Duty to Act in the Best Interest

In accordance with the current legislation applicable to MFO Asset Management Ltd (the “Company”), the Company shall act in the best interests of its managed UCITS, AIFs and clients that receive the service of portfolio management in accordance with clients’ mandates on a discretionary basis (“the Clients”), when:

  1. placing orders to deal on behalf of the managed UCITS, AIFs and investment portfolios with other entities for execution, in the context of the management of Client portfolios;
  2. executing decisions to deal on behalf of the managed UCITS, AIFs and investment portfolios, in the context of the management of Client’s portfolios.

In general, the Company does not execute orders on behalf of its Clients but instead places orders with other entities for execution in accordance with point (a) above. In this respect, the Company takes all reasonable steps to select third party brokers that deliver the best possible result for its Clients. 

Where a client that receives the service of portfolio management in accordance with clients’ mandates, gives specific instructions as to the broker with which the execution of orders shall take place, the Company follows the client’s instruction. In such cases, the Client is made aware of the fact that such instructions may prevent the Company from implementing its Order Execution Policy and obtain the best possible result for the execution of those orders in respect of the elements covered by those instructions.

All the above apply when buying or selling financial instruments or other assets for which best execution is relevant. 

Best Execution

The Company has established effective procedures to ensure that when placing orders with other entities for execution or in case it executes orders, it takes all reasonable steps to obtain the best possible result for its Clients, taking into account the following factors, as applicable (hereinafter jointly referred to as "the Execution Factors”):

  • Price
  • Possibility of immediate execution;
  • Speed of execution;
  • Likelihood of failure to execute;
  • Liquidity;
  • Commissions and costs;
  • Order size and nature;
  • Average size of orders;
  • Market participants;
  • Client’s preferences;
  • Negotiating power;
  • Possibility of price improvement;
  • Access cost and settlement capabilities.

The relative importance of the Execution Factors is determined by the Company, using the following execution criteria, as applicable:

  • The objectives, investment policy and risks specific to the managed UCITS or AIFs as indicated in the prospectus/offering document of each UCITS or AIF, or as the case may be in the rules or articles of association of each UCITS or AIF;
  • The characteristics of the client including the categorization as retail or professional client, where applicable;
  • The characteristics of the order;
  • The characteristics of the financial instruments or other assets that are the subject of the order;
  • The characteristics of the third party broker(s) or execution venue(s) to which the order can be directed. 

Whenever there is no choice of different execution venues, the above shall not apply. However, the Company shall be able to demonstrate that, in such cases, there is no choice of different execution venues.

Handling of UCITS or AIF Orders

When carrying out UCITS or AIF orders to buy or sell financial instruments on behalf of managed UCITS or AIFs, the Company has in place procedures and arrangements which provide for the prompt, fair and expeditious execution of portfolio transactions on behalf of the UCITS or AIFs, by ensuring that:

  • Orders executed on behalf of UCITS or AIFs are promptly and accurately recorded and allocated;
  • Comparable UCITS or AIF orders are executed sequentially and promptly unless the characteristics of the order or prevailing market conditions make this impracticable, or the interests of the UCITS or AIF or their investors require otherwise;
  • Financial instruments or cash or other assets received in settlement of the executed orders, are promptly and correctly delivered to or registered in the account of the relevant UCITS or AIF;
  • There will be no misuse of information relating to pending orders, and the Company will take all reasonable steps to prevent the misuse of such information by any of its relevant persons. 

Selection of Third-Party Brokers and Execution Venues

In general, the Company does not execute orders on behalf of its Clients but instead places orders with other entities for execution. As a result, the Company places reliance on the order execution policy of such entities. When selecting third party brokers and execution venues for placing orders for execution, the Company applies appropriate due diligence so as to ensure that the selected third-party brokers have arrangements consistent with the Company’s obligations laid down within its Order Execution Policy, in order to enable the Company to comply with the overarching best execution requirements.

As part of this assessment, the Company considers the following factors (as applicable) so as be able to ensure that the Company obtains the best possible result for its Clients:

  • License and authorisation, as required, to execute or transmit orders on behalf of the Company for a type of transaction;
  • Whether the entity will undertake by contract to comply with any or all of the best execution requirements considered by the Company in relation to the relevant business (with the result that it has contractual but not regulatory responsibilities for best execution);
  • Whether the entity can demonstrate that it can deliver a high level of execution quality for the kind of orders that the Company is likely to place with;
  • Access to different execution venues;
  • Commission policy and fee structure;
  • Experience in the financial sector and in particular with the financial instruments and trades applicable to the Client;
  • Independence, fairness and professionalism;
  • Effectiveness of the communication regarding the reception and confirmation of the Company's orders;
  • Ability to execute orders relating to transactions that are not directly executable due to volume;
  • Ability to take into account, during execution, specific orders of the Company or specific client needs;
  • Speed of execution of the orders placed;
  • Effectiveness of their systems available; 
  • Efficiency, speed and settlement risk associated with the clearing agency or a central counterparty used by the third party;

The Company in general monitors and reviews the effectiveness, including execution quality delivered by such entities. Where the monitoring or review indicates that an entity through which the Company places orders on behalf of its Clients, does not enable the Company to obtain the best possible result for the execution of its Client orders, the Company will not continue relying on such entity.

Aggregation of Orders

Aggregation of orders by the Company is strictly prohibited.

Monitoring and Review

The Company monitors, on a regular basis, the effectiveness of its order execution arrangements and policy in order to identify and where appropriate, correct any deficiencies, and assesses on a regular basis the quality of execution by the third-party brokers and execution venues selected (where applicable) and, in particular, whether they provide the best possible result on a consistent basis. 

The Company’s Order Execution Policy is reviewed on an annual basis or whenever a material change occurs that affects the Company’s ability to continue to achieve the best possible results for its Clients. 

A “material change” for this purpose is a significant event that could impact parameters of best execution such as cost, price, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order. 

The Company shall make available to its Clients any material changes to its order execution arrangements or Order Execution Policy by also updating its website.