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ACA launches solution to address investment management global regulatory requirements

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ACA has announced the launch of its new Best Execution solution, designed to help investment managers worldwide address regulatory requirements while reducing cost of ownership.

The firm writes that the solution streamlines and automates the process for gathering quantitative and qualitative data needed to support clients’ best execution analysis and reporting. Firms can utilise this technology to help meet global regulatory requirements for SEC Rules 110-1102, FINRA rule 5310, MSRB Rule G-18, and MiFID II compliance, the firm explains.

Best Execution is the latest module added to the firm’s ComplianceAlpha integrated RegTech platform for financial services firms. The offering is available as Software-as-a-Service (SaaS), that complements and integrates with ComplianceAlpha’s Employee Compliance and Market Abuse Surveillance solutions, as well as with third-party systems. This solution helps global firms facilitate the exchange of critical data and reduce the cost and time to complete required regulatory reports, ACA writes.

“The fiduciary duty of investment managers and advisers includes seeking the best execution when placing orders for clients,” says Patrick Conroy, Partner at ACA. “Regulators expect firms to demonstrate that they are consistently taking all sufficient steps to obtain the best possible results for their clients, including evaluating the execution performance of transactions. Our new ComplianceAlpha Best Execution solution helps clients meet these obligations by evaluating not only the cost of services received from all their financial counterparties and service providers, but also the quality of those services.”

“ACA’s Best Execution solution outlines a specific set of recommended tasks for conducting a compliant best execution report. In addition to performing a transaction cost analysis, it allows the firm to rank brokers on responsiveness, breadth of services, and other factors,” says Jordan Schwartz, Partner at ACA. “These qualitative capabilities are a differentiator for ACA enabling clients to quickly identify potential conflicts of interest and flag related records for investigation. Integration with other ComplianceAlpha modules, like Market Abuse Surveillance, facilitates the exchange of data and implementation.”

The best execution regulatory framework builds on existing global best execution regulations, including Markets in Financial Instruments Directive II (MiFID II), which states that investment firms must take all sufficient steps to obtain the best possible result for their clients when executing a client order, providing full disclosure and transparency items including price, transaction costs, speed of execution, likelihood of execution, and trading venue selection.

Best Execution regulatory requirements:

In December 2022, the SEC proposed Regulation Best Execution, establishing a regulatory framework for brokers, dealers, government securities brokers, government securities dealers, and municipal securities dealers. The regulation includes a need for firms to assess the execution quality of their customer orders at least quarterly, with policies and procedures that describe how they comply with the best interest standard.

While the UK no longer requires regulated firms to prepare certain best execution reports (Relevant Technical Standard (RTS) 27 relating to venues and RTS 28 for firms), the regulatory obligations to seek best execution for clients remain and form a central part of Treating Customers Fairly. The EU also deprioritised supervisory actions on non-publication of RTS 27, though the RTS 28 obligation for EU firms remains in place.

Chief Product Officer at ACA Group, Annie Morris says: “With the launch of ACA’s Best Execution solution, we reaffirm our dedication to meeting our clients’ needs by streamlining the review of trade execution quality and ensuring regulatory compliance. By integrating quantitative and qualitative data, we empower our clients to make informed decisions, evaluate broker performance, and fulfill their fiduciary duty diligently.”

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