Order Execution Policy Summary Information
Summary Information about Union Bancaire Privée (UK) Limited’s (UBP UK) Order Execution Policy
1) Introduction
This document summarises how ‘best execution’ is provided by UBP UK, including its branches. UBP UK is part of the Union Bancaire Privée, UBP SA group.
UBP UK must take all sufficient steps to obtain the best possible results for clients when executing orders or placing orders with other entities for execution. UBP UK bank branches that are located in Gibraltar, Jersey and Guernsey are also required by their local regulations to take reasonable care to ascertain the price which is best available at the time for transactions of the kind and size concerned and then, unless circumstances require it to do otherwise in the client's interests, deal at a price no less advantageous to the client. UBP UK has a single policy, as summarised below, based on the UK standards that also ensures that Gibraltar, Jersey and Guernsey standards are met. Since the UK rules consider the costs of dealing as well as the instrument’s price to obtain the best overall result for clients, there may be occasions where it is in a client’s best interests to deal at a less advantageous instrument price as the total cost is the same or lower.
Best-execution obligations are applicable to all financial instruments but, as these instruments may differ substantially in terms of standardisation, liquidity and number of possible execution venues, the application of the best execution principle is adapted to each financial instrument and the type of transaction that the client proposes to affect.
The “best execution” principle applies to all retail and professional clients, and UBP UK operates a single order handling and execution policy for all its clients, whether retail or professional.
For each individual transaction, this obligation is to be considered as an obligation of means and not of outcome. Nevertheless, UBP UK will, at the client’s reasonable and proportionate request, provide all necessary information showing that it has complied with its “best execution” obligation.
Further information about our policy or about the execution venues or entities where orders are transmitted or placed for execution are available upon reasonable request.
Specific Client Instructions
When clients give us specific instructions to execution order, we will execute the order in accordance with those specific instructions. When instructions relate to only part of the order, we will continue to apply our best execution policy to those aspects of the order not covered by specific instructions.
Warning: 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 execution policy to obtain the best possible result with respect of the elements covered by those instructions.
2) Description of the order execution process
To satisfy clients’ needs, UBP UK offers a full range of services and execution of orders involving a wide variety of financial instruments.
As a result, UBP UK may act as:
- an intermediary receiving and transmitting orders for execution by a third-party, including other entities in the Union Bancaire Privée, UBP SA group.
- a direct counterparty in highly specific cases (forward currency transactions, swaps, and bespoke financial instruments etc).
As detailed in UBP UK Terms of Business, instructions may be communicated to us between the hours of 9.00 a.m. and 5.00 p.m. on Business Days (i.e. days that are not a Saturday, Sunday or a public holiday in the country of the relevant office). Instructions received outside these hours will be deemed to have been received on the next Business Day and will be executed as soon as possible on the next Business Day.
Warning: For clients who execute investment orders on an execution only basis, you should direct all investment orders direct to the Execution Only Desk for terms set in this policy to be achieved. Please contact your Private Banker for the Execution Only Desk contact details.
Clients who are signed to one of our advisory services, your Investment Manager will direct your orders on your behalf once you have approved to proceed. External Asset Managers using the Channels platform will have orders transmitted directly to Societe Generale Luxembourg S.A (SG Luxembourg) for execution.
2.1 UBP UK as a receiver/transmitter of orders
Order execution terms may vary according to financial instruments and their specific characteristics, even when UBP UK is acting simply as an intermediary.
As part of its “best execution” obligations towards its clients, UBP UK transmits client orders swiftly and in order of arrival unless otherwise instructed by the client, or the nature of the order or market conditions make it impracticable to do so or the interests of the clients require a different course of action. Client orders may be aggregated with orders from other clients, but we will not combine them with UBP UK own orders. We will only combine your orders with those of other clients where it is unlikely that the aggregation will work overall to the disadvantage of any client. In individual cases, aggregation may result in you obtaining a less favorable price in relation to a particular order.
UBP UK will act with due competence, care and diligence in selecting and appointing the exchange members/counterparties that will execute the transactions. It will assess the market expertise and reputation of the exchange member/counterparty in question, be it internal or external to the UBP SA group, as well as their capacity to ensure the best execution of transmitted orders. UBP UK sets a minimum standard of credit risk for any trading counterparty that may be used and has daily monitoring by counterparty of failed settlements.
UBP UK places significant reliance for execution on SG Luxembourg, which is an exchange member within the Société Générale group. UBP UK has selected exchange members/counterparties that take all reasonable steps to obtain, when executing client orders, the best possible result considering the following factors, in order of priority:
- Total cost – Total cost means the price of the financial instrument plus the costs related to execution, including commissions, execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order. UBP UK’s commissions are structured so as not to discriminate unfairly in the selection of potential exchange members/counterparties.
