Introduction
IG Asia Private Limited (‘IG’, ‘we’, ‘our’ or ‘us’) is committed to treating our clients (‘you’, ‘your’, ‘yours’) honestly, transacting with you in a professional and transparent manner, and to act in your best interests whether opening or closing Transactions entered into between us and you. Our Transaction trading service and definition of related terms used in this document are detailed in the Margin Trading Customer Agreement (“Customer Agreement”).
More specifically, when we enter into a Transaction with you we will endeavour to provide you with ‘best execution’. Best execution means that we will endeavour to take all reasonable steps to obtain the best possible result for you when executing an order with you taking into account various ‘execution criteria’.
This document provides a summary of our Order Execution Policy which came into force on 1st March 2016 and which applies to IG’s execution of orders in all types of Instruments
This disclosure statement forms part of our terms of business. Therefore, by agreeing to the terms of the applicable Customer Agreement, you are also confirming your understanding to the terms of our Order Execution Policy, as summarised in this document.
Order Handling and Trading Details
Information regarding how we handle orders can be found within the Customer Agreement. Term 12.
Full details of the trading conditions for types of Transactions and products available through an account with us are available through the Product Details section on our website and within our trading platform.
How do we endeavour to give you Best Execution?
When you enter into a Transaction with us, we will take all reasonable steps to achieve the best possible result for you by executing those Transactions according to our order execution policy and subject to any specific instructions received from you. Our order execution policy comprises a set of procedures that are designed to obtain the best possible execution result for you subject to and taking into account (a) the nature of your Transactions, (b) the priorities you have identified to us in relation to entering into those Transactions, and (c) the practices relating to the market in question, with the aim of producing a result which provides, in our view, the best balance across a range of sometimes conflicting factors.
What we consider in determining whether we obtain Best Execution for you
We have determined, that the order of importance of the execution factors is the same across all IG products and markets; that for all clients the best possible result will be determined in terms of the total consideration, representing the price of the Instrument and the costs related to execution.
In determining the importance given to the other factors (speed, likelihood of execution and settlement, the size and nature of the order) we will exercise our discretion in assessing the criteria that we need to take into account to provide clients with the best result. The relative importance of these criteria will be judged in line with our commercial experience and with reference to market conditions including the need for timely execution, availability of price improvement, the liquidity of the market and size of your order (which may make it difficult to execute an order) and the potential impact on total consideration. In certain circumstances therefore IG may determine that the speed, and likelihood of execution and settlement for example may take precedence over immediate price and cost factors if they are instrumental in delivering the best possible result. This may be the case for example for large client orders in illiquid shares or when a stop has been triggered.
In relation to Transactions
In relation to Transactions that you enter into with us, we act as principal and not as agent on your behalf and we therefore act as the sole execution venue for the execution of your Transactions. This means that you will be dealing with us and not within the underlying market.
The main way in which we will ensure that you obtain best execution is by ensuring that in the calculation of our bid/offer prices, we pay due regard to the market price for the underlying reference product to which your Transaction relates. We have access to a number of different data sources in order to ascertain the market price, which is our objective view of the bids and offers available to arms’ length traders.
In relation to some Instruments, at the time at which you give us an order there may be no functioning or open market or exchange on which the reference product is traded. In such cases, we set out to determine a fair underlying two-way price based on a number of factors such as price movements on associated markets, other market influences and client trading flow.
Execution venues
Whilst we act as principal in respect of your orders, we assess the execution venues available to us and upon which we place significant reliance to obtain on a consistent basis the best possible result for the execution of your orders. These venues are subject to change as we see fit and shall include amongst others regulated markets, multilateral trading facilities, market makers and other liquidity providers. A non-exhaustive list is available on our website and may be updated from time to time.
IG Order flow for electronic OTC trades
IG’s order flow logic is designed to maximise the chance of your order being accepted, while keeping you in control of the most important execution factor – price.
