Execution Policy

Numis Securities Limited (“Numis”) is required to establish and implement an order execution policy. This document sets out Numis' execution policy. It is made available to all Professional and Retail Clients (normally as an attachment to the relevant client agreement) to ensure that such clients have appropriate information on the policy and to enable Numis to obtain any requisite consent from clients.

The order execution policy does not apply to business conducted with clients which Numis has classified as Eligible Counterparties in respect of eligible counterparty business. In particular fellow members of an exchange are normally so classified and accordingly this policy does not apply to business carried on with them. Nor does this order execution policy apply to cases where Numis does not execute the order on the client’s behalf because it simply publishes a quote or provides a request-for-quote service and the client transacts with Numis on the basis of that quote.

It should be noted that when Numis executes business for a client, it will normally show on the trade confirmation or contract note sent to the client an indication that it has acted as principal. This does not necessarily mean that Numis has put itself at risk by adopting a long or short principal position. It signifies that Numis is selling to or buying from the client a composite number of securities after carrying out some or all of the following actions:

Buying from or selling to another client who wished to deal in the opposite direction;

Adopting a principal position whether long or short, especially (though not exclusively) in circumstances where Numis is a formal market maker;

Adjusting a previously-held principal position whether long or short, especially (though not exclusively) in circumstances where Numis is a formal market maker;

Buying or selling by using an order book facility.

The securities bought or sold by using some or all of the actions set out above are then aggregated and sold on to, or bought from, the original client.

Execution factors & execution criteria

Numis has a duty, when executing orders on behalf of a client, to obtain the best possible result for its clients within the framework of its execution policy. This is often known as the duty of best execution. In seeking to give a client best execution, the FSA Handbook requires Numis to take into account the execution factors set out below. It is incumbent on Numis to decide the relative importance of each such factor. In making this judgement, Numis must consider certain execution criteria. These are also set out below, together with a note of the relative importance that Numis attaches to each execution factor.

Analysis of execution factors

General

In appraising the execution factors, it is important to emphasise a sharp difference that distinguishes an institutional securities firm from a retail securities firm. The latter will execute business for a client at their discretion. By contrast in the institutional marketplace, larger institutions have dedicated centralized dealers through whom all orders are routed; smaller institutions have fund managers who play the same role. In executing a dealing order, there is constant liaison between Numis' salesmen and sales traders and skilled professional employees at the client. This means that execution factors are discussed by Numis with skilled professionals and an agreed strategy thus emerges. Thus in many instances Numis will be acting on the specific instructions of the client.

A further difference is that many of the institutional dealing orders received by Numis are of a size well in excess of the amount that could be executed by using any order book facility or be satisfied by the principal position-taking of Numis or any other firm. Such orders are executed by working the order -- that is, by finding clients who are willing to deal in the opposite direction from the original order. Numis may, if stock is available or saleable at an appropriate price, execute the deal in part by using an order book facility provided by one of the execution venues. To complete such business it may take a principal position (long or short) to fill any gap. In the case of smaller orders, Numis may execute the business by using the order book facility or by adjusting its own principal position (long or short).

Price, size, speed and likelihood of execution

Numis believes that price is the most important factor in the result desired by the client. It therefore rates price as being of primary importance. However price will be affected by the size of the intended bargain. Most of the business conducted by Numis is in amounts well above the displayed size and accordingly there may be a differential between a price attaching to a displayed size and the price at which a much larger order can be executed. Speed and likelihood of execution are, in Numis' judgement synonymous. Once again they will affect price. If in a particular case a client wants prompt execution, it may be impossible to satisfy his price aspirations; whereas if he is prepared to wait, it may (depending on such matters as news flow on results from the underlying company) be easier to obtain the desired price. Speed also interrelates with size. In some circumstances the client will wish the order to be executed on a staggered basis which may limit the market impact of an abnormally large order; in other cases the client will not wish the matter to be handled piecemeal but to be executed in a single bargain, or in a few bargains. It is the practice of Numis to discuss these matters with the client in each relevant case and to follow the importance that the client attaches to the interrelation between price and speed. Numis does not normally make decisions on such matters without discussion with and without the consent of the client.

