Effective as of January 2023
INTRODUCTION
The purpose of this document is to provide clients of Garrick and Crown with the arrangements that Garrick and Crown has in place to meet its order execution obligations to its clients as set out in Chapter 11.2A of the Conduct of Business Sourcebook (COBS) which applies the Markets in Financial Instruments Directive (MiFID II”) in addition to our policy.
PRODUCTS IN SCOPE
Products in scope of this policy are any financial instrument as defined within MiFID II and covers shares, bonds, unit trusts, structured products, as well as financial contracts, including derivatives, regardless of whether they are listed publicly or not. (see Annex 1 Section C Financial Instrument of MiFID II for full details)
Best Execution applies to all financial instruments within MiFID II regardless of whether they are traded on an exchange or not.
APPLICATION OF BEST EXECUTION – CLIENT CLASSIFICATIONS
Retail Clients
Garrick and Crown will always provide best execution to clients which have been categorised as retail clients, as such clients are deemed to be relying on Garrick and Crown to protect their interests. Therefore, best execution obligations will apply whenever Garrick and Crown executes orders for Retail clients, except where a specific instruction has been provided (See ‘Specific Instructions’ below)
Professional Clients
Garrick and Crown owes best execution obligations where a professional client is legitimately relying on Garrick and Crown to protect their interest. We would consider that our Professional clients will generally be relying on us for this purpose, but this will be assessed based on each specific transaction.
Examples of reliance on Garrick and Crown would be:
• Accepts an order executed on an order book of an Exchange; or
• Fulfils an order directly against its own trading book without recourse to an external party
Examples of orders where a client cannot rely on Garrick and Crown to protect their interests may include, where it is market practice for the client to request numerous quotes from a number of dealers prior to executing a transaction. Additionally, where we follow a ‘Specific Instruction’ this will be regarded as fulfilling best execution requirements
Eligible Counterparties
Best Execution obligations do not apply to Eligible Counterparties and therefore does not apply to business conducted with any firm which Garrick and Crown has classified as an Eligible Counterparty, in respect of Eligible Counterparty business. In particular, other members of an exchange are normally classified as an Eligible Counterparty and so this policy does not apply to business carried on with them.
ORDER EXECUTION FACTORS
When executing orders on client’s behalf Garrick and Crown will take into consideration: The client characteristics; The Financial Instruments that form the order; and The execution venues where the order is directed. In addition, once the above has been assessed the following execution factors will then be considered: Price and Size of the order Speed and Likelihood of execution Likelihood and speed of settlement; Costs; Any other factors relevant to the order. The priority of the execution factors may vary depending on the client’s classification and will be judged on an order by order basis.
Data Transfer
When executing orders on client’s behalf Garrick and Crown will take into consideration:
• The client characteristics;
• The Financial Instruments that form the order; and
• The execution venues where the order is directed.
In addition, once the above has been assessed the following execution factors will then be considered:
• Price and Size of the order
• Speed and Likelihood of execution
• Likelihood and speed of settlement;
• Costs;
• Any other factors relevant to the order.
The priority of the execution factors may vary depending on the client’s classification and will be judged on an order by order basis.
Price and Size
For the majority of liquid instruments, the market price will be the main factor in delivering best execution. This will be the case for the majority of orders for Retail clients, where size of order does not restrict Garrick and Crown’s choice of trading venue.
