Best Execution

Research Disclaimers • Ratings Distribution • Conflicts of Interest Policy • Compendium Disclosures • Best Execution • Execution Quality

DISCLAIMER

• This Best Execution Policy describes the procedures undertaken by the Cash Equities Department (“CED”) of Haitong International Securities Company Limited (“HTI”) when executing orders on behalf of Clients serviced by HTI CED.
  
• This Best Execution Policy is not intended to create a legally binding obligation and should instead be read as a statement of intention when executing orders.
  
• This Best Execution Policy should not be taken as a representation and failure to comply with these procedures should in no way, of itself, mean that HTI has breached any client obligation.
  
• HTI’s commitment to provide “best execution” does not mean that it owes any of its clients any fiduciary responsibilities over and above any specific regulatory obligations placed upon it, or as contractually agreed with the Client.
  
• HTI reserves the right to amend this Best Execution Policy at its sole discretion and without providing notice. Updated versions will be made available via the HTI website.
  
• This Best Execution Policy does not represent legal advice and should be read in the context of any prevailing Client agreements, local law, and applicable market rules and regulations.

1. Purpose

HTI is licensed by the Securities and Futures Commission of Hong Kong (the “SFC”) for Type 1 (dealing in securities), Type 3 (leveraged foreign exchange trading) and Type 4 (advising on securities) regulated activities with CE number AAF806. HTI is also a participant of The Stock Exchange of Hong Kong Limited.

The SFC requires licensed persons, when acting for or with clients, to execute client orders on the best available terms.

This document summarises the Best Execution Policy of HTI’s Cash Equities Department in relation to agency orders executed on behalf of Clients. HTI has established and implemented a framework of Policies and Procedures which are designed to take all reasonable steps to deliver to a Client the best available terms on a consistent basis when executing orders on the Clients’ behalf.

2. Scope

The Best Execution Policy applies when HTI executes orders on behalf of any Client and there is a legitimate reliance on HTI to achieve a stated execution outcome. In executing orders, HTI may execute via its own trading membership or via third party brokers (“Brokers”).

The Best Execution Policy will not apply where there is no expectation on HTI to provide a best execution service. These situations typically occur when:

(i) The Client initiates a request for a price from HTI principal house book ; or
(ii) The Client elects to control and execute its own orders via HTI’s electronic trading platform.

3 Client Specific Instructions

Clients may instruct HTI to take into consideration certain execution factors which the Client may, from time to time, consider to be of importance (for example, executing at a particular price or time and/or through the use of a particular strategy, Broker and/or execution venue). Where the Client provides specific instructions, HTI will take reasonable steps to execute the orders in accordance with such instructions.

Where the Client specifies execution instructions these may conflict with, and therefore prevent HTI from fully following, this Best Execution Policy. In following Client instructions HTI will be deemed to have taken all reasonable steps to provide the best outcome. In such circumstances HTI shall consider its duty of best execution under this policy to be satisfied.

4. Best Execution

In the absence of Client specific instructions, HTI will exercise its own discretion and will take into consideration a range of execution factors and characteristics. HTI will generally give price a higher relative importance when obtaining the best possible outcome for orders executed on the clients’ behalf. However HTI may also take into consideration other factors, including, but not limited to cost of execution, speed, size of order, liquidity of market, potential price impact and characteristics of the Client, the order, the financial instrument and the execution venue. There is no guarantee that best execution will be achieved in all circumstances and, in any event, the execution factors and characteristics that HTI considers in pursuit of best execution may lead to different results to the same order executed at different times.

4.1 Execution Factors

The manner in which an order is executed for a Client can be affected by various factors and criteria. In determining how a specific Client order will be executed HTI will take into consideration the following:

a. Price
b. Cost
c. Speed and likelihood of execution
d. Size of the order
e. Market impact
f. Any other factors relevant to the execution of the order

4.2 Characteristics

Clients may instruct HTI to take into consideration certain execution factors to which they attach greater importance. In the absence of a Client’s specific instructions, HTI will exercise its own discretion to determine the relative importance of the execution factors and will use reasonable efforts to obtain the best possible outcome in executing Clients’ orders. In determining the relative importance of the execution factors to achieve best outcome for Clients’ orders, HTI will also take into consideration the following characteristics:

(i) Client – characteristics of the client (e.g. regulatory categorization, order handling preferences, trading objectives)
(ii) Order – characteristics of the relevant order (e.g. size of order, liquidity profile, prevailing market conditions)
(iii) Financial instruments – the characteristics of the instruments or products that are the subject of the relevant order
(iv) Execution venue – the characteristics of the Broker or other execution venue

5. Execution Venue

It may be possible to execute and/or report transactions and crossings through various execution venues. In meeting its obligation to take all reasonable steps to consistently obtain the best outcome for the Client, HTI may execute or report orders at the following venues:

(i) A regulated exchange, either via HTI’s membership or Broker’s membership;
(ii) Alternative liquidity platforms (subject to Client consent); or
(iii) Cross reporting platforms where an order has been crossed with opposing HTI client orders (subject to Client consent).

HTI will regularly monitor and assess whether the execution venues used provide best possible outcomes for its Clients. Clients will be required to elect their execution preferences. In the absence of any specific client instructions HTI will direct Client orders to regulated markets.

6. Review and Monitoring

HTI will monitor the effectiveness of its order execution arrangements on a regular basis in order to identify any issues that may affect its ability to continue to obtain the best outcome for the execution of Client orders on a consistent basis using the venues stated in this Best Execution Policy.

HTI will review its order execution arrangements and this Best Execution Policy at least annually and will notify Clients of any material changes to its order execution arrangements or Best Execution Policy as described above by posting the information on its website.