For FX Forwards/Swaps, FX Options, Rates, Credit, and Money Market Instruments, NatWest Markets transacts in a principal capacity and the only execution venue is NatWest Markets.
The most important execution factors NatWest Markets takes into account to obtain Best Execution for transactions in these instruments are price, size and speed of execution. The priority of any one of these factors over the others depends on the specific instructions from the client. If no instructions are received, NatWest Markets generally uses the following order of priority:
1. Price. NatWest Markets uses its access to all available liquidity channels to achieve the best price for the client
2. Size. NatWest Markets uses its access to all available liquidity channels to attempt to execute the full size of the client transaction given the prevailing market conditions and instructions of the client. NatWest Markets assumes that partial fills are acceptable unless the client indicates otherwise. A partial fill occurs where NatWest Markets is unable, due to market conditions, to satisfy the whole of the client transaction and hence only provides the client with a part of its requested transaction
3. Speed. NatWest Markets endeavours to execute the transaction as soon as is practicable given the prevailing market conditions.
For Retail Clients, NatWest Markets gives the Total Consideration [1] a higher relative importance when assessing the best result. We may also consider the other Execution Factors [2] where we consider it appropriate or necessary to provide Best Execution.
For Professional Clients, price is usually the most important factor when assessing the best result, although other Execution Factors may be taken into account at our discretion.
Where NatWest Markets receives a specific instruction from a client relating to a transaction or a particular aspect of a transaction, we execute the transaction as far as reasonably practicable in accordance with those instructions. Specific client instructions may preclude us from being able to give precedence to price and cost when executing client orders. Therefore, please note that where you provide us with a specific instruction, we are not obliged to provide Best Execution to the extent such specific instructions apply, and this may prevent us from obtaining Best Execution for the overall transaction. Where the specific instruction only applies to part of an order, the remaining parts of that order will still be subject to Best Execution.
NatWest Markets has an obligation to monitor the effectiveness of its execution arrangements and its Order Execution Policy, and where appropriate, correct any deficiencies. NatWest Markets will review on a regular basis whether the venues and liquidity sources it uses allow it to provide the best possible result on a consistent basis. To evidence fair outcomes in accordance with our local legal and regulatory requirements, NatWest Markets has implemented a number of controls with primary focus on pricing based on:
Observable Pricing: Where clients trade with NatWest Markets in financial instruments for which observable market prices are available, NatWest Markets attempts to benchmark the pricing of the financial instrument against what is achievable on external (non-NatWest Markets) venues. To the extent that pricing on external venues is indicative and cannot be executed against, NatWest Markets seeks to establish that the pricing we provided was reasonable within an established framework utilising these inputs.
Unobservable Pricing: Where clients trade with NatWest Markets in financial instruments for which there is no observable price available in the market due to various factors (including but not limited to the unavailability of observable venue pricing, the illiquidity of the financial instrument and/or the bespoke nature of a particular client trade and/or negotiated price) then in certain circumstances, based on internally developed tolerances, NatWest Markets seeks to reconstruct the price on a sample basis. The price reconstruction uses, as far as possible, either industry accepted pricing models or NatWest Markets’ proprietary models with market observable inputs to assess the pricing achieved.
