Whitman Howard Terms of Business - Professional Clients
Terms of Business & Best Execution Policy
1. Our Particulars
1.1 References to “WH”, “us”, “we”, “our” etc. in these Terms of Business (“Terms”) are to Whitman Howard Limited. We are registered in England and our registered office and principal place of business is 1st Floor Connaught House, 1 – 3 Mount Street, London W1K 3NB and our registered number is 6044529. We are authorised and regulated by the Financial Conduct Authority (registered no. 514466). References to “you”, “your” etc. are to the person named as client on the signing page of these Terms. These Terms govern your relationship with us. Our e-mail address is firstname.lastname@example.org.
1.2 Words and phrases used in these Terms are defined in, and these Terms are interpreted in accordance with, clause 24 (Definitions) below.
2. Scope of Terms and Client Classification
2.1 These Terms govern all the services we provide to you (“Services”). We will treat you, but not any person on whose behalf you may be acting, as our client for the purposes of the FCA’s Handbook of Rules and Guidance (the “FCA Rules”). We are required by FCA Rules to classify you. We believe that you satisfy at least one of the criteria in Schedule 2 to these Terms and are therefore eligible to be treated as a Per Se Professional Client. You agree to your classification as a Per Se Professional Client by using our Services. If you do not believe that you satisfy any of these criteria, or if at any time you cease to satisfy any of the criteria, please notify us immediately in writing. You have the right to ask to be treated as a Retail Client but we are only authorised to accept Professional Clients and Eligible Counterparties for the services described in these Terms and so if you wish to be a Retail Client we would be unable to assist you.
2.2 Your Customers (if any) shall not be clients of ours by virtue of these Terms or the provision of Services. Your Customers are not a party to these Terms.
We acknowledge that you are acting as agent on behalf of your clients in using our services.
2.3 As a Professional Client we expect you to understand the investment risks associated with your activities. By undertaking business with us, you confirm that you have the necessary experience and knowledge to understand the risks involved in any transaction which we will carry out for or with you. If we have categorized you as a professional client you acknowledge that we do not have to ensure that any such investment service or transaction (or types of transaction or product for which you are categorized as a professional client) is appropriate for you and we may assume that you have all such necessary experience and knowledge. In addition, you acknowledge that you have read and understood the information about the various types of investments (including any risk disclosure and warnings) set out in Schedules 1.
3. Scope of Services
3.1 We arrange transactions for you and may provide execution services. We may, if we agree, provide related research and advisory services. We always act as your agent when providing our arranging and execution services.
3.2 Clearing and settlement services for the orders handled by us will be provided by the third party settlement agent appointed by us. You must ensure that you have adequate arrangements for clearing and settling the transactions which result from orders you give us.
3.3 We provide our services primarily in relation to equities, but we may also provide services in relation to all other types of investments in respect of which we are authorised by the FCA from time to time to provide our services.
3.4 We may from time to time provide you with trading ideas or market views, as well as written or oral market recommendations and other market and investment analysis (collectively “Market Commentary”). You hereby acknowledge and agree that Market Commentary provided by us to you with respect to your trading activities is solely incidental to the conduct of our business, shall not serve as a primary basis for any decision by you and does not constitute investment advice nor a recommendation to enter into a transaction unless there is a written agreement between us and you to the contrary. You should read and consider carefully any disclosures or disclaimers made in such Market Commentary and set out on our website or otherwise provided to you from time to time. We give no representation, warranty or guarantee as to the accuracy or completeness, reliability or prudence of such information. Any Market Commentary provided by us may not have been verified and may be changed without notice to you and we shall have no duty to update such Market Commentary. You understand that we, our officers and employees may take positions in or advise or make recommendations to other customers concerning such transactions which are the subject of recommendations from us to you, which positions, recommendations and advice may be inconsistent with or contrary to positions which are held by you. Market Commentary which we provide is not to be further distributed by you without our express written consent. When we send you Market Commentary, we will not have considered your circumstances nor assessed the suitability for you of any investment to which the Market Commentary relates.
3.5 Any advice which we provide to you should not be understood by you as personalised to your particular situation unless we agree otherwise at the relevant time. If you wish us to provide personal advice we will only do so if you are a Per Se Professional Client and you have provided us with your investment objectives in writing. We shall assume, as we are entitled to do under the FCA Rules, that you have the necessary level of experience and knowledge to understand the terms, conditions and risks of the transactions you enter into and are willing and able to assume those risks, financially or otherwise.
3.6 We shall not be obliged to provide you with ongoing advice or to monitor your financial position on an ongoing basis. In particular, we shall not be obliged to provide you with advice in relation to the suitability or otherwise or tax consequences of the execution for you of an order which we receive from you. You take all trading decisions in reliance on your own judgement. You will make your own independent decision to instruct any transaction and you acknowledge and agree that the Services do not and will not serve as the primary basis for any of your investment decisions concerning your accounts or your managed or fiduciary accounts.
3.7 You agree that we may use the services of one or more other persons or entities in connection with our obligations under these Terms selected at our absolute discretion as agents, sub-contractors or otherwise. You authorise us to delegate to those persons any powers which you grant to us in these Terms or otherwise in connection with the Services and that we may authorise such persons to further sub-delegate powers. This power of delegation shall be without prejudice to our responsibility to you for the fulfilment of those obligations. You agree that executing brokers used by us are not our agents or sub-contractors, we instruct them acting as agent for you.
4. Dealing and Trading Instructions and other Communications
4.1 You may instruct us to sell or purchase any particular investment. You may instruct us orally, in person or by telephone, or by letter, facsimile transmission or electronic method chosen at our discretion or any other form of communication acceptable to us.
