Best Execution

When Trading with Bitcoin Suisse, all clients benefit from our unique approach “Best Execution”, ensuring they receive the best possible result for their trades. Applying Best Execution comes with many considerations, simply trading at the best price on the market is not all it takes to guarantee this approach. Other crucial factors are the likelihood and speed of execution, analyzing the order book depths as well as identifying the best venue(s) to execute while maintaining a sound and tight counterparty exposure. In simple terms, Best Execution means to execute an order in a way that is most advantageous for our clients. In addition, when placing your order with Bitcoin Suisse, you profit from minimal counterparty risk.

Our guiding principles are captured in our Best Execution Policy. In the following, we highlight the concrete benefits our clients can derive from trading with Bitcoin Suisse, available order types, our multi-exchange setup as well as financial and operational risks involved in crypto trading, which we help reduce for our clients.

What are the benefits of Best Execution for clients of Bitcoin Suisse?

Price

Our Best Execution approach is geared towards achieving the best price for our clients. This is being accomplished by algorithmic smart order routing, a wide and diverse network of trading venues, dynamic trade pre-funding and our long-lasting crypto trading expertise. Typical order types that use smart order routing to achieve a better price are for example:

• Smart Execution Order: Continuous posting of order slices to trading venues through algorithmic smart order routing aiming to minimize market impact and achieve a more favorable price;
• Soft Limit Order: Smart Execution order with limit price (cap/floor). Order is being executed as long as market price is above (sell order) or below (buy order) the limit price.

Speed

For some orders, execution speed might be a priority. At the same time, prioritizing speed as an execution factor may result in an opportunity cost wherein the achieved price might be inferior compared to executing the order without any time constraints.

In such cases, we offer several options to our clients:

• Instant execution: Immediate trade execution sourcing the best obtainable market price at this point in time (market order);
• Scheduled Order: Smart Execution order with a fixed execution deadline without a fixed time interval. Completion of the order can occur before the end of the execution deadline;
• TWAP (Time Weighted Average Price): Smart Execution order with a fixed execution deadline, split into smaller slices per fixed time interval (can be defined by Client). If interval ends without slice being fully executed, a market order is executed for the remainder of the order.

Liquidity

There are two types of Liquidity relevant for executing trades, the first being market liquidity, describing the order book depth of a crypto asset – “how much can you trade at a given price x?”, with the second being funding liquidity, which is required by trading venues to facilitate trading and settlement.

Market liquidity heavily varies depending on the token to be traded. Bitcoin, Ether and some larger altcoins by market capitalization (DOT, ADA, etc.) usually exhibit a healthy order book depth and permit reasonably sized trades, while the order books of smaller altcoins by market capitalization are less liquid. Large trades, if not executed in a smart way, may potentially cause material price changes and not every token is available for trade on every exchange. Therefore, a diversified network of crypto trading venues (exchanges, brokers, etc.) can help not only to increase the available liquidity, but also to trade crypto assets that are not extensively listed across cryptocurrency markets. The greater the liquidity available, the narrower the spreads – which translates to better prices.

Most of the available crypto trading venues require pre-funding. Accordingly, managing funding liquidity is a key feature of our Best Execution approach. Within this approach, we allocate liquidity on a need-to-have basis by considering historical trades, trending tokens and our time-tested expert judgement. In line with the expected liquidity need, we deploy funding to the trading venues. If the allocated liquidity is insufficient for a large or exotic trade, our ad-hoc funding process ensures swift on-time funding and a fast reaction time.

Security

At Bitcoin Suisse, our clients can trade with minimal counterparty risk, as we take over the counterparty risk from exchanges and other trading venues for our clients. This requires a strict application of our risk management framework and a regular reassessment in line with market sentiment, risk events and our house opinion on market trends and developments.

All our venues must fulfill certain minimum criteria to be onboarded as an eligible trading counterparty for Bitcoin Suisse.

Transparency

Our Best Execution Policy transparently outlines the guiding principles, priorities and other factors relevant to Bitcoin Suisse’s order handling. On request, we will provide our clients with documentation and records proving that orders have been executed in accordance with the execution factors in our Best Execution Policy.

How does multi-exchange-trading compare to single market execution?

As a crypto broker, Bitcoin Suisse trades across the most relevant crypto exchanges and over the counter (OTC) desks. Trading over multiple exchanges instead of only one exchange is particularly advantageous for larger trades as it increases the available market liquidity considerably. It also enables Bitcoin Suisse to execute the order in a way that minimizes market impact in addition to the minimal counterparty risk for our clients. Upon completion of the desired order amount, our clients receive the actual traded price – which is typically more favorable than that of a single-exchange market order.

The illustration below shows how advantageous Best Execution with multi-exchange trading is compared to single market execution throughout selected currency pairs.

What order types does Bitcoin Suisse offer?

Bitcoin Suisse offers several order types. Besides the above-mentioned order types (Smart Execution Order, Soft Limit Order, Instant Execution Order, Scheduled Order as well as TWAP Order), Bitcoin Suisse also offers the following order types:

• Hard Limit Order: Limit order with a specific limit price. Order gets executed at limit price if market price on the trading venue(s) reaches limit price;
• Stop-Loss: Stop order with a specific trigger price. Order gets executed on the trading venue(s) as a market order if the trigger price is reached;
• Stop-Limit: Stop order with a specific trigger price combined with a specific limit price. Order is sent to the trading venue(s) as a limit order if the trigger price is reached;
• Smart Stop: Smart execution order with a specific trigger price. Once trigger price is reached, order is executed as a smart execution order.

In Bitcoin Suisse Online and the Mobile App, our clients can choose between Instant Execution, Smart Execution, Stop Loss and Limit orders. All other order types are offered to our clients upon request.

What risks exist when executing a crypto trade? How does Bitcoin Suisse help reduce such risks?

Under financial risks, we summarize the three categories market, credit and liquidity risk.

Market Risk

Market risk is the risk of (adverse) price movements of the traded asset. Any long- or short position in any asset class is subject to market risk, which is always borne by the asset holder. In addition, market risk also exists during the execution of a trade, as prices might move (e.g., for smart execution orders). With instant execution, this execution price risk is mitigated for our clients by Bitcoin Suisse. We are acting as a principal and fill the order immediately. For smart execution, our client bears the market price risk during execution, at the benefit of potentially better prices for larger orders.

Credit Risk

Credit risk - when executing a crypto trade – mostly translates to counterparty risk, meaning the risk of losses due to delays or failure of a counterparty, e.g., a trade- or settlement venue, to fulfill its financial obligations in relation to the trade order. Trading with Bitcoin Suisse minimizes our clients’ counterparty risk.

Liquidity Risk

Liquidity risk consists of two sub-categories: Market liquidity risk and Funding liquidity risk (see above). The former depends on the type of order and the prioritization of the execution factors, potentially resulting in market risk. Bitcoin Suisse aims to mitigate the market liquidity risk with our Best Execution approach, however, the risk is borne by the client (e.g., an order cannot be executed due to a lack of market liquidity). Funding liquidity risk is fully managed by Bitcoin Suisse.