Trade Management Policy

Best Execution
The Portfolio Managers are permitted to exercise discretion on the choice of broker and method of execution (i.e., choice of trading algorithm or by broker’s trading desk) to allow the most favourable outcome for Northcape’s clients.

The factors taken into account when considering the broker and execution method include:

  • Size of order vs Average Daily Volume
  • Reliable minimum liquidity on day to day basis
  • What day of the week or are any Australian or important overseas markets shut
  • Is the stock in the news or reporting
  • Closing match volume is large
  • Commission rate is taken into account when deciding which broker to deal with (high touch vs algorithms)

The above factors are used to determine the strategy used for the orders.

Alternate Brokerage Arrangement

A Commission Sharing Arrangement (CSA) is an approved arrangement whereby Northcape receives a benefit from a third party for directing an amount of commission to a stockbroker.

Northcape does not enter into arrangements of this kind unless the benefit accrues to its clients by satisfying all of the below:

  • Assisting Northcape to provide services to its clients,
  • Primary use is to assist Northcape’s investment decision-making process,
  • Amount of commission was reasonable in relation to the value of the brokerage and research services provided.

If Northcape were to enter into any CSA with a third party, it is required that:

  • Each arrangement be disclosed to the Northcape Board of Directors,
  • Proper records would be kept of the service and consideration, and
  • No group of clients subsidise another group of clients, i.e., only clients that receive the benefit contribute their brokerage to the arrangement and all benefitting clients contribute proportionally to the benefit received.

Each calendar year, Northcape must provide a notification to its mandate clients who were charged any CSA, which includes the benefits derived from these arrangements. Northcape should also notify mandate clients if it intends to enter similar CSA during the next 12 months. When requested by the client, the Manager must provide description of the product or service obtained through that client account’s brokerage. If any significant change in Northcape’s CSA occurs before or after this disclosure, this should be disclosed by separate communication to investors.