MIFID BASIC INFORMATION. Markets in Financial Instruments Directive

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1 MIFID BASIC INFORMATION Markets in Financial Instruments Directive

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3 03 TABLE OF CONTENTS 04 A. GENERAL EXPLANATIONS 04 B. CLIENT CATEGORISATION 04 C. APPROVAL IN THE EU 04 D. INFORMATION ON THE BANK AND ITS SERVICES GENERAL CONTACT INFORMATION FOR APPROVAL AND SUPERVISORY AUTHORITY MEASURES TO PROTECT FINANCIAL INSTRUMENTS HELD IN CUSTODY AT DZ PRIVATBANK AND ITS CLIENTS FUNDS INFORMATION ON STATUTORY REGULATIONS ON THE RECOVERY AND RESOLUTION OF BANKS INFORMATION ON THE SERVICES PROVIDED BY DZ PRIVATBANK GENERAL INFORMATION ON HOW HANDLES POTENTIAL CONFLICTS OF INTEREST (CONFLICT OF INTEREST POLICY) GENERAL INFORMATION ON INDUCEMENTS OF ALL KINDS 10 ANNEX 1 11 ANNEX 2 13 ANNEX 3

4 04 A. GENERAL EXPLANATIONS C. APPROVAL IN THE EU The European Financial Market Directive MiFID (Markets in Financial Instruments Directive) is an EU Directive aimed at harmonising the financial markets and increasing transparency in the European single market. In order to continue to improve investor protection and enhance the efficiency and integrity of financial markets, European legislators have decided to extensively revise the policy (MiFID II) on 3 January Luxembourg legislators transposed most of these requirements in the Law of 5 April 1993 as amended on the financial sector and German legislators transposed most of the requirements in the Securities Trading Act (Wertpapierhandelsgesetz). B. CLIENT CATEGORISATION To improve investor protection, all credit institutions are legally required to classify their clients according to their vulnerability and categorise them into one of the following client groups: a) private clients b) professional clients c) eligible counterparties Different requirements apply to these groups in respect of disclosure and good conduct obligations and concerning advisory services and the execution of securities transactions. To improve cross-border services, investment firms established in the European Economic Area are issued with a European Passport. This means that a securities service provider approved in a Member State is also approved in all other EU Member States. D. INFORMATION ON THE BANK AND ITS SERVICES 1 GENERAL CONTACT INFORMATION FOR Main branch Business address 4, rue Thomas Edison L-1445 Strassen, Luxembourg Postal address BP 661 L-2016 Luxembourg Telephone: Fax: info@dz-privatbank.com Internet: Trade and Companies Register R.C.S. Luxembourg B Clients of established in Luxembourg and of its German branches hereafter referred to as DZ PRIVATBANK will in principle be classified as private clients, professional clients and eligible counterparties, in accordance with the legal requirements. In this respect, DZ PRIVATBANK s policy is to afford clients the highest possible level of protection. Classification is in principle designed on the basis of the entire business relationship with clients and is thus general in nature. However, clients can be reclassified for individual types of financial instrument. DZ PRIVATBANK does not offer classification in a client category for individual financial instruments or securities services. Details concerning client categorisation are provided in Annex 1.

5 05 Branches in Germany Berlin branch Pariser Platz Berlin Trade Register: Local Court of Charlottenburg, HRB Telephone: infoberlin@de.dz-privatbank.com Düsseldorf branch Ludwig-Erhard-Allee Düsseldorf Trade Register: Local Court of Düsseldorf, HRB Telephone: infoduesseldorf@de.dz-privatbank.com Frankfurt branch Platz der Republik Frankfurt / Main Trade Register: Local Court of Frankfurt / Main, HRB Telephone: infofrankfurt@de.dz-privatbank.com Frankfurt branch Leipzig office Paulaner Palais, Klostergasse Leipzig Telephone: infofrankfurt@de.dz-privatbank.com Hamburg branch Rosenstraße Hamburg Trade Register: Local Court of Hamburg, HRB Telephone: infohamburg@de.dz-privatbank.com Hanover branch Berliner Allee Hanover Trade Register: Local Court of Hanover, HRB Telephone: infohannover@de.dz-privatbank.com Hanover branch Oldenburg office Raiffeisenstraße 22/ Oldenburg Telephone: infohannover@de.dz-privatbank.com Munich branch Türkenstraße Munich Trade Register: Local Court of Munich, HRB Telephone: infomuenchen@de.dz-privatbank.com Nuremberg branch Am Tullnaupark Nuremberg Trade Register: Local Court of Nuremberg, HRB Telephone: infonuernberg@de.dz-privatbank.com Stuttgart branch Heilbronner Straße Stuttgart Trade Register: Local Court of Stuttgart, HRB Telephone: infostuttgart@de.dz-privatbank.com

