1. Introduction
Revolut Trading Ltd (“we”, “us”, “our” or “Revolut Trading”) is an appointed representative (“AR”) of Resolution Compliance Limited (“RCL”), which is authorised and regulated by the Financial Conduct Authority (“FCA”) in the United Kingdom (“UK”).
Revolut Trading provides the investment service of reception and transmission of orders, only to physical persons classified as retail clients under the FCA's rules, in relation to whole shares (“shares”) listed in the United States of America (“US”) and fractions of such shares (“fractional shares”). We refer to this service as the "investment service".
Revolut Trading provides the investment service exclusively via the ‘Stocks’ section of the ‘Invest’ tab (“investment platform”) in the Revolut app.
2. Objectives
Revolut Trading is subject to the requirements of the FCA to act honestly, fairly and professionally and to transmit client orders for execution to execution brokers on terms most favourable to its clients (including "you" or "your").
Revolut Trading has therefore established and implemented a ‘Best Execution Policy’ that enables it to comply with said regulatory requirements and makes this Best Execution Policy Disclosure (“Disclosure”) available to you to provide you with appropriate information about its Best Execution Policy.
This Disclosure should be read in conjunction with our:
- Terms of Business;
- Risk Disclosure;
- Complaints Handling Disclosure; and
- Conflicts of Interest Policy Summary.
This Disclosure, the Terms of Business, the Risk Disclosure, the Complaints Handling Disclosure and the Conflicts of Interest Policy Summary form part of your agreement with us (“agreement”), and you must acknowledge that you have read and understood this Disclosure in addition to the remainder of the agreement.
3. Acting honestly, fairly and professionally
In doing business with you, we must act honestly, fairly, professionally and in accordance with your best interests when transmitting your orders to other entities for execution. This is also known as the client's best interests rule.
4. Obligation to transmit orders on terms most favourable to you
The obligation described here forms our “best execution obligation”.
We must take all sufficient steps to obtain the best possible result for you when transmitting your order to an execution broker for execution, taking into account the execution factors of price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of an order.
We determine the relative importance of these factors for the transmission of your order. Therefore, we give the factor of speed a higher relative importance compared to the other factors, because this is most relevant to the nature of the investment service that we provide to you.
As regards the execution of your order by an execution broker, the best possible result must be determined in terms of the total consideration, representing the price of the financial instrument and the relevant costs, which must include all expenses incurred by you which are directly related to the execution of your order, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of your order.
4.1 Following specific instructions from you
There could be instances where we follow specific instructions from you when transmitting an order to another entity for execution. In those instances, we act in accordance with your best interests and we are not required to take additional steps to satisfy our obligation to comply with the client’s best interests rule.
5. Order execution arrangements
We receive and transmit your orders only for US listed shares and US fractional shares. At present, we do not offer a different class of financial instruments to you.
5.1 Selection of a third party execution broker
For this arrangement to operate, you must open a general investment account with a third party execution broker, DriveWealth, LLC (“DriveWealth” or “third party broker”).
In accordance with this arrangement, we are liable to you only insofar as the reception and transmission of your orders is concerned, but we are not liable for the execution of your orders, as we may not control the execution parameters. Instead, the third party broker undertakes responsibility for the execution of your orders.
As a firm transmitting orders to other entities for execution, we may select a single entity for execution only where we are able to show that:
- this provides the best possible result for you on a consistent basis; and
- you can reasonably expect that the selected entity will enable you to obtain results that are at least as good as the results that could reasonably be expected from using alternative entities for execution.
Our sole third party broker is DriveWealth. DriveWealth is a US brokerage firm registered with the Securities and Exchange Commission (“SEC”) and regulated by the Financial Industry Regulatory Authority (“FINRA”) in the US. DriveWealth is also a member of the Securities Investors Protection Corporation (“SIPC”).
We rely on DriveWealth to give you access to shares listed on the New York Stock Exchange (“NYSE”) and the Nasdaq Stock Market (“NASDAQ”), and fractions of these shares.
DriveWealth has execution arrangements that enable us to comply with our best execution obligation when we transmit orders to it for execution. We also undertake regular reviews to assess that DriveWealth is providing best execution on a consistent basis and in your interests.
