Order execution policy summary

 

1) Introduction

This is a summary of the order handling and execution arrangements we use when we execute orders on your behalf 
or transmit them to a third party to execute. We aim to obtain the best possible result on a consistent basis when 
carrying out orders for our clients.

This policy applies to all of our execution activities provided to both retail and professional clients, in respect of 
orders in ‘financial instruments’ (this includes funds, equities, investment trusts and other investment types). 
You should read this policy carefully and if you have any questions please contact us using the contact details in 
paragraph 1 (Who we are and how to contact us) of the General Terms, or get in touch with your regular contact at JM Finn

2) Our obligation

We have a regulatory obligation to take all sufficient steps to obtain, on a consistent basis, the best possible result for 
you when executing orders on your behalf or when transmitting orders to fulfil your instructions. 
Although we will take all sufficient steps to achieve the best possible result for clients on a consistent basis, it 
cannot be guaranteed that best execution will be achieved for each and every trade. This policy is subject to: 
(a) Any specific instructions that you give to us (e.g., an instruction to execute subject to a specified price 
limit);
(b) The nature of the markets and financial instruments (e.g. whether there are buyers and sellers in the 
market for the financial instrument)

3) Execution Venues

When we are carrying out client orders we may use any of the following execution venues dependent on the type of security the order is for:

Trading Venues:

  • Regulated Markets (“RM”s) – we are a member of the London Stock Exchange.
  • Multilateral Trading Facilities (“MTF”s) – we are a member of the Bloomberg MTF.
  • Organised Trading Facilities (“OTF”s) – JM Finn does not currently use any OTFs as part of 
  • our execution policy but we will keep this under review. 


Non-trading Venues:

  • Systematic Internalisers (“SI”s) – these are firms which, on an organised, frequent, systematic, and substantial basis, deal on their own account in investments outside of a Trading Venue.
  • Market makers – these are firms that take on the risk of holding a certain number of shares of a particular security in order to facilitate the trading of that security, whom we deal with outside of a Trading Venue.
  • Other liquidity providers (i.e. parties who help create a market for investments by buying and selling them frequently) such as brokers.

We will ordinarily execute orders via a Trading Venue. However, Non-Trading Venues can be used if we are able to obtain a better price than that available on a Trading Venue. There are risks of executing orders outside of a Trading 
Venue, such as counterparty risk (i.e. the risk of an execution venue not being able to settle a trade). We try to 
mitigate this risk by carrying out reviews of the execution venues we use, and placing trading limits or blocks on any 
we have concerns about.

A list of the main venues JM Finn uses to execute orders or that we transmit orders to can be found on our website at 
www.jmfinn.com. We rely on the venues on our list, but from time to time we may seek to use alternative venues if we 
think this could lead to a better outcome for our client. We regularly review the execution venues available, to identify 
those that enable us to obtain the best possible result on a consistent basis.

3.4) Executing orders

 We ordinarily execute orders in UK instruments and debt instruments of any jurisdiction through our direct access 
to execution venues. Depending on the nature and size of an order, we might use the following methods of dealing:

Retail Service Providers (RSPs)

  • RSPs are also known as ‘market makers’ and will guarantee to buy and sell investments up 
    to a certain limit. There is a network of RSPs that provides electronic quotes from different 
    RSP market makers. For some UK equities and exchange traded products (“ETP”s) that we 
    consider are particularly liquid (i.e. where there are high volumes traded on a daily basis), 
    orders are set up to route via the RSP network. This allows for the automatic execution of 
    orders.
    Our dealers have the option to place orders manually on the RSP if we have not set up 
    automatic routing

Electronic order books

  • Our dealers can place orders in UK equities electronically, in all but the smallest securities, 
    on SETS which is an anonymous order book provided by the London Stock Exchange. 
    The order book allows any limits to be displayed and organises buy and sell orders by 
    price. All trading is settled through a centralised counterparty, which means that trading is 
    anonymous.

Market makers and brokers

  • Our dealers can contact market makers and brokers directly to establish what price they will 
    bid or offer for an order in a security. This method can be applied to orders in UK equities 
    and ETPs.

Agency cross

  • This is when JM Finn matches a buyer and seller in-house, and the order is struck at a price 
    fair to both parties.

Request for quotes

  • Our dealers will place an electronic request for quotes to all available venues via the 
    Bloomberg multilateral trading facility (“BMTF”) and the Fidessa RSP, in order to execute 
    orders in debt instruments.

Platforms and fund managers

  • Our trade support team will either place orders in unit trusts on a platform where a wide 
    range of fund managers make their products available to trade, or they will place an order 
    with a fund manager directly.
3.5) Transmitting orders

We will transmit an order to another party for execution if we do not have membership or access to a particular 
execution venue. This is the case for orders in securities traded on overseas exchanges. We review the parties 
that we transmit orders to, in order to satisfy ourselves that they have satisfactory order execution policies and 
procedures in place so they can consistently achieve the best possible result.

