Best execution policy, order management and selection of intermediaries

BITCOINFORME, PSC, S.L

Index:

• 1. INTRODUCTION AND REGULATORY CONTEXT
• 2. SUBJECTIVE SCOPE OF APPLICATION 
• 3. OBJECTIVE SCOPE OF APPLICATION
• 4. FACTORS FOR SETTING BEST EXECUTION CRITERIA
• 5. BEST EXECUTION CRITERIA AND ORDER EXECUTION PROCESSING
• 6. PROCEDURE FOR AUTHORIZING INTERMEDIARIES IN THE RTO SERVICE
• 7. SELECTION OF EXECUTION VENUES FOR THE EXECUTION SERVICE
• 8. PERIODIC REVIEWS OF SELECTED INTERMEDIARIES AND EXECUTION VENUES
• 9. INFORMATION TO CUSTOMERS
• 10. RESPONSIBILITIES
• 11. APPROVAL, ENTRY INTO FORCE, AND UPDATE OF THE POLICY
• ANNEX I Execution Venues 

1. INTRODUCTION AND REGULATORY CONTEXT

BITCOINFORME, PSC, S.L. (hereinafter, “Bit2Me” or the “Entity”) is a licensed provider of crypto-asset services authorized by the National Securities Market Commission (“CNMV”), among others, for the provision of crypto-asset order execution services on behalf of clients.

The regulations applicable to companies that provide crypto-asset services, in particular, Regulation (EU) 2023/1114 of the European Parliament and of the Council of May 31, 2023, on crypto-asset markets (hereinafter, “MiCA”) establish a general principle, applicable to the provision of crypto-asset services covered by said regulations, according to which the providers of such services must act with honesty, impartiality, and professionalism, in the best interest of the clients. 

MiCA, as well as the regulations that may supplement or develop this Regulation, require Bit2Me, like all MiCA providers, that when they execute or intermediate client orders for their subsequent execution, whether they provide these services independently or through another/s, the entities adopt sufficient measures to obtain the best possible result for their clients taking into account the price, costs, speed and probability of execution and settlement, volume, nature of the operation, and/or any other element relevant to the execution of the order (“best execution”). 

In this sense, in the context of RTO services, it will also be necessary for Bit2Me to act in the best interest of its clients when transmitting the orders of its clients to other entities for their execution, guaranteeing a quick and adequate transmission of the orders. 

These obligations are understood to be fulfilled when sufficient measures are adopted aimed at consistently obtaining the best possible result for clients, without this implying the obligatory obtaining of such a result for each and every one of their orders, or without the best result always consisting of obtaining the best price, given the relative importance that other factors may have in certain operations. Likewise, it must apply procedures and mechanisms that provide for the quick and adequate transmission of client orders for their 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 Management Policy, as well as the processes and criteria for selecting intermediaries (hereinafter, the "Policy"). 

2. SUBJECTIVE SCOPE OF APPLICATION 

The obligations established in this Policy will apply to individuals linked, directly or indirectly, with the provision of the client execution and RTO service (hereinafter, "Subject Persons").

This Policy applies to client orders on crypto-assets. Therefore, the Entity executes orders on execution venues or transmits them to intermediaries who have been rigorously selected to guarantee a better execution of its clients' operations. 

3. OBJECTIVE SCOPE OF APPLICATION

This Policy is applicable to the orders of Bit2Me clients regardless of their category as qualified or non-qualified investors since MiCA does not establish criteria that require different treatment. 

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

Likewise, it also applies to the RTO service that Bit2Me provides to its clients with respect to crypto-assets traded or available on trading venues or other platforms to which it does not have direct access, for the execution of which it resorts to the use of intermediaries who access these venues or platforms, in accordance with what is stated in this document. 

