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Best Execution and Order Handling Disclosure - Crypto

July 1, 2024

Wealthsimple Investments Inc. (“WSII”, “we” “our”) is a registered investment dealer and member of the Canadian Investment Regulatory Organization (“CIRO”). Under CIRO’s Investment Dealer and Partially Consolidated Rules, WSII is required to have policies and procedures that are designed to achieve “best execution” for client orders and provide its clients with information on those policies and procedures.

This disclosure applies to our order handling practices for Crypto Assets, including orders to buy, sell or swap Crypto Assets supported on our platform.. WSII may review and amend this disclosure to reflect changes in our business practices or changes in our regulatory environment. For order handling and best execution disclosures relating to listed stocks and options, see our Best Execution and Order Handling Disclosure - Stocks & Options. 

Crypto Assets 

Crypto assets are a form of digital asset where ownership or control is recorded on a public, decentralized ledger and transfers of ownership or control are secured and verified using cryptography. For information regarding Crypto Assets and associated risks, please refer to our Crypto Product Risk Disclosure. 

There is no fixed market or universally accepted benchmark against which to evaluate best execution for Crypto Assets. Best execution is defined as “obtaining the most advantageous execution terms reasonably available under the circumstances.” WSII will take all reasonable steps to achieve best execution for client orders, taking into consideration any instructions we receive from you, the unique factors specific to Crypto Assets, and any applicable regulatory requirements.  

Factors Considered for Best Execution

When executing client orders in Crypto Assets, WSII considers the following factors:

  • The price of the crypto asset, 

  • The speed of execution of the client order, 

  • The certainty of execution of the client order, and 

  • The overall cost of the transaction.

WSII will also consider any order handling instruction(s) WSII may receive from you, such as a limit price instruction.

Order Handling and Routing

WSII employs a request for quote (“RFQ”) process with its liquidity providers (each a “LP” and collectively “LPs”). For each client order to buy or sell a Crypto Asset, WSII will submit a RFQ for the order to each of the LPs which support that Crypto Asset. WSII will route the client order to the LP which provides the best price in response to the RFQ.

WSII also supports “coin swaps”. A coin swap is predicated on the value of the crypto asset currently held (the Base Asset) and the value of the crypto asset that the Base Asset will be swapped for (the Quoted Asset). The value relationship between the Base Asset and the Quoted Asset is based on the current price of each asset, in addition to any spread applied by the LP to account for liquidity or market conditions. For each coin swap order, WSII will submit a RFQ for the order to each of the LPs which support coin swaps between the Base Asset and Quoted Asset. WSII will route the client order to the LP which provides the best price (or exchange value) in response to the RFQ. The exchange values provided by our LPs will generally include a spread, which compensates the LP for taking on the risk of the transaction. WSII does not set or receive part of the spread applied by its LPs.

WSII monitors its LPs to ensure that client orders in Crypto Assets are executed quickly and with high certainty of execution. We are required to review our policies and procedures around best execution, at least annually.

WSII’s LPs are generally firms which specialize in trading Crypto Assets, and are based in Canada, the United States or another jurisdiction. Use of multiple LPs is designed to reduce the liquidity risk and operational risk associated with any one trading platform. WSII and its affiliates do not have an ownership interest in any of its LPs used for executing client orders in Crypto Assets. When your order is routed by WSII to an LP, the order is subject to the order handling practices of that LP. WSII conducts initial and ongoing due diligence on its LPs and recurring assessments of the execution quality provided by all of its LPs. 

Additional information, such as which LP handled a particular order or information about the pricing received, is available upon request. 

WSII does not trade against client orders in Crypto Assets. WSII does not receive remuneration in the form of cash, rebates and/or credits against fees in return for routing client orders to specific LPs. WSII charges a fee for each transaction, which includes any spread in any currency conversion related to an order. Any other additional costs associated with the transaction are incurred by WSII. For more information, please refer to our Fee Schedule.

