Introduction

Capital Assets Limited has defined and developed an order execution policy designed to ensure that client transactions are executed correctly in accordance with the requirements of the rules on Order Handling and Best Execution, as required by The Nigerian Stock Exchange. The purpose of this document is to explain this policy to all clients of Capital Assets Limited.

Best Execution

Capital Assets Limited is required when executing Orders on behalf of clients to take all sufficient steps to obtain the best possible result for its clients on a consistent basis, taking into account the execution factors: price, costs, speed, likelihood of execution and settlement, size, nature, fill rate, price improvement, market impact or any other consideration relevant to the execution of an order. This requirement also applies when the Capital Assets receives and transmits client Orders and is known as the Best Execution obligation (“Best Execution”).

Scope

This Best Execution Policy covers all deals and transactions on financial instruments that Capital Assets Limited has specific instruction to deal on behalf of our clients directly at an execution venue as well as where we place and transmit an order to other entities for execution.

Our best execution obligation applies where we execute orders to buy or sell Equity Market Products (“Orders”) on behalf of clients. “Equity Market Products” include:

  • Equities (including exchange traded funds, closed ended funds)
  • Collective Investment Schemes (including Unit Trusts, Mutual Funds, REITs)

Best Execution Factors

In order to obtain the best possible result when executing, placing or transmitting Orders on behalf of a client, Capital Assets Limited will take into account the factors listed below when determining its execution strategy. The order of relative priority and the variety of criteria that are taken into account in determining the appropriate consideration will be made based on a transaction-by-transaction basis.

Factors that Capital Assets will consider are:

  • Price: price at which the financial instrument is executed, excluding any internal and external costs;
  • Costs: include costs such as brokerage fees, regulatory fees, taxes;
  • Speed: time it takes to execute a client Order;
  • Likelihood of execution and settlement: the likelihood the Firm will be able to complete the client Order;
  • Size: the size of the Order executed for a client accounting for how the size affects the price of execution;
  • Nature of the transaction: how the particular characteristics of a client Order can affect how best execution is received;
  • Fill rate;
  • Price improvement;
  • Market impact;
  • any other consideration relevant to the execution of an order

It is assumed that the most important execution factor for a client is usually the price at which the relevant financial instrument is executed. However, there may be circumstances where the primary execution factors may vary and price is no longer the most prominent execution factors.

Specific Instructions from Clients

Where a client gives Capital Assets specific instruction(s) in relation to the handling and execution of an entire Order or particular aspect(s) of the Order (including executing at a particular price or time or the use of a specific strategy), Capital Assets will execute the Order following the specific instruction(s).

It is important to note that any specific instruction(s) provided by the client may therefore prevent Capital Assets from taking all sufficient steps it has designed and implemented to obtain the best possible result for the execution of those Orders in respect of the elements covered by the client instruction(s).

Provisions relating to Capas E-Trade

Where Orders are executed by the client themselves using Capital Assets Online Trading Platform, Capas E-Trade, the client will be providing specific instructions for execution factors and the Best Execution obligations will be fulfilled by the orders being executed based on those instructions.

Best Execution Criteria

When executing a client’s order, Capital Assets Limited takes into account the following criteria for determining the relative importance of the execution factors:

  • The characteristics of the client, including the categorization of the client as retail or institutional;
  • .The characteristics of the client order i.e. Good Till Month (GTM), Day Order, Good Till Open (GTO), Fill or Kill (FOK), All or None
  • The characteristics of securities that are the subject of that order, including expected return, risk, liquidity, and volatility.

It may not always be possible to quantify the relative contribution of each of the factors and criteria above in quoting prices ahead of execution as these can vary from the time of quoting to the time of execution as well as from transaction to transaction.

Execution Venues

All Orders in respect of equity and fixed income products in the secondary market are directed to the following Order Books of these licensed exchanges:

  • The Nigeria Stock Exchange
  • NASD OTC-Exchange

 Execution Method

  • Trades are normally executed inside official market trading hours between 9.30am and 14.30pm, Monday to Friday.
  • All trades executed are transacted primarily on an agency basis.
  • The client is required to specify the nature of the order mandated which will determine the manner in which the client order is executed.
  • Price orders are executed in line with the indicated price.
  • Market orders are executed in line with overall market volume and average price before the expiration date of the order except otherwise stated by the client.
  • All trade orders should contain:
  1. Order Type: Buy/Sell Mandate
  2. Quantity
  3. Price Limit
  4. Date Limit/Expiration date

Where no price limit is stated, orders will be executed at the best available market price. Where no date limit is stated, orders will be valid for 10 days.

Cross Deal Transactions (Negotiated Deal)

Where there is a specific instruction from a client or an account holder of a security to transmit a whole or part of his holdings to another client within the company, either for normal or nominal transfers, such order is executed at the ruling market price on the execution date.

Order Handling

General Principle

Capital Assets Limited will provide for the prompt, fair and expeditious execution of order, relative to other orders and/or to the trading interests of the company. This must allow for the execution of otherwise comparable orders in accordance with the time of their reception by the Capital Assets Limited.

Capital Assets Limited ensures the following in executing the orders received from its clients:

  1. Client orders are received in writing or taken via mail, pre-approved email, SMS or telephone. Client may come to the office to fill out a mandate form.
  2. Orders are executed as promptly as possible and subject to any client instructions.
  3. Orders are executed the day it is received by Capital Assets Limited provided that the order is received within the timeframe that the Exchange is open for trading (official market trading hours is between 9.30am and 2.30pm, Monday to Friday). Where orders are not executed on the same day, a record of the reason will be documented and the order is retained for execution the following day.
  4. Executed orders are promptly and accurately recorded and allocated;
  5. Comparable orders are otherwise executed sequentially and promptly unless the characteristics of the order or prevailing market conditions make this impractical, or the interests of the client require otherwise.
  6. Order received through multiple and different media will be handled as practically possible with the aim for sequential treatment wherever possible.

Aggregation and Allocation of Client Orders

Capital Assets Limited will not aggregate a client Order with that of another client.

Aggregation and Allocation of Transactions for Own Account

Capital Assets Limited will not aggregate a client Order with a trade for its own account i.e proprietary trade.

Furthermore, where Capital Assets Limited is responsible for overseeing or arranging the settlement of an executed Order, it will take all reasonable steps to ensure that any client financial instruments or client funds received in the settlement of the executed Order are promptly and correctly delivered to the account of the appropriate client.

Capital Assets Limited will not misuse information relating to pending Orders and will take all reasonable steps to prevent the misuse of information by any relevant persons.

Monitoring and Review

Capital Assets Limited will monitor the effectiveness of its execution arrangements and policy in order to identify and where appropriate correct, any deficiencies. The company will assess on a regular basis whether the execution arrangement included in this order execution policy provide the best possible result for its clients or whether there is a need to make changes to the execution arrangements.