Requirement (MIFID)
Article 44 Best execution criteria
Requirements MIFID - DIRECTIVE 2006/73/EC
Description
Description
1. Member States shall ensure that, when executing client
orders, investment firms take into account the following criteria
for determining the relative importance of the factors referred to
in Article 21(1) of Directive 2004/39/EC:
(a) the characteristics of the client including the categorisation
of the client as retail or professional;
(b) the characteristics of the client order;
(c) the characteristics of financial instruments that are the
subject of that order;
(d) the characteristics of the execution venues to which that
order can be directed.
For the purposes of this Article and Article 46, ‘execution venue’
means a regulated market, an MTF, a systematic internaliser, or a
market maker or other liquidity provider or an entity that
performs a similar function in a third country to the functions
performed by any of the foregoing.
2. An investment firm satisfies its obligation under
Article 21(1) of Directive 2004/39/EC to take all reasonable
steps to obtain the best possible result for a client to the extent
that it executes an order or a specific aspect of an order following
specific instructions from the client relating to the order or the
specific aspect of the order.
3. Where an investment firm executes an order on behalf of a
retail client, the best possible result shall be determined in terms
of the total consideration, representing the price of the financial
instrument and the costs related to execution, which shall
include all expenses incurred by the client which are directly
related to the execution of the order, including execution venue
fees, clearing and settlement fees and any other fees paid to third
parties involved in the execution of the order.
For the purposes of delivering best execution where there is more
than one competing venue to execute an order for a financial
instrument, in order to assess and compare the results for the
client that would be achieved by executing the order on each of
the execution venues listed in the firm's order execution policy
that is capable of executing that order, the firm's own
commissions and costs for executing the order on each of the
eligible execution venues shall be taken into account in that
assessment.
4. Member States shall require that investment firms do not
structure or charge their commissions in such a way as to
discriminate unfairly between execution venues.
5. Before 1 November 2008 the Commission shall present a
report to the European Parliament and to the Council on the
availability, comparability and consolidation of information
concerning the quality of execution of various execution venues.
Comment
Applies to Articles 21(1) and 19(1) of Directive 2004/39/EC