Best Execution Report

Best execution

'Best execution' means that we will take all sufficient steps to obtain the best possible results on a consistent basis for you, when we go to execute an Exchange Traded Fund ('ETF') order on your behalf.

When we place orders with our broker (Winterflood Business Services) to execute a deal, we owe a duty of best execution to you. To do this, we have 'execution factors' and 'execution criteria' that help us assess the quality we're giving you.

How we measure best execution?

When we execute an order for you, we determine best execution in terms of 'total consideration'.

This is the:

price of the financial instrument
together with the costs related to the execution
including all expenses incurred by you that are related directly to the execution of the order, (such as fees charged by the execution venue, clearing and settlement fees and any other fees paid to third parties)
the full list of execution factors is below, which we also consider

Vanguard's ETF broker for personal investing

We've chosen Winterflood Business Services ('WBS') because we expect good results – at least as good as any results from alternative stockbrokers. All of the ETF trades we place with WBS are sent to the market via a Retail Service Provider ('RSP'). If orders cannot be placed electronically with an RSP then the order will be placed manually via another RSP. WBS assess the quality of their execution performance by using the services of Liquid Metrix – they independently benchmark and validate trade executions.

Liquid Metrix automatically benchmark each execution against the best reference price available in the market at that time. WBS monitor daily reports, and review the results monthly with their Best Execution Committee(s).

When the best price hasn't been achieved they'll look at the other factors which may have influenced their execution, such as speed or likelihood of execution, settlement and often liquidity or market impact.

Execution factors

The execution factors that will be taken into account when we place an order for you or execute a transaction are:

Price – the price you'll pay for the investment.
Costs of the transaction – any costs you'll incur as a result of the transaction being placed.
The likelihood of being able to place the deal and settle it.
Timely execution – the speed at which Vanguard is able to complete the deal.
Size and nature of the deal.
Market impact.

Execution criteria

When you've instructed us to place an order, we then take 'execution criteria' into account. This involves considering

You, the client.
The transaction.
Financial instruments that are the subject of that transaction.
The brokers or execution venues available.

This helps us to get you the best deal possible when you ask us to place an order.

How we work with WBS

We receive a monthly report of 'execution quality' from WBS. We also perform our own oversight of the execution quality with queries referred to Vanguard's UKPI Cash & Assets Oversight team. If we notice any trends we'll raise it with WBS to identify any issues and to discuss potential resolutions.

Vanguard has:

No direct common ownership with WBS or with any trading venue that they use.
No specific financial arrangements regarding discounts, rebates or other non-monetary benefits related to the execution of trades with any brokers or trading venue they use.
Not made any changes to its best execution arrangements in the last year. WBS as the sole broker for ETF trades has not informed us of any material changes to their best execution policy.

Any more questions?