This Best Execution Policy intends to provide the client with the information that the Firm believes they need in order to understand how the Firm will achieve the best possible results for the client in accordance with the Markets in Financial Instruments Directive 2014/65/EU (MiFID II). This policy is available via the Firm’s website and copies can also be provided upon request.
1.2 What is Best Execution?
Best execution is the requirement for firms to take ‘sufficient steps’ to provide the client with the best possible overall results on a consistent basis, and not just by providing the best price for an individual trade. To do this, the Firm will take into account execution factors such as price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration considered to be relevant to the execution of client’s order. The importance that is placed on these execution factors depends on the characteristics of the client, the order, the financial instrument and execution venue and are discussed further on in this policy.
The Firm has a duty to act honestly, fairly and professionally in executing client orders and the Firm will check the ‘fairness’ of the price proposed to the client. Where the order is transmitted to a third party, we will also seek to procure best execution.
1.3 Delivery of Best Execution
The Firm is responsible for executing client orders and as such is responsible for providing best execution for those orders.
1.4 Executing outside of a ‘trading venue’
Where there is a likelihood that orders will be placed outside of a trading venue, the Firm will first obtain the client’s express prior consent before proceeding with placing the order.
The Firm is authorised and regulated by the Financial Conduct Authority to offer clients the investment services and financial instruments mentioned in this policy.
This policy applies to Retail Clients and Professional Clients. In accordance with the Firm’s obligations to the client, it has notified the client of the client classification that applies to them. Once the client has accepted their client categorisation, they may not elect to be re-classified for the purposes of a particular transaction as their categorisation must be consistent across all transactions that they undertake.
2.1.1 Retail Clients
When dealing with Retail Clients, there is a regulatory assumption that the client can rely on the Firm to protect their interests, and the Firm will apply best execution to all trades that the client places through it, which will be assessed on the basis of ‘total consideration’. This is defined as the sum of the price and the costs incurred by the client and it represents the price of the financial instrument and all costs associated with the execution of client’s order. Costs are discussed further on in this policy.
188.8.131.52 Total Consideration
Best Execution will be evidenced by checking the pricing of instruments and the total transaction costs charged to clients. We will ensure this is in line with industry best practice.
2.1.2 Professional Clients
When dealing with Professional Clients, the Firm does not differentiate between an ‘elective’ Professional Client or a ‘per se’ Professional Client. The Firm will apply best execution where it has agency or contractual obligations to the client and also in circumstances where it can be demonstrated that the client is legitimately relying on the Firm in relation to the execution of their order.
The Firm has permission to carry out the following regulated activities:
Arranging Transactions in Investments
Making arrangements with a view to transactions in investments
Dealing in investments as agent
Dealing in investments as principal
Arranging safeguarding and administration of assets
This means that the Firm will be executing client orders in these instruments in accordance with this policy.
2.3 Financial Instruments
The following financial instruments are within the scope of this policy:
Certificates representing certain security
Commodity option and option on commodity future
Contract for Differences (excluding a spread bet and a rolling spot forex contract)
Future (excluding a commodity future and a rolling spot forex contract)
Option (excluding a commodity option and an option on a commodity future)
Rights to or interests in investments (Contractually Based Investments)
Rights to or interests in investments (Security)
Rolling spot forex contract
2.3.1 Contract for Differences
The Firm recognises that when closing out an open position, the client must close out the contract with the firm that sold it to them, even if there is a better price elsewhere. The price that is quoted for a CFD product will be based on the price of the relevant underlying instrument. To this, will be added our spread and fees so the price may differ from the exchange or market makers quotes on the underlying instrument, however we will disclose these costs to the client and seek out the best possible consideration on the underlying instrument in so much as the automated platform is able to.
2.4 Order Types
Regardless of the type of order that the client transacts with the Firm, best execution will apply. This will normally include order types commonly used on an execution venue as defined by MiFID.
Notwithstanding the intentions expressed above, the Firm does not undertake to provide “best execution” if the client falls within any of the following exemptions:
2.5.1 Eligible Counterparties
This policy does not apply to Eligible Counterparties and as such, the Firm will not owe best execution to transactions undertaken by clients classified as such.
2.5.2 Client Instructions
Where the client provides the Firm with a specific instruction in relation to their order, or any particular aspect of their order, including an instruction for their trade to be executed on a particular venue, the Firm will execute the order in accordance with the client’s instructions.
However, please note that in following the client instructions, the Firm will be deemed to have taken all reasonable steps to provide the best possible result for the client in respect of the order, or aspect of the order, covered by their specific instructions.
