Best execution review 2018 - ninetyone.com...BEST EXECUTION REVIEW 2018 Introduction As part of the Markets in Financial Instruments Directive (“MIFID II”), the European Securities

Best execution review 2018RTS 28/Article 65(6)

April 2019

Not for distribution within a country where distribution would be contrary to applicable law or regulations.

3

BEST EXECUTION REVIEW 2018

Introduction

As part of the Markets in Financial Instruments Directive (“MIFID II”), the European Securities and Markets Authority (ESMA) requires all Investment Firms to publish, on an annual basis, information on the top 5 execution venues used and the quality of execution obtained. MIFID II requires this disclosure to be split between two reports; Regulatory Technical Standard 28 (“RTS 28”) and Delegated Regulation Article 65(6).

Where an Investment Firm has executed an order on an execution venue, the order is captured under RTS 28. Where the Investment Firm has placed an order with a broker then it is captured in Article 65(6). For clarity:

• ‘Execution’ occurs where the Investment Firm executes an order directly against an execution venue: e.g. a regulated market, Multilateral Trading facility (MTF), Organised Trading Facility (OTF), Systematic Internaliser, a market maker or other liquidity provider.

• ‘Placement’ is where the Investment Firm places an order with another entity for it to execute, such as a broker or affiliated dealing desk.

The data and related commentary is for the calendar year 2018.

Extra information

Within RTS 28, where the trade has been agreed via a Request-For-Quote (RFQ) System of a Trading Venue, the Trading Venue may appear in the top 5 table instead of the underlying counterparty with whom the transaction was agreed. To provide more transparency, an additional table has been provided under ‘Extra Information’ with details of the underlying investment firms used.

Within Article 65(6), where an affiliated dealing desk appears in the top 5 table, an additional table has been provided under ‘Extra Information’ to provide more transparency to the underlying investment firms used.


1

EquitiesShares & Depositary Receipts

Tick size liquidity bands 5 and 6 (from 2000 trades per day)

RTS (28)

CLASS OF INSTRUMENT Equities Shares & Depositary Receipts

NOTIFICATION IF <1 AVERAGE TRADE PER BUSINESS DAY IN THE PREVIOUS YEAR N

TOP FIVE EXECUTION VENUES RANKED IN TERMS OF TRADING VOLUMES (DESCENDING ORDER)

PROPORTION OF VOLUME TRADED AS A

PERCENTAGE OF TOTAL IN THAT CLASS

PROPORTION OF ORDERS EXECUTED AS

A PERCENTAGE OF TOTAL IN THAT CLASS

PERCENTAGE OF PASSIVE

ORDERS

PERCENTAGE OF AGGRESSIVE

ORDERS

PERCENTAGE OF DIRECTED

ORDERS

Morgan Stanley & Co. International PLC (4PQUHN3JPFGFNF3BB653)

36.84 19.22 0.00 0.00 0.00

Goldman Sachs International(W22LROWP2IHZNBB6K528)

16.27 8.36 0.00 0.00 0.00

HSBC Bank PLC(MP6I5ZYZBEU3UXPYFY54)

10.12 16.03 0.00 0.00 0.00

Barclays Capital Securities Limited(K9WDOH4D2PYBSLSOB484)

9.32 8.02 0.00 0.00 0.00

Merrill Lynch International(GGDZP1UYGU9STUHRDP48)

8.05 10.17 0.00 0.00 0.00

ESMA requires Investment Firms to group equity orders according to tick size liquidity bands. Liquidity bands are based on the average daily number of transactions executed on the most relevant market of the instrument in question. The tick size liquidity band that was in place for the majority of the year has been applied to all orders. Non-EEA equities with no tick size data have been included in ‘Other Instruments.’

2


Article 65(6)



TOP FIVE INVESTMENT FIRMS RANKED IN TERMS OF TRADING VOLUMES (DESCENDING ORDER)

PROPORTION OF VOLUME TRADED AS A PERCENTAGE OF

TOTAL IN THAT CLASS

PROPORTION OF ORDERS EXECUTED AS A PERCENTAGE OF

TOTAL IN THAT CLASS

Morgan Stanley & Co. International PLC(4PQUHN3JPFGFNF3BB653)

15.47 11.56

J.P. Morgan Securities PLC (K6Q0W1PS1L1O4IQL9C32)

7.50 10.14

Investment Technology Group Limited (213800EEC95PRUCEUP63)

7.18 8.61

Credit Suisse Securities (Europe) Limited (DL6FFRRLF74S01HE2M14)

7.18 5.31

HSBC Bank PLC (MP6I5ZYZBEU3UXPYFY54)

7.09 11.73


3


NOTIFICATION IF <1 AVERAGE TRADE PER BUSINESS DAY IN THE PREVIOUS YEAR

N




PROPORTION OF ORDERS EXECUTED

AS A PERCENTAGE OF TOTAL IN THAT CLASS


ORDERS


ORDERS


ORDERS


27.15 13.75 0.00 0.00 0.00

Joh. Berenberg Gossler & Co. Kg (529900UC2OD7II24Z667)

12.08 10.42 0.00 0.00 0.00


11.05 13.54 0.00 0.00 0.00

UBS AG (BFM8T61CT2L1QCEMIK50)

8.94 8.96 0.00 0.00 0.00

Barclays Capital Securities Limited (K9WDOH4D2PYBSLSOB484)

8.67 7.71 0.00 0.00 0.00

RTS (28)

Tick size liquidity bands 3 and 4 (from 80 to 1999 trades per day)

4





N



TOTAL IN THAT CLASS


TOTAL IN THAT CLASS

Investec Asset Management Hong Kong Limited (213800T9WL75FWKGWG76)

16.50 2.96


9.26 8.69


8.22 9.84

Citigroup Global Markets Limited (XKZZ2JZF41MRHTR1V493)

7.07 4.10

Cantor Fitzgerald Europe (549300KM6VUHPKQLQX53)

6.15 1.78

Article 65(6)


5


Article 65(6) Extra Information

The table below shows information on orders placed with Investec Asset Management Hong Kong Limited. The values shown are a proportion of the volume traded with each of the top 5 Investment Firms as a percentage of the total in that class of financial instruments.




