Best Execution Policy




1.1 Background

Under the SEC rules and the corresponding rules of the Nigeria Exchange Group, Calyx Securities Limited (CSL) is required to have in place an Order Execution Policy which allows the firm to take all reasonable steps to obtain the best possible result for clients when executing orders or when receiving or transmitting orders for execution.

1.2 Guiding principles

  1. CSL will take reasonable steps to obtain the best possible result in the execution of a client’s order, taking into account a number of factors as prescribed in section 1.4.
  2. Where the firm is provided with a specific instruction in relation to an execution of an order, the firm will act in accordance with that instruction wherever possible.
  3. In the absence of any specific instructions the firm may consider a number of appropriate factors, as laid out in section 1.4 of this document, to determine the manner in which the order will be executed.
  4. Adherence to this policy is a statutory responsibility under the Investment and Securities Act (ISA) and wider SEC rules and guidance

1.3 Rule  

SEC Rule 65, NGX rules and Calyx Securities Limited Standard Operations Procedure

1.4 Best execution instructions  

Where a specific instruction is received to execute an order the firm will take reasonable steps to act in accordance with that instruction wherever possible. Where the firm acts under such an instruction the client must be made aware that the firm may not be able to follow the steps outlined in the Best Execution Policy to achieve the best result for the client. In following the instructions provided the firm will be deemed to have taken all reasonable steps to provide the best possible result.

The absence of specific instructions – consideration shall be given to determine the manner in which the order will be executed, that will include but not limit to:

  • Price
  • Cost
  • Likelihood of execution
  • Speed
  • Size of Order
  • Nature of the order
  • Market impact
  • Any other consideration relevant to the efficient execution of the order

Best execution criteria – consideration shall be given when determining the relative importance of the range of execution factors and how they apply to the client order, in such cases the following criteria may be used:

  • The characteristics of the client including the categorization of the client as retail or professional
  • The characteristics of the client order
  • The characteristics of the financial instrument that are the subject of that order
  • The characteristics of the execution venues to which the order can be directed

The role of price – For the purposes of ensuring that the best possible result is obtained for the client when executing an order and in the absence of specific client instructions, the firm should take into consideration all factors that will allow it to deliver the best possible result in terms of the total consideration, representing the price of the financial instrument and the costs related to execution. Speed, likelihood of execution and settlement, the size and nature of the order, market impact and any other implicit transaction costs may be given precedence over the immediate price and cost consideration only insofar as they are instrumental in delivering the best possible result in terms of the total consideration to the retail client.

Aggregation – Where the firm aggregates client orders it will only do so if;

  • It is unlikely to disadvantage the client whose order is being aggregated.
  • Execution costs will be allocated on pro-rata basis relevant to the size of each aggregated order.
  • Partial execution of an aggregated order will be allocated on a pro-rata basis relevant to the size of each aggregated order

A firm is not permitted to carry out a client order or a transaction for own account in aggregation with another client order unless the following conditions are met:

(1) it must be unlikely that the aggregation of orders and transactions will work overall to the disadvantage of any client whose order is to be aggregated;

(2) it must be disclosed to each client whose order is to be aggregated that the effect of aggregation may work to its disadvantage in relation to a particular order;

(3) an order allocation policy must be established and effectively implemented, providing in sufficiently precise terms for the fair allocation of aggregated orders and transactions, including how the volume and price of orders determines allocations and the treatment of partial executions.

1.5 Execution venues

CSL acts as the execution venue, all sources of reasonably available information shall be used in order to ensure best execution is achieved.

Where the firm is required to execute an order in NASD or outside a regulated market the firm must obtain the prior express consent of the client before proceeding to execute. 

1.6 Counterparty relationships

Where the firm engages the services of another firm to fulfill best execution, we shall establish effective procedures and controls in order to ensure they meet the minimum control objectives assigned to the Management of the other firm. This shall include, but is not limited to:

  • A review of the agreement is conducted and approved by the appropriate authority levels
  • An annual review to determine whether the agreement remains fit for purpose and continues to meet regulatory requirements

 1.7 Compliance monitoring

Compliance Officer shall establish a periodic review, but at least annually, of its execution arrangements and execution policy to ensure their ongoing effectiveness and to identify and correct any potential deficiencies. This will cover;

  • A suitable sample of orders to ensure they are executed in accordance with the Best Execution Policy.
  • A review of the Best Execution Policy for current relevance and suitability.
  • To be satisfied that the execution venues provide the best possible outcome for the clients
  • To be satisfied that the firm could demonstrate to its clients, at their request, that it has executed their orders in accordance with its execution policy

The firm will notify its clients of any material changes to the execution arrangements and/or execution policy.

Should you require further information or assistance in relation to the Best Execution Policy, please contact: Calyx Securities Limited – or call 08120099414