4) Order Execution

Subject to any specific instructions that you may give us, we will take all sufficient steps to obtain the best possible 
result on a consistent basis when executing your order. In order to do this, we will take into account various 
‘execution factors’ and their relative importance in obtaining the best possible result, and we have procedures in 
place for each asset class that our dealing desk follow.

4.2) Execution factors

The execution factors that we take into account when executing orders are:

Price

  • We will usually assume that paying the lowest total amount possible is the most important 
    outcome for clients, and price is a key component of this.

Costs

  • We will look to use the execution venue that offers a combination of the lowest cost and best 
    price for the trade, in order to achieve the lowest total amount payable.

Speed

  • Whilst we place a higher importance on achieving the best price, there may be occasions 
    where speed is of greater importance to a client. The size of the order will always need to be 
    considered when assessing how quickly we can carry out the order. 

Likelihood of execution and settlement

  • We need to understand whether the venues we use are able to carry out orders to our 
    satisfaction, and whether they will be able to settle those orders. We consider the financial 
    stability of the venues we use and maintain a register of the risk we feel each venue poses to 
    the settlement of any order. This can use this information to place restrictions on the size of 
    any order we give to a venue, to help us minimise any risk of non-settlement.

Size

  • The size of an order may dictate how it is carried out. For orders that we consider are small 
    in size and are in liquid stocks (i.e. in stocks where there are high volumes traded on a daily 
    basis), our systems are programmed to route orders directly the Retail Service Provider 
    (RSP) network which allows for automatic execution of orders. Larger orders or orders in 
    less liquid securities are usually executed via our dealing desk, so that they can exercise their 
    expertise and knowledge of the market for that stock.

Nature

  • The nature of the order will impact the way in which it is executed (although paying the lowest 
    total amount will ultimately be the most important outcome). For example, whether an order 
    has a limit price (i.e. a price below which we will not sell or above which we will not purchase) 
    may determine how it is executed.

Any other consideration relevant to the execution of the order

  • A client may give us a specific instruction in relation to the execution of their order, which 
    means that the best possible result for them is something other than paying the lowest total 
    amount possible. It should be noted that if a retail client asks us to direct an order to a specific 
    venue, we will only do so if that venue will achieve the best possible result for the client.
4.3) Execution criteria

We consider the following criteria when deciding the relative importance of the different execution factors:

  •  The characteristics of the client (including the categorisation of the client as retail or professional);
  •  The characteristics of the order;
  • The characteristics of the financial instrument that is being traded;
  •  The characteristics of the execution venues to which that order can be directed; and
  •  Our own commercial judgement and experience

 

4.3) Relative importance

The relative importance of the execution factors will be determined by using our commercial judgement and 
experience. We will take into account of the market information available and the execution criteria. The following 
gives an overview of relative importance of execution factors for each of the asset classes we carry out orders in:

Equities

  • Price and costs are given the most importance for both retail and professional clients. The 
    size of the order and the liquidity of the instrument will normally be the next consideration, 
    as larger orders or orders in less liquid stocks can impact the price obtained. The size of the 
    order will impact the speed at which the trade may be executed. For example, taking a patient 
    approach when trading larger or less liquid orders can limit a negative impact on the price. 
  • These execution factors may become secondary if we have concerns over the likelihood of execution or settlement by a venue; if we have these concerns we may use an alternative venue even if it is not offering as good a price, or we may use multiple venues. If the order is in a foreign equity, we will give more importance to the venue we transmit the order to, with the focus on using the one which will mean our client pays the lowest total amount.
  • Clients can instruct us to trade at a certain price (this is known as a ‘limit order’). Where this is the case, price and costs will remain the most important factor, but we will continue to consider the other execution factors (although they may be impacted because of the limit).
  • Professional clients are able to direct orders (i.e. request which venue we place an order with). If they do this, the client instruction becomes the most important factor as we are no longer in a position to influence the price and costs incurred. 

 Debt instruments            

  • Price is given the most importance for both retail and professional clients. We only have 
    access to a limited number of venues who are all polled to determine the best price available 
    to us.
  • In rare circumstances, where the instrument is less liquid, the size of order will become a 
    factor that may also impact upon the speed in which the order is filled and the likelihood 
    of the order being completed. We do not need to consider costs as charges will not differ 
    between venues.
  • Clients can instruct us to trade at a certain price (known as a ‘limit order’). Where this is the 
    case, price remains the most important factor, but we will continue to consider the other 
    execution factors (although they may be impacted because of the limit).

