OKX Middle East - Best execution policy
1. General Information
OKX Middle East Fintech FZE (the “Company”) is a limited liability company registered and incorporated under the laws of the Dubai World Trade Centre in the United Arab Emirates. The Company is licensed by the Virtual Assets Regulatory Authority (the “VARA”) to provide the following services:
i. Exchange Services (including VA Derivatives Trading);
ii. Management and Investment Services;
iii. Lending and Borrowing Services; and
iv. Broker Dealer Services.
(each a “VA Service” and collectively the “VA Services”) in relation to Virtual Assets (“VAs”).
The VA Services are provided to the clients of the Company (collectively “the Clients”).
Rule II.A of the Broker-Dealer Services Rulebook issued by the VARA provides that the Company must exercise reasonable diligence to execute each client order to buy or sell one or more Virtual Assets that it receives so as to obtain the most favourable price for the client under the prevailing market conditions, provided that due consideration is also given to costs, speed, likelihood of Execution and settlement, size, nature or any other consideration relevant to the Execution of the order to ensure the best possible result for the client.
2. Scope of Application
This Best Execution Policy (this “Policy”) applies to all Clients to whom the Company provides the following services as part of its Broker Dealer activities: (a) execution of orders, (b) reception and transmission of orders, and (c) dealing on own account when executing clients orders; in relation to VAs.
This Policy does not apply where the Company receives an unsolicited instruction from a client to route that client’s order to a particular Market or counterparty for Execution, or at a particular price. In these circumstances, the Company is not required to make a best Execution determination beyond the client's specific instruction, provided that the Company processes the client’s order promptly in accordance with its terms.
3. Execution Venues
In light of the fact that the Company also operates a crypto currency exchange, the Company may transmit orders to its own central limit order book and act as an Execution Venue.
The Company may also use other Execution Venues as appropriate.
The Execution Venues selected by the Company shall have execution arrangements that enable the Company to comply with its obligations under the Rules when it transmits orders to those Execution Venues for execution.
In the event that the Company executes a client order with another VASP or another third party, the burden of demonstrating compliance with the best execution standard shall at all times remain with the Company.
4. Execution Factors
The Company shall, as set out in this Policy, take all sufficient steps to obtain the best possible result for the Client by taking into account:
i. price;
ii. execution costs and fees;
iii. execution speed;
iv. likelihood of execution and settlement;
v. order size;
vi. nature of the order; or
vii. any other consideration relevant to the execution of the order,
(the “Execution Factors”).
The relative importance of these factors is likely to vary on a case by case basis and one or more may be applicable. Nevertheless, where there is a specific instruction from the Client, the Company shall follow that specific instruction and, by doing so, the Company will satisfy its obligation to provide best execution in relation to that aspect of the order.
Warning: Any specific instructions from a Client may prevent the Company from taking the steps that it has designed and implemented in this Policy to obtain the best possible results.
The Company will use its commercial judgement and experience in the light of available market information and market conditions at the relevant time in order to achieve the best balance across the following Execution Factors:
i. Total Consideration [Price and Cost] – This refers to the total consideration or net cost of the transaction to the Client. When transmitting a transaction in respect of a Client, the Company shall take into account, where relevant, the fees and commissions charged by the Company to the Client.
ii. Speed – The Company shall consider: (i) the significance of completing the transaction quickly; and (ii) whether speed is of equivalent importance to, or more important than, achieving the best possible price.
iii. Likelihood of Execution and Settlement – The Company will consider whether the use of a particular Execution Venue involves a risk(s) that the transaction will not be completed due to lack of liquidity or other factors that may effect the settlement of the transaction.
iv. Size – The Company shall consider the size of the transaction. Large orders may have to be dealt with differently to smaller orders, particularly when large orders could have a potential impact on the market and market price for the VA concerned.
v. Characteristics - the characteristics of the Market for the Virtual Asset (e.g. price, spreads, volatility, relative liquidity, and pressure on communications).
vi. Number of Markets – the number of markets or other sources of liquidity.
vii. Accessibility – the accessibility of quotes to trade in the Virtual Assets in question under the market conditions prevailing at the relevant time, noting that, even in the event that certain sources of liquidity are not available.
viii. Terms - the terms and conditions of the order which result in the transaction as communicated to the Company.
ix. Any other consideration relevant to Transmission of Orders, which may include but are not limited to low liquidity and/or high volatility.