TOTAL IN THAT CLASS


TOTAL IN THAT CLASS

Merrill Lynch International (GGDZP1UYGU9STUHRDP48)

6.82 0.76

Goldman Sachs International (W22LROWP2IHZNBB6K528)

3.71 0.46

ITG Hong Kong Limited(54930088A108K3K5M708)

1.36 0.17


1.18 0.31

Instinet Pacific Limited (549300RI6VZUNIR81J81)

1.04 0.33

6


Tick size liquidity band 1 and 2 (from 0 to 79 trades per day)

RTS 28



N







ORDERS


ORDERS


ORDERS


29.87 33.28 0.00 0.00 0.00


16.12 28.38 0.00 0.00 0.00


15.36 18.57 0.00 0.00 0.00

USB AG (BFM8T61CT2L1QCEMIK50)

10.01 7.28 0.00 0.00 0.00


8.60 2.23 0.00 0.00 0.00


7


Article 65(6)



N

Top Five Investment Firms Ranked In Terms Of Trading Volumes (Descending Order)

Proportion Of Volume Traded As A Percentage Of Total In That Class

Proportion Of Orders Executed As A Percentage Of Total In That Class


17.29 17.32


12.32 15.34


9.03 12.06

HSBC Bank PLC MP6I5ZYZBEU3UXPYFY54

7.65 14.57

Citigroup Global Markets Limited XKZZ2JZF41MRHTR1V493

7.45 5.26

8








TOTAL IN THAT CLASS


TOTAL IN THAT CLASS

UBS Securities Asia Limited (549300Y35FCB6270R069)

2.06 2.32


1.85 1.75


1.49 1.36


1.39 1.28

Liquidnet Europe Limited (213800ZIRB79BE5XQM68)

1.39 0.89


9

a. Relative importance given to the Execution Factors The majority of transactions were reasonably liquid, and execution could be achieved across multiple venues in most countries, so price was relatively the most important factor. Given the fragmented liquidity across many of the global equity markets, careful venue choices had to be made in order to maximise the likelihood of execution particularly where the instrument is less liquid. A reasonable proportion of our equity orders are above a normal tradeable size, so great care is taken by the trader over the execution strategy for these trades. Our traders have the ability to utilise various different execution strategies which include algorithmic, programme, crossing networks and block trading. Execution costs are always carefully considered when selecting execution strategy and assessing which venue offers the lowest execution impact. In times of increased market volatility, as was seen during the most of 2018, speed of execution can become more of a focus. Where there is relatively low volatility, speed of execution was generally lower in importance except for larger sized trades where we had to be more sensitive to this factor. Finally, any conditions around each trade are always clearly communicated to the Trading Team through our order management system and adhered to by the trader.

b. Common Ownerships and Conflicts of Interest Investec Securities is a part of the Investec Group, together with IAM, and provides us with essential liquidity access to certain equity markets and therefore forms a natural part of our best execution process. We do not consider this a conflict of interest and they are subject to the same Best Execution rules as all other venues.

c. Venue Arrangements All commission sharing arrangements, as referenced in last year’s Best Execution Review, were terminated by Investec Asset Management Limited London at the end of 2017. As a result of this all execution counterparties and venues were changed to an execution-only commission rate structure from the beginning of 2018. Also at the beginning of 2018 we undertook our annual commission rate review against a comprehensive third-party global consultation survey in order to ensure our rates across all trade-types remained fair and competitive. In addition, there are no specific arrangements concerning rebates or non-monetary benefits with any current execution venues.

d. Execution Venues During the course of the year we added two equity execution counterparties to our approved list. One in order to improve our access to liquidity in the local Dutch market and another in order to improve our access to liquidity in the local Japanese market with a particular focus on their block execution product. One execution counterparty was removed from our approved list due to a deterioration in our liquidity access requirement from them. This did not impact our best execution process. We also ensured that the execution counterparty chosen was able to access all the required execution venues in order to ensure the most efficient price discovery.

10


e. Client Categories All clients were treated in exactly the same way by our independent Trading Desk in accordance with our Execution Policy.

f. Retail Clients This is not applicable, as we do not currently execute retail client orders.

g. Quality of Execution Our pre-trade liquidity and price discovery ensured our trade execution was of the highest quality. Equity transaction cost analysis was performed using Bloomberg’s BTCA product. We utilise BTCA in various ways which include a daily exception process as well as monthly and quarterly reports that analyse our trading data in several different ways. For the 2018 review we have not made use of any RTS 27 venue execution data. We are however currently in the process of considering how to make best use of the RTS 27 tables in order to ascertain which of these tables would be most relevant to our trading activity monitoring requirements. We have been in contact with a third-party data provider who will be able to help us with this assessment.


11

Debt instruments Bonds

RTS 28

CLASS OF INSTRUMENT Debt Instruments Bonds


N







ORDERS


ORDERS


ORDERS

Bloomberg Trading Facility - MTF 41.47 28.41 0.00 0.00 0.00

Marketaxess Europe - MTF 13.13 22.70 0.00 0.00 0.00


5.85 3.30 0.00 0.00 0.00

JP Morgan Securities PLC (K6Q0W1PS1L1O4IQL9C32)

5.55 7.06 0.00 0.00 0.00


5.31 5.25 0.00 0.00 0.00

12


RTS 28 Extra Information

The table below shows the Top 5 Investment Firms ranked in terms of trading volume of all orders executed via Bloomberg Trading Facility – MTF




TOTAL IN THAT CLASS


TOTAL IN THAT CLASS

HSBC BankK PLC (MP6I5ZYZBEU3UXPYFY54)

4.84 8.26


4.05 0.78

Deutsche Bank Aktiengesellschaft (7LTWFZYICNSX8D621K86)

3.84 2.87


3.83 3.32

ING Bank N.V. (3TK20IVIUJ8J3ZU0QE75)

3.58 4.60


13


The table below shows the Top 5 Investment Firms ranked in terms of trading volume of all orders executed via MarketAxess Europe – MTF




