Binary Capital Investment Management Limited (“BCIM”) executes orders in relation to financial instruments on behalf of its clients. There are two methods that it can use to execute those orders that are distinguished for the purposes of FCA Rules.
First, BCIM can execute the relevant transaction on behalf of the client directly on an exchange or other trading system. The exchange or trading system with which BCIM chooses to execute such a transaction is referred to in this policy as an “Execution Venue”.
Secondly, BCIM can place an order as agent with a third party (e.g. another broker or bank).
BCIM’ Core Best Execution Obligations
In accordance with FCA Rules, BCIM is required to take all sufficient steps to obtain the best possible result for its clients when executing orders for its clients. (i.e. to obtain best execution). In seeking to obtain best execution, BCIM is required:
To take all sufficient steps to obtain the best possible result for its clients, taking into account certain “execution factors” – price; costs; speed; likelihood of execution and settlement; size of the transaction; nature of the transaction; or any other consideration relevant to execution. Under BCIM’s policy, such other considerations can include (without limitation) the overall cost of the transaction or any costs for executing the order on an execution venue); timely execution availability of price improvement; the potential impact of the transaction on price; importance of retaining commercial confidentiality in relation to trading activities or intentions; liquidity of the market (which may make it difficult to execute an order); order information leakage; trading conflict; market conduct; market impact; venue liquidity and counterparty risk.
In order to comply with the overarching best execution requirement (above), BCIM will ensure that appropriate (execution) policies and/or arrangements are effectively implemented for the carrying out of all orders.
The detailed policy for order execution contained below will be reviewed regularly and clients will be informed of any material changes to the policy.
Best Execution Policy
This policy is intended, in as clear a way as possible to demonstrate how BCIM operates and provides best execution as often as is possible.
The decision of which venues is used for any one trade will be reached based on price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of an order. This decision may be influenced by BCIM’s own fees and commissions.
When executing an order BCIM will generally treat price as the highest priority for ensuring best execution. Only under exceptional circumstances would this not be the case.
In order to calculate the price BCIM will pay due attention to the ‘total consideration’. This is represented by the price of the financial instrument and the costs related to execution, which must include all 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.
When executing a client order, we will take into account the following criteria for determining the relative importance of the execution factors above:
1. the characteristics of the client including the categorisation of the client as retail or professional;
2. the characteristics of the client order;
3. the characteristics of financial instruments that are the subject of that order;
4. the characteristics of the execution venues to which that order can be directed
Selecting an Execution Venue
The following methodology will be used when selecting an execution venue for an Order.
Subject to proper consideration of the execution criteria and execution factors referred to above, we will choose where we believe we can trade to the best advantage for (or at no disadvantage to) you.
Specific Client Instructions
BCIM can take specific instructions from a client which may override this policy however BCIM may not induce any client to do so. If a client chooses to give specific instructions to BCIM then BCIM will attempt to provide best execution as far as is possible. However this may prevent BCIM from taking the steps that it has designed and implemented in its execution policy to obtain the best possible result for the execution of those orders in respect of the elements covered by those instructions.
BCIM may use one or more of the types of Execution Venue. BCIM may execute orders on behalf of clients directly on exchanges, multilateral trading facilities or organised trading facilities.
Placing Orders with Brokers / Banks
In choosing the Broker or Bank to place orders BCIM has taken care to select those Brokers/Banks that, in BCIM’s view, consistently provide a high quality execution service, taking account of the relevant execution factors for the relevant Instrument Class.
Where BCIM places an order with a Broker/Bank for execution, BCIM is not responsible for controlling or influencing the arrangements made by this third party relating to the execution of that order (e.g. BCIM does not control the Broker’s choice of execution venues, such as exchanges, multilateral trading facilities or organised trading facilities). BCIM is not required to duplicate the efforts of the Broker/Bank to whom an order is passed in ensuring the best possible result.
Direct Execution of Orders
In choosing the Execution Venues BCIM has taken care to select those Execution Venues that, in BCIM’s view, enable it to obtain on a consistent basis the best possible results for its clients.
The selection process takes into account such factors as liquidity, integrity of marketplace and price formation.
Choosing Between Order Placement and Direct Execution
BCIM will determine whether to place an order with a Broker/Bank or to execute an order directly on an Execution Venue according to the nature of the order and the market in which the relevant order is to be executed. In determining whether to place an order with a Broker/Bank or to execute directly, BCIM will have regard to the relative importance of the execution factors. In certain markets, it will only be possible to execute client orders by placing them with a Broker/Bank in the relevant market.
The factors affecting the choice of Execution Venue or Broker
In relation to an order, an Execution Venue or Broker/Bank will be selected as is appropriate in view of the size and nature of the relevant order. BCIM will select Execution Venues and Brokers/Banks based on their track records of achieving the best result in terms of the execution factors taking into account, in particular, the geographic and market coverage of the relevant Execution Venue or Broker/Bank.
Over-the counter trades
When executing orders or using a Broker to deal in financial instruments over-the-counter, BCIM will check that the price quoted is fair by taking into account market data, including comparing that price with similar instruments (where available). There may be counterparty risk when executing an order outside a trading venue. On request by the client, BCIM can provide additional information about the potential impact on the execution of orders when executing over-the-counter.
Monitoring and Reviewing this Policy
BCIM has an obligation to monitor the effectiveness of its order execution arrangements and this policy. This obligation has been incorporated into BCIM’s general compliance monitoring process and business procedures and policies.
BCIM assesses, on a regular basis, whether the execution venues listed above provide the best possible result for clients or whether it needs to make changes to its execution arrangements. The assessment takes into account the information on execution quality published by execution
venues and brokers in accordance with MiFID II. BCIM also conducts regular reviews through random sampling of transactions to ascertain whether the best possible result was obtained in respect of those transactions.
Review of Policy
At least annually, BCIM will review this policy and its execution arrangements. The review will focus on whether BCIM would obtain better results for its clients if it was to:
1. include additional or different Execution Venues or Brokers/Banks;
2. assign a different relative importance to the execution factors; or
3. modify the process by which Execution Brokers/Banks and Venues are selected
4. modify any other aspects of this policy and/or its execution arrangements.
BCIM will also review this policy and/or its execution arrangements whenever a material change occurs that could affect its ability to obtain the best possible result for the execution of its clients’ orders on a consistent basis, for example, a significant event that could impact the parameters of best execution such as the execution factors specified above.
Client Notification / Consent Requirements
BCIM has an obligation to provide its clients with appropriate information on this policy. Where BCIM executes orders on behalf of a client, it will also have an obligation to obtain the client’s consent to this policy. By accepting our terms of business, you consent to your transactions being executed in accordance with this policy.
Annual Publication of Top 5 Execution Venues
Each year BCIM will publish data on the top five Execution Venues and the top five Brokers/Banks BCIM has used during the previous year. The top five Execution Venues and Brokers/Banks will be based on trading volume [(i.e. the number of financial instruments traded times price for each transaction, cumulated for the year)] for each class of financial instrument for the preceding year.
BCIM will also publish an annual report on BCIM’s website providing a summary of the analysis and conclusions drawn from BCIM’s monitoring of the quality of execution obtained on the Execution Venues.