Order Execution Policy May 2021
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PROFIT hunters Order Execution Policy May 2021
ARTEMIS Order Execution Policy
Contents
1. Document governance............................................................................................................ 2
2. Introduction ........................................................................................................................... 3
3. Execution factors .................................................................................................................... 4
4. Order execution ..................................................................................................................... 5
5. Commission ........................................................................................................................... 6
6. Inducements........................................................................................................................... 6
7. Asset class execution approaches ............................................................................................. 6
8. Best execution monitoring, oversight and governance ........................................................... 12
9. Disclosure and reporting to clients ....................................................................................... 12
Appendix 1: Execution brokers by asset class ................................................................................... 13
Appendix 2: Glossary of terms ......................................................................................................... 15
1ARTEMIS Order Execution Policy
1. Document Governance
Policy Owner Sheena Kelman, Front Office COO
Review frequency Annual
Committee responsible for review Dealing committee (DC)
Effective date of current version May 2021
Next review due May 2022
Change History
Date Changes
October, 2014 Document updated
January, 2015 Document updated
February, 2016 Document updated
November, 2016 Document updated
January, 2017 Document updated
February, 2017 Document updated
November, 2017 Document redrafted
December, 2017 Document updated
June, 2018 Document & Owner updated
June 2019 Document updated
June 2020 Document updated
May 2021 Document updated
2ARTEMIS Order Execution Policy
2. Introduction
2.1. Scope
The disclosures set out in this document are made by Artemis Investment Management LLP (AIM) and
Artemis Fund Managers Limited (AFM), (a wholly owned subsidiary of AIM), in accordance with the
requirements under Markets in Financial Instruments Directive II (MiFID II). Together, AIM and AFM are
referred to as ‘Artemis’, as AIM undertakes all investment management activities on behalf of AFM clients.
AIM provides investment management services to its professional clients in segregated mandates and, on
a delegated basis, to the UCITS, NURS and AIFs managed by AFM. A centralised dealing desk (CDD) in
Artemis’ London office is responsible for implementing investment decisions on behalf of Artemis’ clients on
an agency basis.
All Artemis’ clients are classified as professional clients.
2.2. Purpose
In accordance with the Financial Conduct Authority’s (FCA’s) Handbook of rules and guidance, when
executing orders Artemis is required to take all sufficient steps to obtain, on a consistent basis, the best
possible result for its clients, taking into account relevant execution factors and any specific client
instructions.
This document outlines adherence to the set of requirements stated in the FCA Handbook in relation to best
execution policy and execution arrangements.
2.3. Background
This policy describes Artemis’ approach to best execution when trading in normal market conditions. When
markets are trading in a disrupted manner or become illiquid and/or volatile, Artemis’ CDD will exercise its
discretion and expertise in order to achieve the best result for Artemis’ clients.
If Artemis is provided with a specific client instruction in relation to an order (in whole or in part), including
selection of a broker or venue, it will execute that order in accordance with those instructions. In such
circumstances, Artemis may not achieve best execution as outlined in this policy.
Failure to adhere to this policy could result in significant detriment to Artemis’ clients as well as reputational
and regulatory risk for Artemis as a business. Neither the management committee of AIM nor the board of
directors of AFM have any appetite for activities that could undermine the trust of Artemis’ clients, internal
and external stakeholders or regulators. Artemis is therefore committed to ensuring that all necessary
arrangements are in place to mitigate those risks.
Artemis places the majority of orders via third parties, who in turn execute our trades. Whether we place
an order with a third party, or execute ourselves directly with a venue, both methods are hereby referred to
as “execution” for the purposes of this policy.
3ARTEMIS Order Execution Policy
3. Execution factors
To determine the manner in which orders will be executed, Artemis will take into account the following
execution factors. This list is not exhaustive, nor are the factors presented in any particular order.
price
cost
speed
likelihood of execution and settlement
size
nature of order
any other consideration relevant to the execution of an order, such as :
volatility
market information
order instruction
counterparty risk
To determine the relative importance of these execution factors when executing or placing a client order,
Artemis takes into account various criteria, including (but not limited to) these characteristics:
the client order
financial instruments that are the subject of that order
execution venues to which that order can be directed
Using the execution criteria set out above, Artemis will determine the relative importance of each factor for
each class of financial instrument. For further details see section 7.