When Numis works an order, it is impossible to compare the result with what another firm in like position might have achieved. By contrast, when Numis receives an order within the displayed size, it can make comparisons between the prices available from different market makers (including the in-house market maker). It is the policy of Numis to execute all business through the in-house market maker if the latter makes a market in that stock.

Likelihood of settlement

When dealing in shares whose principal quotation is in London, Numis does not regard likelihood of settlement as relevant to its execution policy. Its standard business is in shares which have their primary quotation in the London market. The settlement of such bargains is carried out through the external CREST clearing system. Even if Numis acts as agent in a particular bargain, the dealing rules of the exchanges on which it acts require it to assume liability as principal to its clients. The position is the same in respect of those bargains (a minority of the overall business) that Numis carries out in foreign markets. The securities involved will normally be quoted on an exchange and will be subject to the centralised clearing and settlement procedures of that marketplace. The only relevance of likelihood of settlement is that if Numis were acting for a client and if there were a sole possible counterparty in respect of that order, Numis would refuse to conclude the bargain if it had doubts about that counterparty's ability to settle until it had clarified the position. This would be the case even if the price acceptable to the counterparty were particularly favourable to the client. Numis would normally consult with the client in such circumstances.

Cost

Numis does not believe that cost is relevant to giving the client best execution. Numis charges commission which may be higher in respect of more complex bargains, but it does not in practice pass on to clients the costs of execution (though contractually it reserves the right to pass these costs on) - for example, the trade reporting fees which are payable for each bargain executed on the London Stock Exchange. Likewise in the case of foreign bargains executed on markets outside London, Numis absorbs the bargain costs - for example, settlement costs - associated with such executions.

Analysis of execution criteria

Numis is required to consider how the execution factors may change in the light of the execution criteria.

Numis believes that the characteristics of the client (especially whether categorised as a Professional or as a Retail Client) have little effect on the grading attributable to the execution factors. It regards price as being the most important requirement of any type of client. It is likely that Retail Clients will deal in smaller amounts than institutional (Professional) clients and this means that in such cases size (and hence the impact of size on price) is less likely to be a significant factor.

The characteristics of the client order are principally relevant in understanding whether the client wants the best price, even at the risk of delayed execution; or is prepared to sacrifice a fraction of price in return for immediate execution. The orders received by Numis normally specify a price range that is acceptable to a client in a particular size. The salesmen and sales traders will reflect to the client what can be done and will execute the order or part of it as the client instructs.

The characteristics of the financial instruments have limited significance. Numis’ core business is dealing in quoted securities that have a listing on a Regulated Market or on an Multilateral Trading Facility or less frequently (in the case of overseas shares) on a foreign exchange. Some shares will be more liquid than others, and illiquid shares will be less readily saleable in volume. This will emphasise the repercussion of size / likelihood of execution on price as mentioned above.

The characteristics of different execution venues have a limited effect on the execution factors. In negotiated bargains the choice of execution venue has minimal influence on price. This is discussed in more detail in Execution venues below.

Execution venues

Numis currently has direct membership with the following exchanges and Multilateral Trading Facilities ("MTF"):

The London Stock Exchange

Plus Markets

Chi X

Turquoise

BATS

Numis has access to and actively trades on a number of Dark Pools/Venues including, but not limited to:

Chi-X

Turquoise

BATS

Nomura

ITG (Posit)

Knight

CitiMatch

BlockCross

UBS

Numis accesses all other exchanges via DMA/DSA arrangements with the following brokers:

UBS

Barclays Capital

Nomura

Numis may trade over-the-counter if the instrument concerned has no listing of any kind.

Numis is aware that a number of large securities firms often internalise trades done with them - that is, they meet supply and demand for a security by having own account or internally-managed funds buy or sell that security. If the security concerned is one of the stocks designated liquid under the MIFID regime, then such a firm may well fall within the definition of a Systematic Internaliser and be obliged to make public quotes in that stock. Where the other firm is acting as a Systematic Internaliser, any bargain done with it in that capacity will always be done over-the-counter. In other circumstances where such a firm acts as an Internaliser, it will often agree to do business only if the bargain is treated as over-the-counter. Thus Numis may, in executing a bargain, find itself doing business with a firm which insists on doing the business over-the-counter and which may, in the case of liquid stocks, be acting as a Systematic Internaliser.

