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“Know Your Broker to Achieve BestEx”

Bill Stephenson, CEO of Urvin.Compliance, explains how standardization and transparency will enhance the best execution process.

View original article on TabbForum HERE


Anyone who has worked on a trading desk understands how important it is to have a consistent process if they want to preserve or generate alpha for their clients. For investment managers, part of that process is understanding how brokers handle orders and manage the myriad of decisions they make on behalf of clients to deliver best execution.  My partner, Dave Lauer, and I have spent the better part of the last two years speaking with investment managers about the best way to manage the broker review and communication process, and how it can be improved.  We call it Know Your Broker (KYB), and we believe it is the most important and perhaps least developed component of best execution. 

Currently, the expectation of investment managers relates not only to execution quality but also to the appropriateness of execution arrangements and broker policies. A proper review of these arrangements can be time-consuming and resource-intensive. The onus is placed on investment managers to review the full lifecycle and outcomes of trade execution, in addition to understanding the policies and procedures of each broker with which they trade. This expectation is not just for a point-in-time either, investment managers must have a process in place for doing these reviews on a regular basis.

KYB can create a significant workflow management challenge because an investment manager’s best execution policy should include a process for gathering, processing, interpreting, and collaborating on each broker’s policies and procedures. It is also incumbent upon each investment manager to determine whether a broker’s policies and procedures align with their own firm’s objectives for clients. This requires an investment manager to have its own clearly defined perspective on best execution as well as a strong sense of what is or is not appropriate given the circumstances.

The fragmentation of liquidity and the need for many trading partners and venues has complicated this process. Therefore, it has become increasingly difficult for investment managers to comply with each regulatory regime and to really understand how each broker operates.  Dave and I believe that KYB expectations will continue to be a hot button item as asset owners, fund boards, and regulators increase their demand for transparency and accountability in the investment process.  A simple start is through the standardization of information that asset managers require of their brokers to create a base level of transparency.  Recently, Dave and I have collaborated with a team of industry leaders to devise standard questionnaires for Europe and the U.S. that should be a catalyst for engaging conversations around best practices.  What we have found is that there are so many areas that investment managers care about and there are also a lot of topics where brokers want to be asked about because they feel as though their response would differentiate them relative to their competitors.  Some of the areas of focus that I think are important are related to audit, venue selection, conflicts of interest, information leakage, risk controls, and surveillance. 

To read more about the 2021 questionnaires or to obtain a copy, visit here.

As one broker recently stated to me, they receive hundreds of questionnaires from clients each year, so standardization would make their life easier since every client can ask the same question but in different ways.  The panacea would be standard questions in a centralized platform instead of receiving spreadsheets, emails, or via other non-secure questionnaires; all with different formats.   Enter, the PLIA Platform by Urvin.Compliance.  PLIA is an end-to-end platform supporting all the important KYB activities performed by best execution committee members, heads of trading, and trading compliance officers.  There is a huge opportunity here to de-risk some of the compliance challenges related to the best execution process and we believe PLIA is well-positioned to be a solution that can be utilized with minimal onboarding effort.


About Plia

Plia is a highly secure platform that allows brokers to share important information about their trading practices, policies, and procedures with key clients. The centralized management of questions and responses streamlines this communication to ensure brokers remain in sync with internal objectives, regulatory obligations, and client expectations.

Plia can support global markets and multiple asset classes. Asset managers can leverage existing standardized questionnaires or create their own from a large selection of questions in the Plia database. With over 400 brokers having utilized the Plia platform in the past six years, Plia has a significant network spanning almost all markets.

For more information on Plia, visit or email us at

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