Order Execution Policy

Trek Labs Europe Ltd. dba Backpack EU

ORDER EXECUTION POLICY

1. INTRODUCTION

Trek Labs Europe Ltd (hereinafter called the "Company", "us", or "we"), is a Cyprus Investment Firm (“CIF”) licensed and regulated by the Cyprus Securities and Exchange Commission (“CySEC”) license 273/15, incorporated and registered under the laws of the Republic of Cyprus with registration No. 335683.

The Company has established this Order Execution Policy (the “Policy”) in accordance with the Markets in Financial Instruments Directive 2014/65/EU (“MiFID II”) and in accordance with the Law regarding the provision of investment services, the exercise of investment activities and the operation of regulated markets L.87(I)/2017, as amended from time to time (the “Law”).

MiIFD II requires firms to take all sufficient steps to obtain, when executing orders, the best possible result for their clients taking into account price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order.

2. SCOPE OF THIS POLICY

This Policy applies to Retail and Professional Clients (please refer to the Company’s Client Categorisation Notice for more details). This Policy does not apply to Eligible Counterparties.

This Policy applies when receiving and transmitting Client Orders or executing Client Orders for the Client and when taking decisions to deal for all types of financial instrument, as applicable, offered by the Company to the Client.

The Company provides execution services to its clients in relation to exchange-traded derivative financial instruments under MiFiD II and arranges the execution of orders on a third-party EU-regulated Multilateral Trading Facility.

The Policy sets out the execution procedures for the financial instruments offered by the Company. Clients must therefore ensure that they have read, understood and consent to the contents of this Policy before trading with the Company.

3. DELIVERING BEST EXECUTION AND BEST INTEREST

According to the Regulations, the Company is required to take all sufficient steps to obtain, when executing orders, the best possible result for their clients taking into account price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order.

This Policy is designed to provide clients with the best possible result for orders executed rather than the best possible result in respect of every single occasion.

The Company's operations times are: round - the - clock, seven days a week. Any changes in the Company's operations times as well as holidays and trading times for specific financial instruments are shown on the Company's website.

3.1 Specific client instructions

Any specific instructions from a client may prevent the Company from taking the steps that have been designed and implemented in this Policy to obtain the best possible result from the execution of those orders in respect of the elements covered by those instructions. Hence such orders are executed under the Client’s responsibility with no liability on the Company. However, by executing a client’s order based on the specific instructions provided by the Client, the Company shall satisfy its obligation to provide the Client with best execution. If Clients provide specific instructions in respect of part of their orders only, the Company will apply this Policy to the remainder of the order.

3.2 Risks associated with execution

Clients should be aware of the risks associated with execution, placement which include but are not limited to:

  • Slippage

  • Execution of orders placed during periods of high volatility

  • Trading System or Internet Connectivity Execution Delays

3.3 Best Execution Factors (Execution Criteria)

In the absence of specific client instructions, the Company shall take all sufficient steps to obtain the best possible results for its Clients taking into account the following factors when executing Clients’ Orders:

3.3.1 Price

With respect to exchange-traded financial instruments, the Company will provide its clients prices available from the execution venue(s). Such prices are determined by the offer and demand of buyers and sellers on the market, with consideration of the price of the underlying asset of such a financial instrument, which are represented by benchmark indices. The use of different benchmark indices by different execution venues may produce material differences in the price of apparently similar instruments and therefore the reference prices may not be comparable.

The Company will periodically review the underlying benchmark price levels for comparison with similar benchmarks to ensure it continues to adhere to the best interests of clients on price.

3.3.2 Costs

Costs are any additional charges that may be incurred in executing the order in a particular way over and above the Company’s normal charges.

The costs quoted by the Company for trading its financial instruments are inclusive of any costs by third-party execution venues such as clearing or settlement fees involved in the execution of Client orders.

For opening a position, the client may be required to pay commission or funding rates, the amount of which is disclosed on the Company’s Website. Commissions may be charged either in the form of a percentage of the overall value of the trade or as fixed amount.

For all types of instruments that the Company offers, the commission and funding rates are not incorporated into the Company’s quoted price for the instruments and are instead charged explicitly to the Client account.

The Company takes all reasonable steps to keep the costs of transactions as low and competitive, to the extent possible.

3.3.3 Speed of Execution

The Company places a significant importance when executing client’s orders and strives to offer high speed of execution, within the limitations of technology and communications links, at all times. The Company takes utmost care to ensure fastest possible order execution by maintaining high speed connections through servers hosted globally. Trading platform is scrutinized from time-to-time to test its performance.

The use of wireless connection or dial-up connection or any other form of unstable connection at the client’s end, may result in poor or interrupted connectivity or lack of signal strength causing delays in the transmission of data between the client and the Company when using the Company’s platform. For example, the client’s order might be delayed to be received by the Company’s platform and thus it may affect the price of execution.

Execution speed and the opportunity for price improvement are critical to every trader and we repeatedly monitor these factors to ensure we maintain our high execution standards.

