SUMMARY OF BEST EXECUTION POLICY
Pursuant to the European Directive 2004/39/EC of 21 April 2004 regarding Markets in Financial Instruments (“MiFID”) which has been implemented by Cyprus legislation on Investment Services and Activities and Regulated Markets Law of 2007 (Law 144(I)/2007), XFR Financial Limited (“the Company”) is required to take all reasonable steps to obtain the best possible result when executing clients’ orders or when receiving or transmitting orders for execution.
For the purpose of fulfilling its obligations as mentioned above, the Company has established a Best Execution Policy which is in effect an overview of how trades and orders are executed and how the Company will obtain the best execution for its clients. The Company is further required to provide appropriate information to its clients and/or prospective clients in regards to the aforementioned framework and it is for this purpose that this Summary has been produced.
This Policy is not intended to create third party rights or duties that would not already exist if the Policy had not been made publicly available. It does not form part of any contract between the Company, any of its affiliates, and any client/user or prospective client/user.
Entering into the Term and Conditions Agreement means you agree with the present execution policy.
PURPOSE OF POLICY
The Policy applies upon the acceptance of an order and/or when the client gives no specific instruction on the execution method. Where a specific instruction on an order is given, the Company shall execute the order in the lines of the instruction. Nevertheless, the Company may be prevented from implementing the Policy in order to obtain the best possible result when it receives a specific instruction on an order. The Policy applies only to retail and professional clients where the Company executes transactions with such clients for the financial instruments the Company offers (for the definition, please refer to the Terms and Conditions agreement). The Policy describes the criteria and factors taken into consideration to obtain the best possible result. The Company cannot guarantee that when executing a trade the client’s price will be more favorable than one which might be available elsewhere.
TYPES OF ORDERS
There are different types of Orders that the client is able to give to the Company. Given the market volatility when trading, the client may wish to limit his/her risk and better manage investment strategies simply by choosing different types of orders.
(a) Instant Order: When a client gives a Market Order it means that the client instructs the Company to execute it as promptly as possible at the prevailing market price. The Company will execute the order without consideration to price changes. This means in effect, that if the prices change significantly by the time the client fills in his order, the order will most likely be exposed to risks. These risks include the execution occurring at a price that is substantially different from the price when the order was entered. The client may further attach to the order a Stop Loss and/or Take Profit.
(b) Pending Order: There are several kinds of orders, including a Buy Limit, Sell Limit, Buy Stop and Sell Stop. When a client gives an order it means that the Company will execute it at a later time at the price the client specified in his/her order. Therefore, the Company will continuously monitor this order and when the price specified by the order is reached, the Company will then execute the order. Under certain market conditions, the order might not be executed at the declared price but at the next best price. The client may further attach to an order a Stop Loss and/or Take Profit order.
(c) Stop Loss Order: This order allows you to limit the amount that you are willing to risk by establishing a bottom level on the losses subject to the market price at the time the order was placed. When the stop order is reached, the Company will automatically liquidate your trade.
(d) Take Profit Order: This order allows you to limit the profit amount by establishing a top level on the earnings subject to the market price at the time the order was placed. When the take profit order is reached, the Company will automatically liquidate your trade. It is noted that any given order may be modified should the client wish to do so but any amendment can only be done before the execution of the order. Moreover, in case of Stop Loss, Take Profit and limit Orders, the client cannot alter or remove such orders where the price has reached the level of the order execution.
APPROACH TO BEST EXECUTION
In order for the Company to obtain the most reasonable execution for the order of its clients, the Company relies on three basic components:
(a) state-of-the-art technology for routing, monitoring and executing orders
(b) careful consideration of the elements of order execution
(c) regular and careful examination of the overall execution policy
When executing an Order, the Company shall consider:
(i) the classification of the client as retail or professional
(ii) the nature of the client’s order
(iii) the characteristics of the financial instruments subject to that order
(iv) the characteristics of the execution venues to which that order can be directed
The Company uses automated systems to route and execute client orders. The substantial investment in cutting edge technological tools made by the Company guaranties the best execution possible. The technology enables a fast and secure Forex trading system. The trading platform is able to process a variety of orders due to solid resources and sustainable IT infrastructure. The system was built and is maintained by expert professionals from both the financial and software sectors, in a manner that allows the Company to use this advanced technology as a competitive advantage.
