top of page

RTS 28

Qualitative Analysis

Requirements under Article 3.3
Talomon Capital Analysis
a) an explanation of the relative importance the firm gave to the execution factors of price, costs, speed, likelihood of execution or any other consideration including qualitative factors when assessing the quality of execution
Equity orders make up the vast majority of Talomon Capital’s market activity. Each order is assessed on its own merits given their different liquidity profiles, however, under most circumstances price and size (a function of likelihood and speed) take precedence. Prior to order creation, likelihood and speed of execution is assessed (Talomon considers these metrics to be similar). In doing so, Talomon can determine potential sizes for the order. Given the nature of the equities Talomon invests in and the long-term investment approach taken by Talomon, the firm generally chooses to spread orders over time in order to minimise market impact on price. The likelihood of execution is also highly dependent on selecting the right broker. In a numbers of cases Talomon chooses to utilise brokers local to the equity being traded (domestic broker). Domestic brokers tend to have a greater understanding of their markets intricacies and potentially have better access to those interested in the equity. Overall Talomon views broker selection as key to achieving optimal prices. In terms of cost, Talomon has worked to ensure that each broker charges the same commission rate (in most cases), thereby eliminating the outright cost factor. Market impact is however, viewed as a cost of trading and therefore likelihood of execution is of great importance.
b) a description of any close links, conflicts of interests, and common ownerships with respect to any execution venues used to execute orders
Talomon Capital does NOT have any close links, conflicts of interests, and common ownerships with any execution venues or brokers used to execute orders.
c) a description of any specific arrangements with any execution venues regarding payments made or received, discounts, rebates or non-monetary benefits received
Talomon Capital does NOT have any specific arrangements with any execution venues or brokers regarding payments made or received, discounts, rebates or non-monetary benefits received.
d) an explanation of the factors that led to a change in the list of execution venues listed in the firm’s execution policy, if such a change occurred
Each venue/broker on Talomon Capital’s execution venue list is subject to a continuous monitoring process. Execution performance is tracked monthly via TCA reports and internal discussions. If such changes to the execution venue list are made, it is due to the new brokers ability to deliver best execution consistent with Talomon Capital’s policies or an old broker’s failure to deliver execution to these standards.
e) an explanation of how order execution differs according to client categorisation, where the firm treats categories of clients differently and where it may affect the order execution arrangements
Talomon Capital’s order execution does NOT differ between each client category, in line with the firm’s best execution policy. All of Talomon’s clients are per se professional clients.
f) an explanation of whether other criteria were given precedence over immediate price and cost when executing retail client orders and how these other criteria were instrumental in delivering the best possible result in terms of the total consideration to the client
Talomon Capital does NOT execute retail client orders as it manages assets with discretion for professional investors. Talomon does not have the regulatory permission to deal with retail clients.
g) an explanation of how the investment firm has used any data or tools relating to the quality of execution, including any data published under Commission Delegated Regulation (EU) 2017/575
Talomon Capital monitors the quality of executions provided by brokers using Transaction Cost Analysis (TCA) reports. The reports are received on a monthly basis, with a consolidated quarterly report and annual report (where available). The reports provide insight in to the price achieved vs benchmarks, the exchanges the executions took place on and the market impact of Talomon’s trading activity.
h) where applicable, an explanation of how the investment firm has used output of a consolidated tape provider established under Article 65 of Directive 2014/65/EU
Talomon Capital does NOT use any consolidated tape providers.

*Notes:

1) Passive vs aggressive orders
Talomon capital receives monthly TCA reports from brokers that include exchange level data for all orders (Figure 1). However, the data is not provided with orders split into the defined liquidity bands. Similarly, data regarding passive and aggressive orders (Figure 2) is only available on an overall basis.

Talomon is working with its brokers and exploring its options with external providers in order to better understand broker execution performance.

Figure 1. Exchange level data

Figure 2. Passive vs aggressive orders

FX

RTS28 FX.png

Bands 1 & 2

Bands 3 & 4

Bands 5 & 6

Definitions:
Volume Trade   –   The notional value of all Swaps, Forwards, and Other Currency Derivatives orders executed with a specific broker
Orders Executed   –   Number of distinct Swaps, Forwards, and Other Currency Derivatives orders executed by a specific broker

bottom of page