Best Execution Policy & Procedures Outline – Equities Desks

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I.Purpose of the Policy and Trading Process
-Explanation of the trading process and explanation of the importance of the best execution monitoring. -
II.Elements of Best Execution
-(i.e. price, costs, speed of execution, likelihood of execution and settlement, size, past history in executing orders, quality of service, access to initial public offerings, research capabilities, creditworthiness, or any other consideration relevant to the execution of an order).

III.Pre-Trade Consideration by Portfolio Manager
-Factors considered by a portfolio manager in deciding to trade a security (i.e. liquidity, intrinsic and extrinsic cost, anonymity, etc.) -Use of cross trades

IV.Pre-Trade Consideration by Trader
- Factors considered by a trader in selecting execution strategy, execution venue, executing broker/dealer
- Soft-dollars consideration

V.Monitoring of the Execution by Trader
-Trader’s review process during the execution

VI.Post-Execution Best Execution Analysis
-Factors considered in analyzing best execution and benchmarks used (i.e. implementation shortfall, VWAP, etc.) -Periodic review of commissions
- Negotiation of commission rates (how the negotiation is carried out, whether the amount of commissions agreed to depends on comparative data with respect to commission rates, and generally how transaction costs are measured). Broker/dealer target trade allocation vs. actual allocation - Effect of the use of alternative trading systems on best execution -Evaluation of the quality of “execution-only” trades – trades that do not include payment for any additional research or services beyond execution – compared to that of other trades (for example, whether trades that are executed through channels that include an additional soft dollar component are reviewed in comparison with execution-only trades to discern any discrepancies in the quality of execution) -Evaluation of performance of each trader, as well as the...
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