The best possible result for clients will be determined in terms of the ‘total consideration’, representing the
price of the financial instrument as well as costs related to execution, which include all explicit costs (such
as execution commission, clearing and settlement fees) incurred by the client that are directly related to the
execution of the order. In addition, factors such as: speed; likelihood of execution and settlement; the size
and nature of the order; market impact; and any other implicit transaction costs will be given precedence
over the immediate price and cost consideration only insofar as they are instrumental in delivering the best
possible result in terms of ‘total consideration’. There may, however, be circumstances in which Artemis will
determine that factors other than the immediate price and cost will be more important for clients in achieving
the best possible execution result.
4ARTEMIS Order Execution Policy
4. Order execution
The indirect costs of transacting arising from market impact (i.e. price movements) can be larger than the
direct cost of transacting (i.e. commission and fees). So when executing or placing orders on behalf of our
clients, our selection of the execution venue is dictated primarily by liquidity considerations. Our primary
focus in minimising overall transaction costs is to choose a venue where liquidity can be accessed.
Artemis’ CDD places the majority of orders via third-party entities (referred to as ‘brokers’ in this policy). It
may use one or more of the following methods when executing or placing client orders:
with an approved broker (over the phone, or electronically through FIX or instant messaging);
algorithms (‘algos’) – allowing access to both ‘dark’ and ‘lit’ execution venues;
multilateral trading facilities (such as Bloomberg, Tradeweb, MarketAxess & FX Connect); and
direct market access (DMA) - allowing direct access to the order books of the financial exchanges for
trade execution
It may be necessary for the CDD to execute certain transactions outside a regulated market (RM),
multilateral trading facility (MTF) or organised trading facility (OTF). Where the CDD executes outside of
these venues, namely with a systematic internaliser (SI) or on an over-the-counter (OTC) basis, it does so
in the full knowledge and more importantly, understanding, that counterparty risk may be higher.
Where the settlement process is not delivery versus payment a client may be subject to additional
counterparty risk. If not already provided pursuant to an investment management agreement or similar
authority, written client consent to the execution of orders outside a trading venue will be obtained before
those orders are executed. Additional information about the consequences of executing outside of a trading
venue is available upon request.
‘Crossing orders’
Artemis’ CDD may receive orders in the same security, but in opposing directions (i.e. purchase vs. sale).
On these occasions, subject to identical order instructions, the dealers can execute a cross, if deemed
appropriate. There are obvious advantages to our clients crossing stock: there is no market impact, cheaper
commission and potential spread capture. But it is also a potential conflict and we therefore retain an
appropriate audit trail to show that the cross is in the best interest of all clients involved.
Because we believe it can be in our clients’ best interest to do so, we retain the ability to cross stock unless
a client specifically instructs us not to.
4.1. Brokers
Artemis has relationships with a substantial number of global and local brokers, executing transactions on
both a principal and agency basis. Brokers provide access to their corporate and institutional client network
(to match business) and access to their capital (to facilitate execution). Artemis does not share any close
links or common ownership with any of its brokers.
Artemis has a standardised process for approving new brokers. Requests for new brokers are directed to
Artemis’ front office COO along with a rationale for on-boarding a new counterparty. New brokers are subject
to a due diligence process in which the terms of business and execution policy are reviewed as required to
ensure Artemis complies with its obligation to take all sufficient steps to provide the best possible result for
5ARTEMIS Order Execution Policy
its clients when executing or placing orders. Artemis’ dealing committee (DC) provides final authorisation
for adding a broker to the approved broker list.
Artemis’ approved broker list is coded into the order management system (OMS) and maintained by the
investment operations team.
Full details of the broker approval and monitoring process are available on request.
5. Commission
Commission rates are not uniform across all transactions and vary depending on the asset class, country
and type of transaction (i.e. programme or single trade) being executed. Artemis will take into consideration
the different execution commission rates when choosing an appropriate execution strategy and will seek to
minimise commissions paid. Where there are competing execution venues for a given order Artemis will
select the most appropriate venue.
The commission rates we pay for execution services are reviewed by a dealer and by the dealing committee,
at least annually.
We do not use client commission to pay for research – only for execution.
6. Inducements
Excluding minor, non-monetary benefits that comply with Article 24(9) of MiFID II, no inducements are
received from either execution venues or from brokers. Artemis has a control framework in place that
requires its employees to disclose any minor non-monetary benefits they have accepted and/or rejected.
