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MiFID

 

BEST EXECUTION POLICY – Professional Clients



   
  • INTRODUCTION
    
As you may be aware, the Markets in Financial Instruments Directive (MiFID) will come into force on 1 November 2007 .

MiFID requires Investment Firms, when executing orders on behalf of Clients to take all reasonable steps to obtain the best possible result ( the "best execution")

As one of the main consequences, OTCex group's entities (HPC, Vanilla Technology, Geldhandels) and relevant EU branches will take all reasonable steps to achieve “best execution” of your orders when executing orders on your behalf in relation to financial instruments as defined by MiFID.
 
In particular, we are required to establish an order execution policy that is designed to obtain the best possible result for your orders, taking into account any specific instructions from you, the nature of the orders, of the markets and products concerned.

We're also required to provide appropriate information to our clients on our order execution policy. The purpose of this document is to provide such information.
  • SCOPE AND EXECUTION ORDERS ON YOUR BEHALF
    
OTCex group’s entities order execution policy apply to Professional Clients and to Financial Instruments , as defined by MiFID, when we execute Orders on behalf of clients or when we transmit your order to a third party broker for execution.

We will be executing orders "on behalf of a client" when the client relies on us to protect his interests in relation to the pricing or other aspects of the transaction that may be affected by the way we execute the order.
This will be the case when we :
-executes an order by dealing as agent
-executes an order by dealing as riskless principal on behalf of a client or "work" an order on a clients behalf.

We do not consider that we execute orders "on behalf of a client" when :
- we provide prices at which we would be willing to buy or sell
- you ask us to provide a quote for a particular security (request for quote)
- we negotiate with you the terms of a transaction in which we deal with you as principal for our own account.

 

Taking into account the execution characteristics listed above and in the absence of any specific client instructions (as detailed in section 3), we will choose the most appropriate execution venue and will execute the Client order using one of the following means:

(i)directly on a regulated market or on an MTF or when we are not a direct member of the concerned regulated market or MTF, by using a third member with whom we have previously negociated an execution agreement
(ii)out of a regulated market or an MTF when the full consent of the Client has been obtained, we will execute the order :
- by dealing directly with an other Client
- and/or with us acting as an execution venue

When we act as an execution venue, we will take into account all information to which we have reasonable access, including the MTF, the local markets, the data providers, in order to obtain the best result.
When we use a third party broker, , we will make sure that the broker satisfies the best selection MiFID criteria.

  • CLIENTS’ SPECIFIC INSTRUCTIONS
    
When you give us a specific instruction as to the execution of an order (for example specifying the venue for execution, a limit order…) we will execute your order in accordance with those instructions.
When your instructions relate to only part of an order, we will continue to apply our order execution policy to those aspects of the order not covered by your specific instructions.
 
You should be aware that if you provide us with specific instructions, this may prevent us from following some or all the steps in our order execution policy that are designed to obtain the best possible result for the execution of your orders.
  • EXECUTION FACTORS
    
In the absence of specific instructions from you, the execution factors that will be taken into account are :
(i)price,
(ii)costs,
(iii)speed,
(iv)likelihood of execution or settlement,
(v)size and/or nature of your order,
(vi)any other consideration relevant to the execution of the order.

We will take into account the following criteria when determining the relative importance of each of these factors :
(i)the client classification,
(ii)the characteristics of the order,
(iii)the characteristics of the financial instruments that are the subject to the order and
(iv)the execution channels to which your order can be directed.

 
Price and liquidity will ordinarily merit a high relative importance in obtaining the best possible result. However, other factors will also be considered , such as where that financial instrument is frequently traded, the venue, the relative speed and likelihood of execution and settlement, which in our experience has been consistently demonstrated for the financial instrument in question.
  • EXECUTION VENUES
    
An "execution venue" is a regulated market, an MTF (multilateral trading facility), a systematic internaliser, a market maker, any other liquidity provider or any entity which performs a function, in a third country, similar to the function performed by any of the afore-mentioned venues, as defined by MiFID (all hereafter named the "execution venues").
The list of the execution venues chosen by us and used for each financial instrument category is attached.
This list of execution venues is not exhaustive but does include the most relevant execution venues. We reserve the right to use other execution venues when so ever we judge it appropriate.
 
