This Order Execution Policy (the “Policy”) is available to both retail and professional clients upon request and is also made available on our Website. The Policy serves to enable clients to make a properly informed decision about whether to utilize the services offered by the Company.
B.O. TradeFinancials Ltd (the “Company”) is an Investment Firm regulated by the Cyprus Securities and Exchange Commission (“CySEC”) with authorization number 216/2013. In accordance with the provision of the Investment Services and Activities and Regulated Markets Laws of 2007 to 2014 (hereafter the “Law”) Law 144(I)/2007, as subsequently amended from time to time (“the Law”), the purpose of this policy is to establish effective arrangements for the Company to obtain, the best possible result for its clients, in a consistent basis when executing orders, taking into account price, costs, speed, likelihood of execution and settlement size, nature, specific instructions received from the client or any other consideration relevant to the execution of an order.
The Company cannot guarantee that upon execution of an order on behalf of its clients the price at which the order is executed will always be better than a price which is or might has been available elsewhere.
In addition, this document aims to set out those arrangements and to ensure compliance with legislative requirements and the departmental and general procedures, and gives an overview on how trades and orders are executed, the factors that may affect the execution’s timing and the way in which market volatility determines the execution of an order.
This policy shall be read in conjunction with the Company’s Client Agreement/Terms & Conditions that is uploaded in Company’s website.
The Company solely executes orders in relation to one or more financial instruments mainly on binary options as well as in contracts for difference (“CFDs”) on foreign exchange (“FX”).
1.3 Legal Framework
This Policy implements the requirements of the Law. Additionally, the Policy further implements the relevant requirements of Parts VI and VII of Directive DI144-2007-02 for the Professional Competence of Investment Firms and the Natural Persons Employed by them as issued by CySEC.
Terms used in this Policy that are not interpreted differently shall have the meaning given to them by the Terms & Conditions of the Company.
2. Execution Policy
The Company satisfies the following conditions when carrying out client orders:
a) ensures that orders executed on behalf of clients are promptly and accurately recorded and allocated;
b) carries out otherwise comparable client orders sequentially and promptly unless the characteristics of the order or prevailing market conditions make this impracticable, or the interests of the client require otherwise;
c) Informs a retail client about any material difficulty relevant to the proper carrying out of orders promptly upon becoming aware of the difficulty.
Dealing Room is the relevant department of the Company, to which the order execution policy mainly applies.
The Company proceeds with the establishment and maintenance of an Order Execution Policy, in order to ensure compliance with the obligation to execute orders on terms most favourable to the clients and to achieve the best possible results for its clients, taking into consideration its clients’ ability, needs and trading policies, where applicable and possible.The policy outlines the process that the Company follows when executing trades, and assure taking all reasonable steps to consistently obtain the best possible result for clients through its order execution policy. It is noted however that when executing an order following a specific client instruction, the Company executes the order in line with those instructions and considers that it has discharged its best execution obligations.
Senior Management reviews the policy on an annual basis or / and whenever a material change occurs that impacts the Company’s ability to continue offering best execution of its clients’ orders using the Company’s trading platform.
The Company reserves the right to amend or supplement this Policy at any time. In such case the Company will inform clients should any material change takes place.
2.2 Execution Factors
In the absence of specific client instructions, when managing client orders through to execution or upon facilitation of reception and transmission of orders the Company takes all reasonable steps to achieve the best possible result for clients in a comprehensive and consistent way. The Company takes into consideration; inter alia, a combination of the following execution factors when executing an order for a client:
- Nature of the order
- Market conditions and variations
- Likelihood of Execution and Settlement
- Any other direct consideration relevant to the execution of the order
For a retail client, the best possible result will always be determined in terms of the total consideration.
2.3 Best Execution Criteria
The Company considers the relative importance of the abovementioned execution factors when weighted against the following execution criteria:
- The characteristics of the client;
- The characteristics of the client order;
- The characteristics of the financial instruments that are the subject of that order;
- The characteristics of the execution venues to which that order can be directed.
