Best Execution Policy
In accordance with the provisions of Article 40-2, Paragraph 1 of the Financial Instruments and Exchange Law, this Best Execution Policy ("Policy") sets forth our policy and methods for execution of transactions on the best possible terms in favour of our customers. When we receive orders from our customers to trade in securities listed on stock exchanges in Japan, we will endeavor to execute such orders in accordance with the following policy and methods unless otherwise instructed by the customers.
1. Securities Subject to the Policy
(1) The Listed Share Certificates such as the stocks, the convertible bonds and the unit trusts, which are defined in Article 16-6 of the Financial Instruments and and Exchange Law Enforcement Order ("Listed Stocks"); and
(2) The "Securities Handled Over-the-Counter" defined in Article 67-18, Item 4 of the Financial Instruments and Exchange Law ("Green Sheet Stocks")
2. Methods to Execute Transactions at the Best Conditions
(1) Listed Stocks
When we receive an order from our customer for Listed Stock, we will promptly pass the order, unless otherwise instructed by the customer, on to the stock exchange through our contracted securities company which is a trading participant in or a member of that exchange (the "Broker"), and we will not engage in off-exchange transactions, nor will we pass the order on to a Proprietary Trading System ("PTS").
We will pass the order in (i) through the Broker on to a stock exchange selected by the criteria as follows:
If the Listed Stock, which the order is placed for, is listed on a single exchange only, then we will pass the order on to that stock exchange.
If the Listed Stock is listed on multiple stock exchanges, then we will pass the order through the Broker on to the stock exchange, which is firstly displayed on a Bloomberg screen when the securities code for the stock is entered for its market price.
(2) Green Sheet Stocks
We do not accept any order for a Green Sheet Stock.
3. Rationale for the Methods
The investors demand for listed stocks is concentrated on stock exchanges where there are more liquidity, higher execution probability and higher speed in transactions than there are in the off-exchange market. We therefore believe that it is advantageous for our customers that we execute their orders on a stock exchange rather than off exchange.
When a stock is listed on multiple exchanges, we believe that it is advantageous for our customers that we execute their orders on the stock exchange where there is higher liquidity for that particular stock than any others.
4. Miscellaneous
(1) The following orders shall be executed by the methods set forth below instead of the methods in 2 above.
Whenever we receive an order, for which a specific instruction is given by a customer in respect of its execution, we will execute such order in accordance with such instruction.
When we receive an order for fractional shares or less-than-board-lot shares, we will pass the order to a securities company, which trades those shares principally.
In respect of an order for account of an offshore entity of the RBS group, where we are allowed to enter into a discretionary agreement, and in case there is such agreement in place, we may execute such order on a stock exchange other than the one selected by the method set forth in 2., or may execute it by crossing against our proprietary account or other client account through after- hours on-exchange trading or off-exchange trading in consideration of such factors as price, certainty of the execution, etc., within the scope of such agreement.
(2) We may inevitably execute orders by a method different from the Policy due to system disruptions or other circumstances if we believe another method to be the best one at the time.
Note
The obligation for best execution concerns not only the price but also encompasses considerations of the cost, the speed, the assurance of execution and other various elements. Therefore, the mere fact that our execution may not result in the best price will not necessarily mean that there has been a contravention of such obligation.
