Introduction
This Order Execution Policy (the “Policy”) sets out the arrangements implemented by ADM Investor Services Europe (“ADMIS Europe”) to comply with its obligations under Directive 2014/65/EU (“MiFID II”), the Dutch Financial Supervision Act (Wet op het financieel toezicht) and applicable delegated regulations relating to best execution.
ADMIS Europe provides investment services to Professional Clients in relation to exchange-traded commodity futures and options. These services include the receipt and transmission of orders and the execution of orders on behalf of clients.
Where ADMIS Europe executes orders on behalf of clients or transmits client orders for execution, it is required to take all sufficient steps to obtain the best possible result for its clients where a best execution obligation applies.
This Policy explains how ADMIS Europe satisfies those obligations and describes the execution arrangements, execution factors and execution venues used in the provision of its services.
ADMIS Europe does not provide investment services to Retail Clients. The best execution obligations described in this Policy therefore apply only in the context of Professional Clients and, where relevant, Eligible Counterparties.
ADMIS Europe monitors the effectiveness of its execution arrangements on an ongoing basis and reviews this Policy at least annually, or whenever a material change occurs that may affect its ability to obtain the best possible result for clients.
Governance, Monitoring and Review
ADMIS Europe is responsible for maintaining effective arrangements to comply with its best execution obligations under MiFID II and applicable Dutch law.
Employees involved in the receipt, transmission and execution of client orders must comply with this Policy and the firm’s order handling procedures.
ADMIS Europe monitors the effectiveness of its execution arrangements on an ongoing basis and reviews them at least annually, or whenever a material change occurs that may affect its ability to obtain the best possible result for clients.
As part of this review, ADMIS Europe assesses, where relevant:
- the execution venues and brokers used;
- the quality of execution obtained;
- the continuing appropriateness of its execution arrangements; and
- whether changes are required to this Policy.
Where deficiencies are identified, ADMIS Europe will take appropriate remedial action and update its execution arrangements or this Policy as necessary.
Any material breach of this Policy must be promptly escalated in accordance with the firm’s internal governance and compliance procedures.
Application of Best Execution
ADMIS Europe provides investment services exclusively to Professional Clients and, where applicable, Eligible Counterparties.
Eligible Counterparties are generally not entitled to best execution protections under MiFID II unless otherwise agreed.
Professional Clients are entitled to best execution where ADMIS Europe executes orders on their behalf or receives and transmits orders for execution.
The best execution obligation applies when ADMIS Europe acts on behalf of a client in relation to an order concerning a financial instrument.
Where ADMIS Europe receives and transmits an order to another entity for execution, ADMIS Europe remains responsible for taking all sufficient steps to obtain the best possible result for the client.
Where ADMIS Europe enters into a transaction as principal, whether best execution applies will depend on the particular circumstances of the transaction and whether the client is legitimately relying on ADMIS Europe to protect its interests in relation to the execution of the transaction.
In assessing whether such reliance exists, ADMIS Europe may take into account:
- which party initiated the transaction;
- market practice, including whether clients customarily seek quotations from multiple brokers or dealers;
- the level of transparency in the relevant market; and
- the contractual relationship and information provided by ADMIS Europe to the client.
Where a Professional Client requests a quote from ADMIS Europe and independently decides whether to transact on the basis of that quote, or where market practice involves obtaining quotations from multiple dealers, the client may be less likely to be relying on ADMIS Europe for best execution.
ADMIS Europe will assess each relevant transaction based on its particular facts and circumstances.
Regardless of whether a formal best execution obligation applies, ADMIS Europe will act honestly, fairly and professionally and in accordance with the best interests of its clients.
Client instructions
Where a client provides specific instructions regarding an order, ADMIS Europe will follow those instructions subject to applicable law, exchange rules and market requirements.
To the extent that a specific instruction relates to a particular aspect of an order, ADMIS Europe will be deemed to have satisfied its best execution obligations in relation to that aspect of the order.
Any elements of an order not covered by the client’s instructions will continue to be executed in accordance with this Policy.
Clients should be aware that specific instructions may prevent ADMIS Europe from taking the steps that it would otherwise take to obtain the best possible result.
Client Limit Orders
A limit order constitutes a specific client instruction in relation to the specified price and other parameters of the order.
Limit orders will be handled in accordance with applicable law, exchange rules and market practice.
Order Handling and Execution
Unless a client provides specific instructions, ADMIS Europe will determine the most appropriate method for handling and executing an order, taking into account the execution factors described in this Policy.
Client orders may be handled in one of two ways:
- Execution, where ADMIS Europe executes the order using its execution arrangements, including access to trading venues obtained directly or through affiliated entities or third-party service providers; or
- Reception and transmission, where ADMIS Europe transmits the order to an affiliated entity or selected third-party broker for execution.
Where ADMIS Europe transmits orders for execution, it will take all sufficient steps to select execution arrangements that are designed to obtain the best possible result for clients on a consistent basis.
Where ADMIS Europe executes orders directly, it will take all sufficient steps to obtain the best possible result for clients, taking into account the relevant execution factors and circumstances of the order.
