Xtrakter, a provide of trade matching and regulatory reporting services, has compiled leagues table based on data passing through its systems showing the top execution venues for the equities and fixed income markets in Europe. While OTC leads as an execution method in both lists, NYSE Euronext scooped top honours in equities with a combined share of about 25% for its three companies. Meanwhile, the fixed income market is dominated by OTC executions, with individual venue shares only in the single digits.

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Agency broker Instinet Europe Limited (IEL) has just finished a review of its best execution policy, which reveals significant price improvements for its clients as a result of smart order routing (SOR). In an exclusive interview with MiFID Monitor, IEL’s CEO, Richard Balarkas, challenges the brokerage community to step up to the plate.

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Dynamic best execution policies will soon be the norm, according to Dr Anthony Kirby, director of financial services advisory at Ernst & Young and chair of the Best Execution Subject Group (BESG). However, without a better settlement and clearing solution, the cost savings from best execution will not be fully realised, he warns.

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Although many investment firms are reporting issues carrying out MiFID’s reporting and best execution requirements BHF-Bank, a leading German private bank, is busy promoting its solution.

In an exclusive interview with MiFID Monitor, BHF’s Lutz Soor, MD corporate office/strategic products, told us why he believes best execution will eventually have to be done on an order-by-order basis and how BHF-Bank has developed what it believes to be a market leading solution.

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A recent survey shows 80 per cent of financial institutions firms will find it difficult to prove – for MiFID’s required five-year window – that orders, executions and allocations were processed correctly.

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Further details have emerged about start-up Exchange Axis (EAX) and its promised new “best execution service”, set for an autumn 2008 launch. Using the latest smart order routing (SOR) technology and offering 5 millisecond latency, EAX will provide an option for firms to insulate themselves from market fragmentation issues, it says.

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Firms are missing out on best execution if they aren’t using smart order routing (SOR), according to a number of speakers at this month’s TradeTech MiFID conference. The message was that SOR would be indispensable as more execution venues and dark liquidity pools come online and clients become more informed.

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New MIFID execution policies from 36 buy and sell side firms reveal a trend towards a “process and policy” approach to best execution. Smart order routing, trade monitoring and alternative venues receive little mention.

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Best execution will be translated as a process rather than monitored trade-by-trade. However, key questions remain and market practices will be evolutionary rather than revolutionary, with most firms doubtful that evidencing of best execution will be consistent across the EU, and so unwilling to invest heavily in technology until they have seen how MiFID evolves. This is all according to the latest version of a white paper on best execution.

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UK-headquartered FIXCITY is touting its web-based indication of interest (IOI) distribution product ioinet as a useful tool to support firms seeking to meet the requirements of best execution under MiFID. When it comes to trading large blocks, the best quoted price is not the only important factor for best execution, the vendor argues: finding a natural opportunity to match without market impact is also key.

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Days before the MiFID deadline, Reuters offered more detail on the third leg of its MiFID offerings – focused on best execution – first outlined to MiFID Monitor earlier this year (March 2007). The vendor says it has beta tested and already signed users for the Reuters Transaction Cost Analysis Service and Reuters DataScope Tick History On Demand, both hosted solutions. The best execution solutions are the third piece of the puzzle, says Reuters head of marketing, exchange traded instruments Andrew Allwright, joining Reuters Trade Publication and the Reuters .x RIC, which provides a view of the best aggregated price for a stock.
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By coincidence Thomson Financial chose the same day in MiFID week as Reuters to announce its transaction cost analysis (TCA) solution for MiFID.

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Multi-asset trading solutions provider Portware has integrated Citi’s MiFID smart order routing DMA order types and pre-trade transaction cost analysis (TCA) into the Portware trading system.

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The Centre for European Policy Studies last month warned that financial institutions that don’t embrace the incoming MiFID regulation will go the way of the dinosaur. In a white paper entitled MiFID Revolution or Delayed Execution, the Brussels-based think tank described the regulation as a true revolution in the European financial services landscape, both in terms of the depth of its impact among institutions’ practices and of the diversity in preparedness among member states and firms.

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With just over a month to go before the November 1 MiFID implementation date, UK connectivity provider Fidessa has formally launched its MiFID product suite and announced orders from more than 50 financial institutions. A new execution policy, order compliance and handling system – Epoch – has emerged as a key element of its MiFID suite, comprising five key elements, plans for which were outlined by Fidessa six months ago (MiFID Monitor, March 2007).

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Three months after outlining its high-level MiFID strategy, high-performance market data systems provider Wombat Financial Software plans to unveil its multi-tiered product offering at a client conference in London next month. At the event, Wombat will demonstrate its SuperBook, SuperTrade and the new Wombat Acumen, which draw on the company’s suite of European direct exchange feedhandlers to offer a consolidated pan-European view of the marketplace in support of best execution.

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Firms may risk breaking the law should they fail to gain “express consent” from clients before MiFID’s November deadline, said mid-tier firms during a recent meeting at which they named the issue as their biggest MiFID challenge. The firms expressed concerns that they will “never get consent”.

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In its latest Policy Statement, PS 07/15, the Financial Services Authority (FSA) attempts to cross the t’s and dot the i’s when it comes to best execution. It says firms now have a “sufficient basis” to implement MiFID’s best ex requirements.

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CESR has spared the bond markets from MiFID’s transparency requirements, at least for the short term, by recommending no regulatory action at this time in its recently published Technical advice on non-equities transparency (CESR/07-284b). Meanwhile both CESR and the European Commission have weighed in on regulatory issues associated with the commodity and exotic derivatives businesses.

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Investment bank Jefferies is to use Ullink’s UL Smart order routing software to meet its MiFID best execution obligations. A user of Ullink’s UL Bridge for the past 18 months, the firm has added UL Smart’s MiFID Best Execution Engine, which adds several rules and features designed specifically to meet the needs of institutions affected by the impending regulation.

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