The duties of securities companies in the optimal execution of client orders

The executive regulations of the law establishing the Capital Markets Authority and Regulating Securities Activity required the securities companies to implement any orders or instructions that might be issued to them by their clients, and required them, when executing the orders of their clients, to exercise sufficient care in order to achieve the best possible results for these clients, taking into account the considerations of implementation, which includes the price of the deal, its size, the possibility of executing it, its settlement, and any other considerations.

Securities companies must set policies and procedures that enable them to provide the best service to the client, in particular those policies and procedures related to the implementation of clients’ orders and instructions, and they should provide their clients with any information that these clients may request about the policies and procedures for executing their orders. Execution of orders on behalf of clients to apply policies and procedures that ensure the execution of such orders with the necessary speed and efficiency, and to ensure that orders on behalf of clients are accurately and promptly recorded and identified.

There are several criteria that a securities company must take into account when executing a transaction for a client, which are as follows:

  1. The nature and needs of the client.
  2. Classification of the client as a regular client or a professional client.
  3. The nature of the order to be executed.
  4. The type and nature of the securities in question.
  5. The entities through which the order is executed.
  6. Execution of orders according to the priority received from clients.

If the transactions are executed on the orders of the client, the securities company shall be exempted from the obligations mentioned in items (1) to (4).

In the event that the securities company executes an order on behalf of an ordinary client, the best possible result must be determined in terms of the total consideration, which represents the price of the security and the costs related to executing the order including fees, fees and commissions, and in the case of more than one entity, the order can be executed from during it, the company must compare between these bodies, taking into account the fees and other expenses associated with the implementation of the order, and it may not obtain any commissions of its own in a manner that involves unjustified discrimination between the bodies entrusted with the implementation of the order.

The securities company, when executing a transaction of buying or selling a security, must send to the client notices of executing the sale or purchase transactions of securities concluded in his favour, unless the client exempts the company from such notices according to the form prepared by the company, and these notices include in particular what follows:

  • Customer account number.
  • The name of the stock company.
  • Customer name.
  • The date the order was received from the customer.
  • The date and time the order is executed.
  • The type of transaction, whether buying and/or selling.
  • The name of the security subject of the transaction.
  • Quantity, transaction execution price, commission, net value, and total price.
  • The mechanism of executing the transaction, whether by written order or according to a phone call or e-mail.
  • The currency in which the transaction was made.

The company must prepare notices of transaction execution for securities and send them on the same day the transaction is executed, and it is prohibited from using information related to customer orders, and it must take sufficient care to prevent its exploitation by its employees or agents.

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