4. FACTORS FOR SETTING BEST EXECUTION CRITERIA 

The general factors identified in accordance with MiCA for setting the criteria of this Policy are the following:

• Crypto-asset price: monetary expression of the value that could be obtained from trading the crypto-asset on the possible execution venues.
• Costs: monetary expression of the costs associated with the execution, clearing, and/or settlement of the client's order, on the different execution venues and which are borne directly or passed on to the client. 
• Speed: time required for the execution of the client's order on a specific execution venue from among those available for the specific crypto-asset under standard market circumstances when there is a counterparty for it.
• Probability of execution and settlement: possibility that an order is executed on a trading venue based on its depth and liquidity. 
• Volume: dimension of supply and demand for a specific crypto-asset on the available execution venues.
• Custody conditions: monetary expression of the costs associated with the custody necessary to execute client orders on the possible execution venues.
• Other relevant elements: 
• Costs not directly associated with execution: 
  1. Other fees related to services associated with Blockchain technology, fees for sending crypto-assets or fiat money, etc. 
  2. Custody fees: the passing on to the client after the execution, clearing, and settlement of an order of a different custody fee depending on where the crypto-assets associated with the operation are custodied.
• Technical availability: the execution venues are technically integrated with the Brokerage engine. This integration requires development and subsequent validation. The choice of providers already known and integrated with the engine is prioritized. Since there are other more important criteria such as the aforementioned liquidity, it may be decided to implement a new provider to connect it to the engine. In this case, Bit2Me prioritizes those that support the CCXT library since the development is based on it.
• Execution, clearing, and settlement risk: credit risk and operational risk associated with the settlement, execution, and clearing of operations.
• Regulatory compliance and other reputational risks: this criterion is decisive, since it is the first reason for discard. Having a MiCA license will only be required in cases where the execution venue or platform or intermediary provides a custody service for client crypto-assets, whether temporarily or permanently.

Bit2Me considers that as a general rule the best possible result will in all cases be determined in terms of total consideration, composed of the price of the crypto-asset and the costs and expenses related to the execution, which will include all expenses that are directly related to the execution of the order, 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 probability of execution and security and reputation issues of the execution venues.

5. BEST EXECUTION CRITERIA AND ORDER EXECUTION PROCESSING

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

In any case, the execution of orders must be timely, fair, and fast, and will prevent the misuse of any information related to client orders by Bit2Me employees.

In order to determine the importance of each of the factors mentioned above, the Entity takes into account the characteristics of the crypto-asset subject to 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 directed. 

These general criteria are applicable under normal conditions and do not prevent that, in exceptional circumstances, other factors may be prioritized, provided that, in its assessment, it is understood that the best result for the client's orders can be obtained.

Regarding the management of the client's orders itself, they will be processed sequentially and on a first-come, first-served basis, not aggregating orders received from some clients with those of others or with those of the entity itself for sending to the market. Only and always for the benefit of the client, orders related to the sale of rights will be aggregated when there is no express order from the Client to go to a rights issue and it entails a premium, as recognized as a good banking practice by the CNMV itself.

6. PROCEDURE FOR AUTHORIZING INTERMEDIARIES IN THE RTO SERVICE

Bit2Me, when providing RTO services, as in the execution service, will apply procedures and mechanisms that provide for the quick and adequate transmission of client orders for their execution on a crypto-asset trading platform or to another crypto-asset service provider, following the selection criteria of the Policy.

In no case will information related to pending client orders be misused, and all reasonable measures will be taken to prevent the misuse of said information by any of its employees or Subject Persons.

1. Selection of intermediaries for crypto-assets

Criteria for the selection of intermediaries

In those cases where Bit2Me is not a member or does not have direct access to the execution venues where certain crypto-assets are traded or for other circumstances provides an RTO service and, therefore, must resort to the services of an intermediary for the final execution of its clients' orders, it must select the intermediaries to operate. In these cases, Bit2Me acts as the recipient of its clients' orders and transmits them to the intermediary, with the latter being ultimately responsible for their execution on the execution venues duly selected for this purpose by the corresponding intermediary.

