Purpose of this document
This policy outlines the process that nextmarkets Trading Limited (hereafter referred to as "the Company" or "Company" follows when executing Orders on behalf of its Clients. This best execution policy (the ‘Best Execution Policy’) integrates the Company’s obligations under MiFID and the implementing measures as transposed into national laws and regulations.
For the purposes of this Best Execution Policy and unless otherwise defined in the terms of Annex  herein, the capitalised terms shall have the meaning given in the Terms and Conditions document to which this Best Execution Policy is part of.
Best Execution and scope of obligation
In terms of MiFID, when executing Orders on behalf of Clients (both Retail Clients and Professional Clients and but the exclusion of Eligible Counterparties) with respect to Financial Instruments, the Company is required to take all sufficient steps to consistently obtain the best possible result for its Clients, taking into account the factors of (i) price, (ii) costs, (iii) speed, (iii) likelihood of execution and settlement, (iv) size, (v) nature and/or any other consideration relevant to the execution of the Order. This overarching obligation to obtain the best possible result for Clients is referred to, in this document, as our obligation of ‘Best Execution’.
The Company will owe a duty of Best Execution in accordance with this execution policy when it Executes Orders on behalf of Clients.
The application of Best Execution will be limited to where the Company executes Orders “on behalf of Clients”. This will always be the case when the Company is dealing as the Client’s agent or as riskless principal. This will include where a Client has placed an actionable instruction to buy or sell a financial instrument and where the Company has an element of discretion over the execution of the Order. By way of illustration, this would apply where the Company receives an instruction to, amongst other things:
Executing a Client Order by dealing as agent for a Client;
Executing a Client Order against the Regulated Person’s own proprietary position (e.g. when the Company is “working an Order for a Client”);
Execute an Order at best; and
Execute a limit or stop loss Order.
In other situations where a Client trades with the Company, whether a duty of best execution is owed will depend on whether the Client is deemed to be placing legitimate reliance on the Company to protect their interests in relation to the pricing and other parameters of the transaction that may be affected by the choices made by the Company when executing the Order.
For Retail Clients, it is assumed that reliance is being placed on the Company.
For Professional Clients, the Company will determine whether a Client is placing reliance upon it by considering the complexity of the product, the transparency of the market and the sophistication of the Client by taking into account the “Four-Fold Test” guidelines issued by the European Commission.
The Company, when executing trades, will take into account various execution factors whilst taking all sufficient steps to obtain the best possible result.
The particular execution factors that will take precedence for a specific Order may not depend on the class of Financial Instrument but on the specific characteristics of a particular Financial Instrument and the particular requirements of the Client in question. Listed below are the execution factors, which the Company considers and takes into account in its analysis of whether it is delivering Best Execution.
The Company views Best Execution holistically, taking account quantitative and qualitative factors. The Company determines the relative importance of the execution factors by using its experience, expertise and judgment in light of available market information with the prime aim of prompt, fair and expeditious execution of trades. This applies to all types of Financial Instrument dealt. Execution factors include, but are not limited to:
Likelihood of execution and settlement;
Speed of execution;
Cost or commissions of execution;
The size and nature of the Order;
The current liquidity for the relevant instrument;
Market impact of the transaction;
Financial status, responsibility and solvency of the counterparty.
Best Execution Criteria
Without prejudice to the below, where the Company executes an Order for a Client the importance of each of the factors listed in the section 3 above and how they are treated may vary depending on the following:
The characteristics of the Client, including the categorisation of the Client as Retail or Professional Client;
The nature of the Client’s instructions and the Client’s Order;
The characteristics of the transaction;
The characteristics of the financial instrument that are the subject of that Order; and, where applicable,
The characteristics of the Execution Venues to which the transaction can be directed.
Where the Company executes an Order on behalf of a Retail Client it is assumed that Best Execution will always be owed. The best possible result shall be determined in terms of the total consideration, representing the price of the financial instrument and the costs relating to the execution, which shall include all expenses incurred by that Retail Client which are directly relating to the execution of the Order including, where applicable, Execution Venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the Order.
Trading Venues and Order Execution
nextmarkets Trading Ltd. acts as a ‘Market Maker’ as defined under MiFID, with respect to all financial instrument in respect of which it executes Client’s Orders.
Generally, investment firms may execute Client Orders (i) on Trading Venues or (ii) outside a Trading Venue (“OTC”).
In this respect, nextmarkets Trading Ltd executes Orders related to CFDs through its trading platform, considering that such arrangement is suitable to allow them to obtain best execution for the Clients on a consistent basis. Consequently, CFDs are dealt either directly between us and the Client. This means that the Client will be dealing with nextmarkets Trading Ltd. and not within the underlying market and/or any other Execution Venue. nextmarkets Trading Ltd. will not provide any Direct Market Access (DMA) and will not transmit any Order to another Trading Venue or to a liquidity provider(s).
nextmarkets Trading Ltd. will seek to attain its Best Execution obligations by ensuring that the calculation of tradable prices relates to the market price for the underlying reference product. In this respect, nextmarkets Trading Ltd uses the MetaTrader 4 (MT4) System and its own in-house developed web and mobile front end both of which contains state of the art APIs for trading and pricing to ensure Best Execution.
