Effective May 24, 2018
1.Introduction
The law of 13 July 2007 that transposes into Luxembourg law the European Markets in Financial Instruments Directive (MiFID) reinforces the best practice rules applicable to financial intermediaries.
The best execution obligation is one element of this regulation.
What is meant by “Best Execution”?
It’s a term used to describe that all financial services firms carrying out transactions on their clients’ behalf must take all reasonable steps to achieve the best possible result considering execution factors such as the price of financial Instruments, the associated costs, execution speed, the probability of execution and settlement, the size of the order, the nature of the order and any other consideration relating to the order’s execution. However, for each individual transaction, this obligation should be considered as an obligation of means and not as one of a result.
2.Scope of Birdee Policy
Birdee intends to comply with this “best execution” obligation by formalizing rules in the form of this policy.
The Best Execution Policy (BEP) applies without distinction, in the sense of the MiFID, whether customers have been classified in the professional client category or the non-professional client category. Both categories are defined in our discretionary management mandate agreement.
For its retail activity, Birdee will deposit portfolios of its clients with a Custodian Bank.
Birdee or Custodian Bank generates Exchange Traded Funds (ETF) purchase or sales orders in accordance with the composition of the model portfolio linked to the client portfolio given by Birdee. Custodian Bank has a role of execution and booking. It shall operate portfolio investment for Birdee and buy and sell ETFs as instructed by Birdee.
The execution of an order for a vehicle such as an ETF or for similar instruments may be subject to market liquidity.
Custodian Bank put in place a selection process for brokers based on their ability to provide services for the instruments being traded.
In 2017, Sutor Bank is the custodian Bank and UBS is its single Broker.
Nevertheless, other custodian banks may be appointed in the future.
In that framework, Birdee must ensure the validity of the best execution policy of UBS.
UBS Order Execution Policy – UBS Europe SE
UBS executes customer orders for the sale and purchase of different classes of financial instruments as commission agent. Where UBS has no direct access to execution venues in respect of the classes of financial instruments, its customer orders are executed by selected commission agents or intermediaries. The use of commission agents and intermediaries for the execution of customer orders is a more cost-effective way of gaining access to as many execution venues as possible as if UBS were to obtain direct access to a large number of such execution venues.
If a customer gives UBS instructions for the execution of his order or aspects of such execution, he releases UBS to that extent from its duty to achieve best execution and to implement the requirements set out in this Order Execution Policy. UBS will execute the customer’s order in accordance with his instructions. The customer’s instruction may lead to the customer order not being executed in the best possible way within the meaning of this Order Execution Policy. The customer’s instruction will be followed even if this would frustrate the best possible result. UBS will not advise separately of this risk again in the event that a customer issues instructions when placing an order.
For reasons of cost and efficiency, UBS has no direct access to domestic and foreign stock exchanges for the execution of customer orders for the sale and purchase of shares in domestic and foreign exchange-traded investment properties; instead, it only has indirect access through commission agents and intermediaries.
To determine the commission agents, intermediaries with whom the best possible results can be obtained on a consistent basis, UBS obtained offers for the execution of customer orders from a large number of investment firms in both Germany and abroad. When analyzing the offers, UBS assessed the investment firms according to different criteria such as prices, processing efficiency, speed of execution or research services are analyzed to ensure our clients benefit from optimum execution. It takes into account risk factors, together with all the commercial, operational, legal and compliance aspects of each eligible broker.
UBS will ensure that customer orders are executed immediately and fairly in proportion to other customer orders and the commercial interests of the investment firm. Comparable customer orders will be either executed or transmitted to third parties for execution in the order received unless the customer has instructed otherwise, the size of the order and the prevailing market conditions require an alternative procedure or the alternative procedure is otherwise in the interests of the customer.
3.Monitoring and review
Birdee shall review its best execution policy. It will re-examine it annually or in the event of a substantial change which affect its capacity to continue to obtain the best possible results in the execution of its customers’ orders on a consistent basis.
Birdee shall also review annually custodian bank and broker best execution policy : Sutor Bank and UBS as well as new potential partners.