The purpose of this Policy is to establish effective arrangements for obtaining, when Guaranteed Trading Limited, hereafter the “Company”, is executing clients’ orders, the best possible result for its clients.
This document aims to set out those arrangements and to ensure compliance with legislative requirements and the departmental and general procedures, which are set within this Internal Procedures Manual.
II. Legal Framework
In accordance with the Investment Services and Activities and Regulated Markets Law of 2007, CIFs must take all reasonable steps to obtain, when executing orders, the best possible result for their clients taking into account price, costs, speed, likelihood of execution, size, nature or any other consideration relevant to the execution of the order. Nevertheless, whenever there is a specific instruction from the client, the CIFs shall execute the order following the specific instruction.
In addition, CIFs must establish and implement an read Order Execution Policy Policy to allow the CIF to obtain, for its clients’ orders, the best possible result.
Dealing Room is the relevant department to which the read Order Execution Policy mainly applies. Senior Management reviews the Policy on an annual basis and/or whenever a material change occurs that impacts the Company’s ability to continue offering best execution of its clients’ orders using the Company’s trading platform.
The Company proceeded to the establishment and maintenance of an read Order Execution Policy Policy, in order to ensure compliance with the obligation to execute orders on terms most favourable to the clients and to achieve the best possible results for its clients, taking into consideration its clients’ ability, needs and trading policies, where applicable and possible.
The Policy outlines the process that the Company follows in executing trades, and assure taking all reasonable steps to consistently obtain the best possible result for clients through its read Order Execution Policy Policy. It is noted however that when executing an order following a specific client instruction, the Company will execute the order in line with those instructions and will consider that it has discharged its best execution obligations.
Best Execution Criteria
The Company will take into account the best execution criteria for determining the relative importance of the execution factors:
- The characteristics of the client;
- The characteristics of the client order;
- The characteristics of the financial instruments that are the subject of that order;
- The characteristics of the execution venues to which that order can be directed.
The best possible result will be determined in terms of the total consideration, representing the price of the contract and the cost related to execution. The other execution factors of speed, likelihood of execution size, nature or any other relevant consideration will, in most case, be secondary to price and cost considerations, unless they would deliver the best possible result for the client in terms of total consideration.
The Company, when managing client’s orders takes into account various execution factors, provided that there are no specific instructions from the client to the Company about the way of execution of the orders. The execution factors include:
- Speed and likelihood of execution
- Costs or commissions
- Size and nature of the order
- Market conditions and variations
- Execution capability
- Any other direct consideration relevant to the execution of the order
You are warned that Slippage may occur when trading in Financial Instruments. This is the situation when at the time that an Order is presented for execution, the specific price showed to the Client may not be available; therefore, the Order will be executed close to or a number of pips away from the Client’s requested price. So, Slippage is the difference between the expected price of an Order, and the price the Order is actually executed at. If the execution price is better than the price requested by the Client, this is referred to as positive slippage. If the executed price is worse than the price requested by the Client, this is referred to as negative slippage. Please be advised that Slippage is a normal element when trading in financial instruments. Slippage more often occurs during periods of illiquidity or higher volatility (for example due to news announcements, economic events and market openings and other factors) making an Order at a specific price impossible to execute. your Orders may not be executed at declared prices. Slippage may appear in all types of accounts we offer. It is noted that Slippage can occur also during read Stop Loss Orders, read Limit Orders, and other types of Orders. We do not guarantee the execution of your Pending Orders at the price specified. However, we confirm that your Order will be executed at the next best available market price from the price you have specified under your pending Order.
In circumstances where the client provides the Company with a specific instruction as to how to execute an order and the Company has accepted this instruction, then the Company will execute the order in accordance with that specific instruction.
Nevertheless, if the client provides a specific instruction to carry out an order, then by executing that order the Company will be complying with the Company’s duty to provide the client with best execution. This may result in being unable to follow the Company’s read Order Execution Policy Policy for that particular order. In such event the Company will proceed with the client’s instructions. A relevant warning as to the non-execution of the order based on the read Order Execution Policy Policy will be sent to the client.
