Order handling

Equities

We accept AON orders in all securities.

UBS provides clients with superior execution quality through our internally designed and maintained trading platform. In addition, we actively monitor qualitative and quantitative characteristics that affect our clients; executions. These include, but are not limited to:

  • Execution price and price improvement statistics 
  • Market depth and order size 
  • Trading characteristics of individual securities 
  • Execution speed 
  • Level of service and execution quality of various market centers 
  • Cost of executing orders at various market centers 
  • SEC Rule 605 execution statistics 
  • FINRA monthly report card data

UBS reviews order execution quality on a regular and rigorous basis in an effort to provide best execution to clients. As part of this review and to maintain optimal performance of our trading algorithms, UBS assesses the order handling and execution practices of trading centers, as well as their controls and processes employed to address market volatility and out-of-range executions. As these practices, controls and processes evolve, so too will the routing decisions of UBS with respect to all order types (e.g., we may route stop/stop limit orders to an exchange market or we may execute the orders ourselves in accordance with client instructions).

Pursuant to NASD Rule 3510 and NYSE Rule 446, UBS maintains a business continuity plan with established procedures in the event of an emergency or significant business disruption.

Upon receipt of a client order, we will seek out the best market, that which exists either domestically or on Canadian exchange, and provide execution at that best available market price. Execution prices may reflect a commission, if applicable.

UBS Securities, LLC (UBS) will adjust or cancel open orders as required pursuant to applicable regulations when a stock is subject to a Corporate Action, (e.g., distributions, dividends, splits, etc.).

Adjustment Guidelines

  • Stock Dividend: The prices of all open buy limit and sell-stop orders are adjusted by rounding up the dollar value of the stock dividend to the next higher quotation variation. The resulting amount will be subtracted from the price of the open order. 
  • Cash Dividend: The prices of all open buy limit and sell-stop orders are adjusted by rounding down the resulting price to the next lower minimum quotation variation. The resulting amount will be subtracted from the price of the open order. 
  • Dividend payable in either cash or securities at the option of the stockholder: The prices of buy limit and sell stop orders are reduced by the $-value of the cash or securities, whichever is greater.
  • Forward Splits: The size of all open buy limit and sell-stop orders are increased by multiplying the size of the original order by the numerator of the ratio of the dividend or split, dividing the result by the denominator of the ratio of the split and then rounding the result to the next lower round lot.
  • Reverse Splits: All open orders are cancelled.
  • Symbol Changes: All open orders are cancelled.
  • Exchange Changes: All open orders are cancelled unless the change is from Bulletin Board to OTC Markets or OTC Markets to Bulletin Boards for which case the orders will remain in force.
  • Stock Delisting: All open orders are cancelled.

Additional Notes

  • Open orders (GTC/GTD): Refers to any order received by UBS prior to the effective date.
  • Odd lot orders (1-99 shares): Will be adjusted for cash dividends, stock dividends and forward stock splits. 
  • Prices less than one dollar ($1.00): If the price of the stock is below $1.00 the open order will be adjusted to four (4) decimal places and it will not be rounded down. 
  • Dividends less than one cent ($0.01): Open orders will not be adjusted If the cash dividend or distribution is less than one cent ($0.01)
  • Do-not-reduce/Do-not-increase (DNR/DNI): A client may choose to enter orders with 'DNR' instruction if the client does not want the price of an order reduced for cash dividends; or with 'DNI' instruction if the client does not want the size of an order increased for stock dividends or stock distributions.
  • Corporate Action Notifications: UBS distributes a daily “Corporate Action Notification” e-mail containing Stock Splits, Dividends, Symbol Changes and Symbol additions and deletions. If you are not receiving this email or have any questions regarding how your orders with UBS are affected by a Corporate Action, please contact Client Services at OL-BD-TEAM@ubs.com or call +1-212-713 2999.
     

