FSA examines the feasibility of benchmarking for execution policies under Mifid

The Financial Services Authority (FSA) in the UK has just released discussion paper 06/3, ‘Implementing Mifid’s best execution requirements’. The paper, open for comments until August 17, 2006, will inform the FSA’s approach to Article 21 of the Markets in Financial Instruments Directive.

Article 21 is the section of the directive that states that a firm must take reasonable steps to obtain the best possible results for clients by taking into account price, speed and likelihood of settlement. The execution policy firms have to create to ensure best practice must be available to the client, who must then give consent under the directive.

This provision has been a cause of concern for many in the industry, as there is uncertainty as to how the FSA plans to monitor firms. The FSA has

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