Part A – General
This Order Execution & Order Allocation Policy for Private Clients and Professional Clients (The "Order Execution Policy") sets out UBS AG, London Branch Wealth Management's ("UBS WMUK") policy in respect of its client order execution methodology for taking all reasonable steps to obtain the best possible result for its clients in accordance with Financial Conduct Authority rules when executing Client Orders.
This policy applies to:
a) the transmission to or placement with Execution Entities of Client Orders received from UBS WMUK Private and Professional clients (referred to in this policy as acting as a Receiver and Transmitter of Orders ("RTO"); and
b) the execution of Client Orders by UBS on behalf of Private and Professional clients. In such case UBS WMUK acts as "Executor of Orders".
c) where clients receive an institutional service (Global Family Office and Per Se Professionals), and transactions are executed directly with the UBS Investment Bank Division, these transactions will be subject to the Investment Bank's Execution Policy.
2. Relevant Order Execution Factors
Whenever UBS WMUK acts as RTO or as Executor of Orders, it will take all reasonable steps to obtain the best possible results for all clients taking into account the factors in (a) to (f) below. Each class of Financial Instrument is assessed by UBS WMUK in order to determine the relative importance of these factors, taking into account the characteristics of:
(i) the Client (as either a Private or Professional Client);
(ii) the characteristics of the Client Order;
(iii) the Financial Instruments that are the subject of that Order; and
(iv) the Execution Entities or venue to which that Order can be directed. Except as set out in the following paragraph, UBS WMUK will give total consideration primary importance for execution of both Private and Professional client orders.
"Total consideration" comprises of factors (a) and (b). Depending upon the circumstances, factors (c) to (f) may be of more importance for a particular Order if they are instrumental in providing the best possible result for that particular Order or in terms of total consideration.
The factors are:
a) The price of the Financial Instruments which are offered by that Entity or venue; and
b) The direct and indirect costs related to execution of such
Financial Instruments, such as:
– All expenses incurred which are directly related to the execution of the Order,
– Execution Venue fees,
– Clearing and settlement fees; and
– Any other fees paid to third parties involved in the execution of the Order
d) Likelihood of execution and settlement, e) Size and nature of the Order
f) Any other relevant consideration (such as market impact and implicit transaction cost).
II. UBS WMUK as Receiver and Transmitter of Orders
UBS WMUK is a Receiver and Transmitter of Orders for the following classes of financial instruments:
– Cash Equities
– Equity OTC – options and forwards
– Units/Shares in funds
– Secondary market structured products
– Cash Bonds
– Exchange Traded Derivatives – futures and options
– FX OTC – swaps, forwards, and options
3. Selection of Execution Entities
Subject to any exceptions detailed below, all orders will be transmitted to and placed with the Execution Entities which are able to demonstrate to UBS WMUK that they have in place execution arrangements enabling UBS WMUK to comply with its obligations to act in the best interests of its clients.
4. Criteria for Selection of Execution Entities
The following criteria are taken into account in assessing and selecting the Execution Entities:
– The terms of that Entity's execution policy, where such policy is available
– That Entity's methodology in determining the relative im- portance of the above mentioned factors listed in section (2) based on the Entity's commercial experience and judgement
– That Entity's assessment and use of Execution Venues in order to enable that Entity, on a consistent basis, to achieve the best possible result when executing Client Orders together with the Entity's processes, methods and reasons for executing Orders in a particular way as detailed in its own Execution policy. It is permissible for the Entity to execute Orders by crossing orders, itself acting as an Execution Venue by selling from it's own inventory, placing the order on a regulated market or Multi-Lateral Trading Facility ("MTF") or placement with a third party to obtain execution.
– The approach taken by the Entity to the aggregation of Client Orders.
– That Entity's processes and systems for monitoring its execution procedures and in particular in obtaining the best possible result in accordance with the factors detailed in 2 above.
5. Execution Entities with which all Orders are placed, and/or to which all Orders are transmitted for Execution
Subject to any exceptions such as receipt of specific client instructions and after reviewing the execution policies and methodologies of potential Execution Entities, UBS WMUK has determined that the Execution Entities set out in Annex A are the most significant entities which enable UBS WMUK to meet its execution obligations. This list of Execution Entities is not exhaustive and will be kept under review and updated in accordance with this policy. UBS reserves the right to use other Execution Entities additional to those listed in Annex A where it deems appropriate in accordance with this policy.
