Cappitech MiFID II industry survey finds high percentage of non-compliance in best execution

14 November 2018
Knowledge Base

Cappitech, a leading provider of regulatory reporting and intelligence technology for the financial services industry, announced the results of a survey of over 100 European buy- and sell-side compliance decision-makers.  The survey examined how MiFID II regulation has affected financial services organisations and how these plan to tackle new regulations such as Best Execution and RTS27/28 in order to improve their business processes.

The Cappitech survey found that, despite a legal obligation to comply with Best Execution under MiFID II, 65% of respondents do not monitor trades systematically according to best execution criteria.  Furthermore, almost 60% of respondents have no plans to use their Best Execution reports internally, even though the data would improve their execution quality, client offering and ability to make better informed business decisions.
“Many firms still don’t define their best execution policies properly, and many of those that do so don’t have a system to monitor their policies in a systematic fashion,” said Ronen Kertis, CEO and Founder of Cappitech.  “Furthermore, the operational processes in many cases continue to be unnecessarily laborious and complex.  Industry participants need a single point for all compliance needs across reporting, execution quality analysis, service, ARM and Trade Repository integration and reconciliation.”

Additional Survey Findings

  • More than half of the respondents were not fully compliant with MiFID II’s reporting mandates on January 3rd this year, confirming industry-wide suspicions that large numbers of market participants were struggling in the run-up to the implementation date.
  • Firms are still unclear about which financial instruments fall under MiFID II’s purview from a transaction reporting perspective.  ESMA’s Financial Instrument Reference Database (FIRD), conceived to help firms understand their reporting obligations, is complex and confusing.
  • Firms that rolled-out new technology prior to the MiFID II deadline might be paying too much for TCA solutions, which in many cases feature unnecessarily broad functionality, designed expressly for bulge-bracket firms.

To see the full survey results, download the report or view the summary infographic on our website.

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