Information for Customers concerning Business with Baader Bank Aktiengesellschaft. (including trading in Derivatives)

Transcription

1 Information for Customers concerning Business with Baader Bank Aktiengesellschaft (including trading in Derivatives) As at: September 2015

2 Contents 4 General customer information ( 31 (3) no 1-4 German Securities Trading Act / WpHG) 10 Dealing with conflicts of interest at Baader Bank Aktiengesellschaft 12 Policies of Baader Bank Aktiengesellschaft governing the eecution of orders in financial instruments 16 General information for customers concerning received payments 17 General Terms of Business 23 Special conditions governing securities transactions 26 Special conditions governing forward transactions 29 Conditions governing the eecution of credit transfers 34 Conditions governing tolerated overdrafts at Baader Bank Aktiengesellschaft 35 Conditions governing the use of the Bank s web portal 37 Customer information concerning payments 38 Conditions for a joint account/deposit This general customer information does not represent advice. It is intended only as general information for customers and parties interested in Baader Bank Aktiengesellschaft. All the information has been carefully researched, but no guarantee is given for its accuracy or completeness en As at 09/ e

3 Baader Bank Aktiengesellschaft Weihenstephaner Strasse Unterschleissheim Germany T * F service@baaderbank.de * Toll-free from (inter)national landline networks. Charges may apply from other networks. Dear Sir/Madam, We are delighted that you are interested in what we at Baader Bank Aktiengesellschaft are able to offer. We have put together a brochure containing the most important information to keep you informed about matters concerning business in securities, foreign echange and derivatives. In this publication you are receiving detailed information about the Bank and its services as well as the relevant terms of business. Etensive information concerning financial instruments, their functions and the risks and opportunities they entail is contained in the brochures Basisinformationen über Vermögensanlagen in Wertpapieren (=Basic information on investing in securities) as well as Basisinformation über Termingeschäfte (=Basic information on forward transactions) which we offer to our customers. We shall be happy to answer any further questions on this by telephone. The German Securities Trading Act (WpHG) provides rules on information and investor protection which are adapted to various categories of customers for use by banks and financial services providers. Private clients are awarded the highest level of protection. Parts of the rules do not apply to professional clients or apply to them only in a restricted form. Suitable counterparties have most eperience of investment services and are therefore afforded the lowest level of protection. You will be sent your customer category in a separate document. We look forward to close and successful collaboration with you. We shall be available during business hours to answer any questions you may put to us. Baader Bank Aktiengesellschaft Board of Directors Page 3

4 Baader Bank Aktiengesellschaft Baader Bank Aktiengesellschaft Weihenstephaner Strasse Unterschleissheim Germany T * F service@baaderbank.de * Toll-free from (inter)national landline networks. Charges may apply from other networks. General customer information ( 31 (3) no 1-4 German Securities Trading Act / WpHG) Baader Bank Aktiengesellschaft is the leading universal bank in its segment of the German market. At present, the specialists of Baader Bank Aktiengesellschaft look after about 700,000 order books at the stock echanges of Berlin, Frankfurt, Munich and Stuttgart. Baader Bank Aktiengesellschaft currently employs about 470 staff throughout the Group. The main focus of its business was formerly classic stock echange trading. Baader Bank Aktiengesellschaft now offers diverse services which are all concerned with the capital market and is currently epanding its business segments further. Since 1 August 1994, Baader Bank Aktiengesellschaft shares have been listed and are traded on the open market at stock echanges in Berlin, Frankfurt, Munich, Hamburg, Dusseldorf and Stuttgart. Baader Bank Aktiengesellschaft has many years of epertise in trading securities and derivatives. We offer our customers various powerful online trading platforms. As a universal bank, we are licensed to operate all corresponding banking transactions, allowing us to offer banks, asset managers, fund companies, issuers and professional traders product solutions for the implementation of alternative investment strategies. Baader Bank Aktiengesellschaft can currently provide the following services: a) Financial brokerage (purchase and sale of financial instruments in its own name for third-party account) b) Own-account trading for others (purchase and sale of financial instruments for own account as services to customers) c) Contract brokerage (purchase and sale of financial instruments under third-party name for third-party account) d) Investment brokerage (brokerage of transactions for the purchase and sale of financial instruments) e) Financial portfolio management (management of single or several assets invested in financial instruments for others with scope for taking decisions) f) Custody business (safekeeping and administration of securities for others and provision of associated services) g) Lending business (granting of loans and advances for investment services) h) Foreign currency transactions in connection with investment services i) Issuing business (taking financial instruments at own risk for placement or assuming equivalent guarantees) j) Placement business (placing financial instruments without a fied underwriting commitment) k) Services in connection with issuing business l) Preparation, dissemination or forwarding financial analyses which directly or indirectly include recommendations (research) The relevant trading epertise, appropriate reporting services and necessary risk control enable us to offer our customers an attractive package of services in the field of Alternative Investments. We are clearly set apart from our competitors by virtue of our inepensive and technically efficient offers. In this contet we identify suitable products for our customers such as certificates, funds, single hedge funds or managed accounts. This is where we benefit from our ecellent, long-term relationships with major banks, capital investment companies and portfolio managers in Germany as well as abroad. Tasks we take on within these solutions: investment manager eecution broker monitoring of strategies (investment monitoring) management of portfolios and accounts central collection point and paying and depositary agent direct routing to the following stock echange trading platforms: - Xetra Frankfurt - Xetra Vienna - ALL the regional stock echanges in Germany * Frankfurt * Munich * Stuttgart * Berlin * Dusseldorf * Hamburg * Hannover - Chi-X (at present for German, French, Dutch and Austrian securities) - Euronet Paris - Euronet Amsterdam - Euronet Brussels - Eure - Swiss Echange (SIX) Baader Bank Aktiengesellschaft has access to other international markets via eternal trading systems and other trading partners. You will find a detailed overview of our products (including eecution venues) in the relevant information under the heading Produkt- und Märktekatalog (list of products and markets). The electronic trading platforms we offer lead the sector in terms of functionality, reliability and scalability. They give you direct real-time access to the principal stock echanges worldwide. The trading platforms as well as our portfolio and account management services are designed to handle multiple asset classes and currencies. The IT infrastructure provided by Baader Bank Aktiengesellschaft for order routing enables there to be a free choice of the means of access to the Baader systems. The following are linked: Bloomberg Direct link via a FIX interface (VPN or Point-to-Point) AUTEX SWIFT EZE Software RealTick Fidessa ULLink Trading Screen As well as standardising the order routing process, routing via Baader Bank Aktiengesellschaft can also result in cost synergies through the bundling of statement generation: all contract notes are produced electronically and at end of day inepensive statements can be generated via contract note a daily summary of trades on an order basis with average rates or based on category per page and day is possible individual appraisal and analysis of the possibilities for inepensive clearing and settlement en As at 07/2015 Page Page 1 of 46

5 Baader Bank Aktiengesellschaft The order routing services of Baader Bank Aktiengesellschaft can also be chosen as the basis for a MiFID-conforming structuring of the order handling process at financial services providers. The following services with MiFID relevance are offered by Baader Bank Aktiengesellschaft to its customers: Best eecution providing advice to the customer and joint development of MiFIDconforming customer support and customer order eecution processes preparation of best-eecution policies for selecting the best order eecution venue for the customer based on price and eecution costs or other individually assessed features of the venue research, generation and updating of the database as well as implementation of the procedures for direct comparison with appropriate consideration of prices and fees and evaluation of stock echange features for best eecution (script processing) regular verification and, where appropriate, adaptation of best-eecution policies creation of policy accounts by Baader Bank Aktiengesellschaft specially designed for the customer order routing: processing of customer orders according to the relevant customer policies documenting obligation: archiving all relevant parameters as the basis for a record of the path to the best-eecution decision made for the order customer transparency: ability to reproduce best eecution through a web-based research function on an order basis Xetra Best In this contet, Baader Bank Aktiengesellschaft also provides best eecution on the Xetra trading platform of Deutsche Börse AG for its clients. This is based on a private-law agreement with corresponding order flow providers on the structuring of the better eecution of customer orders in respect of the Xetra order book within a regulated market on the Xetra trading platform. With its package of best-eecution services, Baader Bank Aktiengesellschaft offers a complete service covering entry of the order, order routing and order selection and eecution policies. For customers of Baader Bank Aktiengesellschaft this means an efficient and inepensive design of their MiFID-relevant order handling processes under a holistic approach. On trading days our order desk can generally be reached between 7.45 a.m. and p.m. The Bank s clientele includes investment managers and institutional clients such as banks, insurance companies, asset managers, commodity trading advisers, fund managers and futures traders. Baader Bank Aktiengesellschaft is a universal bank licensed to operate in Germany. Address Baader Bank Aktiengesellschaft Weihenstephaner Strasse Unterschleissheim Tel * Fa service@baaderbank.de Members of the Board of Directors Nico Baader, CEO Dieter Brichmann, Deputy Chairman Christian Bacherl Oliver Riedel Banking licence and competent supervisory authority Baader Bank Aktiengesellschaft has a banking licence issued by the competent supervisory authority in compliance with 32 German Banking Act (KWG). Federal Financial Supervisory Authority (BaFin) Institutsaufsicht/Institutional supervision Graurheindorfer Strasse Bonn Germany and Federal Financial Supervisory Authority (BaFin) Securities supervision Marie-Curie-Strasse Frankfurt am Main Germany Notes concerning customer complaints Kindly address customer complaints to the Bank s compliance officer. Out-of-court dispute resolution: It is possible to involve the private banking ombudsman in order to resolve disputes with the Bank. Complaints must be addressed in writing to the customer complaints department (Kundenbeschwerdestelle) of Bundesverband deutscher Banken e. V., P. O. Bo , Berlin. Legal notice The Bank is entered on the commercial register of the local court of Munich (Handelsregister des Amtsgerichts München) under number HRB The value added ta registration number of Baader Bank Aktiengesellschaft is DE All contractual relationships between Baader Bank and its customers are governed by German law. For payments into your account from Germany (in EUR): Bank of beneficiary: Account number: Recipient: Baader Bank AG BIC BDWBDEMMXXX IBAN DE Your EUR account number/iban Your name, address with city and country For payments into your account from the European Union (in EUR): Credit institution: BIC** code: Account holder: IBAN***: Baader Bank Aktiengesellschaft BDWBDEMM Your name Your IBAN*** For all other deposits please note the information in the document Information concerning payments (94.000). * Toll-free telephone number from the (inter-)national fied-line network. Calls from other networks may entail charges. ** Bank Identifier Code. *** International Bank Account Number en As at 07/2015 For customers of banks and financial services providers, the German Securities Trading Act (WpHG) provides duties of protection and information which are graduated according to the category of customer. Private clients are allocated the highest level of protection. Page Page 2 of 56

