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A. Best Execution

1. VASPs must exercise reasonable diligence to Execute each client order to buy or sell one or more Virtual Assets that it receives so as to obtain the most favourable price for the client under the prevailing market conditions, provided that due consideration is also given to costs, speed, likelihood of Execution and settlement, size, nature or any other consideration relevant to the Execution of the order to ensure the best possible result for the client.
2. For the avoidance of doubt, Rule II.A.1 of this Broker-Dealer Services Rulebook applies to the handling of orders to buy or sell one or more Virtual Assets and does not apply where a VASP provides another VASP, a Qualified Investor or an Institutional Investor with a quote to Execute at the VASP’s discretion, whether that VASP is itself executing an order on behalf of a client or is dealing on its own account. Rule II.A.1 of this Broker-Dealer Services Rulebook does, however, apply where a VASP satisfies a client order by dealing as principal with the client.
3. VASPs shall have written controls in place to ensure that the best Execution standard in Rule II.A.1 of this Broker-Dealer Services Rulebook is met and that any conflicts of interest either between competing client orders or between client orders and the interests of the VASP are managed appropriately.
4. Among the factors that will be considered in determining whether a VASP has taken steps to obtain the best possible result for the purposes of Rule II.A.1 of this Broker-Dealer Services Rulebook are—
  a. the characteristics of the Market for the Virtual Asset [e.g. price, spreads, volatility, relative liquidity, and pressure on communications];
  b. the size and type of transaction;
  c. the number of Markets or other sources of liquidity checked;
  d. accessibility of quotes to trade in the Virtual Asset[s] in question under the market conditions prevailing at the relevant time, noting that, even in the event that certain sources of liquidity are not available, VASPs are not relieved from taking reasonable steps and employing their market expertise in seeking to achieve the best Execution of client orders; and
  e. the terms and conditions of the order which result in the transaction, as communicated to the VASP.
5. Where a VASP Executes a client order off-Market by trading with another VASP or another third party, the burden of demonstrating compliance with the best Execution standard set out in Rule II.A.1 of this Broker-Dealer Services Rulebook shall remain with the VASP.
6. When Executing client orders, VASPs shall disclose to their clients, both prior to Execution and in the trade confirmation, the portion of the amount payable by the client that is retained by the VASP as fees or commission for the trade, except where a VASP provides another VASP, a Qualified Investor or an Institutional Investor with a quote to Execute at the VASP’s discretion under Rule II.A.2 of this Broker-Dealer Services Rulebook.
7. VASPs shall not pay or receive any monetary or non-monetary benefit, including by way of reciprocation for any service or business, to any third party in respect of its Execution services provided to a client, except for necessary service fees required to Execute the client’s order. In particular, VASPs shall not receive any remuneration, discount or non-monetary benefit for routing clients’ orders to a particular trading venue or to another Entity. Any fees payable by or to another VASP or other third party shall be structured in such a way so as not to give rise to conflicts of interest in respect of the Execution of client orders.
8. For the avoidance of doubt, failure to maintain or adequately resource a department assigned to Execute clients’ orders cannot be considered justification for not complying with the Execution requirements in this Part II of this Broker-Dealer Services Rulebook.
9. A VASP through which an order is channelled and that knowingly is a party to an arrangement whereby the initiating VASP has not fulfilled its obligations under this Part II of this Broker-Dealer Services Rulebook, will also be deemed to have violated this Part II.
10. If a VASP receives an unsolicited instruction from a client to route that client’s order to a particular Market or counterparty for Execution, the VASP is not required to make a best Execution determination beyond the client's specific instruction, provided that the VASP processes the client’s order promptly in accordance with its terms.
11. Where a client has directed that an order be routed to another specific VASP that is also Licensed by VARA, the receiving VASP to which the order was directed is required to meet the requirements in this Part II of this Broker-Dealer Services Rulebook with respect to its handling of the order.
12. Each VASP must document its compliance with its policies and procedures related to its selection of the best Market for a Virtual Asset, including how to Execute client orders where there is an absence of pricing information, an absence of drivers or valuation factors behind such prices, or multiple quotations.
13. No VASP can delegate to another Entity responsibility to provide best Execution to its client’s orders. VASPs that route client orders to other Entities for Execution on an automated, non-discretionary basis, as well as VASPs that internalise client order flows, must review [at least quarterly] the quality of Execution received by their clients, with reference to how such Execution quality compares with the Execution quality the VASP may have obtained from other Markets or sources of liquidity. In conducting each such reviews, VASPs must determine whether any material differences in Execution quality exist among the Virtual Assets trading and, if so, modify their routing arrangements or justify why they are not modifying their routing arrangements.
14. VASPs that route their order flows to another Entity that has agreed to handle that order flow as agent for the client can rely on that Entity’s regular and rigorous review, as long as the rationale of the review is fully disclosed to the originating VASP.
15. VASPs shall develop, implement and maintain systems to ensure that their systems have the capacity and capabilities to Execute client orders received through such systems or such other means as may be agreed with clients from time to time.
16. VASPs must notify clients with whom they have an ongoing relationship of any material changes to their order Execution arrangements or their Execution policy.