Oversight of this framework is provided by Artemis’ compliance function, and an annual attestation to the
inducements policy is completed by all staff.
7. Asset Class Execution Approaches
The firm’s obligation to provide, on a consistent basis, the best possible result for its clients, applies to all
instruments. However, given the differences in market structures, it is not possible to apply a uniform
standard of – or procedures for – best execution that is valid and effective for all classes of instruments.
Therefore, Artemis applies its best execution obligations relative to the circumstances associated with each
type of financial instrument, as detailed below.
Each member of the CDD, when executing orders in quote-driven markets (markets in which there is little
pre-or post-trade transparency available publicly, such as credit markets) is responsible for evidencing the
price discovery of a trade, explicitly recording where competing quotes have been obtained. Where
competing quotes are not obtained (e.g. when we do not want to inform the market of a very large order, or
general illiquidity) a rationale for not having cover quotes must be provided to the investment oversight team.
6ARTEMIS Order Execution Policy
7.1. Equity Trading
7.1.1. Order execution for equity & ETF trades
Order type 1. Equity and equity-like instruments (including ETFs, equity swaps,
ADRs, preferred stock and P-notes/ Participation-notes)
Summary Orders received by the CDD for equity and ETF trades.
Prioritised 1. Total consideration
execution factors 2. Nature of order
3. Price
Main execution The CDD considers the selection of execution venue to be highly dependent
considerations on the factors above. The prioritisation is not in a fixed order and can change
with market conditions. Factors other than those above can also have an
impact but these are the ones most frequently taken into account. With ‘total
consideration’ always the main focus, and as a product of more than one
factor (cost is a product of price, size and speed) the CDD will use any
method at its disposal in order to best achieve this.
Other
considerations
Equity swaps: the regulatory restriction placed on market participants by local
regulators means that US or Asian equity swap orders can only be placed
with a prime broker (PB). Equity swaps outside of these regions can be
executed wherever the CDD deems appropriate for best execution, with the
resulting execution given up by the executing broker to the PB. The equity
execution is the PB’s fully funded hedge. What we receive is not the
underlying equity position, but a derivative contract that affords us a similar
economic exposure. As with all OTC derivatives, equity swaps carry
additional counterparty risk.
P-notes: risk exposure is both to the counterparty providing the note
programme and to the underlying equity. The counterparty executes an
underlying transaction in the relevant equity market to provide commercial
exposure, but Artemis (on behalf of its clients) has no right to access the
underlying security.
7.1.2. Order execution for Programme Trades
Order type 3. Equity – Programme trades (PT)
Summary A list of orders received by the CDD most likely in response to a significant
investment, divestment or rotation.
Prioritised 1. Total consideration
execution factors 2. Nature of order
Main execution When a programme trade (a list of orders) is received, the CDD would expect
considerations to use algorithms or dedicated PT desks. This will ensure the CDD can best
match the criteria in the order instruction provided by the fund
manager/client.
7ARTEMIS Order Execution Policy
Less liquid orders may be separated and treated as single orders, whereby
the CDD will follow a similar execution and venue/broker selection approach
as in 7.1.1 This is because one illiquid order can impact the pricing of a
whole PT; by stripping it out and trying to source liquidity ourselves, we aim
to keep the ‘total consideration’ as low as possible.
Other N/A
considerations
7.1.3. Order execution for new issues, placements and other offerings
When taking part in a placing (IPO or secondary) speed is generally not a factor as it is dependent on the
book runner's timeframe, which may be subject to change. There are no key execution factors as the CDD’s
role is more limited in these instances, largely acting as the information gatekeepers.
7.2. Fixed income trading
7.2.1. Order execution for government bonds
Order type 1. Fixed income – Government bonds
Summary Orders received by the CDD in liquid developed market government bonds.
Prioritised 1. Price
execution factors 2. Likelihood of execution
3. Nature of order
Main execution Such orders are executed via a request for quote (RFQ) platform. The CDD
considerations requests prices from multiple counterparties simultaneously and executes at
the best terms shown. Multiple competing quotes are recorded.
Other When the size of the order is substantial the CDD may execute over a longer
considerations period of time.
