ORDER EXECUTION POLICY

1.   PURPOSE

1.1   Introduction:

It is important that you read this policy as we will deem that you agree to the terms of the policy and our Dealing Policy when you request us to act on your behalf.  All instructions are acted upon at our sole discretion and we may refuse to accept any dealing instruction without giving a reason. We draw your attention in this regard to regulatory rules on tipping off where, for example, we may suspect a financial crime or where we are acting upon the instructions of proper authorities such as regulators or law enforcement agencies.

Enigma Strategy Limited (“Enigma”) order execution policy complies with the Markets in Financial Instruments Directive II (“MiFID II”) and the associated regulation MiFIR. Part of our method of achieving this is through our Order Execution Policy that is summarised here and which we will abide by when handling any standard dealing instructions from investors or instructing parties.

Our Order Execution Policy must be read in the context of our Conflict of Interest Policy, and our Trading Terms and Conditions of Business. FCA regulatory rules and appropriate legislation and relevant European Union directives (or UK equivalents) also apply. We may update or amend our Order Execution Policy at any time and without notice for reasons of compliance and risk management or any appropriate commercial purpose and any such amendment will supersede previous policies.

Best execution requirements apply to all financial instruments as listed in Annex I of MiFID II, section C. The Firm has permission to carry out regulated activities allowing the Firm to execute and transmit client orders in these instruments in accordance with this policy.  For further information on the Firm’s permitted regulated activities please see the FCA register here.

This policy details how Enigma Strategy Limited (the Firm) will comply with its overarching regulatory requirement of taking all the sufficient steps to obtain, when transmitting orders to, and/or placing decisions to deal with other entities for execution, the best possible results for its clients. The Firm is authorised by the Financial Conduct Authority (FCA) and, as such, will act in accordance to the rules as defined in the FCA Handbook, which will take precedence over the requirements of this policy.

2.   REVIEW OF POLICY

This policy, and the Firm’s order execution arrangements, will be reviewed regularly, at least once a year, and amended as considered necessary by the Firm’s Management Body in the event of changing circumstances or regulations.

3.  BEST EXECUTION

Best execution is the overarching requirement for firms to take ‘sufficient steps’ to provide the client with the best possible overall results on a consistent basis, and not just by providing the best price for an individual trade. To do this, the Firm shall take into account execution factors such as price, costs, speed, the likelihood of execution and settlement, size, nature or any other consideration considered to be relevant to the execution of client’s orders.

Nevertheless, where there is a specific instruction from the client the Firm shall execute the order following the specific instruction. If the client’s specific instruction covers one aspect of the order, the Firm will follow its execution policy for the other aspects to ensure the best execution.

When you instruct or request us to buy or sell an investment, we will take all sufficient steps to obtain, the best possible result for you.  To achieve this, we will consider the execution factors summarised below:

• The characteristics of your client classification (retail, professional or eligible counterparty)
• The characteristics of the financial instrument
• Price, cost, speed and likelihood of execution and settlement
• The type of order, its size, and its nature, including where the order involves securities financing transaction (SFT)
• The execution venues on which it can be dealt (‘execution venue’ includes a regulated market, an MTF, an OTF, a systematic internaliser, or a market maker or other liquidity provider or an entity that performs a similar function in a third country to the function performed by any of the foregoing)
• Whether there is a liquid market for the instrument
• Plus, any other factors that we are aware of or are made aware of that seem to us to be relevant to the execution of the order request or instruction.

In the absence of specific instructions from you, we will determine in our sole judgement the relative importance of these factors by judgement, experience in the light of market information available, and by considering any other execution factors. All executions will also adhere to our dealing policy. Judgements are determined by us by reference to information available to us at the time of trade or just before the time of trading. Hindsight is not pertinent to this where factors were not apparent or available to us, or when clients or instructing parties withhold relevant or potentially relevant information from us.

When in receipt of specific execution instructions, we will action them so far as reasonably possible and we will be treating this as providing you with best execution. Such instructions may prevent us from following the steps for obtaining the best possible result as outlined in this policy.

