EDHEC, while recognising that the directive allows the conditions in which investment companies can operate on the regulated markets or over-the-counter to be harmonised, warns of the eventual adverse effects relating to the obligation of transparency for systematic internalisers and the obligation of best execution.

The authors of the report, Jean-René Giraud and Catherine D'Hondt, who are also co-authors of the recent publication MiFID: Convergence towards a Unified European Capital Markets Industry, find, in the case of the obligation imposed on systematic internalisers to maintain a public spread of prices, that it is prejudicial for this restriction to be removed for the least liquid securities. This provision will lead, in a certain number of cases, (small-caps on markets that are centrally organised at present), to a deterioration in the pre-trade transparency that is currently provided to investors.

In the same way, and in spite of its primary importance in protecting investors, it seems obvious that the best execution obligation has suffered from the desire to reach an impossible consensus and from lack of consistency on the objectives to be achieved. Firstly, the notion of best execution does not actually refer to any conceptual or technical reality either in the industry or in academia. Secondly, evaluation of the criteria and factors taken into account in order to show compliance is left in the hands of the investment companies themselves.

These circumstances may lead to an unjustified feeling of confidence on the part of investors, who will be led to believe by default that, since they are operating within a regulated framework, their intermediaries are bound to meet their obligations, even though nobody will be able to verify the situation in reality.

In order to make up for this deficiency, the authors propose an original model for evaluating execution performance based on an analysis of the whole universe of transactions carried out in comparable conditions. The EBEX (EDHEC Best Execution) model has been the subject of an academic publication in the Journal of Asset Management.