IOSCO has published a report looking at supervisory practices relating to incentives for order routing. It considers how different jurisdictions require firms to manage conflicts associated with routing orders and best execution. The report focuses on:
- monetary incentives paid or received by brokers to or from third parties;
- internalisation and use of affiliated venues that may give a broker commercial benefits; and
- provision of goods and services bundled with execution by brokers, such as research.
IOSCO consulted on its report last year, and most respondents agreed no further work is needed, not least because of the MiFID 2 reforms.