SFC brings best execution in line with Mifid II

Author: Karry Lai | Published: 26 Feb 2018

Hong Kong’s Securities and Futures Commission (SFC) has released a circular setting out guidance on the standards of conduct and internal controls in delivering best execution by licensed corporations. The release of these guidelines coincides with the EU’s new Markets in Financial Instruments Directive (Mifid II) which includes tougher reporting, disclosure and publication requirements.

Guidelines include governance and management supervision, best execution factors, applicability of best execution, responsibilities of execution staff, controls and monitoring, and arrangements with affiliates, connected parties and third parties.

The circular was released after a review of the practices of 21 licensed corporations that included global financial institutions, asset management firms and local brokers. Questionnaires were sent to the licensed corporations which were followed by discussions with management and selected onsite inspections.

A recurring observation arising from the SFC’s inspection related to the general scope of products covered by licensed corporations’ existing policies and...


 

 

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