4.2 We may communicate with you by electronic means. You acknowledge that electronic communications between us may have legal consequences. We may contact you without being expressly invited to do so.
4.3 You shall provide us with a list of persons who shall be authorised to send orders, provide details and make other communications to us on your behalf. We may in good faith rely upon, and you will be bound by, any instructions or other communications which purport to be or originate from any person included on such a list and from any other person who in our reasonable view appears to us to be authorised on your behalf to give such instructions. Subject to clause 12 (Liability), you release us from any liability in relation to our reliance on the authenticity of any such communication and the information contained within it and from any liability in relation to communications sent by you but not received by us or which we reasonably believe were not made by you. We give no undertaking, warranty or representation that access will always be available by telephone or by any means of electronic communication during normal operating hours. Subject to clause 12 (Liability) we shall have no liability for the unavailability of or for any fault in any medium of communication which you use to send us a communication or any loss or corruption of any such communication or any errors made by you in any communication or for failure of any communication to reach us. Electronic trading orders must be sent to such electronic addresses and/or using such systems as we may specify from time to time and shall be in English. You agree to provide any reasonable verification we request of the identity of any individual purporting to act on your behalf.
4.4 You authorise us to record any telephone conversation we have with you (whether or not for the purposes of your sending an order to us) and agree that the records made by us shall be our property. You are advised that we may record conversations without the use of a warning tone. You agree that the recording shall be evidence of all such telephone calls and may be used as evidence in the event of a dispute.
4.5 We shall not be obliged to accept any particular order, nor do we need to give any reason for declining to do so. If we decline an order, we will try promptly to notify you of this where in our view we may do so without breach of Applicable Law.
4.6 You agree that if FCA Rules require us to provide certain general information and allow us to provide it via our website, that we may do so.
5. Execution and Delegation
5.1 When you give us an order we decide how it should be executed, subject to any overriding specific instruction from you and in accordance with the policy referred to in clause 5.2.
5.2 As required by FCA Rules we have established a "best execution" policy. A summary of our current policy is in Schedule 4. You consent to our policy and expressly consent to orders being executed outside EU regulated markets and multilateral trading facilities. You agree that we may update this policy from time to time and publish that policy or a summary on our website and that such publication shall constitute notification to you of our updated policy. You agree that subject to any express requirements which you specify in an order, we may exercise our discretion in relation to the nature, timing and other factors relevant to fulfilment of that order. If you wish, you can notify us that your order should be dealt with in a particular way. If you do so, your specific instructions may prevent us from taking the steps in our policy which are designed to achieve the best result for you. To the extent that you do not give specific instructions in relation to every execution factor, we will address other factors in accordance with our execution policy.
5.3 We may combine your order with orders of other customers. We may do so provided that it is unlikely that the aggregation of orders and transactions will work overall to the disadvantage of any client whose order is to be aggregated but the effect of aggregation may work to your disadvantage in relation to a particular order.
5.4 If you give us a limit order (an order to buy or sell at a specified price limit or better and for a specified size) then if the order is not immediately executed under prevailing market conditions, you instruct us not to make the order public immediately unless we consider that it is in your best interests to do so.
5.5 You agree that all orders are executed subject to applicable FCA Rules and the rules of any relevant investment exchange or multilateral or other trading facility. You agree that we are not responsible for any default or failure on the part of any counterparty to a transaction.
5.6 To the extent required under Applicable Law, we will make public certain details with respect to quotes provided to you and transactions executed with or for you and we will submit trade reports to third party Approved Publication Agents (“APAs”). We may not be required to do this in respect of each transaction and we retain sole discretion to determine where any trade should be trade reported for post trade transparency purposes.
You acknowledge that you may be separately required to submit trade reports regarding certain transactions. You will be solely responsible for assessing and determining whether you are subject to any trade reporting obligations in relation to any transaction that is executed by or through us, and you will be solely responsible for complying with any such trade reporting obligations that you are subject to.
We may agree to allow APAs to use certain data provided by us for the purposes of your trade reporting obligations, however if we do so you undertake, represent and warrant that you are and remain responsible and liable for the submission and accuracy of the data or related reports (including promptly checking and verifying such data, where applicable) and overall compliance with your trade reporting obligations. We give no representations or warranties as to the accuracy of such data and we shall not be liable for any losses arising in connection with the accuracy of such data or the failure of, or delays caused by any system, interface or other internal or external technology used for capturing transmission or receipt of such data or the APA services or any act or omission of such APA or any third party. We reserve the right to discontinue provision of such data at any time.
To enable us to comply with our transaction reporting obligations under Applicable Law, you agree to promptly deliver to us any information that we may from time to time request to enable us to complete and submit transaction reports to the relevant competent authority.
You acknowledge that you may be separately required to submit transaction reports regarding certain transactions. You will be solely responsible for assessing and determining whether you are subject to any transaction reporting obligations in relation to any transaction that is executed by or through us, and you will be solely responsible for complying with any such transaction reporting obligations that you are subject to.
You acknowledge that the disclosures made in the context of our trade or transaction reporting may include information about you (or, where applicable, your Customers) and you consent to us making such disclosures, which may be made to recipients in a jurisdiction other than ours or yours.
6. Settlement; Charges
6.1 Unless we agree otherwise, you are responsible for the due performance of every transaction which we enter into with or for you and you shall be responsible for any losses we incur as a result of your failure to deliver appropriate settlement instructions to us.
6.2 You will fully indemnify us from and against all Liabilities which may be suffered by, imposed on, incurred by or asserted against us as a direct result of any failure by you to settle transactions which result from orders we have arranged or executed on your behalf.
6.3 You will pay us a commission for arranging transactions for in accordance with the commission rates which we agree with you from time to time. Our rates are VAT exclusive. You will, unless we agree otherwise, pay the commission due to us to the settlement agent, which collects the commission as our agent.