6 06 2 APPROVAL AND SUPERVISORY AUTHORITY The Minister responsible for the Financial Services Industry Regulatory Commission has given DZ PRIVATBANK written approval under Article 1 of the Law of 5 April 1993 to conduct banking business. The supervisory authority is the Commission de Surveillance du Secteur Financier (CSSF) 283, route d Arlon, L-1150 Luxembourg. The European Central Bank (ECB), Sonnemannstr. 20, D Frankfurt / Main is the other responsible supervisory authority. DZ PRIVATBANK is entitled to establish branch offices and to operate in such offices. DZ PRIVATBANK branches in Germany are governed by the Luxembourg supervisory authority (CSSF), the European supervisory authority (ECB) and the relevant Federal Financial Services Supervisory Authority (BaFin). Its address is: Graurheindorfer Str. 108, D Bonn or Federal Financial Services Supervisory Authority (BaFin), Marie-Curie-Str , D Frankfurt. DZ PRIVATBANK is obligated to observe circulars dispatched by the relevant bank supervisory authority. 3 MEASURES TO PROTECT FINANCIAL INSTRUMENTS HELD IN CUSTODY AT DZ PRIVATBANK AND ITS CLIENTS FUNDS 3.1 Deposit protection Under statutory deposit protection provisions, DZ PRIVATBANK is a member of the Deposit Protection Fund (Fonds de Garantie des Dépôts Luxembourg, FGDL, and of the Luxembourg investor compensation scheme (Système d indemnisation des investisseurs Luxembourg, SIIL). is also a member of the protection scheme of the Federal Association of German Volksbanken and Raiffeisenbanks (BVR). For further information see Financial instruments held in custody In terms of the safe custody of financial instruments, DZ PRIVATBANK complies with the statutory and supervisory requirements regarding the regularity of securities and custody business. Financial instruments registered in client custody accounts are held in safe keeping by DZ PRIVATBANK directly or indirectly through a central securities depositary in line with the relevant statutory provisions governing collective safe custody. Under the agreements entered into with DZ PRIVATBANK, a central securities depositary or other custodian may only assert claims arising from security rights, retention rights and other rights to financial instruments relating to the acquisition, management and safe custody of such instruments. 4 INFORMATION ON STATUTORY REGULATIONS ON THE RECOVERY AND RESOLUTION OF BANKS Bank shares, debt instruments issued by banks and savings banks and other claims against banks and savings banks are subject to specific Europe-wide provisions relating to going-concern risk. In this respect, there are statutory regulations on the recovery and resolution of banks that can be applied in the event of liquidation. These regulations (for example bail-in provisions) can have a negative impact on investors or contractual partners if the institution is liquidated. For further information in English, see: and in German, see: (under the search term liability cascade ) 5 INFORMATION ON THE SERVICES PROVIDED BY DZ PRIVATBANK Information on securities services and ancillary services under securities regulations is provided below. 5.1 Intermediary Services are also provided by tied agents registered in the European Union or Switzerland. 5.2 Securities services and ancillary services General Various securities services and ancillary services are provided in connection with the acquisition, disposal, management and safe custody of financial instruments, such as financial portfolio management, investment advice, commission transactions, investment brokerage and custody business.

