ORDER EXECUTION POLICY
Under the Markets in Financial Instruments Directive (“MiFID II”) and the Financial Conduct Authority (FCA) rules, we have an obligation to take all sufficient steps to obtain the best possible result for our clients when executing orders, or transmitting orders to other financial institutions for execution. This is known as “Best Execution”.
This Order Execution Policy (“Policy”) provides information on how KW Investment Management (“Kingswood”, “we”, “our”) intends to comply with this obligation and implement effective arrangements to enable us to obtain the best possible result for our clients.
Our commitment under the FCA Consumer Duty ensures that we put our customers’ needs first, by acting in good faith, supporting financial objectives and avoiding foreseeable harm through complying with all relevant regulation, taking all sufficient steps to obtain, when executing orders, the best possible results for our clients.
The scope of this policy is to cover all transactions by retail or professional clients in such instruments and asset classes defined as financial instruments under MiFID (including Equities, Fixed Interest, Exchange Traded Funds, Collective Investment Schemes, Derivatives, Forward FX and Structured Products).
3. Delivery of Best Execution
When executing orders, unless otherwise specifically instructed, Kingswood will use price as the primary measure for achieving best execution. The following execution factors will be considered, and how these may be a part of the decision-making process in the context of the details below.
- Price – this will usually be considered the most important factor in achieving best possible result.
- Cost – we will consider the explicit costs (internal & external) for example, commission and any fees, along with the implicit costs such as potential market impact.
- Speed – the price of liquid securities can move quickly and a delay in execution may cause a detrimental price to that expected being achieved.
- Likelihood of Execution and Settlement – may become important in illiquid/large orders, where the trading venue is not obvious and there is a need to execute on a timely basis.
- Size and Nature of order – the prices displayed on execution venues are for dealing in a certain size. Orders greater than this size will be managed in line with this policy.
- 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 For example, size against market impact or speed against price, any of which might also be influenced by a client’s specific instruction.
Kingswood will determine the relative importance of these factors, and in general, we will regard price as the most important of these factors for obtaining the best possible result. However, we recognise that there occasionally be circumstances for some customers, particular instruments or markets where other factors may be deemed to have a higher priority.
Whilst total consideration (the sum of the price and costs incurred by the client including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order) are ordinarily the key factors, the overall value to you of a particular transaction may be affected by the other factors listed above. In certain circumstances we may conclude that factors other than price and costs are more important in achieving the best possible result for you.
4. Executing Orders
Subject to any specific instructions that you may give us, Kingswood, and Third Platform Securities (TPS) will take all sufficient steps to obtain the best possible result when executing orders.
All fund orders will be transmitted to TPS for execution via the associated investment platform. TPS will take reasonable steps to execute client orders in a prompt, fair, and efficient manner relative to other client orders. TPS will execute comparable client orders sequentially in accordance with the time of their reception unless otherwise instructed; or the characteristics of the client order or prevailing market makes this impracticable.
All Exchange Traded Funds (ETFs) and direct equities will be executed directly by Kingswood via the Fidessa RSP platform, provided by TPS. Kingswood will take reasonable steps to execute client orders in a prompt, fair, and efficient manner relative to other client orders. Kingswood will execute comparable client orders sequentially in accordance with the time of their reception unless otherwise instructed; or the characteristics of the client order or prevailing market makes this impracticable.
Where we transmit an order to another entity, we will take all reasonable steps to achieve the best possible result in line with this policy.
Transmission of orders:
- Where we are appointed Discretionary Manager orders will be transmitted / executed at our discretion.
- Where we are acting on a client instruction, the order will be transmitted / executed as soon as practicably possible following receipt.
- We transmit orders as agent only (i.e. we facilitate our clients; we do not purchase from/sell to our clients from our own account).
- Orders are dealt with in the order that they are received by Kingswood.
We may transmit an order to another entity. When we do this, we will be under an obligation to take all commercially sufficient steps to obtain the best possible result for clients. Third party price quality and costs will be reviewed on a regular basis to ensure competitiveness and that they meet our best execution obligations to clients.
5. Aggregation of Client orders
As the attainment of similar end investment performance for all clients within the same investment strategy is important to us, we may aggregate orders if we reasonably believe that this will work to the advantage of our clients (for example achieving a better price through benefits of scale). It is unlikely that the aggregation of orders and transactions will work overall to the disadvantage of any client whose order is to be aggregated. However, it is possible that aggregation may work on some occasions to a customer’s disadvantage.
6. Specific Instructions
Where we owe you a duty of best execution and you provide us with specific instructions in relation to the entire transaction, or any particular aspect of the transaction, which we accept, then we will execute the transaction in accordance with those instructions and in doing so have satisfied our best execution obligations.
Where your 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. Execution venues
For the purposes of MiFID, and in meeting our obligations to take all reasonable steps to consistently obtain the best possible result (subject to any client instruction), Kingswood and TPS may use one or more of the following venue types when executing an order on your behalf:
- Regulated Markets;
- Multilateral Trading Facilities;
- Organised Trading Facilities;
- Systematic Internalisers;
- Other liquidity providers e.g. market makers acting as principal;
- Inter-dealer brokers; Unrelated third parties performing similar functions; and
- Equivalent third country venues to the above
Kingswood’s choice of venue may be constrained by there being only one market or trading platform where an order can be executed because of the nature of the order or a specific client instruction.
8. Top 5 Execution Venues
As per the Policy Statement (PS21/20) that took effect in December 2021, firms are no longer required to report this information.
9. Publication of Unexecuted Limit Orders
The FCA rules require unexecuted client limit orders to be made public unless the client expressly instructs otherwise. By agreeing to this policy, the client is expressly instructing us not to make unexecuted limit orders public and allowing Kingswood to exercise their discretion in accordance with this policy.
10. Monitoring and Review
We review all trades on a regular basis for timely execution and price achieved.
This policy is reviewed at least annually or more frequently as required. We will notify the client of any material change to our execution arrangements or our order execution policy by providing the client with notice to this effect in accordance with our agreement.
We are required to obtain your prior agreement to this policy, as well as your consent to:
- Not publish Limit Orders.
- Allow Kingswood to execute orders outside a Trading Venue, where required.
While it is Kingswood’s intention to always trade on a Trading Venue, in certain circumstances it may be in the client’s best interests to trade away from a Trading Venue. Signing our Investment Management Agreement and agreeing to our Terms and Conditions constitutes this acceptance/consent to the above.
Published March 2023