Order Execution Policy
Overview of Best Execution requirement
DRS Markets Ltd is authorised and regulated by the UK Financial Conduct Authority (FCA) and under the FCA rules we are obliged to act in our clients’ best interests and, other than in certain circumstances described below, where we execute or arrange the execution of orders, we are required to take all reasonable steps to obtain the best possible result for our clients (known as delivering “best execution”) and to establish and implement an order execution policy and related procedures to allow us to do so.
We have internal policies and procedures governing how we will act when we execute orders for our clients. We continually strive to provide the best possible level of service to all of our clients. Consequently, our policies and procedures are under constant review and may be revised at any time without prior notice.
We deal with clients as principal and not as agent. This means that we are the execution venue and so clients transact directly with us and not on an exchange or another external market. Trades that clients undertake with us are non-transferable, which means that if a client opens a position with us, they must close the position with us.
We apply the following execution factors:
- The Price – this relates to the underlying instrument. We obtain the price from third party external reference sources. For equities it is common that there will be a third party securities exchange from which we source the price. Our price will differ from the price of the underlying instrument. We may also adjust the price to take account of liquidity, dividend announcements, financing charges, volatility and any other relevant market factor. Clients will be responsible for daily financing fees associated with their trade. We aim to update our price as frequently as possible but this cannot be guaranteed due to technological factors, hardware, software and data communication links. We execute all trades in accordance with our terms and conditions. We cannot guarantee that the price at which we permit clients to execute a trade will be better than elsewhere.
- The Cost – this includes our spread. There are no additional charges except financing fees for holding positions overnight. If clients hold a long or short position overnight they pay us a daily financing fee. Details of these financing fees can be found on our website.
- Speed and Likelihood of Execution – trades may be executed on our platform or by clients telephoning one of our dealers. Screen and telephone trades are subject to liquidity and market conditions and so we cannot guarantee that a client’s trade will be open or closed instantaneously or at the desired price due to illiquidity in the underlying instrument or if the order is unusual. The speed and likelihood of execution is also subject to software, hardware and telecom/ data line use and we cannot guarantee that this will not be free of interruption or suspension.
- Quantity – We set the minimum and maximum quantity that clients may place on a stock. This is influenced by market conditions and firm policy and changes from time to time. If clients wish to execute a trade that exceeds our price, we may quote a different price for the quantity requested. As an alternative, clients may also phone our dealers and we may work the order in the market subject to clients’ instructions. We cannot guarantee that upon receiving such an order that we will obtain the quantity clients desire due to market conditions.
When arranging a transaction or executing a client order, we will take into account the following criteria for determining the relative importance of the execution factors referred to above:
- the characteristics of the client including the categorisation of the client as retail, professional or an eligible counterparty;
- the characteristics of the client order; and
- the characteristics of the financial instruments that are the subject of that order.
Dealing with Client Orders
Subject to market conditions a client order will be executed at our price or very close to our price. The price clients receive at execution is not guaranteed as the market may widen, become very volatile or even gap. The execution price is dependent on the liquidity of the underlying instrument. There is no guarantee that a client’s order will be executed.
Aggregation of Orders
We may aggregate clients’ orders which mean we may combine orders of several clients as a single order. This is not considered to compromise a client’s interest although some disadvantage in respect of a particular order may occur. We aggregate as on occasion it reduces the time it takes to get orders to the market as opposed to placing lots of small orders.
Working Orders in the Market
Upon clients confirming acceptance of our price then the trade becomes effective. If we work an order for clients by means of positions they have entered on our trading platform or by telephone they cannot cancel the order once they have confirmed it. However we may agree to cancel any unfilled part of a client order.
If clients have any particular requirements as to how we act when dealing with them, then they must let us know and we will do our best to accommodate them. However, clients should be aware that where they give us specific instructions that are incompatible with our normal order execution policies and procedures, their specific instructions will take precedence. This may result in a different outcome than would have been achieved had our normal policies and procedures been followed and, for Retail Clients and Professional Clients, we will not be required to deliver best execution in respect of the aspects of a client order which are covered by their specific instructions. [Our normal policies and procedures take account of the costs that we would incur in transacting business. Transactions that are not undertaken in accordance with our normal policies and procedures may be subject to additional charges. Where this applies, we will notify clients of the applicable charges before their order is executed.]
For Retail Clients we must determine if we have provided them with best execution by reference to the execution factors and usually the price and cost of execution will be the determining factor.
If we have classified a client as a Professional Client we will consider relevant FCA guidance to determine whether they are relying on us to deliver best execution. We understand that clients may be relying upon us to deliver best execution but the importance of execution factors may differ to those for Retail Clients and for example speed of execution may take precedence over price.
If we have classified a client as an Eligible Counterparty, there is no requirement under the FCA rules for us to deliver best execution to them. However we will comply with this policy in relation to Eligible Counterparty Business and maintain records of data which are used to set our prices.
We will review this policy at regular intervals and will monitor and review external pricing sources, our price in relation to the underlying instruments, any fees, charges or financing fees.
We will give clients 14 days written notice where we make any change to this policy and the client disclosure relating to this policy on our website.