Last updated: June 22, 2025
This Conflict of Interest & Compensation Disclosure (“Disclosure”) describes the manner in which Abra Securities (“we,” “us,” “our”) is compensated for its discretionary trading services and identifies potential conflicts of interest that may arise in the course of our operations. By engaging our services or accessing our materials, you acknowledge that you have read, understood, and accepted the terms set forth herein.
1. Purpose & Scope
1.1 Purpose: To provide transparency regarding how we earn fees and manage conflicts, ensuring that you have full visibility into any interests that might influence our trading decisions on your behalf.
1.2 Scope: This Disclosure applies to all services provided by Abra Securities, including the execution of U.S. equities, listed options, and any related advisory or analytical support. It covers all client relationships, whether managed under a formal discretionary mandate or executed on an agency basis.
2. Fee & Compensation Structures
2.1 Management Fees
- Flat Management Fee: A fixed percentage charged on assets under management (AUM), typically invoiced monthly or quarterly. This fee is independent of trading volume or performance.
- Tiered Management Fee: In some arrangements, management fees decline as AUM rises, aligning costs with scale efficiencies.
2.2 Performance Fees
- High-Water Mark Structure: Performance fees are assessed only on net new profits above the highest prior value of your account, preventing fees on the same gains twice.
- Hurdle Rate: A minimum annual return threshold (e.g., 5%) that must be exceeded before performance fees apply, ensuring you receive a baseline return before additional fees are charged.
2.3 Commission & Execution Fees
- Per-Trade Commissions: A fixed dollar amount or basis-point fee per executed trade, covering the cost of routing, clearing, and settlement.
- Block Trade Discounts: Reduced commission schedules for large-block or algorithmically sliced orders, reflecting lower marginal execution costs.
2.4 Financing & Margin Interest
- Margin Financing Rates: Interest charged on borrowed funds when trading on margin. Rates are competitive and tied to benchmark indices but may vary by client credit profile and regulatory jurisdiction.
- Overnight Funding Fees: For positions held beyond standard settlement cycles, nominal overnight carry fees apply to compensate for financing costs.
2.5 Ancillary Service Fees
- Reporting & Analytics: Fees for bespoke reporting packages or advanced analytics dashboards outside standard client statements.
- API & Tech Access: Subscription fees for programmatic access to our trading APIs, data feeds, or execution platforms.
3. Potential Conflicts of Interest
3.1 Principal Trading
- Description: Abra Securities may, in certain circumstances, execute trades as a principal—buying or selling from our own inventory rather than directly matching your order with a third-party counterparty.
- Implication: Principal trades can present a conflict if our inventory pricing differs from consolidated market rates. We mitigate this by adhering to our best-execution standards and disclosing principal activity on trade confirmations.
3.2 Allocation Between Clients
- Description: When multiple clients place simultaneous orders in the same security or strategy, we may aggregate orders to seek better execution.
- Implication: Aggregation requires fair allocation of fills; we follow a pro rata or predefined allocation methodology to ensure no client is unduly advantaged or disadvantaged.
3.3 Order Flow Internalization
- Description: We may internalize order flow by matching client orders against other client orders or our principal book.
- Implication: While internalization can reduce market impact and improve execution speed, it may limit exposure to external liquidity. We monitor execution quality to confirm that internalized fills remain competitive.
3.4 Counterparty Selection
- Description: Our selection of brokers, exchanges, or dark‐pool venues may be influenced by our commercial arrangements (e.g., volume-based rebates or preferred partner agreements).
- Implication: These commercial relationships could influence venue selection. We manage this conflict by conducting quarterly reviews of execution venue quality metrics and disclosing summary statistics to clients upon request.
4. Mitigation Measures & Governance
4.1 Best-Execution Oversight
- Audit Committee: An independent committee reviews execution reports and conflict logs quarterly, ensuring that execution outcomes align with client interests.
- Execution Quality Monitoring: We track metrics such as price improvement rates, fill‐through rates, and rebated fees to detect any adverse trends linked to conflict sources.
4.2 Information Barriers (“Chinese Walls”)
- Functionality: Formal policies prevent the sharing of proprietary or sensitive trading information across business units where conflicts may arise (e.g., principal trading desk vs. discretionary client desk).
- Enforcement: Access controls, monitoring logs, and periodic staff attestations uphold these barriers.
4.3 Disclosure & Transparency
- Trade Confirmations: All trade confirmations specify whether execution was on a principal or agency basis and disclose any related-party or affiliated counterparty involvement.
- Periodic Reporting: Clients receive annual or upon request conflict summaries, detailing instances of aggregated orders, internalization rates, and venue commission rebates.
4.4 Remuneration Policies
- Alignment with Client Outcomes: Employee and management compensation structures emphasize long-term performance and risk management, rather than short-term revenue generation.
- Clawback Provisions: In the event of significant client underperformance or breach of risk limits, performance-based compensation may be subject to clawback.
5. Client Acknowledgment & Consent
5.1 Review & Acceptance: You confirm that you have reviewed this Disclosure, understand the potential conflicts, and consent to our compensation structures.
5.2 Ongoing Obligations: You agree to notify us promptly if your mandate changes in a manner that could affect conflict management or compensation terms (e.g., changes in authorized trading size, jurisdiction, or entity structure).
5.3 Right to Request Information: You may request further details regarding any aspect of our conflicts or compensation arrangements at any time. We will respond within a reasonable timeframe and provide supplementary documentation as necessary.
By providing this detailed Conflict of Interest & Compensation Disclosure, Abra Securities reaffirms its commitment to transparency, fairness, and alignment of incentives, ensuring you can engage our trading services with full confidence.
