Resonanz Capital GmbH
With these Best Execution principles, RC establishes its principles of order execution to achieve the best possible result for its clients when executing their orders. These are to be set down in writing. This is an internal process that must be documented. The principles must meet certain criteria and comply with a minimum standard provided for by law.
The principles must be observed by all employees unless there is an overriding client instruction.
1.2 Scope of application
RC predominantly triggers orders directly at the issuers. Therefore, RC’s best execution principles are essentially limited to the determination of an efficient order process. RC has established a selection policy only for the exceptional case that the company directly sells financial instruments via the secondary market.
However, since the secondary market available for a particular financial instrument is limited to very few venues, RC can only adhere to selecting the most favorable execution venue for the particular client and transaction among the execution venues that are eligible in the first place. An ex-ante determination of the execution venues is therefore not possible and would rather be disadvantageous for RC’s clients.
Hence, the following principles only apply to the type of execution to which they can reasonably be applied – i.e. the following clause 1.3 relates to order placements vis-à-vis issuers (for buy and sell / return) and the following clause 1.4 (for sell only) to order placements on the secondary market.
1.3 Placing orders with issuers
When RC places an order with an issuer, RC will by default select the financial instruments that offer the best conditions for the intention of the respective client. There is usually a choice between public shares or shares for institutional investors. The selection is made individually according to the needs of each client.
Furthermore, RC will generally execute orders clearly, efficiently and correctly and will take care to obtain a price that is as optimal as possible for its respective client in light of the urgency of the order and the overall context in which the order is placed, the composition of the respective investment fund, etc.
If RC has the opportunity to save costs or fees without jeopardizing the respective order or delaying it to such an extent that its purpose may not be achieved in the client’s interest, RC will proceed accordingly.
The highest priority in the context of placing an order is always the client’s interest, which is usually not only oriented towards the costs of a transaction, but also includes time components, yield opportunities, etc.
1.4 Placing Orders on the Secondary Market (sell only)
1.4.1 With the exception of financial instruments RC “sells” by returning them to the issuer, RC resorts to selling these financial instruments on the secondary market. Given the nature of the financial instruments, sales on the secondary market are predominantly executed through a broker.
In doing so, RC ensures that the respective broker offers and executes the transaction at arm’s length conditions, complies with its obligations and maintains transparent procedures and comprehensible documentation of each material step of a transaction and is accountable to RC accordingly. In making its selection, RC’s primary objective is to obtain the best possible overall price (purchase or sale price) for the client, taking into account all costs associated with the disposition in question. In addition, RC makes its selection decision in accordance with the following criteria, whereby the individual criteria are weighted taking into account the characteristics of the client and the financial instruments concerned:
(1) Expected time until the transaction is executed.
(2) Reliability of the available brokers
(3) Probability of complete execution and settlement
(4) Experience gained with the available brokers
(5) Cost of the available brokers and execution venues
(6) Security of settlement
(7) Size and type of order
(8) Market condition
(9) Pre- and post-trade transparency guaranteed by the respective broker/execution venue
The selection procedure must be designed in such a way that the result can be verfied by external auditors. Merely, a verifiable selection process must be documented whereas it is not necessary to provide an explicit justification for each execution venue included in the selection. The following steps are suitable for defining the execution policy and, in particular, the most suitable execution venues:
1.4.2 First, RC performs a status-analysis of the selection criteria currently used and, if necessary, an expansion to include additional criteria. In doing so, RC shall place particular emphasis on the quality of:
- clearing/securities settlement systems (“clearing schemes”),
- collateral mechanisms (“circuit breakers”), and
- auction procedures (“scheduled auctions”).
The selection shall take into account both, the classes of financial instruments offered and the type of investment services provided.
1.4.3 In a next step, all criteria must be selected that are decisive for achieving the best possible result. By law, the following criteria are particularly mentioned:
- the prices of the financial instruments
- the costs associated with the execution of the order
- the speed of full execution and settlement
- the probability of execution and settlement
- the size and nature of the order
Other criteria that may be considered in the RC selection process include, for example, the safety of settlement and market condition.
1.4.4 The selected criteria shall then be weighted, taking into account the characteristics of the client, the order, the financial instrument and the execution venues. The costs to be taken into account when calculating the total fee include fees and charges of the execution venue where the transaction is executed, costs for clearing and settlement and any other fees paid to third parties involved in the execution of the order. In the weighting, order groups can also be formed from certain types of financial instruments or customer groups (clusters).
1.4.5 In the next step, RC compares the theoretically eligible trading venues (exchange, multilateral trading systems, systematic internalizers, market makers, other trading venues, etc.) based on the identified and weighted criteria.
1.4.6 Finally, RC determines which orders are routed to which execution venues. A given cluster may be assigned multiple execution venues under certain circumstances.
The client may issue instructions to RC as to the execution venues at which individual orders of RC are to be executed. Such instructions shall in any case take precedence over this Best Execution Policy. In the event that a client requests RC to use a particular broker or execution venue, RC will honor such request, but will advise the client prior to execution of an order if and why RC believes that the particular transaction should be placed with a different broker or execution venue.
1.6 Notification to clients
RC shall communicate its Best Execution Policy to its clients prior to the first provision of investment services and shall also make it available on its website (Article 66 (3) sentence 2 Delegated Regulation (EU) 2017/565).
2. Annual Review
Monitoring of the selection policy shall be performed at least annually by the Compliance Officer. This is done by randomly monitoring the actual orders executed.
Significant changes will be communicated to the clients without delay.