TOTAL IN THAT CLASS


TOTAL IN THAT CLASS


1.75 2.17


1.38 1.95


1.17 2.13

BNP Paribas (R0MUWSFPU8MPRO8K5P83)

0.83 1.66


0.82 1.27

14


Article 65(6)



N



TOTAL IN THAT CLASS


TOTAL IN THAT CLASS

Investec Asset Management North America, Inc. (549300O7JGTAQICP0Q97)

33.75 45.18


19.14 9.94

Investec Asset Management (PTY) Limited (2138002UF3SGWU6MR348)

14.03 11.88


9.99 10.79

Scotiabank Europe PLC (5G6NVP4WADOI32VUUB17)

6.12 4.73


15



PROPORTION OF VOLUME TRADED AS A PERCENTAGE

OF TOTAL IN THAT CLASS

PROPORTION OF ORDERS EXECUTED AS A PERCENTAGE



2.62 2.78

Citigroup Global Markets Inc (MBNUM2BPBDO7JBLYG310)

2.37 1.17

J.P. Morgan Securities LIC (ZBUT11V806EZRVTWT807)

1.90 1.91


1.58 2.51

Jefferies International Limited (S5THZMDUJCTQZBTRVI98)

1.50 3.08


The table below shows information on orders placed with Investec Asset Management North America, Inc. The values shown are a proportion of the volume traded with each of the top 5 Investment Firms as a percentage of the total in that class of financial instruments.

16








Nedbank LTD (213800ZBWY3BU3UUMA42)

3.63 2.82

ICBC Standard Bank PLC (F01VVKN4DRF2NWKGQ283)

3.10 2.42

Absa Bank Limited (SLI1CVYMJ21DST0Q8K25)

2.91 2.02

Firstrand Bank Limited (ZAYQDKTCATIXF9OQY690)

2.22 2.41


1.10 0.97


The table below shows information on orders placed with Investec Asset Management (Pty) Limited. The values shown are a proportion of the volume traded with each of the top 5 Investment Firms as a percentage of the total in that class of financial instruments.


17

Debt InstrumentsMoney markets instruments

CLASS OF INSTRUMENT Debt InstrumentsMoney Market Instruments








ORDERS


ORDERS


ORDERS


UBS AG (BFM8T61CT2L1QCEMIK50)

16.01 9.68 0.00 0.00 0.00


9.93 5.62 0.00 0.00 0.00


8.73 7.35 0.00 0.00 0.00

Tradeweb Europe - MTF 7.51 6.51 0.00 0.00 0.00

RTS 28

18







TOTAL IN THAT CLASS



HSBC BankK PLC (MP6I5ZYZBEU3UXPYFY54)

13.91 23.18


5.71 2.75

Nomura International PLC (DGQCSV2PHVF7I2743539)

5.66 2.57


4.17 2.33

The Toronto Dominion Bank (PT3QB789TSUIDF371261)

3.14 1.61


19


The table below shows the Top 5 Investment Firms ranked in terms of trading volume of all orders executed via TradeWeb Europe – MTF




TOTAL IN THAT CLASS




1.77 1.08


1.57 1.19


1.22 1.61

The Royal Bank Of Scotland Public Limited Company (RR3QWICWWIPCS8A4S074)

0.71 0.78

Bnp Paribas (R0MUWSFPU8MPRO8K5P83)

0.57 0.48

20


Article 65(6)



N






Icap Securities Limited (213800NMEZS3MD2IUP33)

28.34 23.86


21.75 26.19

ING Bank N.V. (3TK20IVIUJ8J3ZU0QE75)

18.40 16.08

Cooperatieve Rabobank U.A. (DG3RU1DBUFHT4ZF9WN62)

13.10 9.71

The Toronto Dominion Bank (DG3RU1DBUFHT4ZF9WN62)

6.90 5.26


21

a. Relative importance given to the Execution Factors A significant portion of our volume is in shorter maturity securities situated at the lower end of the credit curve, typically within emerging market debt, hence we are very price sensitive. We are highly conscious of market impact through the life of a full transaction hence we always consider the full cost of accessing liquidity, particularly impact cost and trade size. As part of our price discovery process we thoroughly assess the speed and likelihood of execution to ensure the optimal counterparty is selected.

b. Common Ownerships and Conflicts of Interest There are no close links or conflicts of interest with any venue that we currently use for fixed income execution.

c. Venue Arrangements There are no specific arrangements concerning rebates or non-monetary benefits with any current execution venues.

d. Execution Venues During the course of 2018 we made nine additions to our approved counterparty list in total. These counterparties provide us with access to additional pools of liquidity in emerging and developed market credit, particularly in Middle East, Asia and Russia and also provide local expertise on these specific markets. We also added traditional inter-dealer brokers as execution counterparties to give us direct access to their pools of liquidity. Further, we also added counterparties that specialise in local markets such as Russia and Mexico, providing us with local expertise in these markets. We removed two counterparties from our approved list

due to a deterioration in our liquidity access requirements from them. This did not affect our best execution process.

e. Client Categories All clients were treated in exactly the same way by our Trading Desk in accordance with our Execution Policy.

f. Retail Clients This is not applicable, as we do not currently trade retail client orders.

g. Quality of Execution Our pre-trade liquidity and price discovery ensured our trade execution was of the highest quality. We expect to be able to review transaction cost analysis for this asset class during 2019 utilising data from I.C.E., a third-party global bond transaction cost analysis provider. For the 2018 review we have not made use of any RTS 27 venue execution data. We are however currently in the process of considering how to make best use of the RTS 27 tables in order to ascertain which of these tables would be most relevant to our trading activity monitoring requirements. We have been in contact with a third-party data provider who will be able to help us with this assessment.

