Order Execution Policy Summary
1. Our obligation
We are obliged to take all reasonable steps to obtain the best possible result for our clients whenever we execute orders for our clients or whenever we pass orders on to a third party to execute. This duty applies whether we execute orders for retail clients or for professional clients.
This document is a summary of our order execution policy.
2. What happens when you give us specific instructions?
We will always endeavour to comply with any specific instructions from you on how to execute your order. However, if we do not have access to a specific execution venue or we are unable to carry out your order for any other reason, we reserve the right to refuse the order.
Please note, any instructions from you on how we should execute an order may prevent us from taking the steps we have designed and implemented in our order execution policy to obtain the best possible result for the execution of orders, in respect of the elements covered by your instructions.
3. Execution factors
The FSA Rules set out a number of “execution factors” which we should consider when executing an order. These are:
- the price of the financial instrument;
- the costs related to execution;
- the speed of settlement;
- the likelihood of execution and settlement;
- the size of the order;
- the nature of the order; and
- any other consideration relevant to the execution of an order.
When we execute orders on behalf of a retail client, we will always determine the possible result for the client in terms of the financial instrument and the costs related to execution (i.e. the total consideration for the order). We will give precedence to the other execution factors only insofar as they are instrumental in delivering the best possible result in terms of the total consideration.
When we execute orders on behalf of a professional client, we will determine the relative importance of the execution factors taking into account a number of execution criteria, including the characteristics of the client, the nature of the financial instruments concerned and the markets on which the client’s orders can be executed. We will do this by using our commercial judgement and experience in the light of market information available at the time of the transaction. For example:
- In relation to orders executed on regulated markets and multilateral trading facilities in normal market size, price will normally be given priority;
- In relation to orders relating to exchange-traded instruments, market impact may be take into account where an order is large in size relative to normal market size;
- Speed of execution may be afforded greater importance when corporate action is in prospect (e.g. of a rights issue or takeover bid);
- The likelihood of settlement may be afforded greater importance in respect of an OTC derivative carrying ongoing counterparty risk; and
- In relation to orders which are substantially greater or smaller than the customary transaction size in the instrument concerned, the ability to execute an order of that size may be afforded greater importance.
In particular, where a particular financial instrument is illiquid, the likelihood of execution and settlement is likely to be the most important execution factor.
4. Execution venues
Our current focus is orders relating to equities. We are a full member of the London Stock Exchange and an AIM Nominated Broker.
At present the execution venues on which we place significant reliance when carrying out orders in equities are:
- London Stock Exchange;
- Toronto Stock Exchange;
- Australian Stock Exchange;
- New York Stock Exchange; and
However, depending on the circumstances of a particular order we may use other regulated markets or multilateral trading facilities or use a market maker to act as an execution venue for the purposes of the order.
If we trade in bonds, we may use the services of a bond market specialist firm to process the order.
If we trade in funds, we will generally transmit orders to the operator of the fund or its agent for execution, and the operator will therefore be the only "execution venue" that we will use. Where there is only one execution venue that we can use in practice to deal with your orders, we will have to use that venue regardless of the impact of other execution factors. Sometimes a fund may be available through a trading platform provided by a third party, which could be an alternative execution venue. However, our policy is generally not to use such platforms, as we do not believe that we would obtain a better price by doing so.
We may, from time to time, alter the range of financial instruments for which we provide execution services. We shall update this Order Execution Policy Summary accordingly to include information on our processes for obtaining best execution in relation to those instruments.
5. Off-exchange transactions
We may from time to time execute orders outside a “regulated market” or “multilateral trading facility” (as those terms are defined in the FSA Rules) if we believe that using alternative execution venues will result in the best possible result in respect of those orders.
6. Execution of orders by third parties
We may on occasion transmit client orders to another broker or dealer for execution. When we do so, we shall rely on their commercial judgement provided we are satisfied that their order execution arrangements are satisfactory. Alternatively we shall give specific instructions to the broker or dealer as to how the order shall be executed.
We are obliged to obtain your consent to our order execution policy and your prior express consent to our dealing outside regulated markets or multilateral trading facilities. By signing to our Terms and Conditions, you will be deemed to have given these consents.
8. Monitoring and review of our Order Execution Policy
We will monitor the effectiveness of our order execution arrangements to identify and, where appropriate, correct any deficiencies. Furthermore, we will conduct a full review of our order execution policy at least annually.
We shall notify you of any material changes to our order execution policy.