The value of your investments and the income received from them can fall as well as rise. You may not get back the amount you invested.

Order Execution Policy

When placing orders in the market for our clients JH&P’s objective is always to obtain the best possible result (obtain ‘best execution’) for our clients. There are many factors which can affect our ability to obtain this result and our approach to each of these factors is set out below..

For the purposes of best execution, we treat all clients as Retail Clients.

In order to achieve the best possible result, when placing orders for our clients, we take into account the following execution factors:

  • Price
  • Explicit costs (e.g. commission associated with the transaction)
  • Implicit costs (e.g. ‘market impact’, which is the movement in price between when the order is placed with a broker and when it is executed)
  • Speed of execution
  • Likelihood of execution and settlement
  • Size of trade
  • Nature of the order

In general, we consider that total consideration (Price, Explicit and Implicit costs) will be the primary factor in attaining best execution. However, for certain orders, financial instruments or markets, we may appropriately determine that other execution factors are more important in obtaining the best possible execution result. Below is a more detailed description of the relative importance we place on each execution factor:

Best Execution Factors

When dealing in a financial instrument on a client’s behalf we will exercise our discretion in assessing the criteria that we need to take into account to provide the client with the best possible result, ensuring that all clients are treated fairly. We will take all sufficient steps to obtain the best result taking into account the following factors:

1.Price

In the absence of any specific instructions from the client, JH&P generally gives precedence to the factors that allow us to deliver the best possible result in terms of value (total cost) to the client. The price available in the market from a broker will be one of two principal factors in attaining best execution.

2. Costs

The other principal execution factor is execution costs. Execution costs are made up of both explicit & implicit costs. A large portion of the explicit costs is the commission paid to brokers for execution,JH&P cannot place trades in the market without incurring these costs and therefore regularly reviews commission rates with our approved brokers to ensure our clients are getting value for the commissions that are paid. Implicit costs such as opportunity costs and market impact are also a factor. The JH&P dealing team always aim to minimise implicit costs by making informed pre-trade execution decisions.

3. Nature of The Order

JH&P will take into account any other factor relevant to the order that it believes warrants consideration in terms of how that order should be executed. This could be simply whether it is a buy or sell order, the imposition of price limits, whether it is part of a contingent order, or whether the security is dealt in more than one market.

4. Likelihood of Execution & Settlement

In some instances, a broker’s ability to actually execute the order will be the primary factor to be considered. Where, for example, the instrument is illiquid (i.e. rarely traded) or the size of the order is prohibitive the likelihood of execution has to take precedence over other factors. In such circumstances this factor may be given precedence over the immediate apparent price of a financial instrument where this will, in our opinion, deliver a better overall result for the client.

5. Speed of Execution

Speed may be an important factor for particular types of order, security or client, for example executing orders in a fast moving, or illiquid market.

6. Order Size

The size of an order in relation to the liquidity of the stock may have significant influence on the best execution process. Where the order is bigger than the typical quoted size, then the part of the order executed over and above the threshold may only be available at a less favourable price. In such circumstances we will use our dealers’ expertise in placing the trades with the market and may incur higher commission costs in order to reduce the impact on the price.

The relative importance of the above execution factors will be judged on an order by order basis in line with our experience in light of current market information, as well as the following criteria:

  • The characteristics of the client including regulatory categorisation of the client
  • The characteristics of the relevant order
  • The characteristics of the financial instruments that are the subject of that order
  • The characteristics of the execution venues to which that order can be directed

Like a lot of investment managers, we are not a member of any regulated exchange and consequently will not deal directly with an exchange but on an agency basis will deal through a broker that is generally an exchange member.

A broker must be on our Approved Broker List (“ABL”) before it can be selected as an execution partner.

For each specific order our dealers identify the priority execution requirements including trading strategy and select a broker from our list who has the capability to meet those needs.

The execution venues used by JH&P, via our approved brokers, include Regulated Markets (e.g. London Stock Exchange), Multilateral Trading Facilities, Systematic Internalisers, Large in Scale negotiation and execution platforms and Periodic Auctions among others.

JH&P’s Trading Deskfulfils its role as trading agent by;

  • Placing an order with a third party, such as a broker, to execute on our behalf. This includes our use of our counterparties’ electronic algorithm suites and will be in accordance with the relevant third party’s order execution policy.

And/or

  • Executing an order directly ourselves on a trading platform, versus a counterparty or other liquidity provider.

We will execute an order by one of the following methods or combination of methods:

  • On a Regulated Market via a market participant with whom we have entered into an agreement for handling orders for that Regulated Market (a Broker acting as Principal);
  • Outside a Regulated Market by executing the order via a market participant (with whom we have entered into an agreement for handling orders) matching orders from another of their clients (an Agency Broker);
  • Outside a Regulated Market by executing the order versus a market participant (with whom we have entered into an agreement for handling orders) matching orders i.e. a Systematic Internaliser (SI);
  • Directly on a Multilateral Trading Facility (MTF).

