Rules for Best Execution of Client Instructions

Transcription

1 Rules for Best Execution of Client Instructions Effective as of 28 February 2013

2 1. Introduction Sberbank CZ, a.s. (hereinafter referred to as the Bank ) hereby introduces these Rules for Best Execution of Client Instructions (hereinafter referred to as the Rules ) relating to investment instruments. In particular, these Rules define the selection of trading venues for individual investment instruments along with the factors behind this selection. The introduction of these Rules in no way hinders the Client s right to select its own trading venue for performing the instruction. The Bank shall proceed pursuant to these Rules only in cases when the Client does not select its own trading venue when submitting the instruction. The particulars of an instruction are defined in the Business Terms and Conditions for Securities Trading or in the General Contract on Concluding Trades in Investment Instruments I or II. The term trading venue refers to a regulated public market (stock exchange or over-the-counter electronic trading platform). For instructions performed outside regulated public markets (a so-called OTC market), the Bank has, for purposes of these Rules, the character of a trading venue. The Bank classifies its Clients into three categories: retail Client, professional Client, and eligible counterparty. Client classification is based on the document Categorization of Clients and is carried out prior to concluding (signing) contract documentation for trading in investment instruments. The primary objective of these Rules is to provide maximum protection for the interests of retail Clients. To the appropriate extent, however, they are also applied to the professional Client category. 2. Types of instructions The types of instructions are based on the definitions of instructions and their particulars as provided in the Business Terms and Conditions for Provision of Investment Services or in the General Contract on Concluding Trades in Investment Instruments I or II. Instruction with a price limit The Client may stipulate in the instruction the lowest or highest price at which he or she requests to sell or buy the given investment instrument. The Bank shall accept an instruction with a price limit for investment instruments traded on regulated public markets provided the rules of those markets permit the acceptance of such instruction and for other investment instruments only if their nature permits doing so. Instruction without a price limit If the Client stipulates no limit price, the Bank is obliged to buy or sell the given investment instrument under the best conditions that may be achieved when exerting professional care at the time of the instruction s validity. Stop-loss instruction The instruction is activated once the market price reaches the stipulated value (the so-called stoploss limit). The execution price for a stop-loss instruction may differ considerably from the stop-loss limit, especially on markets with lower liquidity. For this reason, it is recommended that a price limit be set together with the stop-loss limit. The Bank will accept a stop-loss instruction (with or without a price limit) for investment instruments traded on public markets provided the rules of those markets permit the acceptance of such instruction and for other investment instruments only if their nature permits doing so. The Bank shall not accept generalized requirements relating to future instructions. 3. Combining of instructions The Bank generally does not combine Client instructions. Possible exceptions include instructions relating to mutual funds which are traded directly through the investment company managing the fund or through an official distributor of the fund and instructions traded outside regulated public markets (OTC). In such cases, no individual Client instruction will be disadvantaged in relation to the other combined instructions. 4. Execution of instructions outside regulated public markets (OTC) The Bank trades some investment instruments or categories of investment instruments outside regulated public markets. In such cases, the Client s prior written consent to this procedure is always necessary. Written consent is given by means of the Client s general consent for all thus related instructions by signing these Rules. 5. Forwarding of instructions The Bank may forward an instruction for execution to a securities broker within Sberbank Group or to another licensed securities broker pursuant to the selected trading venue. The Bank is liable for the observance of the procedures under these Rules when forwarding an instruction for execution on regulated public markets to third parties. Instructions accepted by the Bank as a securities broker from other banks or securities brokers are regulated by these Rules, unless stipulated otherwise upon submission of the instruction. 6. Categories of investment instruments The Bank distinguishes among the following categories of investment instruments: a) shares and similar equity securities, including exchange traded funds (ETFs), b) collective investment funds (mutual funds, investment funds), c) bonds and similar debt securities, d) structured products (investment certificates = e.g. guarantee certificates, index certificates, airbag/bonus certificates, and other non-leveraged certificates), e) interest rate derivatives (particularly forward rate agreements, interest rate swaps, interest rate options, or combinations thereof), f) foreign exchange derivatives (particularly forwards, swaps, currency options, or combinations thereof), g) money market instruments (particularly treasury bills). Additional information regarding the aforementioned classification of investment instruments can be found in the document Description of Investment Instruments and Notification about Risks. Should you have any questions related to the aforementioned classification of investment instruments, you may contact your advisor or the Treasury Securities and Sales department directly. Effective as of 28 February 2013 Page 01 of 05

