The Markets in Financial Instruments Directive (MiFID) as subsequently amended is a European Union law which provides a harmonized regulatory regime for investment services across the 30 member states of the European Economic Area. The main objective of the MiFID is to increase competition and consumer protection in investment services. What follows is an overview on how trades and orders are executed, the factors that can affect an execution’s timing and the way in which market volatility plays a part in handling orders when buying or selling a financial product.
This section sets out information on Renesource Capital Execution Policy and approach to providing best execution as it is required by the Markets in Financial Instruments Directive (Mifid).
Renesource Capital is an European Brokerage Investment Company and fully complies with the MiFID. In accordance to this we have all the necessary policies and procedures, which are available upon request and could be downloaded on our website at www.renesource.com
1. Client categories
MiFID requires financial institutions to categorize clients into the following profiles:
- "Retail client (these have the highest level of protection)";
- "Professional client";
- "Eligible counterparty (ECP)";
2. Scope
The Financial Instruments executed by Renesource Capital include margin FOREX, CFD’s, equities, exchange traded futures, options and options on futures, ETF’s, OTC Energy swaps and fixed income securities. Full details of Financial Instruments available for trading and trading conditions with Renesource Capital can be viewed on the relevant page on website www.renesource.com
3. Best Execution Policy
When executing orders on customers behalf in relation to Financial Instruments, Renesource Capital will take all reasonable steps to achieve best execution of orders flow. Renesource Capital is committed to providing a high quality execution service to its customers when handling customer orders and has established an order execution policy which is especially designed to obtain the best possible result on a consistent basis for our customers. When executing Buy or Sell orders, RC always will consider:
- Classification profile of the client;
- The nature of the client order;
- The characteristics of the financial instruments that are subject to that order;
- The characteristics of the execution venues to which that order can be directed.
4. Execution venues
MiFID requires Renesource Capital to take all reasonable steps to obtain the best possible result for its clients, taking into account price, charges, speed, probability of execution and settlement, amount, nature and any other relevant order execution consideration, whether RC is executing orders on behalf of clients or placing orders with, or passing orders to, others for execution.
5. Types of transactions where Best Execution has limited scope
In some cases the Best Execution obligation technically applies but, because of the nature of the order given by customer, or of the transaction, the obligation is, in effect, satisfied. These cases are as follows.:
- Single venue transactions:
Where the nature of the transaction results in there being only one venue and, therefore the only pricing consideration is time of execution. It, therefore, precludes the use of comparable prices.
- Highly structured transactions:
The Best Execution obligation applies only in very limited form, to highly structured off-exchange transactions where, due to the unique contractual structure entered into between customer and RC, it is not possible to provide any comparisons with other transactions or instruments. MiFID recognises that different considerations apply where the transaction involves a customised OTC financial instrument (like, OTC energy swaps, physical carbon emissions (CO2)) tailored to customers circumstances. Although Best Execution technically applies, there is little or nothing against which to compare the transaction. This applies if it is (1) an OTC transaction, which is (2) highly structured/customised to the particular client and, therefore, (3) is not one of a series of similar deals to which the firm is a counterparty, and (4) there is nothing comparable in the market.
- Specific Instructions:
Where customer gives us a specific instruction, including specifying the characteristics of a bespoke product, either relating to an order or a particular aspect of an order, we will execute so far as is reasonably possible in accordance with those instructions. This may prevent us from taking the steps that we have put in place to obtain the best possible result for the execution of customer orders.
6. Direct Market Access (“DMA”)
Where customer chooses to execute an order via Renesource Capital, Direct Market Access (“DMA”) system, customer will select parameters of the trade (such as the price, the counterparty, the venue, the timing, the size and nature of interaction with its selected execution venue). In such a case RC, while acting on customer’s behalf in providing the DMA service, will be treated as having satisfied its duty of Best Execution and customer will be treated as having given specific instructions for the entirety of its order by means of the DMA system. In cases where customer do not select any parameters then RC will select execution venues in accordance with its Execution Policy.
In the absence of express instructions from customer RC will exercise on its own discretion, having regard for the terms of customers order in determining the factors that it needs to take into account for the purpose of providing with Best Execution.