7.2.2.Order execution for corporate bonds
Order type 2. Fixed income – Corporate bonds
Summary Orders received by the CDD in all corporate bonds (Investment Grade & High
Yield)
Prioritised 1. Price
execution factors 2. Likelihood of execution
3. Nature of order
Main execution The quote-driven nature of the corporate bond market makes price discovery
considerations more challenging for the CDD. Therefore, the CDD relies heavily on ‘runs’
and ‘axes’ received electronically from the brokers. A ‘run’ is a broker
informing Artemis of where they see a particular bond trading, whereas an
‘axe’ is the price where the broker (or a client of theirs) wants to do business.
8ARTEMIS Order Execution Policy
In addition, the CDD may directly contact those brokers deemed closest to
the bond issue (i.e. brokers involved in placing it or other bonds from the
same issuer) and either leave the order with them or request a firm price to
be provided.
Likelihood of execution would have a higher prioritisation if referring just to
high yield markets, where the liquidity is often low and concentrated.
Other Market impact is a significant consideration when executing corporate bond
considerations orders. To ensure a comprehensive assessment of the market prior to
trading, having several two-way conversations is normally an optimal
approach in more liquid situations. In the high yield market, however, this can
sometimes be counterproductive. The correct approach is assessed on an
order by order basis, subject to market conditions.
7.3. FX trading
7.3.1. Order execution for FX: spot
Order type 1. FX – Spots
Summary The CDD execute spot FX trades when required to convert cash from one
currency to another
Prioritised 1. Price
execution factors 2. Nature of order
Main execution Where accounts are set up with multiple counterparties, spot FX can be
considerations executed via request for quote (RFQ) platforms. For some accounts,
however, a client may specify the counterparty to be used, restricting us to a
single counterparty. Nature of order will be a consideration here.
Other N/A
considerations
In addition to trading by Artemis’ CDD, spot FX trades are often executed by JPMorgan in response to trade
instructions, corporate actions or income.
7.3.2.Order execution for FX: forwards
Order type 2. FX – Forwards
Summary The CDD executes forward FX trades for two reasons:
1. For alpha generation (looking to profit from taking an active currency
position)
2. To hedge positions held that are not priced in the base currency of certain
funds
Prioritised 1. Price
execution factors 2. Nature of order
9ARTEMIS Order Execution Policy
Main execution Forward FX transactions can only be executed with counterparties with
considerations whom Artemis has an international swaps and derivatives association (ISDA)
agreement in place (outlining responsibilities between two parties). ISDAs
determine what happens to an open position in the event of the default of
either counterparty. Spot and forward transactions may be executed at the
same time to roll forward exposures on their expiry. The same execution
factors apply.
Other Forward points (i.e. the financing cost – the interest-rate differential between
considerations the two currencies over the forward period) are a primary consideration when
trading forwards. While spot FX transactions can rely purely on the best rate
available, forward FX transactions are made on the best ‘all in’ basis (spot
rate + forward points). FX forwards, for the Artemis funds, settle through
Continuous Linked Settlement (CLS).
Forward FX transactions relating to hedged share or unit classes in Artemis funds are carried out by
JPMorgan under a separate passive currency overlay (PCO) arrangement. This is managed by Artemis’
fund operations team.
7.4. Exchange-traded derivatives (ETDs)
Order type 1. Exchange-traded derivatives (futures and options)
Summary The CDD will execute orders in ETDs mainly for the purposes of efficient
portfolio management EPM. That may involve:
Trading index futures to mirror a cash flow (with a view to trading the
constituents of the fund later) or to adjust net exposures;
Options to hedge positions (or to increase income); or
Trading fixed income futures to adjust the duration of bond portfolios.
Prioritised 1. Speed
execution factors 2. Price
Main execution To reduce costs, futures are traded electronically where possible. Futures
considerations traded by the CDD tend to be the most liquid contracts (e.g. S&P500), enabling
them to execute at the prevailing bid/offer price the vast majority of the time.
The execution method for options is highly dependent on order size. Relatively
small orders can be traded at prevailing market rates. But if the order is large
the method will be determined depending on the urgency of the order, as
indicated by the fund manager.
ETDs are centrally cleared, this means that counterparty risk is reduced to one
counterparty with whom bilateral collateral movements take place.
