Knowledge Base
Explain the order execution policy to clients
Why is Euronext Paris often preferred for executing orders on French shares?
Euronext Paris is preferred for its order book depth, which provides better liquidity and more efficient execution for large orders.
Which criterion is generally decisive for executing a small order on a highly liquid security?
For a small order on a highly liquid security, total cost is generally the decisive factor. This is specified in the AMF Position-Recommendation DOC-2014-07, which explains how the service provider arbitrates between the different criteria.
What must the professional do in the event of a significant change to the execution policy?
In the event of a significant change to the execution policy, the professional must inform clients of the changes. This obligation is mentioned within the framework of execution policy review procedures.
The order execution policy must be explained in the same way to all clients, whether professional or not.
The AMF Guide recommends adapting the explanation of the execution policy to the client's profile. For non-professional clients, a summary emphasizing total cost and main execution venues is sufficient, while for professional clients, a more detailed explanation may address technical aspects.
Execution policy review procedures are only applied in the event of a financial crisis.
Execution policy review procedures are applied regularly and not only in the event of a financial crisis. They ensure that the policy remains adapted to market conditions.
Articles governing the obligation to inform about the execution policy:
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The obligation to inform about the execution policy is governed by Article 27 paragraphs 4 and 5 of MiFID II and Article 66 of Delegated Regulation 2017/565. These articles form the legal basis for this obligation.
Categorize items by dragging them to the appropriate zones
Items to categorize:
Legal documents
Selection criteria
Special cases
The elements must be classified according to their role in the execution policy: legal documents (articles), selection criteria (factors), and specific adaptations (special cases).
According to Article 66(3) of the delegated regulation, what document must be provided to the client to explain the order execution policy?
Article 66(3) of the delegated regulation stipulates that the professional must provide a written document on a durable medium containing the information necessary for the client to understand how their orders will be processed. This document constitutes a contractual commitment that the client accepts by signing the general terms and conditions.