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Trading

Nearly all managers not ready for MiFID best-execution standards — survey

Ninety-four percent of money manager clients of institutional trading network Liquidnet said they're not ready to meet best-execution standards to be imposed by MiFID II starting in January.

The survey results, part of a study released Tuesday titled "Re-Engineering Best Execution," showed only 6% were ready to meet the best-execution requirements of the European Union's Markets in Financial Instruments Directive II, which goes into effect Jan. 3.

Among the changes needed to prepare for MiFID II among respondents, 61% of the 55 heads of trading at money managers surveyed by Liquidnet said they need to add asset classes to their best-execution policy; 33% need to enhance their trading functions and strategies; 31% need to invest more in technology; 20% must improve communication and governance; 19% must refine their transaction cost analysis model; and 13% weren't sure what they needed to do.

"While many (managers are) confident that they have best execution strategies in place, these are often ad-hoc in nature, lacking sufficient detail across asset classes, or have inadequate governance around implementation and monitoring to ensure best execution is delivered systematically," wrote the report's author, Rebecca Healey, head of Europe, Middle East and Africa market structure and strategy at Liquidnet.

Also, 70% said they're evaluating new execution providers but have not yet made any changes to their broker lists. Of those, 33% plan to make major changes to their broker list before MiFID II takes effect.

Liquidnet conducted the survey in April and May.