The manager of Norway’s sovereign wealth fund has urged the UK’s financial watchdog to carry on efforts to make market participants share more data, despite mandatory best execution reports having proved next to useless.
Norges Bank Investment Management (NBIM), which manages the Government Pension Fund Global, made the remarks in its response to the UK Financial Conduct Authority’s (FCA) consultation on changes to the UK Markets in Financial Instruments Directive’s (MiFID) conduct and organisational requirements.
NBIM wrote: “Regulation should require that timely and transparent market data is available to market participants, on a cost basis, and to allow for comparison of execution venues and assessment of order routing and execution outcomes.
“We recommend that the FCA continue to develop regulation to this effect,” Emil Framnes, NBIM’s global head of equity trading and transition, and Vegard Vik, special adviser at the organisation wrote in the letter.
Regarding best execution reporting, the FCA is planning to drop the obligation for execution venues to produce execution quality reports prescribed under RTS 27, as well as the duty for firms who execute orders to produce reports about their routing and execution outcomes under RTS 28.
The UK authority admitted in its consultation document that the intended audiences for the reports, including retail and wholesale market participants, did not in fact view the reports.
NBIM said it could confirm that the reports had not been important in its internal evaluation of trading cost, market quality and execution.
“Nonetheless, we concur with the FCA that the broad issue of access to market data is a key concern for market participants and in particular institutions such as NBIM that rely on high market quality,” Frames and Vik said.
“The FCA should not draw the conclusion that the failure of the specific reports to meet the objectives of the regulation is a reason to abandon these objectives,” the pair said.
MiFID is the body of laws regulating the buying, selling and organised trading of financial instruments.
The FCA and the treasury are mulling capital market reforms, and say they are looking into changes to the UK’s regulatory regime to ensure it is adapted to the structures of UK markets and maintains standards.
The consultation, which ended on Wednesday, was the first output of that work, the FCA said.