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Annual Publication on the Main Intermediaries and the Quality of Execution Obtained

- 2017 FINANCIAL YEAR -

On 3 January 2018, throughout Europe, the Markets in Financial Instruments Directive, better known as MiFID II, came into force. Among many other regulatory changes, this new European Community directive obliges all financial entities to publish annually, in relation to each class of financial instrument, the main investment firms, in terms of transaction volume, to which they have transmitted customer orders for their execution during the preceding year, and information on the quality of execution obtained.

To this end, published below are the data relating to the retail customer orders for financial instruments that have been brokered by Open Bank, S.A. in 2017 and the information on the quality of execution obtained:

MAIN INTERMEDIARIES IN RELATION TO EACH CLASS OF FINANCIAL INSTRUMENT FOR RETAIL CUSTOMER ORDERS

  1. SHARES:
Instrument category a) Shares[1]
Indicate whether during the previous year, on average, < 1 order per day was traded No
Five main trading venues classified by trading volume (decreasing order) Ratio of traded volume to the total of this category (%) Ratio of orders executed to the total of this category (%) Percentage of passive orders[2] Percentage of aggressive orders[3] Percentage of directed orders[4]

Santander Investment Bolsa, Sociedad de Valores, S.A.

(LEI 549300VXHFB1JDHP7C26)

100% 100% Not applicable[5] Not applicable[5] Not applicable[6]

[1] For this initial publication referring to the quality of execution obtained for 2017 financial year, there are not sufficient data available to distinguish this type of asset based on the liquidity bands. As of the next publication, a distinction will be made between: (i) Liquidity bands of a tick size of 5 and 6 (starting from 2,000 daily transactions); (ii) Liquidity bands with a tick size of 3 and 4 (80 to 1,999 daily transactions); and (iii) Liquidity bands of a tick size of 1 and 2 (0 to 79 daily transactions)

[2] passive order: an order entered in the order book that has provided liquidity;

[3] aggressive order: an order entered in the order book that has absorbed liquidity;

[4] directed order: an order for which the customer has specified the execution venue before its execution

[5] The differentiation between passive and aggressive orders is not applicable for Open Bank, S.A. in accordance with the ESMA Q&A on MiFID II for Investor Protection (Q&A 14 of the section on better execution), as Open Bank, S.A. is an entity that only receives and transmits the orders to a broker.

[6] Owing to its operational set-up, Open Bank, S.A. does not currently allow directed orders (for which the customer can specify the execution venue before execution of the order)

  1. WARRANTS
Instrument category h) i) warrants and certificates
Indicate whether during the previous year, on average, < 1 order per day was traded No
Five main trading venues classified by trading volume (decreasing order) Ratio of traded volume to the total of this category (%) Ratio of orders executed to the total of this category (%) Percentage of passive orders Percentage of aggressive orders Percentage of directed orders

Santander Investment Bolsa, Sociedad de Valores, S.A.

(LEI 549300VXHFB1JDHP7C26)

100% 100% Not applicable[5] Not applicable[5] Not applicable[6]
  1. ETFS
Instrument category k) Products traded on the stock market: exchange-traded investment funds
Indicate whether during the previous year, on average, < 1 order per day was traded No
Five main trading venues classified by trading volume (decreasing order Ratio of traded volume to the total of this category (%) Ratio of orders executed to the total of this category (%) Percentage of passive orders Percentage of aggressive orders Percentage of directed orders

Santander Investment Bolsa, Sociedad de Valores, S.A.

