Investment Bank

December, 2023

UBS Securities Canada Inc. Best Execution and Order Handling Disclosure

The purpose of this best execution and order handling disclosure is to provide you with information on the way UBS Securities Canada Inc. (“UBS,” “we,” “us,” or the “Firm") handles your orders for equity securities and to provide certain other relevant disclosures.

General Order Handling. We have a duty to seek to obtain best execution for our clients' orders. In fulfilling our best execution obligation, we endeavor to obtain the most advantageous execution terms that are reasonable under the circumstances. We consider factors such as price, size of the order, the potential for price improvement, the speed of execution, the certainty of execution, trading characteristics of the security, and the overall cost of the transaction when costs are passed on to clients. In addition, prevailing market conditions are taken into consideration when manually handling a client order, such as the direction of the market for the security, the depth of the posted market, the last sale price and volumes of previous trades, the size of the spread, and the liquidity of the security.

In making routing decisions for any order we act in accordance with any specific instructions we receive from our clients (subject to regulatory requirements). Our routing decisions are generally made by the Smart Order Router ("SOR") technologies utilized by UBS. When utilizing UBS algorithms, routing decisions may also be made according to the algorithmic decision to add or remove liquidity from the order book, and whether the algorithm seeks to trade in a lit or dark market. The decision as to which marketplaces and price points to target will depend on both the explicit instructions accompanying each order and the SOR's programmed judgment. Dark order types and marketplaces will be considered by the SOR if the order terms permit.

US Marketplaces may be considered for orders in inter-listed securities when better liquidity conditions and/or prices are determined to be available. To facilitate this process, UBS uses its proprietary inter-listed router in conjunction with trading algorithms to seek liquidity on US marketplaces. UBS may only conduct certain trades of listed securities outside of Canada if such trades are executed on a foreign organized regulated market as defined in UMIR. All orders in inter-listed securities sent to the US for execution will be handled by our affiliate, UBS Securities LLC. These orders will be subject to the order handling and routing practices of the intermediary. UBS Securities Canada Inc. does not send client orders in bulk to UBS Securities LLC without considering other liquidity sources in Canada. UBS Securities Canada Inc. periodically reviews the order handling and routing practices of UBS Securities LLC and is satisfied that that they are reasonably designed to achieve best execution.

UBS allows a number of its Direct Execution Services (DES) clients to manage their own orders and in some cases select their default posting market(s), and active order strategies. Such clients are executing their own orders through Direct Electronic Access (DEA), and/or accessing the markets directly by placing their own orders into UBS strategy algorithm servers. UBS takes best execution into account when designing and providing these tools to clients and actively monitors this trading on an ongoing T+1 basis. However, as these orders are not handled by UBS traders, UBS recognizes that these clients are largely responsible for their own execution results.

Handling Multiple Orders. When handling multiple orders in the same security from different clients or for the Firm’s own account, we apply a fair and equitable method of allocating executions among those orders in compliance with regulatory requirements. Our allocation methodology may be conducted on the basis of time priority, even split, proportional split, or another methodology that we determine to be fair and equitable. Please note that UBS SC has no traders employed at the firm.

Standard Trading Hours. UBS standard trading hours will be 9:30 a.m. to 4:00 p.m. ET, Monday to Friday, with the exception of Canadian market holidays. Some Canadian marketplaces trade outside of UBS standard trading hours: for example, the CSE, Nasdaq, and Aequitas marketplaces are open from 8:00 a.m. to 5:00 p.m. UBS SC does not trade outside of standard trading hours.

Day Order. A day order is only valid on the day it is received, for execution during standard trading hours. All orders are assumed to be day orders unless instructed otherwise by the client. A day order received prior to the opening of the principal marketplace at 9:30 a.m. will not route to an alternative marketplace. Instead the order will route into the opening sequence of the principal marketplace for that particular security. All orders not filled in full during normal trading hours will expire at the closing time of the principal marketplace, currently 4:00 p.m. An order received after 4:00 p.m. will be routed the next business day to the pre-opening of the principal marketplace, unless instructed otherwise by the client. When entering orders into the pre-open as instructed and/or agreed to by the client, or into the opening auction of the primary marketplace, consideration is given to the fair pricing of the execution. In addition, all general order handling and Best Execution factors (listed above) are taken into consideration when trading in the pre-open.

Marketplaces we route to. Marketplaces in Canada that we route to and their hours of business are as follows:

Fees and Payments. We pay fees to and receive rebates for orders executed on certain marketplaces as part of "Maker-Taker" programs. These payments generally offset fees for accessing orders or for other services provided by market centres. Any net payments are retained by us and are utilized to reduce our overall expenses in providing services to our clients. Fees and rebates may be passed on to clients, in certain circumstances where such an agreement has been made with a specific client. We make routing decisions on the basis of the quality of execution offered and not on the receipt of payments. However, we do consider costs, including rebates and fees, in comparing market centres with comparable performance.

Guaranteed Orders. A “guaranteed order” is one in which UBS has agreed to execute, as principal, a trade with a client in a specified or unknown security at a price based on an agreed-upon benchmark or other pricing formula, such as the closing price or volume-weighted average price of the security. UBS SC does not offer guaranteed orders at this time, as UBS SC currently has no traders employed at the firm.

Stop Loss (Stop Limit) Order. A special terms order placed with the intention of trading when the price of the stock reaches the specified stop (trigger) price. UBS order handling procedures treat stop orders in Canada “synthetically”. The client will enter the stop order with a trigger price and has the option of adding a limit price for the triggered order ("secondary limit"). Where the client has not entered a secondary limit or has entered a market order in place of the secondary limit, a mandatory secondary limit price at 8% away from the trigger price will be applied. The order is then held in the firm's Order Management System (OMS) until the stop trigger price is reached. Once the stop trigger price is triggered (based on last trade price), the order will be sent through a Smart Order Router with the secondary limit price. 

CIRO guidance on the management of Stop-Loss Orders note that while dealer's best execution procedures may favour "immediacy of execution" over price of execution, the orders cannot be executed at "clearly erroneous" prices. CIRO considers that the execution of an order could be disruptive of a fair and orderly market if the execution would: (a) result in the triggering of a Single Stock Circuit Breaker; or (b) exceed the " no touch zone" limits that are publicly disclosed by CIRO for price movement for which there would be no regulatory intervention for the variation or cancellation of trades.

Changes from December 2022 policy

Updated name of Canadian market regulator from IIROC to CIRO