7 07 The sale of financial instruments and securities services involves obtaining specific information from clients. Institutions must assess whether a financial instrument or securities service is appropriate and suitable for an investor. To this end, they must obtain information on the investor s knowledge, experience and investment objectives, including in respect of their risk tolerance and financial circumstances, in particular their ability to sustain losses. However, clients should anticipate that more information and forms will be processed. The information is provided on a voluntary basis, but is used to provide appropriate clarification and advice and is therefore in the client s interests. It is the statutory prerequisite for the provision of specific securities services. Any changes must therefore be notified by the client in good time Further information on investment advice Securities service providers that provide investment advice are required to tell their clients whether the investment advice provided is independent ( independent commission-based advice ) or not. The investment advice provided is not independent commission-based advice. This means that clients are not charged any commission for investment advice. DZ PRIVATBANK may, however, obtain inducements from its distribution partners in connection with investment advice. More detailed information can be found under sub-section 7. To provide tailored investment advice, a wide range of investment advice is selected from a variety of financial instruments offered by various providers. These can be financial instruments from the cooperative finance group Volksbanken Raiffeisenbanken and/or from other issuers Information on asset management lines that takes into account quality criteria such as trading venue with the highest turnover, individually traded volumes and price types. As a result, valuation is carried out at a fair market value Information in the vent of Losses If the entire portfolio performs significantly badly, asset management clients will be immediately informed, i.e. no later than at the end of the business day on which the threshold value is exceeded or if the threshold value is exceeded on a non-business day at the end of the following business day. A significant loss usually is said to exist if the carrying value of the managed assets for an investment strategy with/without an equity component of at most 30% drops by 8%, the total value of the managed asset for other strategies drops by 10% or whenever there is a loss in value in stages of 8-10%. The total value of the portfolio, including monetary holdings, is measured at the end of the last quarter or when the final loss threshold is exceeded, provided this occurs in the current quarter. Until the first portfolio report is produced, the percentages apply accordingly in relation to the initial assets being managed Basic exclusion of credit-financed portfolios and specific transactions Unless otherwise agreed, DZ PRIVATBANK does not manage any credit-financed portfolios, does not invest in leveraged financial instruments and does not engage in short selling, purchases with borrowed funds, security financing transactions or other transactions involving margin payments or the provision of collateral Benchmark DZ PRIVATBANK has defined a benchmark for all portfolios for which an appropriate and meaningful comparison standard can be determined Reporting and valuation frequency for asset management mandates Clients receive an asset management report from DZ PRIVATBANK on 31 March, 30 June, 30 September and 31 December each year. The securities are valued in the portfolio report using the price supplied by the provider contracted by DZ PRIVATBANK. Updates are carried out on a daily basis as part of end-of-day processing. Prices can be derived automatically on the basis of a set of guide- In addition to the performance of their portfolios, client reports can also include, on request, information on the performance of the relevant benchmark. The request should be submitted to the DZ PRIVATBANK adviser who has agreed the assessment in writing with the client. In this case, only comparative figures agreed with DZ PRIVATBANK are possible. An individual benchmark cannot be agreed. Clients can find out from their adviser, upon request, what indices DZ PRIVATBANK has established for the

