This document sets out the Execution Policy and approach to providing best execution, as Required by the Markets in Financial Instruments Directive 2014/65/EU (MiFID II) for UK Bond Network Limited (UKBN).
MiFID II requires UKBN to take all sufficient steps to obtain the best possible result for its clients, taking into account price, costs, speed, likelihood of execution and settlement, size, nature and/or any other relevant order execution consideration, whether we are executing orders on behalf of clients or placing orders with, or passing orders to, others for execution. This overarching obligation to obtain the best possible result for clients is referred to, in this document, as the obligation of Best Execution.
1.1 This document applies to clients classified by UKBN as Retail or Professional Clients and only to dealings in Financial Instruments (each as defined in MiFID). Best Execution is owed when UKBN accepts an order to execute a transaction on a client’s behalf, or in other circumstances where it has otherwise expressly agreed to accept such Best Execution obligations.
1.2 UKBN has implemented this Best Execution Policy (the "Policy") in order to ensure that it takes all sufficient steps to obtain best execution: i.e. the best possible result for clients when arranging deals in investments for them, taking into account the FCA's execution factors and any other consideration relevant to the execution of an order (the "Execution Factors").
1.3 UKBN will only make arrangements for clients to invest in Corporate Bonds. UKBN will not make arrangements for clients in relation to any other types of investments. This execution policy is designed on this basis.
2. Best Execution obligation and relevant factors
2.1 As set out above when executing orders on a client’s behalf in relation to Financial Instruments, UKBN will take all sufficient steps to obtain the best possible result for the client, and achieve Best Execution.
2.2 UKBN has in place processes which are designed to obtain the best possible execution results on a consistent basis, subject to and taking into account the Financial Instrument subject to the nature of a client’s orders, the execution venues available for such Financial Instruments and the priorities a client places upon UKBN executing those orders. The policy and processes provide, in UKBN’s view, the best balance across a range of factors.
2.3 UKBN will take into consideration a range of different factors when determining how to obtain the best possible result for orders executed on a client’s behalf, including price, the need for timely execution, availability of price improvement, the liquidity of the market (which may make it difficult to execute an order), potential price impact, the size of the order, the nature of the financial transaction and the quality and cost effectiveness of any related clearing and settlement facilities.
2.4 UKBN will also consider the characteristics of the client (including the categorisation of the client as Retail or Professional), the characteristics of the client order, the characteristics of the financial instrument that is subject of the order and characteristics of the execution venues to which the order can be directed.
2.5 UKBN will not structure or charge commissions in such a way as to discriminate unfairly between execution venues.
2.6 For Retail clients, the best possible result is determined in terms of the total consideration, representing the price of the financial instrument and the costs relating to execution, which shall include all expenses incurred by the client which are directly relating 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.
2.7 Whenever a material change/significant event occurs that affects UKBN’s ability to continue to obtain the best possible result for the client, UKBN will assess the nature of the change (such as cost, price, speed, likelihood of execution etc.), and shall consider making changes to the execution venues or entities.
3. Execution venues
Bonds issued via the UKBN Platform will not typically be issued or traded on, or in accordance with, the rules of any Regulated Market or Multilateral Trading Facility (as defined in the FCA rules).
UKBN act on an execution-only basis and provide no recommendation or advice to the client. An execution is defined as the completion of a buy or sell order for a security. In some circumstances, orders may be partially completed.
UKBN believes that by administering a Bulletin Board trading venue in these circumstances, and by executing a client’s order against another client’s trading interest enables UKBN to obtain on a consistent basis the best possible result for the execution of client orders given the resources available to it as a Firm, and its obligations to its various stakeholders. For more detail on the Bulletin Board, please see the Investors’ Agreement.
Once UKBN are in receipt of the transaction confirmations from both the buyer and seller, the transaction will proceed and once UKBN are in receipt of the funds will arrange with Jarvis Investment Management Limited (Jarvis) to effect the transaction and update the nominee register.
In the Investor’s Agreement, the client agrees that UKBN may act as their agent both in executing any orders and in relation to the Jarvis’ Services. The client also agrees that UKBN may pass their instructions relating to bids or Bonds for which they have subscribed to Jarvis in respect of the Jarvis Services, including arranging settlement and custody services in respect of any subscription by the client of Bonds.
In addition, and prior to UKBN providing any services relating to the execution of client orders, the client must also agree that:
- UKBN shall act on an execution-only basis and shall provide no advice or recommendation
- in connection with Bonds issued via the UKBN Platform, there will be no alternative execution venues to the arrangements set out in the Investor’s Agreement and the price of any Bonds shall be determined solely in accordance with the Offer Documents and clause 7, and accordingly, transactions via the Platform shall be deemed to be specific instructions to effect a transaction in accordance with the Agreement
- to the extent reasonably necessary Jarvis may aggregate orders in arranging or effecting subscription for the client; and
- the client understands that Bonds issued via the UKBN Platform will not be issued or traded on, or in accordance with, the rules of any Regulated Market or Multilateral Trading Facility.
UKBN do not currently charge Investors fees or commission for use of the Platform or our services, however we reserve the right to charge such fees in the future.
Future selection of additional venues would include consideration of factors such as liquidity and price offered, credit and settlement risk, realized performance (latency, liquidity, price improvement, fill rates, pricing analysis), commercial positioning, market mechanism, resilience and reliability.
4. Client Consent to the policy and executing transactions outside a regulated market or multilateral trading facility
The FCA rules require UKBN to obtain the prior express consent of the client before processing to execute their orders outside a Regulated Market or Multilateral Trading Facility. In this respect, UKBN will obtain the client's express consent to UKBN carrying out transactions on the Website, on the basis that the Website does not fall within the definition of a Regulated Market or Multilateral Trading Facility.
5. Monitoring and Review
5.1 UKBN will monitor the effectiveness of its execution arrangements and the Execution Policy, and assess on a regular basis (as part of its Compliance Monitoring plan) whether the execution venues it has selected provides for the best possible result for orders it executes on the client’s behalf.
5.2 UKBN will review this Execution Policy and its order execution arrangements at least annually. UKBN will also notify clients of any material changes to its order execution arrangements or this Execution Policy, and such notification may be made via the UKBN website at this link – www.ukbondnetwork.com.
5.3 To the extent that UKBN becomes aware of any material change that could affect its ability to obtain best execution a review should be carried out more frequently.
6. Appendix – List of execution venues
MIFID II does not prohibit firms from selecting only one execution venue to execute client orders in a given class of financial instruments where they are able to demonstrate that such a choice enables them to consistently get the best results for their clients.
UKBN will remain aware of the evolving competitive landscape in the market for execution venues operators and therefore to take into consideration the emergence of new players, new venues functionalities or execution services to determine whether or not any of these factors would support to include only one execution venue in their execution policy.
- UKBN Bulletin Board and Website
7. RTS28 – Tables and Summaries
To download the trades report spreadsheet, click here.