The best possible result when the Company executes an order on behalf of a retail client, is determined in terms of the total consideration, representing the price of the contract and the cost related to execution. The other execution factors of speed, likelihood of execution size, nature or any other relevant consideration will, in most case, be secondary to price and cost considerations, unless they would deliver the best possible result for the client in terms of total consideration. The Company may also consider transmitting client orders instead of executing them itself where that would deliver a better result for clients.
3. Specific Instructions
In circumstances where the client provides the Company with specific instructions as to how to execute an order and the Company has accepted this instruction, then the Company executes the order in accordance with that specific instruction.
If the client provides a specific instruction to carry out an order, then by executing that order the Company complies with its duty to provide the client with best execution. This might result in being unable to follow the Company’s order execution policy for that particular order and it is therefore noted that the specific instruction provided by the client may prevent the Company from obtaining the best possible result for the client as otherwise would be implemented according to this Policy.
4. Execution Venues
Execution venues are the entities to which the orders are placed or the entities at which the Company executes clients’ orders. In this respect, the Company does not act as the Execution Venue for the execution of client orders as it executes orders via third party(ies). Specifically, and upon receipt of the order, the order is delivered directly to the execution venue for execution.
As of the 1st January 2017 the Company uses Marketfinancials Ltd a company registered in the Seychelles and regulated by the FSA as its primary Execution Venue. The Company may use one or more of the following venue types when executing a client order:
- Regulated Market (“RM”)
- Multilateral Trading Facility (“MTF”)
- Systematic Internaliser (“SI”) or
- Regulated Investment Firm (Market Maker) or any other approved liquidity provider.
In the case where there is more than one competing venue to carry out an order for a Financial Instrument, the Company’s own commissions and costs for executing the order on each of the eligible execution venues shall be taken into account in that assessment. This is done for the purpose of delivering best execution, to assess and compare the results for the Client that would be achieved when executing the order on each of the execution venues listed in the Company’s order execution policy that is capable of executing that order.
Finally, as a safeguard for best execution, the Company shall not structure or charge their commissions in such a way as to discriminate unfairly between execution venues.
5. Analysis of Execution Factors
5.1.1 Pricing when trading on FX and CFDs
In regards to a given FX or CFD financial instrument the Company quotes the higher price at which the client can buy, thus going long (“ASK”) and the lower price at which the client can sell thus going short (“BID”) the relevant FX or CFD. The difference between the BID and ASK of a given FX or CFD is called the spread, which can vary with the different types of accounts in FX and CFDs.The Company provides prices as are obtained from the third party external providers. In this respect prices of a given FX and CFD are calculated with respect to the underlying asset prices as these are provided from external sources. The Company ensures that the client receives the best execution mainly by ensuring that the price provision to the client is made with reference and compared to a range of underlying price providers and data sources. The Company reviews its independent price providers at least once a year to ensure that correct and competitive pricing is offered. Company’s prices can be found on the Company’s website or trading platform.
In addition, the provider, is continuously updating its prices, therefore last updated prices are displayed on Company’s trading platform.
However, under certain trading conditions, as under high volatility causing rapid price fluctuations, the Company might not be in a position to execute the order placed by the client at the client’s requested price. Under this scenario, the Company maintains the right to execute the order at the first available price.
Under certain market conditions, particularly those of high volatility and/or low liquidity the Company maintains the right to limit or prevent changes in “Stop Loss” or “Take Profit” Parameters. Under such conditions, the Company may also change without notice the amount of Leverage it is prepared to offer Clients.
5.1.2 Pricing when trading in Binary Options
The Company provides prices as are obtained from the third party external providers. In this respect, the price of a given Binary Option is calculated with respect to the underlying asset prices provided from external sources. The Company ensures that the client receives the best execution mainly by ensuring that the price provision to the client is made with reference and compared to a range of underlying price providers and data sources. Under certain market conditions, particularly those of high volatility and/or low liquidity trade execution of a trade may not be possible.