8 08 individual investment guidelines. DZ BANK PRIVATBANK reserves the right to amend the benchmarks as required Individual billing In principle, clients will receive regular reports on the transactions conducted. Clients can obtain, upon request, key information regarding transactions directly after execution. They may also arrange for this information to be sent to their adviser. The overall handling process of DZ PRIVATBANK asset management may involve the execution of individual security transactions in several tranches. In this case, clients are billed based on the mixed price calculated using the arithmetic mean. This may put certain clients at a disadvantage. Upon request, clients can have the execution prices for individual tranches sent to their adviser Basic information on securities and other capital investments Detailed information on the key features of the different types of financial instrument offered or used in financial portfolio management can be found in the BVR brochure Basic information on securities and other capital investments. The brochure is made available when an account is opened and can also be obtained from DZ PRIVATBANK upon request Consideration of the target market When selling financial instruments, the Bank takes account of the target market of the financial instruments. The target market of the financial instrument is a group or groups of clients defined by issuers or product manufacturers for whom a financial instrument has been developed and offered. In principle, the Bank takes full account of whether a client is included in this defined group. With no-advice transactions, in addition to the target market criterion of client categorisation, the Bank will only check whether a client s knowledge and experience with securities transactions places them within the target market. 5.3 Information on published securities prospectuses Where a prospectus is published in accordance with the relevant statutory provisions for a security issued and publicly offered by DZ BANK AG, this will be made available free of charge by DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt / Main, Platz der Republik, D Frankfurt / Main. Prospectuses for other publicly offered securities published in accordance with the relevant statutory provisions may be obtained from the issuers or ourselves. As a rule, prospectuses published in accordance with the relevant statutory provisions can also be downloaded from the issuer s website. 5.4 Best execution policy Each securities service provider must define a best execution policy. This is to ensure that financial products will be acquired or sold at the best acquisition and sale price for clients. The policy specifies how banks execution venues are selected and how the selection criteria are monitored. This should ensure that the trading centre does not depend on commission rates but rather on client interests. Full information can be found in the Special Conditions for Securities Transactions and on the DZ PRIVATBANK website ( 5.5 Information on costs The relevant information will be made available to clients in the schedule of private banking fees. It will be handed out to clients at the start of a business relationship. DZ PRIVATBANK will inform clients of any changes within the legally prescribed deadlines. An up-to-date schedule of fees can be obtained upon request. To ensure cost transparency for clients, information on costs and ancillary costs including all related fees, commissions, charges and expenses, particularly product costs, as well as on payments made and obtained («ex-ante cost information») must be made available prior a business transaction relating to securities services and ancillary services. In addition to the costs and ancillary costs listed in these documents, further costs or taxes may arise in connection with order execution that are not paid or charged by DZ PRIVATBANK. Further information on inducements can be found in sub-section Means of communication and language rules Types of communication and languages Clients can communicate with DZ PRIVATBANK in German in person, by telephone, , fax or letter during normal business hours. For account and securities account management in Luxembourg, clients may also communicate in English and French. Orders may be transmitted in person or by letter. If agreed, transmission by telephone or telefax

9 09 (by fax or other means of communication) is also possible. In certain cases, orders by letter or telefax can only be executed with some delay or only after the client has been contacted again. As a rule, DZ PRIVATBANK makes documents available in German, English and French. Information provided by third parties, such as issuers, is forwarded in the language in which the Bank received it. Subject to special agreement, the Bank offers clients the option to set up an electronic mailbox for all information and correspondence Recording of telephone conversations and electronic communications Telephone conversations and electronic communications between DZ PRIVATBANK and clients that lead or may lead to transactions will be recorded, as per legal requirements. A copy of the recordings of these conversations and communications will be retained for five years and made available to clients upon request. 5.7 Information on reporting day, clients will be informed at the end of the following business day. 6 GENERAL INFORMATION ON HOW HANDLES POTENTIAL CONFLICTS OF INTEREST (CONFLICT OF INTEREST POLICY) All securities companies are required by law to provide their clients with a description of their policy for handling conflicts of interest.conflicts of interest may arise when securities services or ancillary services are processed. If conflicts of interest cannot be avoided in individual cases, DZ PRIVATBANK will notify its clients in line with its conflict of interest policy. In such cases, it may be that no evaluation, advice or recommendation regarding the relevant financial instrument will be given and no investments made as part of the financial portfolio management. Detailed information regarding the DZ PRIVATBANK conflict of interest policy can be found in Annex Client order status information Upon request, DZ PRIVATBANK will transmit information to clients on the status of their orders. 7 GENERAL INFORMATION ON INDUCEMENTS OF ALL KINDS Confirmation of order execution Clients will be sent a statement or order confirmation no later than the first business day after the order is executed or, where DZ PRIVATBANK receives order confirmation from third parties, no later than the first business day after receiving confirmation Information on losses on credit-financed financial instruments and/or transactions with contingent liabilities (loss threshold reporting) Where DZ PRIVATBANK manages a private client account for clients which includes positions in credit-financed financial instruments or transactions with contingent liabilities, the client will be informed if the initial value of the relevant financial instrument falls by 10%, and subsequently each time the value falls by a further 10%. A financial instrument is deemed credit-financed if, according to issuer information, it entails disproportionate participation in price changes. Clients will be informed no later than the end of the business day that one of the above-mentioned thresholds has been ex ceeded. If the threshold is exceeded on a non-business DZ PRIVATBANK offers its clients high-quality services, some of which are free of charge. The costs relating thereto may also be covered by inducements of all kinds from DZ PRIVATBANK business partners, provided clients are informed and that the inducement is designed to improve the quality of services provided to clients. Ultimately, the acceptance of inducements must not run contrary to the proper provision of services in the interest of clients. Detailed information regarding inducements of all kinds relevant to DZ PRIVATBANK can be found in Annex 3. Clients will be informed of the actual amount of the inducements obtained by DZ PRIVATBANK in connection with a specific service, along with the costs of the relevant financial instrument or service.

