The Financial Commission today issued execution certification for St. Vincent & the Grenadines-based FX broker Fiber Markets. The new approval comes barely one week after the company joined FinaCom’s member roster, which is made up of online brokerages operating in FX, derivatives and cryptocurrency markets.
FinaCom’s assessment provides broker members with specific guidance regarding best execution requirements. Depending on a post-trade solution called ‘VerifyMyTrade,’ the commission introduces a package of rules and interpretations relating to the standards of conduct that brokers owe to their customers.
VerifyMyTrade provides price and execution analytics to retail focused OTC brokers that enable them to be more competitive while addressing regulatory requirements. It collates market reference data against which brokers’ price execution can be benchmarked.
The “value-added” service allows clients of the commission’s brokerage members to use its analysis tool to check whether their trades were fairly priced or not. The best execution considerations also cover the whole trade allocation process, in the aggregate, including the best asset price, lowest transaction costs, and reliable counterparties.
According to its latest annual report, the Financial Commission received a record of 1340 complaints in the fiscal year of 2020, and the amount it recovered for broker member customers more than doubled from a year earlier.
VerifyMyTrade, however, is not a dispute resolution committee like the Financial Commission, but instead it provides the technology to optimise the process for regulators to quickly assess cases. The service provides a certified email to disputing parties and the relevant watchdog in order to provide an independent view of the state of the market at a specific point in time.
“All interested parties can now view the execution audit results for members of the Financial Commission using VMT certifications by visiting our Members page or the profile pages of brokers listed in our Members section. Certified brokers will be highlighted with a unique badge as displayed below,” the Financial Commission said.
FinaCom’s rules are similar to the approach already taken by other regulators within ‘best practices’ frameworks. Overall, the requirements help avoid risks of regulatory arbitrage by brokerage firms, which subsequently result in legal uncertainty.
The approach could also be seen as a response to increasing transparency requirements which define the conduct of all market participants, including the need for brokers to prove best execution.
Best execution is also an important part of the Markets in Financial Instruments Directive II (MiFID II). Most of the debate in relation to best execution under MiFID II has focused on the requirements for firms to publish data on execution quality and to revise their relevant policies.