|Execution of orders on behalf of clients (MiFID definitions)|
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'Execution of orders on behalf of clients' means acting to conclude agreements to buy or sell one or more financial instruments on behalf of clients and includes the conclusion of agreements to sell financial instruments issued by an investment firm or a credit institution at the moment of their issuance (Article 4(1)(5) of MiFID II Directive).
Execution of orders on behalf of clients is included in the Section A (Investment services and activities) of the MiFID II Annex I point 2.
A specific form of execution of orders on behalf of client is a matched principal trading.
It has been underlined by the the UK Financial Conduct Authority (Markets in Financial Instruments Directive II Implementation – Consultation Paper I (CP15/43), December 2015, CP15/43, p. 262) "If a firm executes client orders by standing between clients on a matched principal basis (back-to-back trading), it is both dealing on own account and executing orders on behalf of clients".
Another important observation on the regulatory scope of the "execution of orders on behalf of clients" has been made by the European Banking Authority (EBA) in theReport on Investment Firms, Response to the Commission's Call for Advice of December 2014 (EBA/Op/2015/20, p. 18).
EBA noted that "the combination of MiFID investment services for which an authorisation is necessary and which is required in order to carry out certain activities differs between Member States. In most Members States, an authorisation to exercise reception and transmission of orders (MiFID A1) is mandatory for the execution of orders (MiFID A2), but there are exceptions.
MiFID II, Article 4(1)(5), Annex I Section A2
|Last Updated on Thursday, 28 June 2018 22:26|