1. Introduction
B2C2 OTC Limited (“B2C2”) has established and implemented this Order Execution Policy (the “Policy”) as required by the rules of the Financial Conduct Authority (“FCA”).
2. Scope and Application of this Policy
This Policy applies only to clients classified by us as Professional Clients in accordance with our Terms of Business. This Policy does not apply to Retail Clients (with whom OTC does not interact) or Eligible Counterparties for Eligible Counterparty Business (each term being defined by the FCA’s rules).
This Policy only applies to orders received and/or executed by OTC for Financial Instruments as defined by the FCA’s rules, which include (but is not limited to) derivatives. The application of this Policy to specific Financial Instruments for which we provide our investment services is set out in Annex I.
For the avoidance of doubt, we do not owe any fiduciary responsibilities as a result of the matters set out in this Policy, over and above the specific regulatory obligations placed on us, or as contractually agreed.
Please note that by conducting business with us following the receipt of this document, you will be deemed to have consented to this Policy.
3. Legal Structure
OTC is authorised and regulated in the UK by the FCA and is a wholly owned subsidiary in the UK of B2C2 Ltd which is majority owned by SBI Financial Services Co. Ltd in Japan, neither of which are regulated.
In all circumstances, your counterparty to any executed order(s) you place with OTC will be OTC.
OTC will always act in a principal capacity where transactions entered into with clients will be executed against its proprietary capital.
4. Our Duty of Best Execution
We are required to obtain the best possible results for the execution of orders on behalf of our clients (“Best Execution”). When we are required to provide Best Execution, this means that we will take all sufficient steps to obtain the best possible result for our client, taking into account the Execution Factors set out below in section 5.
If we have classified you as a Professional Client, our determination of whether or not Best Execution actually applies will depend whether you have placed legitimate reliance upon us.
In order to assess whether there is legitimate reliance, we will consider the transaction by reference to the following factors (known as the “Four-Fold Test”):
1. Which party initiates the transaction – where we approach you and suggest that you should enter into a transaction, it is more likely that you will be placing reliance on us. Where you initiate the transaction, it is less likely that you will be placing reliance on us;
2. Market practice and the existence of a convention to “shop around” – where the market convention is for participants to approach several dealers for quotes, and you have the ability to “shop around” for quotes, it is less likely that you will be placing reliance on us;
3. The relative levels of price transparency within a market – where we reasonably believe you have access to similar levels of price transparency, it is less likely that you will be placing reliance on us;
4. The information provided by us and any agreement reached – where our arrangements and agreements, including as described in this Policy, do not indicate or suggest a relationship of reliance, it is less likely that you will be placing reliance on us.
Following consideration of all relevant circumstances of the transaction and the application of theFour-Fold Test, we will take a view as to whether you are legitimately relying on us. Our current business model means that our activity rarely meets the Four-Fold Test; in particular it is generally only paragraphs 4.3.2 and/or 4.3.3 which may apply to some executions. Where we conclude that you are not legitimately relying on OTC, then Best Execution will not apply. Please consult Annex I for specific guidance on when you will / will not be owed Best Execution.
Please consult Annex I for specific guidance on when you will / will not be owed Best Execution.
5. Execution Factors
Where we have determined that we owe you a duty of Best Execution in relation to a transaction, we must consider certain execution factors as part of the process of taking all sufficient steps to obtain thebest result possible for you in relation to that transaction, in accordance with this Policy. We will therefore take into account, as relevant, the following factors (“Execution Factors”):
We will therefore take into account, as relevant, the following factors (“Execution Factors”):
Price: the price a financial instrument is or may be executed at excluding any External Costs (as defined below) or any of OTC’s explicit internal costs;
Costs: this may include implicit costs such as market impact, external costs relevant to the execution including (but not limited to) execution venue fees, clearing and settlement fees and any other fees paid to third parties (“External Costs”) and explicit internal costs representing our own remuneration through commission and/or spread;
Speed: the time it may take to execute a transaction;
Likelihood of execution and settlement: the likelihood that we will be able to complete a client transaction;
Size and nature of the order: the size of the transaction and how this may impact the price of execution; and
any other considerations deemed relevant to the execution of your transaction.