Enigma acknowledges when executing an order on behalf of retail and professional clients, the best possible result must be determined in terms of the total consideration, representing the price of the financial instrument and the costs related to execution, which must include all expenses incurred by the client which are directly related to the execution of the order, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order. This, however, should not be considered the sole determining factor. In some circumstances, for some clients, speed, the likelihood of execution and settlement, the size and nature of the order, market impact and any other implicit transaction costs may be given precedence over the immediate price and cost consideration only insofar as they are instrumental in delivering the best possible result in terms of the total consideration of the order.

3.1 Delivery of Best Execution

The Firm is responsible for transmitting client orders and as such is responsible for procuring best execution for those orders.

4.  SCOPE

4.1 Financial instruments:

Best execution requirements apply to all financial instruments as listed in Annex I of MiFID II, section C. The Firm transacts in the following classes of financial instruments:

• Certificates representing certain security
• Commodity Future
• Commodity option and option on commodity future
• Contract for Differences (excluding a spread bet and, a rolling spot forex contract and a binary bet)
• Debenture
• Future (excluding a commodity future and a rolling spot forex contract)
• Government and public security
• Option (excluding a commodity option and an option on a commodity future)
• Rights to or interests in investments (Contractually Based Investments)
• Rights to or interests in investments (Security)
• Rolling spot forex contract
• Share
• Spread Bet
• Unit
• Warrant

 4.2 Clients:

This policy applies to Retail Clients and Professional Clients. In accordance with the Firm’s obligations to the client, it has notified the client of the client classification that applies to them.

4.2.1 Retail Clients:

When dealing with Retail Clients, there is a regulatory assumption that the client can rely on the Firm to protect their interests, and the Firm will apply the best execution to all trades that the client places through it, which will be assessed on the basis of ‘total consideration’.

4.2.1.1 Total Consideration:

Total Consideration is defined as the sum of the price and the costs incurred by the client and it represents the price of the financial instrument and all costs associated with the execution of the client’s order including execution venue fees, clearing and settlement fees, and any other fees paid to third parties involved in the execution of the order.

The Firm will use third party Platforms as the custodian for the client. A quote is received from the platform prior to execution that can either be accepted or rejected. The Firm works closely with third party platform providers to ensure the consideration achieved is sufficient and in line with the market and any agreed costs all of which are regulated in their respective jurisdiction which is detailed in our Trading terms and conditions

Regulated markets we will use:

• All UK Exchanges
• All European Markets
• All US Markets
• All Major Asian Markets 

4.2.2 Professional Clients:

When dealing with Professional Clients, the Firm does not differentiate between an ‘elective’ Professional Client and a ‘per se’ Professional Client and will apply Best Execution to all transactions undertaken for its clients.

4.2.3 Eligible counterparties:

This policy does not apply to Eligible Counterparties where carrying out Eligible counterparty business and as such, the Firm does not owe best execution to transactions undertaken by clients classified as such.

4.3 Activities:

The Firm’s activities primarily involve providing wealth management services to retail and professional customers.

This involves offering both advisory and discretionary investment advice to a number of customers or clients.

The Firm has permission to carry out regulated activities allowing the Firm to execute and transmit client orders in these instruments in accordance with this policy.  For further information on the Firm’s permitted regulated activities please see the FCA register here.

4.4 Order Types:

Regardless of the type of order that the client transacts with the Firm, the best execution will apply. This will normally include order types commonly used on an execution venue, as defined by MiFID.

5.  BEST EXECUTION OBLIGATIONS

5.1 Order execution arrangements & client information:

The Firm has designed and implemented specific arrangements to take all sufficient steps to obtain when executing client orders, the best possible results taking into account the execution factors including:

• A specific venue selection process
• The ranking of the execution factors in accordance with the characteristics of the client, the order, the financial instrument and the execution venue to which that order may be directed
• The design of efficient execution strategies
• The verification of the fairness of the price when dealing in OTC products

5.1.1 Information on order execution policy:

In accordance with its regulatory requirements, the Firm has prepared a comprehensive document summarising those arrangements and explaining clearly how the orders will be executed by the Firm. This document is given to clients before entering into an agreement to provide investment services.

