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Metzler Asset Management GmbH signs UN Principles for Responsible Investment

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Metzler Asset Management

Best execution policy for orders in financial instruments

I. Objective
These principles shall apply to the execution of orders for the purchase or sale of securities and other financial instruments (e.g. options) placed by Metzler Investment GmbH on behalf of its clients under portfolio management agreements or as an authorised asset management representative.

II. Principle of Best Execution
Metzler Investment GmbH shall not place orders to purchase or sell securities or other financial instruments (e.g. options) directly with execution venues; instead it shall arrange for them to be executed by intermediaries (brokers, banks, etc.). It will endeavour to achieve best execution of orders through careful selection and monitoring of such intermediaries. Metzler Investment GmbH monitors at regular intervals whether the intermediaries take suitable precautions to enable them to guarantee best execution of orders.

III. Order placement principles and best execution
Metzler Investment GmbH normally places orders on the basis of the following principles:

(1) Trading orders for financial instruments are normally placed via the central order desk at B. Metzler seel. Sohn & Co. KGaA – hereinafter referred to as the Bank. The purpose is to consolidate order placement and the monitoring of execution in one place and, where this is possible and permissible, ensure that trading orders can be combined to ensure efficient trading. Metzler Investment GmbH shall instruct the Bank that, where it cannot execute orders itself, orders may be transmitted to defined brokers on the best possible terms, taking into account all information available at the time of order placement. Metzler Investment GmbH shall base the selection of intermediaries on factors that are relevant for ensuring best execution, in particular:

  • Price of the financial instrument
  • Costs linked to order execution
  • Speed of execution
  • Probability of execution and/or processing
  • Volume and type of order

To select the most suitable intermediary, these criteria are given different weightings, depending on the classification of the client, type of financial instrument and trading order.

(2) When placing orders for private clients, best execution is based on the overall cost, comprising the price of the financial instrument and all execution-related costs.

(3) Orders for professional clients are placed with a view to obtaining the best possible results for the client, taking into account all costs involved in execution of the order. Consequently, in view of the customary fluctuations in the prices of financial instruments, orders are generally allocated to intermediaries who consistently ensure complete and timely order execution at the lowest possible cost. In such cases, the selection of intermediaries may be influenced by other relevant factors such as the market impact of the order, security of the transaction or the quality of investment search.

(4) On the basis of this weighting Metzler Investment GmbH draws up a list of intermediaries that the Bank may use to handle orders that it cannot execute itself. If the list provides a choice of several brokers for a specific order, the selection must be made using best judgement on a case-by-case basis.

(5) Metzler Investment GmbH monitors order execution by the Bank or the brokers used by the Bank. For this purpose, random samples of completed orders are checked for compliance with these order execution principles. Complaints will lodged if any shortcomings are identified.

(6) The issue of investment fund units at the issue price and their redemption at the redemption price are not subject to statutory provisions on best execution of clients’ orders or the present Best Execution Principles.

(7) The applicability of these Best Execution Principles is limited if Metzler Investment GmbH or the Bank or a third party concludes a purchase agreement for financial instruments at a fixed or determinable price (fixed-price transactions). In this case, the duties of the client represented by Metzler Investment GmbH and the Bank or the third party are regulated by the contractual agreement. Metzler Investment GmbH regularly concludes fixed-price agreements for the purchase and sale of interest-bearing securities (including zero-coupon bonds), certificates, warrants and financial derivatives.

IV. Aggregating orders
Metzler Investment GmbH may bundle orders for several clients and arrange for their execution as aggregate orders (block trades) if this appears advisable in the clients’ interests due to the order volume, securities class, market segment, current market liquidity and price sensitivity of the relevant financial instrument. Metzler Investment GmbH specifically points out that aggregating orders may be detrimental for an individual order. Metzler Investment GmbH will only aggregate orders if this appears unlikely to be detrimental to individual clients. Further, it will allocate aggregated orders correctly and in compliance with the normal market principles for the allocation of orders.

V. Priority of instructions
The client may issue instructions to Metzler Investment GmbH regarding execution venues for orders. Such instructions have priority over the present Best Execution Principles. Note: If a client has issued instructions, Metzler Investment GmbH shall arrange for the transaction to be executed in accordance with these instructions and shall thus not be equired to carry out the transaction in accordance with the present Best Execution Principles.

VI. Review of the Best Execution Principles
Metzler Investment GmbH shall review these Order Execution Principles at least once a year. A review may be undertaken more frequently if Metzler Investment GmbH becomes aware of a major change as a result of which best execution of clients' orders is not always guaranteed at the execution venues covered by these principles.

VII. Different terms of execution in individual cases
If extraordinary market conditions or market interferences should make it necessary to execute a specific order other than in compliance with the present Best Execution Principles, Metzler Investment GmbH shall choose such alternative execution method while safeguarding the client’s interests.

VIII. Outsourcing of portfoliomanagement
Metzler Investment GmbH outsources the portfoliomanagement for administered funds (“Investmentfonds”) in accordance with § 16 InvG to external asset managers. In such cases transactions can be executed by the orderdesk of the external asset manager. Metzler Investment GmbH analyses on an annual base, whether the Best Execution Policy of the external manager is consistent with her own Best Execution Policy.

Best Execution Policy (PDF)