3 7. Factors used for selecting the best conditions The Bank s selection of the best possible conditions for executing Client instructions is based on the following factors: a) price (rate) that can be achieved at the trading venue, b) costs charged to the Client in connection with executing and settling the instruction, c) speed and probability of executing the instruction (realization), d) probability of settlement, e) volume of the requested trade, f) conditions for settlement, g) type of instruction. Costs connected with executing and settling the instruction include all related fees and commissions, and in particular fees paid to the third parties, fees of the trading venues and settlement institutions, administration fees (so-called custody fees), and costs of foreign exchange conversions. The speed and probability of executing the instruction refer to the liquidity of the investment instrument within the given trading venue. The probability of settlement indicates the quality of the trading venue or its system. The type of instruction indicates the instruction s validity period and the price limit. 8. Weights assigned to individual factors 8.A. Retail Client Factor Weight Price (rate) that can be achieved at the trading venue Costs connected with executing and settling the instruction Speed and probability of executing the instruction (realization) 40% 30% Probability of settlement 10% Volume of the requested trade 0% Conditions for settlement 0% Type of instruction 0% The Bank has selected total costs as the primary factor. These costs consist of the price (rate) of the investment instrument and the costs connected with executing and settling the instruction and, as the case may be, related foreign exchange conversions (buying or selling foreign currencies). Other factors have only a supplementary character (but lead to best execution of the instruction) or are not taken into consideration at all. The listed factors, together with their weights, are applied to all investment instruments with the exceptions stated in article 9.B., parts 1 and 4. 8.B. Professional Client Factor Price (rate) that can be achieved at the trading venue Costs connected with executing and settling the instruction Speed and probability of executing the instruction (realization) Weight Probability of settlement 10% Volume of the requested trade 30% Conditions for settlement 0% Type of instruction 0 % The Bank has selected total trade volume as the primary factor, complemented by total costs consisting of the price (rate) of the investment instrument and costs connected with executing and settling the instruction and, as the case may be, related foreign exchange conversions (buying or selling foreign currencies). Other factors have only a supplementary character or are not taken into consideration at all. The listed factors, together with their weights, are applied to all investment instruments with the exceptions stated in article 9.B., parts 1 and Selection of trading venues designated for executing Client instructions under best conditions 9.A. Trading for a fixed price stipulated by the Bank Trading for a fixed price stipulated by the Bank applies to investment instruments for which Sberbank CZ is specified as the trading venue in the table below (OTC). When trading for a fixed price, the Bank will provide the Client, upon request, with a price for a specific investment instrument. The trade is realized once the Client s express consent has been given. In such case, the Bank is in the position of the trading venue. 9.B. List of selected trading venues for individual categories of investment instruments Although the weights assigned to the individual factors are different for retail Clients versus professional Clients, the list below is applicable to both Client groups. Effective as of 28 February 2013 Page 02 of 05

4 Categories of investment instruments 1 Shares and similar equity securities including ETFs 1.1 Czech Republic Prague Stock Exchange 1.2 Foreign countries Sberbank Europe AG issues Sberbank CZ (OTC) Issues traded on public markets The market indicated by the issuer as the domestic/primary market according to the list of trading venues in article 10 is selected. Exception: When selecting the best trading venue, the Bank may deviate from the stipulated Rules in the Client s interest in such situation when an investment instrument within this category is traded simultaneously on multiple trading venues in various currencies. In this case, the Bank shall favour such trading venue on which the investment instrument is traded in the same currency as invested by the Client so that the Client incurs no costs connected with foreign exchange conversion. In such cases, the Bank may select only from the trading venues listed below. This does not affect the Client s right to request purchase or sale of an investment instrument with settlement from/to a currency other than the currency in which the investment instrument is traded. Pre-emption rights: If the Client does not submit an instruction regarding use of pre-emption rights, these rights shall be sold, if possible, on the last business day at the domestic or main stock exchange (if listed) or through an OTC market (if not listed). Otherwise, they will be excluded from the record of investment instruments kept by Sberbank CZ as having no value. 2 funds Mutual funds Investment funds traded on public markets Investment company managing the specific mutual fund or an official distributor of that mutual fund Pursuant to the rules for shares and similar equity securities 3 Bonds and similar debt securities Sberbank CZ (OTC) 4 Structured products (investment certificates) 4.1 Czech Republic Sberbank Europe AG issues Sberbank CZ (OTC) 4.2 Foreign countries Other issuers Sberbank Europe AG issues Issues traded on public markets in Germany and Austria Prague Stock Exchange Sberbank CZ (OTC) EUWAX/Börse Stuttgart AG Other issues If the security is not listed on EUWAX/Börse Stuttgart AG, the market indicated by the issuer as the domestic/primary market according to the list of trading venues in article 10 is selected. Exception: When selecting the best trading venue, the Bank may deviate from the stipulated Rules in the Client s interest in such situation when an investment instrument within this category is traded simultaneously on multiple trading venues in various currencies. In this case, the Bank shall favour such trading venue on which the investment instrument is traded in the same currency as invested by the Client so that the Client incurs no costs connected with foreign exchange conversion. In such cases, the Bank may select only from the trading venues listed below. This does not affect the Client s right to request purchase or sale of an investment instrument with settlement from/to a currency other than the currency in which an investment instrument is traded. 5 Interest rate derivatives Sberbank CZ (OTC) 6 Money market instruments Sberbank CZ (OTC) 7 Foreign exchange derivatives Sberbank CZ (OTC) Effective as of 28 February 2013 Page 03 of 05