6.4 We do not receive remuneration or fees from, or share fees and charges with, any third party, save that we may share commissions with research providers. We can provide further information on request.
7. Custody, Client Money and Margin
7.1 We do not provide you with custody, client money or lending services.
8. Conflicts, Material Interests, Self-Dealing and Dual Agency
8.1 In providing services under these Terms, we shall not be subject to any fiduciary duties which would oblige us to accept responsibilities more extensive than those set out in these Terms. When we advise or transmit or execute orders in investments for you, we may have an interest, arrangement or relationship that is material in relation to the transaction or investment concerned. The following are some examples of the type of interest, relationship or arrangement that could be involved:
8.1.1 we or any of our officers, employees, agents or other clients may have or hold a dealing position (long or short) in the investment concerned or a related investment or may have informed us of an intention to do so or instructed us to deal;
8.1.2 we or any of our members, officers, employees or agents may be a director or employee of a company which has issued or is selling or purchasing an investment;
8.1.3 we may be advising other persons in relation to investments on which we have advised or may advise you and we may not give the same advice to all clients;
8.1.4 we may be aware of the details of orders from other clients and will not disclose any such information to you;
8.1.5 we may cross your orders with orders from other clients.
8.2 You agree that we shall not be obliged to account to you for any profit, benefit, fee, commission or other amounts which we receive in connection with any interests, arrangements or relationships referred to in clause 8.1 and nor shall our fees be abated or reduced by such amounts.
9. Market Abuse
9.1 You agree that you will not deliberately, recklessly or negligently by act or omission engage in market abuse (within the meaning of Part VIII of the Financial Services and Markets Act 2000 (“FSMA”)) or insider dealing (within the meaning of Part V of the Criminal Justice Act 1993), or require or encourage another to do so or otherwise contravene any similar requirement under Applicable Law.
10. Personal Data
10.1 You hereby agree to provide us with "personal data" (as defined under the Data Protection Act 1998 (the "Data Protection Act")) where requested, in order for us to provide our services under these Terms and you hereby consent to the processing and use by us and our agents of such personal data for that purpose (including in order to update customer records and for other related purposes, including monitoring and analysis of our business, crime prevention and legal and regulatory compliance). You also consent to use of such personal data for the marketing by us to you of our investment products and services. We will hold and process your personal data in accordance with our obligations under the Data Protection Act. Individuals may request, in writing and on payment of a fee, a copy of the personal data we hold about them.
10.2 For the purposes set out above, we may transfer or disclose personal data to any third party in connection with the provision of Services (or in connection with credit checking and our compliance activities). These persons may be located worldwide. Personal data used, stored, or otherwise dealt with as described may be processed in countries with data protection laws which do not afford as much protection as in the UK and the European Union.
10.3 We agree that we will not disclose any information relating to you or these Terms to any third party, except as necessary for the performance of our and your obligations under these Terms or as required by law. Where so required by law, we will, to the extent and if permitted by law, notify you as soon as possible of such disclosure. We shall not be obliged to disclose any information to you which may be a breach of our duties of confidentiality to any other person.
10.4 To the extent that you provide personal data relating to other persons, you warrant that you have their authority to provide such data and to give the consents above, on their behalf.
11. Force Majeure
11.1 Subject to clause 12, we shall have no liability whatsoever to you nor be deemed to be in default under these Terms as a result of any delay or failure in performing our obligations under these Terms to the extent that any such delay or failure arises from causes beyond our reasonable control. This could include, but is not limited to, suspension of trading, acts of God, terrorist or suspected terrorist acts, acts or regulations of any governmental or supranational authority, war or national emergency, accident, fire, riot, civil disturbance, failure of electronic equipment or communications equipment, strikes, lock-outs and industrial disputes.
12.1 We shall not be liable to you for any Liability suffered or incurred by you except to the extent that such Liability directly results from our negligence, wilful default or fraud and we shall not be liable for any loss of profits or anticipated savings (in either case, whether direct or indirect) or any special, indirect, incidental or consequential damages which you may incur or experience in connection with the Services, even if we know of the possibility of those losses or damages Provided that nothing in this clause or these Terms shall exclude or restrict any duty or liability we may have to you under the regulatory system (as defined in FCA Rules).
12.2 We are not liable for the acts or omissions of any third party we use to execute transactions. We do not accept any liability to any person for whom you act and you will indemnify us and keep us indemnified against any action, claim or proceedings brought against us by any such person.
12.3 In the event that you accept liability or agree any compromise with any third party then this shall not increase the type or amount of any Liability which we owe to you beyond such type or amount which would have existed but for such agreement or compromise.
12.4 Nothing in these Terms shall exclude or limit our liability for any injury or death caused by our negligence or for Liabilities to the extent that such Liabilities result from our fraud or fraudulent misrepresentation.
12.5 You shall notify us promptly on becoming aware of any matter which you consider could give rise to a claim under these Terms.
12.6 Except to the extent that the same may result from our negligence, fraud, breach of these Terms, or breach of our obligations to you under the regulatory system you shall indemnify, protect, and hold us harmless on an after tax basis from and against any and all Liabilities arising in connection with any claims brought or established against us by any person arising out of the provision of the Services to you or any material breach by you of your obligations under these Terms provided that we (a) have taken all reasonable steps to avoid or minimise such Liabilities; (b) have informed you of any Liabilities in respect of which an indemnity is sought under these Terms as soon as practicable; and (c) keep you informed of and act reasonably in relation to any request from you in relation to any steps taken or to be taken to mitigate or make recovery in respect of Liabilities in respect of which an indemnity is sought.
