Best selection – best execution

As part of the management of UCIs and mandates, INOCAP Gestion transmits to intermediaries the orders it wishes to execute on the market on behalf of the UCIs and mandates it manages, and which result from its investment decisions. INOCAP Gestion implements a policy of selecting and evaluating entities providing order execution services. INOCAP Gestion must be classified by its intermediaries as a professional client, which enables it to benefit from the principle of best execution.

The management company which provides the portfolio management service or manages a UCI complies with the obligation to act in the best interests of its clients and the UCI it manages when it transmits for execution with other entities orders resulting from its decisions to trade financial instruments on behalf of its principal or the UCI it manages. The management company must review its best selection and best execution policies at least once a year.

Methodology

A – General rules for selecting and evaluating intermediaries

The selection and evaluation of intermediaries is based on qualitative and quantitative criteria. Some criteria are more important than others, and are therefore given greater weight in the overall assessment.

The Manager in charge of managing UCIs or mandates :

• review the service quality of existing intermediaries,
• evaluates the number of counterparties and the intermediaries’ commissions,
• decides to include or exclude an intermediary from the authorized list.

The choice of investments and intermediaries is made independently in the interest of unitholders. Only intermediaries on the list of authorized intermediaries may be used to execute orders on behalf of UCIs or mandates managed by INOCAP Gestion.

B – Order placed by EXOE

INOCAP Gestion executes its orders directly on the market by placing :

-Directly through brokers

-Or indirectly through an outsourced trading table

The management company uses an outsourced trading desk (EXOE) to execute orders on behalf of UCITS on the market. Exoe has communicated its best execution policy to INOCAP Gestion, and provides the management company with periodic reports to assess best execution on orders placed.

C – Evaluation

Counterparties are valued every six months.

D – Informing customers about the Best Selection policy

INOCAP Gestion communicates its “Best Selection” policy to customers on its website. For discretionary management, this information is included in the management mandate. For UCITS and FIAs, this policy is outlined in each management report.

2022 report on intermediation fees

A – Regulatory application

Article 319-18 and 321-122 of the AMF General Regulations

AMF Instruction 2007-02

B – Regulatory background

INOCAP Gestion is required to prepare a report on intermediation fees whenever it uses services to assist in investment decision-making and order execution, and when intermediation fees exceeded 500,000 euros for the year. During the 2022 financial year, which ended on December 30, 2022, INOCAP Gestion used investment decision support and order execution services. In addition, intermediation fees exceeded 500,000 euros in fiscal 2022. In accordance with the provisions of articles 319-18 and 321-122 of the General Regulations of the Autorité des Marchés Financiers, INOCAP Gestion draws up a document entitled “Compte rendu relatif aux frais d’intermédiation”. This document specifies the conditions under which INOCAP Gestion has used investment decision support and order execution services, as well as the breakdown between :

1) Intermediation fees relating to the order reception and transmission service and the order execution service;
2) Intermediation fees relating to the investment decision support and order execution services.

In order to process its stock market orders, INOCAP Gestion uses intermediaries to execute orders on the market:

– Directly through brokers
– Indirectly through an outsourced trading desk

C – Breakdown of transaction costs

The breakdown of intermediation fees for the year ended 12.31.2022 is as follows:

Execution brokerage: 77%
Exoé brokerage: 23

D – Research budget

INOCAP Gestion’s 2022 research budget is €183,200 including tax.

E – Preventing conflicts of interest

Inocap Gestion has taken the following steps to prevent conflicts of interest in the selection of service providers providing investment decision support and order execution services:
– The selection of service providers is subject to a rigorous process.
– There is no agreement on the volume of transactions with the selected service providers.
– The management company does not receive any retrocessions on investment decision support and order execution fees
– The management company is not linked to the service providers providing investment decision support and order execution services.

The management company has a satisfactory organization in place to deal with any potential conflict of interest that may arise in its relationship with service providers providing investment decision support and order execution services.
The management company’s Compliance and Internal Control Officer (RCCI) is systematically involved in the handling of any conflict of interest.

RTS 28 – Annual review 2020

A – Purpose

The European Commission requires annual publication of information on the identity of execution venues and the quality
of the execution obtained. This reporting obligation is part of the MiFID II Directive (Markets in Financial Instruments Directive
), which aims to harmonize the regulation of investment services in all member states
of the European Economic Area.
Investment firms are therefore required to apply a number of regulatory technical standards
(RTS). RTS 28 sets out the requirements for increasing the quality and
transparency of information available to professional and non-professional investors concerning orders
transmitted or executed.

B – What is RTS 28?

