Achieving Market Integration: Best Execution, Fragmentation and the Free Flow of Capital
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Table of contents
- Cover
- Contentsvii
- Acknowledgementsxi
- Prefacexii
- Forewordxiv
- Chapter 1. Introduction1
- Part I: Best Execution5
- What is best execution - an introduction to the concept5
- Chapter 2. Is this Regulation Necessary?7
- 2.1 Why should best execution be regulated?7
- 2.2 State or self-regulation?9
- 2.3 The state as provider of standardisation11
- Conclusion12
- Chapter 3. Fundamental Issues14
- 3.1 To whom should the standards apply?14
- 3.2 Assessing execution15
- 3.3 The approach: conceptualŽ or prescriptiveŽ?15
- 3.4 The scope: single or multiple markets?17
- 3.5 The details: what factors constitute best execution?17
- 3.6 Price and non-price dimensions18
- 3.7 Speed of execution19
- 3.8 Certainty of execution19
- 3.9 Market impact20
- 3.10 Non-standard settlement21
- 3.11 Counterparty risk limits21
- 3.12 Other issues23
- Conclusion30
- Chapter 4. Putting it Together: Elements of a Sound Best Execution Policy31
- 4.1 Elements of an effective best execution policy31
- 4.2 The enforceability/flexibility dilemma31
- 4.3 Enforcement: visibility and clarity32
- 4.4 Determining the benchmark33
- 4.5 Calculating the benchmark34
- Conclusion39
- Chapter 5. Comparing Approaches41
- 5.1 Overview41
- 5.2 Best execution in the US markets41
- 5.3 Best execution in the United Kingdom51
- 5.4 Introduction of a multiple exchange environment51
- 5.5 The relevant marketŽ condition52
- 5.6 Board Notice 54253
- 5.7 FSMA and the Conduct of Business Sourcebook53
- 5.8 The FSA’s statutory requirements57
- 5.9 European Union regulation59
- Summary63
- Conclusion64
- Chapter 6. A Legal Approach66
- 6.1 Fiduciary responsibility and the shingle theoryŽ66
- 6.2 Cases and decisions67
- 6.3 ICE securities69
- 6.4 Limitations70
- 6.5 Competition issues70
- Conclusion73
- Chapter 7. Technological Considerations74
- 7.1 The best execution process75
- Conclusion92
- Best Execution. Conclusions94
- Part II: Market Integration97
- Introduction97
- Chapter 8. Liquidity, Market Fragmentation and Price Formation99
- 8.1 What is liquidity?99
- 8.2 Liquidity begets liquidity100
- Conclusion105
- Chapter 9. Fragmentation and Concentration106
- 9.1 Concentration rules in Europe and the United States106
- 9.2 Alternative Trading Systems (ATSs)112
- Conclusion115
- Chapter 10. Clearing and Settlement116
- 10.1 The nature of clearing and settlement arrangements116
- Conclusion119
- Chapter 11. Old Solutions to New Problems120
- 11 .I The integration of the US markets120
- 11.2 Rules121
- 11.3 Pan-European markets126
- Conclusion128
- Chapter 12. Malting Integration Work: The European Case129
- 12.1 Treaty of Rome129
- 12.2 Constructing a market system132
- 12.3 Overcoming inertia - best execution as a necessary element of market integration134
- 12.4 Is a super-regulatoryŽ necessary?135
- Conclusion138
- Market Integration: Conclusions139
- Part III: Making Market Integration Work141
- Chapter 13. State vs Market - Who Regulates the Integrated Market?143
- Conclusion146
- Chapter 14. Conclusions147
- Appendix A. Selected Best Execution Terminology150
- Appendix B. Proposed Best Execution Policy151
- Further Reading153
- Selected Bibliography154
- Index157
Best execution, market integration, and other major financial market issues have traditionally been dealt with as separate matters requiring individual solutions. In Achieving Market Integration the author demonstrates the interrelated nature of these and other imperative problems, and sensibly reduces them to their common fundamental principles. Beginning with an in-depth examination of best execution in today's multiple-market environment, the book moves logically into an examination of market structure and the problems of achieving genuine integration. The book makes the case that order interaction is fundamental to addressing each of these issues, and develops a unified regulatory approach to achieve true market integration based on intermarket linkages and a cross-market best execution policy. This unique approach culminates in a coherent set of policy recommendations and an innovative framework for assessing the effectiveness of future policy proposals.
*The first book on this important subject for the finance community
*Explains the aims and proposes solutions to the difficulties of establishing a stock market that integrates the diverse national exchanges around Europe
*Provides a discussion point for those lobbying the European Commission on formulating regulation for an integrated European capital market
*The first book on this important subject for the finance community
*Explains the aims and proposes solutions to the difficulties of establishing a stock market that integrates the diverse national exchanges around Europe
*Provides a discussion point for those lobbying the European Commission on formulating regulation for an integrated European capital market