MiFID – revolutionerende eller ej? En undersøgelse af Best Execution fra en dansk institutionel investors perspektiv

Christian Heinen & Jacob Zitawi

Student thesis: Master thesis


After the introduction of MiFID (Markets in Financial Instruments Directive) on 1 November 2007, the European trading landscape has seen significant changes. The introduction of several new platforms has arisen; resulting in an abolition of the primary exchange monopoly, which existed pre-MiFID. Furthermore, alternative methods of trading have seen the light post-MiFID while several compliance requirements, have been laid upon the stakeholders. Compliance refers specifically to Best Execution – an obligation for trading members to obtain the best possible trade on behalf of their clients. Altogether this has led to a fragmentation of the market, for all services within securities trading in Europe, thereby increasing the level of competition. After a comparison with Reg. NMS, the American counterpart to MiFID, several conclusions pointed towards a lack in efficiency of MiFID. Clearly, MiFID is still in the introduction phase, evidenced by the immense investments that have taken place in recent years, in order for stakeholders to be MiFID-compliant. One reason why MiFID seems less efficient than Reg. NMS, is due to the enormous scope that it covers, primarily within Best Execution requirements. Reg. NMS covers only “Price”, whereas MiFID covers five additional parameters. From the empirical analysis, conclusions point towards a greater fragmentation of the European markets, resulting in higher market efficiency on behalf of a decrease in trans-parency, as negative correlation between these dynamics exists. The new opportunities that have arisen in the light of MiFID, has definitely benefitted the Danish institutional investor, through both cost reductions, easier access to foreign shares for the purpose of differentiating portfolios through new venues, greater investor protection through client classification etc. Many aspects could be taken into consideration, when discussing the future development of MiFID. Efficiency within data transferring could be one main area, which MiFID could improve, e.g. by adopting a system, similar to the American Consolidated Tape

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2010
Number of pages121