Best Execution Policy
1. Purpose of Policy
This Best Execution Policy sets out information relating to how Millennium Global Treasury Services Limited (MGTS or the Firm), seeks to provide order execution services as required by the Markets in Financial Instruments Directive 2014/65/EU (“MiFID II”) and the Financial Conduct Authority’s Conduct of Business sourcebook (“COBS”), when executing orders on behalf of clients.
'Best execution' is the term used to denote the duty we have to take all sufficient steps to obtain the best possible result given certain market conditions when executing transactions on clients’ behalf.
2. Scope of the Policy
This policy covers trading by MGTS in the following financial instruments:
- FX Spot
- FX Forwards (deliverable / non-deliverable)
- FX Swap
- FX Options
It is worth highlighting that the obligation to execute orders on terms most favourable to the client and/or to act in the best interest of the client when transmitting orders to other entities for execution under MIFID II do not apply to FX spot transactions.
However, MGTS applies its Best Execution Policy to OTC FX spot trades as well as it makes all efforts to treat clients fairly and to manage any conflicts of interest that may arise in respect of such transactions.
As of the date of this policy, MTE only provides its services to clients categorised as Professional Clients and Eligible counterparties* (*In accordance with the Authorisation granted by the ACPR). Art. 30 of MIFID II clarifies that best execution requirements do not apply to eligible counterparties. Therefore, the information provided within this policy addresses the Firms obligations in respect to Professional clients only.
Please note that MTE, in accordance with its regulatory obligation, will nonetheless ensure that appropriate information will be provided to that category of clients in good time before the provision of services in relation to execution venues/brokers* (*For the purpose of the Policy a broker means an investment firm authorised to receive and transmit orders and/or a third country firm equivalently authorised) and all costs and charges. Please refer to section 7 of this policy for the list of execution venues/brokers.
4. Information to Clients
4.1 Client request for information
When clients make reasonable and proportionate requests for information about this Policy the order execution arrangements and how they are reviewed, MGTS will answer clearly and within a reasonable time.
4.2 Status of the order
MGTS will provide clients with information about the status of their orders if requested to do so.
4.3 Transaction notice
In accordance with applicable rules* (*Article 59 MiFID II DR), clients are provided systematically with a transaction confirmation after their orders have been executed. When a client sends MGTS a reasonable request to obtain additional information or details on how the order has been executed, MGTS will provide the information requested including proving the details on the price of each tranche where the order has been executed in tranches and the confirmation provides for an average price.
4.4 Annual information on the identity of execution venues/brokers and on the quality of execution
MGTS will summarise and make public on an annual basis, covering the calendar year (January 1st to 31st December), for each class of financial instrument, the top five execution venues/brokers in terms of trading volumes, where it has executed client orders in the preceding year, together with information on the quality of execution obtained.
The reports will be published on the MGTS website, no longer than 4 months after the end of each calendar year, for a period of two years and will be accessible without costs and without any restrictions
As a general rule, MGTS does not pay or receive any inducements, i.e., payments or non-monetary benefits to/from third parties.
In the unlikely event, such situation arises; MGTS will ensure that any payments or non-monetary benefits comply with the rules on inducements and will disclose accordingly all details to its clients.
MGTS will also ensure that no payments received or paid would constitute payments for order flows.
MGTS does not receive inducements from execution venues/brokers to which client orders are directed which are linked to the volume of trades allocated to those execution venues/brokers
4.6 OTC execution
The foreign exchange market is mostly traded over the counter (“OTC”). Consequently, clients’ orders will most likely be executed outside trading venues. Executing orders outside trading venues may imply certain risks such as counterparty risk for instance.
Risks warning pertaining to such a mean of execution are provided in Schedule 4 of investment services agreement.
By signing the Standard Terms of Business, clients expressly consent to MGTS being able to execute their orders OTC
5. Order Handling
MGTS handles client orders on a first-in-first-out basis under each of the following scenario:
- Trades executed on the MillTechFX Platform
- Receiving and transmitting client orders
When MGTS routes orders to Millennium Global Investments Limited (MGIL) for execution, in order to avoid conflicts of interests as MGIL is considered as a connected party to MGTS, orders are sent directly to MGIL’s execution team. MGIL’s execution team executes all orders based on the time stamp the order arrives at its Order Management System (OMS).
Where execution is undertaken electronically (both via platform or voice execution), in order to reduce potential for significant market impact and impact to counterparty banks, MGTS executes client orders in full size.
Where a client submits multiple orders, MGTS will normally fill the orders in accordance with the time of their arrival as indicated above. MGTS may also choose, if it believes to be fair and that it will help delivering best execution, to fill the orders on an aggregated basis. In either case, depending on the market conditions, it may on occasion result in the client orders not being filled (either in full or in part).