However, the price will be affected by the size of the intended bargain, as the best market price may not be available in the order size required by the client. Some of the business executed by Garrick and Crown is in amounts above the displayed size and accordingly there may be a differential between a price attaching to a displayed size and the price at which a larger order can be executed. In such circumstances Garrick and Crown will use reasonable judgement in securing the best execution based on a specific size of order
Speed and Likelihood of Execution
Speed and Likelihood will have an impact on the price and in some situations, this may be given priority over the price. For example, if a client wants a prompt execution, it may not be possible to meet their price expectations, as opposed to the client being prepared to wait, in which case it may be easier to obtain the required price
Additionally, a client will require the order to be executed on a staggered basis, so as to limit the market impact of a large trade, but in other cases the client may want a large trade to be executed in a single order. In such scenarios Garrick and Crown will discuss this with the client to understand the importance between price and speed
Likelihood of settlement
Garrick and Crown’s business is mainly in shares that are quoted on recognised exchanges on a global basis which are subject to centralised clearing and settlement procedures and as such does not regard likelihood of settlement as a critical factor in its best execution obligations.
Cost
Where explicit costs (such as exchange fees or settlement/custody cost) would make the overall consideration of the execution prohibitive, this cost as an execution factor may become the most important. The Dealing Desk prior to executing an order, in particular where the settlement cost on overseas securities is based on cents per share, will take this into consideration before determining where the best execution venue is for such orders.
Certain instruments such as Unit Trusts will only have one price and one venue. In some circumstances the remaining factors would be given precedence over the price, but only when they are instrumental in delivering the best possible result in terms of total consideration.
EXECUTION VENUES
Garrick and Crown selects a set of execution venues which include market counterparties on which it places significant reliance in enabling us to obtain, on a consistent basis, the best possible result for the execution of client orders. The types of venues we use are as follows:
• Markets having regulated market (“RM”) status under MiFID II such the London Stock Exchange
• Multilateral Trading Facilities (“MTF”) and Organised Trading Facilities OTF’S
• Market Makers, Systematic Internalisers and other Liquidity providers
• Third Party investment firms and brokers
There will be instances when Garrick and Crown passes an order to a counterparty (i.e. a broker) for execution. In these circumstances, Garrick and Crown remains under an obligation to monitor the counterparty’s performance and this does not remove Garrick and Crown’s obligation to obtain the best possible result for its client.
Our selection criteria take into account the following:
• The historic performance, including the quality of executions obtained over a period of time;
• The extent of services that may be provided to enable us to meet our obligations to our clients; and
• Market reputation and any matters arising from our due diligence process.
We consider a number of factors to determine the appropriate venue or market counterparty for each asset class and instrument type. The factors include the asset coverage and liquidity provided by these venues/ market counterparties in addition to the various costs, exchange fees and any other ancillary charges.
We regularly assess the execution venues available and may add or delete venues in accordance with our obligation to provide you with the best possible execution result on a consistent basis. We will notify you of material changes, which would impact our Order Execution Policy. A current list of Execution venues for which Garrick and Crown places reliance on to meet best execution requirements is shown below:
• London Stock Exchange and AIM
• Retail Service Providers
• Market Makers and Brokers (Investec, Stifel, Winterfloods, Peel Hunt, Singers, Cenkos, Numis, Panmure)
• Instinet (via GPP)
• Multilateral Trading Facilities (Aquis Exchange, Turquoise, CHID, JPSI, BATD)
• Systematic Internalisers (Virtu Financial)
• Dark Pools OTC (ITG, Liquidnet, Turquoise Plato Dark)
• Order book for Retail Bonds
• NCL Capital Markets (for OTC Bonds)
• European brokers (Baader, MW Warburg, Carnegie, Equita)
As noted above, we may deem it appropriate or advantageous to execute your order outside a RM or MTF even where the investment (“financial instrument”) concerned is trading on a RM or MTF.
Garrick and Crown is required to obtain your consent before executing orders outside an RM or an MTF. By agreeing to the Order Execution Policy and our Terms of Business, you are giving your express consent to this requirement.
Having assessed the relevant criteria and any specific instructions provided by you, we will select the most appropriate venue(s) from those available and execute your order accordingly.
VALUATION OF UNLISTED SECURITIES
There will be circumstances where private unlisted securities are held occasionally prior to potential listings. In these scenarios pricing such securities is carried out generally on a prior transaction method. This means where a manager participates in a placing of a private company the placing price will be used as the fair value price for these securities. Any changes to this price whilst the company remains unlisted will be based on any further fund raises and the final price on that fund raise.