If a transaction is eligible for review under Rule 11890, UBS will contact its client to ascertain confirmation of an obvious error in any term, such as price, number of shares or other unit of trading, or identification of security, prior to filing. Refer to NASD Rule 11890 for a full description of the "Clearly Erroneous" rule.

Our SmartEx™ technology requires three indicators before it commences trading post the market opening: 1) Notification that the market has opened (electronic market open message); 2) a print for the stock that is deemed to be the opening print; and 3) a valid exchange NBBO.

UBS maintains an independent Compliance Department that conducts vigorous daily and monthly analyses of client and trading activities

Unless otherwise designated, all orders received are deemed "day" orders, and any unfilled portions of orders will expire at the end of that same trading day (4:00 p.m. Eastern Time). UBS accepts good-till-cancelled (GTC) and good-till-day (GTD) orders. GTC and GTD orders will remain an open order until executed, cancelled by the client that placed the order, or cancelled by UBS.

UBS maintains client good-till-cancelled (GTC) orders in equities on file for one year only.

If a GTC order has not been executed or cancelled during this period, it will automatically expire at the conclusion of the trading session of the one-year anniversary of the order's original entry date.

UBS will cross market or marketable limit orders upon receipt with opposite-sided market, marketable limit and resting limit orders. Generally, market and marketable limit orders are priced at the midpoint of the NBBO at the time of execution when crossed with opposite-sided market and marketable limits.

UBS developed a Limit Order Display ('LOD') utility for all securities, which immediately displays non-marketable limit orders upon receipt. Our general procedures are as follows:

  • LOD displays multiple levels of our open order book to ensure representation in a fast moving market;
  • Orders are displayed in accordance with applicable SEC Limit Order Display Rules;
  • The LOD utility displays oversized held orders entirely;
  • Regular system monitoring ensures adherence with all applicable display regulations and procedures;
  • Orders can be displayed on exchanges or by utilizing ECNs.
  • Just prior to the close, an automated process migrates all orders to the primary listing exchange in order to participate in the respective exchanges’ closing cross processes.
  • UBS will display orders up to exchange limits.
  • From time to time, UBS may partially display orders that, due to their size, are exempt from the provisions of the Limit Order Display Rule, (i.e., "exempt oversize" orders).
  • If an exempt oversize order is partially displayed, UBS will execute the remainder of the un-displayed portion of the order upon the full execution of the displayed portion of that order.

UBS provides automated limit order display for all Held orders in which UBS makes a market for a share amount equal to the minimum quote size, with any the balance in reserve.

Our SmartEx™ technology platform combines capital commitment and intelligent order routing to consistently provide executions that either match or exceed the NBBO at the time of execution for every security in which we make a market.

UBS provides price-for-price and share-for-share protection to market, limit, and marketable limit orders in all securities.

SEC Rule 15c3-5 (the "Market Access Rule") requires that broker-dealers have risk management controls that are reasonably designed to prevent the entry of erroneous orders into the marketplace. This includes both daily notional limits as well as controls on an order by order basis that appear to exceed appropriate price or size parameters. UBS has created certain controls designed to identify potentially erroneous orders and to enforce daily notional thresholds. As a result of these controls, UBS may, in its sole discretion, reject an order or delay the processing of an order while determining whether to accept or reject it.

Furthermore, in an effort to obtain Best Execution for its clients, UBS may exercise discretion in the handling of certain orders by awaiting a replenishment of liquidity, particularly for lower volume securities, prior to execution.

For details concerning UBS's order handling algorithms, or questions regarding your individual limits and order-by-order checks, please contact your UBS Sales Representative. 

NASDAQ, NYSE, NYSE Amex & NYSE Arca Securities access our deep liquidity pools, crossing at the time of receipt with any eligible unexecuted orders that are marketable at the NBBO or better.

UBS sends MOC/LOC orders to the stock's primary exchange and are therefore handled in accordance with the respective exchanges' closing processes and are subject to all terms and conditions of that exchange.