Trade execution details are provided via the trade confirmation(s) WSII provides to you. The trade confirmation will include the total quantity of Crypto Assets bought or sold, the trade price, and the trading fee charged by WSII. Additional information can be made available upon request. 

Orders to purchase or sell are classified as either quantity-based (an order to buy or sell a certain number of units of a Crypto Asset) or price-based (an order to buy or sell a specified dollar amount worth of a Crypto Asset). WSII supports market and limit orders for Crypto Assets. WSII will accept orders for Crypto Assets at any time through the mobile or web apps. Your Crypto account is denominated in Canadian dollars (CAD), but the majority of Crypto Assets are quoted in U.S. dollars (USD). To account for this, your CAD orders are converted to USD for the RFQ that is sent to LPs. WSII converts funds between CAD to USD using its corporate exchange rate. WSII earns income on the corporate exchange rate, but this cost is included in the trading fee. For more information, please refer to our Fee Schedule. 

Market orders

A market order is an order to buy or sell a crypto asset at the prevailing price available from our LPs. Market orders are “day orders”, which means a market order will expire if it is not executed on the intended trading day. Market orders are supported for orders to buy, sell or swap Crypto Assets. A market order can expire if WSII’s LPs are not quoting in the specified Crypto Asset. 

Limit orders

A limit order is an order for a Crypto Asset at a specific minimum sale price or maximum purchase price that is not to be exceeded. Limit orders are “time-specific orders”, which means a limit order can be opened for a duration of either twenty-four (24) hours or up to thirty (30) days. Using a limit price instruction may reduce the certainty or speed of execution for your order, but all orders will be canceled after the specified duration if not executed. Limit orders are supported for orders to buy or sell. Limit orders are not supported for coin swaps.

Limit orders  executed in USD can be impacted by foreign exchange (FX) price fluctuation at the time of execution. Changes in foreign exchange rates between CAD and USD from the time a limit order is placed to when it is executed can present a risk of account delinquency if the entire position of an account has been allocated to the limit order.

Quantity-based limit orders will be executed at the limit price. Price-based limit orders will be executed with the fee included within the total order value, reflecting a comprehensive pricing structure.

Good Till Cancelled orders

Good Till Cancelled (or “GTC”) orders are orders that will remain valid until fully executed, partially executed, cancelled by the client or a specified date of expiry. If not immediately executable, these orders will be entered and remain open in WSII’s trading systems until fully executed, partially executed, cancelled by our client or expiry, whichever comes first. GTC orders remain valid for thirty (30) calendar days.

Support

In cases where a client is having trouble accessing their account or placing an order(s), Investment Representatives are available to receive manual orders during the regular trading session (9:30am and 4:00pm ET on business days and non-statutory holidays). Staff may be further available for assistance before and after these hours.  Investment Representatives will accept market day orders, but no special instructions. Prior to calling, you should have the necessary account information and order details prepared. Our Investment Representatives cannot provide you with any recommendations or investment advice.

Conflicts of Interest Related to Best Execution

WSII considers a conflict of interest to be any circumstance where the interests of different parties, such as the interests of a client and those of WSII, are inconsistent or divergent. WSII takes reasonable steps to identify all existing and potential material conflicts of interest, and those we would reasonably expect to arise with regards to fulfilling our best execution obligation. For more information, please refer to our Conflicts of Interest Disclosure.

Use of Market Data

WSII provides access to real-time quotes in the Wealthsimple mobile and internet apps, but does not provide market data as a service. The price that is displayed in the app for a Crypto Asset may have changed by the time you place an order, WSII’s LPs may not quote at the price level displayed in the app, and the price or quote information provided by WSII does not reflect a consolidated quote for the Crypto Asset. Trading with incomplete or delayed trading data can reduce your ability to see available orders on every possible venue. WSII considers quotes from multiple LPs when handling your orders, regardless of the pricing information displayed in the Wealthsimple app.