5 10. List of available trading venues The Bank enables its Clients to make trades on the trading venues stated below. The list of trading venues is not exhaustive, but it does include most important markets. Information about the possibility of executing trades on trading venues not listed below shall be provided to the Client upon request. Instructions relating to trading venues not stated in this document shall be accepted for trading only if possible. Otherwise, the Client shall be informed that the instruction cannot be accepted. Country Name of trading venue Information source Abbreviation*) Austria Wiener Boerse AG XWBO (XVIE) Germany Xetra Frankfurt (electronic trading system) XETR Frankfurter Wertpapierbörse XFRA Börse Stuttgart XSTU Börse München XMUN Börse Berlin XBER Börse Hamburg XHAM Börse Hannover XHAN Börse Düsseldorf XDUS Belgium Euronext Brussels NV/SA XBFO Denmark OMX Copenhagen Stock Exchange XCSE Finland Helsinki Stock Exchange XHEL France Euronext Paris XPAR Greece Athens Exchange S.A. XATH United Kingdom London Stock Exchange Group PLC XLON Ireland The Irish Stock Exchange XDUB Italy Borsa Italiana S.p.A. XMOT (XMIL) Luxemburg Luxembourg Stock Exchange XLUX Netherlands Euronext Amsterdam Effectenbeurs XAMS Norway Oslo Stock Exchange XOSL Poland Warsaw Stock Exchange XWAR Portugal Euronext Lisbon XLIS Russia Russian Trading System 1RTD Sweden NASDAQ OMX Stockholm AB XSSE Switzerland The Swiss Exchange XSWX Spain Madrid Stock Exchange XMAD Czech Republic Prague Stock Exchange RM-SYSTÉM (OTC electronic market) XPRA XRMZ Hungary Budapest Stock Exchange XBUD USA The Nasdaq Stock Market, Inc (NASDAQ) XNMS New York Stock Exchange XNYS NYSE ALTERNEXT (AMEX) XASE Canada Toronto Stock Exchange XTSE Australia Australian Stock Exchange Ltd. XASX Hong Kong The Stock Exchange of Hong Kong, Ltd. XHKG Japan Tokyo Stock Exchange XTKS New Zealand New Zealand Exchange Limited (NZSX) XNZE South Africa The Johannesburg Stock Exchange XJSE Effective as of 28 February 2013 Page 04 of 05

6 Other trading venues Investment instrument/ group of investment instruments Name of trading venue Description Abbreviation*) ING Investment Management Instructions relating to ING funds INGF Luxembourg HSBC Global Investment Funds SICAV Instructions relating to HSBC funds HSBC Volksbank Investments Appropriate investment company Instructions relating to Volksbank Investments funds Instructions relating to mutual funds of investment companies not stated above VBIF OSTF Investment instruments Other public markets not stated above OSTT under article 6, letters a, b, c and d Bonds Sberbank CZ (OTC) OTCB, OTCV, OTCO, OTCD Structured products Sberbank CZ (OTC) Instructions relating to structured products traded in accordance with article 9.B. OTCC Investment instruments under article 6, letters e, f and g Trading venue not selected by the Client; Bank proceeds according to this regulation. *) The trading venue abbreviation is stated in a written instruction in the field Trh / Market. OTCF 11. Instructions to sell investment instruments In connection with sell instructions, the Bank proceeds according to which trading venue the investment instrument was acquired (bought) from. The Bank does so in instruction to limit costs that may arise in connection with transferring investment instruments between depositories. These Rules are to be strictly followed if this condition cannot be met. If the Client insists on his or her selection of trading venue, despite the possible costs connected with transfers between depositories and after having been warned about these costs by the Bank, the Client acknowledges these costs. 12. Final provisions These Rules are continuously reviewed, particularly with regard to significant changes in the factors influencing the selection of trading venues and other significant circumstances. In case of such change, the Bank may introduce an immediate amendment to these Rules. The minimum frequency of complete revision of these Rules is once per year. The Bank does not inform its Clients individually about amendments to this document. The current wording is available on the Bank s website and in written form at all branches of the Bank. These Rules come into effect on 28 February 2013 and replace the version from 1 November 2010., on Client s stamp and signature Effective as of 28 February 2013 Page 05 of 05