ORDER TRANSMISSION AND EXECUTION POLICY

Transcription

1 ORDER TRANSMISSION AND EXECUTION POLICY 1. INTRODUCTION Pursuant to the provisions of Legislative Decree no. 58 of 24 February 1998 and Regulation of Intermediaries adopted by CONSOB with resolution no of 29 October 2007, as subsequently amended and integrated, Banca Leonardo S.p.A. (hereinafter the Bank ) takes all reasonable measures to obtain the best possible result ( best execution ) for its clients both private and professionals when providing the following services: EXECUTION OF ORDERS ON BEHALF OF CLIENTS; DEALING ON OWN ACCOUNT; RECEPTION AND TRANSMISSION OF ORDERS; PORTFOLIO MANAGEMENT. In particular, the Bank has adopted an Order Execution Policy (the Execution Policy ) for the following services: execution of orders on behalf of clients, dealing on own account, and portfolio management, when the Bank executes the investment decisions and/or the client s instructions directly. The Bank has adopted an Order Transmission Policy (the Transmission Policy ) for the following services: reception and transmission of orders, and portfolio management, when the Bank executes the investment decisions and/or the Client s instructions through a broker (the Broker ). In relation to those clients classified as qualified counterparties, acting on their own account, the Bank is not bound to comply with the Execution Policy nor with the Transmission Policy; when such clients act on behalf of retail or professional clients, can request the application of the Transmission Policy. 2. EXECUTION POLICY IN EXECUTING ORDERS ON BEHALF OF CLIENTS AND PORTFOLIO MANAGEMENT SERVICES 2.1 Execution Factors In relation to execution of orders on behalf of clients and portfolio management services, when the Bank executes the investment decisions and/or the Client s instructions directly, adopts all the procedures to obtain the best possible result for the clients taking the following Execution Factors into account: price of the financial instrument; costs of execution; speed and likelihood of execution and settlement; nature and size of the order; any other factor relevant to the execution of the order. 2.2 Execution criteria In order to establish the relative importance of the Execution Factors, the Bank takes the following Execution Criteria into account: characteristics of the Client, including the classification as a private or professional Client and his possible nature of financial institution; characteristics of the orders; characteristics of the financial instruments that are the subject of the orders; characteristics of the execution venues to which the orders may be routed. 2.3 Total Consideration When the Bank executes an order received from a private or professional Client, best execution is achieved by taking into account as prevailing Execution Factors the price of the financial instrument and the cost of execution ( Total Consideration ). Total Consideration includes all the expenses directly related to the execution of the order incurred by the Client, including execution venue fees, clearing and settlement fees and any other fee paid to third parties in connection with the execution of the order. Page 1 of 6

2 After Total Consideration, the Bank also gives importance to the Execution Factors listed below, in the following order of importance: speed of execution; likelihood of execution and settlement; size of the order; nature of the order. 2.4 Execution venues The Bank has identified, for each category of financial instruments, the execution venues reasonably deemed trustful with a view of obtaining the best execution ( Execution Venues ). Annex A contains the list of Execution Venues for each category of financial instruments. In the selection of Execution Venues, the Bank takes no account of its own fees chargeable to the Client for the provision of the execution of orders and portfolio management services. The Bank will not charge fees in a way that unduly discriminates among Execution Venues. In certain circumstances, the Bank has the right to use other venues when it is deemed necessary in order to obtain the best execution, and to add or remove any venue to or from the list in Annex A without any obligation of a specific communication to the clients. The Bank has established effective measures ( Execution Measures ), in order to execute the orders on an Execution Venues. Subject to Client prior express consent (which may be expressed in general terms and/or referring to each transaction) the Bank may execute orders outside of a regulated market or a multilateral trading facility (MTF). Anyway, as regards some typologies of Financial Instruments, the venue for the execution of orders may be the Bank itself, in case this allows, in accordance with the process described in Annex A, the Client to obtain the best possible result as per previous par. 2.3 and in compliance with part Specific Client instructions When a Client submit an order to the Bank, may give specific instructions regarding, for example, an Execution Venue, or a particular method of execution (including the closing of the deal with the Proprietary Desk of the Bank - principal transactions). In these cases, the Bank will execute the order in accordance with the specific instructions. If the specific instructions refer only to a part of the order, the Bank will apply the Execution Policy for the part not covered by these instructions. The Client acknowledges that specific instructions may prejudice the Execution Measures included in the Execution Policy. 3. EXECUTION POLICY IN DEALING ON OWN ACCOUNT SERVICE 3.1 Execution Factors In relation to dealing on own account service, the Bank adopts effective mechanisms regarding the following Execution Factors, in order to obtain the best possible result for the clients: price of the financial instrument; costs of execution; speed and likelihood of execution and settlement; nature and size of the order; any other factor relevant to the execution of the order. The price conditions applied by the Bank on transactions concluded through this channel are determined according to prevailing market conditions that can be identified by reference to the principal over the counter circuits or by the quotes registered in the Regulated Markets. In relation to FX-Forward, however, the price conditions applied by the Bank are given by the market price (bid/offer) to which is applied the mark-up varies according to: Page 2 of 6