Other N/A
considerations
10ARTEMIS Order Execution Policy
7.5. Over-the-counter derivatives (including cleared)
Order type 1. Over-the-counter derivatives (such as credit default swaps and
interest rate swaps)
Summary Over-the-counter (OTC) transactions are normally cleared, but can be
bilateral, depending on security type and issuer.
Prioritised 1. Price
execution factors 2. Nature of order
3.
Main execution When trading bilaterally, the desk are restricted to certain counterparties. If
considerations the instrument trades in a cleared fashion, then the desk are able to RFQ
with multiple counterparties. Price discovery for OTC derivatives is carried
out in a similar way to any other asset, using data platforms such as
Bloomberg to ascertain prevailing market rates (with the use of curves, two-
way prices and trades displayed by various counterparties).
Other Bilateral OTC derivatives exhibit high exposure to counterparty risk as
considerations Artemis’ clients are directly exposed to the executing counterparty.
Where market structure allows it, Artemis clears these OTC derivatives
through a central clearing counterparty. This considerably reduces the
counterparty risk to which our clients are exposed.
For detail on other OTC instruments, see section 7.1.1 (equity swaps and p-
notes) and section 7.3.2 (for FX forwards).
7.6. Stock borrowing
Order type 1. Stock borrowing
Summary Where Artemis wishes to take a short position in equities (via the use of
equity SWAPs), it does so by borrowing stock to satisfy the settlement of the
swap transaction. The physical equity execution is covered in sections 7.1.1
and 7.1.2.
Prioritised factors 1. Cost
2. Volatility
Main To borrow their stock from them, we must pay the holder of an underlying
considerations stock an annual fee (pro-rated). We endeavour to do at the lowest possible
rate through one of our PBs. While this is an annual rate, the lender can ‘call’
the borrow at any time. This is more likely during periods of increased
volatility in either the underlying stock or the overall market. When called, we
are forced to cover the short to return the stock to the lender. If we are
unable to borrow the stock from another lender, this would result in us having
to close the position in the market.
Other N/A
considerations
11ARTEMIS Order Execution Policy
8. Best execution: monitoring, oversight and governance
Artemis has a formal framework for monitoring best execution. The dealing committee (DC) is the principal
body providing oversight and governance for the policies, procedures and practices around the best
execution process. The DC reports to the executive committee. It is chaired by our front office COO and has
representation from dealing, compliance, investment oversight and the investment team. It meets quarterly.
The first line of defence resides with the CDD and the investment oversight team.
We continually monitor the effectiveness of our execution arrangements to ensure they remain
relevant, robust and deliver the best possible outcome for our clients.
A dealer will analyse third-party transaction cost analysis (TCA) outputs each month and hold
regular meetings with the members of the CDD to discuss and review any patterns and outliers. In
addition, management information is submitted to the DC for it to review and challenge. Transaction
cost analysis of brokers and execution venues is also reviewed on a periodic basis. Any
unsatisfactory outcomes are investigated, and could result in suspension or removal of a
broker/venue.
A dealer further monitors adherence to best execution by leveraging the same third-party TCA tool
for equities, derivatives and fixed income, comparing the execution price Artemis achieves to pre-
defined benchmarks. Benchmark and threshold tolerance levels around the execution price have
been agreed by the DC and any trades outside these tolerances are raised as exception alerts to
the Investment Oversight automatically for review (on a T+1 basis). Unsatisfactory outcomes are
escalated to the dealers, compliance and the front office COO as required.
Post-trade monitoring of FX transactions is performed using TCA from a specialist provider. The
DC holds oversight responsibility and summary of emerging patterns and trends from the TCA data
is reviewed periodically at the DC meetings.
Timely execution is monitored; the time the dealer initially pick-up the order, and when it is placed
with a broker.
Artemis’ compliance function serves as the second line of defence for best execution.
Artemis’ third line of defence is an independent internal auditor, Deloitte.
Artemis continuously monitors the effectiveness of its order execution policy and underlying order execution
arrangements to identify and, where appropriate, enhance its execution process. The order execution policy
is reviewed at least annually – or whenever a material change occurs. Clients will be notified of any material
change.
9. Disclosure and reporting to clients
Each year, Artemis will publish information for each class of financial instruments on the top five execution
venues and brokers (by trading volume), detailing where orders were placed or executed. This information
will be made available on Artemis’ website and be available for download by all clients.
https://www.artemisfunds.com/en/gbr/adviser/resources/rts-28-execution-venues
Our order execution policy is also available on our website. It is reviewed at least annually – or whenever a
material change occurs. Clients will be notified should any material changes be made.
