Best execution and order handling policy

This Best Execution and Order Handling Policy (the “Policy”) has been drafted in line with the Conduct of Business Rulebook (the “Rulebook”). The Policy outlines the execution arrangements that have been established and implemented by the Company to ensure that the best possible results are obtained for its Client orders.

 

The Best Execution Policy is to be applied by the Company when providing the following investment services (the “Services”):

 

• Execution of orders on behalf of other persons; and
• Reception and Transmission of Orders.

 

Furthermore, the Policy outlines procedure and arrangements implemented by the Company which provide for the prompt, fair and expeditious execution of Client orders, relative to other Client orders or the trading interests of the Company. The Policy also provides for the fair allocation of aggregated orders and transaction, including how the volume and price of orders determines allocations and the treatment of partial executions.

 

Where the Company aggregates an order with one or more orders of other Client orders and the aggregated order is partially executed, it shall allocate the related trades in accordance with this Policy.

Best execution factors

 

Best execution factors are to be viewed holistically, considering both quantitative and qualitative factors on a case-by-case basis. The relative importance of the execution factors is determined by using industry practice and experience, expertise and the best judgement in light of all the available market information and resources. The prevalent aim is the attainment of prompt, fair and expeditious execution of trades. This should apply to all types of financial instrument dealt. The Company shall take all sufficient steps to obtain, when executing orders, the best possible result that the company can reasonably be expected to achieve for its Clients. The following factors (“Best Execution Factors”) shall be considered:

 

• Price;
• Costs;
• Speed;
• Likelihood of execution and settlement;
• Size;
• Nature of transaction; and
• Any other consideration relevant to the execution of the order.

 

The Best Execution Policy shall apply equally for each class of financial instrument, and for each order type.

 

When executing Client orders the Company shall take into account the following criteria for determining the relative importance of the Best Execution Factors:

 

• The characteristics of the Client, including the categorisation of the Client as Retail or Professional Client;
• The characteristics of the Client order, including, where applicable, where the order involves a securities financing transaction;
• The characteristics of the Financial Instruments that are the subject of that order; and
• The characteristics of the execution venues to which that order can be directed.

 

Execution of orders in OTC products

 

The Company shall, when executing orders or taking a decision to deal in OTC products, including bespoke products, check the fairness of the price proposed to the Client, by gathering market data used in the estimation of the price of such product and, where possible, by comparing with similar or comparable products.

 

Specific client instructions

 

Notwithstanding the Best Execution Factors as defined above, whenever there is a specific instruction from the Client, the Company shall execute the order following the specific instruction. The Company shall be deemed to have satisfied its obligation in line with the Best Execution Factors as defined above, to take all reasonable steps to obtain the best possible result for a Client to the extent that it executes an order or a specific aspect of the order following specific instructions from a Client relating to the order or the specific aspect of the order.

 

Provided that the Company shall, in good time prior to the provision of its Services, provide a Retail Client with a clear and prominent warning that any specific instructions from a Client may prevent the Company from taking the steps as defined under this Policy to obtain the best possible result for the execution of those orders in respect of the elements covered by those instructions. This being said, the Client giving specific instructions which cover one aspect of the order should not be treated as releasing the Company from its best execution obligations in respect of any other aspects of the Client order that are not covered by such instructions.

 

Where the Company executes an order on behalf of a Retail Client, the best possible result shall be determined in terms of the total consideration, representing the price of the Financial Instrument and the costs relating to execution, which shall include expenses incurred by the Client which are directly related to the execution of the order, including Execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.

 

For the purposes of delivering the best possible result in accordance with the Best Execution Factors as defined above, where there is more than one competing venue to execute an order for a Financial Instrument, in order to assess and compare the results for the Client that would be achieved by executing the order on each of the Execution venues listed in this Policy, the Company’s own commissions and costs for executing the order on each of the eligible Execution venues shall be taken into account in that assessment.

Selection of execution venues by regulated persons

 

The Company shall not receive any remuneration, discount or non-monetary benefit for routing Client orders to a particular Trading Venue or Execution venue which would be in breach of its conflicts of interest and inducements requirements.