3 trade policy 1 ; the underlying currency; the duration of the operation. 3.2 Execution Criteria In order to establish the relative importance of the Execution Factors, the Bank takes the following Execution Criteria into account: characteristics of the Client, including the classification as a private or professional Client and his possible nature of financial institution; characteristics of the orders; characteristics of the financial instruments that are the subject of the orders; characteristics of the execution venues to which the orders may be routed. 3.3 The relative importance of the Execution Factors Bonds admitted or not admitted to negotiation on regulated markets/mts When the Bank executes an order received from a private or professional Client, as direct counterpart, the best execution is achieved by taking into account as prevailing Execution Factor the Total Consideration. The Bank applies also the following Execution Factors, in order of importance: likelihood of execution; speed of execution; nature of the order; size of the order OTC Derivatives When the Bank executes as direct counterpart an order on derivative financial instruments over the counter (OTC) for a private or professional Client the best execution is achieved by taking into account as prevailing Execution Factor the speed of execution and the likelihood of the execution. The Bank applies also the following Execution Factors, in order of importance: total consideration; size of the order; nature of the order; other factors Buy/Sell Back When the Bank executes as direct counterpart an order on Repos for a private or professional Client the best execution is achieved by taking into account as prevailing Execution Factor the speed of execution and the likelihood of the execution. The Bank applies also the following Execution Factors, in order of importance: total consideration; size of the order; speed of execution; nature of the order; other factors. The provisions detailed in paragraph 3.3, in terms of respect for the execution factors above detailed (in particular the price of the financial instrument, the costs of execution- Total Consideration - and the speed of execution), are not applied to door to door selling orders for which the dealing on own account is not provided. 3.4 Execution Venues In providing a dealing on own account service, the venue for the execution of the Client's orders is the Bank itself. 1 Trade policy is defined and applied at a general level and not in relation to specific cases/individual customers. Page 3 of 6

