How do I ensure best execution while maintaining my ability to reward brokers?
BestEx facilitates the unbundling of brokerage on behalf of fund managers. This means that while you pay brokerage as per normal upon settlement, your brokerage is designated as to ‘execution’ and ‘non-execution’ components. The ‘non-execution’ component is used to reward broker research and other value adding services. This component can be allocated to any broker or combination of brokers at your discretion, regardless of whether they have executed the trade for which the brokerage was generated.
Unbundling is considered best practice by regulators and asset owners as it delivers maximum value and transparency to investors for the brokerage incurred on their behalf. It is also supported by IFSA Guidance Note 10 in Australia and is used extensively by fund managers to demonstrate compliance with their fiduciary obligations to investors. Unbundling enables you to obtain best execution while continuing to reward brokers for value adding services.