Best execution, order handling, and intermediary selection policy

BITCOINFORME, PSC, S.L

Table of contents:

• 1. INTRODUCTION AND REGULATORY CONTEXT
• 2. PERSONAL SCOPE OF APPLICATION 
• 3. MATERIAL SCOPE OF APPLICATION
• 4. FACTORS DETERMINING BEST EXECUTION CRITERIA
• 5. BEST EXECUTION CRITERIA AND HANDLING OF ORDERS UNDER EXECUTION
• 6. AUTHORISATION PROCEDURE FOR INTERMEDIARIES IN RTO SERVICES
• 7. SELECTION OF EXECUTION VENUES FOR EXECUTION SERVICES
• 8. PERIODIC REVIEWS OF SELECTED INTERMEDIARIES AND EXECUTION VENUES
• 9. INFORMATION TO CLIENTS
• 10. RESPONSIBILITIES
• 11. APPROVAL, ENTRY INTO FORCE, AND UPDATES TO THE POLICY
• ANNEX I Execution Venues     

1. INTRODUCTION AND REGULATORY CONTEXT

BITCOINFORME, PSC, S.L (hereinafter, “Bit2Me” or the “Entity”) is a crypto-asset service provider authorized by the National Securities Market Commission (“CNMV”), among others, to provide execution of orders on crypto-assets on behalf of clients.

The regulations applicable to crypto-asset service providers, in particular Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets (hereinafter, “MiCA”), establish a general principle applicable to the provision of crypto-asset services covered by such regulation, whereby providers of such services must act honestly, fairly, and professionally in the best interests of their clients. 

MiCA, as well as any regulations supplementing or implementing it, require Bit2Me, as with all MiCA providers, when executing or intermediating client orders for subsequent execution—whether providing these services independently or through third parties—to take all sufficient steps to obtain the best possible result for their clients, taking into account price, costs, speed, likelihood of execution and settlement, size, nature of the transaction, and/or any other consideration relevant to order execution (“best execution”). 

In this regard, within the context of RTO services, Bit2Me must also act in the best interests of its clients when transmitting client orders to other entities for execution, ensuring a prompt and proper transmission of orders. 

These obligations are deemed satisfied when all sufficient steps are taken to consistently obtain the best possible result for clients, without implying an absolute guarantee of such a result for each and every individual order, or that the best result always consists of obtaining the best price, given the relative importance that other factors may have in specific transactions. Likewise, it must implement procedures and arrangements providing for the prompt and proper transmission of client orders for execution on a crypto-asset trading platform or to another crypto-asset service provider.

In compliance with these obligations, Bit2Me has prepared this Best Execution and Order Handling Policy, as well as the intermediary selection processes and criteria (hereinafter, the “Policy”). 

2. PERSONAL SCOPE OF APPLICATION 

The obligations set forth in this Policy apply to individuals and entities directly or indirectly related to the provision of execution and RTO services to clients (hereinafter, “Covered Persons”).

This Policy applies to client orders regarding crypto-assets. Therefore, the Entity executes orders on execution venues or transmits them to intermediaries that have been rigorously selected to ensure the best execution of client transactions. 

3. MATERIAL SCOPE OF APPLICATION

This Policy applies to Bit2Me client orders regardless of whether the client is categorized as a qualified investor or not, as MiCA does not establish criteria requiring differentiated treatment. 

This Policy applies to the execution service provided by Bit2Me to its clients regarding crypto-assets traded on trading venues to which it has direct access. 

Likewise, it also applies to the RTO service provided by Bit2Me to its clients regarding crypto-assets traded or available on trading venues or other platforms to which it does not have direct access, for whose execution it relies on intermediaries that access these venues or platforms, in accordance with what is set forth in this document. 

4. FACTORS DETERMINING BEST EXECUTION CRITERIA 

The general factors identified under MiCA to establish the criteria of this Policy are as follows:

• Crypto-asset price: monetary expression of the value that could be obtained by trading the crypto-asset across the possible execution venues.
• Costs: monetary expression of the costs associated with the execution, clearing, and/or settlement of the client's order at the different execution venues, whether incurred directly or passed on to the client. 
• Speed: time required to execute the client's order at a specific execution venue among those available for the specific crypto-asset under standard market conditions when a counterparty exists.
• Likelihood of execution and settlement: probability that an order will be executed on a trading venue based on its depth and liquidity. 
• Size: extent of supply and demand for a specific crypto-asset across the available execution venues.
• Custody conditions: monetary expression of the costs associated with the custody required to execute client orders on the possible execution venues.
• Other relevant considerations: 
• Costs not directly associated with execution: 
  1. Other fees relating to services associated with blockchain technology, network fees for transferring crypto-assets or fiat currency, etc. 
  2. Custody fees: passing on to the client, subsequent to the execution, clearing, and settlement of an order, a different custody fee depending on where the crypto-assets associated with the transaction are held in custody.
• Technical availability: execution venues are technically integrated with the Brokerage engine. This integration requires development and subsequent validation. Priority is given to selecting providers that are already known and integrated with the engine. Since other criteria, such as the aforementioned liquidity, are more critical, a decision may be made to integrate a new provider into the engine. In this case, Bit2Me prioritizes those supporting the CCXT library, as development is based on it.
• Execution, clearing, and settlement risk: credit risk and operational risk associated with the settlement, execution, and clearing of transactions.
• Regulatory compliance and other reputational risks: this criterion is decisive, as it constitutes the primary grounds for exclusion. Holding a MiCA license will only be mandatory where the execution venue, platform, or intermediary provides a custody service for client crypto-assets, whether on a temporary or permanent basis.

