5.III.3.2.2 Price improvements for all types of clients

The second change is that MiFID II permits price improvements for all types of clients, including retail. MiFID I restricted price improvements for retail clients. During the MiFID I review, CESR questioned whether retail clients should also be able to obtain price improvements. A majority of respondents to the CESR consultation noted that removing price improvement restrictions for orders up to retail size could enhance retail participation and best execution.1 However, CESR noted that this would make SI quotes less meaningful and would potentially lead to unequal treatment of retail clients.2 CESR recommended the Commission to consider whether the MiFID I price improvement restrictions for retail clients were still adequate.

The Commission’s MiFID II proposal included the possibility of price improvements for retail investors.3 This reflected the argument of enhancing retail participation and best execution for retail trades, albeit at the cost of less meaningful quotes. The European Parliament and Council also supported price improvements for retail clients.4 This position is evident in the final MiFID II text (see paragraph above).