SCOTIABANK SCOTIABANK ORDER EXECUTION POLICY DISCLOSURE STATEMENT WITH EFFECT FROM 30 JANUARY 2012

Transcription

1 TM SCOTIABANK Part One: SCOTIABANK ORDER EXECUTION POLICY DISCLOSURE STATEMENT WITH EFFECT FROM 30 JANUARY 2012 The quality of execution When executing orders on your behalf in relation to financial instruments as defined by the Markets in Financial Instruments Directive (MiFID), we will take all reasonable steps to achieve what is called best execution of your orders. This means that we have in place a policy and procedures that are designed to obtain the best possible result for your orders, subject to and taking into account the nature of your orders, the priorities you place upon us in filling those orders and the market in question, and which provides, in our view, the best balance across a range of sometimes conflicting factors. We will also take into consideration a range of different execution factors (as further described in Part Four) which include not just price but which may include such other factors as the cost of the transaction, the need for timely execution, the liquidity of the market (which may make it difficult to even execute an order), the size of the order and the nature of the financial transaction including whether it is executed on a regulated market or not. We will also take into account your dealing profile, the nature of the dealing service you require of us and the specific and general instructions given to us by you which may prioritise how we are to fill your orders. When determining the relative importance of the execution factors, we will take into account various best execution criteria (as further described in Part Four), including your understanding and experience of the market in question. In the absence of express instructions from you, we will exercise our own discretion in determining the factors that we need to take into account for the purpose of providing you with best execution. Our commitment to provide you with best execution does not mean that we owe you any fiduciary responsibilities over and above the specific regulatory obligations placed upon us or as may be otherwise contracted between us. Part Two: Order execution policy We have set out in Part Four below information on the criteria which determine how we select the different venues on which we may execute your orders and have identified those venues

2 (which may include your dealings with us on a principal-to-principal basis) on which we will most regularly seek to execute your orders and which we believe offer the best prospects for affording you best execution. We will also assess, on a regular basis, the quality of execution afforded by those venues on which we execute your orders (and that includes the quality of execution offered by us when you are dealing with us on a principal-to-principal basis) and whether we need to change our execution arrangements. We will review our order execution policy and execution arrangements at least annually and whenever a material change occurs that could affect our ability to obtain the best possible result for the execution of our clients' orders. What is material will depend on the nature and scope of any change. Any material changes made to our order execution policy will be communicated to you (including by making such changes available on any website we operate from time to time where we have advised you of the details of the website). In selecting the most appropriate venues for the purpose of executing your orders, we will take into account factors relevant to the order, including those set out in Part Four of this document and: (a) what we reasonably assess to be your best interests in terms of executing your orders; and (b) such other factors as may be appropriate, including the ability of the venue to manage complex orders, the speed of execution, the creditworthiness of the venue and the quality of any related settlement facilities. While we will take all reasonable steps, based on those resources available to us, to satisfy ourselves that we have processes in place that can reasonably be expected to lead to the delivery of best execution of your orders, we cannot guarantee that we will always be able to provide best execution of every order executed on your behalf. Where we are, in effect, ourselves the execution venue (i.e., where we deal directly with you on a principal-to-principal basis), we will review the quality of our own execution as if we were an execution venue, and, at your request, disclose the criteria used by us to judge the quality of the execution offered by us to you (and of any model used by us for this purpose). However, you should note that, as a regulated market will charge exchange fees which reflect the quality of its execution facilities, we have to price the cost of our own business model and the utilisation of our capital to support our dealings with you (including carrying the risk of those dealings; e.g., credit risk) as part of our assessment of the quality of execution offered to you. Our policy, in providing you with best execution, is, so far as possible and subject to the processes set out in this Disclosure Statement, to exercise the same standards and operate the same processes across all the different markets and financial instruments on which we execute your orders. However, the diversity in those markets and instruments and the kind of orders you may place with us mean that different factors will have to be taken into account when we assess the nature of our execution policy in the context of different instruments and different markets. For example, there is no formalised market or settlement infrastructure for over-the-counter transactions. In some markets, price volatility may mean that the timeliness of execution is a priority, whereas, in other markets that have low liquidity, the fact of execution may itself constitute best execution. In other cases, our choice of venue may be limited (even to the fact that there may only be one platform/market upon which we can execute your orders)