6 Baader Bank Aktiengesellschaft Information on risk We provide information for our customers about the risks and opportunities in respect of the products we offer by means of the standardised brochures Basisinformationen über die Vermögensanlage in Wertpapieren (=Basic information on investing in securities) and Basisinformationen über Termingeschäfte (=Basic information on forward transactions). These brochures are presented when the customer opens an account with us. We should make it clear that Baader Bank Aktiengesellschaft does not offer its customers investment advice. We only eecute orders on a nocounselling basis (derivatives) or as eecution only (shares, bonds, funds and ETFs). We cooperate predominantly with professional clients and suitable counterparties. We would like to point out that we therefore assume that these groups of customers are capable of understanding, assessing and evaluating the risks entailed by the chosen forms of investment. We do not conduct a suitability test for professional clients or suitable counterparties as to whether the particular form of investment chosen by the customer agrees with the customer s profile based on the eisting knowledge and eperience of securities operations. We specifically point out that various protective rules specified in WpHG are not applied on behalf of the professional client. The law offers the professional client the option to make a separate agreement to be classified as a private customer. Baader Bank Aktiengesellschaft in its role as broker passes on the collateral (margin) deposited by its customers via its clearing partner to the relevant futures and options echange. In the event of the clearing partner becoming insolvent as per the German Insolvency Statute or insolvency proceedings as specified by the laws of the state in which the clearing partner has its registered seat, the customer must reimburse the Bank for the necessary epenses incurred in respect of the clearing partner. This claim for reimbursement of epenses is in principle limited to the amount of the collateral with which the customer has to furnish the Bank at the start of the trading day following the date of opening of the insolvency proceedings. The level of the epenses to be reimbursed shall be charged in the event of insolvency as soon as it has been established. To increase transparency we have broken down the margins per clearing partner and entered them with the depository in customer reporting. The current partner list of clearing members/depositories (Partnerliste der Clearing-Mitglieder/Lagerstellen) and abbreviations can be found in the overview in the login area of the website Third-party support/advice from third parties Customers can take advice from third parties (e.g. eternal asset managers or freelance investment advisers). The basis for such collaboration is a written authorisation to be provided by the customer. In these cases it is the third party which has been authorised by the customer and not the Bank which provides investment advice or financial portfolio management for the customer and therefore is itself obliged pursuant to the relevant statutory provisions to verify the appropriateness and suitability of the investment decision for the customer. By contrast, in such cases the Bank does not eamine the appropriateness or suitability of individual investment decisions made for the customer by the asset manager or investment adviser authorised by the customer. Note concerning deposit guarantee The Bank is affiliated to the deposit protection fund of Bundesverband deutscher Banken e. V. and Entschädigungseinrichtung deutscher Banken GmbH. This secures all liabilities that are recognised on the balance sheet as Liabilities to customers. These include sight, term and savings deposits including registered savings bonds. The collateral limit per creditor is 20% of the Bank s liable equity capital determining the deposit protection. The Bank shall notify the customer of the respective collateral limit if so requested. It can also be enquired on the Internet at Liabilities for which the Bank has issued bearer papers, e.g. bearer note and bearer certificates of deposit, and liabilities to credit institutions are not protected. If, contrary to its obligations, the Bank is incapable of redeeming the customer s securities, in addition to the Bank s liability in the event of compensation there also eists a claim for compensation against Entschädigungseinrichtung deutscher Banken GmbH (EdB). The claim against EdB is limited in amount to 90% of the value of those securities concerned, but with a limit of EUR 20,000. EdB is an entity for securing the claims of investors created under the Deposit Guarantee and Investor Compensation Act (Einlagensicherungsund Anlegerentschädigungsgesetz) of 16 July 1998 which undertakes to compensate investors under that law as a public undertaking. The Bank is authorised to provide all the information and documents to the EdB or to an agent commissioned by it as required in this connection. Means of communication You may transmit orders to us electronically, by phone, verbally or in writing, by fa, or letter. Our customers may communicate with us in German or English. An order sent by telefa is only permissible following eplicit agreement of this method of communication. If the Bank cannot be reached using one of the mentioned means of communication in order to issue an order, the customer is obliged to switch to another of the methods of communication mentioned. Communication via , for eample as part of getting into contact, is not suitable for the encrypted transmission of confidential information. However, should we receive an from the customer/counterparty or an interested party, the Bank will conclude that we are also entitled to respond by unencrypted , unless a different form of communication is specifically requested. Tied agents Baader Bank AG currently does not offer a liability umbrella for tied agents but does work with tied agents covered by other liability umbrellas. Information about costs and incidental epenses We charge our customers a combination of fees, commission and eternal costs whose level depends on the type and etent of the investment services provided. At your request we will provide you with individually detailed information about costs and incidental epenses. You will find our comprehensive List of Prices and Services on our homepage under Service. The current brokerage fees, transaction fees and order fees of the respective stock echanges as well as clearing and settlement fees incurred may be found on the relevant websites of the stock echanges or requested from Baader Bank Aktiengesellschaft en As at 07/2015 Page Page 3 of 6

7 Baader Bank Aktiengesellschaft Information concerning investment transactions and their settlement Unless agreed otherwise, the Bank sends its customers after each trade in financial instruments, but at the latest on the first business day after eecuting an order, a contract note with which the Bank informs the customer of the main data of the trade (contract note via the stock echange systems, trade confirmation or bought/sold note and bank statement [all in principle via the web portal]). Nature and frequency of reporting securities financing transactions We offer our customers the option to take up Lombard loans to finance their securities trades. The purchase of securities and derivatives on credit represents an increased risk. The loan has to be repaid regardless of the success of the investment. The loan costs also reduce the income achieved. The information brochure Basisinformationen über Vermögensanlagen in Wertpapieren contains clear warnings concerning speculating in securities on credit (Chapter E. 4.2 Zusätzliches Verlustpotential bei Kreditaufnahme [=Additional loss potential in case of borrowing]). We ask our customers to carefully read and note these warnings. We shall inform you regularly on your bank statements and account balancing statements about the development of the loan and the associated costs. Safekeeping of securities Safekeeping of securities is conducted in accordance with the special conditions governing securities transactions. Domestic securities are held in safekeeping at the German central securities depository Clearstream Banking, Frankfurt, provided they are admitted for collective custody. As a rule, foreign securities are held in safekeeping in the home country of the security and where applicable in the country in which the purchase was effected. We are happy to notify our securities account holders of the country in which their securities are held in safekeeping using the bought/sold note or if so requested. You retain ownership of the securities which we hold for you in safekeeping as described briefly above or enjoy the normal legal status of the country of deposit which if possible is equivalent to that in Germany (safekeeping of securities abroad). More details can be found in the Special conditions governing securities transactions. We should like to point out that in the case of securities on public sale the prospectus can be found on the issuer s website or that of the Federal Financial Supervisory Authority (heading for consumers admitted/deposited prospectuses) and a printed version can be requested from the issuer. Baader Bank Aktiengesellschaft is a member of the following stock echanges and trading systems: Frankfurt Stuttgart Munich Berlin Dusseldorf Hamburg Hannover Xetra Xetra Vienna Euronet Amsterdam Euronet Brussels Euronet Paris Swiss Echange (SIX) London Stock Echange (LSE) Eure Chi-X Baader Bank Aktiengesellschaft has access to other international markets via eternal trading systems en As at 07/2015 Page Page 4 of 76