 

The Company shall not structure or charge its commission in such a way as to discriminate unfairly between Execution venues. For the avoidance of doubt, the Company shall be considered to be structuring or charging commissions in a way which discriminates unfairly between Execution venues or entities if it charges a different commission or spread to clients for execution or transmission on different execution venues/entities and that difference does not reflect the true difference in the cost for the Company.

 

For indicative purposes the Company maintains the following execution venues or other entities to whom it transmits orders for execution.

 

Locally listed financial instruments

The Company does not execute Client orders directly on local stock exchanges. Transactions in local listed securities are executed by third-party brokers. Kindly refer to Appendix I for further information.

 

Foreign listed financial instruments

The Company does not execute Client orders directly on foreign stock exchanges. Transactions in foreign listed securities are executed by third-party brokers. Kindly refer to Appendix I for further information.

 

Choosing an execution venue or entity

 

In selecting an execution venue or entity with whom to transmit orders to, the Company will consider price, cost of executing, liquidity available for the instruments being traded, the speed of execution, reliability, likelihood of execution and settlement, continuity of trading, creditworthiness of the venue and quality of any related clearing and settlement facilities. The selected execution venues and any alternatives available will be assessed on a regular basis.

 

When determining whether an entity, for example a broker, is qualified to provide services to its Clients, the Company considers, inter alia, the following relevant factors:

 

• Confidentiality of trading activity;
• Reputation – financial strength and stability of the broker;
• Broker’s ability to commit capital;
• Likelihood of execution – accuracy, clearance and error/dispute resolution;
• The quality and efficiency of the settlement process post-execution;
• Quality of Fixed Income and derivatives offerings;
• Market intelligence regarding trading activity;
• Capacity to execute at the best price;
• Overall costs of trades including commissions, mark-ups, mark-downs and/or spreads; and
• Speed of execution.

 

Choosing a single execution venue or an entity for execution

 

The Company may specify a single execution or venue or a single entity with which it transmits orders for execution, where it:

 

• Is able to show that this allows it to obtain the best possible results for the Clients on a consistent basis; and
• Can reasonably expect that the selected execution venue or entity will enable the Company to obtain results for each Client that are at least as good as the results that it could reasonably expect from using alternative execution venues or entities. The reasonable expectations are to be established with reference to relevant published data and other internal analysis conducted by the Company.

 

Alternative measures

 

Due to system failures or exceptional market conditions it may be necessary to transmit an order without observing all principles of this Policy. Nonetheless, in such cases, the Company will strive to achieve the best possible result for the Client.

Order handling

 

The following conditions shall be satisfied by the Company when carrying out client orders, to ensure that it provides prompt, fair and expeditious execution of Client orders, relative to other Client orders or the trading interests of the Company:

 

• Ensure that orders executed on behalf of Clients are promptly and accurately recorded and allocated;
• Carry out otherwise comparable Client orders promptly and sequentially in accordance with the time of their reception by the Company, unless the characteristics of the order or prevailing market conditions make it impracticable, or the interests of the Client require otherwise;
• Inform any Retail Clients about any material difficulty relevant to the proper carrying out of orders promptly upon becoming aware of the difficulty; and
• Take reasonable steps to ensure that Financial Instruments or sums of money, received in settlement of the executed order shall be promptly and correctly delivered to the account of the appropriate Client.[1]

 

The Company shall not treat Client orders as comparable if they are received through different media and if it would not be practicable for them to be treated sequentially.

 

The Company shall not carry out a Client order in aggregation with another Client order unless the following conditions are met:

 

• It must be unlikely that the aggregation of orders and transactions will work overall to the disadvantage of a Client whose order is to be aggregated; and
• It must be disclosed to each Client whose order is to be aggregated that the effect of aggregation may work to its disadvantage in relation to a particular order.

 

[1] This requirement shall apply where the Company is responsible for overseeing or arranging the settlement of an executed order.

 

Limit orders

 

In the case of a Client limit order in respect of shares admitted to trading on a Regulated Market or traded on a Trading Venue which are not immediately executed under prevailing market conditions, the Company shall, unless instructed otherwise by the Client, take measures to facilitate the earliest possible execution of that order by making public immediately that Client limit order in a manner which is easily accessible to other market participants.

