Eighteen Months In, MiFID II’s Impact on Research and Execution is Felt Far and Wide

By Jen Fagenson

August 18, 2020

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In order to thrive in today’s environment, many agency brokers have built systems designed to streamline best execution. DASH Financial Technologies, which delivers high-performance solutions for trade execution and analytics, as well as a suite of tools for regulatory capital compliance, is one such firm.

“Today, brokers who want to have a serious execution offering must not only be able to offer a full tool kit to deliver best execution directly to the buyside or through sell-side partners, but they must also be able to demonstrate how client orders are executed through transparency analytics and post-trade reports,” said Stino Milito, co-COO at DASH. “Unquestionably that is a positive for investors, and very much in keeping with the spirit of what regulators intended when enacting MiFID II.”

If MiFID II is a rising tide, the arrival of the COVID-19 pandemic was a bolt from the blue. The result was not just huge spikes in volumes and volatility, but also an extended work-from-home protocol that is still in place for many in the industry. This has had significant implications for best execution.

“Not only has volatility been high, but spreads have often been wider with less available liquidity,” said Milito. “It is therefore more critical than ever to capture liquidity at a high rate, and that shines the spotlight squarely on the quality of order routing.”

There is no telling how the rest of this year will play out, but one thing is clear: MiFID II, technically unchanged since it was implemented in 2018, is still evolving in terms of its effects on the industry. It has become a truly global framework and altered practices and budgets in the process. It is an important ongoing chapter in the story of global market structure – striving to find a balance between protection and efficiency and adjusting practices in the name of fairer markets for all.