Knowledge Base
Describe the best intermediary selection policy
Which regulatory documents govern the intermediary selection policy? Select all relevant answers.
The intermediary selection policy is governed by several regulatory documents. Article 65 of Delegated Regulation 2017/565 and Articles 321-114 et seq. of the AMF General Regulation are essential. Additionally, RTS 27 concerns execution quality reports and RTS 28 concerns the annual publication of information on the intermediaries used.
Which intermediary selection criterion is primarily assessed by analyzing spreads between requested and actually obtained prices?
The quality of execution prices criterion is assessed by analyzing the spreads between requested and actually obtained prices on a representative sample of transactions. This analysis measures the intermediary's performance in terms of prices obtained for the client, as stipulated in Article 65 of Delegated Regulation 2017/565.
Which elements are included in the qualitative assessment of intermediaries? Select all relevant answers.
The qualitative assessment of intermediaries includes several elements. The provider verifies that intermediaries are subject to best execution obligations, assesses their financial soundness, market reputation, quality of technological infrastructure, and reliability of settlement-delivery procedures. These criteria are essential for ensuring quality throughout the transmission chain, as specified by the AMF General Regulation.
What annual obligation is required by RTS 28 regarding intermediaries?
RTS 28 requires the provider to annually publish information on the top five intermediaries used, ranked by transaction volumes for each category of instruments. This publication enables clients to evaluate the relevance of the choices made and forms an integral part of the selection policy description.
The initial due diligence process includes only the verification of the intermediary's authorization and regulatory supervision.
The initial due diligence process is more comprehensive than simply verifying authorization and regulatory supervision. It also includes reviewing the intermediary's best execution policy, analyzing its execution quality reports in accordance with RTS 27, and verifying the adequacy of its capabilities with identified needs. This phase is crucial for the intermediary's inclusion on the approved counterparties list, as stipulated by the AMF General Regulation.
The annual review only serves to confirm the retention of intermediaries on the list, without the option to remove them.
The annual review is not limited to confirming the retention of intermediaries. It also allows for the removal of an intermediary if its performance no longer meets the criteria. This assessment is crucial for maintaining the quality of the selection policy, as stipulated by the AMF General Regulation.
Quantitative indicators for periodic monitoring:
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The quantitative indicators used for periodic monitoring include order rejection rates, average execution delays, and price spreads compared to market conditions. These indicators enable regular assessment of the selection policy's effectiveness and the execution quality obtained, in compliance with the AMF General Regulation.
Categorize items by dragging them to the appropriate zones
Items to categorize:
Quantitative criteria
Qualitative criteria
Quantitative criteria include measurable indicators such as order rejection rates and average execution delays. Qualitative criteria concern subjectively assessed aspects such as market reputation and financial soundness. This distinction is essential for a comprehensive assessment of intermediaries, as stipulated by the AMF General Regulation.