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Best execution compliance: new techniques for managing compliance risk

Best execution compliance: new techniques for managing compliance risk Purpose – New regulatory initiatives, principally MiFID and RegNMS, challenge wholesale financial firms to prove that they can provide best execution for their clients. This article aims to outline the background to the problem and suggest that current research into SVM/DAPR applications may provide a practical approach. Design/methodology/approach – The article presents a desk review of current issues in “best execution” based on work with European brokers and others, followed by initial, promising trial of SVM/DAPR. Findings – The article finds that brokers need automated tools, e.g. “sifting engines” that help them to focus compliance efforts on anomalous trades. Research limitations/implications – Although brokers appear to need assistance in identifying anomalous trades, whether they place significant effort in compliance depends on regulatory enforcement. Originality/value – MiFID and RegNMS will require changes in current practice. SVM/DAPR approaches appear to be worth further investigation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Risk Finance Emerald Publishing

Best execution compliance: new techniques for managing compliance risk

The Journal of Risk Finance , Volume 7 (3): 12 – May 1, 2006

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References (1)

Publisher
Emerald Publishing
Copyright
Copyright © 2006 Emerald Group Publishing Limited. All rights reserved.
ISSN
1526-5943
DOI
10.1108/15265940610664979
Publisher site
See Article on Publisher Site

Abstract

Purpose – New regulatory initiatives, principally MiFID and RegNMS, challenge wholesale financial firms to prove that they can provide best execution for their clients. This article aims to outline the background to the problem and suggest that current research into SVM/DAPR applications may provide a practical approach. Design/methodology/approach – The article presents a desk review of current issues in “best execution” based on work with European brokers and others, followed by initial, promising trial of SVM/DAPR. Findings – The article finds that brokers need automated tools, e.g. “sifting engines” that help them to focus compliance efforts on anomalous trades. Research limitations/implications – Although brokers appear to need assistance in identifying anomalous trades, whether they place significant effort in compliance depends on regulatory enforcement. Originality/value – MiFID and RegNMS will require changes in current practice. SVM/DAPR approaches appear to be worth further investigation.

Journal

The Journal of Risk FinanceEmerald Publishing

Published: May 1, 2006

Keywords: Compliance costs; European Union; Research; Financial control

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