Our policy is to maintain a list of approved brokers which give access to venues and entities that offer the potential for JH&P to obtain the best possible result for the execution of client orders on a consistent basis. We transact with pre-approved brokers as professional clients on an agency basis.

All the brokers on our ABL are subject to initial and ongoing due diligence. Achieved prices and costs are monitored on an ongoing bases.

When selecting and approving brokers, we prioritise the following factors which are key to the broker’s ability to deliver in line with our execution priorities:

  • Access to global regions
  • Past history in executing orders in particular asset classes;
  • Access to trading venues and liquidity
  • Electronic trading offering or capabilities
  • Prevention of information leakage
  • Quality of overall service provided
  • Access to initial public offerings and new issues
  • Creditworthiness of the institution.

Our ABL comprises a mixture of large integrated investment banks and smaller country specific or niche firms.

Our currently approved brokers for different classes of financial instrument are listed here.

Equities

For equities, the selection of venue and type of execution strategy is vitally important. We are not affiliated with any broker, bank or venue, allowing us full flexibility to select trading partners on the basis of best execution. We typically consider the following factors to be of higher importance (i) price; (ii) costs associated with execution; and (iii) the size and nature of the order. We consider the following factors to be of lower importance: (i) speed; and (ii) likelihood of execution.

Equity orders are placed electronically via an execution management system which provides access to our approved broker’s trading desks, technology to access numerous algorithmic platforms / strategies & multiple trading venues & exchanges. On the very rare occasions an order can not be routed electronically, they are placed via telephone, or secure audited instant messaging through systems such as Bloomberg.

Our dealers also use electronic Program Trading as an efficient and cost effective way of transacting multiple securities at the same time. Savings result primarily from lower commission rates.

Standard default low touch (electronic) and high touch (manually managed) execution only commission rates are pre-determined with our pre approved brokers and maintained within our order management system (“OMS”).

Fixed Income

As over the counter (OTC) products are not executed on any exchange, it is vital we have the most appropriate broker available to us to source the liquidity we require. We execute electronically using a ‘request for quote’ model, with the best price securing the order.

Collective Investment Schemes

Prices in unit trusts & OEICs are calculated and fixed at specified point. Trades are conducted directly with the product provider or their agent and therefore best execution is limited in its application as prices and costs are set by the product provider.

Portfolio Managers may combine (“aggregate”) the orders of two or more clients prior to releasing the order to our separate dealing desk for execution.

Where orders are aggregated, the prices of the executed trades are allocated to clients on a pro rata basis, meaning all clients receive the same average price. If the entire order cannot be filled, each client will received an allocation proportionate to his participation in the aggregated order.

If the fill is a very small proportion of the overall demand, to avoid uneconomical holdings for individual clients we may allocate the order according to other factors. Such situations are rare and must be approved by senior management.

Any specific instructions which we might receive from you may prevent us from taking the steps that we have designed and implemented to obtain the best possible result for the execution of order.

Where we are unable to execute orders under prevailing market conditions due to limits imposed on those orders, we are required to make such Orders public. We do not believe that this is in your best interests and by consenting to the Order Execution Policy, you agree that we may use our discretion as to whether or not we make such orders public.

On an annual basis, we will make available at jameshambro.com details of the five brokers, by asset class, through whom we have executed the highest volume of client transactions.

We are required to obtain your prior consent to this Policy. Signing our Application Form and agreeing to our Terms and Conditions constitutes acceptance of our Order Execution Policy and provides us with consent to execute transactions outside a Trading Venue (a Regulated Market, MTF or OTF), where we believe that doing so will achieve the best possible result for you.

The quality of our approved brokers’ execution is monitored on an ongoing basis using live market data together with an analysis of how well brokers perform overall, over a period of time. As part of this process we also review the overall cost to the client of transactions through post trade analysis provided to us by a third party. We may amend our broker list according to these reviews.

We monitor the effectiveness of our order execution arrangements and policy on a regular basis and in any event at least annually. Where necessary following these reviews we will amend our policy and where these are material changes we will notify clients of those changes.

In addition to the above, we monitor any monetary and non-monetary benefits, received from third parties to ensure that they are designed to enhance the quality of service to the client and, do not impair our ability to act in accordance with the best interest of our clients.

Updates to our Order Execution Policy will be provided via our website jameshambro.com. On request, we will send you a copy of the most recent policy by post.

On request, we can provide clients with independent reports of the quality of our execution of their transactions.