The Company shall, in order to achieve operational efficiency and subject to the Execution Factors outlined above being satisfied, transmit its clients’ orders to its own central limit order book and act as an Execution Venue.
The relative importance of the Execution Factors will vary on a case by case basis and may be determined by reference to:
i. the characteristics of the Client;
ii. the characteristics of the Client order;
iii. the characteristics of the VAs that are the subject of that order.
Given the nature of the market for crypto assets, the Company considers “Speed” and the “Total Consideration” as the main Execution Factors that it should fulfil in order to ensure best execution.
The Company will achieve the best available terms for a client when it optimises “Speed” and the “Total Consideration” paid or received by a Client. Where the Company transmits an order on behalf of a Client, the Total Consideration is the (a) price of the VA and (b) the costs related to the completion of the transaction, including all expenses incurred by the Client which are directly related to the transmission of the order.
Other Execution Factors may also be considered, and given precedence over “Speed” and the “Total Consideration” only insofar as they are instrumental in delivering the best available terms for the Client.
In cases where pricing information is insufficient or valuation factors or quotes are absent, the Company will:
i. notify the relevant Client in writing of the insufficient / absent pricing information, valuation factors and / or quotes; and
ii. not proceed with the execution of the trade.
Subject to the type of product used by the Client, the notification to the Client may either be by Telegram, website platform or API.
5. Aggregation, Split and Allocation of Orders
The Company shall not carry out a Client’s order in aggregation with another Client’s order or split Client orders.
6. Disclosure and Notification Procedures
6.1 Initial Disclosure
The Company provides clients with comprehensive information regarding its order execution policy upon the commencement of the client relationship. This information includes details about the factors considered in achieving best execution, the relative importance of these factors, and the execution venues used.
The Company shall additionally disclose to clients the portion of the amount payable the client that is retained by the Company as fees and the commission for the trade both before executing a trade and when providing a trade confirmation.
6.2 Regular Updates and Availability
The execution policy is made available to clients through various channels, ensuring they have access to the most up-to-date information. The Company commits to maintaining transparency by providing this policy in a readily accessible format, potentially including digital formats such as a website or client portal.
6.3 Notification of Material Changes
The Company has established a process for notifying clients of any material changes to the order execution policy. Material changes are defined as significant alterations that may impact the execution of client orders or the client's understanding of how their orders are handled. These changes could include modifications to the execution factors, the addition or removal of execution venues, or changes in the Company’s internal processes.
6.4 Client Communication
When a material change occurs, the Company promptly informs clients using appropriate communication channels. This communication is designed to be clear and informative, ensuring clients understand the nature of the changes and their potential impact. The methods of communication may include email notifications, updates on the Company’s website, or direct messages through the client’s preferred contact method.
6.5 Regular Review and Compliance
The Company undertakes regular reviews of its order execution policy, at least annually, to ensure ongoing compliance and effectiveness. During these reviews, the Company assesses whether any updates are necessary to reflect changes in the market environment, regulatory requirements, or the Company’s own operational capabilities.
7. Client Orders Information Handling: Arrangements and Procedures
7.1 Responsible Department
The Company has a separate department that is responsible for facing clients in relation to the products offered under the VA Broker-Dealer License. The Company ensures that the department is at all times always adequately staffed and resourced taking into consideration that all actual execution is carried out automatically upon a client accepting a quote and not manually.