  • Nasdaq Securities: Orders must be received prior to 3:50:00 p.m. ET to be eligible for the closing process. Orders that are eligible for the closing process cannot be cancelled between 3:50:00 p.m. and 4:00.00 p.m. ET.
  • NYSE & NYSE Amex Securities: Orders must be received prior to 3:45:00 p.m. ET to be eligible for the closing process. Orders that are eligible for the closing process cannot be cancelled between 3:45:00 p.m. and 4:00.00 p.m. ET.
  • NYSE Arca Securities: Orders must be received prior to 3:59:00 p.m. ET to be eligible for the closing process. Orders that are eligible for the closing process cannot be cancelled between 3:59:00 p.m. and 4:00.00 p.m. ET
  • BATS Securities: Orders must be received prior to 3:55:00 p.m. ET to be eligible for the closing process. Orders that are eligible for the closing process cannot be cancelled between 3:55:00 p.m. and 4:00.00 p.m. ET
  • OTCBB/Pink Sheet Securities: MOC/LOC orders are not accepted. 

Not Held orders are handled on our agency desk on a commission basis or can be executed as a negotiated block bid. UBS offers two ways to execute Not Held orders on the agency desk: 1) Orders are executed via an algorithm; or 2) orders are manually worked by a human trader.

From time to time, and at UBS's discretion, UBS may provide a principal execution to certain client orders that participate in the pre-market trading session.

Eligible pre-opening orders will be executed at a price based on the primary exchanges' opening cross price either as principal by UBS or as agent by routing pre-opening orders to the primary exchange for participation in the opening cross.

Pre-open orders are handled in accordance with the respective exchanges’ opening processes:

  • Nasdaq Securities: Orders must be received prior to 9:28:00 a.m. ET to be eligible for the Opening Cross pricing. Orders that are eligible for the pre-opening cannot be canceled between 9:28:00 a.m. and 9:29.59 a.m. ET. Orders received after 9:28:00 a.m. will be executed after the cross is complete.
  • NYSE & NYSE Amex Securities: Orders can be accepted up until the first trade on the primary exchange in each specific security to be eligible for the opening auction pricing.
  • NYSE Arca Securities: Orders must be received prior to 9:29:00 a.m. ET to be eligible for the opening auction pricing. Orders that are eligible for the pre-opening auction cannot be canceled between 9:29:00 a.m. and 9:29:59 a.m.
  • BATS Securities: Orders must be received prior to 9:28:00 a.m. ET to be eligible for the opening auction pricing. Orders that are eligible for the pre-opening auction cannot be canceled between 9:28:00 a.m. and 9:29:59 a.m.
  • OTC Market Securities – UBS does not handle OTC Market securities on a proprietary bases and will route client orders to external wholesalers for order handling and execution on an agency basis.

Note: The aforementioned pre-opening order handling protocols assume normal market conditions and fully operational systems. To the extent that a primary exchange experiences a technology failure or other issue that interrupts the pre-opening process of a security or securities, UBS may utilize alternate methods and/or exchanges for order handling and execution, when possible.   

UBS falls within the definition of a "trading center," and is obligated under Rule 611 to establish, maintain and enforce written policies and procedures reasonably designed to prevent “trade-throughs”. To comply with Regulation NMS, we have implemented a variety of polices and procedures. This list addresses some of the most commonly asked questions relating to our policies and procedures:

  • UBS's technology routes Held order flow in a manner consistent with the requirements of Regulation NMS.  Our SmartExTM technology achieves best execution by providing liquidity and price improvement, while preventing the execution of trades at prices inferior to protected quotations;
  • UBS has proprietary routing technology that connects with all automated trading centers in compliance with Rule 611;
  • UBS continuously monitors and evaluates display facilities to decide where orders are best displayed.  Some of the factors included in our analysis are volume, system availability and reliability, clearly erroneous trade policy and cost;
  • Our policies and procedures are constantly under review to seek areas of improvement and on a quarterly basis UBS holds a formal execution quality review

UBS reserves the right at its sole discretion to reduce, modify, suspend, or cancel any of its order handling protocols, without notice when non-normal market conditions exist.

