Annual qualitative disclosure on the quality of execution obtained
Firm name: Square Mile Investment Services Limited
Disclosure Period: 01/01/2020 to 31/12/2020
This disclosure is being made pursuant to Article 3(3) of RTS 28 and/or Article 65(6) of theMiFID II Delegated Organisational Regulation, which require firms to disclose, for each class of financial instruments traded for clients during the period, a summary of the analysis and conclusions drawn from the execution quality monitoring that the Firm has undertaken.
This disclosure covers the following classes of financial instruments that were traded during the period.
Swaps, forwards, and other currency derivatives
Trading in this instrument was de minimis during the period, i.e. less than one average trade per business day.
Other MiFID instruments
Transactions were placed in units/shares of regulated/unregulated collective investment schemes only.
The information below covers Square Mile Investment Services’ analysis for each of the relevant class of financial instruments:
RTS 28 / Art. 65(6) requirements:
(a) an explanation of the relative importance the firm gave to the execution factors of price, costs, speed, likelihood of execution or any other consideration including qualitative factors when assessing the quality of execution;
In placing trades Square Mile are obliged to consider a range of factors. These are:
Price: Obtaining ‘best price’ is not the most important consideration for Square Mile in issuing trade instructions recognising managers of collective investment schemes establish the price of the units/shares by reference to the net asset value of a fund.
Cost: In placing trades Square Mile do not impose a specific charge. Our experience is that the managers of Open Ended Collective Funds do not impose a transaction charge and seek to absorb this within their overall operating costs. Consequently the cost of placing trades is not an important consideration when placing trades.
Speed of Execution: Square Mile are mindful of the speed of execution recognising that the trades that we input onto the Platforms are executed by them with the underlying fund manager.
Our obligation in regard to the speed of execution is to ensure that any instructions to trade issued by us to the Platform(s) are:
- Issued in a timely manner.
- Compliant with the agreement that we have with the Platform.
- Issued with the aim all clients are treated equitably in the placing of trades in line with our Order Execution Policy.
Likelihood of Execution and Settlement: Execution is a prime consideration for Square Mile but settlement is not, as this is the responsibility of the Platform that holds and controls the investors’ assets and that executes the trades with each underlying fund manager.
In placing orders with Platforms for them to execute with the underlying fund managers we have to be confident in the ability of the Platform to place those trades effectively.
Size of Deal: As any transactions placed by Square Mile are executed by a platform with the underlying manager there is limited consideration given to the size of the deal, as it will not influence the cost of undertaking a transaction. Consideration is given to the possible application of a Dilution Levy/Swinging Price although control of this is limited given their application will be based on all aggregated trades placed at any one time.
Nature of Orders: Trades placed are primarily sell and buy orders. No one transaction type is prioritised over another other than where a sell needs to be executed before a corresponding buy order is placed.
(b) a description of any close links, conflicts of interests, and common ownerships with respect to any execution venues/brokers used to execute orders;
The Firm does not have any close links, common ownership or other relationships that would give rise to any conflicts of interests with any of the execution venues or brokers used.
(c) a description of any specific arrangements with any execution venues/brokers regarding payments made or received, discounts, rebates or non-monetary benefits received;
The Firm has no specific arrangements to report with any execution venues or brokers regarding payments made or received, discounts, rebates or non-monetary benefits received.
(d) an explanation of the factors that led to a change in the list of execution venues/brokers listed in the firm’s execution policy, if such a change occurred;
The Firm’s internal list of execution venues / brokers approved for use by the Firm did not change during the period.
(e) an explanation of how order execution differs according to client categorisation, where the firm treats categories of clients differently and where it may affect the order execution arrangements;
This is not applicable as the Firm only deals with Professional Clients.
(f) an explanation of whether other criteria were given precedence over immediate price and cost when executing retail client orders and how these other criteria were instrumental in delivering the best possible result in terms of the total consideration to the client;
This is not applicable as the Firm does not deal with Retail Clients.
(g) an explanation of how the investment firm has used any data or tools relating to the quality of execution, including any data published under Delegated Regulation (EU) 2017/575 [RTS 27];
The Firm did not use RTS 27 reports or RTS 28 reports produced by execution venues or brokers during the period under review (2020).
(h) where applicable, an explanation of how the investment firm has used output of a consolidated tape provider established under Article 65 of Directive 2014/65/EU.
Square Mile do not use the services of Consolidated Tape Providers.
Summary of Analysis
The on-going monitoring of execution quality is undertaken by our operations team with independent scrutiny provided through our risk management framework. Given the nature of services provided and instruments traded the current governance and oversight framework is effective in delivering the quality of execution.
Summary of Conclusions
The primary consideration of Square Mile, recognising that there are no transaction costs in implementing trades or differentiation in the prices quoted of instruments traded is the likelihood, effectiveness and speed of execution.
Square Mile monitors that trades (Other Instruments) have been placed within portfolios only (we have no visibility of investor accounts) to ensure that these have been effectively traded by the platforms. In 2020 instructions to execution venues totalled 17,219
The Firm is comfortable that its execution policy was adhered to over the period, and that following this policy has delivered best execution for its clients over the period. This analysis will feed in to the Firm’s annual review of its execution policy at which time further enhancements will be considered.
To access our Annual Quantitative Top 5 Brokers and Execution Venues Disclosure please click on the link below:
Annual Quantitative Top 5 Brokers and Execution Venues Disclosure 2020
Annual Quantitative Top 5 Brokers and Execution Venues Disclosure 2019
Annual Quantitative Top 5 Brokers and Execution Venues Disclosure 2018
Annual Quantitative Top 5 Brokers and Execution Venues Disclosure 2017