Buy and sell-side disagree on best execution

BuyingFulfilling clients orders is the key to best execution in the eyes of sell-side firms, but the buy-side only cares about price, according to a survey by financial consultancy GreySpark Partners.

Two-thirds of buy-side firms said price indicates best execution while 69% of sell-side companies said meeting client orders according to instructions was the best indicator. The sell-side also identified speed of execution as an important aspect of best execution.

The third group in the survey, technology providers, said gaining access to liquidity is the key to best execution.

Frederic Ponzo, managing partner at GreySpark, said the buy-side focuses on price because it has a direct impact on profits. These firms are less interested in the overall cost of transactions because this is passed on to the fund clients, although he noted that high transaction costs ultimately impact fund performance.

©2011 funds europe