Best Execution governance

Best Execution (BE) is the obligation under MIFID II that investment firms should aim for the best possible result when executing orders for their client(s). At the start of 2018, the introduction of MiFID II laid the foundation for PGGM Investments’ best execution structure. This structure contributes to the best possible result for the client, complying with rules and regulation as well as with PGGM Investments’ order execution policy.

To guarantee BE, PGGM Investments considers a multitude of criteria. Amongst others, these topics are speed of execution, execution price, transaction costs, volume and nature of the order, probability of execution and settlement, quality of service, footprint, and sustainability. Realising BE requires balancing the above-mentioned criteria within the boundaries of rules and regulation.

This is all captured in our governance: The Best Execution Committee (BEC), which is part of the main PGGM Investment Committee, determines whether execution is compliant with aforementioned obligations. The trading process is an integral part of portfolio management. Transaction costs affect the performance of each fund or mandate. It is therefore in the interest of the portfolio manager (PM) to monitor and optimize the execution process. A continuous dialogue between PM, trading and Risk Management is taking place to allow for this optimisation. PGGM Investments continuously aims to improve the quality of its order execution. Of paramount importance is gaining a thorough understanding of the entire transaction chain by using pre-post- and real time trade analyses with the aim of executing orders cheaper and faster. Determining BE benefits from this as well, because the improvements make it easier to do so.