- Speed – The greater the standardisation of the product and the more liquid the market, the faster the execution will be.
- The likelihood of execution and the size of the order – For non-standard transactions, particularly those that are significantly larger than are normally traded on the relevant regulated market, UBP UK may employ an execution strategy for large orders as detailed in section 3.1 below. In this specific case, the client order may not be executed as if it were in the order book of the relevant exchange.
- The likelihood of settlement – On some foreign exchanges, secure settlement may take priority to ensure the proper execution and settlement of the transaction. UBP UK reserves the right to cease transmitting or executing client orders or have them executed on any market or execution venue or by any exchange member/counterparty presenting recurring problems with settlement and delivery.
This order of priority may change under certain circumstances. UBP UK may choose another order of priority from the above list according to market conditions, the type of order and in compliance with its obligation to obtain the best possible result for its clients. Indeed, total cost is not necessarily the most important factor. In some cases, the likelihood of execution is the key factor in the processing of the order, as in the case of a security that is listed on a regulated exchange but is mostly traded over the counter.
Where we place reliance on brokers to execute transactions, we will take reasonable steps to ensure that the dealing arrangements of the brokers we use are sufficient to provide appropriate execution quality, considering our execution policy.
Where UBP UK transmits orders to other investment firms for execution, UBP UK does not publish a list of execution venues on which it places significant reliance, as it does not itself select the execution venues.
2.2 UBP UK executing client orders as agent.
UBP UK may execute some client orders itself, acting as agent, on execution venues such as Multilateral Trading Facilities (MTFs) or Over the Counter (OTC). This is relevant to bonds (debt securities) in particular. When executing orders as agent, UBP UK undertakes all sufficient steps to deliver the best possible result for the client based on the same criteria as set out in section 2.1 above.
2.3 UBP UK trading as principal to execute client orders.
In the context of transactions executed on a principal basis with clients (foreign exchange and OTC derivative transactions, for example), UBP UK may act as the counterparty of the order received from its client. Where we act as counterparty, this will be disclosed in contract notes or portfolio valuations.
When executing orders, UBP UK undertakes to take all sufficient steps to deliver the best possible result for the client based on the following criteria:
- Price of the financial instrument – UBP UK undertakes to provide a fair price, considering precise market parameters and market conditions prevailing at the time the order is transmitted:
- Speed of execution.
- The likelihood of execution and the size of the order.
The execution of transactions within this context is also subject to the considerations detailed in section 4 below.
3) Application of the execution policy to different classes of financial instrument
3.1 This section summarises how the execution policy is applied to different types of financial instruments for all UBP UK client trades.
3.1.1 Listed equities (company shares) and similar instruments
UBP UK will act as an order transmitter and appoint SG Luxembourg’s dealing team to obtain best execution.
SG Luxembourg’s preferred execution venues for listed equities and similar instruments are the regulated markets or an MTF, based on the principle of the most liquid exchange. In the case of orders to sell equities, the execution venue shall, for reasons linked to the cost of execution, be determined mainly by the place in which the securities in question are deposited.
3.1.2 Collective Investment Schemes/UCITS
UBP UK will normally act as an order transmitter, and appoint MFEX Sweden AB,
(MFEX) to obtain best execution, but in some cases UBP UK will execute the order as agent with the fund manager, either directly or via their respective agent or a clearing agency such as Clearstream.
MFEX place orders directly with the fund’s official registrar (as designated in the fund prospectus) but may occasionally use a third-party broker/custodian (selected in accordance with their best execution policy), for example, where the mutual fund is traded on an exchange. The rapidity of execution of such orders is dependent on the calculation of the NAV as provided for in the prospectus.
Orders concerning the subscription, redemption or conversion of units of collective investment undertakings executed on behalf of UBP UK clients directly with the fund manager or indirectly via a clearing agency shall be deemed to satisfy best execution criteria.
3.1.3 Bonds (Debt Securities)
UBP UK will act as an order transmitter and appoint SG Luxembourg to obtain best execution.
SG Luxembourg’s preferred execution venues for bonds are MTFs, systematic internalisers or equivalent non-EEA venues. However, SG Luxembourg reserves the right to execute bond orders Over the Counter (OTC) provided that does not constitute a disadvantage to the client. The execution of bond orders may depend on the liquidity of the market.
3.1.4 Exchange Traded Funds (ETFs)
UBP UK will act as an order transmitter and appoint SG Luxembourg to obtain best execution.
The execution of an order for a vehicle such as an ETF or for similar instruments may be subject to market liquidity. Accordingly, SG Luxembourg can execute client orders either in a regulated market or via an MTF platform (or an equivalent non-EEA venue), while applying the equity orders execution policy described above, or it can execute client orders with a systematic internaliser, provided it does not put the client at a disadvantage.
