Faculty of Economics and Business Administration Publications Database

Best Execution Implementation and Broker Policies in Fragmented European Equity Markets

Pujol, Gregor
Warnik, Adrian
Volume: 8
Number: 2
Pages: 144 - 162
Month: March
Link External Source: Online Version
Year: 2012
Keywords: Financial Service and Banking Regulation; European Financial Markets
Abstract: From November 2007, the “Markets in Financial Instruments Directive” (MiFID) has to be applied by investment firms and regulated markets in Europe. Investment firms are obliged to make provisions including processes and IT systems for order routing to achieve the best possible result for clients in order execution. We empirically investigate the implementation of best execution obligations applying a longitudinal analysis of best execution policies in 2008 and 2009 respectively. The European trading landscape has changed as competition between established exchanges and new trading venues has increased significantly. In both studies, 75 policies of German investment firms were analyzed to investigate how best execution obligations have been implemented and whether market fragmentation has been considered.