As part of the development of its Risk and Asset Management Research Centre, EDHEC Business School is to launch its fourth research chair, on MiFID and Best Execution.
A first steering committee meeting was organised in Paris on 18 September in order to formally launch the newly formed EDHEC MiFID and Best Execution Research Chair supported jointly by CACEIS, NYSE Euronext and SunGard.
The commitment of the three sponsors is to support an academic research programme over a three-year period so that the EDHEC Risk and Asset Management Research Centre can implement a long-term research strategy in this field. The themes of MiFID and Best Execution are thought to be among the most significant industry challenges for the near future, justifying the need for academic research to be carried out to support industry developments.
The MiFID directive is establishing a very open and competitive market for execution and other investment services by recognising new forms of execution venues, systematic internalisation and the end of the concentration obligation. Regulators have to ensure that new developments will not result in less efficient or transparent markets that could harm the end investor. Although the intentions of the Directive are clearly to protect the investor by introducing a number of significant new obligations for European investment firms, there may be concerns about the results one can expect from the rule.
The objective of this first steering committee meeting was to establish a provisional working plan for the three-year period and agree upon the research orientations for the first academic year. It was agreed that the focus for the first academic year would be on documenting the state of the art in Transaction Cost Analysis. As a second step, the research team will focus their efforts on a better understanding of the various components of those transaction costs, covering explicit and implicit costs, and document further the relative impact of frictions within order books. The Research Chair will focus at a later stage on the various market models and the emergence of new forms of negotiation and its impact on market fragmentation, while analysing the impact of this fragmentation on the overall execution cost structure.
“CACEIS’ decision to sponsor EDHEC Risk and Asset Management Research Centre’s programme focused on MiFID and best execution was motivated by our shared goal of gaining a comprehensive understanding of the new regulation’s effect on the fund industry. We are confident that the project’s conclusions will not only benefit the industry as a whole, but will also enable CACEIS to design a series of new products for our clients, which are fully adapted to current legislation,” says Rgine Besnier-Docet, global head of marketing and communications, CACEIS.
“As a global leader in software and processing solutions for financial services, it is vital for SunGard to identify at an early stage the major trends shaping the investment management arena and to stimulate and support research in these fields. The EDHEC Risk and Asset Management Research Centre – with a string of position papers, research papers and books published in the specific areas related to MiFID, TCA and Best Execution, a world class research program and a recognized brand within the European asset management industry – was a natural choice for SunGard for its first co-sponsored research chair in Europe,” says Elias Nechacby, CFA, vice president of business development for SunGards Asse Arena business.