This type of operation can be channeled through different intermediaries that access the corresponding trading and execution venues, chosen by the intermediary itself for this purpose, where the crypto-assets are traded. The intermediary selected by Bit2Me will direct its clients' operations preferably towards markets that provide the conditions to achieve the best possible result for the clients. The Product Department will be responsible for evaluating and selecting the intermediaries where the RTO service will be carried out.

The list of intermediaries that Bit2Me can access to provide the RTO service for its clients' orders is included in a separate confidential document.

The criteria for the selection of intermediaries through which to carry out operations on these crypto-assets will be the following: 

• Having its own order execution policy: only intermediaries that have a formally established order execution policy that complies with all the requirements established by the MiCA regulations will be considered. 
• Access to trading/execution venues: the access by intermediaries to the trading venues that are considered relevant at any time with respect to each crypto-asset and the choice of said venues, for these purposes, by the intermediary itself. 
• Total consideration: Bit2Me will consider, under normal conditions, the price, cost, and liquidity. In this way, the trading platform, through the selected intermediaries, that has greater liquidity will be the one that can provide better prices.
• Quality of execution: Those intermediaries that can systematically and consistently obtain the best possible results for client orders on the trading platforms will be selected.

Therefore, the selected intermediaries must include in their order execution policy the execution venues that are considered relevant for each type of crypto-asset; additionally, they must justify how they access them and why they consider one way or another to be more appropriate.

Bit2Me will annually review the quality of the execution obtained by the different intermediaries in terms of speed and operational agility. This analysis will include a review of the total costs (including price and fees) for the execution of operations and the different execution venues in which the intermediaries used operate.

Selected intermediaries

The selection of intermediaries is made among entities of recognized solvency, which comply with the requirements mentioned above for each crypto-asset. These entities have been selected as preferred intermediaries, given that they reasonably meet all the aforementioned requirements globally. 

In this decision, the concurrence of other additional factors inherent to operating through said intermediary has also been considered:

• Breadth of the execution venues to which the intermediary allows access for the execution of orders from Bit2Me's clients, either directly or indirectly, whose selection is supported by the corresponding Order Execution Policy. 
• Technological and system capacity of the intermediary for the processing of flows and volumes of client orders transmitted by Bit2Me for their execution. Likewise, the intermediaries must have the necessary technical and human resources for the execution and settlement of said flows.
• Technological and operational integration of the intermediary with Bit2Me that allows for:
• The development of synergies in the processing of orders and their subsequent clearing and settlement until their registration in the client's account at Bit2Me.
• A high degree of mechanization of contracting processes and, as a result, a significant reduction in operational risks and an increase in the quality and speed of service for Bit2Me clients.
• An easier resolution of incidents that may arise in relation to the execution, clearing, and settlement of their orders.
• The organizational structure of the intermediaries is adequate for the needs of providing services to Bit2Me in an integral manner.
• Greater control of operational risk and guarantee of compliance and observance of the regulations that are applicable to the intermediary. 
• The positive historical experience of the relationship between the intermediary and Bit2Me will also be valued. 

2. Management and processing of orders in the RTO service

Bit2Me performs a sequential and first-in, first-out management of orders, in no case accumulating orders received from some clients with those of others or with those of the entity itself for sending to the market. Only and always for the benefit of the client, orders related to the sale of rights will be aggregated when there is no express order from the Client to go to a rights issue and it entails a premium, as the CNMV itself recognizes as good banking practice.

Orders that Bit2Me automatically transmits to its intermediaries for them to be executed to achieve greater speed or better price, without Bit2Me having the capacity to decide on the matter.

7. SELECTION OF EXECUTION VENUES FOR THE EXECUTION SERVICE

The Product Department will be responsible for evaluating and selecting the execution venues and platforms where the client order execution service will be carried out, in accordance with the following criteria established in this Policy. An annex to this policy describes a list of the main execution venues to which the entity directs client orders.

