TRAction Fintech, an international trade, and transaction reporting service provider just launched its new product Best Execution Monitor. The tool is designed to enable the company’s clients to comply with the best execution provisions under MiFID II.
According to the regulatory regime which Europe adopted at the beginning of 2018, forex and CFDs brokers need to adhere to best execution provisions which are embedded in articles 27 and 28 of MiFID II.
The firms are required to take into account what are the most favorable terms for the execution of client orders. While delivering on their obligation they need to consider prices, costs, speed, the likelihood of execution, and other relevant factors.
While RTS 27 requires investment firms to consider the above-mentioned factors and thereby inform their clients where and why the order was executed, RTS 28 mandates investment firms to report their top five venues for their trading on behalf of clients.
The overall best execution provision requires investment firms to implement a policy to assess and monitor whether the execution has resulted in the best result for the client on an ongoing basis.
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Challenges for FX and CFD brokers
In anticipation of the challenges which retail forex and CFDs brokers may face, Traction is focused to assist them in maintaining extensive record-keeping and links with IT and data systems. Due to the complexity of having reliable market data in the Over-The-Counter (OTC) derivatives market, extensive resources to support continuous monitoring and iteration of policy are required.
TRAction’s Best Execution Monitor
To assist FX and CFD brokers to comply with the best execution standards, TRAction has built a new platform called Best Execution Monitor that assists the firm’s clients in monitoring and analyzing the transaction data that provides their clients with the best possible execution outcomes.
The new product operates by aggregating data via a file submission or an API connection. TRAction then compares this data against the one-minute high and low for the relevant time the trades were executed.
After statistics about the quality and execution are displayed from TRAction’s Best Execution Monitor, the numbers, which include the 5 best and worst transactions are compared to Reuters tick data.
Specific transactions can be analyzed by typing in a specific UTI or deal number. All of the trades will be required to be monitored, not just those that are Traded on a Trading Venue (TOTV) or required under MiFIR transaction reporting rules.