When handling client orders, ADMIS Europe seeks to:
- execute orders promptly and fairly;
- record and allocate orders accurately;
- comply with any specific client instructions;
- treat comparable client orders fairly and in the order in which they are received, unless the characteristics of the order or prevailing market conditions make this impracticable or contrary to the client’s interests; and
- maintain arrangements that support the efficient execution and settlement of transactions.
In determining whether to execute an order directly or to transmit the order for execution, ADMIS Europe will consider the nature of the relevant financial instrument, available market access, liquidity, execution quality and the other execution factors described in this Policy.
For exchange-traded commodity futures and options, ADMIS Europe may execute orders using its execution arrangements, including market access, trading systems and infrastructure provided directly or through affiliated entities or third-party service providers.
Where ADMIS Europe determines that execution through another broker is appropriate, orders may be transmitted to an affiliated entity or selected third-party broker for execution.
Where permitted by applicable law, exchange rules and market practice, ADMIS Europe may aggregate a client’s order with orders of other clients. Aggregation will only take place where ADMIS Europe reasonably believes that it is unlikely to operate overall to the disadvantage of any client whose order is aggregated.
Where an aggregated order is only partially executed, allocations will be made in a fair and equitable manner in accordance with ADMIS Europe’s order allocation arrangements.
Where ADMIS Europe is responsible for arranging or overseeing settlement, it will take reasonable steps to ensure that client assets and funds received in connection with a transaction are allocated and delivered accurately and without undue delay.
ADMIS Europe will maintain appropriate arrangements to safeguard confidential information relating to pending client orders and to prevent the misuse of such information.
Direct Electronic Access
ADMIS Europe may provide Direct Electronic Access (“DEA”) services to eligible clients, enabling them to transmit orders electronically to a trading venue using infrastructure, systems or connectivity arrangements made available by ADMIS Europe.
Where a client uses DEA and independently determines the execution parameters of an order, including the instrument, execution venue, price, timing and size, such instructions will generally constitute specific instructions from the client.
To the extent that the client determines those execution parameters, ADMIS Europe will be deemed to have satisfied its best execution obligations in relation to those aspects of the order.
The provision of DEA does not affect ADMIS Europe’s responsibility to maintain appropriate systems, controls and monitoring arrangements in accordance with applicable legal and regulatory requirements.
ADMIS Europe reserves the right to impose limits, controls and restrictions in connection with DEA services where necessary to comply with applicable law, exchange rules, risk management requirements and prudent market practice.
The availability of DEA services does not affect ADMIS Europe’s obligation to act honestly, fairly and professionally in accordance with the best interests of its clients.
Execution Factors and Execution Criteria
ADMIS Europe recognises that for many exchange-traded commodity futures and options the relevant contract is listed on a single exchange or trading venue. As a result, a client’s choice of instrument will often determine the execution venue.
In such circumstances, best execution is generally achieved not through selecting between competing execution venues, but through maintaining effective arrangements for accessing the relevant market and executing client orders efficiently, accurately and promptly.
Accordingly, when providing execution services in exchange-traded commodity futures and options, ADMIS Europe focuses on factors such as:
- the quality and reliability of market access arrangements;
- the efficiency of order handling and execution processes;
- available market liquidity;
- speed of execution;
- likelihood of execution and settlement; and
- the selection and ongoing monitoring of any affiliated entities or third-party brokers used in the execution process.
Where multiple execution routes are available for a particular market or instrument, ADMIS Europe will assess those routes and select the arrangements it reasonably considers most likely to deliver the best possible result for clients on a consistent basis.
Execution Venues
Orders may be executed on regulated markets and trading venues relevant to the exchange-traded commodity futures and options offered by ADMIS Europe.
Such venues may include, where relevant, exchanges operated by ICE, CME Group, EEX, Eurex, LME, Euronext and other regulated markets or trading venues to which ADMIS Europe has direct or indirect access.
ADMIS Europe may access such venues using its own arrangements or through affiliated entities and selected third-party brokers.
Client Disclosure and Consent
This Policy is made available to clients through ADMIS Europe’s website and forms part of the information provided to clients regarding the firm’s execution arrangements.
By entering into a client agreement with ADMIS Europe, clients acknowledge that they have been provided with appropriate information regarding ADMIS Europe’s Order Execution Policy and consent to the firm’s execution arrangements as described in this Policy.
Where required by applicable law, ADMIS Europe will obtain any additional consents necessary in connection with the execution of client orders.
ADMIS Europe will notify clients of any material changes to this Policy by updating the version available on its website or through such other means as it considers appropriate.
Training
ADMIS Europe will ensure that relevant employees receive appropriate training and guidance regarding their responsibilities under this Policy and the firm’s order handling and execution arrangements.
Recordkeeping
ADMIS Europe maintains records relating to client orders, execution decisions and execution arrangements in accordance with applicable legal and regulatory requirements.
Such records will be retained for the period required under applicable law and will be made available to competent authorities upon request.