22


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23

Interest rates derivativesFutures and options admitted to trading on a trading venue

CLASS OF INSTRUMENT Interest rates derivativesFutures and options admitted to trading on a trading venue


N







ORDERS


ORDERS


ORDERS


47.52 45.00 0.00 0.00 0.00


41.00 52.20 0.00 0.00 0.00

Skandinaviska Enskilda Banken AB (F3JS33DEI6XQ4ZBPTN86)

9.41

2.00 0.00 0.00 0.00


2.07 0.80 0.00 0.00 0.00

RTS 28

24


Article 65(6)



N







67.24 52.28


13.49 8.48


9.21 14.66


8.62 23.24


1.45 1.34


25










9.21 14.66

26










ICBC Standard Bank PLC (F01VVKN4DRF2NWKGQ283)

4.51 8.08

Firstrand Bank Limited (ZAYQDKTCATIXF9OQY690)

3.22 11.03

Absa Bank Limited (SLI1CVYMJ21DST0Q8K25)

0.59 1.99

Nedbank LTD (213800ZBWY3BU3UUMA42)

0.30 2.14


27










1.45 1.34

28


a. Relative importance given to the Execution Factors The majority of transactions are highly liquid and execution can readily be achieved across multiple venues available through the price discovery process. We place the highest importance on price alongside total execution cost e.g. commissions. Speed and likelihood of execution are secondary factors although would be very unlikely to replace price or cost as the most important factors. Often the nature of the transaction plays a role e.g. execution of such orders contingent on another security or where a specific market level is set.

b. Common Ownerships and Conflicts of Interest There are no close links or conflicts of interest with any venue that we currently use for execution of Futures and Options.


d. Execution Venues During the course of the year we did not add or remove any execution counterparties to or from our approved list for this financial instrument.



g. Quality of Execution Pre-trade liquidity and price discovery procedures ensured our trade execution was of the highest quality. For the 2018 review we have not made use of any RTS 27 venue execution data. We are however currently in the process of considering how to make best use of the RTS 27 tables in order to ascertain which of these tables would be most relevant to our trading activity monitoring requirements. We have been in contact with a third-party data provider who will be able to help us with this assessment.


29

Interest rates derivativesSwaps, forwards, and other interest rates derivatives

CLASS OF INSTRUMENT Interest rates derivativesSwaps, forwards, and other interest rates derivatives


N







ORDERS


ORDERS


ORDERS


64.96 57.35 0.00 0.00 0.00


16.63 8.82 0.00 0.00 0.00

Citibank National Association (E57ODZWZ7FF32TWEFA76)

9.23 23.32 0.00 0.00 0.00


8.47 5.88 0.00 0.00 0.00

Barclays Bank PLC (G5GSEF7VJP5I7OUK5573)

0.39 1.47 0.00 0.00 0.00

RTS 28

30


Article 65(6)



N







99.82 97.31


0.18 2.69


31










0.18 2.69

32


a. Relative importance given to the Execution Factors The majority of transactions are large in scale hence we are conscious of market footprint and sensitive to pricing throughout the life of the transaction whilst considering the full cost of accessing liquidity. Speed and likelihood of execution are not typically prioritised ahead of price, however we do find two key liquidity providers are more efficient in pricing of such transactions when considering their credit support annex (‘CSA’) coverage and the differentiating CSA cost across mandates. Thus overall cost is a key consideration in broker selection. The standard settlement cycle of this asset class makes the likelihood of settlement factor less of a concern than the price and costs. Likelihood of execution is a consideration as unlike many other instrument classifications banks do not provide access to every market which is a unique feature within the asset class.



d. Execution Venues During the course of the year we added two additional counterparties to our approved list for this financial instrument. Both were added in order for us to be able to increase our global foreign exchange execution scope.



g. Quality of Execution Our pre-trade liquidity and price discovery ensured our trade execution was of the highest quality. For the 2018 review we have not made use of any RTS 27 venue execution data. We are however currently in the process of considering how to make best use of the RTS 27 tables in order to ascertain which of these tables would be most relevant to our trading activity monitoring requirements. We have been in contact with a third-party data provider who will be able to help us with this assessment.


33

Credit derivatives Other credit derivatives

CLASS OF INSTRUMENT Credit derivativesOther credit derivatives


N







ORDERS


ORDERS


ORDERS


61.31 64.18 0.00 0.00 0.00


38.69 35.82 0.00 0.00 0.00

RTS 28

34


Article 65(6)


Y

CLASS OF INSTRUMENTCredit derivativesOther credit derivatives




PROPORTION OF ORDERS EXECUTED AS PERCENTAGE



100.00 100.00


35

a. Relative importance given to the Execution Factors The majority of transactions are large in scale hence we are conscious of market footprint and sensitive to pricing throughout the life of the transaction whilst considering the full cost of accessing liquidity. Speed and likelihood of execution are not typically prioritised ahead of price; however we do find two key liquidity providers are more efficient in pricing of such transactions when considering their credit support annex (‘CSA’) coverage and the differentiating CSA cost across mandates. Thus, overall cost is a key consideration in broker selection. The standard settlement nature of this asset class makes this factor less of a concern than the price and costs. Likelihood is a consideration as unlike many other instrument classifications banks do not provide access to every market which is a unique feature within the asset class.



d. Execution Venues During the course of the year we added two additional counterparties to our approved list for this financial instrument. Both were added in order for us to be able to increase our global credit derivative execution scope.



g. Quality of Execution Our pre-trade liquidity and price discovery ensured our trade execution was of the highest quality. We are expecting to be able to review transaction cost analysis for credit derivatives during 2019. For the 2018 review we have not made use of any RTS 27 venue execution data. We are however currently in the process of considering how to make best use of the RTS 27 tables in order to ascertain which of these tables would be most relevant to our trading activity monitoring requirements. We have been in contact with a third-party data provider who will be able to help us with this assessment.

