GRM European best execution policy

1. Introduction 

Global Reach Markets BV (“GRM”) is authorised by the Netherlands Authority Financial Markets to provide foreign exchange (“FX”) hedging products to corporates across Europe. 

As the products we sell are relatively specialised, they are classified as contract-based investment products and are therefore subject to the regulations set out in the second Markets in Financial Instruments Directive (“MiFID II”).  

Among these regulations is an obligation that we execute orders on terms most favourable to our clients. This policy statement explains how we fulfil our responsibility to you in this regard. We operate a matched principal broker model, in which we contract directly with you and then cover the exposure created by our contract through a similar trade that we execute with a GRM liquidity provider. 

Our commercial priority is to find a hedging solution that is most suitable to your particular circumstances (including your own commercial objectives and appetite for risk). Our best execution obligation is to achieve the best possible outcome for you.       

2. Scope 

The Policy applies to GRM employees when executing client orders. The Policy applies to FX Financial Instruments, i.e. foreign exchange transactions that relate to financial instruments within the meaning of the Markets in Financial Instruments Directive and its supporting Regulation (together “MiFID II”). This, for example, includes MiFID forwards and FX options. GRM is under an obligation to act honestly, fairly and professionally in accordance with the best interests of its clients and to provide best execution to all clients who are categorised as retail or professional clients under MiFID II. Best execution obligations are not due to clients categorised as eligible counterparties.

2.1 Products

Whilst a wide range of FX services is available across Global Reach Group, GRM provides the following three specific classes of contractually based investment products: 

•      Non-Deliverable Forward contracts – contracts for the difference between: 

- an exchange rate for a specific currency pair agreed at the start of a contract; and 

- the actual spot rate for a specific currency pair at maturity of the contract; 

·      MiFID Forwards - agreements to exchange a specific amount of one currency for a specific amount of another at a future date, in order to hedge an internal FX exposure. 

·      Structured FX Options – nuanced contracts which are constructed to meet a client’s FX hedging requirements, whilst simultaneously recognising the client’s appetite to participate in future, positive market movements, but at the risk of incurring increased exposure to negative market movements;

Deliverable spot foreign exchange contracts are not MiFID II Financial Instruments and as such are not required to be covered by the GRM’s Best Execution arrangements.

3. Execution Factors

When executing Orders for Clients in FX Financial Instruments, GRM considers the Execution Factors as part of its obligation to take all sufficient steps to obtain the best possible result for its Clients. 

When determining the relative importance to be assigned to each of the Execution Factors, GRM  takes into account  the nature of the transaction, such as the size of the transaction, any specific terms and the overall complexity of the transaction (including the type and duration of the Order GRM receives) and any other consideration which it considers relevant to the execution of the Order, such as available internal and/or external liquidity for the relevant currency pair and the potential impact on the market of execution. By considering these factors, GRM is able to determine which of the Execution Factors are most important and the weight that it should give to each. 

GRM generally assigns the highest priority to price, i.e. the total consideration payable by its clients in respect of a FX products taking into account the price of the financial instrument in question and the costs associated with the execution of the transaction (including any margin charged by GRM). Ultimately, the Execution Factors will vary depending on (i) general market conditions during the period of execution, including volatility and available market liquidity, and (ii) the precise terms and complexity of the transaction. 

When assessing what is the best possible outcome, we are required to consider all aspects of service execution including

·       price,

·       cost, relevant to the execution (i.e. any external costs charged by third parties which are related to the execution of the transaction and which are directly passed on to you, such as, settlement fees and any other fees paid to third parties),

·       speed,

·       settlement size and 

·       likelihood of execution. 

3.1 Execution Cost

In accordance with GRM’s Conflicts of Interest and Gifts and Entertainment policies, in executing client orders we do not receive any remuneration, discount or non-monetary benefit for routing client orders to a particular Execution Venue, which would  infringe the requirements under MiFID. GRM does not structure or change commission structure commission that discriminates against a liquidity provider. 

GRM’s liquidity provider is our Parent company, Global Reach Markets Limited (GRM Ltd).  GRM Ltd only deals with EEA banks or investment firms with the scale to deliver a high-quality service and a standard of delivery that is consistent across all providers. Consequently, there is no operational benefit in selecting one provider over another. Therefore, the key criterion by which we determine the best outcome for you is the cost and the price of the products that we provide. 

4. Specific Instructions 

Where the client gives us specific instructions as to the execution of an order, we will execute the order in accordance with those specific instructions. Clients should be aware that, providing specific instructions in relation to the execution of a particular order may prevent us from taking the steps set out in our Best Execution Policy to obtain the best possible result for the execution of those orders in respect of the elements covered by those instructions. 

5. Monitoring

Given the bespoke nature of FX hedging solutions, their prices are inextricably linked to the particular circumstances of each trade. Global Reach pricing is driven by our assessment of the costs of its economic model, notably the costs of setting up the sales and monitoring processes, but also including the cost of hedging the transaction or the use of its capital for this transaction, including the cost of credit risk. 

Subject to our assessment of these considerations, we commit to providing you with FX hedging solutions which meet your needs and circumstances, and which are priced competitively with any similar products sold elsewhere in the market. 

In the case of OTC products, we monitor the fairness of our pricing. This means we have appropriate valuation procedures to check the fairness of our pricing on a systematic basis.

6. Consent

The MiFID II rules require your consent to our Best Execution Policy – we understand that, by the act of agreeing to trade with us, you are effectively affirming your consent to it. Alternatively, should you have any questions about it then please contact us at [email protected]

7. Review

As with all of our compliance procedures, we keep our Best Execution Policy under constant review, including the standards of delivery received from our liquidity providers and the criteria employed in our pricing model.  GRM will notify clients of any material changes to order execution arrangements and Policy.  

8. Public Reporting Requirements 

GRM are required to summarise and make publicly available, on an annual basis, for each class of financial instrument traded, the top five Execution Venues in the preceding year and information on the quality of the execution obtained. This information will be made available on the website.

9. Disclosure of Best Execution Policy  

The Policy will be available on the website and will be provided to clients before they enter into a transaction with GRM. Where GRM executes orders for retail clients, it shall provide those clients with the total costs they incur. At that point, the client will also be referred to GRM’s aforementioned annual report on its Execution Venues. 

 

Our policies are also available in PDF format, please email [email protected] to request the one you’d like.