13. Representations and Warranties
13.1 At the date these Terms come into force and each time you send us an order you give and are deemed to give the representations, warranties and undertakings to us that are set out in Schedule 3.
14. Applicability, Amendment and Termination
14.1 These Terms constitute legally binding terms of business and shall come into force upon the earlier of (a) you confirming your acceptance of these Terms; and (b) you accepting from us the benefit of any of the Services.
14.2 These Terms supersede any earlier Terms provided by us in respect of the same Services. We may amend or modify these Terms by giving you a written notice setting out the relevant changes not less than 10 Business Days before those changes take effect or immediately where in our sole discretion the change is necessary to enable us to comply with any legal or regulatory requirement. Such changes will become effective on a date to be specified in the notice of if no date is specified, within 10 Business Days of us issuing the notice to you.
14.3 You agree that we may amend our charges, fees and commission rates from time to time. Please ask us at any time should you require details of our current rates.
14.4 Either party may terminate the Services provided under these Terms by written notice to the other at any time with immediate effect with or without cause. Termination will not affect any outstanding orders or transactions or any legal rights or obligations which may already have arisen. Upon such termination, we will be entitled to receive from you all fees, costs, charges, expenses and liabilities accrued or incurred under these Terms up to the date of termination including any additional expenses or losses reasonably and properly incurred in terminating these Terms. For the avoidance of doubt, the indemnities in these Terms survive termination.
15. Third Party Rights
15.1 The Contracts (Rights of Third Parties) Act 1999 shall not apply to these Terms and accordingly no part of these Terms shall be directly or indirectly enforceable by any third party, nor is it intended to confer a benefit on any third party.
16. Governing Law and Jurisdiction
16.1 These Terms are governed by and shall be construed in accordance with the laws of England and any dispute arising in respect of the Services shall be subject to the exclusive jurisdiction of the English Courts to which we each submit.
17.1 If any provision of these Terms is or becomes inconsistent with any applicable present or future law, rule or regulation, that provision shall be deemed modified or, if necessary, rescinded in order to comply with the relevant law, rule or regulation. All other provisions of these Terms shall continue to remain in full force and effect.
18.1A failure by either party to exercise and any delay by any party in exercising any right, power or remedy under these Terms shall not operate as a waiver of that right, power or remedy or preclude its exercise at any subsequent time or on any subsequent occasion. The single or partial exercise of any right, power or remedy shall not preclude any other or further exercise of that right, power or remedy or the exercise of any other right, power or remedy.
19.1 If you have any complaints in relation to our Services, please address them to the Compliance Officer, at our address set out in clause 1.
20.1 We are not covered by the Financial Services Compensation Scheme.
21.1 Neither party may assign any of its rights or obligations under this agreement to any other person without the signed express written consent of the other party. These Terms will apply to your successor or personal representative or your permitted assignees.
22.1 Any notices, requests or other formal communications to be given by you to us regarding these Terms shall be sent to our principal place of business address as specified in clause 1 and marked for the attention of the Compliance Officer.
22.2 You agree that where we determine appropriate, any communications required to be sent to you under the FCA Rules may be transmitted or provided electronically by us.
23.1 These Terms may be executed in any number of counterparts and by the parties to them on separate counterparts, each of which is an original but all of which together constitute due execution of these Terms.
24.1 References to any statute or statutory provision or the FCA Rules will, unless the context otherwise requires, be construed as including references to all bylaws, instruments, orders and regulations for the time being made thereunder or deriving validity therefrom and references to the same as it or they may have been, or may from time-to-time be, amended, modified or re-enacted.
24.2 Unless the context otherwise requires, the singular includes the plural (and vice versa) and references to persons include companies and partnerships.
24.3 Words and expressions defined in the FCA Rules shall have the same meaning in these Terms unless the same are expressly defined herein or unless the context otherwise requires.
24.4 In these Terms:
Applicable Law means any laws, statutes, regulations, directives, rules, directions, codes, ordinances, judgments, decrees, writs or orders enacted, adopted, issued or promulgated by any governmental body (including for this purpose the FCA) or any supranational, national, state, provincial or local common law or any consent decree, stipulation or settlement agreement entered into with any governmental body (including without limitation the FCA Rules);
Business Day means any day on which the London Stock Exchange is open for business;
Customer means a person other than you who acts as principal to a transaction and for whom you act in relation to that transaction as agent, trustee, representative or otherwise;
Eligible Counterparty shall have the meaning ascribed to it per Article 24 of MiFID
Event of Default An Event of Default occurs where:
- (a) you make a general assignment for the benefit of, or enter into a re-organisation, arrangement or composition with, creditors;
- (b) you state in writing that you are unable to pay your debts as they become due;
- (c) you seek, consent to or otherwise acquiesce in, the appointment of anytrustee or administrator, receiver or liquidator or analogous officer of you or any material part of your property;
- (d) you or any other person has filed a petition or other application in any court or before any agency alleging or for your bankruptcy, winding-up or insolvency or seeking any re-organisation, arrangement, composition, re-adjustment, administration, liquidation, dissolution or similar relief under any present or future statute, law or regulation and, where such petition or other application is presented or filed by a person other than you such petition or other application (except in the case of a petition for winding-up or analogous proceeding, or in the case of an application for an administration order, in respect of which no such 30 day period shall apply) has not been stayed or dismissed within 30 days of its presentation or filing;
- (e) a receiver, administrator, liquidator or trustee or analogous officer is appointed over all or any material part of your property, or a notice of intention to appoint an administrator is given or filed;
- (f) a meeting of creditors is convened for the purpose of considering a proposal for a composition in satisfaction of your debts or a scheme of arrangement of your affairs or any analogous proceeding;
- (g) an attachment before judgment or in execution is levied over all or any material part of your property;
- (h) a moratorium is agreed, declared or otherwise obtained in respect of or affecting all or any material part of your indebtedness;
- FCA means the UK Financial Conduct Authority and any replacement or substitute body or bodies;
- FCA Rules means the rules in the FCA Handbook or otherwise made by the FCA as from time to time in force;
- Liability means any liability, damage, loss, cost (including without limitation legal fees), claim, judgment, suit, action, proceeding or expense of any kind or nature, whether direct, indirect, special, consequential or otherwise;
- Market Commentary has the meaning given in clause 3.3;
- MiFID Directive 2004/39/EC as amended, substituted or replaced from time to time;
- MTF means a multilateral trading facility;
- Professional Client shall have the meaning ascribed to it per Annex II, Part 1 of MiFID
- Per Se Professional Client has the meaning given in the FCA Rules;
- Retail Client has the meaning given in the FCA Rules;
- Terms has the meaning given in clause 1.
