1. Purpose of the Policy
Under the Markets in Financial Instruments Directive II (MiFID), we are required to have in place an order execution policy and to take all sufficient steps to obtain the best possible result (best execution) on behalf of our Clients. This Order Execution Policy sets out the means by which we will meet our best execution obligations when executing orders for you. This policy does not impose any fiduciary responsibilities or duties over and above the specific regulatory obligations placed upon us or as may be otherwise contracted between us.
We will deal with you as principal unless we inform you otherwise and therefore your orders are executed with us and not on any exchange or other external market. Positions cannot be transferred and CFD positions that you open with us must be closed with us. Our Order Execution Policy applies when we execute orders from Clients to trade in any of the Financial Instruments offered by us, which include (but are not limited to) futures, options, forward contracts, contracts for difference and any other derivative contracts relating to securities, currencies, commodities, interest rates or yields.
Subject to any specific instructions that may be given by you, we will take all sufficient steps to obtain the best possible result for our Clients, taking into account the Execution Factors listed below.
We will determine the relative importance of the Execution Factors by using our commercial judgment and experience in light of the market information available to us and taking into account the Execution Factors described below.
2. Execution Factors
The Execution factors that will be taken into account are: price; costs; speed; likelihood of execution and settlement; size; nature or any other consideration relevant to the execution of the order.
Price: For all financial instruments the Company offers, we quote two prices: the higher price (ASK), at which the Client can buy the instrument (go long), and the lower price (BID), at which the Client can sell it (go short). The Company’s price for all financial instruments is a reference to the price of the relevant underlying asset. The Company obtains the price from third-party external reference sources. The Company’s prices can be found on the Company’s trading platform. The prices are updated as frequently as the limitations of technology and communications links allow. The Company reviews its third-party external reference sources from day to day to ensure that the data obtained is still competitive. When the price reaches an order set by you, for example: Stop Loss, Take Profit, Trailing Stop, Market Order, Limit Order, these orders are executed immediately. However, under certain trading conditions there is a possibility that these orders (Stop loss, Take Profit, Trailing Stop, Market Order, Limit) cannot be executed at the Client's requested price. When this happens, the Company has the right to execute the order at the first available price. This may occur, for example, at times of rapid price fluctuations if the price rises or falls in one trading session to such an extent that, under the rules of the relevant exchange, trading is suspended or restricted. This may also occur during thin liquidity conditions, which may occur at the beginning or closing of a trading session, overnight or at the expiration time of relevant CFDs.
Costs: Our charges may be incorporated as a mark-up or mark-down (the difference between the price at which we take a principal position and the transaction execution price with you). The Company’s price quote in many markets already includes our spread and there will be no additional fees or commissions due from you. The Company may alternatively agree to charge a commission or a combination of commission and mark-up or mark-down. The Company’s charges are not taken into account in determining the best execution prices. For opening a position in some types of CFDs, the Client may be required to pay commission or financing fees, the amount of which is disclosed on the Company's website. Commissions may be charged either in the form of a percentage of the overall value of the trade or as a fixed amount. For your open positions, the Company will credit or debit your account on a daily basis with an interest swap.
Speed of Execution: The Company places significant importance on the high speed of execution of Clients’ orders at all times, within the limitations of technology and communications links. The speed of execution can be affected by factors such as a poor Internet connection, or any other link to the Company’s servers and platform which may affect the execution of the Clients’ orders.
Likelihood of Execution: The Company places significant importance on this when executing Clients’ Orders. However, in some cases it may not be possible to execute an order, for example (but not limited to), the following cases: during news, at the start of trading sessions, in periods of high volatility, when prices may move significantly up or down and away from quoted prices, when there is rapid price movement, when there is insufficient liquidity for the execution of the specific volume at the quoted price. In such cases, the Company reserves the right to decline an order of any type or to offer Clients a new price for their orders. As it will be explained in the Execution Venues section of this Policy, the Company acts as principal whereby it will be the Execution Venue for the execution of all orders for any financial instrument offered by us.
