In accordance with the Orders Transmission and Execution Strategy of Eurizon Capital S.A. (hereinafter “the Company”) and consistently with the duty to act in the best interest of investors as required by Article 24(1) and 24(4) of Directive 2014/65/EU as further detailed by Article 65 of the Commission Delegated Regulation (EU) 2017/565, the Company publishes further information about the Intermediaries selected for execution and Execution Venues* where orders have been executed for the year 2020.
In this regard, during the reference period, the Company continued to adopt measures and mechanisms aimed at obtaining the best result for the UCITS managed and for the portfolios of professional clients in the execution of orders. In particular, in implementing the investment choices made on behalf of the managed UCITS / AIF / Accounts, the Company executed and transmitted the orders by using Execution Venues or Intermediaries of high standing who satisfy confidentiality, reliability and financial solidity criteria and have the ability to ensure a proper execution of transactions while minimizing counterpart risk. The methods adopted by the Company in order to reach these objectives were different depending on the management style of the UCITS / AIF / Managed Account, the type of financial instrument and their liquidity conditions. The Company did not aggregate transactions on its own account with one or more orders arranged on behalf of UCIs and customers.
In terms of executing or transmitting to Intermediaries the orders concerning financial instruments on behalf of the managed portfolios, the Company took into account the following factors in order to obtain the best possible result:
- overall costs
- speed and likelihood of execution and settlement
- size and nature of the order
- market impact and price dynamic based on the order size
- liquidity of the financial instruments
- other characteristics of the order that are relevant for its execution and/or transmission.
In accordance with the Strategy, the Company attributes a relative importance to the above factors by referring to the following criteria:
- objectives, investment policy and risks specific to the managed UCITS / AIF / Account, as described in the Prospectus / Offering Memorandum / management agreement;
- characteristics of the order;
- characteristics of the financial instruments that are the subject of the order and their liquidity;
- characteristics of the Execution Venues or Intermediaries where the order may be transmitted.
The Company, in addition to managing its own funds, provides MiFID-scope discretionary management services only for professional clients. For this type of clients, the Company considers the total consideration as the prevailing factor in the absence of specific circumstances that lead to attribute greater importance to other factors for achieving the best result. However, when deemed necessary, the Company has given priority to the speed, the probability of execution and settlement, the size and nature of the order, the impact on the market and each other implicit cost of the operation. When the Company relies on an Intermediary for execution, the latter is the market-facing entity which ultimately executes the transaction on the market and therefore the Company is owed best execution by the Intermediary. In that case, the Intermediary’s execution policy and the ability to evidence best execution on request were a basis for such reliance.
In the provision of the collective asset management and portfolio management service, the Company can use intermediaries belonging to the Intesa Sanpaolo Group. In this regard, the Company has adopted specific organizational structures and internal procedures suitable for ensuring, at Group and Company level, independence of assessment as well as the separation of tasks between structures subject to segregation (so-called Chinese Walls or Information Barriers).
For equity, ETF, ETD, foreign exchange and fixed income financial instruments, taking into account the management style adopted, the Company chose an operational model that provides for the transmission and execution of orders through a main Intermediary, Intesa Sanpaolo Bank Luxembourg S.A. (hereinafter ISPBL), a company of the Intesa Sanpaolo Group. The use of ISPBL allows the Company to have a “high touch” access to the professional and technological structures of the intermediary, to access a wide range of Execution Venues and to increase counterparty and settlement risk management efficiency. Among the elements considered in the evaluation is also the track record in offering ongoing assistance and information during execution in order to allow the Company to comply with the obligations imposed by applicable law.
Intesa Sanpaolo S.p.A. is the intermediary appointed by the Company to carry out clearing activities relating to transactions in listed derivative financial instruments; this decision makes it possible to adopt an operational model for the management of guarantees connected with this area of business able to optimise the level of protection of the assets under management.
The Company did not stipulate specific agreements with any execution venue regarding payments made or received and discounts, rebates or non-monetary benefits obtained. The Company therefore did not receive any remuneration, discount or non-monetary benefit due to the fact that the orders were channelled to a particular execution venue. The fees applied to orders placed on behalf of managed assets may differ depending on the method of execution, the class of activity, the place of execution, as well as the geographical area / capitalization of the issuer.
The analysis of the data relating to the selected Intermediaries for the year 2020 showed that the Company's Transmission and Execution Strategy was respected.
The first five Intermediaries and Execution Venues are listed by volume of transactions during 2020. This information is broken down by type of customer and class of financial instrument, with evidence of the percentage of the volume and the number of orders for each instrument category, as well as the method of execution distinguishing between passive, aggressive and oriented orders**.
* "Execution Venues" means regulated markets, multilateral trading systems (MTF), organized trading systems (OTF) and "Intermediaries" which operate as systematic internaliser, market maker, proprietary negotiator or other liquidity provider or entity that performs in a third country a function similar to those performed by any of the aforementioned entities).
** For the purposes of the Delegated Regulation (EU) 2017/576: a) "passive order" means the order entered on the trading book that provided liquidity; b) «aggressive order» means the order entered on the trading book which absorbed liquidity; c) "oriented order" means the order in which the customer has indicated a specific place of execution prior to the execution of the order.