Capita Share Plan Services

Execution and Order Allocation Policy

Background

The Financial Services Authority (“FSA”) Rules and the Markets in Financial Instruments Directive (“MiFID”) require investment firms involved in the execution of client orders to take all reasonable steps to obtain the best possible result for their clients, taking into account price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to order execution. Firms that execute orders or which transmit or place orders with other entities for execution are required to establish a policy for complying with the overarching best execution requirement.

Capita IRG Trustees Limited (“CIRGT”) provides products which involve receiving client orders in relation to shares, and on occasion other financial instruments such as rights and options, and transmitting these orders to other entities for execution. It does not ordinarily execute orders itself. This execution policy sets out CIRGT’s strategy, and details the key steps it is taking to comply with the overarching best execution requirement and how those steps enable it to obtain the best possible result for its clients. It is made available to clients on request. Appropriate information on this policy is provided to clients in the terms and conditions for the products offered by CIRGT.

This policy applies to CIRGT’s retail and professional clients.

Execution Factors and Criteria

CIRGT has a duty when executing orders on behalf of a client to obtain the best possible result for its clients within the framework of its execution policy.

When selecting entities to provide execution services in relation to orders in shares, CIRGT  takes all reasonable steps to obtain the best possible result for its clients, taking into account price, cost of execution, speed of execution and settlement, likelihood of execution and settlement, size and/or nature of the order or any other consideration relevant to order execution.

For all transactions that CIRGT undertakes on clients’ behalf it will ordinarily treat them as a retail client; this will always be specified in the terms of business or the client agreement. The products that CIRGT offers are execution only and ordinarily relate to non-complex financial instruments that are traded on regulated exchanges and accordingly it makes no assessment of the appropriateness or suitability of the transaction unless otherwise detailed in the terms of business.  CIRGT recognises that for retail clients the most important factor to determine best execution is the overall cost to the client of the trade. Consequently share price and the cost of execution are normally selected as the most important factors for the execution of a trade. 

CIRGT receives orders and transmits them to an execution entity, which is responsible for executing the order and achieving best execution. The entities to whom CIRGT transmits orders adopt the same approach towards the factors set out above but their choice of how to deal may also be affected by the following:

  1. the liquidity of the shares involved and the execution venues upon which the orders can executed
  2. the execution policy of the entity
  3. that the order may be aggregated with orders from other clients

In the event that an order, whether aggregated with other clients’ orders or on its own, exceeds the market size for a particular stock, this may have an impact on the liquidity and price achieved for that order.  In these circumstances, CIRGT reserves the right to delay the trade and make reasonable efforts to contact the client to ascertain if the trade should be progressed once an indicative quote has been received.

On occasion CIRGT may consent to allow an entity providing execution services to deal off-market. An example of this may be where a stock is particularly illiquid and/or where an entity decides to deal as principal and trade on its own account. CIRGT undertakes to ensure that the client still receives best execution in accordance with Financial Services Authority rules.

Execution Venues

CIRGT ordinarily acts as a receiver and transmitter of orders and relies on the entity it places the order with to determine the venue for the execution of the trade. The venue of execution used depends on the nature of the trade being executed. Further details of this are given in the sections below.

CIRGT does not ordinarily accept instructions to place trades on specific venues.   In the event that CIRGT does accept such an instruction, even if it is a venue or broker not listed in this policy, CIRGT will be deemed to have complied with the FSA Rules regarding obtaining the best possible result for its client so long as that instruction is accurately executed on the venue specified by the client.

Specific Instructions

CIRGT policy is not to accept specific instructions unless it falls within the following categories:

  1. a limit order placed via the telephone or internet dealing service provided through SGSS or via online exercise facility available for certain share option schemes;
  2. a price specified on postal instruction for immediate execution.

Where CIRGT accepts a limit order this may affect the quality of execution that it can provide to its clients and some or all of this policy may not apply to such orders.

Limit orders can fail for a number of reasons, as outlined in the terms and conditions of the relevant service.  CIRGT only offers a limit order service on a reasonable endeavours basis and it remains the responsibility of the client to monitor the execution of the order.

