Order Execution Policy
Introduction
This Order Execution Policy (the “Policy”) sets out Banjaran Asset Management Pte Ltd’s (BAM) approach to order execution and the placement of orders (“Policy”) including our responsibilities to deliver Best Execution for our customers.
Purpose and Scope
This Policy applies where BAM executes or places orders in capital market products on behalf of Accredited and Institutional customers through an approved execution venue or counterparty by BAM’s Investment team.
Best Execution
“Best Execution” is defined under paragraph 3.1 of the Notice to mean placing or executing customers’ orders on the best available terms or for comparable customers’ orders, in accordance with the time of receipt of such orders. This is applicable to all capital markets products that fall within the definition of securities, units in a collective investment scheme (“CIS”), derivatives contracts or spot foreign exchange contracts for the purposes of leveraged foreign exchange trading. Spot foreign exchange contracts that are not caught within the ambit of the Securities and Futures Act (Cap. 289) will not be subject to the Best Execution requirements.
For the purposes of this Policy, BAM has defined ‘Execution Venues’ as:
Regulated Markets, e.g. Singapore Stock Exchange
Market Maker or Agency Broker, e.g. broker or other liquidity provider
Multilateral Trading Facility (“MTF”), e.g. electronic trading platform such as Liquidnet, Tradeweb, FX Connect or FXALL. Outside Europe, such venues may be defined/approved differently e.g. In the US, Liquidnet is defined/approved as an Alternative Trading System (“ATSMultilateral Trading Facility (“MTF”), e.g. electronic trading platform such as Liquidnet, Tradeweb, FX Connect or FXALL. Outside Europe, such venues may be defined/approved differently e.g. In the US, Liquidnet is defined/approved as an Alternative Trading System (“ATS”)
Systematic Internaliser (“SI”), e.g. investment bank
Swap Execution Facility (“SEF”), e.g. Tradeweb SEF, Bloomberg SEF, FXALL SEF
Organised Trading Facility (“OTF”)”
Broker Selection
BAM will only place an order to purchase or sell a security for a client through a broker-dealer, counterparty or agent that is properly registered or is exempt from registration with the local authorities. Most of the funds/discretionary portfolio have one designated broker.
When a fund manager decides to appoint a new broker, the fund manager will perform due diligence on the broker. If the broker is approved, the trustee will engage the broker to open a brokerage account.
For discretionary portfolio, the fund manager will only act as an investment manager with a Limited Power of Attorney over a client’s portfolio that is maintained with an approved broker or counterparty. In such an instance, the broker/counterparty is selected by the client.
The fund manager should institute proper procedures for monitoring and controlling the exposure and volume of business to each broker. The fund manager will consider the credit standing of the broker in addition to the quality of market intelligence, research and execution capability being provided.
Due to the fact that BAM’s trading scale is not huge, we rely mainly on a few brokers namely; CGS and UOB Kay Hian for trade execution.
Order Handling
BAM will ensure the prompt, fair and expeditious execution and allocation of customer orders relative to other customer orders. BAM does not trade for its own account.
Order Execution
MAS requires BAM to take sufficient steps to obtain the best possible result for its customers. This overarching requirement is referred to, in this Policy, as our duty to deliver “Best Execution”. Under the Guidelines, this obligation states that BAM “shall establish and implement Best Execution policies and procedures taking into account a range of factors. The factors may include price, costs, speed, likelihood of execution and settlement, size and nature of the order, or any other considerations relevant to the placement and/or execution of the order.”
When executing, or arranging execution of orders, BAM will take all sufficient steps to obtain the best possible result, taking into account the characteristics of the customer, the execution factors (elaborated below), and other relevant criteria (also elaborated below).
Accredited/Institutional customers (“AI/II”)
In order to achieve Best Execution on behalf of AI/II, BAM will execute an order having assessed the following execution factors:
Price
Cost
Speed
Likelihood of execution and settlement
Size
Liquidity
Generally, BAM will regard price, size, and liquidity as the most significant factors in the execution of a customer order. In taking all sufficient steps, the fund manager will use their commercial judgement and experience in light of available market information to achieve Best Execution. This does not mean achieving the best price for every customer order, but achieving the best possible result that can reasonably be expected given the resources available to BAM. The relative importance of the execution factors will therefore vary considerably between different orders and capital market products. BAM will also consider an executing counterparty’s proven ability to execute a desired trading strategy competently and to manage risk appropriately, adhering to regulatory requirements when selecting an execution counterparty.
Notwithstanding the above, the following execution factors will apply specifically to Equities or Equity-Like Products:
Liquid Equities– Price and cost will normally be the defining factors but other reasons may mean, for example, that certainty of completion takes priority.
Illiquid Equities – Price, size of order and cost will normally be the determining factors but other reasons may mean, for example, that certainty of completion takes priority.
When executing orders, the fund manager would check the fairness of the price proposed to the customer, for example, by gathering market data used in the estimation of the price of such product and, where possible, by comparing with similar or comparable products.