A. General risks of investment activity
- Past performance is not an indicator of future performance.
- The value of investments may go down as well as up.
- You are not certain to make a profit. You may make a loss. You may lose your entire investment.
- The price or value of investments may fluctuate significantly.
- If there are income distributions, they may also fluctuate significantly.
B. Warrants risk warning notice
This notice cannot disclose all the risks and other significant aspects of warrants. You should not deal in these products unless you understand their nature and the extent of your exposure to risk. You should also be satisfied that the product is suitable for you in the light of your circumstances and financial position.
Although warrants can be utilised for the management of investment risk, some of these products are unsuitable for many investors. Different instruments involve different levels of exposure to risk and in deciding whether to trade in such instruments you should be aware of the following points.
A warrant is a time-limited right to subscribe for shares, debentures, loan stock or government securities and is exercisable against the original issuer of the underlying securities. Warrants often involve a high degree of gearing so relatively small movement in the price of the underlying security can result in a disproportionately large movement, unfavourable or favourable, in the price of the warrant. The prices of warrants can therefore be volatile.
It is essential for anyone who is considering purchasing warrants to understand that the right to subscribe which a warrant confers is invariably limited in time with the consequence that if the investor fails to exercise this right within the predetermined time-scale then the investment becomes worthless.
You should not buy a warrant unless you are prepared to sustain a total loss of the money you have invested plus any commission or other transaction charges.
2. Off-exchange warrant transactions
Transactions in off-exchange warrants may involve greater risk than dealing in exchange traded warrants because there is no exchange market through which to liquidate your position or to assess the value of the warrant or the exposure to risk. Bid and offer prices need not be quoted, and even where they are, they will be established by dealers in these instruments and consequently it may be difficult to establish what is a fair price.
Before you begin to trade you should have details of all commissions and other charges for which you will be liable.
4. Foreign markets
Foreign markets will involve different risks from UK markets. The potential for profit or loss from transactions on foreign markets will also be affected by fluctuations in foreign exchange rates.
C. Derivatives risk warning notice
This notice cannot disclose all the risks and other significant aspects of derivatives. You should not deal in these products unless you understand their nature and the extent of your exposure to risk. You should also be satisfied that the product is suitable for you in the light of your circumstances and financial position. Certain strategies, such as a ‘spread’ position or a ‘straddle’, may be as risky as a simple ‘long’ or ‘short’ position.
Although derivative instruments can be utilised for the management of investment risk, some of these products are unsuitable for many investors. Different instruments involve different levels of exposure to risk and in deciding whether to trade in such instruments you should be aware of the following points.
Transactions in futures involve the obligation to make, or to take, delivery of the underlying asset of the contract at a future date, or in some cases to settle your position with cash. They carry a high degree of risk. The "gearing" or "leverage" often obtainable in futures trading means that a small deposit or down-payment can lead to large losses as well as gains. It also means that a relatively small market movement can lead to a proportionately much larger movement in the value of your investment, and this can work against you as well as for you. Futures transactions have a contingent liability, and you should be aware of the implications of this, in particular the margining requirements (see below at paragraph 6).
There are many different types of options with different characteristics subject to different conditions.
Buying options involves less risk than selling options because, if the price of the underlying asset moves against you, you can simply allow the option to lapse. The maximum loss is limited to the premium, plus any commission or other transaction charges. However, if you buy a call option on a futures contract and you later exercise the option, you will acquire the future. This will expose you to the risks described under "futures" and "contingent liability transactions".
If you write an option, the risk involved is considerably greater than buying options. You may be liable for margin to maintain your position and a loss may be sustained well in excess of any premium received. By writing an option, you accept a legal obligation to purchase or sell the underlying asset if the option is exercised against you, however far the market price has moved away from the exercise price. If you already own the underlying asset that you have contracted to sell (known as "covered call options") the risk is reduced. If you do not own the underlying asset (known as "uncovered call options") the risk can be unlimited. Only experienced persons should contemplate writing uncovered options, and then only after securing full details of the applicable conditions and potential risk exposure.
A particular type of option called a "traditional option" is written by certain London Stock Exchange firms under special exchange rules. These may involve greater risk than other options. Two-way prices are not usually quoted and there is no exchange market on which to close out an open position or to effect an equal and opposite transaction to reverse an open position. It may be difficult to assess its value or for the seller of such an option to manage his exposure to risk.
Certain options markets operate on a margined basis, under which buyers do not pay the full premium on their option at the time they purchase it. In this situation you may subsequently be called upon to pay margin on the option up to the level of your premium. If you fail to do so as required, your position may be closed or liquidated in the same way as a futures position.