Likelihood of Settlement: Upon the execution of an order, the Company shall proceed to the immediate settlement of such an order.
Size of Order: The minimum size of an order for each Financial Instrument is published on our website. The Company reserves the right to change the margin requirements when the equity of an account is above a certain level, which is specified on our website.
Market Impact: Economic data and rumours can rapidly affect the price of the underlying instruments/products from which the Company’s quoted price is derived. The Company will take all sufficient steps to obtain the best possible result for its Clients.
For retail clients, the best possible result for you will be based upon the total consideration payable (excluding our charges), representing the price of the financial instrument and the costs related to the execution. If we don’t treat you as a retail client, we may determine that other execution factors are more important than price in obtaining the best possible execution result.
Our charges may be incorporated as a mark‐up or mark‐down (the difference between the price at which we take a principal position and the transaction execution price with you). Our price quote in many markets already includes our spread and there will be no additional fees or commissions due from you. We may alternatively agree to charge a commission or a combination of commission and mark‐up or mark‐down. Our charges are not taken into account in determining best execution prices.
3. Execution Criteria
The Execution Criteria that will be taken into account are the characteristics of:
- the Client (and the Client’s categorisation);
- the order;
- the Financial Instruments that are the subject of that order; and
- the Execution Venues to which that order can be directed.
4. Execution Venues
Execution Venues are the entities with which the orders are placed and executed. For the purpose of order execution for CFDs, the Company acts as principal. Therefore, the Company is the sole Execution Venue for the execution of all Clients’ orders. Moreover, when the Company executes Clients’ orders, it may in turn route its own orders to regulated third-party EU financial institutions. For the purpose of order execution for Equities, the Company has identified brokers that it relies on for best execution. We are required to publish annually the top five execution venues that we use.
5. Trading outside a Regulated Market or a Multilateral Trading Facility (MTF) or Organised Trading Facility (OTF)
Under the FCA and FSC rules, where an instrument is admitted to trading on a Regulated Market, MTF or OTF, we are required to obtain your prior express consent before we arrange for an order in such instruments to be executed at an alternative venue. By trading on our platform, you express your consent to us arranging for your orders to be executed outside a Regulated Market, MTF or OTF.
6. Specific Client instructions
Where you give us a specific instruction as to the execution of an order we will execute the order in accordance with those specific instructions. 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 your specific instructions.
You should be aware that providing specific instructions to us in relation to the execution of a particular order may prevent us from taking the steps set out in our Order Execution Policy to obtain the best possible result in respect of the elements covered by those instructions.
We will monitor the effectiveness of our order execution arrangements and this Order Execution Policy to identify and, where appropriate, correct any deficiencies.
We will assess whether the execution venues included in this Order Execution Policy provide the best possible result for our clients or whether we need to make changes to our execution arrangements. We will review our order execution arrangements and this Order Execution Policy at least annually or whenever a material change occurs that affects our ability to obtain the best result for the execution of orders on a consistent basis using the venues included in this Order Execution Policy.
We are required to obtain your prior consent to our Order Execution Policy. You will be deemed to provide such prior consent when you give us an order.
10. Status of this Policy
This policy forms part of the Trading 212 UK Ltd. and Trading 212 Ltd. Client Agreements.
Execution Venue means a Regulated Market, an MTF, an OTF, a Systematic Internaliser, or a market maker or other liquidity provider or an entity that performs a similar function in a third country to the function performed by any of the foregoing.
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 MiFID II.
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 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 authorised and functions regularly and in accordance with the provisions of MiFID II.
Systematic Internaliser means an investment firm which, on an organised, frequent and systematic basis, deals on own account by executing client orders outside a regulated market or an MTF.
Organised Trading Facility (OTF) means a multilateral system which is not a regulated market or an MTF and in which multiple third-party buying and selling interests in bonds, structured finance products, emissions allowances or derivatives are able to interact in the system in a way that results in a contract in accordance with the provisions of MIFID II.