Information on Erste Group Banks Execution Policy for Professional Clients

Transcription

1 Information on Erste Group Banks Execution Policy for Professional Clients

2 Information on Erste Group Banks Execution Policy for Professional Clients Information on Erste Group Banks Execution Policy for Professional Clients (Version: November 2016) In this document Erste Group Bank AG ( Erste Holding ) sets out its execution arrangements that have been designed to comply with the obligation to execute orders in the way most favorable to its clients, as required by the Markets in Financial Instruments Directive (MiFID 2004/39/EC; MiFID ). This obligation applies whenever Erste Holding executes orders on behalf of its clients and includes the requirement to take all reasonable steps to obtain the best possible result for the client. This overarching obligation is referred to as the obligation of Best Execution. All Erste Holding employees who are responsible for executing orders on behalf of clients (either via brokers in a receive and transmit fashion or directly with an Erste Holding entity) have to ensure that all such activities are conducted in accordance with the procedures and requirements set out in this policy. 1. General Part 1.1 Best Execution Obligation The obligation of executing orders in the way most favorable to the client is included in MiFID and its national implementation in Austria, the Wertpapieraufsichtsgesetz WAG Erste Holding will thus take all reasonable steps to obtain, when executing orders on behalf of its clients, the best possible result for its clients. 1.2 Scope of Application The present document applies to clients that have been classified as Professional Client by Erste Holding and only to dealings in Financial Instruments according to MiFID. The client classification (i.e. Retail Client, Professional Client or Eligible Counterpart) has been communicated to the client while starting the business relationship or was otherwise agreed with the client. Best Execution is generally owed whenever Erste Holding accepts and subsequently executes orders on behalf of its clients and this is subject to the respective circumstances. It can apply if Erste Holding executes client orders directly or receives and transmits client orders to another party, i.e. a broker, for execution. Situations where Erste Holding just provides quotes or negotiates prices following a client request are viewed as a request-for-quote (RfQ) and will not be seen as executing an order on behalf of a client where best execution will apply. In line with European legislation, Erste Holding assumes that Professional Clients (in wholesale markets) - being skilled clients who possess the experience, knowledge and expertise to make their own investment decisions and properly assess the risks that it incurs do not generally rely on Erste Holding to protect their interests in relation to the pricing and other elements of the transaction. 1.3 Relevant Factors for Best Execution While executing an order in line with the Erste Holding execution arrangements price and cost will usually be the most relevant factors. Erste Holding may also take into consideration a range of different factors, including the need for timely execution, availability of price improvement, the liquidity of the market, potential price impact, the size of the order, the nature of the financial transaction (including whether or not such transactions are executable on a regulated market or over-the-counter) and the quality and the cost effectiveness. Evaluating these as relevant and appropriate will determine the concrete execution venue from the list presented in the Annex where the order will then be executed. Best Execution by its very nature is a process not an outcome. When executing orders on behalf of a client, Erste Holding will follow the arrangements set out in this execution policy. It is designed to achieve on a reliable basis the result most favorable to the client considering the execution factors as mentioned above. It is not guaranteed that in all circumstances the best price will be obtained. 1.4 Selection of feasible Execution Venues All execution venues are selected considering their ability to provide on a consistent basis a high-quality execution service. With this, Erste Holding assures to provide its clients with the best possible result when executing orders on their behalf. Trading Venues: Main focus when selecting regulated markets ( RM ) and multilateral trading facilities ( MTF ) for a direct membership is the availability of products and order types tradable on the system. The direct membership is in general intended to lower the overall costs for the clients. Broker and other third-party entities: Brokers and other third-party entities need to be approved before any offered execution services will be used. When placing orders with a third-party for execution, Erste Holding 2