Types of orders
Given the nature of risk and volatility of financial markets, the client may want to consider using different types of orders to limit risk and manage investment strategies. (It should be noted that the following descriptions of order types may apply only to some and not all types of financial instruments).
Market order: With a Market order the client instructs a financial institution to execute a trade of a certain size as quickly as possible at the current market price. Financial institutions are required to execute Market orders without regard to price changes. Therefore, if the market price moves during the time it takes to fill a client’s order, the order will most likely be executed at a price different from the price when the order was entered. Execution price can be either improved, worsened or unchanged.
At requested/Limit order: With an at requested order/limit order, the client sets the maximum purchase price, or minimum sale price, at which the trade is to be executed. As a limit order, may be entered away from the current market price, a limit order to buy below the current market price or to sell above the current market price, it may not be executed immediately. With those type of orders a client must be aware that he/she is giving up the certainty of execution. And are likely to receive requotes/rejects if the market price moves during the time it takes to fill a client’s order.
Stop Order: A Stop Order allows selling below the current market price or buying above the current market price if the stop price is reached or breached. A Stop Order is therefore a pending order until the stop price is reached or breached. When a Stop Order is executed, it becomes a Market order and is filled as soon as possible at the price obtainable on the market. Note that this price may differ from the price you set for the order (Slippage).
Execution venues are the entities to which the orders are placed or to which the Company transmits orders for execution. The Execution Venue for clients’ orders will be both the CIF and CST Financial Services, a duly authorised market maker.
The Company will provide its own tradable prices which are derived from independent price providers. The main way in which the Company will ensure that the client receives the best execution will be to ensure that the price provision to the client is made with reference and compared to a range of underlying price providers and data sources. Despite the fact that the Company takes every reasonable step to obtain the best possible result for its Clients, it does not guarantee that when executing an Order its price will be more favorable than one which might be available elsewhere. The Company reviews its independent price providers at least once a year to ensure that correct and competitive pricing is offered.
When the client opens a position in some types of financial instruments a commission or a financing fee will apply.
Size of order
All orders are placed in monetary value. The client will be able to place his order as long as he has enough balance in his trading account. If the client wishes to execute a large size order, in some cases the price may become less favorable considering the feed obtained from its price provider.
Obviously, prices change over time. The frequency with which they do varies with different financial instruments and market conditions. Considering that the tradable prices which are distributed via the Company’s trading platform/ terminal, technology used by the client to communicate with the Company plays a crucial role. For instance, the use of a wireless connection, or dial up connection, or any other communication link that can cause a poor internet connection can cause unstable connectivity to the Company’s trading platform/terminal. The result for the client is to place his orders at a delay and the order to be executed at better or worst prevailing market price offered by the Company via its platform/terminal.
Likelihood of execution
Due to the levels of volatility affecting the underlying instrument’s price, the Company seeks to provide client orders with the fastest execution reasonably possible.
Likelihood of settlement
The Company shall proceed with the settlement of all transactions upon the execution and/or time of expiration of the specific transaction.
The Company’s quoted prices which are derived from its independent price providers may be affected by various factors which could also affect the above-mentioned factors. The Company will take all reasonable factors to ensure the best possible result for its clients.
Appropriate information is provided to the client on the content of the Execution Policy. The prior consent of the clients is obtained regarding the documented read Order Execution Policy to be followed. In addition, a clear and prominent warning is disclosed to the Company’s clients (within the Client Agreement) that any specific instruction from a client may prevent the Company from taking the steps that is has designed and implemented in its Execution Policy for obtaining the best possible result for the execution of those orders in respect to the elements covered by those instructions.
Adequate information is provided to the clients through this Policy in relation to the factors that are taken into consideration by the management when handling clients’ orders. Also, the Policy is reviewed periodically by the Company and the clients are informed accordingly in relation to any material changes.