6. Execution Factors
The Firm will endeavour to take all sufficient steps to obtain the best possible results for its clients taking into account the following Execution Factors:
The execution price and costs: MGTS considers that generally price merits a high importance, however, the nature of financial instruments will determine if MGTS shall give precedence of other factors such as speed or likelihood depending on the financial instrument characteristics. MGTS will always pay due regard to the costs related to any execution to ensure that the costs will not jeopardise the end result.
Speed: MGTS considers that for foreign exchange, speed is paramount taking into account the fact that markets tend to move quickly, i.e., the price of the financial instrument may vary significantly.
Likelihood of execution and settlement: MGTS considers that for less liquid financial instruments, likelihood of execution may take precedence over price and speed. Whilst settlement risk is paramount when unwinding trades.
Size of order: MGTS considers that the size of the transaction and how it may impact the price of execution needs to be taken into account especially in case of large orders to minimise the market impact when executing orders or parts of an order.
Availability of price improvements: MGTS will take into consideration the opportunity to execute an order at a better price than what is quoted publicly.
6.1 Relative importance of Execution Factors
In most circumstances, the Firm would typically expect that the price to be paid or received would be the most heavily weighted execution factor in respect to all OTC FX instruments. However, there will be occasions when other factors may be more important or relevant and the Firm may use its judgement and experience to give greater weight to other execution factors other than price based on the following types of criteria:
- Specific Client’s instructions
- The liquidity providers to which that order can be directed
- The market conditions which may dictate how the order is directed.
- Specific Client’s instructions
- The liquidity providers to which that order can be directed
- The market conditions which may dictate how the order is directed
7. Execution Venue /Broker and Authorised Counterparties
Following review and a due diligence process, MGTS has selected Millennium Global Investments Limited (MGIL) as its execution broker and entered into an agreement with MGIL to ensure that MGTS client orders are exclusively routed towards the authorised counterparties and that only those counterparties are selected when MGTS execute orders on matched principal basis and/or receives and transmit orders.
Authorised counterparty banks are the liquidity providers selected based on their ability to ensure that MGTS meets on a continuous basis the best possible results when applying the execution strategies specified above.
The list of authorised liquidity providers includes Australia and New Zealand Banking Group Limited, BNP Paribas, Citibank N.A., HSBC Bank Plc, Merrill Lynch International (Bank of America), Morgan Stanley & Co. International Limited, NatWest Market, Jefferies Financial Services, Inc., Standard Chartered Bank, State Street Bank and Trust Company, UBS AG, Investec Bank Plc.
7.1 List of factors used to select execution venues/brokers
MGTS selection process is designed to identify a list of execution venues/brokers appropriate to the volume and type of client orders to address the overall and/or specific needs of its clients. The MGTS risk committee is responsible for reassessing the execution venue list annually and confirming that the execution venues/brokers remain appropriate to be on the list. The assessment conducted by the Risk committee will take into consideration, the following factors:
- Access to large liquidity pools (e.g., liquidity breadth and depth)
- Demonstrated trading expertise and experience in relation to OTC FX derivatives
- Robust order execution policies and procedures
- Consistent outcomes (e.g., prices, speed, costs) measured vs independently obtained TCAs
- Results of Compliance monitoring
- Results of the Risk function monitoring
- Number of incidents, near misses or errors
- Quality of market information and trading support
- Quality of post-trade services (e.g., trade confirmation, settlement accuracy, margin management)
Please note that MGTS is not required to excessively search for possible execution venues/ brokers but to use its judgement and expertise to identify possible candidates and assess them against the criteria it has defined as being the most relevant for the type of financial instruments it wishes to trade.
7.2 Execution venues/brokers and liquidity providers on-going monitoring
MGTS has set out the arrangement that currently best execution will be reviewed at the firm’s monthly risk committee meeting, comprising of the Head of Risk and other senior members of the firm.
The monthly risk committee meeting reviews selected execution venues/brokers and list of counterparty banks on a quarterly basis to ensure that it is still up to date and will enable MGTS to obtain the best possible results for its clients on a consistent basis.
The analysis conducted independently by MGTS (Please refer to section 9.2 for further details) and is based on multiple factors such as, but not limited to: pricing structure, TCAs, clearing and settlement facilities, quality of back-office management, connectivity and technical infrastructures, market liquidity, trading controls, execution quality reports, reliability regarding the protection of confidential information, financial stability (e.g., liquidity and solvency risks) and any other relevant features.
