Purpose and the Best Execution Obligation
The purpose of this document is to set out a summary of how Alpha Bank London Ltd (ABL) ensures Best Execution when executing client deals. Please ensure that you read this document so that you have an understanding of how we will execute any transactions.
Under the Markets in Financial Instruments Directive II (“MiFID 2”) Best Execution rules, as implemented in the FCA’s Conduct of Business Sourcebook, ABL is required to take all reasonable steps to obtain the best possible result for their clients when executing orders. This Best Execution Policy (‘the policy’) sets out ABL’s approach and requirements.
For the purposes of this Policy and in relation to the best execution rules more generally, the term “client order” should be understood to mean all orders in financial instruments, whether they are executed directly in the market or transmitted to another firm to execute on ABLs behalf that are conducted on behalf of a client.
ABL is committed to obtaining the best possible result for its clients when executing client orders, this will be achieved through a consistent order execution process. This process will be reviewed on a regular basis.
Clients are provided with information in respect of this policy in ABLs Terms of Business (a copy of which is available on our website at www.AlphabankLondon.co.uk), and accordingly clients consent to:
Scope and application
This policy will apply to all retail and professional clients of ABL who carry out investment transactions in financial instruments covered by MiFID 2 regulation on an execution only basis.
Order Execution Considerations
ABL will organise, manage and oversee the placement and execution of client deals in accordance with the following operating principles and in particular to ensure that:
ABL will also take into account:
For other occasions where the bank does not follow its order execution process because it has decided that Best Execution is achieved through other means, the decision process is documented and checked after execution, examples where the bank may not follow its order execution process include;
– Specific client instructions to place an order on a particular venue.
– No availability of a security through a particular broker.
– Lack of access/availability to a particular broker/venue.
ABL distinguish between three types of products:
When in a specific case it is apparent that it is possible to achieve Best Execution in a trading venue that the Bank does not regularly use, the Bank will at its discretion use such a trading venue for the execution of the specific order only and document the reasons for this. In the case where the execution of the order is only possible through one trading venue, it is deemed that Best Execution is achieved with the execution of that order in that venue.
Custodians are used to settle transactions and hold assets on behalf of ABL, the use of custodians allows ABL to settle deals and hold assets in European and US markets, settlement is usually performed on a delivery, or receipt versus payment basis.
Best Execution Factors
ABL notes and adheres to the Best Execution factors which are defined in Annex 1 Section C of the MIFID 2 Directive.
In accordance with these ABL is obliged to seek the best possible result for its client in relation to each trade. What constitutes the best possible result however may vary depending on the situation; consequently, this may not always ensure obtaining the best price or lowest cost. The firm is therefore required to consider and assess the relative importance of the relevant ‘execution factors’ in respect of each class of financial instrument in which it trades. When determining a venue or counterparty to place an order with ABL will consider the following best execution factors in order to achieve the overall best result:
Other considerations will include the following:
Transmission of Orders (Direct and Indirect Execution)
The nature of the best execution obligations differs depending on whether the Firm is executing orders directly, or whether these orders are being transmitted to third parties (i.e. custodians) for execution.
Direct execution includes situations where the Firm interacts directly with other counterparties to the trade, without going through a broker, and in addition covers situations where the Firm uses its own membership of a Trading Venue, or otherwise places an order directly with an Execution Venue in order to execute the trade.
Indirect execution refers to the practice of transmitting orders to brokers, for which the broker is then responsible for execution. These orders may be transmitted to the custodian by a variety of methods, including by telephone, Bloomberg chat, email and electronic order entry.
ABL is committed to a prompt and fair treatment of all client orders.
ABL is required under MIFID 2 to promptly inform retail clients of any material difficulties that would prevent ABL from properly carrying out their order upon becoming aware of such difficulty. Whilst this obligation only applies to retail clients ABL will endeavour to similarly inform professional clients on a best-efforts basis.
Aggregation of Client Orders
ABL may aggregate client orders with orders of another client or clients where it is determined that the aggregation of such orders and transactions will not work to the disadvantage of any client whose order is being aggregated. Alternatively, should it be advantageous to the clients concerned ABL may in this case aggregate client order to achieve the best overall result.
In the case of IPO’s, or primary offers, orders may be aggregated in order to apply for an allocation which will then be distributed appropriately to clients.
Specific Client Instructions
Should ABL receive specific instruction from a client for an order or part of that order, including to execute on a particular execution venue, that may prevent ABL from obtaining the best possible result from the execution of that order ABL will follow the clients request even if it may be in contradiction of ABL’s Best Execution process.
There may be circumstance which are beyond ABL’s control that impact on ABLs ability to provide Best Execution. Should these arise for any client order ABL will attempt to deliver the best possible result, ABL follows a consistent process as defined in their Order Execution Policy any events that result in ABL not following this process will be documented.
Commissions & Charges
Commission and any applicable charges are detailed in the ABL tariff which is reviewed annually and sent to clients. ABL will charge clients appropriate commission as detailed in the tariff. Any commission from the choice of brokers will not be passed on to clients, however costs such as exchange fee’s which are inherent to the product and dependent on choice of broker will be passed on.
Monitoring & Execution Methodology
ABL will monitor and access the effectiveness of its execution policy and its execution arrangements on a regular basis, at least annually and any material changes will be approved by its governance committee, and we will notify you of any material changes
ABL will also ensure that it monitors the effectiveness of its order execution arrangements and meets the requirements.
Last reviewed and updated