It has been one year since the implementation of The Markets in Financial Instruments Directive (MiFID), and as part of the MiFID implementing directive, the European Commission is expected to present a report to the European Parliament and to the Council on the availability, comparability and consolidation of information concerning the quality of execution of various execution venues. In order to inform the Commission's report, the Investment Management Association (IMA) has conducted a survey of its members in order to gather views on how the quality of information has changed since the implementation in November 2007.
The IMA's authoritative asset management survey 2007 recorded that IMA member firms were managing 44% of the domestic equity market for clients and £1.1 trillion in fixed income instruments. It is in relation to these markets that the IMA execution quality survey focuses. The key issues include, settlement certainty and counterparty risk ,which have become the most relevant factors in the provision of best execution following the collapse of Lehmans. Also, brokers should be required to describe their execution policies and practices upon request. And a consolidated tape should be introduced for all EEA equity markets. An order routing rule for EEA equity venues similar to Reg NMS in the US should be introduced, according to the survey. It also said that fixed income managers are generally content with the information that they are getting, absent the credit crunch.
Guy Sears, director of wholesale at IMA, said in a press release, "The survey findings show that as far as UK equities are concerned, IMA members clearly think that the information quality has significantly deteriorated. Members would welcome the introduction of a rule for order routing similar to Reg NMS in the US. Counterparty risk and settlement certainty dominates the selection process of brokers and venues following the settlement debacle arising in London from the Lehman collapse. Fixed income managers are generally content with the information that they are getting,but note that all data have deteriorated in quality during the credit crunch."