IG will process 100%1 of our client’s active2 trades without any manual intervention. Trades up to a certain size will be auto-accepted without referencing our internal exposure and without referencing liquidity in the underlying markets. Trades above a certain size will generally be auto-accepted if they do not take IG over our internal exposure limits. If these large trades do take us over exposure limits, part, or all, of the order will be worked in the market and the fill level passed to the client.
You have the ability to set an aggressive limit price (‘points through current’) and to accept partial fills – both of these features are designed to increase the likelihood of execution. IG will only ever partially fill an order as an alternative to an outright rejection. Any remaining orders from a partially filled order will be deleted.
Aggregation
Aggregation means that we may combine your instruction to deal, (for example, an instruction to close a Transaction in relation to a Non-guaranteed Stop) with those of other clients of ours, or our own orders for the purposes of hedging other client activity, for execution as a single order. We will pursue this policy where we reasonably believe that it is in the overall best interests of our clients to do so. This means that whilst it is unlikely to work overall to your disadvantage, on occasions, aggregation may result in you obtaining a less favourable price in relation to a particular order once your instruction to close a Transaction.
The reason IG may sometimes aggregate orders is that it reduces the time it takes to get all orders to market. For example execution of many small orders one at a time could also ‘signal’ to the market that this pattern may continue which may result in IG client’s getting worse fills than if IG sent one, single order to market. This may be particularly important in illiquid, quote driven or fast moving markets.
Order Allocation Policy
Where an aggregated order is partially filled in the market, allocation to clients will be distributed proportionately across all clients. In all instances, the allocation will be undertaken on a fair and reasonable basis and will not be undertaken in a way which gives unfair precedence to any particular person.
Whilst not usually the case, in the event that your order is aggregated with orders arising from IG’s hedging activities we shall allocate your trades in priority to ours. If however, we are able to demonstrate on reasonable grounds that the aggregation of your order with ours allowed the execution on more advantageous terms, or indeed at all, then we may allocate the trades proportionally.
On rare occasions and only where we believe that it will not be detrimental to you, we may re-allocate your orders. We consider that in this context detriment would be caused if as an effect if the reallocation, unfair precedence is given to IG or to any particular client.
Specific Instructions
Where you give us specific instructions, including but not limited to (a) specifying a venue where you wish for a Transaction to be executed, (b) specifying the price of a Transaction with us (for example, through the use of a direct dealing platform such as L2), (c) specifying the price at which a Transaction is to be closed if the market moves against you (eg a Limited Risk Transaction), or (d) for us to ‘work’ an order, then those instructions take precedence over other aspects of our policy. IG will continue to apply the policy for the aspects of an order not affected by the specific instructions.
A transaction for which a Limited Risk Stop has been set will be closed at the level of the Stop if the price is reached. However, if a Non-guaranteed Stop has been set, the price attained may be less favourable than the level at which you set the Non-guaranteed Stop, or at which it is triggered.
Monitoring and Review
IG will monitor the effectiveness of our order execution policy. We will assess on a regular basis whether the price feed and hedging venues relied on in pricing our products allow us to achieve best execution on a consistent basis or whether we need to make changes to our execution arrangements. We will also review our order execution arrangements and order execution policies regularly whenever a material change occurs either in respect of one of our chosen pricing venues or otherwise that affects our ability to continue to achieve best execution. Should there be any material changes to our order execution arrangements or order execution policy, we will notify you of such change.
We do not owe you a fiduciary duty
Our endeavour to provide you with ‘best execution’ does not mean that we owe you any fiduciary responsibilities over and above the specific regulatory obligations placed upon us or as may be otherwise contracted between us.
1 Rounded to 2 dp – data is all trades in Jan 2016
2 An ‘active’ trade is where our clients give us an instruction to execute an order immediately. As opposed to ‘passive’ orders where clients give us an instruction to execute an order later, subject to the price moving to a specific level.