Although rare, UBS may request that a client route a stock away only in the event of a regulatory restriction, system outage or potentially abusive trading behavior.

UBS determines inclusion of orders in accordance with applicable SEC requirements. UBS does not include, for the purposes of Rule 605, any orders handled on an agency basis (where UBS does not make a market in the stock).

 UBS offers its clients the option to designate the type of stop election method in Nasdaq, NYSE, NYSE Amex, NYSE ARCA, & BATS securities.

Option # 1 - Stop Order (Default method): Election of stop and stop limit orders based on last sale transactions printed through the Consolidated Tape.

Option #2 - Stop Quotation: Election of stop and stop limit orders based on the best bid and offer quotations communicated through the Consolidated Quote System (i.e., the NBBO).

Option #3 - Order-by-Order: Election based on either transaction or quotation, as specified on an order-by-order basis via FIX messaging.

Note: UBS elects stop and stop limit orders in OTC Markets based only on the best bid and offer quotation.

UBS employs a team of Supervisory staff that reviews the trading activity on the desk on a daily basis. The Supervisory staff also assists traders and sales traders in the review of any execution issues.

UBS’s downtime has been negligible over the last 12 months. In the case of system downtime the UBS routing technology has the capability to immediately route around our trading technology direct to the market. Any system outage is communicated to clients via telephone and/or email. In the event of a system outage, we review both unexecuted and executed market and limit orders for any adverse handling or executions.

For NASDAQ, NYSE, NYSE Amex & NYSE Arca Securities priced over a dollar, UBS executes orders in sub-pennies either when providing price improvement or when providing a Manning execution from a Street-side trade returned in sub-pennies. UBS will display orders in subpennies out to four decimal places.

Options

We accept AON orders in all securities.

UBS monitors for the opening quote from all exchanges for a particular option. If an order is at an exchange that has not opened, UBS will identify any exchange that has opened and re-route orders to the exchange to access the NBBO.

Our technology platform combines smart order routing and capital commitment to constantly provide superior execution quality. UBS commits capital to facilitate and improve customer executions through exchange sponsored crossing mechanisms that include the following:

  • CBOE: Automated Improvement Mechanism (AIM) is an automated crossing process of any origin type providing price improvement opportunities with participation in an auction process.
  • PHLX: Price Improvement XL (PIXL) electronic price improvement mechanism whereby an initiating member submits a two-sided (buy and sell) order into an auction process soliciting price improvement.
  • BOX: Price Improvement Period (PIP) auction is an automated trading mechanism which permits brokers to seek to improve executable client orders. BOX Participants executing agency orders as Order Flow Providers (OFPs) and wishing to improve the client’s price by taking the other side as principal signal this intent to the BOX market-place via a special order message submitted to the BOX trading engine; market makers on the class as well as other BOX trading participants can then compete for this order through enhanced pricing.

UBS immediately displays non-marketable limit orders upon receipt. Our general procedures are as follows:

  • Orders are displayed in accordance with pre-determined routing preferences, and are subject to applicable exchange limit order display rules.
  • Regular system monitoring ensures adherence with all applicable display regulations and procedures.

LOC orders are not supported by the option exchanges.

Rule 15c3-5 (the 'Market Access Rule') requires that, among other risk controls, broker-dealers assign daily limits to each of their clients who are provided access to trading securities in the US markets and alternative trading systems. The limits are based on each client's particular profile - such as size, trading style, capitalization, and other reasonable factors.  In order to comply with this regulation, UBS has defined trading limits for all of its electronic trading clients.  For details about your individual limits, questions regarding the order limit checks, please contact your UBS Sales Representative.

