Order Execution Policy
Alpha FX Europe Limited (“Alpha FX”, and “we”, “us” and “our” shall be construed accordingly) is required to take all reasonable steps to obtain the best possible result for its clients when executing orders. This is known as “best execution” and the general obligation to achieve this is referred to in this document as the “best execution requirement”.
We are required to establish and implement effective arrangements for complying with the best execution requirement, including establishing and implementing an order execution policy (an “Order Execution Policy”). This document sets out our Order Execution Policy. While this Order Execution Policy should be read in conjunction with our terms and conditions, it does not form part of any contract we may enter with a client and does not mean we owe any fiduciary or contractual responsibility over and above our regulatory obligations to any client.
Our aim is to adopt the principle of best execution across all of our services, and we aim to provide the best value and the best service to ensure that our clients’ best interests are always at the core of our services.
We reserve the right to amend this Order Execution Policy, including but not limited to where required to do so by applicable law or regulation. A copy of our current Order Execution Policy is available on request, and we will notify clients of any material changes to our execution arrangements or this Order Execution Policy.
2. Scope of Order Execution Policy
This Order Execution Policy applies where we execute an order in derivative financial instruments for a client. However, this Order Execution Policy does not apply where the client has been classed as an eligible counter-party. Whilst we will endeavour to obtain the best possible result in carrying out each client order, this does not mean we have an obligation to obtain the best possible result for each individual order on a transaction-by-transaction basis. It does, however, mean that we are obliged to apply this Order Execution Policy to each order with a view to obtaining the best possible result.
3. Specific Instruction From Clients
Where a client has not provided any specific instructions in relation to execution, orders will be executed by us in accordance with this Order Execution Policy. Where a client gives a specific instruction about an order, we must execute the order following that specific instruction. We will satisfy our best execution requirement to the extent that we execute an order, or a specific aspect or an order, following specific instructions from the client relating to the order or specific aspect of the order. If we execute an order following specific instructions from a client, we will have satisfied our best execution requirements only in respect of that part or aspect of the order to which client instructions relate. Our best execution requirements will still apply in respect of any other parts or aspects of the client order that are not covered by those instructions. We will not induce a client to instruct us to execute an order in a particular way if we ought reasonably to know that an instruction to that effect is likely to prevent us from achieving best execution.
Where a client gives a specific instruction about an order, that client will be warned that fulfilling such instructions may prevent us from taking the steps prescribed in this Order Execution Policy to obtain the best possible result. Generally, we feel it is inappropriate to accept specific instructions which are not in accordance with this Order Execution Policy and clients who give such instructions will be encouraged to review other options. We will provide clients with details of this Order Execution Policy and volunteer relevant information to clients to assist them in making an informed choice. We reserve the right to refuse specific instructions from clients. In the event that we accept a specific instruction from a client as to how they wish an order to be executed, we will record and follow those instructions. We will make a consideration of such instructions but will deem that the client proceeds based on their own judgement.
We will take all reasonable steps to achieve best execution by:
- in all instances considering the execution factors and criteria set out in this Order Execution Policy to provide the best possible result;
- maintaining established dealing lines to enable us to provide competitive, expeditious and firm pricing; and
- directing orders to execution venues or to third parties that we consider will provide the best possible results on a consistent and reliable basis.
5. Execution Factors and Criteria
When executing orders, we must take into account the following execution factors: price, costs, speed, likelihood of execution and settlement, size, nature and any other consideration relevant to order execution. Such considerations include the availability of liquidity, the market impact of the order and, where relevant, the availability of appropriate credit lines.
In determining the relative importance of these factors we will take into account the following criteria: the characteristics of the client, including categorisation as a professional client; the characteristics of the client order; the characteristics of the financial instrument that is the subject of that order; and the characteristics of the execution venues to which the order can be directed. We will exercise our discretion to determine which of these factors, or combination of them, will be relevant to achieve the best result.
