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2018 - Best Execution Report.

 

Information on the identity of execution venues and on the quality of execution under Commission Delegated Regulation (EU) 2017/576 of 8 June 2016 (‘RTS 28’)

Overview of Blue Whale Capital LLP’s execution arrangements in 2018

Blue Whale Capital LLP (“Blue Whale”) is a MiFID Investment Firm authorised and regulated by the Financial Conduct Authority. Blue Whale provides discretionary investment management services to a single professional client in equity and equity-like financial instruments (e.g. exchange traded funds). Blue Whale may provide the MiFID investment services of execution of orders on behalf of clients, and reception and transmission of orders in relation to one or more financial instruments. Blue Whale only provides investment services to Professional clients and Eligible counterparties and does not provide any investment services to Retail clients.

During 2018, Blue Whale executed 100% of client orders by transmitting or placing all client orders (stemming from discretionary portfolio management) with a single external broker, Northern Trust Securities LLP (the “broker”) who then executed orders or placements on one or more organised trading venues (e.g. regulated market, multilateral trading facility or third country equivalent).

Blue Whale therefore provides the following information on execution venues as appropriate for each class of financial instrument, and where necessary sub-class of financial instrument, in which traded in 2018:

(a) The identity of the top five execution venues (i.e. trading venues and counterparties) where client orders were executed in 2018; as required by Article 27(6) of Directive 2014/65/EU.

Not applicable as Blue Whale passed all orders to Northern Trust Securities LLP.

(b) The identity of the top five receiving firms (i.e. external brokers) to which client orders were transmitted in 2018; as required by Article 65(6) Commission Delegated Regulation (EU) 2017/565.

All orders were transmitted to Northern Trust Securities LLP.

 

Information on the quality of execution

The following information is provided in accordance with the requirements of Article 3(3) of RTS 28 and summarises the analysis and conclusions drawn
from the monitoring of the quality of execution obtained through the broker used by Blue Whale in 2018.

(a) An explanation of the relative importance the firm gave to the execution factors of price, costs, speed, likelihood of execution or any other consideration including qualitative factors when assessing the quality of execution;

In the light of our business as longer-term investors and not traders, the primary execution factors which influence execution on a trade by trade basis are:

  • The likelihood and speed of execution. When decisions are taken to buy or sell, the primary desire is to implement those purchases or sales without delay. The importance of this factor will be increased in respect of less liquid investments. Orders will thus normally be executed on an “aggressive” basis; and
  • Price. Whilst the desire to execute is strong, it is tempered by the need to execute at a reasonable price. If we consider the size of the trade we are trying to execute as material to the prevailing trading volume for example in the smaller mid-cap stocks, we will often place a limit order. However, for mega-cap stocks with significant liquidity where the size of the trade we are trying to implement is immaterial to the prevailing trading volume, we will usually ask the broker to execute the order with no limit instructions.

In practice, a number of the execution factors are subject to initial pre-assessment and subsequent ongoing monitoring and review:

  • The costs related to execution are pre-agreed with the broker and not subject to variation or negotiation on a trade by trade basis. Whilst cost is important and excess cost will represent a performance drag, market volatility is such that the ability to execute will likely outweigh pure cost;
  • The speed of settlement is not normally an issue as settlement is subject to standard market convention; and
  • The likelihood of timely settlement is one of the factors in the initial selection and ongoing monitoring of counterparties and will not be a factor on a trade by trade basis.

(b) A description of any close links, conflicts of interests, and common ownerships with respect to any execution venues used to execute orders;

Blue Whale does not have any close links, conflicts of interests or common ownerships with any trading venue. Blue Whale uses a Northern Trust Assisted Reporting Service for transaction reporting for which it pays a separate non-discounted fee.

(c) A description of any specific arrangements with any execution venues regarding payments made or received, discounts, rebates or non-monetary
benefits received;

Blue Whale does not receive any payments, discounts, rebates or non-monetary benefits (other than occasional low value hospitality) from the broker.

(d) An explanation of the factors that led to a change in the list of execution venues listed in the firm's execution policy, if such a change occurred;

Not applicable as Blue Whale used Northern Trust Securities LLP as sole broker in the period.

(e) An explanation of how order execution differs according to client categorisation, where the firm treats categories of clients differently and where it may affect the order execution arrangements;

Not applicable as Blue Whale has a single professional client.

(f) An explanation of whether other criteria were given precedence over immediate price and cost when executing retail client orders and how these other criteria were instrumental in delivering the best possible result in terms of the total consideration to the client;

Not applicable, Blue Whale does not provide investment services to Retail clients.

(g) An explanation of how the investment firm has used any data or tools relating to the quality of execution, including any data published under Delegated Regulation (EU) 2017/575;

Throughout 2018, and in accordance with the best execution obligation under Article 27 of MiFID II, Blue Whale measured the performance of client orders via reports provided by the broker’s third party transaction cost analysis tools.

Blue Whale did not specifically make use of any data published under Delegated Regulation (EU) 2017/575 (‘RTS 27’) by execution venues and continued to rely upon its execution performance and transaction cost analysis tools provided by the single broker.

(h) Where applicable, an explanation of how the investment firm has used output of a consolidated tape provider established under Article 65 of
Directive 2014/65/EU.

Blue Whale did not use a consolidated tape provider established under Article 65 of Directive 2014/65/EU in 2018.

 

 

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