In addition to the client specific trading limits, UBS does employ standard order quantity thresholds that apply to all clients. Upon receipt of an option orders order from a client with a quantity of  5000 contracts or greater, UBS will generate an "Max Quantity Exceeded" message back to order originator.

UBS accepts MOO orders in all US exchange-listed options. MOO orders are routed to exchanges that accept them. If the option is proprietary to an exchange that does not accept this order type, we will reject the order back to the client.

UBS sends MOC/LOC orders to the stock's primary exchange and are therefore handled in accordance with the respective exchanges' closing processes and are subject to all terms and conditions of that exchange.

  • Nasdaq Securities: Orders must be received prior to 3:50:00 p.m. ET to be eligible for the closing process. Orders that are eligible for the closing process cannot be cancelled between 3:50:00 p.m. and 4:00.00 p.m. ET.
  • NYSE & NYSE Amex Securities: Orders must be received prior to 3:45:00 p.m. ET to be eligible for the closing process. Orders that are eligible for the closing process cannot be cancelled between 3:45:00 p.m. and 4:00.00 p.m. ET.
  • NYSE Arca Securities: Orders must be received prior to 3:59:00 p.m. ET to be eligible for the closing process. Orders that are eligible for the closing process cannot be cancelled between 3:59:00 p.m. and 4:00.00 p.m. ET
  • BATS Securities: Orders must be received prior to 3:55:00 p.m. ET to be eligible for the closing process. Orders that are eligible for the closing process cannot be cancelled between 3:55:00 p.m. and 4:00.00 p.m. ET
  • OTCBB/Pink Sheet Securities: MOC/LOC orders are not accepted.

UBS accepts orders with a minimum quantity in all US exchange listed options and will route them to exchanges that support this order type. If the option is proprietary to an exchange that does not accept this order type, we will reject the order back to the customer.

UBS will make a clearly erroneous filing if the transaction is eligible for review and if there is an obvious error in any term, such as price, number of shares or other unit of trading, or identification of security. We will require confirmation of such error from a client prior to filing.

UBS sends pre-opening orders to exchanges based on pre-determined routing preferences.

UBS has created an exchange preference list for each option based on the following criteria:

  • Execution Quality
  • Volume
  • System reliability
  • Response time
  • Customer service

UBS’s routing list is used for various order handling processes, including pre-open and display.

UBS, as a member of all U.S. Options Exchanges, must comply with rules and regulations of those exchanges.  Exchange rules provide certain marketplace advantages to public customer orders over non-customer orders, such as priority over non-customer orders and Market-Maker quotes at the same price, and, in most cases, the absence of transaction fees for the execution of public customer orders.  Exchange rules dictate that orders placed by non-customers, or "Professional Customers", be designated a "Professional Order" in order to distinguish customer orders from non-customer orders.   A Professional Customer is any person or entity that is not a broker or dealer in securities and who places more than 390 orders in listed options per day on average during a calendar month.  A customer's orders will need to be marked Professional for an entire quarter if they exceed the 390 average daily order threshold during any month in the preceding quarter.  This notice is to inform you of our obligation to mark your orders as Professional Customer if it is determined that the above criteria has been met.  Brokers or dealers that route order flow to UBS have an obligation to ensure that orders are marked appropriately. 

Brokers or dealers that route order flow to UBS have an obligation to ensure that orders are marked appropriately.  UBS expects that its broker or dealer customers with multiple beneficial accounts maintain policies and procedures to properly identify professional orders.  You may contact your UBS representative to discuss the adequacy of your policies and procedures related to professional orders.

UBS accepts stop and stop-limit orders in all US exchange listed options. Stop and stop-limit orders are sent to exchanges based on a pre-determined preference list. Sell-stop orders are triggered by a transaction price at or below the stop price, or an offer (quote) at-or- below the stop price.Buy-stop orders are triggered by a transaction price at-or-above the stop price, or a bid (quote) at-or-above the stop price.