Investment Management Association (AIMA) has published a guide for alternative
investment managers to help them understand and implement the enhanced best
execution obligations under the European Union’s updated Markets in Financial
Instruments Directive (MiFID2), which will apply from January 2018.
AIMA’s MiFID2 Best
Execution Guide, which is only available to AIMA members, outlines the
MiFID2 obligation to achieve the best possible results when executing
These rules were originally introduced under MiFID1 and have
now been enhanced in a number of areas. In order to meet the new requirements,
firms will likely need to review their execution policies and client disclosures
(such as Investment Management Agreements) to ensure they meet the higher
standards under MiFID2. Fund managers also will be required to publish annual
reports about their choice of trading venues and brokers.
Best execution practices will vary between firms, depending
on their investment strategy and the types of financial instruments they trade.
AIMA’s guide sets out the practical considerations that firms will need to take
account of in order to ensure they are ready for the MiFID2 deadline and
maintain ongoing compliance standards.
The guide was developed by AIMA in conjunction with a
working group of members. The law firm Dechert LLP chaired the working group
and is the sponsor of the guide.
“The new best
execution obligations under MiFID2 continue to be a key focus for our members
as they work towards January 2018,” says AIMA’s CEO Jack Inglis. “We hope that our comprehensive guide will
support them in their implementation programmes. Our recent MiFID2 survey
indicated that some of our members with an international presence are setting
the MiFID2 best execution requirements as their global standard. This makes it
all the more important to get it right from the start.”
Dick Frase, partner at Dechert LLP, adds, “New best execution obligations are a major
part of the MiFID market reforms and will have a very significant impact on
business practices. We were delighted to work with AIMA and its members on
producing the MiFID2 Best Execution Guide, which takes a practical look
at implementation of the requirements, and draws on good and poor practices
identified by the FCA in their supervisory and thematic work in recent years.”