36




37

Credit derivatives Futures and options admitted to trading on a trading venue

CLASS OF INSTRUMENT Currency derivativesFutures and options admitted to trading on a trading venue


Y







ORDERS


ORDERS


ORDERS


98.21 52.31 0.00 0.00 0.00


0.88 9.23 0.00 0.00 0.00


0.82 24.62 0.00 0.00 0.00


0.09 13.85 0.00 0.00 0.00

RTS 28

38


Article 65(6)

CLASS OF INSTRUMENT Currency derivativesFutures and options admitted to trading on a trading venue


Y







100.00 100.00


39

a. Relative importance given to the Execution Factors The majority of transactions are highly liquid and execution can readily be achieved across multiple venues available through the price discovery process. We place the highest importance on price alongside total execution cost e.g. commissions. Speed and likelihood of execution are secondary factors although it would be very unlikely to replace price or cost as the most important factors. Often the nature of the transaction plays a role e.g. execution of such orders contingent on another security or where a specific market level is set.



d. Execution Venues During the course of the year we did not add or remove any execution counterparties to or from our approved list.



g. Quality of Execution Our pre-trade liquidity and price discovery ensured our trade execution was of the highest quality. For the 2018 review we have not made use of any RTS 27 venue execution data. We are however currently in the process of considering how to make best use of the RTS 27 tables in order to ascertain which of these tables would be most relevant to our trading activity monitoring requirements. We have been in contact with a third-party data provider who will be able to help us with this assessment.

40




41

Currency derivatives Swaps, forwards, and other currency derivatives

CLASS OF INSTRUMENT Currency derivativesSwaps, forwards, and other currency derivatives


N







ORDERS


ORDERS


ORDERS

FX CONNECT – MTF 96.96 93.11 0.00 0.00 0.00


0.81 2.12 0.00 0.00 0.00


0.76 1.41 0.00 0.00 0.00


0.74 1.69 0.00 0.00 0.00


0.33 0.90 0.00 0.00 0.00

RTS 28

42



The table below shows the Top 5 Investment Firms ranked in terms of trading volume of all orders executed via FX Connect – MTF








24.90 30.64


23.93 29.09


21.89 14.86


12.73 10.90

Standard Chartered Bank (RILFO74KP1CM8P6PCT96)

7.18 6.28


43

a. Relative importance given to the Execution Factors A substantial amount of our execution volume is esoteric in nature and large in scale, hence we are conscious of market footprint whilst sensitive to pricing throughout the life of the transaction, thus considering the full cost of accessing liquidity since trade inception. It would be difficult to suggest speed and likelihood of execution are prioritised ahead of price, however we do have efficient process to enable efficient execution of orders of standard market size. Our price discovery process which includes the review of transaction cost analysis and pre-trade analysis enables us to locate the most efficient counterparty depending on the characteristics of the order(s). Credit support annex (‘CSA’) coverage across mandates at the point of trade does play a role in broker selection. The standard settlement nature means this becomes lower priority with nature of the transaction due to the focus on price, size and cost.



d. Execution Venues During the course of the year we added two additional counterparties to our approved list to for this financial instrument. Both were added in order for us to be able to increase our global foreign exchange derivative execution scope.

We also added an additional execution platform provided by Flextrade to improve the efficiency of our execution.



g. Quality of Execution Our pre-trade liquidity and price discovery ensured our trade execution was of the highest quality. For the 2018 review we have not made use of any RTS 27 venue execution data. We are however currently in the process of considering how to make best use of the RTS 27 tables in order to ascertain which of these tables would be most relevant to our trading activity monitoring requirements. We have been in contact with a t hird-party data provider who will be able to help us with this assessment.

44




45

Structured finance instruments

CLASS OF INSTRUMENT Structured finance instruments


Y







ORDERS


ORDERS


ORDERS


43.91 48.15 0.00 0.00 0.00

Wells Fargo Securities International Limited (BWS7DNS2Z4NPKPNYKL75)

20.60 29.63 0.00 0.00 0.00


17.89 11.11 0.00 0.00 0.00


9.47 7.41 0.00 0.00 0.00


8.13 3.70 0.00 0.00 0.00

RTS 28

46


Article 65(6)


NOTIFICATION IF <1 AVERAGE TRADE PER BUSINESS DAY IN THE PREVIOUS YEAR:

Y







87.81 93.10


12.19 6.90


47








43.38 37.93

Wells Fargo Securities LLC (VYVVCKR63DVZZN70PB21)

23.14 13.79

Bank Of America National Association (B4TYDEB6GKMZO031MB27)

11.65 17.24


5.35 20.69



48


a. Relative importance given to the Execution Factors For the credit linked notes traded within this category price was the most important factor to consider. We are also highly conscious of market impact through the life of a full transaction hence we always consider the full cost of accessing the underlying bond liquidity, particularly impact cost and trade size. As part of our price discovery process we thoroughly assess the speed and likelihood of execution to ensure the optimal execution strategy is implemented with the chosen counterparty.

b. Common Ownerships and Conflicts of Interest We do not execute any securitised derivatives trades with any affiliated execution counterparties of IAM.

c. Venue Arrangements Explicit commission rates per instrument are typically common across all execution counterparties. No commission is charged on securitised derivatives so this is therefore not a consideration in the venue that we use, as our most important execution factor is price, as explained above. In addition, there are no specific arrangements concerning rebates or non-monetary benefits with any current execution venues.

d. Execution Venues The securitised derivatives traded during the period under review were credit linked notes where we utilised one execution counterparty to construct the note and execute the underlying bond.



g. Quality of Execution The best execution process followed by our traders ensures a high quality of execution for securitised derivatives. For the 2018 review we have not made use of any RTS 27 venue execution data. We are however currently in the process of considering how to make best use of the RTS 27 tables in order to ascertain which of these tables would be most relevant to our trading activity monitoring requirements. We have been in contact with a third-party data provider who will be able to help us with this assessment.