We monitor the available execution venues on a regular basis in order to identify the best execution venues for the best execution of your orders. The list of all the execution venues will be updated at least once a year and will be accessible on our website. You will not be automatically informed of any changes to our execution venues list.
  • RECEPTION AND TRANSMISSION OF THE ORDERS
    
We may transmit your order to an OTCex group entity or to an external entity, such as a third party broker, for execution.
In this case, we shall act in your best interest with respect to sections 3 et 4 of the present document.
 
Those entities, to whom your orders are transmitted for execution, must have already made execution arrangements which allow us to fulfil its commitments regarding our duty to serve your interests to the best of our ability.
  • REVUE AND MONITORING
    
The effectiveness of our order execution arrangements are monitored to identify and, when appropriate, correct any deficiencies. We review on a regular basis whether the execution venues included in the Policy provide the best possible result and whether any changes need to be made.
 
A review of the execution venues and the Policy is undertaken at least once a year. We will not notify you directly of any changes to our execution arrangements or the Policy but you are invited to check any changes on our website.
  • CONSENT
    
We are required under MiFID to obtain your prior consent to the best execution Policy.
The consent will be considered implicit when the Client gives an order after 1 November 2007 with the following exception:
-execution of an order outside a regulated market or an MTF (HPC has to obtain your express consent)
 
October 2007
EXECUTION VENUES LIST FROM 1 NOVEMBER 2007    
Monétaire et Obligataire :

• HPC, Geldhandels

Actions :

• American Stock Exchange *
• Chi-x *
• Copenhague Stock Exchange *
• Euronext Amsterdam *
• Euronext Bruxelles *
• Euronext Lisbonne *
• Euronext Paris *
• Frankfurt Stock Exchange *
• Helsinki Stock Exchange *
• Hong Kong Stock Exchange *
• Irish Stock Exchange *
• London Stock Exchange *
• Madrid Stock Exchange *
• Milan Stock Exchange *
• Nasdaq *
• New York Stock Exchange *
• Oslo Stock Exchange *
• Singapore Stock Exchange *
• Stockholm Stock Exchange *
• SWX Swiss Exchange *
• Vienna Stock Exchange *
• Virt-x Swiss Exchange *
 
Octobre 2007
 
Futures et options : • AEX Amsterdam *
• CME & CBOT ( USA) *
• Eurex Francfort
• Euronext Liffe Londres
• Euronext Liffe Paris
• MEFF Madrid *
• OMX Stockhom *


* Access to markets via third party brokers (section 5)
POLICY FOR THE PREVENTION AND MANAGEMENT OF CONFLITS OF INTEREST
   
The EU Directive on Markets in Financial Instruments (MiFID) states that we must adopt a policy for the detection and management of conflicts of interest which may arise during the provision of any investment service, or combination thereof, either between us and our clients or between two of our clients.
   

1. Identifying conflicts of interest

The Policy specifies, in accordance with the requirements provided under MiFID, certain situations of potential conflicts of interest which may give rise to an important risk of damage to the interests of one or more of HPC’s clients.

Then, a procedure has been drawn up whereby a HPC employee can inform the appropriate person or department at HPC, prior to the provision of a service or activity, of any situation that, in his or her opinion, may give rise to a conflict of interest, in order that appropriate measures can be taken to resolve the conflict.

   

2.Preventative measures and management of conflicts of interest

Taking into consideration the nature and importance of a detected situation of potential conflict of interest, the following measures can be highlighted:

  •  
    • General and specific guidelines prohibiting certain behaviour (such as divulging information about a client’s transactions to another client),
    • Measures aimed at preventing or controlling the simultaneous or consecutive involvement of an employee in several investment services or activities, when such participation might damage a client’s interests,
    • Procedures and measures, specific to the case at hand, aimed at preventing or controlling of information between different persons or departments carrying out activities which bear an important conflicts of interest risk,
    • Specific measures for employees involved in the writing of investment research reports, aimed at guaranteeing the employees’s autonomy and objectivity.
 
  3. Procedures for solving other conflicts of interest

The diversity and the dynamic nature of the business activities carried out by HPC make it very difficult to provide an answer to all situations which may give rise to conflicts of interest.

HPC has therefore drawn up a specific procedure in order to resolve unforeseen conflicts of interest situations arising during the ordinary course of its business.

Finally, in the event that measures adopted by HPC for managing a specific conflict of interest are unable to guarantee, with reasonable confidence, that the risk of damage to a client’s interests will be prevented, HPC will disclose the general nature or the source of the relevant conflict to the client before acting on its behalf, thereby allowing the client to make its own decision in terms of what it considers to be the most suitable course of action in respect of the services being offered.