3.1.5 Structured Products
Structured products are executed on an OTC basis with the product provider concerned, rather than on a centralised market exchange. Your attention is drawn to the risks related to OTC transactions which are summarised in Section 4.
The best execution principle must be adapted to each financial instrument. Best execution requirements may be more complex to achieve for orders relating to structured products and non-listed financial instruments in general.
For structured products issued through UBP UK structured products desk, we transmit client orders to SG Luxembourg or Société Générale SA for execution. For primary issuance, they will instigate a tender process which will consider terms, price and credit rating of the issuer and, where possible, comparing with similar or comparable products.
For secondary market transactions the fairness of the price is checked by reviewing market data to compare the price proposed by the issuer.
Other structured products (not issued through UBP UK structured products desk) may be executed for clients upon their request directly with the issuer or product provider concerned, but in such cases, there is a single price quoted and (except where UBP UK is acting as discretionary portfolio manager) the client is solely responsible for accepting the terms offered by the product provider and we cannot accept these terms on your behalf.
3.1.6 Exchange traded Derivatives
UBP UK will act as an order transmitter and appoint SG Luxembourg to obtain best execution.
Total consideration and speed of execution will normally be the primary factors considered in achieving the best overall result for the client.
3.1.7 Over the Counter (OTC) Derivatives
UBP UK will act as an order transmitter, and appoint SG Luxembourg to obtain best execution in relation to OTC derivatives (other than Foreign Exchange (FX) products).
Total consideration will normally be the primary factors considered in delivering best execution for OTC derivatives. However, there will be occasions when the nature of the transaction is so complex and/or proprietary that, considering the whole nature of the transaction, UBP UK believes that it would be appropriate to involve only one or two counterparties.
In normal circumstances our execution will be outside of a regulated market or MTF, which clients have expressly consented to in our Terms of Business. Section 4 below details the main consequences of dealing outside of a trading venue.
3.1.8 Foreign Exchange (FX) Products
UBP UK will act as principal when executing Foreign Exchange (FX) products. For FX Forwards and other FX derivatives, the total consideration, representing the price of the product and the costs related to execution, will normally be the primary factor considered in delivering best execution. We review market data used in the estimation of the price of such products and, where possible, compare them with similar or comparable products to ensure best execution. However, where the order is of such a size or nature that the Dealing Department believes that its immediate execution would lead to a poorer total consideration for the client due to market impact and in the absence of other instructions from the client, then the Dealing Department will use their discretion to seek to manage the order in such a way as to deliver the best total consideration for the client. The speed of execution will then be a lesser factor in the execution decision. This may require us to execute orders over the course of a day, or a number of days. As spot FX is not an investment, it is out of scope of this execution policy, however, we will disclose the margin applied.
In normal circumstances our execution will be outside of a regulated market or MTF, which clients have expressly consented to in our Terms of Business. Section 4 below details the main consequences of dealing outside of a trading venue.
4) Execution of orders outside of a trading venue
As noted above in relation to bonds, OTC derivatives, structured products and FX products, client orders may be executed outside a trading venue where we believe this will obtain the best possible result for the client. In such cases, the transaction does not benefit from any clearing mechanism and the client is exposed to the credit risk of the counterparty selected for the transaction. If the counterparty becomes insolvent between the time of execution and of settlement, the client will not have the benefit of any protections provided by an exchange or central clearing system and may suffer a loss of the entire value of the transaction. Such loss may not be covered by the UK Financial Services Compensation Scheme nor the Gibraltar Investor Compensation Scheme. Additional information about the consequences of executing outside a trading venue are available upon request.
5) Monitoring of execution quality
UBP UK has established procedures to analyse and monitor the quality of execution of client orders that are independent of the dealing desks. The Operations and Risk Team undertakes regular sample monitoring of transactions to monitor the effectiveness of its order execution policy and correct any deficiencies identified. This includes reviewing the price obtained, the total cost, the timeliness of execution and the market impact, as appropriate for the instrument concerned. The performance, dealing costs and credit standing of brokers used by UBP UK are regularly assessed. The results of these monitoring activities are periodically reviewed in accordance with UBP UK governance arrangements.
UBP UK reviews its Order Execution Policy at least annually. This includes assessing whether the execution venues and/or brokers used by UBP UK provide the best possible results for clients, taking account of published data, or whether changes to UBP UK’s execution arrangements are required. A review is also done when a material change affects UBP UK ability to continue obtaining the best possible results for clients.
It is UBP UK policy to look to continuously learn from its monitoring and awareness of real customer outcomes and regularly challenge itself to ensure it is delivering good client outcomes. Where UBP UK identifies poor outcomes or foreseeable harm, we will act to address this by putting in place processes to tackle the causes.