49

Equity Derivatives Options and Futures admitted to trading on a trading venue

RTS 28



N







ORDERS


ORDERS


ORDERS


73.74% 60.75% 0.00 0.00 0.00


13.34% 14.21% 0.00 0.00 0.00

Bank Of America National Association (B4TYDEB6GKMZO031MB27)

6.14% 2.88% 0.00 0.00 0.00


5.78% 18.39% 0.00 0.00 0.00


0.96% 2.18% 0.00 0.00 0.00

50


Article 65(6)



N




PROPORTION OF ORDERS EXECUTED AS PERCENTAGE



43.72 35.90


43.02 25.50


13.24 38.37


0.02 0.06


51



CLASS OF INSTRUMENT Currency derivatives Swaps, forwards, and other currency derivatives







38.48 18.39


2.66 4.64

Citigroup Global Markets Limited(XKZZ2JZF41MRHTR1V493)

1.88 2.47

52


a. Relative importance given to the Execution Factors The majority of transactions were reasonably liquid and execution could be achieved on the primary execution venue in all countries, so price was relatively the most important factor followed by counterparty selection to source liquidity. Additionally a reasonable proportion of our futures and options orders are relatively large in size, so great care is taken by the trader over the execution strategy for these trades making size of the order another important factor. In times of increased market volatility, as was seen during the most of 2018, speed of execution can become more of a focus. Where there is relatively low volatility, speed of execution was generally lower in importance except for larger sized trades where we had to be more sensitive to this factor. Costs for futures and options trading and clearing are generally negotiated up front and therefore do not have to be re-negotiated at the point of execution, particularly as most listed futures and options are traded on just one primary venue. All conditions around each trade are clearly communicated to the Trading Team through our order management system and adhered to by the trader.

b. Common Ownerships and Conflicts of Interest We do not execute any listed futures and options trades with any affiliated execution counterparties of IAM. We also do not have any clearing arrangements with any affiliated counterparties.

c. Venue Arrangements Explicit commission rates per instrument are typically common across all execution counterparties. This is therefore not a consideration in the venue that we use, as our most important execution factor is price, as explained above. In addition, there are no specific arrangements concerning rebates or non-monetary benefits with any current execution venues.

d. Execution Venues During the course of the year we did not add any listed futures and options execution counterparties to our approved list. We endeavoured to achieve trade execution on the venue that produced the best overall result which in most cases was the primary market.


f. Retail Clients This is not applicable, as we do not currently trade retail client orders

g. Quality of Execution Our pre-trade liquidity and price discovery ensured our trade execution was of the highest quality. We expect to be able to review transaction cost analysis for this asset class during 2019 utilising data from a third-party global transaction cost analysis provider. For the 2018 review we have not made use of any RTS 27 venue execution data. We are however currently in the process of considering how to make best use of the RTS 27 tables in order to ascertain which of these tables would be most relevant to our trading activity monitoring requirements. We have been in contact with a third-party data provider who will be able to help us with this assessment.


53

Securitized Derivatives Other securitized derivatives

RTS 28

CLASS OF INSTRUMENT Securitized DerivativesOther securitized derivatives


Y







ORDERS


ORDERS


ORDERS


81.81 78.57 0.00 0.00 0.00


54


SECURITIZED DERIVATIVES Securitized Derivatives Other securitized derivatives



TOTAL IN THAT CLASS




18.19 21.43




55

a. Relative importance given to the Execution FactorsThe majority of transactions were reasonably liquid and

execution could be achieved across multiple venues in most countries, so price was relatively the most important factor. Given the fragmented liquidity across many of the global equity markets, careful venue choices had to be made in order to maximise the likelihood of execution particularly where the instrument is less liquid. A reasonable proportion of our equity orders are above a normal tradeable size, so great care is taken by the trader over the execution strategy for these trades. Our traders have the ability to utilise various different execution strategies which include algorithmic, programme, crossing networks and block trading. Execution costs are always carefully considered when selecting execution strategy and assessing which venue offers the lowest execution impact. In times of increased market volatility, as was seen during the most of 2018, speed of execution can become more of a focus. Where there is relatively low volatility, speed of execution was generally lower in importance except for larger sized trades where we had to be more sensitive to this factor. Finally any conditions around each trade are always clearly communicated to the Trading Team through our order management system and adhered to by the trader.

b. Common Ownerships and Conflicts of Interest Investec Securities is a part of the Investec Group, together with IAM, and provides us with essential liquidity access to certain equity markets and therefore forms a natural part of our best execution process. We do not consider this a conflict of interest and they are subject to the same Best Execution rules as all other venues.

c. Venue Arrangements All commission Sharing Arrangements, as referenced in last year’s Best Execution Review, were terminated by Investec Asset Management Limited London at the end of 2017. As a result of this all execution counterparties and venues were changed to an execution-only commission rate structure from the beginning of 2018. Also at the beginning of 2018 we undertook our annual commission rate review against a comprehensive third-party global consultation survey in order to ensure our rates across all trade-types remained fair and competitive.In addition, there are no specific arrangements concerning rebates or non-monetary benefits with any current execution venues.

d. Execution Venues During the course of the year we added two equity execution counterparties to our approved list. One in order to improve our access to liquidity in the local Dutch market and another in order to improve our access to liquidity in the local Japanese market with a particular focus on their block execution product. One execution counterparty was removed from our approved list due to a deterioration in our liquidity access requirement from them. This did not impact our best execution process. We also ensured that the execution counterparty chosen was able to access all the required execution venues in order to ensure the most efficient price discovery.

56



f. Retail Clients This is not applicable, as we do not currently execute retail client orders.

g. Quality of Execution Our pre-trade liquidity and price discovery ensured our trade execution was of the highest quality. Equity transaction cost analysis was performed using Bloomberg’s BTCA product. We utilise BTCA in various different ways which include a daily exception process as well as monthly and quarterly reports that analyse our trading data in several different ways. For the 2018 review we have not made use of any RTS 27 venue execution data. We are however currently in the process of considering how to make best use of the RTS 27 tables in order to ascertain which of these tables would be most relevant to our trading activity monitoring requirements. We have been in contact with a third-party data provider who will be able to help us with this assessment.


57

Commodities derivatives and emission allowances Derivatives Options and Futures admitted to trading on a trading venue

RTS 28

CLASS OF INSTRUMENT Commodities DerivativesOptions and Futures admitted to trading on a trading venue


Y







ORDERS


ORDERS


ORDERS


70.88 50.43 0.00 0.00 0.00

J.P. Morgan Securities PLC(K6Q0W1PS1L1O4IQL9C32)

20.63 36.52 0.00 0.00 0.00


8.49 13.04 0.00 0.00 0.00

58


CLASS OF INSTRUMENT Commodities derivatives and emission allowances DerivativesOptions and Futures admitted to trading on a trading venue


Y



TOTAL IN THAT CLASS



Goldman Sachs International(W22LROWP2IHZNBB6K528)

91.10 83.78


8.90 16.22

Article 65(6)


59


execution could be achieved on the primary execution venue in all countries, so price was relatively the most important factor.