Further information about this policy can be provided to clients upon request.
All clients have the right to request Artemis to demonstrate its adherence to this order execution policy in
relation to their account. Should you wish to do this, please write to Compliance, Artemis Investment
Management LLP, 6th floor, Exchange Plaza, 50 Lothian Road, Edinburgh EH3 9BY.
12ARTEMIS Order Execution Policy
Appendix 1: Execution brokers by asset class
Equity (and equity-like) execution brokers
ABG Sundal Collier Kempen & Co NV
Arden Partners Kepler
Atlantic Securities Liberum
Bank of America Merrill Lynch Liquidnet
Barclays Capital Macquarie
BCS Global Markets Mediobanca
Berenberg Mirabaud
BMO Capital Markets Morgan Stanley
BTIG Ltd NPLUS1 Singer
Canaccord Genuity Numis
Cantor Fitzgerald Panmure Gordon (UK) Ltd
Carnegie Investment Bank AB Peel Hunt
Cenkos Securities PSAGOT
Citigroup Raymond James Financial
CLSA (UK) Redburn
Cowen International Robert W Baird Ltd
Credit Suisse Royal Bank of Canada
Daiwa Capital Markets Saigon
Danske Bank A/S Sanford Bernstein
Davy SEB Enskilda
DnB NOR Bank ASA Shore Capital
Exane Societe Generale
Excellence Nessuah SpareBank 1 Markets
Finncap Ltd Stifel Nicolaus
Forsyth Barr Svenska Handelsbanken AB
Goldman Sachs Tachibana
Goodbody Tradition Securities & Futures
HSBC UBS
Instinet Virtu Financial Ireland (previously ITG)
Investec Wells Fargo
Jefferies WH Ireland
Jones Trading Winterflood
JP Morgan Wood & Co
KBW
Algorithmic trading providers
Cowen International Morgan Stanley
Goldman Sachs Peel Hunt
HSBC Redburn
Jefferies Royal Bank of Canada
JPMorgan UBS
Kepler
Prime brokers and swap providers
Goldman Sachs Morgan Stanley
JP Morgan UBS
13ARTEMIS Order Execution Policy
Fixed income: brokers
Aurel Kepler
Autonomous Research Liquidnet
Bank America Merrill Lynch Lloyds
Banco Santander MarketAxess
Barclays Capital Mitsubishi UFG Securities EMEA
BNP Mizuho
BMO Capital Markets Morgan Stanley
Canaccord Genuity Ltd National Australia Bank
Cantor Fitzgerald Nomura
Citadel Peel Hunt
Citigroup RBS
Credit Agricole Royal Bank of Canada
Credit Suisse Stifel
Danske Societe Generale
Deutsche Bank Seaport
DNB ASA Toronto Dominion
Goodbody Tradeweb Europe Limited
Goldman Sachs Tradition Securities & Futures
HSBC UBS
Imperial Capital Unicredit
Investec Valcourt
Jefferies Wells Fargo
JP Morgan Winterflood
Fixed income: multilateral trading facilities
Bloomberg Tradeweb
MarketAxess
Exchange-traded derivatives: clearing
JP Morgan
Exchange-traded derivatives: execution
JP Morgan Morgan Stanley
Stock borrowing
Goldman Sachs Morgan Stanley
JP Morgan UBS
FX: multilateral trading facilities
FX Connect
FX: brokers
Goldman Sachs Lloyds
JP Morgan UBS
Programme trading brokers
Goldman Sachs Royal Bank of Canada
JP Morgan UBS
Morgan Stanley
14ARTEMIS Order Execution Policy
Appendix 2: Glossary of terms
Algorithmic trading A means of executing client orders via a broker’s smart order
router. Using advanced mathematical tools, it expedites decision-
making in many order-driven markets.
Is a cross border payment system for the settlement of foreign
Continuous linked settlement
exchange trades that eliminates settlement risk through a
payment versus payment mechanism. The CLS system is run by
CLS Bank International, which is solely dedicated to settling
foreign exchange trades.