6. Execution Criteria
In determining the applicability of, and relative importance attached to, each of the Execution Factors, we will take into account any specific instructions that you give us and the following criteria:
• the characteristics of the client (including the regulatory categorisation of the client);
• the characteristics of the client order;
• the characteristics of the Financial Instruments that are subject to that order; and
• the characteristics of the execution venues to which that order can be directed.
In general, we would expect price to be the most significant execution factor for our Professional Clients. However, there may be circumstances where, depending on the nature of the transaction, the factors vary and other Execution Factors should be prioritised over price. We will use our experience and expertise to achieve the best outcome across all factors. As we have a degree of discretion in our application of these Execution Factors, this may result in a range of permissible approaches to executing your orders.
7. Specific Instructions from Clients
Where we owe our clients a duty of Best Execution, if we receive an order from a client that includes specific instructions in relation to the handling and execution of the entire order or a particular aspect of the order, subject to our legal and regulatory obligations, we will follow those specific instructions and in doing so, we will have satisfied our Best Execution obligations with regard to the relevant aspects of the order. A specific instruction, for example, would include a ‘resting limit orders’, where you place a bid or an offer outside of our quote, and will be filled by OTC when / if our price crosses with yours.
Where the specific instructions relate only to a part or aspect of the relevant order, then this Policy will be applied to the remaining elements of the order not covered by the specific instructions.
Where we are provided with specific instructions, this may prevent us from taking the steps that we have designed and implemented in and under this Policy to obtain the best possible result for the execution of your order in respect of the elements covered by your specific instructions.
8. OTC is Always the Sole Execution Venue
OTC will always deal as principal against you, with the transaction being executed against OTC’s proprietary capital. Consequently, OTC is the sole execution venue.
9. Order Handling
We have procedures and arrangements in place to ensure that client orders are dealt with promptly, fairly and expeditiously.
We do not aggregate client orders with an order or orders from other clients and/or with a transaction on our own account.
10. Monitoring and Review
We periodically monitor the execution achieved through OTC to ensure that we are satisfied that B2C2 meets the standards that we require in order for OTC to meet its Best Execution obligations.
In addition, we will review this Policy annually and whenever material change occurs.
We will notify you of any material changes to this Policy or our Best Execution arrangements via our website. We consider that a change will be material where its disclosure is necessary to allow ourclients to make informed decisions about whether to continue with the use of our services.
Should you have any comments or queries in relation to this Policy please contact your usual OTC contact.
11. Publications
We are required to summarise and make public on an annual basis, for each class of financial instruments, certain information regarding the top five execution venues where we have executed client orders and the top five brokers where we have transmitted or placed client orders, in each case, in terms of trading volumes in the preceding year and information on the quality of execution obtained. Given our business model means OTC is always the sole execution venue, this policy also acts as the annual update set out here.
12. Record Keeping and Notifications to Clients
We maintain sufficient records to demonstrate that we have executed client orders in accordance with this Policy. If requested, we will review the execution of an order in respect of which we have provided Best Execution to confirm that it has been executed in accordance with this Policy.
Annex
Application of Best Execution by reference to specific products and order types
General Application of Best Execution in respect of CFDs and Options
Continuous pricing
Where we post prices to clients, who then execute against those prices, we generally do not owe best execution, as there is no reliance placed on us.
RFQs
Where clients submit an RFQ that we respond to, and which is then accepted by the client, we generally do not owe best execution as there is no reliance placed on us.
Resting limit orders
Where clients place a buy/sell order with us, below/above our offer/bid, we generally do not owe best execution, as the client has placed a specific instruction.
Execution venues
This table sets out the execution venues by product:
