Best Execution Policy
We take our 'Best Execution' obligations very seriously, and we will always strive to deliver a service that meets your stated requirements and which you have a right to expect.
Prism Financial Advice Limited (Prism) operates as a firm of Independent Financial Advisers (IFA), who is authorised and regulated by the Financial Conduct Authority (FCA) under registration number 426165. Principle 6, of the FCA’s Principles for Business state that a firm must pay due regard to the interests of its customers and treat them fairly.
This Best Execution Policy sets out information relating to how Prism seeks to provide best execution as required by the Markets in Financial Instruments Directive 2014/65/EU (“MiFID II”) and the FCA’s Conduct of Business Sourcebook (“COBS”), when executing orders on behalf of clients. Specifically, the FCA requires Prism to take all reasonable steps to obtain, when executing orders, the best possible result for its clients taking into account the execution factors stated within COBS 11.2A.2R.
'Best Execution' is the term used to denote the duty we have to take all sufficient steps to obtain the best possible result under the relevant circumstances when executing transactions on clients’ behalf. Prism owes its clients a duty to seek best execution when we execute financial business on clients’ behalf in line with our regulatory permissions.
It is in the interests of our clients and Prism that we obtain the best possible result when placing orders with other firms e.g., third-party brokers and fund managers for the execution of client orders or when transmitting orders on behalf of clients.
Prism and its representatives will not execute orders directly but may transmit orders on behalf of clients. We are required to take all sufficient steps to provide best execution when transmitting such orders and, on your request, to provide you with a copy of the policy that we have adopted to achieve that objective.
This best execution policy applies to all orders in financial instruments such as funds and other securities and is designed to ensure that all orders are handled in a fair and consistent manner.
When placing orders with other firms for the execution of orders or when transmitting orders, we will make every effort to ensure the best possible result for our clients, considering the following factors:
The Price - This is the price a financial instrument is traded at.
The Cost - This includes all fees and costs related to order execution, including implicit costs such as market impact, and explicit costs such as adviser, product, and provider fees.
The Speed - This is the time it takes to execute a transaction.
The Execution / Settlement - this is the likelihood that we will be able to complete the transaction and that the transaction will settle.
The Size - This is the size of the transaction.
The Transaction Nature - This is the transaction or any other consideration relevant to the execution of the transaction and any characteristics of a transaction that can affect the best execution.
Prism will determine the relative importance of each of these execution factors by using our commercial judgment and experience considering market information reasonably available and considering a number of criteria, namely: The characteristics and nature of the client order, including whether any specific instructions are given. The categorisation of Prism’s clients; and the market conditions, such as the degree of liquidity and volatility in the market.
For retail clients, the price and cost of execution of the order will normally be the most important aspect in obtaining the best possible result. We will therefore assume this is the most important outcome for client transactions when we pass an order to the contracted service provider in each instance unless the client tells us otherwise.
For certain transactions, speed may be an essential factor. For example, if the Investment Committee believes that the market may move in the short term, they may instruct the administrative team to prioritise speed as an execution factor to try to ensure that we take advantage of any market movements.
We do not tend to prioritise the likelihood of settlement, given that in most developed markets, which does not tend to be a factor. However, in less developed markets, again, the emphasis may shift as we deem it necessary to protect your interests.
When placing an order with a broker/platform for execution, Prism will consider not only these factors and criteria but also the broker/platform’s ability to fulfil the obligations to seek best execution.
During the trading process when applying consideration to each execution factor, Prism will use our expertise and experience to achieve the best balance across the full range of factors; including where they may conflict with each other. Overall, this may mean that Prism and the execution venues we select may not always achieve best execution (taking into account the characteristics of each trade) for every transaction, despite our good faith efforts to seek best execution.
In arranging for the execution of your order we will pass your order instructions to your contracted service provider to the best of our ability.
We will use a third-party to execute your order such as an investment product provider, platform, or broker.
We may trade as an agent (where our scope of regulatory permissions allows us to do so.