A contract between an investor and an investment bank as a
Equity swaps
substitute for a direct transaction in a stock. No consideration is
paid when opening the position. The two parties make a series of
financing payments to each other, then one final payment when
closing the transaction, determined by the underlying stock
return. The buyer receives/ pays the difference in price
movements of the underlying stock along with the dividends.
Execution venue Either a regulated market, a multilateral trading facility (MTF), an
organised trading facility (OTF), a systematic internaliser, a
market maker or other liquidity provider or an entity in a third
country that performs similar functions to those performed by any
of the foregoing.
Explicit cost Costs that are clearly known before execution takes place (such
as commission and taxes)
Financial instruments These are defined under MiFID II (see below) or by the relevant
laws and regulations in the US (or other relevant trading venue).
FIX The Financial Information eXchange (FIX) protocol is an
electronic communications protocol initiated in 1992 for
international real-time exchange of information related to the
securities transactions and markets.
High-touch orders Orders placed through a dedicated person (known as a sales
trader or salesperson) at a broker who will assist in execution by
providing liquidity (either from other clients’ or bank capital) or
work an order on an agency basis in more esoteric markets.
Implicit cost Inferred or embedded cost such as market impact, spread and
opportunity cost.
‘Lit’ and ‘dark’ venues A ‘lit’ venue is a venue where the trading opportunity is visible for
all participants to see and potentially interact with. A ‘dark’ venue
is one where the trading opportunity is not necessarily visible at
the point of execution.
MiFID II The Markets in Financial Instruments Directive
2004/39/EC2014/65/EU is a European Union
directive intended to enhance the single market for investment
services and financial markets in all European Economic Area
jurisdictions.
Multilateral trading facility (MTF) A multilateral system, operated by an investment firm or a market
operator, which brings together multiple third-party buying and
selling interests in financial instruments - in the system and in
15ARTEMIS Order Execution Policy
accordance with non-discretionary rules - in a way that results in
a contract.
Organised trading facility (OTF) A multilateral system, which is not a regulated market or MTF
and in which multiple third party buying and selling interests in
bonds, structured finance products, emissions allowances or
derivatives are able to interact in the system in a way which
results in a contract.
Over-the-counter (OTC) Over-the-counter (OTC) or off-exchange trading is done directly
between two parties, without the supervision of an exchange. It
contrasts with exchange trading. A stock exchange has the
benefit of facilitating liquidity, providing transparency, and
maintaining the current market price. In an OTC trade, however,
the price is not necessarily published for the public, nor does it
necessarily settle versus payment, which adds a counterparty
risk exposure to the process
Participatory notes (P-Notes) Participatory notes, commonly known as P-Notes or PNs, are
instruments issued by registered foreign institutional investors
(FII) to overseas investors who wish to invest in markets without
registering themselves with the local market regulator. This is a
derivative contract that gives most of the economic benefit of
owning the underlying security but with the added counterparty
risk that it is fully unwritten by the FII and not the company
themselves.
Programme trade A group of multiple orders placed through a broker, with a single
instruction, often at a reduced commission rate.
Regulated market (RM) A multilateral system operated and/or managed by a market
operator. It brings together or facilitates 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.
It is authorised and functions regularly and in accordance with
the provisions of MiFID II.
Systematic internaliser (SI) An investment firm which, on an organised, frequent and
systematic basis, deals on its own account by executing client
orders outside a regulated market, OTF or MTF.
Trading venue A regulated market, an MTF or an OTF
Transaction cost analysis (TCA) A method for determining the effectiveness of executions, by
measuring implicit costs to ensure adherence to our commitment
of best execution to our clients.
16ARTEMIS Order Execution Policy
Lists of relevant MiFID II financial instruments
Equity and equity-like Equities – shares and depositary receipts
instrument classes
Exchange-traded products (funds, notes and commodities)
Contracts for difference
P-Notes
Fixed income instrument Debt instruments – bonds
classes
Debt instruments – money market
Derivative instrument classes Interest-rate derivatives – futures and options admitted to trading
on a trading venue
Interest-rate derivatives - swaps, forwards and other interest-rate
derivatives
Credit derivatives – futures and options admitted to trading on a
trading venue
Credit derivatives – other credit derivatives
Currency derivatives – futures and options admitted to trading on
a trading venue
Currency derivatives – swaps, forwards and other currency
derivatives
Equity derivatives – options and futures admitted to trading on a
trading venue
Equity derivatives – equity swaps and other equity derivatives
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