10 10 ANNEX 1 CLIENT CATEGORIES 3. national and regional governments (federal state, states) as well as public bodies that manage public debt at national or regional level; Private clients All clients that are not professional clients or eligible counterparties are classified as private clients. According to the legal definition, the category of private client extends beyond natural persons and also includes small and medium-sized companies, regardless of their legal form. Private clients receive the highest possible level of protection, i. e. all statutory provisions on investor protection apply in full. Particular information obligations apply in full to private clients, as does the obligation to execute orders on terms most favourable to the client and information on the processing of client orders. 4. central banks, international and supranational entities such as the International Monetary Fund, the European Central Bank, the European Investment Bank and other comparable international organisations; 5. other institutional investors not defined in point 1 which are subject to approval or supervision and whose main activity involves investing in financial instruments, and entities involved in asset securitisation and other financial transactions. Clients meeting one of the above-mentioned criteria are by law deemed to be professional clients and are classified as such by DZ PRIVATBANK. Professional clients These are clients with sufficient experience, knowledge and expertise to make their own investment decisions and to adequately assess and take the associated risks. Professional clients are considered professional clients in relation to all financial instruments, securities services and ancillary services. The following clients are defined as professional clients: Eligible counterparties Specific legal entities are classified per se as eligible counterparties. This client category is a subset of professional clients and has wide-ranging knowledge and experience in financial transactions, meaning that statutory safeguards apply to only a limited extent. 1. Companies that are By law, eligible counterparties are a) securities service providers, particularly credit institutions and securities companies b) other approved or supervised financial institutions c) insurance and reinsurance companies d) undertakings for collective investment and their management companies e) pension funds and their management companies f) exchange traders and commodity derivatives traders h) other institutional investors whose main activity is not included under (a) to (f) and which are subject to domestic or foreign approval or supervision in order to operate on the financial markets; 2. companies not subject to approval or supervision as defined in point 1 but which exceed at least two of the following: total balance sheet of EUR 20 million revenue or net sales of EUR 40 million equity capital of EUR 2 million;» companies listed under professional clients in point 1(a) to (f)» entities listed under professional clients in points 3 and 4 The classification of the listed companies and entities as eligible counterparties relates only to the following securities services:» financial commission business: the acquisition or disposal of financial instruments on own account and on behalf of others» acquisition brokerage: the acquisition or disposal of financial instruments in the name of and on behalf of others» investment intermediary: the mediation of transactions for the acquisition and disposal of financial instruments» proprietary trading: the acquisition or disposal of financi al instruments on own account» directly related ancillary services

