A European transaction-cost-analysis survey conducted by business school Edhec and commissioned by HSBC came up with figures in January that show just how unprepared many fund managers are to meet the requirements of the EU’s Markets in Financial Instruments Directive (Mifid) and the best execution requirements of their clients.
Among the more worrying results was the finding that only 50% of respondents bother with pre-trade analytics and only 40% take into account actual costs – that is, ex-post transaction costs – when reviewing broker performance. Such figures clearly undermine the claim of many fund managers to be doing anything meaningful to help achieve best execution for their clients and mean that firms might not be meeting their Mifid obligations.
One year from the implementation deadline, it is also astonishing to see that 26% of traditional asset managers still believe Mifid is not related to their business or are not even aware of the directive. The situation among hedge fund management firms is equally dire since 50% of respondents were mistaken as to the importance of Mifid for their firm.