 

A Client limit order in respect of shares admitted to trading on a Regulated Market or traded on a Trading Venue which have not been immediately executed under prevailing market conditions shall be considered available to the public when the Company has submitted the order for execution to a Regulated Market or Multilateral Trading Facility (“MTF”).

[1] This requirement shall apply where the Company is responsible for overseeing or arranging the settlement of an executed order.

Best execution reporting

 

Under the guidance of MiFID II’s RTS 28, the Company is required to summarise and make public on an annual basis, for each class of financial instruments, the top five Execution Venues in terms of trading volumes per class of financial instruments in the preceding year and information on the quality of execution obtained. Links to this data will be published on the Company’s website on or before the 30^th April following the end of the period to which the report relates, and will be kept in the public domain for a minimum of two years. Separate reports have to be made depending on whether the Clients were Professional Client orders, Retail Client orders or Securities Financing Transactions.

 

The Company has to make a separation based on whether it executes the order directly and/or when it transmits the order for execution to another investment firm. In cases where the Company provides both services, the information will be published on two separate reports, one for order execution and one for order transmission e.g. to a broker.

 

The Company must also publish a summary of the analysis and conclusions drawn from its detailed monitoring of the quality of execution obtained on the Execution Venues where the Client orders were executed over the previous year.

 

The summary will also include the following information:

 

• An explanation of the relative importance given the execution factors of price, costs, speed, likelihood of execution or any other consideration including qualitative factors when assessing the quality of execution;
• A description of any close links, conflicts of interests, and common ownerships with respect to any execution venues used to execute orders;
• A description of any specific arrangements with any execution venues regarding payments made or received, discounts, rebates or non-monetary benefits received;
• An explanation of the factors that led to a change in the list of execution venues in the Policy, if a change occurred;
• An explanation of how order execution differs according to client categorisation, where the Company treats categories of Clients differently and where it may affect the order execution arrangements;
• An explanation of how the Company has used any data or tools relating to the quality of execution, including any execution data published under MiFID II; and
• If applicable, explanation of how the Company has used output of a MiFID II Consolidated Tape Provider.

Disclosure and consent

 

The Company is required to provide appropriate information to Clients about this Policy. The information is to explain clearly, in sufficient detail and in a way which can be easily understood by the Clients, how orders will be executed by the Company for the Client.

 

In case where the Company executes orders on behalf of Clients, the Company is required to obtain two types of consents from Clients, namely:

 

• Prior consent to the Policy. This can be tacit, meaning that the Client can indicate consent by seeking to trade with the Company after having received appropriate information on the Policy in good time before the provision of the service.
• Prior express consent before executing orders outside a trading venue (i.e. regulated market, MTF or OTF). This means that the Client has to actively demonstrate consent, either by signature, email, web-page click etc. This may be in the form of a general agreement or in respect of individual transactions.

Responsibility, monitoring and review

 

The Company shall monitor the effectiveness of its order execution arrangements and ultimately, the Policy. To this effect, the Company shall monitor the execution quality of the entities identified in the Policy, in order to identify and, where appropriate, correct any deficiencies.

 

The Company shall also review, on at least an annual basis, the Policy and order execution arrangements. The Company shall also review the Policy and order execution arrangements, whenever a material change occurs that affects the Company’s ability to continue to obtain the best possible result of the execution of Client orders on a consistent basis using the venues included in this Policy. The Company shall assess whether a material change has occurred and shall consider making changes to the relative importance of the Best Execution Factors in meeting the overarching best execution requirement. Furthermore, when receiving and transmitting orders to third parties for execution, the Company shall assess whether a material change has occurred and shall consider making changes to the Execution venues or entities on which they place significant reliance in meeting the overarching best execution requirement.

Appendix I – List of local and foreign brokers used

 

Local brokers

• Bank of Valletta plc
• MeDirect Bank (Malta) plc

 

Foreign brokers

N/A

Order routing for foreign CISs

• Calastone
• Medirect