to the NCAs of France, Liechtenstein, Luxembourg, Malta, Poland and Spain.
Steven Maijoor, ESMA Chair, said: “The overall findings in this report show that the standard of supervision to ensure the implementation of MiFID’s best execution requirements falls short of its aim of ensuring that retail investors receive the best outcome when trading securities. A number of factors, including differing views on the application of the best execution requirements, lack of supervisory focus, insufficient resources and market structure issues have contributed to the current situation.
“It is important that this situation is addressed in the interests of Europe’s investors. The report includes a number of recommendations whose implementation would contribute to the consistent application of best execution requirements across the EU, thereby helping to achieve the best outcome for retail investors.”
The Report found that:
The Report identifies a number of areas for future work by NCAs and ESMA which could promote a more coherent cross-EU implementation, supervision and enforcement of the best execution rules, including:
Next Finance , March 2015
2009 was a year of intense reflection on the functioning of the financial sector. There followed an intense regulatory activity in 2010, unfortunately with few formal adoptions of regulations. 2011 marked the surge of the will to succeed with provisional schedules. Where do (...)
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