Best Execution Policy

To ensure that the execution policy is specific to the business needs and the client, certain factors must be considered. QUAY FINANCIALS (Gibraltar) Limited receives and transmits orders to its’ executing broker ADM Investor Services, London. The executing broker has been elected due to a number of primary factors including the personal knowledge and experience of the Directors of QUAY FINANCIALS (Gibraltar) Limited, its FSA regulation, its creditworthiness, availability of a variety of venues and its provision of a twenty-four hour service to QUAY FINANCIALS (Gibraltar) Limited’s clients.

In addition, QUAY FINANCIALS (Gibraltar) Limited executes orders by dealing as an agent, both functions are carried out by the Investment Brokerage division and it is the intention that this execution policy applies solely to this division.

PURPOSE

Following the implementation of the Markets in Financial Instruments Directive (‘MIFID’), QUAY FINANCIALS (Gibraltar) Limited (‘the Company’) is required by the Financial Services (MiFI) Act 2006 to take all reasonable steps to obtain, when executing orders for professional clients, the best possible result for its clients taking into account the execution factors (see Point 4 below). In the opinion of the Company, the relative importance of these execution factors varies in relation to different market instruments and is detailed later in this document. In addition the Company is required to establish and implement effective arrangements for complying with this best execution requirement.

In particular, the Company must establish and implement an Order Execution Policy to allow it to obtain best execution where required, for example where specific instructions are notreceived from the client.

SCOPE

The Company’s Order Execution Policy applies only to Professional Clients within the meaning of the Markets in Financial Instruments Directive (‘MIFID’) qualification rules.

The Company’s Order Execution Policy applies where the Company

receives and transmits client orders; and/or
executes orders on a client’s behalf.

The Company will be executing orders ‘on a client’s behalf’ where the client legitimately relies upon the Company to protect his/her/their interests in relation to the pricing or other aspects of the transaction that may be affected by the way that the Company executes the order. For example, this will be the case when the Company:

executes an order by dealing as agent;
executes an order by dealing as riskless principal on behalf of a client; and
‘works’ an order on a client’s behalf.

The Company will not owe a duty of best execution where a client provides a specific instruction, e.g. by routing an order through an electronic trading system or if a request for quote is submitted. (see Point 9 below).

OBTAINING BEST EXECUTION
Subject to any specific instructions that a client may give (see Point 9 below), when executing orders on behalf of a client, the Company will take all reasonable steps to obtain the best possible result for the client taking into account the execution factors listed in Point 4.

The Company will determine the relative importance of the execution factors by using its commercial judgement and experience in light of the market information available and taking into account the execution criteria described in Point 5.

THE EXECUTION FACTORS

In seeking to deliver best execution, the Company will take into consideration a range of different factors which include not just price, but may also include such other factors as the cost of the transaction, the need for timely execution, the likelihood of execution and settlement including the liquidity of the relevant market (which may make it difficult to execute an order), the size of the order, the nature of the financial transaction including whether it is executed on a regulated market or ‘over-the-counter’ or any other consideration relevant to the execution of the order.

If the Company was able to execute transactions on behalf of retail clients, the best possible result would have to be determined in terms of the total consideration representing the price of the financial instrument and the costs related to the execution. As is the case of the Company, where services are only provided to professional clients, price will ordinarily merit a high relative importance in obtaining the best possible result. However, in some circumstances for some professional clients, the Company may appropriately determine that other execution factors are more important than price in obtaining the best possible execution result in determining the relative importance of the execution factors.

It should be noted, however, that the current structure of the Company solely allows for ‘execution only’ trades by the professional clients and trades are usually requested by the price and size. In the absence of express instructions from a client, the Company will exercise its own discretion in determining the factors that it needs to take into account for the purpose of providing a client with ‘best execution’ in relation to the execution factors that are not expressed by the client.

EXECUTION CRITERIA

When determining the relative importance of the execution factors, the Company will take into account the characteristics of:

the client;
the order;
the financial instruments that are the subject of the order; and
the execution venues to which the order can be directed.

EXECUTION VENUES

The Company’s Order Execution Policy includes, for each financial instrument in which it executes client orders, those venues that the Company considers will allow it to obtain, on a consistent basis, best execution for client orders.

The possible execution venues that the Company may use include, for each product: regulated markets, multilateral trading facilities, systematic internalisers and third party investment firms and/or affiliates acting as a market maker.

A list of the execution venues used by the Company in respect of each class of financial instruments can be obtained upon written request from the Company’s registered office address. The Company will assess the execution venues from time to time available in respect of the financial instruments that it trades to identify those that will enable the Company to obtain the best possible result when executing orders. The Company’s list of execution venues will be updated as and when appropriate.