3. Contracts for differences
Futures and options contracts can also be referred to as "contracts for differences". These can be options and futures on the FTSE 100 index or any other index, as well as currency and interest rate swaps. However, unlike other futures and options, these contracts can only be settled in cash. Investing in a contract for differences carries the same risks as investing in a future or an option and you should be aware of these as set out in paragraphs 1 and 2 respectively. Transactions in contracts for differences may also have a contingent liability and you should be aware of the implications of this as set out in the paragraph 6 below.
4. Off-exchange transactions
It may not always be apparent whether or not a particular derivative is on or off-exchange. While some off-exchange markets are highly liquid, transactions in off-exchange or "non-transferable" derivatives may involve greater risk than investing in on-exchange derivatives because there is no exchange market on which to close out an open position. It may be impossible to liquidate an existing position, to assess the value of the position arising from an off-exchange transaction or to assess the exposure to risk. Bid and offer prices need not be quoted, and, even where they are, they will be established by dealers in these instruments and consequently it may be difficult to establish what is a fair price.
5. Foreign markets
Foreign markets will involve different risks from UK markets. In some cases the risks will be greater. The potential for profit or loss from transactions on foreign markets or in foreign denominated contracts will also be affected by fluctuations in foreign exchange rates.
6. Contingent liability transactions
Contingent liability transactions which are margined require you to make a series of payments against the purchase price, instead of paying the whole purchase price immediately.
If you trade in futures, contracts for differences or sell options you may sustain a total loss of the margin you deposit with your broker to establish or maintain a position. If the market moves against you, you may be called upon to pay substantial additional margin at short notice to maintain the position. If you fail to do so within the time required, your position may be liquidated at a loss and you will be liable for any resulting deficit.
Even if a transaction is not margined, it may still carry an obligation to make further payments in certain circumstances over and above any amount paid when you entered the contract.
Contingent liability transactions which are not traded on or under the rules of a recognised or designated investment exchange may expose you to substantially greater risks than those which are so traded.
7. CollateralIf you deposit collateral as security with your broker, the way in which it will be treated will vary according to the type of transaction and where it is traded. There could be significant differences in the treatment of your collateral depending on whether you are trading on a recognised or designated investment exchange, with the rules of that exchange (and associated clearing house) applying, or trading off exchange. Deposited collateral may lose its identity as your property once dealings on your behalf are undertaken. Even if your dealings should ultimately prove profitable, you may not get back the same assets which you deposited and may have to accept payment in cash.
8. CommissionsBefore you begin to trade, you should obtain details of all commissions and other charges for which you will be liable. If any charges are not expressed in money terms (but, for example, as a percentage of contract value), you should obtain a clear written explanation, including appropriate examples, to establish what such charges are likely to mean in specific money terms. In the case of futures, when commission is charged as a percentage, it will normally be as a percentage of the total contract value, and not simply as a percentage of your initial payment.
9. Suspensions of trading
Under certain trading conditions it may be difficult or impossible to liquidate a position. This may occur, for example, at times of rapid price movement if the price rises or falls in one trading session to such an extent that under the rules of the relevant exchange trading is suspended or restricted. Placing a stop-loss order will not necessarily limit your losses to the intended amounts, because market conditions may make it impossible to execute such an order at the stipulated price.
10. Clearing House protections
On many exchanges, the performance of a transaction by your broker (or the third party with whom he is dealing on your behalf) is "guaranteed" by the exchange or its clearing house. However, this guarantee is unlikely in most circumstances to cover you, the customer, and may not protect you if another party defaults on its obligations to you. There is no clearing house for traditional options, nor normally for off-exchange instruments which are not traded under the rules of a recognised or designated investment exchange.
11. Liquidation of position
Positions may be liquidated or closed out without your consent in the event you fail to meet a margin call. Additionally, the insolvency or default of any broker involved in your transaction may lead to positions being liquidated or closed out without your consent. In certain circumstances, you may not get back the actual assets which you lodged as collateral and you may have to accept any available payment in cash.
D. Penny shares warning notice
There is an extra risk of losing money when shares are bought in some smaller companies including penny shares. There is a big difference between the buying price and the selling price of these shares. If they have to be sold immediately, you may get back much less than you paid for them. The price may change quickly and it may go down as well as up.
You may have difficulty selling some investments at a reasonable price and, in some circumstances, investments may be difficult to sell at any price. In relation to some investments, there may be only one market maker.
CRITERIA FOR CLASSIFICATION AS A PER SE PROFESSIONAL CLIENT
An entity required to be authorised or regulated to operate in the financial markets, including:
- (a) a credit institution;
- (b) an investment firm;
- (c) any other authorised or regulated financial institution;
- (d) an insurance company;
- (e) a collective investment scheme or the management company of such a scheme;
- (f) a pension fund or the management company of a pension fund;
- (g) a commodity or commodity derivatives dealer;
- (h) a local; or
- (i) any other institutional investor.
A large undertaking meeting at least two of the following size requirements on a company basis:
- (a) balance sheet total of at least EUR 20,000,000;
- (b) net turnover of at least EUR 40,000,000;
- (c) own funds of EUR 2,000,000.
A national or regional government, a public body that manages public debt, a central bank, an international or supranational institution or another similar international organisation.
Another institutional investor whose main activity is to invest in financial instruments.
REPRESENTATIONS AND WARRANTIES
At the date these Terms come into force and each time you send us an order you give and are deemed to give the representations, warranties and undertakings to us that are set out below.
- 1. You have all necessary power, authority and capacity (including under any applicable investment restrictions or guidelines) to execute, deliver and perform your obligations under these Terms and any transaction entered into as a result of an order given by you under these Terms.
- 2. This agreement is your legal, valid, binding and enforceable obligation.
- 3. You have and maintain all licences, consents and authorisations required by Applicable Law in connection with your obligations under these Terms.
