Best execution disclosure
The Canadian regulators require members to ensure “best execution”’ for client orders. Under the Investment Industry Regulatory Organization of Canada (IIROC) Dealer Member Rule 3300, best execution is defined as “obtaining the most advantageous execution terms reasonably available under the circumstances.”
Industrial Alliance Securities Inc. (IAS) is committed to always acting in the best interest of its clients and ensuring reasonable steps are taken to provide best execution on all client orders.
When determining how an order can achieve the best possible execution in accordance with client instructions, IAS considers the following factors:
- Speed of execution
- Certainty of execution
- Overall cost of execution
- Market signaling
- Liquidity of the security
- Size of the spread
- Market direction
- Historical price and volume of the security
- Prevailing market conditions
- Market depth of the security
- Client instruction
Hours of operation
The IAS trade desk is available for order execution between the hours of 9:30 a.m. and 4:00 p.m., Eastern Standard Time (EST), Monday through Friday, not including statutory Canadian holidays. IAS trading staff may be available before or after these hours; however, IAS cannot guarantee that an order will be received or executed outside these hours.
Handling of client orders
All client orders are valid from 9:30 a.m. until 4:00 p.m. EST unless otherwise specified by the client. Orders received prior to 9:30 a.m. EST will be routed and booked to the pre-opening of the principal listed marketplace of the particular security. If specifically instructed from the client, orders may be entered on a marketplace which operates prior to 9:30 a.m. EST.
Orders received after 4:00 p.m. EST will be held until the next business day and will be routed and booked to the pre-opening of the principal listed marketplace of the particular security. If specifically instructed from the client, orders may be entered to the after-hours trading of a marketplace where this feature is available. All unfilled day orders will expire on the market at 4:00 p.m. EST or at the time the after-hours trading session will cease on the respective marketplace.
Special terms orders are those with specific terms which are not executable in the regular marketplace. These orders will only post to the special terms market of the principal listed marketplace, unless they are immediately executable on an alternative marketplace at the time of entry.
For all special term orders, please contact your Investment Advisor/Portfolio Manager to review.
The principal marketplace for Canadian listed securities will always be the issuers respective primary listing exchange unless notified otherwise.
IAS is a member of all protected and visible marketplaces in Canada and is required to ensure that orders are executed at the best available price on all protected market places. IAS is also a member of dark trading facilities and unprotected marketplaces which enables IAS to route to these venues in order to help it achieve best execution for client orders.
Transactions executed on non-Canadian marketplaces are handled and routed to an external counterparty. In all circumstances, these orders are required to be executed in accordance with securities rules and regulations in the corresponding jurisdiction. It is possible that the executing broker may rely on different best execution criteria and use their own trading systems and tools, including and not limited to electronic or algorithmic trading systems that IAS does not control.
Canada and the US have a number of electronic marketplaces for trading listed securities. These marketplaces may offer different features and their rules may vary.
Order routing technology
IAS uses third party “smart order routing” (SOR) technologies to ensure best available price and most favorable execution are obtained for client orders. The IAS SOR typically employs the spray or slice strategy which are designed to prioritize execution time and price discovery respectively. The SOR strategies are managed by IAS and are subject to best execution policies and procedures.
IAS uses third-party algorithms which provide clients with a suite of strategies designed to support the execution of a variety of trading objectives. Inter-listed securities entered into the IAS agency algorithms may execute at either US or Canadian venues. The routing decision is based on algorithm objectives and utilizes foreign exchange rates, historical and real-time order book data.
IAS does not receive payment for order flow from any venue to which the firm routes its client orders in listed securities. IAS may pay fees and receive rebates from various marketplaces for passive or active order flow in accordance with the marketplace’s fee schedule. IAS will not pass along any fees or rebates associated with order execution directly to clients.
IAS does not have any ownership interest in any exchange or marketplace in Canada and as such, IAS does not have any conflict of interest regarding order handling and order routing practices.
In order to achieve best execution, IAS relies on the third-party vendor systems and data and marketplace systems. In the ordinary course of business, all third parties and the systems they provide can be subject to various failures. When these failures occur, IAS policies are exposed to compromise and failures are immediately reported to Compliance.
When notified of a technical or systemic problem, the IAS trading desk will immediately verify that the systemic problem is not internal to IAS. If another market participant is isolated as the source of a potential problem, Compliance will take steps to ascertain if best execution is compromised and client executions are affected. When dealing with a marketplace that is experiencing technical difficulties, IAS may rely on self-help in these particular circumstances. If self-help is invoked, the affected marketplace may be removed from the IAS SOR system until it has been determined there are reasonable grounds to believe that the identified issues have been resolved.
If best execution is compromised, Compliance will inform the regulators and take necessary steps to declare self-help.
Disclosure of marketplace
An order executed on one or more marketplaces may be reported to the client with the following disclosure: "Traded on one or more marketplaces of markets, may be an average price; details available upon request". This disclosure will be made on the client’s trade confirmation.
Should the client receive such a trade confirmation, they may contact their Investment Advisor/Portfolio Manager to secure full details of the trade executed.
For unlisted securities, trading and fair price verification is completed through IAS grey market policy and procedures.
Fixed income fair pricing
IAS is committed to providing clients’ orders in over-the-counter securities at the most favorable terms available under prevailing market conditions. IAS fixed income desk acts as principal and facilitates all client transactions. IAS is required to make “reasonable efforts” to provide a fair price for each client order including any markup or markdown, commission and service charges. Markup/markdown charges are the amount added/subtracted from the price of the security. Transactions and prices are reviewed and verified as being “within context of the market”.
All IAS debt transactions are reported to IIROC daily. This enables IIROC to enhance the integrity of Canada’s debt market through more timely surveillance, enhanced oversight and increased regulatory transparency.
Trading review committee
The IAS trading review committee meets on a minimum, annual, or ad hoc basis when necessary. The purpose of the committee is to ensure the ongoing integrity of IAS trading policies, procedures and rules. The marketplace landscape and regulatory environment are re-evaluated in order to ensure IAS best execution policy and procedures remain up to date. Trading technology is also reviewed to ensure client orders receive optimal order execution.