DriveWealth has undertaken to comply in all respects with its regulatory best execution requirements on all orders it executes for you. DriveWealth, in its sole discretion, will determine where to route orders in its execution broker network to comply with its best execution requirements.
5.2 Orders submitted outside market hours
The US market is open between 9:30am Eastern Time (“ET”) or local New York City time and 4:00pm ET Monday through Friday, excluding local market holidays. These are the “market hours”.
If you place an order with us outside market hours, we will transmit your order to the third party broker and your order will be automatically placed in a queue for execution on the next trading day. The execution of your order will generally take place at the time of the market’s next opening. By that time, the price of the share for which you placed an order may have moved.
You may be able to submit a request to cancel an order you placed outside market hours at any time before the opening of the relevant market, i.e., NYSE or NASDAQ. You can do so via the investment platform of the Revolut app. However, we cannot guarantee that we will be able to action your request for cancellation once submitted. Therefore, you should cancel your order plenty of time before the relevant market opens. This way, any risks associated with cancelling your order, or price volatility once the market opens, are reduced.
Please note that we do not offer extended hours trading, meaning that you do not have the ability to trade outside market hours. You can, however, still place an order after the market closes and before the market officially opens.
5.3 Disclosure of execution outside a trading venue
Although we are not liable to you for the execution of your orders by the third party broker, we nonetheless inform you that the third party broker will execute your orders in fractional shares outside a trading venue, i.e. over the counter (“OTC”).
The third party broker obtains your consent to execute orders in fractional shares OTC by means of the agreement entered into between you and the third party broker during the onboarding process.
5.4 Confirmation of non-receipt of payment for order flow
We take all appropriate steps to identify and to prevent or manage conflicts of interest between Revolut Trading and you, or between you and another client, that may arise in the course of providing our investment service to you.
With regard to inducements, except in those limited circumstances where the FCA’s rules on inducements allow so, we do not pay to, or accept from, any third party any fee or commission or provide to, or receive from, any third party any non-monetary benefit in connection with the provision of our investment service.
You can read more about how we treat conflicts of interest in our Conflicts of Interest Policy Summary.
In line with the best execution obligation and our obligations relating to inducements and conflicts of interest, we do not receive payment, remuneration or commission from the third party broker or any other third party in relation to the execution of your orders - a practice described as ‘payment for order flow’.
"Payment for order flow" occurs when an investment firm (typically a broker) that sources liquidity and executes orders for its clients receives a fee or commission from both the client who originates the order and the counterparty the trade is then executed with (typically a market maker or other liquidity provider).
Although we do not receive payment for order flow, we may not control if the third party broker, an entity based in the US and, therefore, not subject to UK regulation, charges payment for order flow when sourcing liquidity for your orders.
The third party broker is required by the SEC to disclose its policies with respect to payment for order flow. According to the SEC, payment for order flow may include monetary payment, reciprocal agreements, services, property, or any other benefit that results in remuneration, compensation, or consideration to a broker in return for routing of customer order flow and includes exchange rebates and credits.
The third party broker may participate in payment for order flow programmes that result in it receiving remuneration, compensation, or consideration for directing orders to broker-dealers, markets, and market centres for execution. The source and nature of such compensation received will be furnished upon written request. However, the third party broker considers the size of the order, the opportunity for price improvement and the quality of order executions when executing orders or routing orders to other brokers for execution. Decisions are regularly reviewed by the third party broker to ensure best execution is achieved.
5.5 Making additional information available and notifying you of changes
Upon reasonable request from you, we will provide you with additional information about the third party broker. We will also notify you of any material changes to our Best Execution Policy or the order reception and transmission arrangements described here by updating this Disclosure.
6. Monitoring the effectiveness of our policy and arrangements
We monitor on a regular basis the effectiveness of our Best Execution Policy and, in particular, we monitor the execution quality of the third party broker and, where appropriate, undertake to correct any deficiencies.
We review our Best Execution Policy and order reception and transmission arrangements at least annually and whenever a material change occurs that affects our ability to continue to obtain the best possible result for you.