Where applicable, the Company will take steps to ensure that it does not structure or charge its commissions in such a way as to discriminate unfairly between execution venues.

SELECTING AN EXECUTION VENUE

Subject to any specific instruction that a client may provide (see Point 9 below) and subject to proper consideration of the execution factors and execution criteria referred to within, the Company will select the execution venue that it considers the most appropriate if more than one execution venue is available.

METHODS OF EXECUTION

Subject to any specific instructions that a client may provide (see Point 9 below), the Company will execute an order by one of the following methods or combination of methods:

directly on a Regulated Market(1) or a MTF(2), or where the Company is not a direct member of the relevant Regulated Market or MTF, with a third party participant with whom the Company has entered into an agreement for handling orders for that Regulated Market or MTF; and
where the Company has obtained the prior express consent of the client concerned, outside a Regulated Market or a MTF.

In relation to some financial instruments, there may be only one possible execution venue. In executing an order on behalf of a client in such circumstances, the Company will assume that it has achieved best execution.

EXCHANGE TRADED DERIVATIVES

Unlike equities, exchange traded derivatives can only be traded on one market venue. The market venues available through the electronic trading system or by phone to the executing broker are Euronext Liffe, Deutche Borse, Chicago Board of Trade (CBOT), Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE).

If a client wished to trade a derivative on an exchange that is not provided by the executing broker, the trade would be declined or referred to a third-party to execute.

The execution factors considered relevant in order of importance to ensure the best result for the client are price, size and nature of the order which influence the likelihood of execution, speed and costs.

(1) A regulated market means a multilateral system operated and/or managed by a market operator which brings together or facilitates the bringing together of multiple third party buying and selling interests in financial instruments in the system, and in accordance with non-discretionary rules, in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with the provisions of Title III of MIFID.

Multilateral trading facility (‘MTF’) means a multilateral system operated by an investment firm or a market operator, which brings together multiple third party buying and selling interests in financial instruments in the system and in accordance with non-discretionary rules, in a way that results in a contract in accordance with the provisions of Title II of MIFID.

EQUITIES AND CFDs

For full details of the market venues available for execution of trades in equities and CFDs, please apply to QUAY FINANCIALS (Gibraltar) Limited.

The order that the Company will consider the relevant execution factors for these types of market instruments are, in order of importance to ensure the best result for the client, price, size and nature of the order which influence the likelihood of execution, costs and speed.

FOREIGN EXCHANGE

The Company through the executing broker uses an electronic multilateral trading facility to provide a guaranteed price spread on currency pairs.

SPECIFIC INSTRUCTIONS

Where a client provides the Company with a specific instruction as to the execution of an order, (for example, direct market access orders submitted via an electronic system), the Company will execute the order in accordance with those specific instructions.

Where a client’s instructions relate only to part of the order, the Company will continue to apply the Company’s Order Execution Policy to those aspects of the order not covered by the client’s specific instructions.

Clients should be aware that providing specific instructions to the Company in relation to the execution of a particular order may prevent the Company from taking the steps set out in the Company’s Order Execution Policy to obtain the best possible result in respect of those elements covered by those instructions.

RECEPTION AND TRANSMISSION OF ORDERS

In the majority of circumstances, Subject to any specific instructions that a client may provide (see Point 9 above), the Company may transmit an order that it may receive from a client to another entity, such as a third party broker, for execution. In doing so, the Company must act in the client’s best interest and comply with Points 4 and 5 above.

MONITORING AND REVIEW

The Company will monitor the effectiveness of its order execution arrangements and Order Execution Policy with a view to identifying, and where appropriate, correcting any deficiencies. In particular, the Company will assess, from time to time, whether the execution venues included in the Company’s Order Execution Policy, and the brokers and dealers to whom the Company transmits orders, allow the Company to achieve best execution on a consistent basis or whether the Company needs to make changes to its execution arrangements. The Company will also review its order execution arrangements and Order Execution Policy annually and whenever a material change occurs that affects the Company’s ability to continue to achieve best execution on a consistent basis using the venues included in the Company’s Order Execution Policy. The Company will notify clients of any material changes to its order execution arrangements or Order Execution Policy.

The Company is required to obtain a client’s prior consent to the Company’s Order Execution Policy.

For an instrument admitted to trading on a Regulated Market or an MTF, the Company is also required to obtain a client’s prior express consent, before executing an order in such an instrument outside of a Regulated Market or MTF.

FIDUCIARY RESPONSIBILITY

The Company’s commitment to provide clients with best execution in accordance with the Company’s Order Execution Policy, does not mean that it owes clients any fiduciary responsibilities over and above the specific regulatory obligations placed upon the Company or as may be otherwise contracted between the Company and a client.

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