Quality of Execution Report 2018
A. Overview
Brewin Dolphin (‘the firm’) as a MIFID investment firm has an obligation to take all sufficient steps to obtain the best possible result when transmitting, placing and executing orders on behalf of clients on a consistent basis (‘Best Execution’). The firm has established an Order Execution Policy (‘the Policy’) that sets out the steps that the firm takes to achieve Best Execution for its clients. The Policy can be accessed on the following link on the firm’s website here. Section 4 of the Policy also contains the Execution Factors and the relative importance of these factors that the firm takes into account to achieve Best Execution for clients.
The purpose of this document is to provide clients with sufficient information to effectively allow for comparison between different firms and also to enable comparison of performance over time.
Under MiFID II[1], the firm is required to publish annually for each class of financial instruments the top five execution venues in terms of trading volumes and a summary of the quality of execution obtained on these execution venues.
For the purpose of achieving Best Execution, the firm treats all clients (Retail and Professional) as Retail. This means that the firm undertakes to provide the highest protection to its clients regardless of client classification.
B. Monitoring Approach
The firm performs monitoring to ensure the effectiveness of the firm’s order execution arrangements which is set out below.
Daily monitoring of transactions;
Due diligence of counterparties;
Annual review (or more frequent, if there is any material change) of the Policy and related client disclosures in respect of Best Execution;
Annual assessment of the firm’s order execution arrangements.
The firm uses an industry leading third-party vendor (LiquidMetrix which is an expert in execution quality assessment and transaction cost analysis) to benchmark[2] the firm’s transactions against venues available. The firm has set a tolerance that would trigger a review of the transaction. Any transaction with a price that is outside the tolerance set, is investigated.
Additionally, execution venues, market makers and systematic internalisers that the firm deal with are required to publish daily trading data on a quarterly basis. The firm sources this information from our third-party vendor and analyses this information to gain clarification that venues are meeting best execution on a consistent basis.
The results of monitoring are presented to the members of the Order Execution Policy Committee (OEPC), which meet on a monthly basis and is the governance forum that oversees the order execution arrangements of the firm.
C. Summary of the 2018 Monitoring results
All the firm’s transactions from 1 January to 31 December 2018 have been monitored to ensure that Best Execution was achieved. Overall, 99.9970% trades achieved Best Execution in 2018 compared to 99.9937% in 2017. The low number of transactions that did not achieve best execution have been reviewed and corrected in accordance with the firm’s procedures.
The firm’s quantitative report contains details of our dealing activity as required by the regulation including information on passive and aggressive orders. The regulation defines ‘passive’ as an order that provided liquidity to the market, ‘aggressive’ as an order that took liquidity from the market; and ‘directed’ refers to when a client specifies the execution venue or trading counterparty prior to the execution of the order.
D. Relationships with Counterparties & Venues
The firm does not have any close links, conflicts of interests or common ownerships with respect to any counterparties used to execute orders. Also, the firm does not receive any payments or non-monetary benefits for directing trades to a specific venue. The firm does not permit arrangements with any execution venues/counterparties for payments made or received, discounts, rebates or any non‐monetary benefits received other than those allowed by the firm’s Gifts and Hospitality Policy.
In addition, the firm has policies and procedures in place to ensure that any potential conflict of interest is managed appropriately. During the period 1 January 2018 to 31 December 2018, nothing has come to the attention of the firm that would indicate any conflicts of interest pertaining to the firm’s counterparties/execution venues.
E. Execution Venues
To ensure the best possible coverage in the asset classes in which the firm transacts clients’ business, a comprehensive list of Execution Venues is maintained. This can be viewed alongside our Order Execution Policy. During 2018, there were limited changes to our Execution Venue list. Two counterparties were removed as one ceased to trade and the other after a review of business transacted. The Order Execution Policy Committee added three new counterparties to the list who were assessed as able to provide best execution in the relevant financial instruments. Please see details below and the list of Execution Venues here: Appendix
The following counterparties have been removed:
| Counterparties Removed | Market and Asset Coverage |
|---|---|
| Beaufort Securities | London – UK Equities |
| Deutsche Bank | Bond |
The following counterparties have been added:
| Counterparties Added | Market and Asset Coverage |
|---|---|
| Joh. Berenberg, Gossler & Co. KG | London – UK Equities |
| Old Mission Europe LLP | London – UK Equities |
| IMC Trading BV | Overseas – Foreign Equities |
The number of trades that have been processed through the counterparties highlighted above, did not have an impact on the Top 5 execution venues reported in 2018.
[1] The Markets in Financial Instruments Directive (MiFID) II is a set of regulations which aims to improve the way firms comply with regulations in order to strengthen protection of investors.
[2] Benchmark means comparing the firm’s transactions, particularly the price achieved on each of the trades, against the prices that would have been achieved in other execution venues.