Background and Scope
This document provides a summary of the policies and procedures of PI Financial Corp. and its affiliates (collectively PI) designed to provide best execution to clients and may affect the manner in which client trades are conducted.
These policies and procedures apply to all trading conducted for retail and as agent for institutional clients. For institutional customers, PI may not have a best execution obligation if an institution asks PI for a bid or offer or if PI contacts an institution seeking a bid or offer such that PI and the institution will be acting as a counterparties rather than the institution using PI as its agent to fill an order.
1. Canadian Listed Securities
Orders for Canadian-listed securities may be executed on the Toronto Stock Exchange (“TSX”), the TSX Venture Exchange (“TSXV”), the Canadian Securities Exchange (“CSE”), the NEO Stock Exchange (“NEO”), a number of alternative Canadian electronic marketplaces, or on a foreign organized regulated market.
The alternative Canadian electronic marketplaces which PI accesses, or may access, are:
All orders for listed securities entered into Canadian marketplaces are subject to the Order Protection Rule, under which a dealer cannot execute a purchase at a lower price or a sale at a higher price than the best available bid or offer on any protected marketplace. A marketplace may be unprotected because its bids and offers are not public, because tradeable orders are not executed immediately on entry, or because its share of trading is too small.
PI is committed to use all reasonable efforts to ensure that our clients achieve “best execution” of their orders for securities that are quoted or traded on all marketplaces. This means that PI will diligently pursue the execution of each client order on the most advantageous execution terms reasonably available under the circumstances.
More specifically, it means that in determining “best execution”, PI will take into consideration a number of general factors including but not limited to:
In its effort to achieve best execution, PI uses an electronic “smart router” which will seek the best marketplace(s) at the time of entry. The “best marketplace” is the marketplace with the best bid (buy price) or ask (sell price) or where the order has the highest probability of being executed.
2. Default Marketplace
Unless notified otherwise by PI, the Default Marketplaces for all securities listed on the TSX, TSXV, CSE, or NEO whether or not the security is trading on other alternate marketplaces, will be the TSX, TSXV, CSE, or NEO. These exchanges operate between 9:30 am and 4:00 pm EST, Monday through Friday, not including statutory holidays in Ontario. All references to EST in this document are references to Eastern Standard Time or Eastern Daylight Savings Time as appropriate.
3. Hours of Operation for Trading in Listed Canadian Securities
PI Investment Advisors, trading staff and systems will be available for order execution during Default Marketplace hours. Staff may be available outside of Default Marketplace hours; however, PI will not guarantee the ability to take client orders and/or effect trade execution outside of the hours of 9:30 am to 4:00 pm EST.
Clients should be aware in requesting a trade outside of normal trading hours my result in an inferior execution because of factors such as lower liquidity, high volatility, wider spreads, price differentials between marketplaces with extended hours and exaggerated reactions to new announcements.
4. Standard Order Routing Conditions
5. Order Execution
Certain types of orders have specific handling implications in a multiple marketplace environment as follows:
6. Foreign Organized Regulated Marketplaces
PI does not bulk send orders for interlisted securities to foreign intermediaries for execution on foreign organized regulated markets.
PI’s smart routers do not check US markets for inter-listed securities.
Subject to compliance with the Order Protection Rule, PI will follow the instructions of an institutional client to use a trading algorithm that requests that an order to be split between Canadian and foreign markets.
Orders received from US broker-dealers are traded through systems that do check US markets for inter-listed securities in obtaining best execution for those dealers.
7. Orders for Securities Traded Only on Foreign Markets
PI directs all of its retail orders for securities traded only in US markets through Citadel Securities LLC. (“Citadel”).
Orders for securities traded only on marketplaces in countries other than Canada and the US are directed to Fidelity Clearing Canada ULC (“Fidelity”) for execution on those markets through its affiliates.
Citadel and Fidelity both have extensive best execution policies and procedures which cover execution of orders directed to them by PI. PI reviews these policies and procedures annually.
8. Disclosure of Marketplace
An order executed on one or more marketplace or alternative marketplace will be disclosed on the confirmation slip. The identity of the specific marketplace on which the order was filled is available on request.
9. Extenuating Circumstances
In the event of technical or other issues that limit PI’s access to specific marketplaces, or limit access to routing automation, orders received will be directed to either the Default Marketplace or an alternative marketplace as circumstances warrant and as determined at the sole discretion of PI.
10. Fair Pricing of Fixed Income and other Over-the-Counter (OTC) Trades
PI is committed to ensure that trades in fixed income and other OTC securities are priced fairly and reasonably.
PI trades for retail account only on an agency basis – it does not hold or price a fixed income inventory for sale to retail customers.
In determining whether the securities are priced fairly and reasonably, PI considers
A ‘fair and reasonable” price must bear a reasonable relationship to the prevailing market price of the security. For hard to price securities, where there is no prevailing market showing recent prices, PI considers:
Where necessary and feasible, PI attempts to obtain prices from three sources including on-line quotations, daily quotation spreadsheets from other dealers, or responses from other dealers to requests for a quotation.
11. Commodity Futures
PI trades in commodity futures traded on various exchanges, including the Chicago Board of Trade, the Intercontinental Exchange, the Chicago Mercantile Exchange (including the International Monetary Market), the New York Mercantile Exchange.
All orders for commodities futures are directed through ADM Investor Services Inc. (“ADM”), a registered commodity futures clearing firm. and are executed only at the prevailing price on the relevant market or the limit price of the order.
12. Conflicts of Interest
PI does not accept payment for order flow and does not pass on the cost of trade execution to clients.
PI does not have ownership interests in any marketplaces through which it trades or other dealers to which it directs client orders.
PI monitors the quality of executions through all trading processes and adjusts them to ensure they continue to provide reasonable assurance of best execution.
PI reviews its best execution policies and procedures at least annually and, whenever there is a material change in the trading environment (for example the launch of a new marketplace), adjusts them as necessary.
PI reviews the best execution policies and procedures of any other dealers it relies on to provide best execution to clients to ensure that they are reasonably designed to do so.
14. Amendments to this Disclosure
Changes to PI’s policies relating to best execution may be made from time-to-time at the sole discretion of PI. Material changes to those policies will be posted to PI’s website www.pifinancialcorp.com.
If you have any questions or concerns regarding these policies, please contact your Investment Advisor.