What does “Best Execution” mean?

The Best Execution process is a legal obligation applied to all products covered by the MIFID II directive, including structured products.

In stock markets, the highest buy orders and the lowest sell orders take priority. This rule ensures that buyers can purchase at the best price and sellers can sell at the best price.

For structured products, it may be more challenging for an investor to consistently obtain the best available price at the time of the transaction. This difficulty may arise due to the complexity of the product being traded or the specific constraints of the investor (such as geographical exposure or the issuer's rating), which can reduce the number of issuers interrogated.

Moreover, Best Execution can be guaranteed by an intermediary only at their level, meaning that they apply the same fee in the final proposed price regardless of the product's issuer. However, Best Execution is in theory absolutely ensured by the intermediary offering the lowest execution commission.

🏦 What measures are implemented by Feefty?

As a regulated company, we ensure that all necessary measures are taken to achieve the best possible outcome for our users during the bidding process.

In Feefty's case, we don't technically refer to Best Execution but rather to Best Selection because orders are not technically executed by Feefty but by the final investor's custodian directly with the issuer. The process is very similar, but the terminology differs. We handle obtaining the Best Selection and relay it to the client so they can choose the issuer with whom the orders will be executed.

To this end, and in accordance with regulations, the following measures are implemented:

• a structured product quote selection policy that specifies, with transparency in mind, the conditions under which quotes are obtained and relayed to the client. It describes the measures taken by Feefty to obtain the best possible outcome;
• a wide range of offers to ensure a quote is obtained from the largest possible number of issuers.

We systematically consider the following parameters:

• the investment amount;
• the product structure (payoff);
• the underlying asset and asset class;
• the product's maturity;
• service quality;
• response speed;
• documentation availability;
• eligibility based on the subscription envelope (life insurance or securities account);
• any other exclusion criteria for certain issuers at the client's request.

In the case of a secondary market trade, the execution factors differ since the product can only be repurchased or resold from the product's issuer. Therefore, we base our approach on the product's net asset value. This value is mostly calculated by the issuer themselves and, in some cases, by an independent valuer — this is referred to as dual valuation.

Our Best Selection policy is available upon request to all clients. It serves as an information and reference tool regarding the processing of quote requests in line with this requirement.