Ordinarily, price will merit a high relative importance in obtaining the best possible result for clients. The next most importance factor is likely to be liquidity. However, in certain circumstances, for some client orders, financial instruments or markets, Alpha FX, in its absolute discretion, may decide that other factors may be more important in determining the best possible result in accordance with this Order Execution Policy.
6. Selection of Execution Venue
We will use our commercial judgement when selecting execution venues that we consider most likely to provide the best possible result on a consistent and reliable basis.
Where there is more than one execution venue that would enable us to obtain best execution on a consistent basis, we will consider the respective merits of these venues.
Before placing a client order with any chosen execution venue, we may refer to an independent pricing tool to ensure the results we obtain adhere to this Order Execution Policy. This process acts as a benchmarking measure so we may monitor our execution results on an ongoing basis. We do not discriminate between any venue or client when considering structure, speed, commissions, charges paid, or the direction of an order to any execution venue. However, we will take into account the effect of our own fees and commissions when choosing an execution venue.
7. Pricing and Margin
We will provide clients with a single “all-in” price only. The sales margin charged by us is determined taking into consideration a variety of factors, which may include but are not limited to:
- service level provided;
- the credit risk that we will take when transacting with client;
- the cost of capital we incur because of the transaction;
- volumes traded by the client; and
- liquidity of the relevant market place.
We may aggregate a client’s order(s) with those of other clients and will allocate such transactions on a fair and reasonable basis subject to the requirements of the MFSA Handbook of Rules and Guidance. Clients acknowledge that aggregation may operate to their advantage or disadvantage.
9. Execution Outside of Regulated Markets
We may execute any orders outside a regulated market or a multilateral trading facility.
10. Client Disclosure
We must provide appropriate information in a comprehensible form about this Order Execution Policy to clients. We must disclose sufficient information to enable clients to make a properly informed decision about whether to use the services offered by us.
We should supply information to professional clients on request, provided the request is reasonable and proportionate (which will depend on the facts and circumstances of each particular situation).
As noted above, we must notify clients of any material changes to this Order Execution Policy. A material change is one where its disclosure is necessary to enable the client to make a properly informed decision about whether to continue to use our services. In particular, consideration should be given to the materiality of any changes made to the materiality of the importance of execution factors or to the venues on which we place significant reliance in meeting the best execution requirement, e.g. the merger of two execution venues. However, the requirement to notify clients about changes does not mean we are required to seek client consent to those changes.
However, we must ensure that the notification mechanism is effective in drawing clients’ attention to the change.
We must be able to demonstrate to clients on request that we have executed their orders in accordance with this Order Execution Policy.
11. Client Consent
We must obtain the prior express consent of our clients to this Order Execution Policy.
We will monitor the effectiveness of our execution arrangements and this Order Execution Policy to identify, and, where appropriate, correct any deficiencies. We will assess, on a regular basis, whether the execution venues set out in section 6 above (Selection of Execution Venue) provides the best possible result for our clients or whether we need to make changes to our execution arrangements.
In particular, we will conduct an annual review of this Order Execution Policy and our execution arrangements. This review will include consideration of whether we could consistently obtain better execution results if we were to use additional or different execution venues set out in section 6 above (Selection of Execution Venue) assign a different importance to the execution factors set out in section 5 above (Execution Factors and Criteria), or modify any other aspects of this Order Execution Policy or
arrangements or both.
We must also review our execution arrangements and this Order Execution Policy if a material change occurs that affects our ability to obtain the best possible results for the execution of client orders on a consistent basis using the venues set out in section 6 above (Selection of Execution Venue).
12. Execution Venues
- Barclays Bank PLC
- Lloyds Banking Group PLC
- Nomura International PLC
- Sucden Financial Limited
13. Policy review
This policy shall be reviewed at least on an annual basis. It may also be necessary to review the policy if a material change occurs consisting of a significant event that could impact parameters of best execution such as cost, price, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order.