8 Baader Bank Aktiengesellschaft List of products and markets The following financial instruments may be traded through Baader Bank Aktiengesellschaft: Instruments group Product Eecution methods XETRA Regulated markets Trading floor EU echanges Non- EU echanges Over-thecounter echanges MTF Other (e.g. Turquoise) OTC Shares German shares - DAX X X X X X X - MDAX X X X X X - SDAX X X X X X X - Other X X X X X Foreign shares X X X X X X X Bonds Government bonds/ Supras, etc. X X X X X X Mortgage bonds X X X X Corporates X X X X X X Other e.g. participation certificates, zero bonds X X X X X X Bank s own debt securities X X X Derivatives (Futures and options) OTC forwards OTC options X X Futures X X X Options X X X Echange traded options X X X Echange traded futures X X X en As at 07/2015 Page Page 5 of 86

9 Baader Bank Aktiengesellschaft Instruments group Product Eecution methods XETRA Regulated markets Trading floor EU echanges Non- EU echanges Over-thecounter echanges MTF Other (e.g. Turquoise) OTC Securitised derivatives Structured securities and deposit-taking X X X X Stripped securities X X X X Securities with warrant characteristics X - Callable bonds X X X X - Putable bonds X X X X - Convertible bonds X X X X Warrants/certificates - Leverage products certificates X X X X - Warrants X X X X - Investment products X X X X FOREX Spot X Swaps Forwards Options Investment funds Echange traded funds X X X X X X X Publicly offered funds (EU-authorised) X X X X X Money market instruments CDs, CPs X We provide information for our customers about the risks and opportunities offered by these products in the brochures Basisinformationen über die Vermögensanlage in Wertpapieren and Basisinformationen über Termingeschäfte. These brochures are handed to our customers at the time they open an account with us. We should point out to customers that Baader Bank Aktiengesellschaft does not offer its customers investment advice. We only eecute orders on a nocounselling basis (derivatives) or as eecution only (shares, bonds, funds and ETFs) en As at 07/2015 Page Page 6 of 96

10 Dealing with conflicts of interests at Baader Bank AG Baader Bank Aktiengesellschaft Weihenstephaner Strasse Unterschleissheim Germany T * F service@baaderbank.de * Toll-free from (inter)national landline networks. Charges may apply from other networks. Baader Bank AG lives from the trust placed by its clients, the general public and its own employees in its integrity, fairness and reliability and the quality of the services it provides. For this reason we appreciate your trust in the fact that Baader Bank AG handles sensitive information with due care. This trust largely depends on the conduct on the part of our managerial staff and our employees. As a client of Baader Bank AG, you can at all times rely on our employees to provide you with services using optimal epertise and the utmost care and conscientiousness while safeguarding your interests. To this end, Baader Bank AG has long imposed rigorous rules of conduct for the purposes of further consolidating our clients trust in us and ensuring continuous observance of and compliance with the respective statutory and supervisory regulations. These rules of conduct form an integral element of our business operations, for which reason you can at any time epect of our employees that they act with the utmost care, honesty and professionalism while observing the applicable practices and market standards. Our implementation of these rules of conduct in the provision of securitiesrelated and ancillary services is consolidated by our principles on dealing with conflicts of interests. Conflicts of interests usually arise when a client places an order with us and his/her epectations of proper and due eecution clash with the interests of other market participants using the services of our Bank. However, these differing epectations cannot be fully ruled out in view of the fact that we eecute orders for a large number of clients and also seek to be of assistance to our clients in other banking services apart from the eecution of orders. Since conflicts of interests could put the professionalism and reputation of our Bank in question, we have taken appropriate measures and precautions to ensure the identification of such circumstances in good time and thus be able to deal with them appropriately. Conflicts of interest can arise between clients of Baader Bank AG and Baader Bank AG itself, other Group member companies, the personnel employed by Baader Bank AG including the Management Board or other eternal companies and persons contractually bound to Baader Bank AG or between clients of Baader Bank AG. Further conflicts of interest can rise in particular from personal connections between Management Board members or employees of Baader Bank AG (as well as with persons associated with the same) with third parties, for eample with issuers of financial instruments or with their employees (for eample as clients of Baader Bank AG), for instance as result of having seats on supervisory boards. Furthermore, conflicts of interests may arise if Baader Bank AG cooperates on issuances by the respective issuer of financial instruments, is the lending or guarantor bank for the respective issuer of financial instruments, has entered into cooperational arrangements with the respective issuer of financial instruments, acts on the one hand as book-running broker/specialist or designated sponsor for a financial instrument and on the other a client order is to be eecuted for this financial instrument within the framework of institutional brokerage business or commission trade at the market place in question with or without client s instruction, acts as book-running broker/specialist or designated sponsor for the same financial instrument at several domestic market places. This applies in particular in the case of liquidation of positions arising from this activity at other market places where Baader Bank AG is likewise acting as book-running broker or designated sponsor for the respective financial instruments, itself holds a portfolio of the financial instruments it is handling within the framework of its activity as book-running broker/specialist or designated sponsor, conducts in connection with the compilation and publication of financial analyses proprietary trading or if employees of the Bank privately conduct transactions in financial instruments, conducts stock echange deals as portfolio manager for more than one client or investment fund, in particular in the allotment of global orders among individual clients. Conflicts of interests can also arise as a result of information becoming known to Baader Bank AG or individual, relevant employees of ours which is not in the public domain at the time of a client s transaction (insider information), Baader Bank AG receives/grants benefits (e.g. placement or trail commissions, non-cash benefits, brokerage remuneration) from/to third parties in connection with securities-related services, employees of ours receive a performance-related remuneration, Baader Bank AG making/receiving payments to/from the respective issuer of financial instruments or trading partner/business partner (socalled kick-back regulation). We shall inform the client groups that are relevant as per the German Securities Trading Act (WpHG) in advance as to the type and magnitude of such kick-back payments. The Management Board of Baader Bank AG has created a comprehensive compliance organization for far-reaching prevention and avoidance of such conflicts of interests. The Compliance department is permanently commissioned with the management of conflicts of interests; its employees work independently of the Bank s trading, business and handling departments, so they can go about their duties in a neutral and autonomous manner. The compliance organization in place at Baader Bank AG embraces the following preventive measures among others for protecting and safeguarding the interests of the Bank s clients: The Bank s employees are given regular training. They are obligated to report immediately to Compliance on any circumstances involving or which could lead to a conflict of interests, or on insider information or unusual business transactions. Insider transactions and price manipulations are strictly prohibited. Confidentiality areas have been set up which are partitioned off by what are known as Chinese walls. These are virtual or real barriers for limiting the flow of information between different spheres of activity and departments of the Bank. The confidentiality areas are separated off from the other areas and their information and reporting channels in functional and spatial terms and through the allocation of different EDP access authorizations. Each and every employee is strictly prohibited from passing on sensitive information from a confidentiality area to another of the Bank s areas or to eternal recipients. Eceptions are only admissible if other departments / employees have to be involved in the transaction, and must be reported to Compliance. This procedure ensures a targeted control and monitoring of insider information and precise knowledge as to the actions of the persons involved. These restrictions on information are employed to enable Baader Bank AG to conduct transactions in the interests of its clients without being influenced by other information possessed by the Bank in other departments which could lead to a conflict of interests. Our employees are under obligation to disclose all of their private securities transactions. In numerous cases, employees must obtain an additional permit from Compliance before placing a private order of their own; the private conclusion of securities transactions is not possible without such a permit en As at 09/ e Page Page 1 of 102