RTS 28 supplements MiFID Directive 2014/65/EU with technical regulatory standards:
Investment firms executing client orders are required to summarize and publish the top five
execution venues in terms of transaction volume on which they executed client orders in the previous year,
together with information on the quality of execution achieved.
Investment firms transmitting client orders are required to summarize and publish a list of the top five
execution providers in terms of transaction volume with whom they executed
client orders in the previous year, together with information on the quality of execution achieved.
As part of this requirement, INOCAP Gestion must also publish, for each category of financial instrument, a
summary of the analysis and conclusions of the detailed monitoring of execution quality obtained during the previous year.

C – RTS 28: Summary of analysis

This document presents a summary of INOCAP Gestion’s analysis and conclusions drawn from detailed monitoring of
quality of execution:

– obtained from the platforms on which it executed all its clients’ orders during the previous year
– obtained from the counterparties to which it transmitted its clients’ orders during the previous year.

INOCAP Gestion has a policy and associated measures (Execution Policy) concerning the transmission and
execution of its clients’ orders as part of its activities as an investment services provider. The INOCAP Gestion Execution Policy information document
is available on
https://www.inocapgestion.com/fr/reglementaire-2/. The products covered by this report correspond to the
financial instruments defined in Section C of Annex I of MiFID II.

Relative importance of factors used to assess performance quality:

The factors considered by INOCAP Gestion are as follows:
– Price: final price at which a financial instrument is executed;
– Costs: implicit costs such as the possible impact on the market, explicit internal costs representing the
INOCAP Gestion’s own remuneration, explicit external costs (minimum fees, compensation, etc.);
– Speed: estimated time required to execute a transaction;
– Probability of execution and settlement: the probability that INOCAP Gestion will be able to complete a transaction;
– Size: size of the transaction that may affect the execution price; and
– Nature of the order or any other consideration relating to the execution of the order: particular characteristics of
the order that may affect best execution.

Generally, INOCAP Gestion considers that the most important factor for its clients is the price at which the financial instrument is executed. This price must take into account any costs paid by the client.
Secondary execution factors taken into account when assessing execution quality are speed, probability of execution, order type and size, and settlement.

During the review prior to the trading process, INOCAP Gestion uses the experience and expertise of its teams to obtain the best balance of factors for best execution. This discretionary judgment is based on the information available when the order is issued and during the execution process. Qualitative factors include market access, market share, liquidity, knowledge of the market or its specific features, specialization, price transparency, order processing, processing costs and rating.

In order to offer the best possible execution to its clients, INOCAP Gestion continuously monitors market trends, the quality of execution obtained, the execution venues and the service providers used to execute client orders. Our monitoring consists of both order-by-order monitoring and monitoring of the general trend in execution quality.
These elements are detailed in INOCAP Gestion’s execution policy, available at the following address: https://www.inocapgestion.com/fr/reglementaire-2/https://www.inocapgestion.com/fr/reglementaire-2/

Description of any links, conflicts of interest and joint holdings with service providers or platforms enabling execution of customer orders:

INOCAP Gestion has no close ties, conflicts of interest or joint ownership with the service providers or platforms used to execute its clients’ orders.
Any transaction or relationship between INOCAP Gestion, service providers or platforms is carried out in accordance with INOCAP Gestion’s Conflicts of Interest Policy. For further information, please refer to INOCAP Gestion’s Order Execution Policy and the procedure relating to the prevention of conflicts of interest.

Explanation of any factors that led to changes in the list of service providers or platforms used:

There are no changes to note in the list of execution venues listed in INOCAP Gestion’s execution policy.
The execution providers listed in INOCAP Gestion’s execution policy are subject to an ongoing approval and monitoring process, which includes regular assessments of the performance of the services provided in terms of execution quality.

Explanation of how order transmission or execution varies according to customer category:

INOCAP Gestion targets both non-professional and professional customers.

For non-professional clients, the best possible result will generally be determined by price and cost.
For professional clients, the best possible result will generally be determined by price and cost, but may depend on other execution factors, such as size and type, specific to the given order.

For a detailed description of how we execute customer orders, please see our Order Execution Policy.

Indication of the criteria favored or not in relation to prices and costs, and explanation of the role of these criteria in achieving the best possible result for non-professional customers:

As part of our Best Execution policy, the best possible result will generally be determined by price and cost. For a detailed description of how we execute our clients’ equity orders, please see our Order Execution Policy.

Use of performance-related data and tools published by providers subject to RTS27:

INOCAP Gestion monitors the quality of execution provided by the execution venues and service providers used to execute client orders. This monitoring uses external and independent providers and market data to measure the quality of order execution.
This monitoring also includes exception-based analyses, the results of which are reviewed by the compliance department in conjunction with the dealing teams.

D – Statistics by asset class

Definitions

“Passive order”: an order, entered in the order book, which has provided liquidity.

“Aggressive order”: an order in the order book that has absorbed liquidity.

“directed order: an order for which the customer has specified the execution platform in advance.

Asset class breakdown – Equities

Asset class breakdown – ETFs

Asset class breakdown – Bonds