A European Union regulator has published a review of 'best execution' supervisory practices under the Markets in Financial Instruments Directive.

The European Securities and Markets Authority (ESMA) has conducted a peer review of the efficacy with which national regulators supervise and enforce the parts of MiFID relating to investment firms’ obligations to provide best execution, or obtain the best possible result, for their clients when executing their orders.

ESMA found that the level of implementation of best execution provisions, as well as the "level of convergence of supervisory practices" (consistency) between regulators, was 'relatively low.'

In order to remedy this situation ESMA is calling for improvements such as:

• a prioritisation of best execution as a key conduct of business supervisory issue;
• the allocation of sufficient resources to best execution supervision; and
• a more proactive supervisory approach to monitoring compliance with best execution requirements, both desk-based and onsite inspections.

The review was conducted on the basis of information provided by 29 national regulators and complemented by on-site visits to the regulators in France, Liechtenstein, Luxembourg, Malta, Poland and Spain.

ESMA's chair berated them for their performance "falling short of ensuring that retail investors receive the best outcome when trading securities." He blamed them for not having the same ideas about how to enforce 'best execution', "lack of supervisory focus," which sounds like an accusation that they could not be bothered, insufficient resources devoted to the task and market structure problems.