Bit2Me considers that, as a general rule, the best possible result will always be determined in terms of total consideration, composed of the crypto-asset price and the costs and expenses related to execution, which include all expenses directly related to order execution, including execution venue fees, clearing and settlement fees, and other fees and taxes paid to third parties involved in the execution of the order, as well as the likelihood of execution and security and reputational considerations regarding the execution venues.

5. BEST EXECUTION CRITERIA AND HANDLING OF ORDERS UNDER EXECUTION

The Entity will execute and/or transmit client orders taking into account the factors mentioned above (such as price, costs, speed, likelihood of execution and settlement, size, nature, or any other relevant consideration). 

In all cases, order execution must be prompt, fair, and expeditious, and must prevent any misuse of information relating to client orders by Bit2Me employees.

To determine the relative importance of each factor mentioned above, the Entity considers the characteristics of the crypto-asset covered by the order and the characteristics of the intermediaries or execution venues (hereinafter also referred to as “markets” or “platforms”) to which the order may be routed. 

These general criteria apply under normal conditions and do not preclude prioritizing other factors under exceptional circumstances, provided that, according to its assessment, the best result for client orders can be achieved.

Regarding the handling of client orders, these will be processed sequentially to ensure prompt, fair, and expeditious execution.

6. AUTHORISATION PROCEDURE FOR INTERMEDIARIES IN RTO SERVICES

When providing RTO services, just as in the execution service, Bit2Me will apply procedures and mechanisms that provide for the prompt and proper transmission of client orders for execution on a crypto-asset trading platform or to another crypto-asset service provider, following the selection criteria set out in the Policy.

Under no circumstances will pending client order information be misused, and all reasonable steps will be taken to prevent any misuse of such information by any of its employees or Covered Persons.

1. Selection of intermediaries for crypto-assets

Criteria for selecting intermediaries

Where Bit2Me is not a member of or lacks direct access to the execution venues where certain crypto-assets are traded, or where it provides an RTO service due to other circumstances and must therefore rely on intermediary services for the final execution of client orders, it must select intermediaries to trade with. In these cases, Bit2Me acts as the receiver of client orders and transmits them to the intermediary, who is ultimately responsible for execution on execution venues selected in due course by that intermediary.

These types of transactions may be routed through various intermediaries that access the relevant trading and execution venues, chosen by the intermediary for this purpose, where the crypto-assets are traded. The intermediary selected by Bit2Me will preferably route client transactions to venues where conditions favor obtaining the best possible result for clients. The Product Department will be responsible for assessing and selecting intermediaries through which to carry out the RTO service.

The list of intermediaries to which Bit2Me may have access to provide the RTO service for client orders is set out in a separate confidential document.

The criteria for selecting intermediaries through which to conduct transactions on these crypto-assets are as follows: 

• Having its own order execution policy: only intermediaries with a formally established order execution policy complying with all requirements established by MiCA will be considered. 
• Access to trading/execution venues: access by intermediaries to trading venues deemed relevant at any given time for each crypto-asset, and the intermediary's own selection of such venues for these purposes. 
• Total consideration: under normal conditions, Bit2Me will consider price, cost, and liquidity. Accordingly, the trading platform that provides the highest liquidity through the selected intermediaries will be the one capable of providing better prices.
• Execution quality: intermediaries capable of systematically and consistently achieving the best possible results for client orders on trading platforms will be selected.

Therefore, selected intermediaries must include in their order execution policy the execution venues considered relevant for each crypto-asset type; additionally, they must justify how they access them and why they consider one route more suitable than another.

Bit2Me will conduct an annual review of the execution quality achieved by different intermediaries in terms of speed and operational agility. This analysis will include a review of total costs (including price and fees) for executing transactions and the various execution venues used by the intermediaries.

Selected intermediaries

Intermediaries are chosen from among entities of recognized solvency meeting the aforementioned requirements for each crypto-asset. These entities have been selected as preferred intermediaries because they reasonably meet all the specified requirements overall. 