11 11 If DZ PRIVATBANK also provides other securities services (e.g. investment advice or financial portfolio management), the client will be treated as a professional client in relation to these transactions. ANNEX 2 INFORMATION ON HOW HANDLES POTENTIAL CONFLICTS OF INTEREST (CONFLICT OF INTEREST POLICY) CHANGING OPTIONS If a professional client or eligible counterparty approaches DZ PRIVATBANK with a view to being classified as a private client, this may be agreed with the client. This classification will then apply to the entire business relationship with the client. Under Article 47(1)(h) of Delegated Regulation (EU) 2017/565, all securities companies are required to provide their clients with a description of their policy for handling conflicts of interest. 1. At DZ PRIVATBANK, conflicts of interest may arise between clients and As a general principle, DZ PRIVATBANK offers private clients the option, as provided for by law, to be classified as a professional client if the statutory requirements are met. Clients must accept the loss of investor-protection rights after their classification changes. a) DZ PRIVATBANK/companies affiliated to DZ PRIVATBANK b) persons employed by DZ PRIVATBANK associated with it, including the Executive Board of DZ PRIVATBANK c) persons linked to DZ PRIVATBANK by control d) other clients They may obtain more precise information directly from DZ PRIVATBANK. and for the following securities services and ancillary services: DZ PRIVATBANK does not make use of the statutory option to consider specific other clients as eligible counterparties. a) financial commission business (the acquisition or disposal of financial instruments on own account but on behalf of others) b) proprietary trading/fixed-price transactions (the acquisition or disposal of financial instruments on own account on behalf of others) a) acquisition brokerage (the acquisition or disposal of financial instruments on own account on behalf of others) d) investment intermediary (the brokering of transactions for the acquisition and disposal of financial instruments) e) new issues (the underwriting of financial instruments for placement at risk or the underwriting of equivalent guarantees) f) placements (the placement of financial instruments without a fixed underwriting commitment) g) financial portfolio management (the management of one or more assets invested in financial instruments for others with scope for decision-making) h) investment advice (issuing personal recommendations to clients or their agents in relation to specific financial instruments, if the recommendation is based on examination of the investor s personal circumstances or is presented as suitable for him and is not issued exclusively through distribution channels or to the public)

12 12 i) depositary and custodian business (safekeeping and management of financial instruments for others and related services) j) granting credit or loans to others for the implementation of securities services, where the company granting the credit or loan is involved in these transactions k) foreign exchange transactions in connection with securities services l) the dissemination or distribution of financial analyses or other information on financial instruments or their issuers that contain a recommendation, directly or indirectly, for a specific investment decision m) services in connection with new issues n) services relating to an underlying instrument, in particular a) persons relevant to personal relationships (management boards or employees or persons associated with them) a.a) of DZ PRIVATBANK with issuers of financial instruments, e.g. through collaboration in supervisory or advisory boards and/or a.b) of issuers of financial instruments with DZ PRIVATBANK (e.g. as clients of DZ PRIVATBANK) and b) arising from relationships with DZ PRIVATBANK and issuers of financial instruments so that b.a) the relevant issuer is a subsidiary/affiliated company of DZ PRIVATBANK or b.b) DZ PRIVATBANK has a direct or indirect interest in the relevant issuers of financial instruments Conflicts of interest may also arise if DZ PRIVATBANK c) collaborates in issues by the relevant issuers of financial instruments d) is a creditor/guarantor of the relevant issuers of financial instruments e) is involved in the preparation of financial analyses on the relevant issuers of financial instruments f) makes/receives payments to/from the relevant issuers of financial instruments g) has entered into partnerships with the relevant issuers of financial instruments h) engages in/holds interests directly or indirectly in joint subsidiaries of the relevant issuers of financial instruments 2. Conflicts of interest may also arise where a) DZ PRIVATBANK or individual relevant persons of DZ PRIVATBANK have information that was not yet publicly available when the client s transaction was conducted b) there are incentives in favour of a specific financial instrument, e.g. in the form of analysis, advice, recommendations or order execution. c) stepped monetary or non-monetary advantages (known as proportional commissions) are granted. 3. DZ PRIVATBANK is subject to banking supervision by the Commission de Surveillance du Secteur Financier (CSSF), and is obligated to observe circulars dispatched by the banking authority. The European Central Bank (ECB), Sonnemannstr. 20, D Frankfurt / Main is the other responsible supervisory authority. DZ PRIVATBANK is also a member of the Association des Banques et Banquiers Luxembourg (ABBL), adhering to the association s code of conduct. DZ PRIVATBANK branches are subject to monitoring by the CSSF and the ECB, as well as by BaFin, and are obligated to observe circulars dispatched by the banking authorities. 4. As a securities company, both DZ PRIVATBANK itself and DZ PRIVATBANK employees are required by law to provide the securities services and ancillary securities services referred to under subsection 1 honestly, fairly and professionally, in the interests of clients, and to avoid, as far as possible, any conflicts of interest. Notwithstanding the above, DZ PRIVATBANK has drawn up a compliance organisational guideline and set up a compliance department, which includes the following measures in particular: a) setting up confidentiality areas with Chinese walls, i.e. virtual and/or actual barriers to restrict the flow of information b) requiring all employees for whom conflicts of interest could arise in the course of their work to disclose all their transactions in financial instruments c) maintaining blacklists indicating financial instruments for which conflicts of interest could arise. Transactions in financial instruments on the blacklists are prohibited