This information includes a link to the most recent execution quality data published by the execution venues listed in this order execution policy.

5.1.2 Demonstrating compliance with the order execution policy:

Where a client makes reasonable and proportionate requests for information about its policies or arrangements and how they are reviewed, the Firm will answer clearly and within a reasonable time. The Compliance function is in charge of this process. It may include demonstrating that the client order was executed in accordance with this policy.

5.1.3 Inducements:

The Firm does not receive any third party payments or non-monetary benefits.

Enigma officers and employees are not allowed to accept gifts, entertainment or any other inducement from any person which might benefit one customer at the expense of another when conducting investment business. Enigma gifts and entertainment policy is maintained and monitored by Compliance for the purpose of ensuring that the Firm always acts in the best interests of its clients.

5.2 Execution Factors:

In the absence of express instructions from the client, the Firm will exercise its own discretion in determining the relative importance it assigns to the execution factors (or the process by which it determines their relative importance) that it needs to take into account for the purposes of providing the client with the best possible result.

These execution factors have been listed in order of priority and will include, but are not restricted to, the:

• Price: The Firm will generally consider that price merits high importance, however, the nature of securities will determine if the Firm shall give precedence of other factors such as speed or likelihood depending on the security characteristics
• Costs: The Firm will always pay due regards to the costs related to any execution to ensure that the costs will not jeopardise the end result
• Size of order: The Firm considers the size of the transaction and how it may impact the price of execution
• Likelihood of execution and settlement: The Firm considers that for illiquid securities, the likelihood of execution may take precedence over price and speed
• Nature of order: The Firm will consider how the characteristics of the transaction can impact how best execution is achieved
• Speed: The Firm considers that for liquid securities, speed is paramount, taking into account the fact that markets tend to move quickly, i.e. the price of the security may vary significantly
• Characteristics of the client: The firm will consider the characteristics of the client, including the categorisation of the client as retail or professional

5.3 Execution strategies:

In the absence of express instructions from the client, the Firm will exercise its own discretion in determining the execution strategy it needs to apply to obtain the best possible results where executing a client order.

5.4 Execution Venues:

When transmitting client orders, the Firm will ensure the venues selected are in the clients’ best interests by considering the following:

• Venues are appropriately regulated and have arrangements in place to provide the best execution in the relevant instruments
• Provision of the venue’s Order Execution Policy
• Charges for execution are competitive and do not include research
• Other relevant considerations such as transaction reporting capabilities
• Market Orders are transmitted to Third Platform Services electronically and brokerage desks are attached to the client’s own nominated custodian. Occasionally, the Firm may place Limit Order with similar venues.

Orders in Collectives are transmitted to Third Platform Services, the client’s own custodian or placed directly with the Fund Manager.

Note: The Firm can only use Third Platform Services where they are custodians to the client on their platform.

• Third Platform Services – Exchange Traded Investments. Access to broker platforms is facilitated by the Firm’s agreement with Third Platform Services (TPS). Trades, where TPS are custodians, can also be placed by them with other brokers.
• Brokerage Desk for clients’ own nominated custodian – Exchange Traded Investments
• Unit Trusts & OIECs – depending on the client’s custody arrangements, these orders will be passed to (i) Third Platform Services (ii) the client’s own custodian (iii) placed directly with the Fund Manager.

When selecting venues, the Firm reviewed the following:

• Standard corporate documentation available on Companies House such as incorporation, directors and accounts
• Regulated entity
• News and reputation
• T&C
• Services to be provided
• Controls and availability of Assurance Report
• Meetings and visits

5.5 Executing order outside a trading venue:

The Firm will avoid trading outside trading venues on behalf of clients.

The other entities to whom the Firm transmit/places orders for execution may execute orders outside a trading venue. To ensure that its clients understand the risks of such type of execution the Firm has included in its “Information on order execution policy” document all the necessary elements highlighting the risks and benefits of such mode of execution.