7.2 Conflicts of Interest
The Company acknowledges that there is a risk of conflicts of interest to arise between competing client orders and between client orders and the Company’s interests. The Company has set in place a number of controls which are set out in the sub-sections below and reflect:
Confidentiality obligations
Access Control and Security Measures
Internal Policies and Procedures
7.3 Competing client orders
Where competing client orders are received, the Company shall prioritize the orders based on the best price offered. If multiple orders have the same price, priority shall be given to the order received earliest in time.
7.4 Confidentiality Obligations
Employees of the Company bound by strict confidentiality obligations. These obligations are part of their employment contracts and are reinforced by the Company’s internal policies. The confidentiality requirements mandate that employees must not disclose or misuse any information relating to client orders, ensuring that such information is handled securely and only accessed by authorised personnel. This is to ensure that conflicts of interest that may arise between competing client orders are appropriately managed.
7.5 Access Control and Security Measures
The Company implements robust access control measures to restrict access to sensitive information. This includes the use of secure systems and databases where client order information is stored. Only employees who have a legitimate need to access this information for their role are granted access. These access controls are regularly reviewed and updated to prevent unauthorised access. By implementing appropriate access control measures, this assists in managing conflicts of interest that may arise between clients and the Company such that only a limited number of individuals have access to such information and can make use of it.
7.6 Internal Policies and Procedures
The Company has established detailed internal policies and procedures that guide the handling of client information. These policies include clear guidelines on the use and protection of client data, as well as the consequences of non-compliance. Employees are trained on these policies as part of their onboarding and through ongoing compliance training programs. In addition, to further mitigate risks in relation to conflicts of interest, the Company will ensure that individuals directly facing clients are placed on the Company’s Insider Register such that they cannot trade on inside information obtained from their role (i.e., that a large market order may occur). Such individuals will require permission from the Compliance Officer in writing in order to place trades.
7.7 Monitoring and Auditing
The Company employs monitoring and auditing mechanisms to oversee the handling of client information. Regular audits are conducted to ensure compliance with internal policies and regulatory requirements. These audits help in identifying any potential lapses in data security and in taking corrective actions promptly.
7.8 Ethical Standards and Conduct
Employees are required to adhere to high ethical standards and conduct themselves in a manner that upholds the integrity of the Company and its commitment to client confidentiality. This ethical framework is part of the Company’s broader corporate governance and compliance culture, which emphasises the importance of trust and professionalism in all client interactions.
The Company shall not pay or receive any monetary or non-monetary benefit, including by way of reciprocation for any service or business, to any third party in respect of its Execution services provided to a client, except for necessary service fees required to Execute the client’s order. In particular, the Company shall not receive any remuneration, discount or non-monetary benefit for routing clients’ orders to a particular trading venue or to another Entity. Any fees payable by or to another entity or other third party shall be structured in such a way so as not to give rise to conflicts of interest in respect of the Execution of client orders.
7.9 Audit Trail
The Company must document its compliance with its policies and procedures in accordance with its obligations under the relevant VARA Rulebooks.
All documents created must be retained for 8 years from the date of creation.
8. Other Matters
The Company will monitor the effectiveness of this Policy to identify and, where appropriate, correct any deficiencies. In particular, the Company shall assess, on a regular basis, and at least quarterly, whether the Execution Venues provide for the best possible result for the Client or changes are needed in relation to the arrangements. The review shall include the quality of Execution received by their clients, with reference to how such Execution quality compares with the Execution quality the Company may have obtained from other Markets or sources of liquidity.
In conducting each such reviews, the Company must determine whether any material differences in Execution quality exist among the Virtual Assets trading and, if so, modify its routing arrangements or justify why it is not modifying its routing arrangements.
The Company undertakes a review of its arrangements and this Policy at least annually, or whenever a material change occurs that affects its ability to continue to obtain the best possible result for the Client on a consistent basis.
Any material changes to the Execution arrangements and this Policy must be communicated to clients with whom the Company has an ongoing relationship.