3 has no responsibility for controlling or influencing the execution arrangements put in place by these entities, i.e. the Brokers choice of execution venues cannot be influenced by Erste Holding when purely transmitting the order. It is for that reason, that Erste Holding will make sure that the order execution arrangements put in place by these third-party entities are in line with Erste Holdings own demand for high quality standards. Key criteria in selecting brokers generally include: The ability to source products The ability to settle the trade The capability of timely trading The rating of that entity The ability to deal in very large volumes 2. Specific Part 2.1 Receiving and Transmission of Orders ( RTO ) Whenever Erste Holding receives and transmits an order to a broker for execution, Erste Holding will act in best interest of the client. Transmission will be generally the case when the order is transmitted to a broker that provides Erste Holding with the demanded connectivity to execution venues. There are two occurrences of RTO: Erste Holding adds specific instructions to the order not initially given by the client before transmitting to the broker. When doing so, Erste Holding will follow its execution policy when deciding on specific details. The broker is then obliged to follow these specific instructions. Erste Holding transmits the original client order without changes to the broker In order to fulfil Erste Holdings Best Execution obligation in this regard, Erste Holding will make sure that the execution arrangements set up by these entities are in line with the standards of Erste Holding. Where the entity itself is a MiFID firm subject to Best Execution, Erste Holding will put a high degree of reliance on that entity. Erste Holding will, however, request that the execution policy of that entity is in line with this policy. Where the entity is a non-mifid firm, Erste Holding will have put in place arrangements with that entity, designed to provide MiFID Best Execution standards as well. 2.2 Aggregation and Allocation When executing orders on behalf of its clients, Erste Holding will, where possible and reasonable, aggregate orders with other clients and/or Erste Holdings own orders to be executed or worked on at the same time. Erste Holding will only aggregate and/or allocate orders where it is unlikely that this approach would work to the overall disadvantage of any client affected by this aggregation. However, it is possible that the aggregation works for the disadvantage in relation to a particular order. Where Erste Holding aggregated clients orders with its own orders and the aggregated order was not executed to the total amount, then the clients orders will be allocated in preference to Erste Holdings own orders. Allocation to remaining client orders will be on a pro rata basis. 2.3 Using a Single Execution Venue Where only one execution venue is nominated for execution (e.g. the very nature if the instrument might not allow for several execution venues), Erste Holding has assured itself that this execution venue is capable of providing on a reliable basis the best possible result for the client. Where Erste Holding transmits orders relating to particular financial instruments to only one execution broker Erste Holding will assure itself, that the broker s execution arrangements are in line with Erste Holdings execution policy and have the ability to provide Erste Holdings clients with the best possible result on consistent basis. 2.4 Complex and individual financial instruments MiFID recognizes that different considerations apply where the transaction involves a customized OTC financial instrument. When executing orders for complex or highly structured financial instruments the application of the described execution arrangements is limited by the very nature of those transactions. Best Execution technically applies but there is little or nothing against which to compare the transaction. This is due to mainly two factors: highly-structured or uniquely negotiated (customized) transactions are off-exchange (i.e. OTC) there are no instruments comparable to it and thus nothing to compare it to in terms of execution factors In this situation Erste Holding will take all reasonable steps to provide you with a price that is market competitive. 2.5 Specific Client Instructions If the customer expressly requests that his or her order be executed at a certain execution venue (so called customer instructions ), we will comply with customer requests. The 3

4 Information on Erste Group Banks Execution Policy for Professional Clients execution principles of Erste Holding are only applicable for those parts of the execution which were not requested by the client. Erste Holding expressly points out that in the event of customer instructions and resulting deviation from the execution principles established herin, it may be prevented from achieving the optimal result from the customer. 2.6 Direct Market Access Where orders are executed by the client using an Erste Holding Direct Market Access (DMA) system, the client may select several (or all) characteristics on order execution (such as price, size, execution venue, and timing). Where the client chooses to select all relevant information, leaving Erste Holding no room to improve the order execution, then Erste Holding is not bound by the Best Execution obligation due to existence of complete specific instructions for the entirety of the client order. In this situation Erste Holding is acting on the client s behalf by providing the DMA service, but does not owe Best Execution. In cases where the client does not choose all characteristics on order execution Erste Holding will select an execution venue in accordance with this policy. 2.7 Monitoring and Review Erste Holding put in place arrangements to monitor the effectiveness of its execution arrangements. Furthermore, this Execution Policy and corresponding execution arrangements are reviewed at least annually including the assessment whether the execution venues selected to provide for the best possible result for its clients. Additionally ad-hoc reviews take place whenever material changes Annex Erste Holding uses the following execution venues when executing orders on behalf of its clients. This list is subject to changes according to the rules and procedures described in this policy. The list will be anyway revised regularly. Erste Holding may use venues not listed below where deemed necessary according to a specific client order. Region Country Execution Venue German-speaking Region Austria XETRA Wien Germany XETRA Frankfurt Frankfurter Wertpapierbörse (XETRA II) Börse Stuttgart Tradegate Börse Berlin Börse Bremen Europe Czech Republic Prague Stock Exchange Croatia Zagreb Stock Exchange Denmark Copenhagen Stock Exchange Finland Helsinki Stock Exchange Frankreich Euronext PARIS Hungary Budapest Stock Exchange 4

5 occur Region affecting the procedures and arrangements. Country Execution Venue Europe (cont.) Italy Borsa Italia (Milano) Netherlands Euronext Amsterdam Norway Oslo Stock Exchange Poland Warsaw Stock Exchange Romania Bukarest Stock Exchange Sweden Stockholm Stock Exchange Switzerland SIX Swiss EX SWX Spain Madrid Stock Exchange United Kingdom LONDON LSE Overseas Australia Sydney Stock Exchange Hong Kong Hongkong Stock Exchange Japan Tokio Stock Exchange Canada Toronto Stock Exchange USA NYSE NEW YORK NASDAQ NMS Exchange traded derivatives Europe EUREX ICE Warsaw Stock Exchange Budapest Stock Exchange USA CME Chicago Mercantile Exchange CBOE Chicago Board Options Exchange COMEX Commodity Exchange Asia Australian Stock Exchange Honkong Futures Exchange Korea Exchange Osaka Exchange Singapore Exchange Thailand Futures Exchange 1 Erste Group refers to the use of entities within the Erste Group (being Erste Group Bank and its subsidiaries and affiliates) including but not limited to Ceska Sporitelna A.S., Slovenska Sporitelna A.S., Erste Investment Hungary Zrt., Banca Commerciala Romania S.A., Erste Bank a.d. Novi Sad, Erste Bank Croatia, Erste Securities Polska S.A. and their respective EU branches and affiliates. 5