III. UBS WMUK as Executor of Orders
UBS WMUK acts as an Executor of Orders for the following classes of financial instruments:
– UK Equities
– Units/Shares in Funds
– Primary & Secondary Market Structured Products
– Cash Bonds
6. Order Execution Methodology
UBS WMUK will execute a Client Order by one of the following methods or combination of methods:
– UK Equities
– On exchange
– Units/Shares in Funds
– Subscription/redemption placed direct with fund provider
– Primary & Secondary Market Structured Products
– Market selected based on best terms but also on valuation, services and availability of secondary markets – direct to the provider
– Cash Bonds
– Request for quotes across the market
7. Execution Venues
When placing Client Orders, UBS WMUK will choose an Execution Venue that it considers to be the most appropriate to meet its obligation to obtain the best possible result for its clients.
A list of Execution Venues in respect of each class of Financial Instruments can be found at Annex B.
IV. General Provisions
8. Client Consent
This policy details the Order Execution and Order Allocation arrangements UBS WMUK has put in place to meet its Best Execution obligations. Clients will be deemed to have accepted the arrangements put in place under this policy when they next place an order for execution with UBS WMUK, or where they only wish to be provided with discretionary portfolio management services, they will be deemed to have accepted when they appoint UBS WMUK to provide these services.
9. Specific Client Instructions
Where a Client provides specific execution instructions or specific instructions on certain elements of the Order, the Order will be executed in accordance with those instructions. This may prevent UBS WMUK from taking the steps it has designed and implemented in this policy to obtain the best possible result for the execution of those Orders in respect of any execution factors which may be affected or influenced by those instructions.
10. Limit Orders
Where a client provides an instruction to place an order at a specific price limit or better, and for a specified size (a limit order), then it may not always be possible to execute that order under the prevailing market conditions. UBS is required to make client orders public (show the order to the market) in such a case unless they agree that we need not do so. It is our policy to exercise our discretion as to whether or not we make client orders public. We will proceed on this basis unless clients specifically instruct us otherwise.
11. Orders Executed outside a Regulated Market
There may be occasions when achieving the best possible result in the carrying out of a client order requires executing such order outside a Regulated Market. Clients consent to UBS WMUK acting under discretion in such circumstances by demonstrating acceptance of this policy. This only applies to financial instruments admitted to trading on a Regulated market or MTF.
Part B – Order Allocation
UBS WMUK will execute or transmit Client Orders in a prompt, fair and expeditious manner relative to other Client Orders or its trading interests. UBS WMUK will ensure that executed Orders are promptly and accurately recorded and allocated. UBS WMUK will carry out otherwise comparable Client Orders sequentially in accordance with the time of their reception unless:
– the characteristics of the Client Order or prevailing market conditions make this impracticable; or
– the interests of the Client require otherwise.
Orders are not treated as otherwise comparable if they are received by different media and it would not be practicable for them to be treated sequentially.
13. Aggregation of Client Orders
Client Orders or Transactions will not be carried out in aggregation with another Client Order unless:
– It is unlikely that the aggregation of Orders and transactions will work overall to the disadvantage of any Client whose Order is to be aggregated.
– It has been disclosed to each Client whose Order is to be aggregated that the effect of aggregation may work to its disadvantage in relation to a particular Order.
– Where an aggregated client order is partially filled allocation to clients will take place on a strict pro-rata basis and the dealing desk will inform the relevant Client Advisors of the particulars of the allocation. In all instances, the allocation must be in the best interests of all relevant clients and any allocation must be undertaken on a fair and reasonable basis.
14. New Issues Procedures (IPOs)
It is UBS policy that all clients are treated in a fair and even-handed way when allocating new issues. Where new issues are oversubscribed and allocation is cut back, reallocation will generally take place on a pro-rata basis. In all instances, the allocation will be in the best interests of all relevant clients and any re-allocation will be undertaken on a fair and reasonable basis.