Given the majority of listed futures and options are traded on one primary execution venue the choice of execution counterparty played an important part in our selection process to increase the chances of finding a range of liquidity.

A reasonable proportion of our futures and options orders are above a normal tradeable size, so great care is taken by the trader over the execution strategy for these trades and size is an important execution factor.

In times of increased market volatility, as was seen during the most of 2018, speed of execution can become more of a focus. Where there is relatively low volatility, speed of execution was generally lower in importance except for larger sized trades where we had to be more sensitive to this factor.

Implicit costs were carefully considered when choosing an execution strategy, particularly when executing a relatively large order. Explicit costs for futures and options trading and clearing are generally negotiated up front and therefore do not have to be re-negotiated at the point of execution.

All conditions around each trade are always clearly communicated to the Trading Team through our order management system and adhered to by the trader.

b. Common Ownerships and Conflicts of Interest We do not execute any listed futures and options trades with any affiliated execution counterparties of IAM. We also do not have any clearing arrangements with any affiliated counterparties.


d. Execution Venues During the course of the year we did not add any listed futures and options execution counterparties to our approved list. We endeavoured to achieve trade execution on the venue that produced the best overall result which in most cases was the primary market.



60




61

Contracts for difference

RTS 28

CLASS OF INSTRUMENT Contracts for difference


N







ORDERS


ORDERS


ORDERS


62.22 23.83 0.00 0.00 0.00

UBS AG(BFM8T61CT2L1QCEMIK50)

22.64 75.39 0.00 0.00 0.00

Deutsche Bank Aktiengesellschaft (7LTWFZYICNSX8D621K86)

15.14 0.78 0.00 0.00 0.00

62



execution could be achieved across multiple venues in most countries, so price was relatively the most important factor.

Given the fragmented liquidity across many of the global equity markets upon which our Contracts for Difference (CFD) are executed, careful venue choices had to be made in order to maximise the likelihood of execution. In some countries, due to there not being a give-up to Prime Broker facility, our execution counterparty choice is limited. Our prime Broker choice was therefore very careful in order to ensure likelihood of execution on all required execution venues.

The majority of CFD transactions during 2018 were of a relative small size but great care had still to be taken over counterparty choice in order to ensure access to all required execution venues.


Implicit costs were carefully considered when choosing execution strategy, and which venues may offer the lowest execution impact. Explicit costs for all CFD trades were typically common within each country.

All conditions around each trade are always clearly communicated to the Trading Team through our order management system and adhered to by the trader

b. Common Ownerships and Conflicts of Interest We do not execute any CFD trades with any affiliated execution counterparties of IAM.


d. Execution Venues During the course of the year we did not add or remove any CFD execution counterparties to or from our approved list. We also ensured that the execution counterparty chosen was able to access all the required execution venues in order to ensure the most efficient price discovery.


f. Retail Clients This is not applicable, as the Firm does not currently trade retail client orders.



63

Exchange traded products (Exchange traded funds, exchange traded notes and exchange traded commodities)

RTS 28

CLASS OF INSTRUMENT Exchange traded productsExchange traded funds, exchange traded notes and exchange traded commodities


Y







ORDERS


ORDERS


ORDERS

Jane Street Financial LTD (549300ZHEHX8M31RP142)

53.68 45.07 0.00 0.00 0.00

Credit Suisse Securities (Europe) Limited(DL6FFRRLF74S01HE2M14)

25.91 18.31 0.00 0.00 0.00


11.52 19.01 0.00 0.00 0.00


6.91 8.45 0.00 0.00 0.00

Societe Generale SA(O2RNE8IBXP4R0TD8PU41)

1.68 2.11 0.00 0.00 0.00

64


CLASS OF INSTRUMENT Exchange traded productsExchange traded funds, exchange traded notes and exchange traded commodities


N



TOTAL IN THAT CLASS



Jane Street Financial Ltd(549300ZHEHX8M31RP142)

29.85 17.28

Investment Technology Group Limited(213800EEC95PRUCEUP63)

15.46 18.41

Virtu Financial Ireland Limited(549300XG5LFGN1IGYC71)

15.07 14.16

Flow Traders B.V.(549300CLJI9XDH12XV51)

15.00 13.31

Credit Suisse sSecurities (Europe) Limited(DL6FFRRLF74S01HE2M14)

8.88 5.38

Article 65(6)


65

a. Relative importance given to the Execution Factors The majority of transactions were reasonably liquid and

execution could be achieved either through an efficient Request for Quote (RFQ) price discovery process or executing on an alternative venue, so price was relatively the most important factor.

Given the underlying structure of Exchange Traded Products (ETP) the execution venue has to be carefully chosen. The primary source of price discovery and liquidity for the majority of the larger trades was via an RFQ process. Alternatively, efficient execution could also be sought in some cases on the primary listing exchange.

A careful choice was made over venue choice in order to maximise the likelihood of execution.

A reasonable proportion of our ETP orders are above a normal tradeable size, so great care is taken by the trader over the execution strategy for these trades as described above.


Implicit costs were carefully considered when choosing execution strategy, and which venues may offer the lowest execution impact. Explicit costs were considered when we were presented with a cheaper venue for the same result.

All conditions around each trade are always clearly communicated to the Trading Team through our order management system and adhered to by the trader.

b. Common Ownerships and Conflicts of Interest We do not execute any ETP trades with any affiliated execution

counterparties of IAM.

c. Venue ArrangementsAll commission Sharing Arrangements, as referenced in last

year’s Best Execution Review, were terminated by Investec Asset Management Limited London at the end of 2017. As a result of this all execution counterparties and venues were changed to an execution-only commission rate structure from the beginning of 2018.

Also at the beginning of 2018 we undertook our annual commission rate review against a comprehensive third-party global consultation survey in order to ensure our rates across all trade-types remained fair and competitive.