(LEI 549300VXHFB1JDHP7C26)

100% 100% Not applicable[5] Not applicable[5] Not applicable[6]

Shown below is the analysis and conclusions of the monitoring performed by Open Bank, S.A. regarding the quality of execution obtained, through the aforementioned financial intermediaries, in the execution venues in which the customer orders were executed in 2017 financial year, in accordance with the information sections required by MiFID II. Given that the information is common to all the financial instruments mentioned in paragraph 1 above, this information on the quality of execution obtained is presented in a consolidated form: INFORMATION ON THE QUALITY OF EXECUTION

  • Relative importance attributed to the prices, costs, speed, diversity of execution or any other factor, including qualitative factors, on assessing the quality of execution:

Open Bank, S.A. has verified that, in actual fact, the best execution policy of the preferred intermediary for all the types of financial instruments identified in the foregoing paragraph of this Publication (Santander Investment Bolsa, Sociedad de Valores, S.A.) establishes that it will direct the orders mainly based on the order specifications, price, volume, probability and efficiency of execution and settlement costs, speed of transmission of the orders to the execution venues and any other relevant consideration for the execution of the order, such as available liquidity and the quality of service of the intermediaries selected.

To determine the relative importance of each of these factors, it will apply its experience, based on the prevailing market conditions and will take into account: (i) the characteristics of the customer, (ii) the characteristics of the order (including whether the order entails Security Financing Transaction (SFT)[7], (iii) the characteristics of the financial instruments that are the object of the order and (iv) the characteristics of the execution venues to which the order can be directed.

However, under certain circumstances, the relative importance of these factors may vary, with others taking on greater importance against the price or volume when it comes to obtaining the best possible result. This will happen when, in the opinion of Santander Investment Bolsa, Sociedad de Valores, S.A., the characteristics of the customer, order, execution venues or of the financial instruments themselves so require or recommend.

[7] Currently, SIB does not trade SFTs

  • Close ties, conflicts of interest and common stock in relation to any intermediary used for the execution of orders:
Open Bank, S.A. uses Santander Investment Bolsa, Sociedad de Valores, S.A. as its sole intermediary for all types of instruments mentioned in the paragraph above of this Publication. This entity belongs to the same group as Open Bank, S.A. both of which are 100% subsidiaries of Banco Santander, S.A.
  • Specific agreement with the intermediaries relating to the payments made or received, discounts, reductions or non-cash benefits received:
This does not apply to Open Bank, S.A. as payments are not made between the two parties (given that Santander Investment Bolsa, Sociedad Valores, S.A. charges the end customer directly in the execution of each order and Open Bank, S.A. charges the end customer directly in the settlement of each transaction executed), nor are any discounts, reductions or non-cash benefits applied.
  • Factors that led to a change in the list of intermediaries included in the execution policy, if any such change has occurred:
This does not apply to Open Bank, S.A. for 2017 financial year given that the list of intermediaries in the execution policy has not been changed since the last financial year.
  • Explanation of how the execution of orders differs based on the categorisation of the customers when the company treats the customer categories differently and this can affect the order execution modalities;
This does not currently apply to Open Bank, S.A. given that all the customers are classified as retail customers and therefore, no differentiated treatment has been established for the execution of these customers’ orders.
  • Explanation of whether preference has been given to other criteria over the criteria of price and immediate costs when executing retail customers’ orders and an explanation of the way in which those other criteria have been decisive in achieving the best possible result in terms of total amount for the customer:

Given that Openbank customers are classified as retail customers, it has been established that, in actual fact, the best execution policy of the preferred intermediary for the types of financial instruments identified in the foregoing paragraph of this Publication (Santander Investment Bolsa, Sociedad de Valores, S.A.) sets the total consideration as the preferential criteria when determining the best possible result for the retail customers.

This total consideration is made up of the price of the financial instrument and the costs and expenses related to execution, which include all the expenses incurred by the customer that are directly related to the execution of the order, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.

  • Explanation of the way in which Open Bank, S.A. has used any data or instrument relating to the quality of execution, including all the data published pursuant to Delegated Regulation (EU) 2017/575, if applicable:
For this initial publication, these data have not been used as they are not available. They will be used as of the annual publication relating to the 2018 financial year.
  • Explanation of the way in which Open Bank, S.A. has used the information originating from a consolidated information provider established in accordance with article 65 of Directive 2014/65/EU, if applicable:
For this initial publication, these data have not been used as they are not available. They will be used as of the annual publication relating to the 2018 financial year.

You can download this information at:  Annual publication on the main intermediaries and quality of execution obtained