K & K G L O B A L C O N S U LT I N G
RESEARCH
MiFID II
Key takeaways from 1H 2017 Alpha Trader Forum (ATF) regional buy-side debates:
Pension funds are, from a strict regulatory perspective, not challenged the
same way as other asset management firms with the necessity to comply
with MiFID II regulation. Regardless of regulations, some pension funds are
still trying to conform to the benchmark of what is expected as an industry
minimum.
BEST EXECUTION
The major discussion topic within best execution is how the buy side should objectively prove to
auditors and their clients that they have fulfilled their due diligence on their counterparties. There
is a need for decisions about which processes and tools should be used and the need for additional
documentation. On one side, there is a push to funnel business to fewer counterparties where one
can prove proper due diligence. On the other hand, specialisation is an area that is challenged due
to regulatory capital restrictions so some buy side are signing up more counterparties to cover all
markets. But additional complexity hits hard as specialised ad-hoc counterparties may not accept
the associated technology connection fees for long unless there is re-occurring business. From
an inducement perspective, is it right that the broker is solely paying for this connection?
Within foreign exchange we look forward to discussing how the buy side plan to prove best
execution when trading through a custodian.
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www.buysideintel.com
Summer 2017