The Company by default enables slippage of pricing such that the price at trade execution may differ from the price at the order time. In conditions of high volatility and/or low liquidity, slippage mode will improve the probability of trade execution.
Slippage of prices will occur more commonly during periods of low liquidity (such as a late-night trading hours), high volatility (for example due to news announcements, economic events and market openings and other factors) and large market orders.
Clients that wish to trade without slippage may request from the Company to operate in with no slippage. Approval of such a request is at the Company’s discretion. In conditions of high volatility and/or low liquidity, clients not operating in slippage mode may suffer from an increased number of trades that the Company is unable to execute.
In this respect the execution or expiration price of an order in Binary Options at execution or expiration can be a value between BID and ASK spread of the underlying reference price at that time. The Company strives to provide traders with tight, competitive spreads; however, there may be instances when spreads widen beyond the typical spread. This is more likely to occur during periods/hours of low liquidity and/or high volatility e.g. night trading hours.
The Company draws clients attention to the BID and ASK prices which are shown for each option available for purchase on the Company’s trading platform.
The Company reviews its independent price providers at least once a year to ensure that correct and competitive pricing is offered. Company’s prices can be found on the Company’s website or trading platform. Finally and as, the provider is continuously updating its prices, therefore last updated prices are displayed on Company’s trading platform.
(i) Binary options:
All trades in Binary Options carry a 2.5 EURO execution fee (or equivalent in local currency).
· In cases where the trade is cancelled after execution the fee will apply.
· Local currency amounts will be adjusted to match the European Bank closing rates on last day of the previous month
(ii) FX and CFDs:
When the client opens a position in FX and CFDs a premium or finance fee may apply. These fees may be charged either in the form of a percentage of the overall value of the executed trade or as a fixed amount. In regards to the financing fees, which affect the value of the client’s open positions these are based on daily prevailing market interest rates, which vary and details of which can be found on the Company’s website as well as on the trading platform. Additionally, a premium charge and a spread fee apply by the Company to FX and CFDs transactions executed. With regards to premium, a funding premium is added to the client trade to cover the cost of the associated funding if the client holds a position open within the platform after a certain hour, as shown in the “Open Trades”.
With regards to the spread fee, this is the fee charged by the Company for the execution of the FX trade, defined as the difference, in Pips between the BID and ASK price of each asset. For both premium charge and spread fee, more details may be found in the FX section of the FAQ’s found on the Company’s website and also within the Legal Terms and Conditions.Finally the above mentioned commissions and charges can be updated at the Company’s discretion. In this respect such changes will be subject to a notification to the clients.
All orders are placed in monetary value. The client will be able to place his order as long as he has enough available balance in his trading account to cover the trade amount as well as the execution fee applicable for each trade. However, FX and CFD trades are leveraged which means a ratio is set that determines how much money a trader must actually invest in order to open a trade for certain value. In addition the leverage can also be expressed in term of what percentage the trader needs to invest for a trade. This percentage is called a margin requirement. In this respect the client may use margin or other Financial Instruments or borrowed capital to increase the potential return of an investment, thus using leverage.
Furthermore, if the client wishes to execute a large size order, in some cases the price may become less favourable considering the feed obtained from its price provider.
Finally, the Minimum size of an order may depend on each type of FX and CFD Client Account based on different lots, and Binary Options Client Account. Information on lots, minimum and maximum size of a single transaction can be found on the Company’s website. 5.4 Speed
Prices may change over time. The frequency with which they do varies with different financial instruments and market conditions. Considering that the tradable prices which are distributed via the Company’s trading platform/terminal, technology used by the client to communicate with the Company plays a crucial role. For instance, the use of a wireless connection, or dial up connection, or any other communication link that can cause a poor internet connection can cause unstable connectivity to the Company’s trading platform/terminal. The result for the client is to place his orders at a delay and the order to be executed at a different market price offered by the Company via its platform/terminal. By taking into consideration potential threats and limitations of technology and communication issues, the Company seeks to provide high speed of execution to its clients.