- 4. The execution, delivery, performance and discharge by you of your obligations and liabilities under these Terms do not and will not: contravene any Applicable Law; conflict with or result in any breach of any of the terms of or constitute a default under any agreement, instrument, license or other authorisation to which you are a party or subject or by which you or any of your property is subject; or contravene or conflict with any provision of your memorandum or articles of association.
- 5. All securities, commodities, futures currencies, derivatives thereon and any other instruments that you offer and sell using the Services shall be free and clear of any liens, mortgages, encumbrances or restrictions of any kind (including legends or restrictions on transfer), both when they are offered or sold and upon delivery at settlement.
- 7. You are a sophisticated investor and you understand the transaction and the nature and extent of the potential risks and have independently determined (after taking independent advice if you are unsure) that the transaction is appropriate for you or your Customer in the light of your/your Customer’s objectives, experience, financial and operational resources and other relevant circumstances.
- 8. You have and will at all times have sufficient funds to meet your duties, liabilities and obligations incurred under orders you give us under these Terms.
- 9. Except to the extent that you have notified us otherwise, no Event of Default has occurred.
- 10. If you are acting on behalf of one or more Customers in relation to any order, then you additionally represent, warrant and undertake to us that:
- (a) you have and will have full power, authority and capacity (including under any applicable investment restrictions or guidelines) to enter into these Terms and to perform all obligations under these Terms;
- (b) each Customer for whom you send an order to us has full power, authority and capacity to enter into any resulting transaction and will at all times have sufficient funds or investments to meet its settlement obligations in respect of any transaction;
- (c) you have no reason to consider that any such Customer is or is likely to become insolvent;
- (d) you have obtained and recorded evidence of the identity of any such Customer in accordance with all applicable laws and regulations and you will provide us with such information or confirmations in relation to any such Customer as we may reasonably require to comply with applicable laws and regulations.
BEST EXECUTION AND CLIENT ORDER HANDLING POLICY
As required by the Markets in Financial instruments Directive II (‘MiFID II’), this document (the “Policy”) sets out Whitman Howard Limited (“the Firm”) Client Order Handling Policy and arrangements for complying with the obligation to take all sufficient steps to obtain the best possible outcome for our client’s orders (so called ‘best execution’). As detailed in the Firm’s Terms of Business, clients are deemed to have consented to their transactions being handled in accordance with this Policy.
This Policy has been updated to take into account new rules arising as a result of the implementation of the Markets in Financial Instruments Directive 2014/65/EU (“MiFID II”) that came into force on 3 January 2018.
What is best Execution?
MiFID II requires that all sufficient steps are taken to obtain the best possible result for professional clients (Professional Clients) within the meaning of Annex II of MiFID II, when executing orders (or receiving and transmitting orders to a third party) on their behalf in respect of financial instruments (Best Execution), taking into account execution factors such as price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order (Execution Factors).
Best Execution does not mean that we can guarantee that the best price will be achieved for every single client order. However, we will look to ensure that we are acting, to the extent that it is possible, in the best interests of our clients.
This Policy applies where we receive from you an order in respect of MiFID Financial Instruments. The MiFID Financial Instruments are listed below. The Firm currently primarily trades in Equity securities.
The policy applies for those clients who have been classified as Professional clients, and where the Professional Clients is legitimately relying on us to protect their interests (Legitimate Reliance). For Professional Clients each specific transaction needs to be assessed in order to make a determination as to whether the client is ‘legitimately relying’ on the Firm to protect their interests
In order to determine whether a professional client is ‘legitimately relying’ on the Firm in relation to a particular client order (whereby best execution is therefore owed to the client) we will consider the four fold test set out by the European Commission:
- (a) Whether we or the client initiates transactions
- Where the Professional Client initiates the transaction, this suggests that it is less likely that the Professional Client will be placing reliance on us. We may communicate trade ideas, relevant market opportunities or indicative prices to the Professional Client as part of our general relationship and we do not consider that this means that we will be deemed to have initiated the transaction;
- (b) Shop around
- Where the market practice suggests that the client takes responsibility for the pricing and other elements of the transaction and the market practice is to obtain quotes from various sources, it is less likely that the Professional Client will be placing reliance on us;
- (c) Relative levels of transparency within a market
- If we have ready access to prices in the market in which we operate, whereas the Professional Client does not, it is more likely that the Professional Client will be placing reliance on us, whereas if our access to pricing transparency is broadly equivalent, it is less likely that the Professional Client will be placing reliance on us; and
- (d) Information provided by us and the terms of our agreements with the client
- Where our arrangements and agreements with the Professional Client (such as our terms of business and this policy) state that we will not provide best execution, it is less likely that the Professional Client will be placing reliance on us.
The Best Execution obligation
When we execute an order on your behalf, we will, subject to any specific instructions that you give us, take all sufficient steps to obtain the best possible result for you in accordance with MiFID and our Order Handling Policy, taking into account the factors identified below.If you give us specific instructions as to how you wish your order to be executed, we will follow those instructions. This may prevent us from taking the steps that we have designed and implemented to obtain the best possible result for the execution of your orders. The Firm will be deemed to have satisfied its best execution obligations in respect of that part of the order to which the specific instructions relate. In taking all sufficient steps, the Firm will look to achieve the best balance across a range of sometimes conflicting execution factors. This does not mean achieving the best outcome for every individual client order, but the best possible outcome that can reasonably be expected given the resources available to the Firm.
We use the execution services of one or more executing brokers who are the means by which you access different execution venues. We can only use executing brokers who are willing to execute and settle trades with you. We will need to instruct the executing broker(s) as to your identity before we provide any Services.