11 Dealing with conflicts of interests at Baader Bank AG We keep watch lists, blacklists and approval lists in which those financial instruments can be recorded in connection with which conflicts of interests can arise. Transactions in financial instruments from the watch list or the approval list remain permissible as long as there is no conflict of interests with the respective employee transaction; this is monitored and checked centrally on a daily basis. Transactions in financial instruments from the blacklist are prohibited. We keep a directory of insiders, in which all relevant Bank employees having insider information are recorded (with point in time and the type of information). All transactions conducted by these employees are strictly controlled. All trading transactions eecuted by ourselves or our employees are subject to ongoing controls via our Compliance department. Audit procedures can be carried out in selected areas on a random basis. All transactions are checked to determine whether they are in line with market conditions, and any anomalies are then looked into by Compliance. In particular the Bank s proprietary trading transactions are eamined to ascertain whether they were eecuted with knowledge of client orders or whether client information was eploited by means of front/parallel running or scalping. Violations are not tolerated by our Bank and can lead to disciplinary action. The employees of Baader Bank AG are obligated to report to Compliance accordingly in the event of receipt of benefits and the offering and acceptance of gifts. Employees of Baader Bank AG are not permitted to participate in socalled Friends and Family programmes. Insofar eecutable despite limitations, the processing of clients orders takes place in the order in which they are received. The conformity of the prices in customers invoices with market conditions is checked daily. Research studies, in particular with rating and/or upside target changes are only published subject to prior approval on the part of Compliance (check for conflicts of interest). In-house guidelines determine that, in order to prevent any eercising of influence on the part of sales staff, variable remuneration based on sales success may not be paid to certain employees. Compliance monitors the organization, structuring and implementation of Baader Bank s remuneration system. Compliance itself is audited annually by Internal Auditing and an eternal auditor. Compliance reports twice yearly to the Full Board and the Supervisory Board on anomalies and the observance of and adherence to the prevailing regulations. If in individual and eceptional cases it is not possible to prevent conflicts of interests by means of the aforementioned division of duties or the compliance organization we will then notify the client in question of the respective conflict of interests. However, in this connection we draw your attention to the fact that Baader Bank AG is under no obligation to disclose significant interests of its own or of its employees insofar as our organizational measures are sufficient to prevent the risk of impairing client interests. When eecuting clients orders we trade in accordance with our Best Eecution policy or the client s specific instructions. Clients orders always have priority over the Bank s proprietary trading and employee transactions. Baader Bank AG does not provide investment advice, so no conflicts of interest can arise in this connection. If you should have any queries or require further information on our handling of conflicts of interests, please do not hesitate to contact our Compliance department at the following address: compliance@baaderbank.de en As at 09/ e Page Page 2 of 11 2

12 Policies of Baader Bank Aktiengesellschaft governing the eecution of orders in financial instruments Baader Bank Aktiengesellschaft Weihenstephaner Strasse Unterschleissheim Germany T * F service@baaderbank.de * Toll-free from (inter)national landline networks. Charges may apply from other networks. The following eecution policies set out how Baader Bank Aktiengesellschaft ensures that a customer order, which is devoid of instructions concerning the market place or an off-floor trading partner, should be eecuted consistently in the best possible interests of the customer. To cater for the different requirements of individual customers, the Bank may set the eecution policies to be sufficiently fleible. These may be set down in special order eecution policies. If you are interested in individual eecution policies, kindly contact your designated contact. Scope of application The eecution policies apply equally to the eecution of customer orders from private clients and professional clients as defined in the German Securities Trading Act (WpHG). The eecution policies do not apply to transactions with suitable counterparties since here the best eecution rules as defined in 33a WpHG are not applicable according to the eemption clauses in 31b WpHG. The Bank s best eecution policy is only applied if you do not eplicitly specify a trading venue for order eecution at the time you issue the order. In principle, customer orders in securities are not eecuted against the Bank s proprietary trading department, but are routed to a trading venue In off-floor ETF trading with professional clients and suitable counterparties, the Bank eecutes customer orders against its own book. In so doing, the Bank is acting as a provider of liquidity, because the transaction volumes enquired for by the customer cannot usually be traded at the respective stock echanges, or if so only at an obvious price disadvantage. The quotes provided by the Bank and dependent on turnover represent without eception an improvement in eecution over the order book depth of the reference stock echange. Priority of customer instructions A concrete instruction by a customer regarding the eecution venue always takes precedence. When eecuting the order, the Bank must always follow the customer s instructions. The customer s attention is specifically drawn to the fact that in the case of a customer instruction concerning the eecution venue the Bank shall eecute the order according to the instruction and thus is not obliged to achieve a best possible outcome (best eecution) under these eecution policies. In the case of orders bound by customer directives, the duties to achieve best eecution for the customer shall always be deemed to have been fulfilled. Special comments on the eecution of fied price transactions The Bank also offers to conclude fied price transactions for its customers. If orders are taken for the purchase or sale of financial instruments as a fied price transaction, the Bank shall ensure that this takes place at terms which are in line with the market. There is no best eecution obligation as defined in WpHG. A different eecution of the customer order than as part of the fied price transaction is always possible if the customer wishes it, provided the corresponding financial instruments are traded on a stock echange and sufficient liquidity is available to eecute the order. Provided there is no other customer requirement, the Bank may partially or entirely take the corresponding position on to its own book for proprietary trading purposes. Warehouse transactions On behalf of the customer the Bank may delay the settlement and delivery of an eecuted customer order, but to no later than the final trading day of the week in which the first (partial) eecution took place. The implementation of such a warehouse trade is always contingent upon prior approval from the Bank and adequate trading limits for the relevant customer. The costs of financing the days beyond the standard value dates shall be charged to the customer when the securities are purchased. It is deemed to have been agreed that the settlement date is the trading date. The customer ensures that this information is taken into account in the verification of compliance with market conditions. In general, each trade has to be settled; netting is not permissible. Deviation from the eecution policies in individual cases If due to its nature and/or etent a buy or sell order from a customer materially differs from normal orders in the opinion of our traders, Baader Bank Aktiengesellschaft may, in the individual case, eecute the order in the interests of the customer in the individual case, so deviating from these policies. The same applies in the case of etraordinary market circumstances or market disruptions (e.g. order backlogs). The customer is immediately informed by telephone of the deviating eecution by the Bank s trading department. Eecution of customer orders in foreign derivatives In the case of derivatives traded eclusively at foreign eecution venues, the customer commissions the Bank to eecute his orders via an interim agent. This interim agent eecutes the order at a futures and options echange selected by him in the proper eercise of his discretion. For possible eecution venues, please refer to the list headed Futures and options echanges on the following page. Non-standardised derivatives and forward echange contracts A trade in non-standardised derivatives and forward echange contracts is concluded directly between the customer and the Bank, or possibly via an interim agent. Because of the individual features of trades and market practices, no other suitable eecution venues eist elsewhere. The rules on best eecution as defined in WpHG do not apply in this case. Subscription rights Subscription rights may be eercised or bought and sold for the duration of subscription rights trading. If the Bank has not received a customer instruction by the penultimate day of subscription rights trading, all the rights in the portfolio are to be sold at best on the final trading day. The Bank is also permitted to sell at best or dispose of foreign subscription rights in accordance with the practices applicable locally on the final trading day. The possible eecution venues for trading in subscription rights are the stock echange in the respective foreign country, the electronic trading system Xetra, the Frankfurt Stock Echange (Xetra2) or the regional stock echange in Germany which includes the respective subscription right in trading en As at 09/ e Page Page 1 of 124

13 Policies of Baader Bank Aktiengesellschaft governing the eecution of orders in financial instruments Special features of orders as part of asset management If a customer order is eecuted as part of asset management arranged with the Bank, the Bank as asset manager may pass on orders in the customer s interest to another venue than the eecution venue determined according to these policies. As part of asset management, the Bank is permitted to make use of the block order as an instrument (combining small orders to form an aggregate order). Combining orders and determining an average price As its discretion, but without a legally binding obligation, the Bank may combine its orders with those from other customers and divide the resulting epenses or revenues among the customers involved in a way which the Bank considers to be fair and appropriate in line with the applicable provisions. If the entire combined order is not eecuted at the same price, the Bank may calculate a mean value from the epenses and revenues and debit or credit your account with a net average price. Details concerning the average eecution prices will be provided to you on request. It cannot be guaranteed that combining orders will not have a negative impact on market pricing. Eecution venues envisaged by Baader Bank Aktiengesellschaft Stock echanges The following eecution venues are available to our customers through a direct link on the basis of stock echange membership, electronic market access or via our brokerage desk: M = Member of the stock echange, Desk = Full service brokerage desk, ET = Electronic market access German stock echanges M Desk ET Berlin Düsseldorf Frankfurt am Main Hamburg-Hanover Munich Stuttgart Tradegate XETRA Frankfurt American stock echanges M Desk ET Canada, Toronto Stock Echange Canada, TSX Venture Meico, Meico Stock Echange USA, American Stock Echange USA Bats USA, NASDAQ USA, NYSE Asian and other stock echanges M Desk ET Australia, Australian Stock Echange Hong Kong, Hong Kong Stock Echange Japan, Tokyo Stock Echange Singapore, Singapore Stock Echange South Africa, JSE Securities Echange European stock echanges M Desk ET Belgium, Euronet Brussels Denmark, OMX Copenhagen Finland, OMX Helsinki France, Euronet Paris Greece, Athens Stock Echange Ireland, Irish Stock Echange Italy, Borsa Italiana Netherlands, Euronet Amsterdam Norway, Oslo Stock Echange Austria, XETRA Vienna Poland, Warsaw Stock Echange Portugal, Euronet Lisbon Sweden, OMX Stockholm Switzerland, SIX Swiss Echange Spain, Bolsa de Madrid Czech Republic, Prague Stock Echange UK, London Stock Echange UK, Chi-X Hungary, Budapest Stock Echange Dark Pools M Desk ET Knight Link Knight Match Bats Trading Chi-X Darkpool Citigroup Credit Suisse Crossfinder Deutsche Bank Darkpool Euronet SmartPool Goldman Sachs SIGMA X MTF Instinet Blockmatch ITG Posit Liquidnet Morgan Stanley Darkpool Nordic@Mid Turquoise Darkpool UBS MTF Darkpool MTFs (Multilateral Trading Facilities) M Desk ET Turquoise Futures and options echanges M = Member of the stock echange, Desk = Full service brokerage desk, ET = Electronic market access International derivatives echanges M Desk ET Australia, Australian Stock Echange Australia, Sydney Futures Echange China, Hong Kong Futures Echange Germany, EUREX England, ICE Italy, IDEM Japan, Tokyo Financial Echange Canada, Montreal Stock Echange Malaysia Derivatives Echange NASDAQ QMX Copenhagen, Stockholm Netherlands, EURONEXT LIFFE Norway, Oslo Stock Echange Austria, Vienna Stock Echange (formerly ÖTOP) Singapore Derivatives Echange Spain, MEFF South Africa Futures Echange Taiwan Futures Echange Turkey, ISE USA, CBOE USA, CBOT USA, CME USA, GLOBEX USA, New York Commodities Echange (COMEX) USA, NYMEX en As at 09/ e Page Page 2 of 134