In making this decision, additional inherent factors when operating through such intermediaries have also been considered:

• Scope of execution venues to which the intermediary provides access for executing Bit2Me client orders, whether directly or indirectly, supported by the corresponding Order Execution Policy. 
• Technological and systems capacity of the intermediary to handle order flows and volumes transmitted by Bit2Me for execution. Intermediaries must also possess the technical and human resources required for execution and settlement.
• Technological and operational integration between the intermediary and Bit2Me, enabling:
• Synergies in order processing and subsequent clearing and settlement through to crediting the client's account at Bit2Me.
• A high level of automated trading processes, significantly reducing operational risks and increasing service quality and speed for Bit2Me clients.
• Easier resolution of incidents that may arise regarding order execution, clearing, and settlement.
• Intermediary organizational structure aligned with the comprehensive needs of servicing Bit2Me.
• Enhanced control over operational risk and assurance of compliance with regulations applicable to the intermediary.
• A positive historical relationship between the intermediary and Bit2Me will also be valued. 

2. Order management and handling in RTO services

Bit2Me handles orders sequentially and on a first-come, first-served basis, and in no event aggregates client orders with those of other clients or with the firm's own orders for submission to the market. Only, and always in the client's best interest, will orders relating to the sale of rights be aggregated when there is no express client order to participate in a capital increase involving a premium, in line with what the CNMV recognizes as good banking practice.

Bit2Me transmits orders automatically to its intermediaries for execution to achieve greater speed or better pricing, without Bit2Me having any discretionary decision-making power in this regard.

7. SELECTION OF EXECUTION VENUES FOR EXECUTION SERVICES

The Product Department will evaluate and select execution venues and platforms where client transactions will be executed, in accordance with the criteria set forth in this Policy. Attached to this Policy is a list of the main execution venues to which the entity routes client orders.

The criteria Bit2Me uses to select execution venues to consistently ensure best execution for client orders are detailed below:

1. MiCA license, reputational risk, regulatory risk, or confidence in operational continuity

Bit2Me conducts prior due diligence to check for adverse news or daily operational issues to identify any early signs of internal or external problems that might prevent normal operations. If any negative factor concerning reputation or any unusual situation regarding the company is identified, that execution venue will be discarded.

Therefore, only execution venues of recognized standing in the market will be considered, taking into account additional variables such as membership in corporate groups with significant market presence, services offered and their quality, audit reports, etc. Where custody services are provided, holding the relevant MiCA license is required.

Examples of adverse news include reports on potential breaches of Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) regulations, which could expose the venue to substantial penalties.

2. Likelihood of execution and settlement, and volume

To ensure orders are properly executed at the execution venue and that best execution is maintained at all times, market liquidity is thoroughly assessed. This liquidity is compared across leading crypto-asset market aggregators such as CoinGecko and CoinMarketCap, and verified by examining the order books directly at the candidate providers. 

As part of liquidity analysis, Bit2Me evaluates, among other factors, daily market volumes, volumes required to impact the market and cause price slippage, etc. 

Generally, venues with high liquidity levels are selected, both in EUR pairs and ART and/or EMT pairs (hereinafter “stablecoins”). In this regard, Bit2Me prioritizes the pair on which to execute the order based on the liquidity of the specific pair at that time; that is, if a market is significantly more liquid with a stablecoin, it is prioritized over the crypto-asset pair against EUR. This is made possible because the execution engine settles transactions against both bases indifferently, allowing a wider range of pairs and thereby offering a better price for client transactions.

3. Speed and technical capacity

Execution venues selected by Bit2Me are technically integrated with the execution service engine. This integration requires development and subsequent validation. Since other criteria, such as the aforementioned liquidity, take precedence, a decision may be made to integrate a new provider into the engine.

4. Costs

If multiple potential execution venues satisfactorily meet all criteria outlined in the Policy, Bit2Me will prioritize those offering lower costs. 

Costs generally depend on the volume of orders Bit2Me executes on each market, which in practice typically means selecting the market through which a larger volume is executed. This does not under any circumstances constitute receiving remuneration from the execution venue.

Once candidate markets and intermediaries for executing/transmitting client orders have been evaluated, and the qualitative and operational compliance report has been prepared, an authorization proposal will be submitted to the Board of Directors, which ultimately approves and authorizes the use of the proposed venue. 

The list of execution venues to which Bit2Me routes client orders is included in a separate confidential document.

8. PERIODIC REVIEWS OF SELECTED INTERMEDIARIES AND EXECUTION VENUES

The Product Department will review the intermediaries and order execution venues to which the Entity transmits or executes orders pursuant to this Policy.