5.5 Nature of the order
The particular characterizing of an order depends on the instrument to be selected by the client. The value of the selected instrument is mainly depended on the volatility of the underlying instrument and the set time of option expiration (in case of binary options). The company reserves the right to suspend from offering particular Instruments (such as volatility sensitive Instruments) or specific assets at periods/hours of low liquidity and/or high volatility.
5.6 Market Conditions and Variations
The Company’s quoted prices which are derived from its independent price providers may be affected by various factors which could also affect the abovementioned factors affecting the price of the underlying instruments or products. The Company takes all reasonable factors to ensure the best possible result for its clients.
5.7 Likelihood of Execution
The likelihood of execution depends on whether there are available prices from other market makers/financial institutions. However, in the event that the Company is unable to proceed with an order for any reason, including size and price, the order will not be executed. The Company is entitled, at any time and at its discretion to decline or refuse to transmit or execute any order or instruction received from the client as this is explained in the Client Agreement and General Terms & Conditions.
5.8 Likelihood of Settlement
The Company proceeds with the settlement of all transactions upon the execution and/or time of expiration of the specific transaction. In regards to FX and CFDs and Binary options, the aforementioned instruments do not involve physical delivery of the underlying asset.
5.9 Different types of accounts in FX and CFDs, and in Binary Options
Different types of account are offered by the Company at which the initial level of minimum deposit, the BID-ASK spread, commission charges, percentage on return, minimum and maximum trade amounts and other relevant factors vary with the account type. Relevant information on the account types can be found on the Company’s website.
Slippage can be defined as the difference between the expected price of an order and the price the order is actually executed at. Trading in financial instruments as FX and CFDs and Binary Options involves slippage to appear in the normal course of trading and can appear in all types of accounts the Company offers. Specifically, slippage appears more often in periods of high volatility and illiquidity in the market thus making an order impossible to be executed at a specific price. Under the concept of slippage, the Company confirms that orders will be executed at the next best available market price in relation to the price specified on the client’s order.
7. Order Management
The Company ensures that, at all times, client orders are handled equitably and to client’s best advantage. Client orders are executed in a prompt and equitable manner, taking into account the nature of the order. Other similar orders may be processed or executed sequentially in parity with the time of receipt and may be aggregated or pro-rated accordingly, unless the characteristics of the order or prevailing market conditions make this impracticable or the interests of the client, require otherwise. The Company undertakes to manage all client orders in accordance with the following principles:Order execution shall be prompt, fair and expeditious and processed sequentially Allocation or reallocation shall be equitable and seek to protect from client detriment
The Company assesses on a regular basis, of particular transactions in order to determine whether it has complied with its execution policy and/or arrangements, and whether the resulting transaction has delivered the best possible result for the client.
Appropriate information is provided to the client on the content of the execution policy. The prior consent of the clients is obtained regarding the documented order execution policy to be followed. In addition, a clear and prominent warning is disclosed to the Company’s clients (within the Client Agreement and Terms & Conditions) that any specific instruction from a client may prevent the Company from taking the steps that is has designed and implemented in its execution policy for obtaining the best possible result for the execution of those orders in respect to the elements covered by those instructions.
Adequate information is provided to the clients through this policy in relation to the factors that are taken into consideration by the management when handling clients’ orders. Also, the policy is reviewed periodically by the Company and the clients are informed accordingly in relation to any material changes.The Company assesses on a regular basis, of particular transactions in order to determine whether it has complied with its execution policy and/or arrangements, and whether the resulting transaction has delivered the best possible result for the client.
1 Includes 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.