14 Policies of Baader Bank Aktiengesellschaft governing the eecution of orders in financial instruments Eecution of orders via trading algorithms Baader Bank offers its institutional customers the following algorithmic order types for the eecution of their orders; these can be applied both as what are known as care orders (semiautomatic orders or orders placed manually via the bank s brokerage desk) as well as DMA orders (within the framework of a customer s direct market access): FAN: Third-broker Smart Order Router. Low latency technology is used to access the liquidity available in the market. The user has a diversity of setting options in order to be able to access LITT (e.g. traditional marketplaces such as stock echanges and MTFs) and/or DARK marketplaces (what are known as dark pools) according to preference. OASIS: Using a liquidity-seeking logic, OASIS takes account of variable trading volumes, elevated volatility and elevate price sensitivity which can typically be found in less liquid and hardly tradable securities. Since OASIS does not follow a fied time schedule and can adjust the corresponding participation rate, it trades at times it regards as optimal and pauses in unfavourable periods. OASIS has the possibility of being active in LIT and DARK markets. Nonetheless, for the purposes of minimizing a signal risk the algorithm will not set any thresholds in LIT markets. COVERT: Only uses DARK liquidity through heading for a dark pool network. An anti-gaming function can be additionally linked up which pauses as soon as COVERT identifies unfavourable market conditions. The COVERT algorithm neither sets limits in LIT markets nor will it handle a displayed rate. VWAP: This algorithm endeavours to minimize the difference to the envisaged volume-weighted average price, taking account of the specifically predefined timeframe. At the same time it endeavours to keep the market/ price impact as minimal as possible. It uses data analysis to forecast volume trends. TWAP: This algorithm eecutes orders over a predefined timeframe and at the same time endeavours to minimize the market/price impact. ARRIVAL PRICE (implementation shortfall logic): This algorithm endeavours to minimize the difference to the arrival price by calculating an optimal timeframe, striking a balance between market/price impact and price risk. Various urgency levels enable the users to determine the aggressiveness of the strategy themselves. PERCENTAGE OF VOLUME (POV): This algorithm anticipates and reacts dynamically to traded volumes for the purposes of keeping the order in line with a specified participation rate. TARGET CLOSE: This algorithm eecutes orders over a timeframe keeping the difference to the closing auction price as minimal as possible. Scaling: This is the same strategy as with Percentage of volume, ecept that different participation rates can also be set for differing price levels, for eample sale of securities over the set threshold should take place with a participation rate of % of the eecuted volume while sales below the set threshold should take place with a participation rate of y% of the traded volume. Sonar: This algorithm works along the same lines as the OASIS algorithm described in the above, ecept that there are differing setting options such as passive, neutral or aggressive. Off-floor trading partners Provided the customer has not given a conflicting instruction, the Bank, in addition to the stock echanges, may trade the customer order or the proprietary trading position resulting from a customer order against another trading partner off the floor. When doing this, it should be noted that the Bank is ultimately not able to influence how this trading partner handles his position. Eamination of eecution policies According to the statutory provisions, Baader Bank Aktiengesellschaft shall review the eecution policies at least once a year. If there are discernible signs of material market changes, which lead to the fact that at the eecution venues determined according to the eecution policies the eecution of customer orders is no longer consistently guaranteed to be in the customer s best interests, the Bank shall where appropriate also review and modify these eecution policies during the year. The Bank shall announce material changes on its homepage. Our duty to achieve best eecution When eecuting your orders for the purchase or sale of financial instruments according to the definition in WpHG, the Bank takes all measures in order to achieve the best possible outcome for you in the eecution of the orders. In doing so, the Bank naturally follows your specific instructions. When selecting eecution venues, the Bank in principle takes account of the following factors: General static features of the trading venue: Quality of technical link ( latency ) Protection of investors Number of trading partners General dynamic features of the trading venue: Price Waiting period until opening the trading venue Remaining trading time until closure of the trading venue Fees for order eecution Liquidity of the trading venue on the final trading day Features of the trading venue per cluster of financial instruments 1 : Price quality Speed of eecution Probability of eecution (eecution guarantees) Partial eecution ratio Liquidity 1Click: This algorithm works along the same lines as the FAN algorithm described in the above; however, there are further setting options such as urgency, participation rate and eecution venue preference. 1 All securities have to be distinguished according to their type and combined in suitable clusters of financial instruments, whereby a single financial instrument may be contained in several clusters. The following selection and valuation criteria are available for the combining of securities into a financial instrument cluster: product category, product subcategory, quotation, issuer, home country, trading currency and membership of an inde en As at 09/ e Page Page 3 of 144

15 Policies of Baader Bank Aktiengesellschaft governing the eecution of orders in financial instruments We have assigned the possible eecution venues to the following groups of financial instruments: Instruments Group Possible eecution venues Berlin Echange, Düsseldorf Echange, Frankfurt Echange, Hamburg Echange, Hannover Echange, German shares Munich Echange, Stuttgart Echange, Tradegate Echange, Xetra, Xetra Vienna, Euronet (Amsterdam), Euronet (Brussels), Euronet (Paris) Berlin Echange, Düsseldorf Echange, Frankfurt Echange, Hamburg Echange, Hannover Echange, Foreign shares Munich Echange, Stuttgart Echange, Tradegate Echange, Xetra, Xetra Vienna, Euronet (Amsterdam), Euronet (Brussels), Euronet (Paris) Berlin Echange, Düsseldorf Echange, Frankfurt Echange traded bonds Echange, Hamburg Echange, Hannover Echange, Munich Echange, Stuttgart Echange, Tradegate Echange, Xetra, Xetra Vienna Non-Echange traded bonds Bank to Bank OTC trading (interbank market) Berlin Echange, Düsseldorf Echange, Frankfurt Echange, Hamburg Echange, Hannover Echange, Investment funds Munich Echange, Stuttgart Echange, Tradegate Echange, Xetra, Xetra Vienna, Euronet (Amsterdam), Euronet (Brussels), Euronet (Paris) Berlin Echange, Düsseldorf Echange, Frankfurt Participation certificates Echange, Hamburg Echange, Hannover Echange, Munich Echange, Stuttgart Echange Berlin Echange, Düsseldorf Echange, Frankfurt Warrants Echange, Hamburg Echange, Hannover Echange, Munich Echange, Stuttgart Echange, Xetra, Xetra Vienna Berlin Echange, Düsseldorf Echange, Frankfurt Certificates Echange, Hamburg Echange, Hannover Echange, Munich Echange, Stuttgart Echange, Xetra, Xetra Vienna Berlin Echange, Düsseldorf Echange, Frankfurt Subscription rights Echange, Hamburg Echange, Hannover Echange, Munich Echange, Stuttgart Echange, Tradegate Echange, Xetra, Xetra Vienna Where private customers are concerned, the best possible order eecution is largely oriented to the total fee. In the case of orders issued electronically, by phone, fa or and not bound by customer instructions, the Bank shall act as follows in order to achieve best eecution: 1 Direct comparison procedure The direct comparison procedure (referred to as direct comparison in the following) is used for a selected number of financial instruments ( order classes ). The procedure takes place as follows: on receipt of order, the order books for the trading platforms cleared for the direct comparison in line with the bank s order eecution policy are considered and a consolidated order book is compiled, with the order then being placed on the trading platform where the best eecution can be achieved whilst taking into account the fees involved. The direct comparison is undertaken for the following order classes: German inde shares (order volume below thresholds defined by us) Non-German inde shares (order volume below thresholds defined by us) Echange-traded bonds Investment funds (order volume below thresholds defined by us) Warrants (order volume below thresholds defined by us) Certificates (order volume below thresholds defined by us) Should the direct comparison fail to lead to a result (e.g. all stock echanges closed, order limit above or below the market quotes, order volumes greater than the volumes of the market quotes) then this is deactivated for the order class in question and the securities order is passed to the script processing procedure and is then processed and evaluated anew. 2 Script processing procedure Within the script processing method (hereinafter script processing ), possible trading venues are evaluated by their above-mentioned features and by forming classes (market properties). The valuation within the classes is rated from 1 (worst) to 10 (best). In the script processing method either all features of the trading venue or a subset of them are used and weighted corresponding to our assessment. Eclusion from trading venues below a ranking limit previously defined by you is also possible. In the practical process, the total of all trading venue features considered and weighted per trading venue is calculated by the following formula Selected trading venue - ma (valuation HP1; valuation HP2;...; valuation HPn) where valuation HP = total (HPM1 * gl;...; HPMm * gm) HP = trading venue HPM = trading venue feature g = weighting The order is placed at the trading venue with the highest value. In addition, all the trading venue features used and their classes are stored in log files in the interests of later evidence. Beyond the statutory provisions, instruction-free orders in investment fund units are also processed in the above-described process. There is also the possibility of handling them through special instruction directly via the capital investment company or custodian bank en As at 09/ e Page Page 4 of 154