Bit2Me will monitor the effectiveness of its RTO and order execution arrangements and the Policy to detect and, where appropriate, rectify any deficiencies. In particular, it will periodically assess whether the execution venues included provide the best possible results for clients or whether its RTO and/or order execution systems need to be modified. 

If these reviews uncover any indications that call the selection criteria into question, a re-evaluation of the entity may be requested to determine whether it should continue providing services to the Entity. 

The evaluation will be conducted based on information obtained by the Entity and its own experience, without prejudice to the Entity's ability to request information from the relevant execution platform to assess the service provided. In this regard, the following aspects must be reviewed and assessed:

• Service quality and whether it satisfies best execution compared to other execution venues or intermediaries. Crypto-assets available under the execution and RTO services are monitored continuously to identify whether a more liquid execution venue exists that also meets the criteria in this Policy, in order to offer that new venue. This review is conducted periodically and at least quarterly. 
• Agreed or applied fees in operations with explicit fees, to verify they align with market conditions.
• Whether negative news has been published regarding the entity's financial standing in public media, or any other situation that could jeopardize the entity's continuity.
• Any situation affecting the entity (changes in solvency, corporate events, etc.), as well as shifts in market conditions or applicable regulations.

The Entity must document the annual evaluation conducted on the selected platform. For this purpose, it may use, for example:

• Merit matrices.
• Documentary records of prices offered and traded at a given time. 
• Reports detailing the assessment performed.

9. INFORMATION TO CLIENTS 

All clients will have the full version of the Policy available on the Entity's corporate website. The Entity will obtain express consent from its clients prior to applying the Policy to them. Bit2Me will notify clients of any material changes to its systems or the Policy.

If a client requests information from the Entity regarding the Policy or the arrangements used to ensure best execution and how these are reviewed, the Entity will respond clearly, in sufficient detail, and within a reasonable timeframe. 

Among these requests, Bit2Me must also demonstrate that it has executed orders in accordance with the Policy and must be able to demonstrate compliance with MiCA provisions to the competent authority upon request.

When a client expressly requests order execution on a specific market, they must be clearly informed that this means the Policy criteria will not apply, and therefore Bit2Me cannot guarantee best execution for that transaction requested by the client. 

Bit2Me will also provide its clients with adequate and clear information regarding the Policy and any material changes to it. Such information will clearly explain, in sufficient detail and in an easily understandable manner, how Bit2Me executes client orders. Bit2Me will also obtain prior consent from each client regarding any changes to the Policy.

10. RESPONSIBILITIES

1. Board of Directors and Executive Committee

The Board of Directors is responsible for approving this Policy and its subsequent updates, supervising its implementation, and establishing control procedures to ensure compliance.

The Executive Committee is responsible for authorizing execution venues and intermediaries, following receipt of the Product Department's report containing the selection proposal. 

2. Compliance

The Compliance Department is responsible for:

• Participating in the design, drafting, and updating of the Policy.
• Ensuring that the content of the Policy complies with applicable regulations.
• Reviewing, at least annually, the Policy and the measures included therein, as well as actual compliance by Covered Persons, and submitting review findings to the Board of Directors, proposing amendments where areas for improvement are identified to align the Policy with the actual reality of the Entity's activities, regulator guidance/recommendations, or regulatory changes. 

Internal Audit must also incorporate compliance with this Policy into its controls. 

3. Product Department 

The Product Department is responsible for:

• Assessing and selecting execution venues and intermediaries in accordance with this Policy.
• Preparing a report containing the proposal for authorizing execution venues and intermediaries and submitting it to the Executive Committee for review.
• Monitoring execution venues and intermediaries to ensure they meet best execution criteria.

4. Covered Persons

All Covered Persons subject to this Policy are responsible for complying with its provisions.

11. APPROVAL, ENTRY INTO FORCE, AND UPDATES TO THE POLICY

This Policy must be approved by the Entity's Board of Directors and enters into force on the date of its approval.

The Policy will be updated and/or amended at least in the following cases:

• When legal or regulatory changes affecting the Policy occur.
• Upon proposal by Compliance or Internal Audit, when they deem there are areas that can be improved to achieve the proposed objectives or to properly adapt to the characteristics of the services offered by the Entity at any time.
• Upon proposal by the Product Department.
• Upon request from supervisory authorities.

In any event, Compliance is empowered to issue any internal circulars or procedures it deems necessary to further develop the contents of this Policy or clarify questions that may arise in its practical application. 

Such implementing documentation will be communicated to all Covered Persons subject to the Policy and duly archived by Compliance.

ANNEX I Execution Venues

This list is updated as of the date of the Best Execution Policy and consists of the main execution venues to which Bit2Me routes client orders. The list does not reflect any preferential order used by the entity for orders; best execution selection and the execution venue to which orders are routed are based on the aforementioned criteria, acting in the best interests of our clients.