5.6 Client instructions:

Where the client provides the Firm with specific instruction in relation to an order, or any particular aspect of that order, including an instruction for the trade to be executed on a particular venue, the Firm will execute the order in accordance with the client’s instruction.

The Firm will take all the steps it has designed in this policy to obtain the best possible results for the client in respect of the order, or aspect of the order, not covered by the specific instruction. It is, however, possible that the specific instruction may prevent the Firm to take all the steps it has designed in its order execution policy to obtain the best possible results in respect of the elements of the order not covered by the specific instruction.

Where the client provides the Firm with specific instruction in relation to an order, the Firm will also transmit the specific instruction to the entity to which the order is transmitted in order to ensure that the other entity will execute the order in accordance with the client’s instruction. It is, however, possible that the specific instruction may prevent the other entity to take all the steps it has designed in its order execution policy to obtain the best possible results in respect of the elements not covered by the specific instruction.

5.7 Verifying the fairness of the price:

For each financial instrument that is traded OTC the firm before proposing the price to the client and/or executing the order will check the fairness of the price by comparing the price to external market data or reference prices in the same financial instrument or a comparable financial instrument if no reference price is available in the same financial instrument.

The Firm will identify and disclose the following costs:

• Implicit cost control: The Firm’s trades are relatively small in nature and have no market impact. If the Firm were selling a significant number of shares, the Firm would work closely with the broker to minimise any potential impact.
• Explicit external costs: due to the nature of the investments the Firm’s clients hold and the size of the orders, explicit costs are unlikely to have an impact.
• Explicit internal costs: the firm does not charge any commission or spread.
• Annual information on the identity of execution venues and on the quality of execution
• The Firm will summarise and make public on an annual basis, for each class of financial instrument, the top five execution venues in terms of trading volumes, where it has executed client orders in the preceding year, together with information on the quality of execution obtained.

6.  MONITORING

The Firm will monitor the effectiveness of its order execution arrangements and order execution policy in order to identify and, where appropriate, incorporate any amendments to procedures. The Firm will monitor the prices available in the wider market to make sure that its executing parties are offering fair prices and that they continue to provide the best results for clients.

The Firm will monitor all trades post-execution to ensure prices are in line with either the Volume Weighted Average Price for the instrument or Quote Recap.

All trades subject to best execution are logged in a spreadsheet that details the date and time of execution, instrument name and identifier, nominal, price, trade direction, total consideration, execution venue, check used (i.e. VWAP and/or QR) and slippage costs.

The Firm monitors all trades to ensure they are executed within a reasonable period after being passed to a venue for execution. Slippage costs are monitored for all direct trades. If a client was disadvantaged by a delay in trade execution, the Firm would work with the venue to determine the reasons for the delay and review whether the incurred slippage was reasonable, and, if appropriate, the Firm would ask the venue to compensate.

The Firm will assess, on a regular basis, whether the execution venues included in the order execution policy provide for the best possible result for clients or whether it need to make changes to its arrangements.

The Firm will review its order execution arrangements and order execution policy at least annually or whenever a material change occurs that affects its ability to continue to obtain the best possible result for the execution of client orders on a consistent basis using the venues included in its order execution policy.

7.  MATERIAL CHANGES

The Firm will notify clients of any material changes to its order execution arrangements or order execution policy as described above by posting the information on its website.

8.  NO FIDUCIARY RELATIONSHIP

The Firm’s commitment to providing clients with “best execution” does not mean that it owes clients any fiduciary responsibilities over and above the specific regulatory obligations placed upon it or as may be otherwise contracted between the Firm and clients.

Clients remain responsible for their own investment decisions and the Firm will not be responsible for any market trading loss clients suffer as a result of those decisions.

9. BREACHES OF ORDER EXECUTION POLICY

Any breaches of the Order Execution Policy will be recorded on the Firm’s breach log in conjunction with its regulatory breach policy.