As a company we work with different counterparties to execute our clients' trade orders, such as share sales. This policy outlines how we select, monitor and review the counterparties that are used to fulfil trade orders, and the factors that will be considered when using such counterparties.
As a receiver and transmitter, we do not transact directly in the market, but pass customers' orders to counterparties with which we have an established contractual relationship to provide us with execution services. These entities will usually be member firms of the relevant exchange, Retail Service Provider s and/or Market Makers. We refer to these entities throughout this policy as "Brokers", and together they form our "Panel of Brokers".
In this policy the words we, us and our always mean Computershare Investor Services Plc.
We always act with integrity and due skill, care and diligence when selecting, monitoring and reviewing Brokers. The primary consideration will be to ensure that the best possible results are obtained for our customers. We are committed to ensuring that customers' interests always take priority over ours, and to the overarching core value of treating customers fairly.
We only select Brokers who can provide an adequate degree of protection under relevant laws and Regulations, and who are able to demonstrate that they have sound governance structures in place.
We only transmit orders to Brokers with whom we have a contractual relationship as either an Eligible Counterparty or a Professional Client. When forming agreements with new Brokers, and when reviewing our Brokers, we consider a number of factors, which includes the following:
Business Factors
The organisational structure of the Broker and the entities that control the business.- The legal, regulatory, and market frameworks to which the Broker is subject. This includes validation that the Broker has the appropriate regulatory authority to undertake the relevant activity, and can provide Best Execution in accordance with FCA Rules.
- The range of activities that the Broker undertakes.
- The capacity in which the Broker trades (Principal or Agent), and the controls in place to mitigate any associated risks.
- That the Broker has sound governance structures in place.
- The reputation of the Broker, including any regulatory findings or fines.
- Any particular operational risks.
Financial Factors
- The credit worthiness of the Broker, checked by undertaking a financial analysis.
- The Broker's ability to maintain and commit adequate capital, when necessary, to complete trades.
- The costs levied by the Broker, since this may affect the final outcome in terms of overall consideration due to the client.
Market Factors
- The number of stocks covered by the Broker and their alignment with the current book of trading business with us.
- The Broker's ability to obtain liquidity, to minimise market impact, and to accommodate unusual market conditions.
- The Broker's flexibility to employ unique trading strategies, to execute and settle difficult trades, and to handle unusual trading volumes.
- The Broker's access to alternative trading options with a view on achieving higher quality execution.
Relationship Factors
- The timely and accurate provision of execution reports.
- The number and/or frequency of errors.
- The level to which the Broker is responsive to comments or complaints and its responsiveness to correct errors.
- Whether there are adequate lines of communication with the Broker's staff and traders.
We make a choice of Broker from those who have satisfied the above and have been included on our panel. Our approach will usually be a consistent selection for all orders within an individual dealing service. When selecting between Brokers within our panel, we will consider the following:
Best Execution Factors
- An assessment of the Broker's ability to consistently provide the best possible results for our client in terms of total consideration (price and costs).
Characteristics of the Client
- Particular rules or considerations relevant to the underlying customer or to the service they have signed up to.
Characteristics of the Trade Orders
- The potential to specify a "limit" order.
- The presence of specific instructions or requirements.
- The frequency of trading of this order type.
- The likely market impact of this order type.
Characteristics of the Stock
- Liquidity.
- Market listing.
- Method and currency of settlement.
Characteristics of the Broker
- Whether the Broker is a Market Maker in a particular stock.
- Whether the Broker is the Corporate Broker for a particular stock.
- The ability of the Broker to meet the technical requirements of the trade orders, including (but not limited to) any requirements for straight through ("Real Time") electronic trading.
- The ability of the Broker to support our settlement requirements, including (but not limited to) any requirements for overseas stock and currency exchange.
- The results of our ongoing monitoring programme, including (but not limited to) execution quality, reliability and recent service performance.
We maintain a record of each Broker selection decision and the factors and characteristics which informed that decision.
We ensure the appropriateness of our Broker selection in accordance with this policy. We will review and adjust our appointments where we believe better results could be achieved by using an alternative counterparty.
The performance of Brokers is continually monitored through:
- Testing as to the provision of Best Execution, focusing on pricing, and including any other relevant execution factor.
- Quality sampling of trades by both Dealing and Compliance departments, including prompt and accurate information and completion.
- Ongoing Due Diligence assessments of all Broker counterparties, performed on at least an annual basis, and wherever a need arises.
- Regular Broker service review meetings. Evaluation of the volume of trades currently being transmitted to each Broker, seeking to maintain an appropriately balanced spread of business between Brokers where possible.
This policy shall be reviewed on at least an annual basis. This review shall be documented and an appropriate record of the review will be maintained.