POSITION PAPER ON
CESR’s PUBLIC CONSULTATION
BEST EXECUTION UNDER MIFID
Ref: CESR / 07 ~ 050b
ALFI welcomes CESR’s analysis on “Best execution under MiFID” published in its
public consultation of February 2007. Having a common approach between regulators on
this topic will be most helpful for market participants.
We are supportive of the positions taken by CESR in this consultation, but recognise that
there is still a need, not addressed in this paper, for guidance on best execution in the
context of quote-driven markets (where we understand CESR is in communication with
the EU Commission).
Further the consultation paper does not address best execution as it applies to investment
funds. Such guidance would be helpful in the light of what appear to be diverging
approaches being taken by EU regulators in applying the rule in their own markets. To
assist in the deliberation of an EU coordinated approach, we would like to make several
remarks as to the application of the best execution rules to funds and would propose
following this up in more detail should CESR feel this is useful.
ALFI is the representative body of the 1.8 trillion Euro Luxembourg fund industry. It
counts among its members not only investment funds but a large variety of service
providers of the financial sector. As such ALFI also represents next to the fund industry’s
direct participants key players in the distribution of fund products.
I. GENERAL COMMENT
Article 21 of the Directive defines “best execution” as the obligation for investment firms
“to take all reasonable steps to obtain, when executing orders, the best possible result for
their clients taking into account price, costs, speed, likelihood of execution and
settlement, size, nature or any other consideration relevant to the execution of the order.”
It should be noted that although MiFID does not apply to fund promoters, its best
execution requirements apply to mutual funds as financial