Part C – Monitoring and Review
UBS WMUK will periodically monitor the effectiveness of the execution arrangements it has in place with the Execution Entities and Venues and assess these results against its obligation to provide Best Execution against the execution factors under Section 2. Where deficiencies are identified these will be corrected.
16. Review of Policy
UBS WMUK's Order Execution Policy will be reviewed regularly and the provisions of this policy will be reviewed annually and also whenever a material change occurs that affects UBS' ability to continue to obtain the best possible result for its Clients. UBS WMUK will also notify Clients of any material changes to the ex- ecution arrangements or this execution policy.3
All terms on capitalised terms are defined in the Glossary in Appendix A.
Appendix A – Glossary
Where we are acting as Agent, we are facilitating a transaction between clients and a market counterparty.
Means any natural or legal person to whom UBS WMUK pro- vides Investment and/or Ancillary Services.
Means a transaction buying or selling one or more Financial Instruments, whether it is on behalf of clients, or at the request of clients.
Closed Architecture Structure
Under this structure UBS WMUK will not request quotes from across the market but will obtain quotes solely from the UBS Group. In such cases UBS WMUK will sample other market participants to compare UBS prices for best execution purposes.
Means the entities to which UBS WMUK transmits or places Orders for execution.
Means a Regulated Market, an MTF, a Systematic Internaliser, or a market maker or other liquidity provider or an entity that per- forms a similar function in a third country to the function performed by any of the foregoing.
Executor of Orders
Has the meaning set out in Part A I (1) of this policy.
iii. Units in collective investment undertakings;
iv. Various options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, or other de- rivatives instruments, financial indices, financial measures or commodities;
v. Derivative instruments for the transfer of credit risk; and
vi. Financial contracts for differences;
vii. FX OTC-swaps, forwards and options.
For the avoidance of doubt, "Financial Instruments" do not include spot foreign exchange transactions or loans.
Means any person whose regular occupation or business is the provision of one or more investment services to third parties and/or the performance of one or more investment activities on a professional basis as defined in the FCA rules Handbook.
Means the provision of a service in relation to a financial instrument which may include;
(a) reception and transmission of orders in relation to one or more financial instruments;
(b) execution of orders on behalf of clients;
(c) dealing with own account;
(d) portfolio management;
(e) the making of a personal recommendation;
(f) underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis;
(g) placing of financial instruments without a firm commitment basis
(h) operation of multilateral trading facilities as defined in the FCA rules Handbook.
Open Architecture Structure
Under this structure UBS WMUK will request quotes from across the market for the best terms.
Means a client that is either a per se professional client or an elective professional client. The application of these terms to specific clients is as defined using the criteria outlined by the Financial Conduct Authority Conduct of Business Rules 3.5.
Where we are acting as Principal, clients will be contracting di- rectly with UBS AG as their market counterparty.
Means any client which is not a Professional Client or Eligible Counterparty.
Receiver and Transmitter of Orders (RTO)
An entity that transmits or places Clients Orders received from Private and Professional clients to/with Execution Entities.
Regulated Market/Multi-lateral Trading Facility (MTF)
Means a multilateral system operated and/or managed by a market operator, which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments – in the system and in accordance with its non-discretionary rules – in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with the provisions.
Means an Investment Firm which, on an organised, frequent and systematic basis, deals on own account by executing Client Or- ders outside a Regulated Market or an MTF.
Class of Financial Instrument
UBS Switzerland AG
Units/Shares in funds
Secondary Market Structured Products
Equity OTC – options and forwards
Exchange Traded Derivatives – futures and options
FX OTC – swaps, forwards and options * See Annex C
Class of Financial Instrument
London Stock Exchange
Direct with Fund Administrators
Units/Shares in Funds
Direct with Providers
Primary & Secondary Market Structured Products
Direct with Market
Best Execution of FX OTC
Execution of FX OTC is currently performed on a closed architecture basis (i.e. prices are provided by UBS IB alone).Regular monitoring is carried out in order to ensure UBS WM best execution policy is adhered to.
This includes sampling UBS IB provided rates for currency swaps plus OTC option implied volatilities and comparing them to external market sources.