16 General information for customers concerning received payments Baader Bank Aktiengesellschaft Weihenstephaner Strasse Unterschleissheim Germany T * F service@baaderbank.de * Toll-free from (inter)national landline networks. Charges may apply from other networks. Dear Client, In sending you our brochures entitled Basisinformationen über Vermögensanlagen in Wertpapieren (=basic information concerning investing in securities) and Basisinformationen über Termingeschäfte (=basic information concerning forward transactions), we intend to elucidate for you the risks and opportunities entailed by various forms of investment. We will also be happy to advise you concerning products and the risks they might entail. For us, this service is associated with cost-intensive staffing and organisational epense. To cover this epense we receive, in some cases, various payments from our sales partners which take the form of monetary payments or other non-cash benefits. In terms of organisation, we ensure that these payments do not come into conflict with your interests as the customer, but are used to maintain and improve the quality of the investment services we provide. In particular, the Bank may profit from reimbursements in the form of non-cash benefits involving technical support and information material, but may also receive or allocate them to sales partners for the purpose of training measures and the conduct of special customer- or product-specific marketing campaigns. Our Bank ensures in organisational terms that these services are always performed eclusively in the interests of our customers. Irrespective of this, we are obliged on the basis of supervisory and civil-law regulations to notify you in the event of purchases of units in investment funds, certificates or structured bonds of payments in the form of money or other non-cash benefits which we grant our sales partners or receive from them and so to create the greatest possible transparency as an aid to your investment decisions. We are therefore informing you that we may receive corresponding payments for the following transactions: 1 Purchase of units in investment funds Funds levy a front-end load when units are issued. We receive a refund of up to the entire front-end load which, depending on the class of investment, can amount to as much as 6% of the invested amount. Funds which invest in other funds are called funds of funds. With these products, too, a frontend load is levied, the full amount of which may be refunded to us. In the case of what are referred to as no-load funds, no front-end load is charged, but commission is taken in order to cover the sales costs. This commission can make up to as much as 1.5% of the value of the units you hold in the fund and we are paid part of this sum or the entire amount. We are paid this refund for the period over which you hold the fund units in your securities account. In the case of funds of funds, commission of up to 1.25% p.a. of the value of the units held by you in the fund of funds is drawn monthly as a rule from the fund assets to cover the sales epenses and part or all of this amount is paid to us for as long as you hold the fund units in your securities account. The capital investment companies draw a management fee from the fund assets concerned which, depending on the investment class, can in the case of funds be as much as 2.6% p.a. of the value of the fund units held by you, part or all of which we receive as a refund. In the case of funds of funds, the capital investment company withdraws from the fund assets a management fee which can amount to up to 2.0% p.a. of the fund assets depending on the type of fund. We are refunded an annual portion of the management fee. We are paid the refunds mentioned for the period in which you hold the units of the fund of funds in your securities account. In addition to the management fee we can receive an additional payment from our sales partners if we market products chosen from the sales partner s entire range on a scale which eceeds a previously defined threshold. We shall be glad to give you details of the amount of this payment on request. 2 Purchase of certificates or structured bonds The issuing houses charge one-off front-end loads in the case of part of the certificates or structured bonds launched by them, which can amount to up to 5.0% of the total investment depending on the characteristics and term of the product. We are refunded part or all of this front-end load. Independently of front-end loads, we can be paid one-off commission by the issuing houses as remuneration of up to 5.0% of the sum invested. In addition, we may receive refunds depending on the portfolio for as long as the corresponding products are held in your portfolio. These payments can make up to 1.5% p.a. of the sum invested. We receive an additional payment of up to 0.3% of the total turnover from our partners if we market products chosen from the sales partner s entire range on a scale which eceeds a previously defined threshold. 3 Purchase of other financial instruments On request, we shall inform you separately in individual cases whether and at what level we receive refunds to cover the sales epenses for other financial instruments. Reimbursements granted to Baader Bank must not eeed 1.5% of the amount invested. You can obtain detailed information on all the above-mentioned payments from your competent contact partner. We shall also be glad to let you have details concerning the particular product and otherwise such information can be found in the product prospectus en As at 09/ e Page Page 1 of 161

17 General Terms of Business Baader Bank Aktiengesellschaft Weihenstephaner Strasse Unterschleissheim Germany T * F service@baaderbank.de * Toll-free from (inter)national landline networks. Charges may apply from other networks. Basic rules governing the relationship between the customer and the Bank 1 Scope of validity and amendments to these Terms of Business and the special conditions governing individual business relationships (1) Scope The General Terms of Business apply to the entire business relationship between the customer and the Bank s domestic branches (referred to below as the Bank ). In addition to this, special conditions govern individual business relationships (for eample business in securities, payments and savings) which contain differences from or additions to these General Terms of Business; these special conditions are to be agreed with the customer at the time an account is opened or when an instruction is given. If the customer also has business connections with foreign branches, the banker s lien (paragraph 14 of these Terms of Business) also safeguards the claims of the foreign branches. (2) Changes Changes to these Terms of Business and the special conditions are to be offered to the customer in tet form by no later than two months prior to the proposed date they are to take effect. If the customer has agreed an electronic communication route with the Bank as part of the business relationship (online banking, for eample), the changes may also be offered via this route. The customer shall be deemed to have given his agreement if he has not communicated his refusal before the proposed date on which the changes are scheduled to take effect. The Bank shall make special reference to this deemed approval within the offer. If changes in the conditions governing payment services (for eample, terms governing credit transfers) are offered to the customer, he may also terminate the framework agreement for the payment service affected by the changes without notice at no epense before the proposed date on which the changes are to take effect. The Bank shall refer specially to this cancellation right in its offer. 2 Banking secrecy and banking information (1) Banking secrecy The Bank is obliged to maintain secrecy concerning all facts and evaluations relating to customers of which it gains knowledge (banking secrecy). The Bank is only permitted to pass on information about the customer if it is obliged to do so by legal requirements or the customer has given consent or the Bank is authorised to issue such banking information. (2) Banking information Banking information includes general facts and remarks concerning the financial circumstances of the customer, his creditworthiness and ability to pay; it shall not provide details of account balances, savings, securities accounts or other assets entrusted to the Bank or give details of the drawing of credit facilities. (3) Conditions for the issue of banking information The Bank is authorised to issue banking information concerning legal entities and business people entered on the commercial register as long as the enquiry relates to their business operation. However, the Bank shall not issue such information if the customer has given it an instruction to the contrary. The Bank shall only issue banking information concerning other individuals, particularly private clients and associations, if they have specifically agreed to this either in general or in a particular instance. Banking information is only provided if the enquirer has credibly presented a justified interest in the desired information and there are no grounds to assume that issues of the customer which are worthy of protection preclude the issue of the information. (4) Recipients of banking information The Bank shall only issue banking information to its own customers and to other credit institutions for their own purposes or those of their customers. 3 Liability of the Bank; contributory liability of the customer (1) Principles governing liability In the fulfilment of its obligations the Bank is liable for any culpability of its employees and of individuals contracted to fulfil its obligations. Although the special conditions for individual business relationships or other agreements may specify otherwise, these rules take precedence. If based on culpable actions (for eample, infringing the duties to cooperate as set out in paragraph 11 of these Terms of Business) the customer has contributed to causing a loss, the etent to which the Bank and customer must bear the loss or damage shall be determined according to the principles of contributory liability. (2) Subcontracted orders If by reason of its content an order is typically eecuted in a form requiring the Bank to entrust a third party with its completion, the Bank fulfils the order by the fact that it passes it on to the third party in its own name (subcontracted order). This concerns, for eample, the obtaining of banking information from other credit institutions or the safekeeping and administration of securities abroad. In such cases, the Bank s liability shall be limited to the careful selection and instruction of the third party. (3) Disruptions to operations The Bank shall not be held liable for losses caused as a result of force majeure, civil unrest, war or natural disasters or through other events which are not under its control (for eample, strikes, lockouts, traffic disruptions, actions by government authorities within the country or abroad). 4 Limits on the customer s right to set off The customer may only offset claims of the Bank if its own claims are uncontested or have been legally established. 5 Drawing authorisation following death of customer Following the death of the customer, the person who claims to be the customer s legal successor must provide suitable evidence to the Bank of his claims under inheritance law. If an original copy or a certified copy of the deceased customer s last will and testament (will, agreement as to succession) as well as the associated record of opening is submitted to the Bank, it is permitted to treat the individual who features therein as the heir or eecutor as the entitled person, to allow him to dispose freely and in particular to render services to him in discharge of its obligations. This shall not apply if the Bank is aware that the individual mentioned (for eample, after challenging the will or on account of its nullity) is not entitled to dispose, or if as a result of negligence it has not become aware of this. 6 Governing law and place of jurisdiction for customers in the commercial and public sectors (1) Validity of German law The business relationship between the customer and the Bank is subject to German law. (2) Place of jurisdiction for domestic customers If the customer is a businessman and the disputed business relationship is attributable to the operation of his business, the Bank may bring an action against the customer at the court responsible for the account-maintaining en As at 12/2014 Page Page 1 of 176