B. Elements of Our Best Execution
As mentioned above, the Company shall take all reasonable steps to ensure that the client receives the best possible result. In such attempt the Company will take into account the following elements when executing Clients’ orders:
(1) Prices: During the time of operation the Company shall quote two prices; the ASK price (Buy) and the BID price (Sell). The ASK price is a higher price at which the client can purchase that Financial Instrument and the BID price is a lower price at which the client can sell it. Therefore, limit orders to Buy, Stop Loss and Take Profit for opened short position orders are executed at ASK price.
Other orders such as Limit Orders to Sell, Stop Loss and Take Profit for long position are executed in BID price. The company’s price for a given Financial Instrument is calculated by reference to the price of the relevant underlying financial instrument, which the Company obtains from third party external reference sources (Data feeds).
The company’s prices are constructed with reference to the given Financial Instruments Contract Specification, which can be found in the Company’s website. The Company updates its prices as frequently as the limitations of technology and communication links allow. The company reviews its used third party external reference sources at least once a year to ensure that the data obtained continues to be competitive. The Company will not quote any price outside the Company’s operations times (see operation time below). Therefore no orders can be placed by the Client during that time.
(2) Costs: The Company may charge commissions and/or overnight Premiums when opening a position which is not incorporated into the Company's quoted price but are explicitly stated within the Client’s account. Commissions
may be charged either in the form of percentage or as a fixed amount. Overnight Premiums vary from time to time. Details on the amounts and/or rates on commissions and financing fees are available on the commissions and charges list in the Company website.
(3) Speed and Likelihood of the Execution: Due to the unprecedented levels of volatility affecting both price and volume, the Company seeks to provide all client orders with the fastest execution possible. Additionally, the Company reserves the right to decline to execute any type of order or to offer the Client a new price for the order.
(4) Speed and Likelihood of Settlement: The Company shall proceed to a settlement of all transactions upon execution of such transactions.
(5) Size of the Order: The minimum size order is 0.05 lots (one twentieth of a lot). A lot is a unit measuring the transaction amount and it is different for each type of Financial Instrument. Please refer to the Charges and Commission list on the Company’s website for the value of each lot for a given Financial Instrument type. Although there is no maximum size of an order that the Client can place with the Company, the Company reserves the right to decline an order as explained in the agreement that was entered into with the Client.
(6) Market Impact and Overall Execution Quality: As any of the above as well as the price of the financial instruments traded may be affected by many factors, the Company shall focus on prompt, sequential and reliable execution. The Company requests from the clients to bear in mind that its obligation to best execution does not solely depend on the above list which is not to be considered as exhaustive. Neither should the clients consider the order of the above list to be presented in priority. Even if a trade appears not to have been executed at the best possible price, it does not necessarily constitute a violation of this policy.
C. Regular Review of Execution Quality and of Execution Venues
The Company will regularly monitor the overall quality of its order executions and the effectiveness of this Policy. If considered appropriate, the Company has the right to amend this Policy.
The Client acknowledges that the transactions entered in Financial Instruments with the Company are not undertaken on a recognized exchange; rather they are undertaken through the Company’s Trading Platform. This may expose the Client to greater risks than regulated exchange transactions. Therefore the Company may not execute an order, or it may change the opening (closing) price of an order in case of any technical failure of the trading platform or quote feeds.
In this respect, the Company shall act as a principal and not as an agent on behalf of the Clients since the Company shall be the sole execution venue for Client Orders. Further to the aforementioned, the Company shall be dealing in CFDs for own account with other counterparties besides its Clients, which could be financial institutions or investment firms operations times.
The Company operation hours for placing orders and/or for trading the financial instruments the company offers is round the clock, 21:00 :01p.m. GMT Sunday through 21:00 :00 p.m. GMT Friday. Please refer to our website for additional information. Non working hours: from Friday 21:00; 01 GMT through Sunday 21:00; 00. Holidays are announced on the Company’s website.
The Company reserves the right to suspend or modify its trading hours at any time and in case of such an event will inform Customers in advance on a best efforts basis of any changes in its trading hours.
The client acknowledges that in certain circumstances the Policy will not apply. For example, when there is an internal/external bug in the system or where the client abuses the system error in order to obtain an advantage.
This is to be read in conjunction with the Term and Conditions Agreement. Provided that the client agrees to the Term and Conditions Agreement it means that the client also agrees with the terms of this Policy.