As I’m sat in a Lufthansa plane writing this, I will try to explain this question very logically. The Germans have a useful word – “Konsequent” (pronounced “Konsekvent”). If you are being Konsequent, you are following processes through to their logical
and inevitable conclusion.
MiFID requires investment firms to provide their clients with “best execution” for instruments in all asset classes (OK – let’s not get too detailed about FX for the moment).
The requirement for best execution is not geographically limited – it is required irrespective of where the instrument is ultimately traded.
Und so – if you buy Hong Kong equities for your client via a broker in Hong Kong, you will be picking that broker firm on the basis that it provides the best execution for Hong Kong equities. Not just because it is a member of the local exchange and can
actually execute your order, but because it provides best execution in Hong Kong equities. Not because that broker firm sends you all of its order flow for European equities in return for all of your order flow for Hong Kong equities, but because it provides
best execution in Hong Kong equities.
Und so – MiFID should have the end-effect not only of increasing competition between investment firms in the EEA, but it should also result in increasing the level of competition between investment firms in all markets internationally where the client is
in the EEA.
All of which, of course, is in the interest of investors.
And this is not just for equities, being MiFID-based – it is for all asset classes.
And all of this will have a much greater effect on global markets than RegNMS.
Does this sound Konsequent to you too?