RFQs are MiFID exempt ?

August 2, 2006

finextra coverage of FSA MiFID proposals suggests that RFQs are exempt from the best execution regulations. To quote…

“The benchmarking proposal could also create a dysfunctional market structure, says Liba. By promoting the use of e-trading systems to obtain the price data required for delivering and monitoring best execution, the proposal fails to recognise the importance of a voice market in the price formation process. This could lead to a distortion in the market in favour of dealing via an electronic “request for quote” model in an MTF market, which would not be required to deliver best execution under MiFID”

I’d be quite happy to see our electronic prices used to keep voice dealers in line. Most RFQs are multi dealer, so the competition and price transparency keeps dealers honest online. But which price source would be used: Bloomberg ?


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