Purpose and Scope
This policy outlines how Charlotte Square Investment Management (Company) takes all reasonable steps to comply with its obligation to act in the best interests of its clients when executing a client order and aggregating client orders.
It applies to all client orders in financial instruments subject to the Markets in Financial Instruments Directive (MiFID) and FCA rules.
Regulatory Framework
This policy is developed in accordance with:
FCA Handbook COBS 11.2A – Best Execution
FCA SYSC rules on outsourcing and operational resilience
Applicable MiFID II requirements
Supports consumer duty outcomes for retail clients
Aggregation of Orders
The Company may aggregate a client’s order with those of other clients to avoid delays in execution and to keep costs to a minimum. Aggregation will be used where it is unlikely that the aggregation will work to the overall disadvantage of any client whose order is to be aggregated. While aggregation may operate to a client’s advantage by achieving better execution terms, in some cases it may operate to their disadvantage, particularly in relation to price or execution timing.
The Company may aggregate their own employee/account trading with client orders unless there is a foreseen clear detriment for our clients. If the aggregated orders are not fully completed, they will always put the interests of clients before their own and therefore employee/account will not receive any allocation until the clients’ orders are completed.
Order Allocation
Partially filled orders will be allocated on a pro-rata basis subject to clients obtaining a meaningful position within their portfolios whilst considering trade fee implications for clients.
Where meaningful positions cannot be achieved for all clients for a scaled back order the client allocation is subject to a client rotation procedure to ensure all clients are treated fairly for this and future scaled back orders.
Cross Trades
Cross Trades are any buy/sell transactions between two or more unrelated client accounts in the same security. The Company will only proceed with such a trade if it is in the best interests, considering all the factors of all clients participating in the transaction. These trades are executed through an external counterparty at prevailing mid-price at the time of execution.
Outsourcing of Execution
The Company outsources the execution of client orders to Raymond James. The Company retain full responsibility for ensuring that Raymond James Investment Services complies with the best execution obligations for our client orders.
Execution Factors
The Company ensures sufficient steps are taken by Raymond James Investment Services to obtain the best possible outcomes on behalf of our clients, including an assessment of their Execution Factors noted below.
Price
Speed
Likelihood of execution and settlement
Costs
Size and nature of the transaction or
Any other consideration relevant to the execution
In executing the Company’s client orders Raymond James Investments Services will comply with their order execution policy: Execution and Order Handling Policies | Raymond James Investment Services.
When outsourcing the execution of client orders with Raymond James Investment Services the Company will periodically assess the costs to the client to ensure that the overall trade fees that are charged to the client deliver the best outcomes for the client.
Monitoring and Oversight
The Company will monitor the performance of Raymond James Investment Services on an ongoing basis, this will include:
Regular reviews of execution quality
Annual review of the execution arrangements and policy
When Does Best Execution Not Apply
Certain financial instruments such as transactions in UCITS vehicles fall outside the scope of the FCA’s best execution requirements under COBS 11.2A due to how they are traded. However, we will continue to act honestly, fairly, and professionally in accordance with the best interests of its clients and will ensure that such transactions are carried out on terms that are fair and reasonable.
In very limited circumstances we may accept specific trade instructions from a client. However, this may prevent us from taking steps in our Order Execution policy or Raymond James’s Execution and Order Handling policy that are designed to get the best possible outcome for the client, but we will always strive for the best execution within any predetermined criteria.
Managed Portfolio Service
All rebalance transactions that are advised by the Company for the Managed Portfolio Service are advised to the underlying platforms quarterly at a set time and date unless a material intra-quarter adjustment is required. These trades are captured by the underlying platform at their next trading point, which is the next day then executed in accordance with their order execution policy.
The Company has no responsibility for the trade execution of these transactions with the underlying platforms executing these trades on behalf of their clients.
Policy Review
This policy is reviewed at least annually or whenever a material change occurs that affects the firm’s ability to continue to obtain the best possible result for its clients.