Terms of Reference:
“Best Execution” means obtaining the most advantageous execution terms for a client order reasonably available under the circumstances.
“Best Execution Committee” is composed of the Head Trader and a senior representative of the Compliance Department (normally the CCO), and other trading or compliance representatives as needed depending on the matters under consideration.
1. Purpose and Obligation
“Best Execution” as defined in IIROC Rule 3300 and National Instrument 23-101 means obtaining the most advantageous execution terms for a client order reasonably available under the circumstances. ATB Capital Markets (ATBCM) is required to establish, maintain and ensure compliance with written policies and procedures reasonably designed to achieve best execution for clients.
2. Hours of Operation for Trading in Canadian Listed Securities
ATBCM trading staff will be available for order entry and execution between 9:30 a.m. ET and 4:00 p.m. ET (“Hours of Operation”), Monday through Friday, not including statutory holidays. Staff may be available outside the Hours of Operation, however, order taking and/or trade execution will be treated on a best-efforts basis.
An order received prior to the opening (9:30 a.m.) will be booked on the principal marketplace (TSX/V) for execution at the opening. At the specific client request, orders received during this time may be routed for execution to a marketplace that is open.
Post Market Open
Order received during Hours of Operation will be routed using the smart order router which will source out the best available market at the time of receipt of the order. The best market is the market that displays the best bid price and best offer price, offering the best liquidity, and where ATBCM has reasonably determined that the order has the best likelihood of execution.
An order resting on an alternative marketplace may be routed by ATBCM traders to the primary marketplace if they determine that such action will increase the likelihood of obtaining an execution.
After the Close – 4 p.m.
An order received after the close may be held in queue and entered the next business day in the preopening session on the principal marketplace, or may be entered on a marketplace that offers after-hours trading, according to client instructions.
3. Best Execution Practices
When executing orders in listed securities, ATBCM must:
4. Best Execution Factors Considered
ATBCM’s Best Execution policy is designed to result in the best outcome for the client. The Policy takes into account the following broad factors for the purpose of achieving best execution for all client orders:
ATBCM also considers the following more specific considerations of the above noted factors:
ATBCM is also required to address the following ‘prevailing market conditions’ when manually handling a client order:
5. Specific Client Instructions and Client Preferences
Where our clients provide specific instructions, such as withholding an order from market until conditions are more conducive, using an algorithm program to achieve VWAP, TWAP, percentage of volume, or any other special instructions, ATBCM will consider such instructions provided they do not contravene “specific market requirements” as defined by UMIR. However, best execution for a client order for any listed security is subject to compliance with Order Protection Rule (see below).
6. Prohibited Practices in Execution of Client Orders
ATBCM will not:
7. Training Obligations
ATBCM will ensure that all employees involved in the execution of client orders know and understand the application of ATBCM’s written best execution policies and procedures.
8. Best Execution and the Order Protection Rule
Regardless of client instructions or consent, all client orders are subject to the Order Protection Rule that requires that ATBCM not trade through any visible order on any Canadian protected marketplace, as shown in National Best Bid and Offer (NBBO) order book. Protected orders and marketplaces are as defined in National Instrument 23-101: Trading Rules.
9. Review of Best Execution Policies and Procedures
ATBCM will maintain well-documented Best Execution Policies & Procedures. The Best Execution Committee will review such policies at least annually, or whenever there is any material change to internal technology, a change in liquidity patterns, or a change in the Canadian trading environment, such as the entry of a new marketplace, or the closing of a current marketplace, or a significant change in any of the marketplaces’ rules.
The compliance representative will document any changes in methodology or policy and retain evidence of such meetings. The compliance representative will also be responsible for updating the ATBCM website disclosures, and maintain evidence of such disclosure changes.
ATBCM will regularly test (sample) trade tickets for Best Execution to demonstrate that our Policies and Procedures are reasonably achieving the goals set out in our Best Execution Policy.
ATBCM will also review quarterly trading statistics published by IIROC on marketplace volumes and value traded, as well as other data available to us on order completion rate, best prices, and best liquidity values, and a survey of all of our traders to determine if we need to amend our Smart Order Router (SOR) market ranking as determined by our Best Execution Order Committee.
ATBCM uses intermediaries to access US marketplaces or when it uses certain algorithms, the intermediary it uses for execution of US listed securities or inter-listed securities is International FCStone Financial Inc. and for algorithms, it uses Fidessa and ITG. These intermediaries have their own Best Price Execution Policies & Procedures, and ATBCM can provide copies of each intermediary’s policies and procedures on client request.
11. Fees, Payments and Commissions
ATBCM does not have any ownership interest in any Canadian or foreign stock exchange or marketplace.
ATBCM may pay marketplace trading fees or receive marketplace rebates when routing client orders. The fee schedule is available on the website of each marketplace. These costs or rebates are not passed on to ATBCM clients. ATBCM’s routing strategies are not primarily based on fees or rebates, but which marketplaces are most likely to provide clients the best execution.
12. Smart Order Router (SOR)
ATBCM principally uses the Fidessa SOR to obtain best order execution of client orders. The SOR also prevents any violation of the Order Protection Rule. The Fidessa order Flag OPR is available for all marketplaces. The SOR scans all accessible marketplaces for the best bid or offer at the time of order entry, the SOR then directs the order to the marketplace with the best bid or offer for execution.
ATBCM’s overall process designed to achieve best execution includes the requirement to take into account client’s instructions, subject to compliance with any regulatory requirements. Further, ATBCM must disclose material conflicts of interest that may arise when sending orders for execution and describe how such conflicts are managed.
© 2020 ATB Capital Markets Inc. All Rights Reserved. ATB Capital Markets Inc. is a member of IIROC and CIPF (Canada) and ATB Capital Markets USA Inc. is a member of FINRA and SIPC (USA).
ATB Business is a unit of ATB Financial which provides financial services to commercial enterprises from small businesses to corporates.