3.3.4 Likelihood of execution and settlement

The likelihood of execution depends on the availability of liquidity by the execution venues while the likelihood of settlement refers to the reliability that the transaction will be fulfilled by both parties. In some cases it may not be possible to arrange an order for execution, for example but not limited in the following cases:

  • during major news times,

  • during volatile markets where prices may move significantly up or down and away from declared prices,

  • 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,

  • where there is insufficient liquidity for the execution of the specific volume at the declared price,

  • if force majeure event has occurred.

In the event that the Company is unable to proceed with an order with regard to price or size or other reason, the order will not be executed. In addition, the Company is entitled, at any time and at its discretion, without giving any notice or explanation to the Client, to decline or refuse to transmit or arrange for the execution of any order or of the Client in circumstances explained in the Client Terms and Conditions.

The Company will continuously monitor the liquidity of its execution venues to ensure that it supports the best execution to its clients.

3.3.5 Size of order

For each product and order type, the Company allows a minimum and a maximum trade size. The relevant sizes vary depending on relevant market conditions that relate to the specific underlying instrument and the overall exposures.

The Company reserves the right to decline an order, in case the size of the order is large and cannot be filled.

3.3.6 Nature of the Market

Some factors may rapidly affect the price of the underlying instruments/products from which the Company’s quoted price is derived and may also affect other factors listed herein. The Company will take all sufficient steps to obtain the best possible result for its Clients.

The Company does not consider the above list exhaustive and the order in which the above factors are presented shall not be taken as priority factor. Nevertheless, whenever there is a specific instruction from the Client, the Company shall make sure that the Client’s order shall be executed following the specific instruction (referabove for further details).

The duty of best execution does not only relate to price but also involves the consideration of various factors including cost, speed and likelihood of execution and settlement. Even if a trade appears not to have been executed at the best possible price, it does not necessarily constitute a violation of the duty of best execution.

3.4 Types of Order(s) in trading Financial Instruments

3.4.1 Nature of the order

Given the nature of risk and volatility of financial markets, the client may want to consider using different types of orders to limit risk and manage investment strategies. The particular characterizing of an order can affect the execution of the client’s order. The following types of orders can be placed (it should be noted that the following descriptions of order types may apply only to some and not all types of financial instruments):

  • “Limit Order”: In general, a limit order is an order sent that will buy/sell up to a certain price. Limit orders are not guaranteed to get filled--if no one is willing to sell below the limit price (or buy above, in the case of a sell limit order) then the order will not be fully filled and the remainder will be sent as a providing order on the orderbook at the limit price. However, limit orders do guarantee that to the extent you do get filled on it, the fills will be at a price no worse than your limit price.

  • “Market Order”: A market order is an order sent as far through the book as possible. Normally this means that market orders will get fully filled but that it could be at any price.

  • “Stop Loss” (Limit and Market): When creating a stop-loss order, the client directly inputs the desired trigger price. If the client is buying, the order will get sent when the market price exceeds the trigger price. If the client is selling, the order will get sent when the market price drops below the trigger price.

  • “Take Profit” (Limit and Market): Like for a Stop-loss order, the client directly inputs the trigger price when creating a Take profit order. If the client is buying, the order will get sent when the market price drops below the trigger price. If the client is selling, the order will get sent when the market price exceeds above the trigger price.

  • “Pending Order”, which is an order to be executed at a later time at the price that the Client specifies. The Company will monitor the Pending Order and when the market price reaches the price specified by the Client, the Pending Order will automatically become a specified Order.

  • "Stop-Out" Order: The Company has the right without the consent of the Client or by giving any prior notice to close the Client's open position in the event the client has not the sufficient funds as per our terms and conditions for maintaining his open positions.

All of the stop order types are triggered by the mark price of the relevant market. Mark price is the median of bid, ask, and last.

Orders of Stop Loss and Take Profit can be attached to a pending order. After a pending order has triggered, its Stop Loss and Take Profit levels will be attached to the open position automatically.

3.5 Determination of the relative importance of the Execution Factors (Execution Criteria)

In considering the application of best execution to client orders, the Company will consider the relative importance of the execution factors by reference to the following criteria in order to provide clients with the best result for their orders:

  • the characteristics of the client, including the categorisation of the client as a Retail or Professional client – Professional clients may have different needs than Retail clients;

  • the characteristics of the client order – such as the potential of the order to have an impact on the market;

  • the characteristics of the financial instruments that are the subject of that order – such as liquidity and whether there is a recognized centralized market;

  • the characteristics of the Execution Venues or entities to which that order can be directed – particular features of the liquidity sources available to the Company.

The relative importance assigned to each of the executions factors is as follows:

  • Price: High

  • Costs: High

  • Speed of execution: High

  • Likelihood of execution and settlement: High

  • Size: Medium

  • Nature of market: High

For its exchange-traded products, the Company will consider the total consideration payable by the client as an appropriate concept to deploy in determining how to apply the factors listed above. Total consideration is the price of the financial instrument and the costs related to execution.

It is noted that the Company may consider that in certain cases the speed, likelihood of execution and settlement, the size and nature of the order, the market impact and any other implicit transaction costs may give precedence over the immediate price and cost consideration only insofar as they are instrumental in delivering the best possible result in terms of total consideration.