We may place the order directly with a fund manager.
All orders placed by us are executed through the following venues/third parties:
As independent financial advisers, Prism are not restricted to any firms or a limited section of the market.
As such we may recommend any platform, product provider or fund manager as is deemed appropriate to the client’s circumstances and needs, and future orders will be placed through the third party that they have signed up to. The execution venues will be dictated by the advised provider or platform’s arrangements.
When executing orders outside a regulated market, we will obtain the client’s explicit consent prior to proceeding.
We will regularly assess the venues/third parties available to us to identify those that will enable us, on a consistent basis, to obtain the best possible result when arranging the execution of the client’s orders. The list will then be updated, where necessary, following such assessment.
The third parties have responsibilities in relation to best execution and client order handling themselves. We will also undertake periodic monitoring to ensure that they meet the relevant requirements.
If you provide Prism with a ‘specific instruction’ in relation to an order, Prism will follow that instruction as far as is reasonably possible when executing the transaction. By following your ‘specific instruction’, we will have satisfied the obligation to provide you with the best execution in relation to that transaction or in relation to the part or aspect of the order to which your instructions relate.
However, where you have given us a ‘specific instruction’ that covers only one part or element of an order, we will still owe you best execution in relation to the rest of the order (i.e., the part not covered by the ‘specific instruction’).
Examples of such instructions may include but are not limited to requests to execute on a particular venue or type of venue. You acknowledge that a ‘specific instruction’ from you may prevent Prism from taking the steps that we have designed and implemented in this Policy to obtain the best possible result for the execution of those orders in respect of the portion of the trade covered by your ‘specific instruction’.
For orders in collective investment schemes e.g., Unit Trusts, OEICs and Investment Trusts, we will place the order directly with the relevant fund manager or the operator of the collective investment scheme via the platform or other provider to which you are contracted.
It is our policy that fees/commission and charging structures will not influence either the selection of execution venues, or the order flow that follows because of the execution process. We will therefore not discriminate between the execution venues we use to arrange execution of your orders.
We will regularly monitor the effectiveness of our best execution policy to identify and, where appropriate, correct any deficiencies. This will cover the execution quality of any third parties referred to in the policy.
This review will be conducted regularly (on at least an annual basis) or whenever a material change occurs that affects our ability to continue to obtain the best possible result for our clients.
To ensure compliance with the best execution policy Prism has implemented a governance framework and control process through which it monitors the effectiveness of our order execution arrangements (including this policy), to identify and, where appropriate, correct any deficiencies. Through this governance framework and controls process Prism will assess whether the execution venues included in this Policy and related arrangements provide the best possible result for you or whether we need to amend our execution arrangements.
Once approved, venues are assessed on an ongoing basis in terms of their ability to deliver the best possible result, their effectiveness in settlement and the relative level of risk presented by the execution venues to ensure that they will consistently offer the best results for clients.
Prism’s Compliance Department works to monitor compliance with Prism’s policies and procedures relating to its dealing activities. This monitoring includes assessing compliance with best execution and our internal order execution process. Monitoring includes reviewing a sample of trades to check that the price achieved appears reasonable given other trades in the market around the time of execution.
All relevant staff are made aware of this policy to highlight and emphasise the importance of best execution.
We will review our order execution arrangements and policy at least annually or whenever a material change occurs that affects our ability to obtain the best result for the execution of your orders on a consistent basis. We will notify clients of any material changes in writing from time to time. A change is to be considered material where its disclosure is necessary to enable the client to make a properly informed decision in relation to this policy as it applies to that client’s trades. In these cases, Prism will reissue the policy to clients and seek one-way deemed consent to those changes.
For further information on our Best Execution Policy, please contact our compliance department by telephoning 0191 461 9400 or email firstname.lastname@example.org.
Risk Warning: The value of your investments and any income you take from them can go down as well as up, and you may get back less than you invested. You should also note that past performance is not a reliable guide for future performance.