18 General Terms of Business branch or at another competent court; the same applies in the case of a legal entity under public law and public funds. These customers may only take action against the Bank itself through the court which is responsible for the account-maintaining branch. (3) Place of jurisdiction for foreign customers The agreement on the place of jurisdiction also applies to customers who run a comparable commercial operation abroad and to foreign institutions which are comparable to domestic legal entities under public law or to a domestic public fund. Account operation 7 Account balancing statements for current accounts (1) Issuing account balancing statements Unless otherwise agreed, in the case of a current account the Bank issues an account balancing statement at the end of each calendar quarter in which any claims on either side which have arisen during the relevant period (including interest and the Bank s charges) are offset against one another. The Bank may charge interest on the balance resulting from offsetting in accordance with paragraph 12 of these Terms of Business or another agreement concluded with the customer. (2) Time limit for objections; tacit approval The customer must raise objections to inaccuracies or omissions in an account balancing statement no later than si weeks after having received it; should he present the objections in tet form, it is sufficient to have sent the objection within the si-week time limit. Failure to make timely objections shall be deemed to constitute approval. When issuing account balancing statements, the Bank shall make particular reference to this consequence. Even after epiry of the time limit, the customer may insist on the correction of the account balancing statement, but must then prove that his account was debited incorrectly or a credit to which he was entitled was not made. 8 Reversal entries and adjusting entries by the Bank (1) Prior to the account balancing statement The Bank is permitted to reverse inaccurate credits to current accounts (due to an incorrect account number, for eample) by the net account balancing statement by way of a debit entry in case it is entitled to a repayment from the customer (reversal entry); in this case the customer may not object that he has already withdrawn the amount credited. (2) After the account balancing statement Should the Bank only establish that there is an incorrect credit entry after an account balancing statement and it has claim against the customer for repayment, it shall debit the customer s account for the amount of its claim (adjusting entry). If the customer raises objections to the adjusting entry, the Bank shall credit the amount back to the account and assert its claim to repayment separately. (3) Notifications to the customer; calculation of interest The Bank shall notify the customer of reversal and adjusting entries without delay. The Bank shall process these entries in respect of the calculation of interest retrospectively to the day on which the incorrect entry was made. 9 Direct debit orders (1) Granting of conditional credit entries at presentation When the Bank credits the equivalent amount of cheques and direct debits before they are honoured, this happens subject to their payment, even if they are payable at the Bank itself. If the customer presents other papers with the order to procure an outstanding amount from a debtor (interest coupons, for eample), and the Bank issues a credit note for this amount, this is done subject to the Bank actually receiving the amount in question. This reservation also applies if the cheques, direct debits and other papers are payable at the Bank itself. If cheques or direct debits are not honoured or the Bank does not receive the amount concerned of the direct debit, the Bank will reverse the conditional credit entry. This takes place irrespective of whether an account balancing statement has been issued meanwhile. (2) Honouring direct debits and cheques made out by the customer Direct debits as well as cheques are honoured as long as the debit entry is not reversed by the second banking day 1 at the latest after it is made. Open cheques are already honoured on payment to the presenter. Cheques are also honoured if the Bank sends out an advice of payment in the particular case. Cheques which are presented via the Bundesbank clearing house are honoured if they have not been returned by the date set by the Bundesbank. 10 Foreign currency transactions and risks entailed by foreign currency accounts (1) Order eecution in the case of foreign currency accounts Foreign currency accounts of the customer are used for making payments to the customer and withdrawals by the customer in foreign currency without the use of cash. Withdrawals of balances on foreign currency accounts (for eample, by credit transfers debited to the foreign currency balance) are settled by banks in the home country of the currency if not entirely eecuted by the Bank within its own operation. (2) Credits in the case of foreign currency transactions with the customer If the Bank concludes a transaction with the customer (for eample, a forward echange deal), from which it is due to furnish an amount in foreign currency, it will fulfil its foreign currency obligation by means of a credit to the customer s account in this currency, unless there is a different arrangement. (3) Temporary restriction on payment by the Bank The obligation of the Bank to eecute an instruction to debit a foreign currency balance [(1)] or to fulfil a foreign currency liability [(2)] is postponed in terms of its etent for as long as the Bank is unable, or only a limited etent able, to draw on the currency in which the foreign currency balance or liability is denominated, as a result of political measures or events in the country of the currency in question. To the etent that, and as long as, these measures or events last, the Bank is also not obliged to carry out the obligation at a different place outside the country of the currency, in a different currency (also not in euros) or by acquiring cash. Conversely, the Bank s obligation to eecute an instruction to debit a foreign currency balance is not postponed if the Bank is able to eecute it entirely within its own operation. The right of the customer and of the Bank to set off reciprocal claims in the same currency is not affected by the above rules. (4) Echange rate The determination of the echange rate in foreign currency operations is found in the List of Prices and Services (Preis- und Leistungsverzeichnis). In the case of payment services the master agreement on payment services (Zahlungsdiensterahmenvertrag) applies in addition. Duties of the customer to cooperate 11 Duties of the customer to cooperate (1) Notification of changes In the interests of the orderly processing of business transactions it is necessary for the customer to notify the Bank immediately of any changes to his name or address as well as the etinguishment or alteration of a power of representation granted to the Bank (particularly a power of attorney). This notification obligation also applies if the power of representation has been entered on a public register (for eample, the commercial register) and its etinguishment or amendment is entered in this register. Additionally more etensive statutory notification obligations may result particularly those as a result of the Money Laundering Act. 1 Banking days are all business days apart from: Saturdays, and 24 and 31 December en As at 12/2014 Page Page 2 of 186

