Coinsquare Capital Markets Limited (“Coinsquare”), as a Dealer Member of the Canadian Investment Regulatory Organization (“CIRO”), is required under CIRO Rules to establish, maintain and ensure compliance with written policies and procedures that are reasonably designed to achieve “best execution” when acting for a client. This Best Execution Disclosure is intended to provide a clear and easy-to-understand summary of the measures that Coinsquare takes to achieve “best execution” for client orders — which means obtaining for our clients the most advantageous execution terms reasonably available under the circumstances, considering prevailing market conditions.
Best Execution Factors
The determination of whether best execution has been achieved is subject to reasonable efforts and should be interpreted in the context of the following broad factors:
● price
● speed of execution
● certainty of execution
● overall cost of the transaction
Review of Coinsquare Client Quote:
CCML will also review all executions via a spread execution exception report which will measure the quote given to clients versus the underlying quote to CCML, to review any instances where the quote is more than a 385 bps difference.
Any such instances will be investigated, and unless the client gave permission for the higher spread, the client will be rebated the difference in Canadian Dollars (CAD) to remedy the situation, and a review of the trading parameters will be done to ensure systems are operating as intended within the intended spread.
Additionally, CCML will review all executions via an exception report which will compare the quote given to clients against the available pricing on the Coinsquare ATS. The report shall return an instances where a discrepancy exists of $1 or greater. If any such instances are found, the affected client shall be compensated the canadian dollar equivalent of the difference between the benchmark price that was used to generate the quote in CS Trade, and the price that was available on the ATS at the time of execution.
Order Submission Options
Coinsquare diligently pursues the execution of each and every client order; however, different kinds of orders may be handled differently, depending on the type of order and the way in which it is submitted to Coinsquare by the client. For example:
1. CS Trade orders are automatically routed to Coinsquare’s principal-backed execution service, which provides a price quote (including an applied spread – a concept that is explained further below) for the indicated volume, based on the best available prices on certain other marketplaces and/or through liquidity providers. When an order referencing a quote is accepted, provided market conditions have not changed, Coinsquare completes the transaction as principal at the price quoted to the client. No additional fees or commissions are charged other than as disclosed to clients in the Coinsquare Fee Schedule [https://coinsquare.com/en-ca/ccml-fs/]. (For additional details, please see “How Coinsquare Establishes a Quote for CS Trade” below.)
2. CS Pro orders are automatically routed to the Coinsquare marketplace and traded against orders in the Coinsquare marketplace on a price/time priority basis. Transaction fees are disclosed to clients in the Coinsquare Fee Schedule [https://coinsquare.com/en-ca/ccml-fs/].
3. Over-the-Counter (OTC) orders are communicated by voice or message to the Coinsquare OTC desk and filled by Coinsquare as principal. The OTC desk provides clients with a quote that is based on a price aggregation of our liquidity partners, plus an applied spread. The desk may withdraw the quote at any time prior to filling a client order. Once the client accepts the last given live quote, this creates a binding execution between the OTC desk and the client. No additional fees or commissions are charged, other than as disclosed to clients in the Coinsquare Fee Schedule [https://coinsquare.com/en-ca/ccml-fs/].
How Coinsquare Establishes a Quote for CS Trade
Unlike equity securities (stocks), which are listed on a stock exchange, digital assets are not “listed” on any single marketplace, but rather, they exist on the blockchain and are traded globally by and through a variety of intermediaries. Coinsquare uses a variety of measures to ensure that your trades through CS Trade will always execute at the best price available under the circumstances that prevail at the moment when you confirm your trade.
In establishing the quote, which is the price at which Coinsquare will buy a digital asset from you, or sell a digital asset to you, Coinsquare:
● looks to a variety of third-party firms that provide liquidity and/or reference prices for price quotes at any given moment of the 24-hour-a-day trading cycle
● aggregates the current, but fluctuating, quotes it receives to arrive at an estimate of the best price for the digital asset that you have expressed an interest in buying or selling
● adds a spread to that estimated price:
o this is a type of compensation that Coinsquare earns for its services to you;
o the spread is a percentage of the total amount of your order that is added to the estimated price for a digital asset that you wish to buy (a “mark-up”), or deducted from the estimated price for a digital asset that you wish to sell (a “mark-down”);
o the spread will be within a target range of 0.5% to 1.85%, (also expressed as 50 to 185 bps) barring adverse market conditions.
o In the event of adverse market conditions and less liquid coin pairings, the spread may be increased by up to 2% (200 bps) to guarantee that an order is filled, and
o the exact spread applied to your order will depend on a number of factors, including the particular digital asset you are trading, its liquidity and price volatility at the time of your order, and the speed, reliability, and total number of third-party firms from which Coinsquare is receiving price quotes at that time.
● adjusts the estimated price (including the spread) when you request a quote for the exact amount of the digital asset that you wish to buy or sell–this is the quote.
The quote you receive is guaranteed for ten (10) seconds; if you confirm the trade within that 10-second period, Coinsquare will execute the trade using that quote as the execution price. After 10 seconds, the original quote will automatically become stale and be replaced by a new quote. This will repeat every 10 seconds until you confirm the trade or you decide not to trade at all.
In sum, Coinsquare looks at the available prices in global markets at each step in the process so that it can provide you with the best price available at any given moment. However, until you confirm your trade, the price that we quote you is subject to change, in line with market fluctuations.
You should also be aware that:
● Coinsquare will only generate quotes predicted to be within our target spread range of 50 bps (or 0.5%) to 385 bps (or 3.85%) above or below the benchmark price.
● In the event that Coinsquare cannot produce a quote within the 250385 bps limit, due to extreme volatility or reduced liquidity, clients will be notified of the situation via Coinsquare’s website or application. If the opportunity exists to receive a quote at a spread that exceeds the 385 bps limit, clients will be provided instructions, in the communication, to proceed with the process. During these periods, client orders may still match with and execute against any resting orders, including other client orders in the Coinsquare Pro order books.
● For all principal trades with clients through CS Trade, we record a benchmark price and investigate any trades where the price is more than 385 basis points inferior to the benchmark.
● Coinsquare may apply a foreign exchange spread in a transaction if you deposit Canadian dollars and request a purchase of a digital asset that trades in US dollars.
Corporate Structure and Conflict Management
Coinsquare is registered and operates as an CIRO-approved investment dealer, but it also has regulatory approval to operate a marketplace that is an alternative trading system (or “ATS”), which it operates as a separate business entity. When providing services to you as a retail client, Coinsquare is operating as a dealer; in contrast, the services of the ATS are only offered to other CIRO dealers and large institutional investor firms. While the dealer and ATS businesses are both operated through a single corporate entity (which is a wholly-owned subsidiary of Coinsquare Ltd.), each business unit has its own employees, and trading information is never shared between the two business units. Moreover, the Coinsquare dealer will never receive any preferential treatment as compared to other dealers that may trade on the Coinsquare ATS. For additional details on how Coinsquare has addressed all potential conflicts between its dealer and ATS businesses, please see the Coinsquare ATS Conflict of Interest Policies and Procedures and Dealer Conflict of Interest Policies and Procedures, which are available on the Coinsquare website[https://coinsquare.com/en-ca/ccml/].
Annual Review
Coinsquare reviews our “best execution” policies and procedures, including this Best Execution Disclosure, at least annually.
Should you have any questions regarding this Best Execution Disclosure or any policy it describes, please email our Support team at support@coinsquare.com.
