Santander Investment Bolsa, S.V., S.A.U. Execution Quality Report under RTS28 Reception & Transmission of Orders

Transcription

1 Santander Investment Bolsa, S.V., S.A.U. Execution Quality Report under Reception & Transmission of Orders Page 1

2 Index: 1. Introduction Conclusions Related Information... 4 i. The relative importance the Firm gave to the execution factors when assessing the quality of execution:... 4 ii. Close links, conflicts of interests, and common ownerships with respect to any intermediaries used to execute orders:... 4 iii. Specific arrangements with intermediaries regarding payments made or received, discounts, rebates or non-monetary benefits received:... 4 iv. Factors that led to a change in the list of intermediaries listed in the Firm's execution policy, if such a change occurred:... 5 v. How order transmission differs according to client categorisation, where the Firm treats categories of clients differently and where it may affect the order execution arrangements:... 5 vi. Other criteria with precedence over immediate price and cost when transmitting 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:... 5 vii. How the Firm used any data or tools relating to the quality of execution, including any data published under Delegated Regulation (EU) 2017/575:... 5 viii. How the Firm used output of a consolidated tape provider established under Article 65 of Directive 2014/65/EU Page 2

3 1. Introduction Santander Investment Bolsa, S.V., S.A.U. (hereinafter, SIB or the Firm ) is an Spanish broker dealer authorised by the CNMV under the number 31 to provide, among others, the service of reception and transmission of clients orders on shares (including the attached preemptive rights, listed SICAVs and ADRs), warrants and Exchange Traded Funds ( ETFs ) 1. In this regard and in compliance with the applicable law (namely, Directive 2014/65/EU, Commission Delegated Regulation (EU) 2017/565 and Commission Delegated Regulation (EU) 2017/576), SIB should publish, for each class of financial instruments, a report containing the top five execution intermediaries, in terms of volumes, for all transmitted client orders (the Top 5 Execution Intermediaries Report ). The Top 5 Execution Intermediaries Report shall include a summary of the analysis and conclusions drawn from SIB s detailed monitoring of the quality of the execution obtained by the intermediaries used to execute all client orders in the previous year (the Execution Quality Report ). It must be noted that the above financial instruments have similar characteristics for the purposes of best execution (all of them are listed on regulated markets) and, therefore, SIB will apply the same factors, criteria and other measures when complying with its obligation to take all sufficient steps to obtain the best possible result for its clients. Therefore, no distinction will be made by the Firm among the aforementioned classes of financial instruments, in its Execution Quality Report. SIB, through an IT report tool (the Report Tool ), monitors at least quarterly the quality of the execution of its clients orders (except the ones coming from the activity mentioned below in the footnote 1 ). The aforementioned Report Tool compares, automatically, the prices obtained by SIB on each trade (indirectly through its intermediaries), versus a benchmark price that reflects the best possible price a participant could have got by routing a single aggressive order to the trading venue with the best price available at the time the trade was executed. Benchmark prices are calculated by the Report Tool by the following process: For each trade, based on the ISIN and CCY of the instrument traded, a list is compiled of all lit venues where that instrument could have been traded at the time of trade. The benchmark price calculated is the best price that could have been obtained by routing an aggressive order to that venue. Volume is taken into account; so if necessary the simulated aggressive order will match up the order book of a venue to obtain an average execution value. It is possible for a price improvement to be measured in cases where customer orders are executed via passive limit orders placed on lit books or on dark midpoint matching venues, have been traded off-book via broker crossing networks or similar. In such cases, the benchmark price for the best possible on- [ 1 In addition and exceptionally, SIB provides reception and transmission of orders in relation to certain fixed income securities only to its client Banco Santander, S.A.] Page 3

4 book aggressive order may be worse than the actual price achieved by the customer. Quarterly execution quality reports are available for its clients upon request. 2. Conclusions During 2017, SIB achieved generally the best possible results for its clients when receiving and transmitting their orders. SIB found no need to change the intermediaries it used in 2017 for this activity. 3. Related Information To reach the above conclusions, SIB considered the following information: i. The relative importance the Firm gave to the execution factors when assessing the quality of execution: Where SIB provides order reception and transmission services to professional clients, it chooses the intermediary to which to direct the orders mainly on the basis of the costs, efficiency and quality of service of the intermediaries selected by the Firm as per its Order Execution Policy. To determine the relative importance of each of these factors, SIB applied its experience, based on prevailing market conditions, and took into account: (I) the characteristics of the client, (II) the characteristics of the order, (III) the characteristics of the financial instruments to which the order refers, and (IV) the characteristics of the execution venues to which the order can be directed. When a professional client or eligible counterparty have expressly selected SIB to execute the order flow of their retail clients, the Firm will execute that client's orders as if it had received them directly from the final retail clients. In this case, SIB determined the best possible outcome in terms of total consideration. ii. Close links, conflicts of interests, and common ownerships with respect to any intermediaries used to execute orders: In 2017, SIB used the following brokers, which are members of the same group as the Firm: BANCO ZACHODNI WBK SANTANDER INVESTMENT SECURITIES INC BANCO SANTANDER TOTTA Apart from the above, during 2017, SIB has not detected any other conflict of interest with respect to the intermediaries used to execute its clients orders. iii. Specific arrangements with intermediaries regarding payments made or received, discounts, rebates or non-monetary benefits received: Page 4

5 In 2017, SIB has no specific arrangements in place with any of the brokers used to execute its clients orders regarding payments made or received, discounts or nonmonetary benefits received. iv. Factors that led to a change in the list of intermediaries listed in the Firm's execution policy, if such a change occurred: In 2017, there was no change in the list of the main intermediaries used by SIB, and therefore, the Order Execution Policy of the Firm has not been updated in this regard. v. How order transmission differs according to client categorisation, where the Firm treats categories of clients differently and where it may affect the order execution arrangements: SIB does not provide order reception and transmission services to retail clients. Nevertheless, as explained in SIB s Order Execution Policy, when SIB was selected by a professional client or eligible counterparty expressly to execute the order flow of their retail clients, it will transmit that client's orders as if it had received them directly from the final retail clients. Having said that, SIB makes no distinction among its previously selected intermediaries when directing its clients orders to one broker or another. The Firm follows the factors set out in its Order Execution Policy regardless the classification of the client. Nonetheless, each trader may apply the aforementioned factors differently based on their personal experience with the selected brokers. vi. Other criteria with precedence over immediate price and cost when transmitting 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: SIB does not give precedence to any factor over price and cost when transmitting retail clients orders. vii. How the Firm used any data or tools relating to the quality of execution, including any data published under Delegated Regulation (EU) 2017/575: SIB is using the Report Tool to challenge the results the selected brokers get when executing its clients orders. Due to the fact that execution venues have no obligation to make public RTS27 reports until the 30 th of June 2018 (regarding the first quarter of 2018), SIB was not able to use any data published under Delegated Regulation (EU) 2017/575 for the year viii. How the Firm used output of a consolidated tape provider established under Article 65 of Directive 2014/65/EU. During 2017, SIB has not used CTPs. Page 5