In addition, there are no specific arrangements concerning rebates or non-monetary benefits with any current execution venues.

d. Execution VenuesDuring the course of the year we did not add or remove any ETP

execution counterparties to or from our approved list.

We also ensured that the execution counterparty chosen was able to access all the required execution venues in order to ensure the most efficient price discovery.

e. Client CategoriesAll clients were treated in exactly the same way by our

independent Trading Desk in accordance with our Execution Policy.

f. Retail ClientsThis is not applicable, as we do not currently trade retail

client orders.

g. Quality of ExecutionOur pre-trade liquidity and price discovery ensured our

trade execution was of the highest quality.

Exchange Traded Product transaction cost analysis was performed using Bloomberg’s BTCA product. We utilise BTCA in various different ways which include a daily exception process as well as monthly and quarterly reports that analyse our trading data in several different ways.

For the 2018 review we have not made use of any RTS 27 venue execution data. We are however currently in the process of considering how to make best use of the RTS 27 tables in order to ascertain which of these tables would be most relevant to our trading activity monitoring requirements. We have been in contact with a third-party data provider who will be able to help us with this assessment.

66




67

RTS 28

CLASS OF INSTRUMENT Other instruments


Y







ORDERS


ORDERS


ORDERS

UBS AG(BFM8T61CT2L1QCEMIK50)

58.56 12.77 0.00 0.00 0.00


25.21 40.43 0.00 0.00 0.00

Morgan Stanley & Co.International PLC(4PQUHN3JPFGFNF3BB653)

8.42 19.15 0.00 0.00 0.00

J.P Morgan Securities PLC(K6Q0W1PS1L1O4IQL9C32)

5.51 21.28 0.00 0.00 0.00


1.19 2.13 0.00 0.00 0.00

Other instruments

The majority of instruments in this category are non-EEA equities where no tick size data was available.

68


Article 65(6)

CLASS OF INSTRUMENT Other Instruments


N







29.27 28.41


14.77 12.15


9.85 10.45

CLSA (UK) (213800VZMAGVIU2IJA72)

6.10 4.51

China International Capital Corporation Hong Kong Securities Limited (529900A2OXHI3I5TPV90)

6.01 3.91


69



CLASS OF INSTRUMENT Other Instruments






The Hong Kong Shanghai Banking Corporation Limited(2HI3YI5320L3RW6NJ957)

5.52 1.80


5.29 6.08

China International Capital Corporation Hong Kong Securities Limited(529900A2OXHI3I5TPV90)

3.99 1.61


2.76 2.94


2.17 2.34

70


a. Relative importance given to the Execution FactorsWe remain highly conscious of market impact through the

life of a full transaction hence we always consider the full cost of accessing liquidity, particularly implicit costs given the size of each order and achievable price.

As part of our price discovery process we thoroughly assess the speed and likelihood of execution to ensure the optimal counterparty is selected.


c. Venue Arrangements There are no specific arrangements concerning rebates or non-monetary benefits with any current.

d. Execution Venues During the course of the year we did not add any execution counterparties for these assets to our approved list.



g. Quality of Execution The best execution process followed by our traders ensures a high quality of execution for all assets traded. For the 2018 review we have not made use of any RTS 27 venue execution data. We are however currently in the process of considering how to make best use of the RTS 27 tables in order to ascertain which of these tables would be most relevant to our trading activity monitoring requirements. We have been in contact with a third-party data provider who will be able to help us with this assessment.

P20

190

424

_778

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C

www.investecassetmanagement.com

AUSTRALIA

Level 23, The Chifley Tower

2 Chifley Square

Sydney, NSW 2000

Telephone: +61 2 9293 6257

[email protected]

BOTSWANA

Plot 64511, Unit 5

Fairgrounds, Gaborone

Telephone: +267 318 0112

[email protected]

CHANNEL ISLANDS

PO Box 250, St Peter Port

Guernsey, GY1 3QH

Telephone: +44 (0)1481 710 404

[email protected]

GERMANY

Bockenheimer Landstraße 23

60325 Frankfurt am Main

Telephone: +49 (0)69 7158 5900

[email protected]

HONG KONG

Suites 3609-3614, 36/F Two International Finance Centre

8 Finance Street, Central

Telephone: +852 2861 6888

[email protected]

Outside the US, telephone calls will be recorded for training, monitoring and regulatory purposes. For more details please visit www.investecassetmanagement.com/contactus.

SWEDEN

Grev Turegatan 3,

114 46, Stockholm

Telephone: +46 709 550 449

[email protected]

SWITZERLAND

Seefeldstrasse 69

8008 Zurich

Telephone: +41 44 262 00 44

[email protected]

UNITED KINGDOM

Woolgate Exchange

25 Basinghall Street

London, EC2V 5HA

Telephone: +44 (0)20 7597 [email protected]

UNITED STATES

666 5th Avenue, 37th Floor

New York, NY10103

US Toll Free: +1 800 434 5623

[email protected]

ITALY

Palazzo Toschi Corneliani Corso Venezia 44

20121, Milan

Telephone: +39 02 3658 1590

[email protected]

LUXEMBOURG

2-4, avenue Marie-Thérèse

L-2132 Luxembourg

Telephone: +352 28 12 77 20

[email protected]

NAMIBIA

100 Robert Mugabe Avenue

Office 1, Ground Floor

Heritage Square Building, Windhoek

Telephone: +264 (61) 389 500

[email protected]

SINGAPORE

25 Duxton Hill #03-01

Singapore 089608

Telephone: +65 6653 5550

[email protected]

SOUTH AFRICA

36 Hans Strijdom Avenue

Foreshore, Cape Town 8001

Telephone: +27 (0)21 416 2000

[email protected]

Important information

Nothing herein should be construed as an offer to enter into any contract, investment advice, a recommendation of any kind, a solicitation of clients, or an offer to invest in any particular fund, product, investment vehicle or derivative. Investec’s internal data may not be audited. © 2019 Investec Asset Management. All rights reserved. Issued by Investec Asset Management.

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