13 13 d) maintaining a register of insiders. This register should include all relevant persons of DZ PRIVATBANK with access to insider information e) ongoing monitoring of all relevant persons working in DZ PRIVATBANK f) executing orders in accordance with its best execution policy and as instructed by the client g) regulations on the acceptance of gifts and other advantages h) training DZ PRIVATBANK employees. If conflicts of interest cannot be avoided in individual cases, DZ PRIVATBANK will notify its clients in line with its conflict of interest policy. In such cases, no evaluation, advice or recommendation regarding the relevant financial instrument will be given. 5. At the client s request, DZ PRIVATBANK will provide further details on these potential conflicts of interest. ANNEX 3 INFORMATION ON INDUCEMENTS OF ALL KINDS 1. General DZ PRIVATBANK offers its clients a wide range of services in connection with the acquisition, disposal, management and safekeeping of financial instruments all under one roof. DZ PRIVATBANK provides support to its clients, both before and after decisions have been made. In this respect, it offers comprehensive advice tailored to investors individual targets and wishes as well as further services through various channels. Maintaining this offering entails high personal, technical and organisational expenditure. This expenditure is also covered by inducements from distribution partners. Inducements may be made in the form of one-off or ongoing cash payments or as contributions in kind. These are exclusively used to maintain and improve the quality of the range of services and to maintain or build up efficient and high-quality infrastructures for the acquisition and disposal of financial instruments. Steps are taken to ensure that the inducements do not prejudice the interests of clients. 2. DZ PRIVATBANK receives the following types of inducements Sales commissions DZ PRIVATBANK receives a one-off sales commission for each transaction. Sales commissions also include performance-related payments, i.e. volume-dependent payments, performance bonuses, etc. Sales commissions for brokerage services in relation to investment share certificates: DZ PRIVATBANK receives one-off sales commissions for brokerage services in the distribution of funds for which a front-end load is charged. This is a proportion of the front-end load, and may be up to 100%. Clients can find the amount of the front-end load in the sales prospectus for the relevant fund. Certificates and structured instruments: In rare cases, DZ PRIVATBANK will receive a commission from the respective issuer on the amount to be invested in return for brokering certificates and structured bonds. The amount of the commission depends on the sales agreement with the issuer. It may amount to up to 5% of the issue price. Clients can obtain more detailed information on the products

