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Best Execution

Best Execution 

Caldwell Securities Ltd is committed to use all reasonable efforts to ensure that clients achieve the best execution of their orders to buy or sell Canadian listed securities that are quoted or traded on Canadian marketplaces. “Best execution” is a brokerage’s obligation to seek the best terms reasonably available when executing a transaction on behalf of a client, including factors such as speed of transaction, execution price, price improvement opportunities and liquidity. 

With the introduction of Alternative Trading Systems (ATSs) in Canada, it is now possible for the same security to be traded on multiple markets. Caldwell Securities has prepared this information sheet to inform you about this new trading environment. 

Understanding the Structure of the Canadian Marketplace 

The Canadian equity market is composed of multiple trading centres, including traditional Exchanges and Alternative Trading Systems. 

(A) Canadian Exchanges: 

Exchanges are marketplaces that may list the securities of issuers, provide a guarantee of a two-sided market for a security on a continuous basis, and set requirements governing the conduct of marketplace participants. The current equity Exchanges in Canada are: 

Toronto Stock Exchange (TSX) 

TSX Venture Exchange (TSXV) 

Canadian Securities Exchange. (CSE) 

(B) Alternative Trading Systems (ATSs): 

ATSs provide automated trading systems which bring together orders from buyers and sellers of securities which are listed by any of the above Exchanges. The current equity ATSs in Canada are: 

Alpha ATS 

Chi-X Canada 

Pure Trading (operated by CSE) 

Omega ATS

All Canadian equity orders placed through Caldwell Securities are directed for marketplace execution using the smart order routing technology. Smart routers seek the best price across all Exchanges and visible ATS simultaneously and fill as much of the order as possible with the unfilled portion of the order being booked on the Default Exchange. Caldwell Securities has chosen the TSX as its Default Exchange as it has the highest volume of orders in its book. Caldwell Securities does not subscribe to any Dark Pools (marketplaces that offer no pre-trade transparency on any orders) as our trading volume is adequately met by the exchanges and ATS noted above. Caldwell Securities continually monitors its order routing choices pursuant to its regulatory obligation to ensure that such choices satisfy best execution of client orders. 

Hours of Operation for Trading in Canadian Listed Securities 

Caldwell Securities trading staff and systems are available for order execution between 9:30 am EST and 4:00 pm ET (“Hours of Operation”), Monday through Friday, excluding Canadian statutory holidays. Staff may be available outside of Principal Marketplace hours; however, trade execution outside of the Hours of Operation is treated on a best efforts basis. 

Standard Handling of Orders 

All orders received for Exchange-listed securities will be handled as follows: 


An order received prior to the Hours of Operation will book to the pre-opening of the Default Marketplace defined for that security. 

Continuous Session 

An order received during the Hours of Operation will be handled as follows: 

An active order is defined as any portion of a market order or a limit price order which is immediately tradable based on current market conditions. An active order will be entered into the marketplace with the best price at the time of execution, where best price is the highest bid for a sell order, or the lowest offer for a buy order. All Exchanges and visible ATSs are evaluated for best price when executing active orders. 

A passive order is defined as the unfilled balance of an active order, or any limit price order which is not immediately executable. Passive orders are booked to the Default Marketplace for that security. 

Changes to an outstanding order, or portion of an outstanding order, will be handled the same as a new order received, with an active order re-evaluated for best price execution across all Exchanges and visible ATSs, and a passive order re-booked based on the description above.


An order received after the Hours of Operation will be entered to the pre-opening of the Default Exchange defined for that security on the following business day. 

Order Execution 

Certain types of orders have specific handling implications in a multiple marketplace environment. These have been addressed as follows: 

Day Orders 

A Day Order is an order to trade that expires if it is not executed the day that it is booked to the marketplace. Any unfilled portion of a Day Order will expire at the close of business of the marketplace where the order was last entered. 

Good Through Orders

Good Through orders are orders that will remain open for a maximum of 90 days. These orders will be entered on the Default Marketplace if they are not immediately executable at the time of entry. The order will remain booked until executed, cancelled, or upon expiry whichever comes first. 

Market Orders 

A Market Order is an order to buy or sell a security at whatever prices are available in the marketplace. Market Orders will be handled in the priority they are received. With a market order there is no control over what the best price available will be at the moment the trade is executed. In cases of extreme market volatility or liquidity imbalance a market order may trade at a price which is significantly different than the expected execution price. Investors are recommended to use aggressively priced limit orders in place of market orders to eliminate the risk of the order trading at a price outside of an acceptable range. Any unfilled portion of a Market Order will expire at the close of business of the marketplace where the order was last entered. 

Limit Orders 

A Limit Order is an order for a security at a specific minimum sale price or maximum purchase price that is not to be exceeded. Limit Orders will be handled in the priority they are received. A limit order provides control over the execution price but also reduces the certainty of execution. It is possible a limit order will miss the opportunity to buy or to sell a stock in a fast moving market. Aggressively priced limit orders, when a buy limit order has a higher price than the prevailing offer price, and a sell limit order has a lower price than the prevailing bid price, will trade much like a market order, increasing the certainty of execution without the risk of the order trading at a price outside of an acceptable range. Any unfilled portion of a Limit Order will expire at the close of business of the marketplace where the order was last entered.

Special Terms Orders 

Special Terms Orders are orders with specific terms that are not executable in the regular marketplace. Special Terms Orders will only post to the Special Terms Market of the primary listing Exchange, unless they are immediately executable on an alternative marketplace at the time of entry. Any unfilled portion of a Special Terms Order will expire at the close of the primary listing Exchange. 

Stop Loss Orders (Canadian Markets) 

Stop Loss Orders are orders that become market orders or limit orders when a board lot trades at or through the stop price on the marketplace in which the order has been booked. Stop Loss Orders are booked to the primary listing Exchange. A Stop Loss market order is filled at the best available market price once the On Stop price is activated. However, if the order enters the market when the stock or overall market is experiencing dramatic fluctuations including rapid declines, an investor may receive a price that is much different than expected. Caldwell Securities does not accept Stop Loss limits. All Stop Loss orders are reviewed by the Head Trader to ensure the volume of the order is not at a level that would result in market volatility should the On Stop price be activated. 


Internal or intentional crosses are recorded on the market at the midway price between the bid and ask at the time the orders are received. 

Disclosure of Marketplace 

Trade confirmations state that an order has been executed on one or more marketplaces or alternative marketplaces. Client may contact their Investment Advisor for further details regarding which marketplace or alternative marketplace a trade was executed on. 

The information contained herein is current as of December 2013.