Below are the criteria with which Bit2Me performs the selection process for execution venues, always seeking to guarantee the best execution for its clients' orders.

1. MiCA license, reputational, regulatory risk, or confidence in the continuity of its operations

Bit2Me performs prior due diligence by searching for adverse news or observations in daily operations, in order to identify any prior indication of internal or external problems that would prevent them from continuing their normal operations. In case any negative factor regarding the reputation or any unusual situation about the company is identified, said execution venue is discarded.

Therefore, only execution venues of recognized prestige in the market will be considered, taking into account additional variables such as belonging to groups with a significant market presence, services offered and their quality, audit reports, etc. In cases where the custody service is provided, it will be necessary for them to have the corresponding MiCA license.

Some examples of adverse news that can be detected are adverse news about potential non-compliance with Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) regulations and exposure to significant sanctions.

2. Probability of execution and settlement and volume

To ensure that orders are properly executed on the execution venue, and that best execution is met in all cases, the market liquidity is carefully evaluated. This liquidity is compared in the main information aggregators on crypto-asset markets such as, for example, Coingecko and Coinmarketcap and is corroborated by checking the order book in the providers subject to selection. 

Within the liquidity analysis, Bit2Me evaluates, among others, the daily market volumes, the necessary market impact volumes, and price slippage, etc. 

Markets with a high level of liquidity are generally selected, both in pairs with euros or ART and/or EMTs (hereinafter "stablecoin"). In this sense, Bit2Me prioritizes the pair to execute the order depending on the liquidity of the specific pair at any given time, that is, if a market is much more liquid with a stablecoin, it is prioritized over the pair of that crypto-asset against euros. This is possible because the execution engine settles operations against both bases indiscriminately, which allows choosing from a wider range of pairs and, therefore, offering a better price in client operations.

3. Speed and technical capacity

The execution venues that are selected by Bit2Me are technically integrated with the execution service engine. This integration requires development and subsequent validation. Since there are other more important criteria such as the aforementioned liquidity, it may be decided to implement a new provider to connect it to the engine.

4. Costs

In the event that there are several possible execution venues that meet all the criteria mentioned in the Policy in a satisfactory manner, Bit2Me will prioritize those that offer lower costs. 

The costs generally depend on the volume of orders that Bit2Me executes in each market, so this in practice usually implies choosing the market through which a greater volume is executed. This does not imply receiving remuneration in any case from the execution venue.

Once the possible markets and intermediaries to be used to execute/transmit client orders have been analyzed, and the report on compliance with the qualitative and operational criteria has been prepared, a proposal for authorization will be presented to the Board of Directors, who will ultimately approve and authorize the use of the proposed market. 

The list of execution venues that Bit2Me will use for the execution of its clients' orders is included in a separate confidential document.

8. PERIODIC REVIEWS OF SELECTED INTERMEDIARIES AND EXECUTION VENUES

The Product Department will be responsible for reviewing the intermediaries and execution venues for orders to which the Entity transmits or executes orders by virtue of the provisions of this Policy.

Bit2Me will supervise the effectiveness of its RTO mechanisms, and order execution and the Policy in order to detect and, where appropriate, correct any deficiencies in this regard. In particular, it will periodically check whether the included execution venues provide the best possible results for clients or if it is necessary to change its RTO and/or order execution systems. 

If as a result of said reviews there are indications that could cast doubt on the selection criteria, a new evaluation of the entity may be requested to decide whether or not it should continue providing services to the Entity. 

The evaluation will be carried out based on the information obtained by the Entity and on the basis of its own experience, without prejudice to the fact that the Entity may collect information from the corresponding execution platform to evaluate the service provided. In this sense, the following aspects must be reviewed and evaluated:

• The quality of the service provided and whether it meets best execution in comparison with other execution venues or intermediaries. In relation to the crypto-assets available in the execution and RTO service, these are continuously monitored in order to identify if there is a more liquid execution venue, which also meets the criteria set out in the Policy, to offer this new market. This review is carried out periodically and at least quarterly. 
• The commissions agreed upon or applied in operations with explicit commissions, to verify that they are at market conditions.
• If negative information about the economic progress of the entity has been published in public media or any other situation that could put the continuity of the entity at risk.
• Any situation that affects the entity (changes in solvency, corporate events, etc.), as well as changes in market conditions or in the applicable regulations.

The Entity must certify the annual evaluation carried out on the selected platform. To do this, they can use, for example:

• Merit matrices.
• Documentary support for the prices offered and traded at a given time. 
• Reports with the evaluation carried out.

9. INFORMATION TO CUSTOMERS 

All clients will have the complete version of the Policy available on the corporate website of the Entity. The Entity will obtain the express consent of its clients before applying the Policy to them. Bit2Me will notify clients of any significant changes in its systems or the Policy.

In the event that a client requests information from the Entity about the Policy or the mechanisms it uses to guarantee best execution and how these are reviewed, it must respond clearly, with sufficient detail and within a reasonable period of time. 

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

When a client expressly requests the execution of their order in a specific market, they must be clearly informed that this circumstance implies the non-application of the Policy's criteria, and, therefore, Bit2Me cannot guarantee best execution for said operation requested by the client. 

Likewise, Bit2Me will provide its clients with adequate and clear information about the Policy and any significant changes to it. Said information will clearly explain, with sufficient detail, and in a way that can be easily understood by clients, how Bit2Me executes client orders. Bit2Me must also obtain the prior consent of each client in relation to any change to the Policy.

10. RESPONSIBILITIES

1. Board of Directors and Management Committee

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

The Management Committee is responsible for authorizing the execution venues and intermediaries, after receiving the report from the Product Department with the selection proposal for it. 

2. Compliance

The Compliance Department is responsible for:

• Participating in the design and preparation of the Policy and its updating.
• Ensuring that the content of the Policy is consistent with the applicable regulations.
• Reviewing, at least once a year, the Policy and the measures included in it, as well as its effective compliance by the Subject Persons, and raising the results of the review to the Board of Directors and proposing, where appropriate, modifications to it when it identifies points for improvement to adapt it to the effective reality of the Entity's activity or that it should be adapted to criteria or recommendations of the regulators or to changes in the applicable regulations. 

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

3. Product Department 

The Product Department is responsible for:

• Evaluating and selecting the execution venues and intermediaries in accordance with this Policy.
• Preparing a report with the proposal for the authorization of the execution venues and intermediaries and sending it to the Management Committee for its evaluation.
• Supervising the execution venues and intermediaries that comply with the best execution criteria.

4. Subject Persons

All Subject Persons to this Policy are responsible for complying with the provisions of the same.

11. APPROVAL, ENTRY INTO FORCE, AND UPDATE OF THE POLICY

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

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

• When legal or regulatory changes that affect the Policy occur.
• At the proposal of Compliance or the Internal Audit Function, when they understand that there are sections susceptible to improvement to achieve the proposed objectives or to adapt appropriately to the characteristics of the services offered by the Entity at any time.
• At the proposal of the Product Department.
• At the proposal of the supervisory bodies.

In any case, Compliance is empowered to issue as many internal circulars or procedures as it deems necessary to develop the content of this Policy or to clarify doubts that may arise in its practical application. 

This development documentation will be communicated to all Subject Persons to the Policy and duly archived by Compliance.

ANNEX I Execution Venues

This list is updated as of the Best Execution Policy date, and is made up of the main execution venues to which Bit2Me directs client orders. The list does not imply the preferential order that the entity uses for orders, the selection of best execution and the execution venue to which they are directed are based on the criteria indicated above, taking into account the best interests of our clients.