Telephone and Internet Dealing Service

All orders received through CIRGT’s Telephone and Internet Dealing Service are transmitted by CIRGT to another entity for execution. CIRGT does not itself execute those orders. CIRGT has selected Société Générale Securities Services (“SGSS”), a subsidiary of Société Générale SA, to provide a dealing platform for CIRGT. CIRGT transmits orders to SGSS via the dealing platform which routes orders to an execution firm for execution in the market. SGSS has selected Talos Securities Limited as its executing broker for orders placed through the Squaregain dealing platform. All of the orders derived from CIRGT’s internet and telephone share dealing service are placed by the executing broker on an execution venue which is either a regulated market or a Multilateral Trading Facility (MTF).

SGSS has been selected to provide this service for the following reasons:

  1. SGSS’s executing broker has electronic links to most of the Retail Service Providers in the UK and is thus able to obtain instant electronic price quotes in shares
  2. SGSS’s broker’s system polls for price quotes automatically and selects the quote returned which provides the best price
  3. SGSS provides CIRGT’s dealing platform which is an effective and efficient method of placing trades with the executing broker.

If CIRGT receives an “At Limit order” in this service, its broker will publish details of the order to market participants unless the client consents for this not to be done.

No trades in this service are aggregated.

Customer instructions are normally executed in the same order as they are received, except where there are special conditions, such as price limits or limited liquidity, where such conditions might require additional time to ensure that the best overall result is obtained.  The execution of instructions, including limit and stop loss orders, may also be delayed for other reasons as outlined in the terms and conditions, such as the need to verify a client’s identity.

CIRGT monitors execution performance on a regular basis, and at least once a year, it will review the effectiveness of the policy and, in particular, the execution quality of SGSS’s executing broker and, where appropriate, correct any deficiencies that are identified.

Other Trades

These comprise trades arising from the following activities:

  1. Dividend Reinvestment Plans
  2. Investment Trust Savings Schemes
  3. Monthly Share Purchase Plans
  4. Share Incentive Plans
  5. Nominee Administration service
  6. Postal Share Dealing
  7. The sale of shares issued as a result of the exercise of a share option

All orders received by CIRGT or generated by CIRGT as part of the above activities are transmitted by CIRGT to another entity for execution. CIRGT does not itself execute those orders. The orders are executed on a venue of the entity’s choice. This can be a Regulated Market, MTF, Systematic Internaliser or outside a Regulated Market. Details of the venue where the trade was executed are confirmed on the advice note.

CIRGT will usually aggregate all orders received on or before a specified dealing day and place the trade for the aggregated order with the selected entity for execution.  Once the order is completed CIRGT allocates the outcome to the clients. This is based on the contract note for the order delivered by the selected entity.

CIRGT takes reasonable steps to ensure that the entity with which it places the trade has an execution approach that enables us to comply with its obligation to provide best execution.

The entities that CIRGT currently use for placing trades in shares and any other financial instruments, such as rights or options, are detailed below. This list is not exhaustive and it includes the entities on which we generally place reliance. CIRGT reserves the right to use another entity that may, from time to time, be appropriate in light of our overall Execution Policy. We will regularly monitor the execution performance and, at least once a year, assess whether the entities included in this policy provide, on a consistent basis, for the best possible result for CIRGT’s clients and whether any changes need to be made to CIRGT’s execution arrangements.

  • BMO Capital Markets
  • Brewin Dolphin
  • Credit Suisse
  • Evolution Securities
  • Jefferies
  • JP Morgan Cazenove
  • KBC Peel Hunt
  • Nat West Stockbrokers
  • Seymour Pierce Limited
  • Société Générale Securities Services
  • Winterflood Securities Limited

© 2010 Capita IRG Trustees Limited.

Capita Share Plan Services is a trading name of Capita IRG Trustees Limited, which is authorised and regulated by the Financial Services Authority http://www.fsa.gov.uk (register number 184113); please note, however, that not all share plan activity falls into this category.

The registered office of CIRGT is The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU, United Kingdom. Registered in England Number 2729260.

Part of The Capita Group Plc.