Additionally, where relevant the risk committee may also, after having reviewed the volume traded, adopt a specific trading flow split between the selected execution venues/brokers to avoid over reliance on one specific counterparty
8. Methods of execution
The FX market is predominantly an over the counter (OTC) and off exchange market. Under normal market conditions, MGTS will execute with authorised counterparties and execution venues/brokers by using electronic trading tools or by voice. Irrespective of the method of execution MGTS will ensure that all clients preferences are adhered to including the fact that orders will be executed with counterparties with whom the client has an adequate documentation in place.
8.1 Voice execution
Voice execution is an execution method expected to be used when the client transaction size is too larger (i.e., exceeding the maximum streaming limit specified in the MGTS execution engine), or the execution engine is not accessible or has stopped operating.
8.2 Electronic execution
Most MGTS client orders will be executed through electronic means. Orders will be entered into the MGTS execution engine that embeds a smart order router calibrated to ensure that client preferences are taken into account and that execution strategies to achieve best execution are adequately deployed.
MGTS routing decisions are made by advanced smart order router logic which adjusts to market conditions. The execution decisions will be made based upon either client instructions and/or the router’s programmed parameters. The router’s primary objective is to achieve best execution.
9. Execution strategies
When executing client orders or sending orders for execution, the execution desk will review a range of execution factors (such as market volatility, liquidity conditions, bid-ask spread, transaction size … etc.) on a real time basis to determine the optimal execution strategies and implement such strategies using market data sourced from Bloomberg, BestX and other relevant data service providers and/or by direct request to the selected execution venues/brokers trading desks.
Depending on the type of orders, market liquidity and all the considerations that have been outlined in section 6, MGTS has designed a set of execution strategies as part of the sufficient steps to obtain the best possible results.
Where execution is undertaken electronically, to reduce potential for significant market impact and impact to counterparty banks, it is important to execute in full size. To safeguard Best Execution and limit the market impact of the transaction, MGTS may also adopt the maximum streaming limit to control the maximum transaction size permitted under each transaction. The maximum streaming limit may depend on the currency pair and the prevailing market conditions.
To achieve Best Execution and to protect the client against an adverse movement between the ‘top of book price (The lowest offer price available from the panel of banks when the client seeks to buy, or the highest bid prices available from the panel of banks when the client seeks to sell)’ after client clicks “Get Best Rates” button on the portal, and the price at which the trade is executed in the market, MGTS will apply a price tolerance threshold (e.g., 5 basis points). If the actual market gap movement exceeds the price tolerance threshold in a direction against the Client, the trade will be rejected.
WMR 4pm fixing
When a client requests an execution at the WMR 4pm fixing, the spot component of the transaction will be executed at the WMR 4pm mid-price while the forward points will be executed via open markets.
10. Client Specific Instructions
If a client provides MGTS with specific instructions relating to a transaction, MGTS will follow that instruction so far as is reasonably possible when executing the trade. By following client’s specific instructions, MGTS has satisfied the obligation to provide client with order execution in relation to that transaction or in relation to the part or aspect of the order to which the instruction(s) relate.
It is however possible that the specific instruction may prevent MGTS to take all the steps it has designed in its order execution policy to obtain the best possible results in respect of the elements of the order not covered by the specific instruction (s).
11. Record Keeping
MGTS records and retains all data relating to its Best Execution Policy including the execution venues/brokers selection process. Records are retained for five years in a durable medium and will be made available to the competent authorities upon request. All communications which relate to reception, transmission and execution of orders, and/or which will or may result in orders will be recorded and maintained for a period of 5 years or any other periods specified by the relevant regulator or government authority.
12. Data Usage
MGTS may need to use data reporting service providers and, in this regard, will transmit data relating to transactions to third parties. Clients are informed within the customer agreements that client data relating to order execution provided to MGTS may be sent to the competent authorities, its affiliated entities and, where relevant, to service providers or subcontractors of the Institution or of its affiliated entities, in accordance with the General Data Protection Regulation.
Compliance with the Best Execution Policy is subject to ongoing compliance monitoring, at a frequency determined according to regulatory and operational risks to which MGTS is exposed but no less than on annual basis or where a material change occurs.
MGTS has adopted a number of procedures and control processes through which it monitors the effectiveness of execution arrangements to identify and where appropriate correct any deficiencies.
This includes but is not limited to:
On-going monitoring of execution quality through execution factors specific reports, exception reports, sampling trade reconstruction, external independent analytics services
Monthly review of execution venues/brokers and liquidity providers performance
Regular assessment of execution strategies, execution factors ranking and execution methods
Any complaint concerning this execution policy may be addressed to: