MiFID’s “Best Execution” provisions require that investment firms, executing orders in financial instruments, take all reasonable steps to obtain the best possible result for their clients, taking into account price, costs, speed of execution and settlement, size, nature and any other consideration relevant to order execution.
Where a firm actually executes customer orders it requires an execution policy listing execution venues used and indicating the relative importance it places on the best execution factors. In executing retail orders, it
is expected that a firm seeks to obtain the best possible result in terms of “total consideration” – i.e. the price of the instrument and the costs related to the execution. The total consideration is also relevant for professional orders, though the regulators have indicated more flexibility here.
Firms which transmit or place orders with other entities for execution now require a policy setting out the entities used. Such firms
also need to monitor the execution received and review its quality at least annually.