Order execution

Important information describing how we process orders

Order execution

1. Introduction

This document outlines our Order Execution Policy which details our obligation to You to obtain the best possible result (‘Best Execution’) when placing orders.

The following information is aimed at providing You with a general understanding of our typical dealing arrangements. These arrangements may vary for different categories of investment types and are described below.

In addition to the terms and conditions of the service we seek your consent for this Policy and it will apply each time you place an order instruction.

2. Transmission

We place all exchange traded orders (equities, investment trusts and exchange traded funds (ETFs) through Winterflood Business Services (WBS), they charge our Custodian for providing this service and they select the execution venues (from the factors detailed below) for where your orders are placed. The current venues for execution are detailed in Section 11.

For Unit Trusts and OEICs, they will generally be routed to the appropriate fund manager for execution at the next available valuation point for that particular fund.  Clients’ orders may be aggregated as described in section 7.

3. Best Execution Factors

When executing orders, unless otherwise specifically instructed, WBS will use price as the primary measure for achieving Best Execution. The following execution factors will be considered, and how these may be considered as part of the decision-making process in the context of the details below (listed in order or priority for a typical trade). Their importance will vary depending on the characteristics of the order received from the client.

4. Execution factors:

Price - Price will be determined with reference to the execution venues to which WBS connects and on which the security is traded. WBS use automatic execution technology which will source the best price from a range of retail service providers and market makers (see Section 11). Where an electronic price is not available the order will be dealt manually by WBS's dealing team.

Cost – for orders where brokerage or exchange fees are applicable, WBS will not seek to pass these on to you. For international orders, certain costs (e.g. foreign exchange ‘FX’) may be passed through to you within the price spread, but WBS deem this to still result in the best overall outcome and hence total consideration for you. Any relevant commission rates will have been agreed with the client in advance.

Likelihood of Execution and Settlement - Likelihood of execution is very high due to the relationships WBS has forged with its market maker and broker counterparties. Likelihood of settlement is difficult to assess pre-trade, but WBS monitors the settlement performance of each counterparty so there is a historical track record to base this decision on.

Size - The size of the trade in relation to the liquidity of the stock may have significant influence on the Best Execution process and is directly correlated to the market impact (implicit costs).

Nature - Consideration will be given to the liquidity of the stock on the order book at the relevant time. Execution may be heavily influenced by the level of on or off order book trading patterns in the stock. These factors plus the size of the order will determine the appropriate execution method. This may include the working of an order into the market place using an appropriate benchmark or immediate execution on an outright bid/offer price, for example.

Speed - The importance of speed of transactions will vary. For example, to reduce the implicit costs associated with market impact, an order might be worked over a day or more. Different order types and specific instructions may also have a bearing on the speed of execution.

Other Relevant Considerations – Careful consideration shall be given not just to each element in isolation, but also to the trade-off and interplay between these factors. For example, size against market impact or speed against price, any of which might also be influenced by a client’s specific instruction.

5. Order Types

The following exchange traded order types are available:

At Best Order - Deal immediately at the best available price for that size of order based on the execution venues available, without the client viewing the price in advance.

6. Specific Instruction

Where you give us a specific instruction as to the execution of an order, we will execute the order in accordance with those specific instructions and you should be aware that doing so may prevent us from applying this policy to achieve the best results.

Where your specific instructions relate to only part of the order, we will continue to apply our order execution policy to those aspects of the order not covered by those instructions.

7. Aggregation and Priority

For Unit Trusts and OEICs client orders may be aggregated with other client orders and bulked prior to executing with the fund manager.

For exchange traded orders, WBS may combine client orders with orders for the account of other clients, or for its own account (including in relation to fractional orders).  The aggregation of orders may operate on some occasions to a client’s (or its customers’) advantage and on some occasions to a client’s (or its customers’) disadvantage in relation to a particular order.  The decision to aggregate will be taken in WBS’s sole discretion and where orders have been aggregated they will be allocated to clients on a pro-rata basis in accordance with WBS’ order allocation policy.

Depending on price and the consideration received, the disaggregation of bulked proceeds may result in penny rounding differences which cannot be allocated at individual client level.

8. Charges, Dilution Levy or Exit Charges

For Unit Trust or OEIC orders fund managers may levy an initial charge on purchase orders and there is a risk that fund managers apply a "dilution levy" to the order. This normally results where there are sizeable buy or sell orders in the market. This is an extra charge placed on the transaction and will be applied proportionately to an order placed.

Should this occur it will be clearly detailed as a percentage of your order on your contract note.

Please note such levies are outside of the control of the Investment Provider or the Custodian.

9. Venues

For exchange traded orders, WBS may use one or more of the execution venues listed in Section 11 to enable it to obtain the best possible outcome on a consistent basis when executing an order on your behalf. WBS will regularly assess the execution venues available to ensure it is able to consistently obtain the best outcome for you.

10. Monitoring

We will monitor the effectiveness of our Order Execution Policy. We will notify you of any material changes where they are relevant to you. Any such changes will come into effect the next time that you trade using the service. If you wish to discuss the above or have any further questions, please contact us.

11. Order Venues and RSPs

Our current execution venues are as follows:

WBS use the following Retail Service Providers (Market Makers/Brokers):