Transmission of orders to brokers
In the event that it is decided to transmit the order to a third party for execution, a broker will be selected based on the Firm’s assessment of the execution criteria in relation to that particular trade order, and in accordance with its prioritisation of the execution factors. This will typically lead to the broker being selected that is expected to provide the most favourable outcome for the client in terms of the price/cost of the trade, although other factors will be taken into consideration.
- The Firm typically transmit orders to brokers in the following ways:
- Bloomberg Chat
We include in our Order Handling Policy details of the various sources of liquidity, which we access for each of the financial instruments covered by MiFID in respect of which we transmit orders on behalf of clients. These sources of liquidity are referred to as "execution venues" and include: regulated markets and multilateral trading facilities; systematic internalisers, market makers and other liquidity providers; and non-EEA entities performing a similar function to any of the above. We include those execution venues that we believe enable us to obtain on a consistent basis the best possible result for the execution of your orders. As a consequence, we may instruct the execution of orders on an execution venue which is not a regulated market or a multilateral trading facility under MiFID. More details about the execution venues that we include in our Order Handling Policy for individual financial instruments will be available upon request.
The decision as to an appropriate execution venue is undertaken on a trade by trade basis, and depends on the reason for the trade, the size of the order, the percentage of average daily volume that the trade represents, the available liquidity in the stock at the time, or any other execution factors deemed relevant by the Firm traders.
The Firm will assess, on a regular basis, whether the execution venues included in this policy provide for the best possible result for the client, or whether changes to the execution arrangements need to be made.
The Firm receives no payment for order flow nor inducements from any venue.
Subject to any specific instructions that we accept from you, we take into account a range of factors in deciding where to direct your order. These include price, costs, speed, likelihood of execution and settlement, together with any other consideration relevant to the execution of the order. In determining the relative importance of these factors we will take into account your status as a Professional Client, together with the nature of your order, the characteristics of the financial instruments to which the order relates and the characteristics of the execution venues to which the order can be directed.
We will generally give the highest priority to total consideration, representing the price of the relevant financial instruments and the costs related to execution. However, we may at our discretion prioritise other factors, including the impact on market prices of displaying and executing your order, the speed and likelihood of execution and the availability of price improvement. We may prioritise such other factors where there is insufficient immediately available liquidity on the relevant execution venue(s) to execute your order in full, where you instruct us to work your order over a period of time or by reference to a benchmark calculated over a period of time or where we determine that there are other circumstances such that obtaining the best immediately available price may not be the best possible result for you.
In determining what is the best possible result for, you, we do not compare the results that can be achieved for you on the basis of our Order Handling Policy and fees with results that might be achieved for you by another investment firm on the basis of that firm's execution policy or a different structure of commission or fees, nor do we compare the differences in our own commissions or fees which are attributable to the nature of the services that we provide to you.
Monitoring and review
We monitor the effectiveness of our order execution arrangements and Order Handling Policy on an ongoing basis to identify and implement any appropriate enhancements. In addition, we regularly review whether the execution venues included in the Policy, and the brokers and dealers to whom we transmit orders for execution provide for the best possible result for our clients on a consistent basis and whether we need to make changes to these execution arrangements.
Updates to the Policy
This Policy may be updated from time to time and shall be reviewed on an annual basis or upon any material change to our execution arrangements. A material change means a significant event that may impact the Execution Factors. The latest version of the Policy is available on our website: www.whitman-howard.com
Client consent to the Firm’s execution policy
Where firms provide direct execution on behalf of clients, it is a requirement to obtain the client’s consent to the firm’s execution policy prior to commencing this business. Since we provide appropriate information on our execution policy to all clients, if a client chooses to continue with the business relationship having received this information then this can be taken as implicit consent.
The Firm will execute client orders outside of Trading Venues, and therefore explicit consent will be required from the client before the provision of services can commence. The Acknowledgement and Client Information Form is included as part of these terms of business. The client is required to completed and return this form to us.
MiFID Financial Instruments
- (1) Transferable securities;
- The Firm does trade in equity instruments, and therefore these instruments are in the scope of this Policy.
- (2) Money-market instruments;
- The Firm does not presently generally trade in Money-market instruments.
- (3) Units in collective investment undertakings;
- The Firm does not presently generally trade in units in collective investment undertakings.
- (4) Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, emission allowances or other derivatives instruments, financial indices or financial measures which may be settled physically or in cash;
- The Firm does not presently generally trade in these instruments.
- (5) Options, futures, swaps, forward rate agreements and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default or other termination event);
- The Firm does not presently generally trade in these instruments.
- (6) Options, futures, swaps, and any other derivative contract relating to commodities that can be physically settled provided that they are traded on an RM, an MTF, or an OTF, except for wholesale energy products traded on an OTF that must be physically settled;
- The Firm does not presently generally trade in these instruments.
- (7) Options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be physically settled not otherwise mentioned in C.6 and not being for commercial purposes, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are cleared and settled through recognised clearing houses or are subject to regular margin calls;
- The Firm does not presently generally trade in these instruments.
- (8) Derivative instruments for the transfer of credit risk;
- The Firm does not presently generally trade in these instruments.
- (9) Financial contracts for differences.
- The Firm does not presently generally trade in these instruments.
- (10) Options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates, emission allowances or inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default or other termination event), as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in this Section, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market, MTF or ORF, are cleared and settled through recognised clearing houses or are subject to regular margin calls.
- The Firm does not presently generally trade in these instruments.
Public Reporting Requirements
Quality of execution
We will publish data on the quality of execution of transactions on our website www.whitman-howard.com.
We will publish data on our top five Execution Venues and Brokers on our website www.whitman-howard.com.
Further information is available from the Compliance Officer at Whitman Howard.