Markets in Financial Instruments Directive (MiFID) Plans

On 1 November 2007 the European Union legislative act known as the Markets in Financial Instruments Directive, or MiFID, comes into effect. This directive, which is intended to foster integration and enhance the competitiveness of EU capital markets, will necessitate significant changes to the manner in which brokers operate in order to comply with its measures. Foremost among these is the requirement that brokers take all reasonable steps to obtain the best possible result in the execution of client orders, in other words, "best execution".

As the leader in providing optimized client executions, IB welcomes these changes. Since our pioneering introduction of SmartRouting^SM in 1999, IB clients have been assured of receiving the best possible executions through its ability to continuously evaluate changing market conditions and dynamically re-route all or parts of orders to achieve execution of each order at the best aggregate price.

SmartRouting^SM, is currently available for all US and certain European stocks and options that are multiply listed. We will enhance this system to include the remaining European markets subject to MiFID.

This enhancement will consider all attributes of a best execution including market price, costs, speed, size, likelihood of execution, settlement efficiency and order type availability. While MiFID compliance is not mandatory until November, IB will make the benefits of this enhanced SmartRouting^SM technology available earlier, as parts of the enhanced system are put into operation.