Best Execution Disclosure
As an IIROC dealer member, Questrade, Inc. (“Questrade”) has a Best Execution obligation for all client orders—meaning, obtaining the best possible execution terms given the particular situation. But beyond this legal obligation, because we care deeply about your financial success we want to provide you with the best possible execution every time you place an order with us. Below we explain how we aim to achieve that for our clients.
- Order – the instruction you give us to buy or sell one or more securities or derivatives
- Execution – the trade resulting from your order
- Best Execution – obtaining the most advantageous execution terms reasonably available under the circumstances
- Listed Security – a security listed on a Canadian exchange, other than an option
Application of this disclosure
This disclosure applies to all clients of Questrade, Inc. unless you have been given a separate disclosure specific to your account’s routing practices as requested by you. The disclosure applies to all securities listed on a Canadian exchange (“listed securities”). This disclosure does not apply to routing of foreign exchange-traded securities. This disclosure is effective as of July 11,, 2018 and is considered current until a separate, more recent disclosure is issued.
Best execution process
Questrade considers 4 main factors when evaluating the quality of an execution:
- Price – the price you pay when purchasing a security or the price you receive when selling a security, less fees
- Speed – the speed of execution after Questrade receives your order
- Certainty of execution – the likelihood that your order results in an execution
- Overall costs – the additional costs you pay for the trade, including commissions, ECN fees, and any other trade-related fees
Questrade considers price to be the most important factor when achieving best execution. Given an equal price, Questrade then tries to maximize both the speed and certainty of execution. Typically, overall costs are equal regardless of how your trade is executed, but if there are additional costs Questrade will consider those in its evaluation of price.
To evaluate our execution, Questrade has created a Best Execution Committee whose mandate is to regularly review our execution processes and recommend updates where necessary. The Best Execution Committee contains members from Trading, Risk, Compliance, and Technology.
When we accept an order from you, we aim to achieve best execution within your order instructions. You can use the trading platform to add additional instructions to your order such as setting a limit price, setting a specific duration, or adding a condition. Some instructions, for example “All or None (AON)”, may reduce the certainty or speed of execution, or be rejected if the exchange does not accept that order instruction. If your order is rejected for any reason you will receive a rejection message on the trading platform. If you need help understanding the rejection message, or have a question about how a specific instruction may affect your execution, call Questrade at 1.888.783.7866 or see our frequently asked questions on order types: http://help.questrade.com/how-to/trading/placing-an-order
Subject to order protection rule
Despite any instruction or consent by you, achieving best execution for a client order of a listed security is subject to compliance with the Order Protection Rule.
If an order is not immediately executable for its entire quantity Questrade will post any remainder of your order on a protected exchange unless otherwise instructed by you.
Questrade will consider an order to be valid for different durations of time depending on the duration chosen:
- Day – valid from 9:30 am to 5:00 pm of the day the order is placed. If any portion of the order remains unexecuted at 5:00 pm the order is cancelled
- Good-till-date (“GTD”) - valid from 9:30 am to 5:00 pm each day until the expiry date chosen on the order. The order cannot be valid longer than 90 days
- Good-till-cancelled (“GTC”) - valid from 9:30 am to 5:00 pm each day until otherwise cancelled by you or until 90 days has elapsed, whichever is sooner
Questrade accepts orders for listed securities from 7:30 am to 4:00 pm and 4:15 pm to 5:00 pm on each day when Canadian markets are open. Orders from 5:00 pm to 7:30 am will be held in pending until Questrade begins accepting orders at 7:30 am of the next trading day
Orders for listed securities between 4:15 pm and 5:00 pm must be sent with a limit price at the closing price for that day. Orders sent without a limit price or with any other price will be rejected.
Orders placed for listed securities between 7:30 am to 9:30 am will be sent for execution at the security’s listing exchange, to participate in the opening auction at 9:30 am.
Orders for listed securities are routed through our trading platform and validated against varying pre-trade controls before being sent for execution. Questrade directs all client orders through a Smart Order Router (“SOR”) which aims to achieve the best price for our client orders. If an order is not immediately executable for its entire quantity, Questrade will post your order on the listing exchange of the security
Marketplaces we access
Questrade currently accesses all transparent exchanges and Electronic Communication Networks (“ECNs”) in Canada. Questrade also accesses some of the available dark marketplaces, as below. As a marketplace participant, Questrade does not route orders through any other intermediary for execution in Canada. The current list of visible marketplaces we access includes (in alphabetical order):
Aequitas Lit, Aequitas Neo, Alpha, Canadian Securities Exchange/PURE, Lynx, Nasdaq CX2, Nasdaq CXC, Omega, TSX, TSX Venture
In addition to the above marketplaces, orders for listed securities are tested ("pinged") against Triact MatchNow, TSX DRK, and Nasdaq CXD to verify if the order can be executed on a dark marketplace at a better price than is currently available on a visible marketplace.
All orders placed through the Questrade are routed to the above marketplaces via the SOR. Questrade reviews the priority of the marketplaces at least quarterly and makes any changes necessary to continue to achieve best execution. Questrade may prioritize marketplaces by rebates received as a means of reducing trade execution costs. Questrade only considers rebates received if all other factors are deemed equal.
Manual handling of client orders
If you place an order through our Trade Desk, an Investment Representative (“IR”) will take your order instruction and place the order on your behalf. The IR will confirm your order instructions and any applicable charges before placing your order. The IR will also inform you of any execution details if the order is immediately executed.
Ownership of marketplaces
Questrade and its affiliates have no ownership stake in any of the marketplaces we access.
Fees and payments statement
Questrade does not receive any fees or payments from the marketplaces we access except for those ECN rebates which all marketplace participants may receive, depending on the exchange or ECN. The payment received varies based on the listing exchange of the security, the price of the security, and whether the order was executed actively or passively. An up-to-date description of these ECN rebates can be found on the marketplaces’ respective websites.
If one of your orders removes liquidity upon execution, you will be charged an ECN fee per share executed. Since Questrade charges a flat ECN fee regardless of the market your order is executed on, Questrade will not consider the ECN fees payable by you when deciding which marketplace to route your order to. For a current ECN fee schedule, see this page on our website: http://www.questrade.com/pricing/self-directed-commissions-plans-fees/transaction
Cancelling or replacing orders
Generally, Questrade will not move an order that has been booked on one marketplace to another marketplace. However, if your order was previously booked on one marketplace and then subsequently modified, Questrade will test the order for execution again at all available marketplaces and may execute the modified order, if possible, on a different exchange.
Directing orders to a foreign intermediary or foreign organized regulated market
Questrade does not route orders for listed securities to a foreign intermediary or foreign organized regulated market. In these cases Questrade will route your order via a smart order router to one of the marketplaces we access.
Market data statement
Questrade offers different market data packages and market data add-ons for clients. For the current available market data packages, see this page on our website: http://www.questrade.com/pricing/self-directed-commissions-plans-fees/market-data
If you do not subscribe to all available market data you may be trading with incomplete or delayed market data, which may reduce your ability to see available orders on some exchanges. Questrade considers prices from all marketplaces we access in real-time when executing your order regardless of the market data you have subscribed to.