3. Best Execution Obligations
In executing client orders, or transmitting those orders, the Firm has a duty to act in the client’s best interests. In doing so, the Firm will endeavour to select venues where it has been able to demonstrate that it is able to deliver the best possible results for the client.
3.2 Execution Factors
In the absence of express instructions from the client, the Firm will exercise its own discretion in determining the factors that it needs to take into account for the purposes of providing the client with the best possible result.
These execution factors have been listed in order of priority and will include, but are not restricted to, the:
Price and costs of execution: The automated system will seek out the best overall outcome for the transaction in terms of the prices offered and by extension, our spread; and the total cost including fees/commissions charged as this is likely to be the most important execution factor to our clients.
Likelihood and speed of execution: Through the use of an automated trading platform, orders will be executed promptly with only rare opportunities for price slippage to occur. Due to the nature of the platform it is likely that speed of execution will be of high importance to our clients.
Size, nature and characteristic of the order: A typical transaction consists of a currency trade in one lot or less, hence will be highly liquid. Some venues will not cover all instruments therefore in some cases the nature of the order will determine the venue.
Characteristics of the client: Our client base will consist of Retail Clients although we will also deal with Professional Client and Eligible Counterparties. The Firm is aware that Retail Clients are afforded the highest protections and will place greater emphasis on any obligations owed to them.
Settled block trades, or positions larger than standard market size, may be crossed at a particular stage in the trading day or kept anonymous to the majority of market participants; unless otherwise directed.
The Firm does not charge different fees or costs depending on the venues used in order to ensure that costs are transparent and fully disclosed to the client. For some markets, clients may be liable to pay commission charges for opening and closing trades however these costs will be disclosed to the client where required.
The Firm will agree a charging structure with the client at the outset and the charging structure will not vary depending on the financial instrument being traded however clients should be aware that the spread can differ and that this is beyond our control. All implicit and explicit costs will be disclosed to the client.
3.3.1 Price Slippage
It is acknowledged that in rare circumstances, price slippage may occur despite the automated nature of the platform. There are several factors that may lead to price slippage, for example, market data latency, the speed of a client’s internet connection or high market volatility can cause this. Clients should be aware that when price slippage occurs it can be to their disadvantage/Where price slippage occurs, the Firm will ensure that the client is not disadvantaged.
3.4 Execution Venues
The Firm currently executes orders for rolling spot FX and CFDs. The Firm does not use a prime broker to execute orders. However, we will use an execution venue, Axis Capital Markets Limited, on which management has carried out extensive due diligence and whose performance we will continue to monitor to ensure our clients continue to receive excellent service primarily on the bases of prices offered, total consideration to the client, speed of execution and reliability of trading infrastructure.
When selecting the execution venue, the Firm took reasonable measures to ensure that it could obtain the best possible trading result for its clients, subject to the following factors:
In the markets in which the Firm operates, the platform will give clients visibility to prices that have been communicated to the Firm;
The platform will provide details of all tradable bids and offers (subject to the other matters referred to below);
Time availability of prices – in many markets there are lulls and spikes in trading as negotiations align trading interests at different times and different parts of the curve, accordingly the “last traded” price may not always be available or act as a reliable indicator of current price;
The Firm cannot allow clients to trade in a market unless it is reasonably satisfied that the client (via an agent or otherwise) is capable of settling the relevant trade;
Fees may vary between clients, based on agreements and levels of activity.
The execution venues used may evolve and the Firm reserves the right to include/exclude execution venues at its own discretion.
The Firm will monitor the effectiveness of its order execution arrangements and order execution policy in order to identify and, where appropriate, incorporate any amendments to procedures. The Firm will monitor the prices available in the wider market to make sure that its executing parties are offering fair prices and that they continue to provide the best results for clients.
The Firm will assess, on a regular basis, whether the execution venues included in the order execution policy provide for the best possible result for clients or whether it need to make changes to its arrangements.
The Firm will review its order execution arrangements and order execution policy at least annually or whenever a material change occurs that affects its ability to continue to obtain the best possible result for the execution of client orders on a consistent basis using the venues included in its order execution policy.
5. Material Changes
The Firm will notify clients of any material changes to its order execution arrangements or order execution policy as described above by posting the information on its website.
6. No Fiduciary Relationship
The Firm’s commitment to provide clients with “best execution” does not mean that it owes clients any fiduciary responsibilities over and above the specific regulatory obligations placed upon it or as may be otherwise contracted between the Firm and clients.
Clients remain responsible for their own investment decisions and the Firm will not be responsible for any market trading loss clients suffer as a result of those decisions.