19 General Terms of Business (2) Clarity of instructions The content of instructions must be clear. Orders which are not formulated clearly may lead to queries which can result in delays. Above all, the customer must ensure the accuracy and completeness of information concerning orders, particularly the account number and bank code or IBAN 2 and BIC 3 as well as the currency. Changes, confirmations or repeats of orders must be clearly marked as such. (3) Special note in the case of urgency in the eecution of an order If when eecuting an order the customer considers that particular speed is necessary, he must notify the Bank of this separately. In the case of standard order forms, this should be communicated separately from the form. (4) Checking and objections to notifications from the Bank The customer must immediately check bank statements, contract settlement notes, statements of securities and income statements, other statements, advices on the eecution of orders and information concerning epected payments and consignments (advices) to ensure they are accurate and complete and must immediately raise any objections. (5) Notification of the Bank if notifications are missed If the customer does not receive account balancing statements and statements of securities, he must notify the Bank immediately. The duty of notification also eists in the case of the absence of other notifications epected by the customer (contract settlement notes, bank statements after the eecution of the customer s orders or concerning payments epected by the customer). Costs of the Bank s services 12 Interest, fees and epenses (1) Interest and fees in business with consumers The level of interest and fees for the normal banking services provided by the Bank to consumers, including the level of payments eceeding the fees agreed for the main service provided, are shown in the Price List - Rates for Standardised Private Client Business ( Price List ) and the List of Prices and Services. When a consumer makes use of one of the main services listed and no deviating agreement is in force, the rates of interest and fees set out in the Price List or List of Prices and Services at this time apply. The Bank may only come to a specific agreement with the consumer concerning a payment by the consumer which eceeds the agreed fee for the main service even if it is shown on the Price List or List of Prices and Services. Provided no other agreement applies, the statutory provisions apply to payments for services not included on the Price List or List of Prices and Services carried out on behalf of the consumer which, in view of the circumstances, can only be epected in return for a fee. (2) Interest and fees in business with customers who are not consumers The level of the interest and fees for the normal banking services provided by the Bank for customers who are not consumers can be found in the Price List and the List of Prices and Services, provided the said lists cover normal banking services for customers who are not consumers (e.g. business customers). If a customer who is not a consumer uses a banking service which is listed and no deviating agreement is in force, the rates of interest and fees applicable at this time in the Price List and List of Prices and Services shall apply. In other respects, unless a different agreement has been made and in the absence of conflicting statutory provisions, the Bank shall determine the level of interest and fees at its own discretion ( 315 of the German Civil Code). (3) Services provided without fees The Bank shall not charge a fee for a service to which it is obligated by law or on the basis of an ancillary contractual duty or which it undertakes in its own interest, unless it is permitted and levied in line with the law. (4) Changes in interest rates; right of customer to cancel in the event of an increase Changes in the interest charged on variable-rate loans are made on the basis of a loan agreement with the customer. The Bank shall notify the customer of changes in the rate of interest. In the event of an increase in the rate of interest, unless agreed otherwise, the customer may cancel the loan agreement concerned with immediate effect within si weeks of the notification of the change being made. If the customer terminates the agreement, the increased rate of interest shall not be used as basis for the cancelled loan agreement. The Bank shall allow a reasonable amount of time to process it. (5) Changes in fees for services which are typically used constantly Changes in the fees for services typically used constantly by customers as part of the business relationship (for eample, account and portfolio management) are offered in tet form to the customer by no later than two months before the date on which they are due to come into effect. If the customer has agreed an electronic communication route with the Bank as part of the business relationship (online banking, for eample), the changes may also be offered by this means. The customer is deemed to have given consent if he has not communicated a refusal before the proposed time the change is to take effect. The Bank shall make special reference to this deemed approval within the offer. When changes are offered to the customer, he may also terminate the contract affected by the changes free of charge and with immediate effect before the proposed date the changes are due to be introduced. The Bank shall refer specially to this cancellation right in its offer. If the customer terminates the agreement, the altered fees shall not be applied to the terminated business relationship. The above agreement only applies in respect of consumers if the Bank intends to alter the fees for main services typically used constantly by the consumer as part of the business relationship. The Bank may only specifically make an agreement with the consumer to alter a fee which is aimed at a payment by the consumer which goes beyond the main service. (6) Reimbursement of epenses Possible claims by the Bank to the reimbursement of epenses are governed by the provisions of the law. (7) Special features of consumer loan agreements and payment services contracts with consumers for payments inside the European Economic Area (EEA) in an EEA currency In the case of consumer loan agreements and payment services contracts with consumers for payments inside the European Economic Area 4 (EEA) in an EEA currency 5 the rates of interest and costs (fees and epenses) are governed by the relevant contractual agreements and special conditions as well as, in addition, the provisions of the law. 2 International Bank Account Number. 3 Bank Identifier Code. 4 Currently the European Economic Area includes the following countries: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France (including French Guiana, Guadeloupe, Martinique, Mayotte, Réunion), Germany, Greece, Hungary, Iceland, Ireland, Italy, Croatia, Latvia, Liechtenstein, Lithuania, Luembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom of Great Britain and Northern Ireland. 5 Currently the EEA currencies include: euro, British pound sterling, Bulgarian lew, Croatian kuna, Czech koruna, Danish krone, Hungarian forint, Icelandic krone, Norwegian krone, Polish zloty, Romanian leu, Swedish krona, Swiss franc en As at 12/2014 Page Page 3 of 196

20 General Terms of Business Collateral for the Bank s claims against the customer 13 Provision of or increase of collateral (1) Claim of the Bank for collateral to be provided For all claims arising from the banking business connection the Bank may demand that collateral be provided for banking purposes, even if the claims are conditional (for eample, reimbursement of epenses owing to the use of a surety taken on for the customer). If the customer has taken on the duty to indemnify the Bank for another customer s liabilities (for eample, as a guarantor), the Bank shall only have a claim for collateral to be provided or increased with regard to the debt resulting from the assumption of liability once it becomes due. (2) Change of risk If, at the time claims arise against the customer, the Bank has initially refrained partially or entirely from demanding the provision or increase of the collateral, it may still demand further security later on. However, this is contingent upon circumstances arising or becoming known which justify an increased risk assessment of the claims against the customer. This may particularly be the case if the customer s financial circumstances have deteriorated or threaten to deteriorate, or the eisting value of the collateral has fallen or threatens to be reduced. The Bank has no entitlement to collateral if it is specifically agreed that the customer does not have to furnish collateral or is only required to furnish specifically mentioned collateral. In the case of consumer loan agreements there is only a claim to the provision or increase of collateral insofar as the collateral is specified in the loan agreement; if the net loan amount eceeds EUR 75,000, a claim to the provision or increase of collateral even applies if the loan agreement does not contain any information about collateral, whether definitive or not. (3) Setting a time limit for furnishing or increasing collateral The Bank shall set an appropriate time limit for the collateral to be furnished or increased. If the Bank intends to use its right to a termination without notice in accordance with paragraph 19 (3) of these Terms of Business in case the customer does not punctually comply with his duty to furnish or increase the collateral, it shall notify him of this beforehand. 14 Agreement on a lien in favour of the Bank (1) Reaching agreement on the lien The customer and the Bank are in agreement that the Bank shall hold a lien on the securities and articles of which a domestic branch has or will gain possession during banking operations. The Bank also acquires a lien on the claims of the customer against the Bank which have arisen or will arise in future through the banking connection (for eample, account balances). (2) Secured claims The lien serves to secure all eisting, future and conditional claims arising for the Bank and all its domestic and foreign branches against the customer from the banking operations. If the customer has taken on liability towards the Bank for another customer s liabilities (for eample, as guarantor), the lien shall only secure the debt arising through the assumption of liability from the date it becomes due. (3) Eceptions to the lien If money or other valuables come under the Bank s control on condition that they are only used for a particular purpose (for eample, cash deposit to honour a bill), the Bank s lien does not cover these valuables. The same applies to the shares issued by the Bank (treasury shares) and to the securities held by the Bank in safekeeping abroad for the customer. The lien also does not etend to the participation rights or participation certificates issued by the Bank itself or to the securitised and non-securitised subordinated liabilities of the Bank. (4) Interest coupons and profit participation certificates If securities are subject to the Bank s lien the customer is not entitled to demand surrender of the interest coupons and profit participation certificates pertaining to these papers. 15 Security interests in collection items and discounted bills (1) Transfer of title for security purposes The Bank acquires a non-possessory lien on the cheques and bills presented to it for collection at the time of their presentation. The Bank acquires unrestricted ownership of discounted bills at the time of negotiation; if it redebits discounted bills to the account, it retains a non-possessory lien on the bills concerned. (2) Assignment by way of security On acquisition of the ownership of cheques and bills the underlying claims also pass to the Bank; there is also a passage of the claim if other papers are presented for collection (for eample, direct debits, commercial negotiable instruments). (3) Special-purpose collection items If collection items are presented to the Bank on condition that the countervalue may only be used for a specific purpose, the transfer of title for security purposes or assignment by way of security shall not affect these items. (4) Secured claims of the Bank The non-possessory lien and assignment by way of security are used to secure all claims of the Bank against the customer on presenting collection items from his current accounts or which arise in consequence of the redebiting of non-honoured collection items or discounted bills. At the customer s request, the Bank undertakes the retransfer to the customer of the non-possessory lien on the items and the claims which have been transferred to it in the event that at the time of the request it does not have any claims to be secured against the customer or it does not permit him to avail himself of the countervalue of the items before their final payment. 16 Limitation of the Bank s right to the collateral and mandatory release (1) Collateralisation limit The Bank can assert its claim to the provision or increase of collateral until the realisable value of all the collateral equals the total of all claims arising from the banking connection (collateralisation limit). (2) Release If the realisable value of all collateral does not just eceed the collateralisation limit temporarily, the Bank must release collateral at its discretion at the customer s request in the amount of any ecess over the collateralisation limit; it will take the justified interests of the customer and of any third-party collateral provider who has furnished security for the customer s liabilities into consideration when selecting the collateral for release. In this contet, the Bank is also obliged to eecute orders for the customer concerning the values subject to the lien (for eample, selling securities, paying out savings balances). (3) Special agreements If a different method of valuation than the realisable value has been agreed for a particular item of collateral or a different collateralisation limit or a different limit for the release of collateral has been agreed, these shall apply. 17 Realisation of collateral (1) Option of the Bank If the Bank liquidates the collateral, it shall have the choice among several items of collateral. When liquidating and choosing the collateral to be sold, it shall take the justified interests of the customer and of any third collateral provider who has furnished security for the customer s liabilities into account en As at 12/2014 Page Page 4 of 206