4 3.5 Specific Client instructions The Bank shall execute to executing clients orders in accordance with any specific instructions received, and shall ensure that it shall take all necessary steps to obtain the best execution of the said clients orders. The present policy shall not apply, either partly or wholly, in those cases in which specific instructions are provided regarding execution of orders from clients. In fact, the existence of specific instructions may not enable the Bank to take all the necessary steps required in order to obtain the best execution on behalf of clients. The Client acknowledges that any specific instructions may prejudice the Execution Measures included in the Execution Policy, as far as regards those elements covered by the said specific instructions 3.6 Restrictions on application of the policy The present policy shall not be applied when the Bank submits a quotation in response to a Client s request, but the latter has not in fact delegated the decision regarding the methods of execution of its order to the Bank. For the same reasons, the policy shall not be applied in relation to transactions carried out following the Client's acceptance of a quote/trading proposal requested from the Bank by the Client. 4. TRANSMISSION POLICY IN RECEPTION AND TRANSMISSION OF ORDERS AND PORTFOLIO MANAGEMENT SERVICES When the Bank provides reception and transmission of orders and portfolio management services may transmit the orders to a Broker for execution. The Bank has chosen Brokers 2 to whom it may transmit the orders, on the basis of their execution policies, taking into account of, and in compliance with, the provisions established by the Bank in sections 2.1 and 2.3, (Execution Factors - The relative importance of Execution Factors Total Consideration), and in section 2.2 (Execution Criteria) hereof. According to art of CONSOB Resolution no of 29 October 2007, factors other than the Total Consideration may be given precedence over the immediate price and cost consideration only if these prove instrumental in providing the best possible result for the retail customer in terms of the Total Consideration. The Bank requires the execution policies from each Broker and checks if these policies are in line with the Execution Policy as described by section 2 hereof. Clients maintain the right to transmit orders with specific instructions for which will be applicable the provisions and specific indications contained in section 2.5 hereof. Bank maintain the right to execute the order as direct counterpart for orders concerning bonds if it allows to obtain the best execution as per previous par MONITORING AND ANNUAL REVIEW OF THE POLICY MATERIAL CHANGES The Bank will regularly monitor the effectiveness of the Execution Measures, the Execution Policy and the Transmission Policy and, if necessary, correct any shortcomings. At least once a year, or whenever a material change occurs that affects the ability to obtain the best result for the execution of orders, the Bank will review its Execution Measures and the Policy. The Bank will notify clients of any material change to the Execution Policy and to the Transmission Policy. Last update: January 30 th As regards to portfolio management service, the Bank may consider appropriate to allocate the orders, in the interest of its clients, between the selected Brokers which offer the best quality of investment research, according to the legal provisions on inducements. Page 4 of 6

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6 ANNEX A Execution Venues SHARES, CONVERTIBLE BONDS, WARRANTS, DERIVATIVES, COVERED WARRANTS, CERTIFICATES, EXCHANGE TRADED FUNDS (ETF), EXCHANGE TRADED COMMODITIES (ETC) AND EXCHANGE TRADED NOTES (ETN) ADMITTED TO TRADING ON REGULATED MARKETS For all orders regarding financial instruments admitted to trading on Italian and Foreign Regulated Markets, the Bank transmits the order to selected brokers, which execute the order in compliance with its execution policy and with the Bank s Transmission Policy, unless legal restrictions of the foreign country in which the order is executed. Furthermore, the orders of the clients may also be executed outside of the Regulated Markets (with an external counterparty or with the Bank as counterpart), in compliance with the execution factors defined by the Bank and if it allows the best execution for the Client, or there is a explicit request of the Client (specific instruction). Please also note that the orders on Italian and Foreign ETFs/ETC/ETN may also be executed outside of the Regulated Markets, if this execution is more competitive (in terms of price and/or likelihood of execution) than the execution on the Regulated Markets. BONDS ADMITTED OR NOT ADMITTED FOR TRADING ON REGULATED MARKETS/MTF The orders on bonds admitted or not admitted for trading on Italian or Foreign Regulated Markets/MTF are executed by the Bank outside of the regulated markets (OTC), by using facilities made available by Bloomberg, with market institutional counterparties. As concerns the sole bonds traded on a limited number of venues (Italian Regulated Market/MTF), the Bank transmits the orders on these titles to a specialist broker which operates in the above mentioned venues. In addition, there is the possibility to execute from the Bank s Proprietary Desk, if the Client has authorized the Bank (in general or for single transactions and when this authorization is necessary) if this solution allows to gain the best possible result for the Client and if the order is not received through the door to door selling activity. OTC DERIVATIVES For this type of Financial Instrument, the Bank acts as direct counterpart of the Client in any transaction. BUY/SELL BACK For this type of financial instrument, deeply customized in terms of underlying and maturity selected by the Client himself, there are no Regulated Markets at retail level. Therefore the Bank is the best Execution Venue. The Bank will act as counterpart of the Client in any transaction. The above mentioned instruments are traded by the Bank for its own account: the operations are closed directly with the clients according to the following ways: "with basket": the Bank presents daily proposals, which are applicable by the clients in terms of: (i) the underlying securities repo transactions, (ii) the maximum amount available, (iii) interest rates (gross and net), in case differentiated for value class; "out basket": it regards the clients orders whose size, usually more than , requires a specific execution of the same. Last update: January 30 th 2014 EXE-1/2014 Page 6 of 6