4. EXECUTION VENUES

To achieve best execution for its exchange-traded financial instruments, the Company has selected a single execution venue approach to enable it to consistently achieve best execution for its clients. This approach was selected based on:

  • The financial instruments offered by the Company are customised and feature unique terms, pricing models and benchmarks. As such, identical instruments are not available on other venues. While similar instruments may exist elsewhere, they serve only as indicative references and are not true substitutes.

  • Beyond the above, only a limited number of venues within Europe meet the regulatory standards under MiFID II and related guidance, while being simultaneously independent.

Accordingly, for its exchange traded derivatives, the Company selected PM MTF Ltd, an EU Multilateral Trading Facility operating in Cyprus and regulated by the Cyprus Securities and Exchange Commission. The Company has satisfied itself that it meets the requirements to meet best execution for its clients.

The Company will continue monitoring its best execution approach, including the choice of Execution venue as described in Section 6.

5. CLIENT ORDER HANDLING AND ALLOCATION POLICY

In accordance with the obligations under the Regulations, the Company will endeavour to provide clients with prompt, fair and expeditious execution of client orders placed with the Company, relative to other orders from its clients. In so doing, the Company:

  • promptly and accurately records and allocates orders executed on behalf of clients;

  • carries out comparable client orders sequentially and promptly unless the characteristics of the order or prevailing market conditions make this impracticable, or the interests of the client require otherwise; and

  • informs Retail clients about any material difficulty relevant to the proper carrying out of orders promptly upon becoming aware of the difficulty.

All executed trades are immediately viewable on the Client’s account, as is the ‘profit and loss’ associated with closed trades, and all sufficient steps are taken to ensure accuracy.

In some occasions, orders executed on the online trading system may get executed at wrong prices. The Company has the right to review the client’s order's details in terms of price, time, volume and the validity of execution type whether they are in the form "Pending" or "Market" orders through the online trading system, and in case of any discrepancies, the Company - without prior notice- will take the proper actions to correct the details of the given orders where and when possible.

Where the Company aggregates a client order with one or more other orders and the client order is partially executed, it will allocate the related trades in accordance with fair and equal treatment and on a pro-rata basis depending on the size of the order received (e.g. block trades) and the liquidity of the market related to the specific financial instrument in question.

6. Review of this Policy

The Company shall review annually this Policy established (by the Company's Dealing Room and Compliance Department and be approved by the Company's Board of Directors), as well as any relevant order execution arrangements.

Such a review shall also be carried out whenever a material change occurs, that affects the ability of the Company to continue to obtain the best possible result when executing client's orders.

A material change shall be a significant event that could impact parameters of best execution such as cost, price, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order.

The Company shall assess whether a material change has occurred and shall consider making changes to the relative importance of the best execution factors in meeting the best execution requirement.

The Company shall notify clients with whom it has an ongoing client relationship of any material changes to its order execution arrangements or Execution Policy.

6.1 Review and monitoring the effectiveness of arrangements and execution quality

The Company shall ensure, at all times, that the design and review process of this Policy is appropriate and takes into account any new services or products offered by the Company.

In addition, the Company shall monitor on an on-going basis the effectiveness of the Execution Policy and the relevant order execution arrangements. In particular, the Company shall assess, on a regular basis, whether the Execution Venues/entities included in this Policy for order execution provide for the best possible result for the client, or whether the Company needs to make changes to its execution arrangements. This shall involve a combination of brokerage department and compliance monitoring.

The Company assesses on a regular basis, particular transactions in order to determine whether it has complied with its execution policy and/or arrangements, and whether the resulting transactions have delivered the best possible result for the client.

Monitoring may include comparing similar transactions:

  • on the same Execution Venue or with the same entity, in order to test whether the Company's judgment about how orders are executed is correct, or

  • on different Execution Venues or entities chosen from among those in the Company's Execution Policy, in order to test whether the 'best' Execution Venue or entity is being chosen for a given type of transaction.

The Company has procedures and processes in place to analyse the quality of execution, as well as to monitor best execution, by:

  • reviewing system settings/ parameters;

  • systematically comparing prices provided by its Execution Venues against external price sources or other venues to ensure that there are no significant or systematic deviations in the pricing provided to its clients;

  • monitoring the quality of execution by reviewing statistics related to frequency of rejections and re-quotes;

  • checking the speed of price updating;

  • comparing the Company's average speed of execution with industry standards;

  • monitoring any complaints related to the quality of execution in order to ensure that any deficiencies are improved.

7. CLIENT CONSENT

This Policy forms part of the agreement between the Company and the client. Therefore, by entering into an agreement with the Company, the client also agrees to the terms of this Execution Policy, as presented in this document.

The Company considers that its clients have given consent to this Policy, as well that they have given consent to the Company to receive and transmit an order for execution outside a Trading Venue.

8. QUESTIONS

Any reasonable and proportionate requests for information about the Company's policies or arrangements and how these are reviewed by the Company, the Company shall provide clear answers within a reasonable time.

For further enquiries regarding the Company's Execution Policy please contact the Company at [email protected].

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