Effective January 2024

Introduction

This document outlines the arrangements that Crown and Bates has in place to fulfill its order execution obligations, as required under Chapter 11.2A of the Conduct of Business Sourcebook (COBS) which applies the Markets in Financial Instruments Directive II (MiFID II). This policy is designed to ensure that clients receive the best possible outcome when executing their orders with Crown and Bates.

Products in Scope

This policy covers any financial instrument as defined by MiFID II, including shares, bonds, unit trusts, structured products, and financial contracts like derivatives, regardless of whether they are publicly listed. Best Execution applies to all financial instruments under MiFID II, regardless of whether they are traded on an exchange.

Application of Best Execution – Client Classifications

Retail Clients

Crown and Bates will always provide best execution to clients classified as retail clients, as they are assumed to be relying on Crown and Bates to protect their interests. Best execution obligations apply whenever Crown and Bates executes orders for retail clients, except when specific instructions are provided by the client (see “Specific Instructions” below).

Professional Clients Crown and Bates is required to provide best execution to professional clients when the client relies on us to protect their interests. This will generally be the case, but we will assess reliance on a transaction-by-transaction basis. Examples of reliance include:
  • Accepting an order executed on an exchange order book.
  • Fulfilling an order directly from our own trading book without involving an external party.
However, clients may not rely on Crown and Bates in instances where it is market practice to seek multiple quotes from various dealers before executing a transaction. In cases where a ‘Specific Instruction’ is followed, Crown and Bates will consider that best execution requirements have been met.

Eligible Counterparties

Best Execution obligations do not apply to Eligible Counterparties, such as firms classified under this category by Crown and Bates. In particular, other exchange members are normally considered Eligible Counterparties, and this policy does not apply to business conducted with them.

Order Execution Factors

When executing orders on behalf of clients, Crown and Bates considers the following factors:

  • Client characteristics
  • Financial instruments in the order
  • Execution venues Once these factors are assessed, additional considerations include:
  • Price and size of the order
  • Speed and likelihood of execution
  • Likelihood and speed of settlement
  • Costs
  • Any other relevant factors

The priority of these factors may vary depending on client classification and will be determined on a case-by-case basis.

Execution Factors Explained

Price and Size

For most liquid instruments, price is the primary factor for achieving best execution, especially for retail clients where the size of the order does not limit Crown and Bates’ choice of venue. However, in larger orders, the best market price may not always be available due to size. In such cases, Crown and Bates will use reasonable judgment to achieve the best execution possible.

Speed and Likelihood of Execution

In some situations, speed and likelihood of execution may take precedence over price, particularly if a client requires prompt execution. In other cases, a client may prefer a large trade to be staggered to minimize market impact. Crown and Bates will discuss the importance of price versus speed with the client to understand their preferences.

Likelihood of Settlement

As most of Crown and Bates’ business involves shares quoted on global exchanges with centralized clearing and settlement, likelihood of settlement is not considered a critical factor in achieving best execution.

Costs

When explicit costs, such as exchange fees or settlement costs, could make the total consideration prohibitive, these may take precedence in determining the execution venue. In some cases, other factors may outweigh price considerations, such as for Unit Trusts which have one price and venue.

Execution Venues

Crown and Bates selects from a set of execution venues, including:

  • Regulated markets (RMs) under MiFID II such as the London Stock Exchange
  • Multilateral Trading Facilities (MTFs) and Organised Trading Facilities (OTFs)
  • Market makers, systematic internalisers, and other liquidity providers
  • Third-party investment firms and brokers

We may pass an order to a counterparty (e.g., a broker) for execution, but Crown and Bates retains the obligation to ensure the best possible result for the client.

Our venue selection criteria include:

  • Historical performance, including execution quality
  • Extent of services enabling us to meet client obligations
  • Market reputation and due diligence outcomes

We regularly review and adjust the venues we use to ensure compliance with best execution requirements. A current list of execution venues Crown and Bates relies on can be found on our website.

By agreeing to our Order Execution Policy and Terms of Business, you consent to Crown and Bates executing orders outside a Regulated Market (RM) or MTF when it is deemed appropriate.

Valuation of Unlisted Securities

For private, unlisted securities, pricing is typically based on prior transactions. Changes to this price will be based on subsequent fundraising or other relevant public information. For delisted stocks, a fair value price (FVP) will be determined by public information and reviewed quarterly to ensure accuracy.

Specific Instructions

If you provide specific instructions for an order, Crown and Bates may not follow all the steps in this policy, potentially limiting our ability to achieve best execution. While we will take sufficient steps to get the best results, there is a risk we may not achieve best execution in respect of the aspects covered by your specific instruction.

Publishing Limit Orders

If you provide a limit order, we may not always be able to execute it under prevailing market conditions. By agreeing to this policy, you consent that we will not publish your limit order unless it is in your best interest.

Dealing Arrangements

All orders are managed by a centralized dealing desk. Orders from portfolio managers are routed electronically to the trading desk, which is responsible for executing the orders according to this policy.

Aggregation and Allocation

Crown and Bates may aggregate orders when it believes it is in the client’s best interest. Aggregation may, on rare occasions, result in a worse price than if the order were executed separately. When allocating aggregated transactions, orders will be allocated pro rata to ensure fairness.

Monitoring and Reviewing

Crown and Bates’ compliance department regularly monitors order execution to ensure compliance with this policy. Any material changes will be communicated to clients, and the latest version of this policy will be available on our website.

Client Declaration

By agreeing to Crown and Bates’ Terms and Conditions and signing the account opening form, you consent to our Order Execution Policy. If you do not consent to this policy, we may be unable to open an account for you.

For further assistance, please contact your broker or email us at info@crownandbates.com.