Numis may trade over-the-counter if the instrument concerned has no listing of any kind.

Clients are informed of the possibility that Numis may execute bargains away from a Regulated Market or a Multilateral Trading Facility through the client agreement and in this document which is attached as a schedule to the client agreement. By agreeing to the client agreement, clients give express consent to such a possibility.

Numis has chosen the above execution venues without consideration of its own commissions or execution costs. The following paragraphs explain the factors that influence Numis' choice of execution venue. Numis will review the choice of execution venues whenever a new relevant venue becomes available.

As mentioned above, Numis caters principally for wholesale clients. Accordingly many of the dealing orders received by Numis are of a size well in excess of the amount that could be executed by using any order book facility or be satisfied by the principal position-taking of Numis or any other firm. Such orders are executed by working the order. In these circumstances the execution venue used is often of secondary importance. The bargain will largely be negotiated. The execution venue used will not affect the price of the negotiated bargain. Wherever possible it is the policy of Numis to do all negotiated business subject to the Rules of the London Stock Exchange and for all bargains to be trade reported to the London Stock Exchange.

There may be specific cases where, for good reason, Numis deviates from this policy, for example if another firm is offering a favourable price and insists on carrying out the bargain over-the-counter. If Numis chooses to become a member of any other execution venue and a bargain is executed on such venue, then that will be the execution venue for that bargain.

Numis does not charge a differential commission for executing business on one or other of the various execution venues that it uses. The costs to Numis of executing on different execution venues are largely uniform, although Numis incurs a charge for trade reporting to the London Stock Exchange but not for trade reporting to Plus Markets or to ITG. Numis does not pass any such cost on to dealing clients (although contractually it reserves the right to do so) and the choice of execution venues is not affected by this factor. Accordingly Numis does not discriminate unfairly between different execution venues.

Foreign stocks

Numis is not a member of any foreign exchange but, through DMA, it is able to access the order book of many global markets to input orders directly into those foreign order books.

If there is a client order in a foreign stock, and it is not feasible to execute it by using one of the facilities mentioned in the previous paragraph, then Numis may carry out business for a client by passing the order on to a foreign broker for execution on a foreign market. It is often the case that such an order is covered at least in part by specific client instruction. Where in these circumstances a dealing order is not covered by specific instruction, Numis will rely on the foreign broker to provide best execution.

It should be noted, in the case of foreign stocks, that there will be occasions when, to carry out the client's wishes, it will be necessary or desirable for Numis or its agents to use a market which is not a Regulated Market or a Multilateral Trading Facility. Both these terms apply only to markets within the EEA. In countries outside the EEA the local markets will not fall into either of these categories and accordingly the business will have to be carried out (whether through an automated dealing facility or through an agent) outside a Regulated Market or Multilateral Trading Facility.

Numis may on occasion trade with another firm over-the-counter, for example, if the other firm is offering a favourable price and insists on carrying out the bargain over-the-counter. The discussion on internalisation set out above in the section on UK Stocks applies equally here.

There may be rare cases where an order is received in a foreign stock which has no listing on any exchange. In these circumstances Numis will be compelled to deal outside a Regulated Market or Multilateral Trading Facility with whatever counterparty may be available.

Clients are informed of the possibility that Numis may execute bargains away from a Regulated Market or a Multilateral Trading Facility through the client agreement and in this document which is attached as a schedule to the client agreement. By agreeing to the client agreement, clients give express consent to such a possibility.

Aggregation and Allocation

Numis will execute comparable orders sequentially and promptly unless the characteristics of the order or market conditions make this impractical. Numis may on occasion aggregate client orders when we believe it is in the clients' best interest to do so. Clients should be aware that aggregation may work to their disadvantage in relation to a particular order. When allocating an aggregated transaction which includes one or more customers orders, Numis will allocate the order on a pro-rata basis, thus giving the fairest possible outcome with regard to the price and volumes involved.