The Central Bank recently completed a Best Execution themed inspection of investment and stockbroking firms with retail clients (‘firms’) authorised under MiFID Regulations and has issued a letter to provide feedback in relation to the areas of concern identified by the Central Bank following the inspection.
For client protection purposes, best execution requires that firms must have arrangements in place to "take all reasonable steps to obtain 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”.
The following are examples of issues identified as areas of concern for the Central Bank:
- Content of policy – generic in nature; did not set out importance of key factors; failure to list the venues/entities used for execution.
- Provision of appropriate information to client’s on firms policies.
- Firms must ensure that they can demonstrate that they are monitoring the effectiveness of their policy and arrangements, through the assessment of transactions on a regular basis.
- Provision of information to the Central Bank.