The other general scenario of an unlisted security is where a stock becomes delisted, which can be for various reasons. In such circumstances a fair value price FVP will be arrived at based on known public information on that company at the time of the delisting. A summary of the FVP will be provided by the Investment Managers who hold stock. Compliance will then review the price and either approve the price or revert back with their rationale for not approving the price. Only once Compliance have approved the price can the price then be amended.
Unlisted securities will be reviewed on a quarterly basis to ensure the price being used is deemed appropriate as an FVP.
SPECIFIC INSTRUCTIONS
If you provide us with a specific instruction to deal for you, it may prevent us from following some or all of the steps outlined in the Order Execution Policy which is designed to obtain the best possible results for you on a consistent basis. When you give us a specific instruction, we will take all sufficient steps to get the best results for you, but there is a risk we cannot achieve best execution, in respect of that aspect covered by your specific instruction.
PUBLISHING LIMIT ORDERS
If you give us an investment instruction at a specified price limit or better and for a specified size (a limit order), then it may not always be possible to execute that order under the prevailing market conditions. We would be required to make your order public (i.e. show the order to the market) in such a case unless you agree that we need not do so. We believe it is in your best interests if we exercise our discretion as to whether or not we make your order public. By agreeing to the Order Execution Policy, you agree that we will not make your order public unless we consider this to be in your best interest to do so.
DEALING ARRANGEMENTS
All dealing is managed by a centralised dealing desk, which consists of a dealing desk in London and Hong Kong, with support provided by dealers in our regional office. Orders are passed from the portfolio managers to the trading desk via our electronic routing system. The Trading desk then has the responsibility for managing the execution of the order and conduct them in accordance with this policy. Further information on how deals are executed depending on the type of order are as follows:
AGGREGATION AND ALLOCATION
Garrick and Crown will usually execute comparable orders sequentially and promptly, unless the type of order or market conditions do not allow this. On certain occasions Garrick and Crown may combine (or ‘aggregate’) an order for our clients with orders of other clients, when it believes it is in the client’s best interest to do so. However, the effect of aggregation may on some occasions work to the client’s disadvantage and may on occasions result in our clients obtaining a worse price than if their order was executed separately. When allocating an aggregated transaction which includes one or more client orders, Garrick and Crown will allocate the order on a pro rata basis, which is deemed the fairest possible outcome.
MONITORING AND REVIEWING
The Compliance department will monitor order execution to ensure ongoing compliance and our order execution arrangements and policy will be reviewed on a regular basis. We will also monitor any material change that may impact our ability to continue to obtain the best possible result for our clients. Any material changes will be posted on our website: www.garrickandcrown.com Garrick and Crown is required to demonstrate, at the request of a client, that it has executed the client’s orders in accordance with this Order Execution Policy. Upon request, Garrick and Crown will produce the necessary analysis detailing the executions for a client for the requested period, to satisfy the client’s request and our regulatory obligations.
CLIENT DECLARATION
Garrick and Crown operates on the basis that all Customers would be relying on Garrick and Crown to deliver best execution for all transactions, regardless of how they arise.
By agreeing to our Terms and Conditions and the declaration in the account opening form, you (or your authorised intermediary) consent to our Order Execution Policy including those sections that require your prior express consent.
Please note that if you do not provide your consent to our Order Execution Policy you may be limiting our ability to execute your orders on the most advantageous terms for you. Accordingly, if you do not consent to this Order Execution Policy, we may be unable to open an account for you.
Should you require further information or assistance in relation to the Order Execution Policy, or would like Garrick and Crown to demonstrate how best execution has been achieved on any order executed for you, please contact your Broker, who will be able to assist you with your queries.
Should you wish to discuss anything further, please email info@garrickandcrown.com
