Last week we had different heads of market structure, compliance, and front office together for our regulation MiFID II breakfast. One of the many themes that was discussed was Best Execution, relevant because we had FCA representation and, whilst the Best Execution Thematic Review was published more than a year ago, it is still fresh in our minds.
What the regulators discovered in that case was a disparity of ways that banks were doing their best execution checks. The thematic review referred to the lack of standards across the industry and the fact that some banks felt like some of their activities were ‘out of scope’ and therefore excluded from the regime. It also reminded banks that a failure to obtain Best Execution is a problem that needs more focus from management, not just compliance and traders.
However, this new management focus and change of culture does not just apply to Best Execution. The event was oversubscribed and many heads of business attended, confirming that the regulators have now successfully gained the attention of upper management. Firms are more than ever conscious that there is a need to improve their current systems and controls to get ready for the implementation of future policy change. The uncertainty now is how to go about it.
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