14 14 currently affected and on the amount of the sales commission from their relationship manager. Performance-related payments DZ PRIVATBANK also receives sales commissions for brokerage services. These can also be performance bonuses. These discretionary commissions cannot be quantified because the amount depends on various factors such as the maximisation of potential and gross and/or net sales. Trail commissions DZ PRIVATBANK receives trail commissions when clients hold certain financial instruments in their portfolios. The entitlement to a trail commission arises when the client purchases the financial instruments by brokerage performed by the bank. The amount of the payments depends on the type of financial instrument brokered, the amount of the holdings and the holding period. Trail commissions for investment share certificates: DZ PRIVATBANK receives trail commissions for the distribution of investment share certificates. These accrue for the distribution of load funds (funds for which a front-end load is charged) and for the distribution of no-load funds (funds for which no front-end load is charged). As a rule, trail commissions for the distribution of load funds are lower than those for the distribution of no-load funds. The bases for calculation are the management fee and the average holding. DZ PRIVATBANK will send the clients further information upon request. The proportion that DZ PRIVATBANK receives can be up to 60%. a) the relationship between the third party and the issuers will be unequivocally disclosed in the relevant material and b) the material will be made available simultaneously to all interested securities service providers or to clients; c) participation in conferences, seminars and other educational events organised to promote the advantages and features of a specific financial instrument or a specific securities service; d) hospitality the value of which does not exceed a reasonable de minimis threshold. 4. Payment of brokerage fees by DZ PRIVATBANK Client mediation and mediation of DZ PRIVATBANK products Client mediation and mediation of DZ PRIVATBANK products DZ PRIVATBANK pays one-off or regular commissions for client mediation and the referral of DZ PRIVATBANK products, which can be paid as inducements. These commissions are calculated based on the client fee (including all-in fee and/ or management fee for the fund when asset management is performed via one or more funds, flat-rate service charge and transaction fees) and the average holding. The amount of the client fee can be found in the relevant agreement with DZ PRIVATBANK. The proportion paid by DZ PRIVATBANK is based on the service provided on a one-off or regular basis by the intermediary to the client. There are five different cases: For the simple mediation of a client to DZ PRIVATBANK, the Bank pays a one-off sales commission of up to 60% of the fee paid by the client for the first full calendar year. 3. Inducements received in connection with financial portfolio management (asset management) DZ PRIVATBANK receives no monetary inducements in connection with financial portfolio management. It only receives non-monetary inducements to the limited extent set out below: a) general or client-specific information or documentation on a financial instrument or securities service; b) written material drawn up by a third party, commissioned and paid for by an issuer or potential issuers from the corporate sector to promote a new issue by the relevant issuers or in respect of which the third party is contractually required by issuers or potential issuers to draw up such material on an ongoing basis. In this case, For the mediation of a client to DZ PRIVATBANK that opens an account and securities account with it and entrusts assets to it for safekeeping, but where the intermediary continues to serve the client and is available to them for general queries, DZ PRIVATBANK regularly pays up to 45% of the annual client fee. For the mediation of a client to DZ PRIVATBANK that continues to hold their accounts and securities accounts with the intermediary, but wishes DZ PRIVATBANK to manage the assets held there in safekeeping, DZ PRIVATBANK regularly pays up to 50% of the annual client fee. For the mediation of a DZ PRIVATBANK investment solution with account and securities account management, where the client continues to be fully managed by the intermediary,

15 15 DZ PRIVATBANK regularly pays up to 55% of the annual client fee. For the mediation of a DZ PRIVATBANK investment solution with account and securities account management by the intermediary, where the client continues to be fully managed by the intermediary, DZ PRIVATBANK regularly pays up to 60% of the annual client fee. DZ PRIVATBANK also pays the intermediary a one-off fee for the expenditure incurred in client acquisition. This amounts to up to 15% of the client fee received by DZ PRIVATBANK for clients mediated to it for the first time. Furthermore, DZ PRIVATBANK may forward up to 100% of the charges from a client relationship to the mediating partner. You can find possible charges and their level from the schedule of fees levied by DZ PRIVATBANK for private banking. 5. Contributions in kind In connection with the provision of securities services and ancillary services in cases other than those referred to in point 4, DZ PRIVATBANK receives or pays contributions in kind from or to distribution partners. This is information or documentation such as brochures, forms and contractual documents relating to a financial instrument or securities service, written material from a third party in connection with a new issue of the company promoted in the material, specialised training sessions and hospitality to a reasonable extent. Further details: DZ PRIVATBANK will provide further information on request. Please also refer to any information on costs incurred for a specific transaction, which also includes information on inducements.

16 Business address 4, rue Thomas Edison L-1445 Strassen, Luxembourg Postal address Boîte Postale 661 L-2016 Luxembourg Telephone Faxsimile BERLIN DÜSSELDORF FRANKFURT HAMBURG HANOVER LEIPZIG MUNICH NUREMBERG OLDENBURG STUTTGART LUXEMBOURG ZURICH info@dz-privatbank.com Internet : Last update of all information, diagrams and explanations: January 2018, unless otherwise stated.