Order Execution Policy
Purpose
The Markets in Financial Instruments Directive (“MiFID”) that came into force on the 1 November 2007 requires Neptune to put in place an Order Execution Policy and to take all reasonable steps to obtain the best possible result (best execution) in terms of the total consideration when executing orders on behalf of its retail and professional clients.
It is also a requirement that Neptune provides appropriate information to its clients on its MiFID Order Execution Policy. This document provides our clients with information regarding our Order Execution Policy.
Scope
Neptune’s Order Execution Policy applies to retail and professional clients and refers to financial instruments.
The policy applies where Neptune:
• Receives and transmits client orders and/or;
• Executes client orders or decisions to deal
Execution Venues and Entities
The execution venues and entities that we use with respect to each class of financial instrument can be obtained from the Compliance Officer. This list is not exhaustive but it details those venues on which we place significant reliance. These venues are chosen because we believe they enable us to achieve the best possible result in terms of the total consideration for the execution of trades for retail and professional clients.
These venues are monitored on an ongoing basis and assessed for their effectiveness in achieving this objective.
In the event that we believe an alternative execution venue not already included within our list of execution venues may be more suitable in achieving our execution policy objectives, we will use such execution venues on either an occasional or permanent basis, as appropriate.
In summary Neptune may use one or more of the following venues when executing orders:
• Regulated Markets (“RM”)
• Multilateral Trading Facilities (“MTF”)
• Other FSA authorised firms and EU or non-EU institutions (for overseas instruments)
We do not transact trades with or for clients via an in-house principal book.
Any entity to which we may transact an order for execution will itself be subject to a regulatory or contractual obligation to provide best execution.
Execution Factors
The execution factors that Neptune will take into account are: price, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order.
Neptune will take all reasonable steps to obtain the best possible result for its clients and will ordinarily place a higher importance on price. However we will, in certain circumstances, for some clients, determine that other execution factors are more important than price in obtaining best possible result, in this case we will take into account the characteristics of:
• the client;
• the client order;
• the financial instrument to the order;
• the execution venue.
Where a client has provided us with specific instructions for execution of a transaction, for example a specific venue, this may prevent us from obtaining the best possible result as per our execution factors.
In certain markets and trading situations such as “over the counter” (OTC) markets there may not be an equivalent publicly available price for the instrument being traded. In such situations we shall use our experience and commercial judgement to take into account all relevant information available to us and apply this execution policy with a view to achieving the best possible result in terms of the total consideration.
Our execution arrangements are structured in such a way as to ensure that we do not either directly or indirectly unfairly discriminate between professional and retail orders when executing via multiple execution venues.
Monitoring and Review
Neptune will monitor compliance with its order execution arrangements and policy at least annually. We will also assess whether the execution venues in our policy provide the best possible result for our clients. Any review may result in an update to our execution venues.
Neptune will notify clients of any material changes to its order execution policy.
Consent
We are required to obtain a client’s consent to our order execution policy when we trade via a RM or MTF. We will consider that consent has been given should a client continue to place orders with us after 1 November 2007.
Prior Express Consent
In order to provide our clients with best execution, we may, on occasion, trade outside a RM or MTF. In order for Neptune to do this we are required to obtain express consent. This may be given to us in writing or by email to the Compliance Officer.
Glossary
The following definitions are taken from the FSA Glossary.
Multilateral Trading Facility
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.
Regulated Market
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 its 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 authorized and functions regularly and in accordance with the provisions of Title II of MiFID.
Karen Barker
Compliance Officer
Neptune Investment Management Limited
1 Hammersmith Grove
London
W6 0NB
Karen.barker@neptune-im.co.uk