The fairness of the price proposed to the Client shall be assessed by gathering market data used in the estimation of the price of such product and, where possible, by comparing with similar or comparable products.
Clients must note that whilst executing Orders outside a Trading Venue may provide the advantage of an improved execution price and faster execution, additional risks may be incurred which are detailed below:
Transactions will not be subject to the rules of Trading venues, which are designed to provide for a fair and Orderly treatment of Orders;
Transactions will not benefit from any additional but unpublished liquidity, such as hidden limit Orders that may be available on Trading Venues;
Executions will not benefit from additional pre and post trade transparency in respect of pricing and liquidity that is required to be published by Trading Venues; and
For transactions executed away from a Trading Venue a settlement risk may be incurred as transactions will subject to counterparty risk and will not be covered by the relevant clearing and settlement rules of the Trading Venue and relevant central counterparty clearing house.
Monitoring and Review
Without prejudice to clause 10.2 hereunder, MiFID requires the Company to monitor on a regular basis the effectiveness of its Order execution arrangements and best execution policy, in particular, the execution quality of its the execution in Order to identify and, where appropriate, correct any deficiencies.
In fulfilment of the above monitoring requirement, the Company will monitor on a regular basis: (a) its compliance with its best execution policy; and (b) the quality of execution obtained through its best execution policy, considering, inter alia, the impact of its own actions on the execution quality it intends to achieve.
The Company shall review its best execution policy as well as its Order execution arrangements at least on an annual basis. Such review should also be carried out whenever a material change occurs (for the purposes of this policy, a material change shall mean a significant event that could impact parameters of best execution such as cost, price, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the Order).
In such review exercise, the Company shall assess, among other things, whether the relative importance it has assigned to the factors in the section headed “Execution Factors” has led it to deliver the best possible result for its Clients or whether it should reconsider this aspect of its execution approach.
When dealing on own account with Clients, the Company shall review its own execution quality relative to other execution venues which it, or their Clients, could potentially access.
Client’s Specific Instructions
Where a Client places an Order with specific instructions that cover each and every aspect of an Order, the Company will execute the Order following those specific instructions, and by doing so shall be deemed to have satisfied its obligations of Best Execution.
To the extent that a Client places an Order with specific instructions that only cover partial aspects of the Order, the Company will execute the Order following those specific instructions. However, Best Execution will be owed on the aspects of the Order in respect of those elements not covered by the instructions.
Clients should be aware that the provision of specific instructions when placing an Order may in certain circumstances prevent the Company from taking the steps that have been implemented within this best execution policy to obtain the best possible result for the execution of those Orders in respect of the elements covered by those instructions.
Order Handling Policy and Record Keeping
The Company is required to execute Clients Orders in a prompt, fair and expeditious manner.
In addition to general rules on Order processing, MiFID imposes far-reaching rules for the processing of limit Orders. The Company addresses this provision by monitoring the Client Order handling process to ensure that Orders are recorded in a timely manner and executed in the correct sequence.
In this complying with the applicable law in terms of Order processing rules, the Company will inform Retail Clients about any material difficulty relevant to the proper carrying out of Orders promptly upon becoming aware of the difficulty.
Locally, in Malta in a secure server;
Via cloud computing, according to the best industry standards.
Aggregation and Allocation
The Company does not envisage to aggregate clients’ Orders as part of its execution procedures.
Dealing in volatile markets and during periods of high trading activity
Clients should be aware of the risks of dealing in volatile markets, and during periods of high trading activity.
Among such risk, Clients should be particularly mindful of the following:
Substantially different price at execution from quoted bid or offer or the last reported price at the time of Order placing by the Client, as well as partial executions or execution of large Orders in several tranches at different prices;
Delays in executing Orders especially those where the Company has to send to external market makers, route manually or manually execute Orders;
Bids that equal the Order or are higher than the offer which may prevent execution;
Price volatility may also affect Order execution. When there is a high volume of Orders in the market, Order back logs can occur. This results in more time to execute pending Orders. Such delays are caused by different factors such as, for explanatory purposes only:
The number and size of Orders being processed;
Capacity constraints and possible system suspensions or failure deriving from any Trading Venue, other firms or the Company;
The speed at which current quotations are provided to the Company and/or external Trading Venues and/or service providers with respect to the instruments underlying the CFDs.
No Fiduciary Responsibility
The Company’s commitment to provide best execution does not mean that it owes Clients any fiduciary responsibilities over and above the specific regulatory obligations placed upon it or as may be otherwise contracted.
The Company will notify Clients with whom it has an ongoing Client relationship, of any material changes to its Order execution arrangements or Order execution policy.
MiFID requires us to obtain your consent (i) to our Best Execution Policy and (ii) when executing a Client’s Order outside a Trading Venue.
If you place an Order or transact business with us, you will be deemed to have consented to our Best Execution Policy and to the Terms and Conditions document to which this Best Execution Policy is attached.