Terms of Reference:
“Best Execution” means obtaining the most advantageous execution terms for a client order reasonably available under the circumstances“Best Execution Committee” is comprised of the Head Trader and a senior representative of the Compliance Department (normally the CCO), and other trading or compliance representatives as needed depending on the matters under consideration.
1. Purpose and Obligation
“Best Execution” as defined in IIROC Rule 3300 and National Instrument 23-101 means obtaining the most advantageous execution terms for a client order reasonably available under the circumstances. AltaCorp Capital (ACC) is required to establish, maintain and ensure compliance with written policies and procedures reasonably designed to achieve best execution for clients.
2. Best Execution Practices
When executing orders in listed securities, ACC must:
3. Best Execution Factors Considered
ACC’s Best Execution policy is designed to result in the best outcome for the client. The Policy takes into account the following broad factors for the purpose of achieving best execution for all client orders:
ACC also considers the following factors which are more specific considerations of the above noted factors:
ACC is also required to address the following ‘prevailing market conditions’ when manually handling a client order:
4. Specific Client Instructions and Client Preferences
Where our clients provide specific instructions, such as withholding an order from market until conditions are more conducive, using an algorithm program to achieve VWAP, TWAP, percentage of volume, or any other special instructions, ACC will consider such instructions provided they do not contravene “specific market requirements” as defined by UMIR. However, best execution for a client order for any listed security is subject to compliance with Order Protection Rule (see below).
5. Practices Not Allowed in the Execution of the Best Execution of Client Orders
ACC will not send:
6. Training Obligations
ACC will ensure that all employees involved in the execution of client orders know and understand the application of ACC’s written best execution policies and procedures.
7. Best Execution and the Order Protection Rule
Regardless of client instructions or consent, all client orders are subject to the Order Protection Rule that requires that ACC not trade through any visible order on any Canadian protected marketplace, as shown in National Best Bid and Offer (NBBO) order book. Protected orders and marketplaces are as defined in National Instrument 23-101: Trading Rules.
8. Review of Best Execution Policies and Procedures
ACC will maintain well-documented Best Execution Policies & Procedures. The Best Execution Committee will review such policies at least annually, or whenever there is any material change to internal technology, a change in liquidity patterns, or a change in the Canadian trading environment, such as the entry of a new marketplace, or the closing of a current marketplace, or a significant change in any of the marketplaces’ rules.
The compliance representative will document any changes in methodology or policy and retain evidence of such meetings. The compliance representative will also be responsible for updating the ACC website disclosures, and maintain evidence of such disclosure changes.
ACC will regularly test (sample) trade tickets for Best Execution to demonstrate that our Policies and Procedures are reasonably achieving the goals set out in our Best Execution Policy.
ACC will also review quarterly trading statistics published by IIROC on marketplace volumes and value traded, as well as other data available to us on order completion rate, best prices, and best liquidity values, and a survey of all of our traders to determine if we need to amend our Smart Order Router (SOR) market ranking as determined by our Best Execution Order Committee.
ACC uses intermediaries to access US marketplaces or when it uses certain algorithms, the intermediary it uses for US marketplace is ITG, and for algorithms, it uses Fidessa and ITG. Both of these intermediaries have their own Best Price Execution Policies & Procedures, and ACC can provide copies of each intermediary’s policies and procedures on client request.
10. Fees, Payments and Commissions
ACC does not have any ownership interest in any Canadian or foreign stock exchange or marketplace. ACC may pay marketplace trading fees or receive marketplace rebates when routing client orders. The fee schedule is available on the website of each marketplace. These costs or rebates are not passed on to ACC clients. ACC’s routing strategies are not primarily based on fees or rebates, but which marketplaces are most likely to give clients the best execution.
11. Smart Order Router (SOR)
ACC principally uses the Fidessa SOR to obtain best order execution of client orders. The SOR also prevents any violation of the Order Protection Rule. The Fidessa order Flag OPR is available for all marketplaces. The SOR scans all accessible marketplaces for the best bid or offer at the time of order entry, the SOR then directs the order to the marketplace with the best bid or offer for execution.
When using the SOR, ACC is committed to the following:
ACC’s overall process designed to achieve best execution includes the requirement to take into account client’s instructions, subject to compliance with any regulatory requirements. Further, ACC must disclose material conflicts of interest that may arise when sending orders for execution and describe how such conflicts are managed.
© 2019 AltaCorp Capital Inc. All Rights Reserved. AltaCorp is a member of IIROC and CIPF (Canada) and FINRA and SIPC (USA)