MiFID II/MiFIR: Best Execution
Authored by: Silvano Stagni, Hatstand (a Synechron company)
MiFID I defines best execution as 'the best possible outcome for the client'. This represented a move away from the equation: best execution = best price. It also introduced the concept of multiple venues and gave clients the possibility or opportunity to query a financial institution's quality of execution for five years after the actual transaction took place.
The changes to best execution introduced by the MiFID Review are partly due to market reaction to the Best Execution rules after MiFID I and partly to the extension of the scope to non-equity instruments. It will be interesting to see how the market reacts to them and to all the other new concepts introduced by MiFID II/MiFIR after the planned introduction in January 2018.