Exchange traded products (ETP)

  • Price and costs are given the most importance for both retail and professional clients. The 
    size of the order and the liquidity of the instrument will normally be the next consideration, as 
    larger orders or orders in less liquid instruments can impact on the price obtained. The size 
    of the order will impact the speed at which the trade may be executed. For example, taking a 
    patient approach when trading larger or less liquid orders can limit a negative impact on the 
    available price. These execution factors may become secondary if we have concerns over the 
    likelihood of execution or settlement by a venue; if we have these concerns, we may use an 
    alternative venue even if it is not offering as good a price or we may use multiple venues. If the 
    order is in a foreign ETP we will give a higher importance to the venue we transmit the order 
    to, with the focus on using the one which will provide the best total consideration.
  • Clients can instruct us to trade at a certain price (known as a ‘limit order’). Where this is the 
    case price and costs remain the most important factor, but we will continue to consider the 
    other execution factors (although they may be impacted because of the limit).
  • Professional clients are able to direct orders, i.e. request which venue we place an order with. 
    If they do this, the client instruction becomes the most important factor as we are no longer 
    in a position to influence the price and costs incurred.

Unit trusts         

  • Unit trusts tend to only price once a day (although some may price and trade less frequently), 
    and prices are inclusive of costs. Fund managers can, at their discretion, charge what is 
    known as a ‘dilution levy’. This levy is applied after an order has been placed so we are unable 
    to take it into account when considering costs. Therefore, we will give the most importance to 
    the speed with which we place an order, so that we reduce the risk of an order being placed 
    after a fund manager’s cut off time for processing an order.

Other instruments          

  • On rare occasions, we will be required to trade in an instrument not covered by the categories 
    above. If we do, we will give price and costs the most importance for both retail and 
    professional clients. However, orders may be restricted to a limited number of venues that we 
    have connections with and so we will assume that best execution was achieved by reference 
    to the prices provided by those venues.

5) Order handling

We will execute client orders promptly and execute comparable client orders sequentially unless:

  • The characteristics of the order or prevailing market conditions make this impossible;
  • The interests of the client require otherwise; or
  • The orders are received by different media and it would not be practicable to do so

We may combine your orders with orders of other clients. We will only combine orders with those of other clients 
where we reasonably believe that this will not operate to your disadvantage. On occasions the effect of aggregation 
may work to your disadvantage in relation to a particular order. Where an order for multiple clients is only partially 
executed, we will usually allocate the instruments that we have completed execution on between our clients on a 
pro rata basis. If this allocation would result in uneconomic or unsuitable holdings for the clients concerned, we may 
allocate other than on a pro rata basis. We will take reasonable steps to ensure that any non pro rata allocation is in 
the best interest of all clients concerned

6) System Failures

In the unlikely event of system failure, any orders received from clients will be accepted on the basis that they will 
be executed once the relevant system has been restored. We will conduct a subsequent review to ensure that best 
execution has been achieved.

7) Monitoring and review

We review our performance, and the performance of the venues we transmit to, daily using data collated by an 
independent third party. JM Finn’s Dealing Committee considers the findings of this monitoring quarterly (or 
more regularly if the reviews highlight any significant issues). The Dealing Committee can agree to changes to our 
execution arrangements if it considers it necessary in order for us to continue to provide the best results for our 
clients. Changes may be, but are not limited to, accessing execution venues that are not currently used, or no longer 
using certain venues. Our Compliance Department also carries out periodic monitoring to make sure that we are 
complying with the Order Execution Policy and execution arrangements.

We will assess, on a regular basis, the quality of execution we get from the venues we use and consider whether 
we need to change our execution arrangements as a result of our monitoring. We will assess our execution 
arrangements whenever a material change occurs which affects our ability to continue to obtain the best possible 
result on a consistent basis. We will let you know of any material changes to our execution arrangements, including 
our execution venues, or our order execution policy, by posting updates to www.jmfinn.com. You will not be notified 
separately of any changes, except as part of any notification of changes to our Terms and Conditions in sections 1 
and 2 above.

8) Reports and disclosures

We can provide reasonable further information about the venues where orders are placed or transmitted for 
execution, or our policies and arrangements and how they are reviewed, on request. You also have the right to 
request evidence to demonstrate that trades have been executed in accordance with the Order Execution Policy.

9) Consent

By accepting our Terms and Conditions, you give us your express consent to execute orders outside of a Trading 
Venue. We will only do this when we believe it is in your best interests, for example because a better price can 
be obtained.

If market conditions mean we cannot immediately execute an order, unless you expressly instruct us otherwise we 
are required to publish certain limit orders (i.e. orders for execution at a certain price or better) in a manner which 
is easily accessible to other market participants. Such publication will not always be in your interests (for example, 
because doing so can itself sometimes adversely affect the market price). You agree that, when dealing with a limit 
order that is not immediately executable, we may exercise discretion not to publish the order.

In all other respects, by using our service after receiving this summary, you will be deemed to have consented to 
having your orders handled by us in accordance with the arrangements summarised in this document