Equity and Equity-Like Products
The fund manager may route the order through any of the Execution Venues listed in this Policy.
BAM will arrange access to all regulated Execution Venues it assesses as appropriate for a fund manager.
Currently, CGS is our preferred broker for both the global equity trading as it has favourable commission rates, research, execution and promptness in meeting our investment needs.
Private equity refers to capital investment made into companies that are not publicly traded. Investment may be in the form of equity, loans, SAFE (Simple Agreement for Future Equity) or convertible instruments. Transaction process involves assessing the deal origination culminating to a deal pipeline (where applicable), structure of the deal, credibility and track record of management of the underlying company, industry analysis, historical financials and forecasts, and valuation analysis (where applicable). An investment memorandum/paper will be prepared to support any investment that is to be made. After the investment committee/fund manager signs off to pursue an investment, negotiations will follow suit leading to either a term sheet or draft subscription agreement.
Typically, in venture capital transactions, investments are done via a consortium of investors where there would be a lead investor. The lead investor typically should be the largest single contributor in that consortium. Once the terms are agreed with inputs from professional advisers which may include financial advisors, accountants, lawyers and consultants, the interested parties would seek to complete all the legal documentation.
Fixed Income
The fund managers would check with agency brokers directly to achieve Best Execution. The fund manager will check Bloomberg for the last traded price and contact a single counterparty or agency broker to request competitive quotes in more liquid sectors of the market.
After obtaining a price which is satisfactory to the fund manager, the fund manager will then route the orders for execution to the counterparty or agency broker. Currently, CGS is our preferred broker for global bond trading as it has favourable commission rates, research, execution and promptness in meeting our investment needs.
Derivatives (Exchange Traded, Exchange Cleared and Over the Counter)
Orders may be routed by fund managers through Regulated Markets, MTFs, OTFs, SEFs, SIs and other liquidity providers. However, under certain circumstances, for example where the size of the order or the liquidity profile of the issue is such that placing an order in competition may result in information leakage, the fund manager may choose to place an order with a single counterparty for execution.
In selecting the Execution Venue(s), in addition to the factors and criteria set out elsewhere in this Policy, the fund manager will have regard to the relevant terms of any International Swaps and Derivatives Association Master Agreement (“ISDA”), Credit Support Annex (“CSA”) and Cleared Derivatives Execution Agreements (“CDEA”) and Global Master Repurchase Agreement (“GMRA”) in place for each customer.
Collective Investment Schemes
In general, secondary markets for units or shares in Collective Investment Schemes (“CIS”) do not exist and therefore BAM places its order or instructs a third party on its behalf to deal directly with the primary market dealing team of the fund provider concerned (generally known as the transfer agent). Transactions in units or shares in CIS are generally transacted at the prevailing net asset value (“NAV”) of the CIS.
Customer Specific Instructions
Where a customer gives a specific instruction or restriction as to the execution of an order, the relevant part of that order will be executed in line with those instructions. In acting on a specific instruction, it would be regarded as having satisfied Best Execution obligations only in respect of the part or aspect of the order to which the customer’s instructions relates.
Cross Trade
Cross Trading is the purchase or sale of securities between various client accounts for the benefit of the accounts involved in the transactions. BAM does not undertake cross trading for its client accounts.
Oversight and Control
It is the responsibility of all fund managers involved in raising and executing orders to understand BAM’s obligations as they relate to Best Execution under the Notice and the Guidelines.
BAM’s Investment, Operations, and Compliance teams all have a role to play in overseeing this Policy.
This Policy has been approved by BAM’s Board of Directors.
Any material change that affects our ability to obtain the best possible result for the execution of customer orders will be communicated to customers through BAM’s website.
Glossary
Customers means customers or funds for which BAM is providing investment management services.
Counterparties means any entity which effects a transaction, executes orders or passes or places orders for execution and includes, but is not limited to, brokers, dealers, market makers, executing brokers and clearing brokers (whether acting as principal or agent).
Accredited/Institutional customers means as defined under the Securities and Futures Act (Cap. 289).
Multilateral Trading Facility (“MTF”) means a multilateral system, operated by an investment firm or a market operator, which brings together multiple third-party buying and selling interests in financial instruments - in the system and in accordance with non-discretionary rules - in a way that results in a contract.
Swap Execution Facility (“SEF”) means a Commodity Futures Trading Commission regulated facility, trading system or platform in which multiple participants have the ability to execute or trade swaps by accepting bids and offers made by multiple participants in the facility.
Systematic Internaliser (“SI”) means a firm that executes orders from its Clients against its own book or against orders from other Clients. MiFID II will treat Systematic Internalisers as mini-exchanges; hence, for example, they will be subject to pre-trade and post-trade transparency requirements.
Organised Trading Facility (“OTF”) means a multilateral system, which is not a Regulated Market or MTF and in which multiple third party buying and selling interests in bonds, structured finance products, emissions allowances or derivatives are able to interact in the system in a way which results in a contract.
Last updated on 27 June 2023