3 because of the nature of your order or of your requirements. Part Three Application, Qualifications and Exclusions The best execution obligation is only owed to you when we are deemed to execute orders in financial instruments on your behalf. Where an execution instruction or order is given to us that gives rise to contractual or agency obligations owed by us to you to execute transactions on your behalf, we shall consider that we are in receipt of an order and we shall owe you a duty of best execution. We will not, however, be executing orders on your behalf where you do not legitimately rely on us to protect your interests in relation to the pricing and other elements of the transaction that may be affected by choices made by us when executing the order. We do not, for example, consider the following situations to represent the execution of orders on your behalf: (i) where we are dealers or market makers in the relevant market and merely provide prices at which we would be willing to buy or sell, either continuously or on specific occasions; (ii) where you approach us on a request for quote basis (i.e. where you contact us and request us to provide you with a quote for a particular instrument); (iii) where we negotiate the terms of a transaction with you, and in which we deal with you as principal for our own account. In any of these circumstances we will not owe a duty of best execution, however, we will be required to act in your best interests and to manage any conflicts of interest that may arise. The best execution obligation only applies to transactions involving financial instruments and does not apply to clients who are Eligible Counterparties. Where you provide a specific instruction in relation to your order, in its entirety or a particular aspect, including the selection of a particular execution venue, and we accept the order, we shall execute that order in accordance with your instructions and by doing so we shall be taken to have satisfied the best execution requirement in respect of the order or aspect of the order to which the instruction relates. This may therefore negate the following of some or all of the specific steps in our order execution policy that are designed to obtain the best possible result for your orders. Part Four: Our firms processes for delivering best execution Where we execute orders on behalf of clients, we have included in our order execution policy those venues or sources of liquidity that enable us to obtain the best possible result for the execution of client orders on a consistent basis. We may use one or more of the following venue types: Regulated Markets; Multilateral Trading Facilities;

4 Systematic internalisers; Our own account; Third party investment firms and/or affiliates acting as Market Maker or other liquidity providers; and/or Non-EU entities performing similar functions. A product-by-product assessment of which venues within this list are likely to provide the best possible result for our clients will be undertaken. Further information relating to the venues used in respect of particular types of financial instrument is set out in the Appendices to this document. There may only be one execution venue in certain financial instruments, and in executing in such circumstances the best possible result in those financial instruments is implicit. Execution factors: We may consider the following factors in determining the achievement of the best possible result in the execution of your orders: Price; Costs; Speed; Likelihood of execution or settlement; Size of order; Nature of order; Any other relevant consideration in efficient execution. Best Execution Criteria We will determine the relative importance of each factor in the light of your characteristics, including your client category; the nature of your order, including any specific instructions given; the characteristics of the financial instruments to which your order relates, and the characteristics of the execution venues to which your order can be directed. Receiving and transmitting orders: We may transmit an order received from you to another broker or dealer (including affiliates) for execution, in which case we will either determine the ultimate execution venue ourselves on the basis described above, and instruct the broker or dealer accordingly, or we will satisfy ourselves that the other broker or dealer has arrangements in place to enable us to comply with our best execution obligations you. Where you specifically request that we execute orders with a third party then we will, in acting in accordance with the specific instructions received from you, satisfy the obligation to act in accordance with the best interests of the client to the extent that the specific instructions are followed.

5 SCOTIABANK ORDER EXECUTION POLICY - APPENDIX SCOTIABANK EUROPE plc: Fixed Income Business Non Canadian fixed income securities Scotiabank Europe plc will be dealing as principal and, unless otherwise agreed, the client will be selecting Scotiabank Europe plc as the execution venue/liquidity source. Scotiabank Europe plc will not normally charge a commission, but will benefit from any dealing spread, mark up or mark down. Scotiabank Europe plc will normally be acting as a dealer and/or market maker, providing a quote, price or rate at which it is prepared to deal. It may do so OTC or in its capacity as market maker or dealer on various exchanges or MTFs. These activities will generally be undertaken in the professional/wholesale markets in which it is conventional to expect that clients may consider prices available in the market and determine whether or not to whether or not to transact on the basis of quotes, prices or rates offered. In such circumstances Scotiabank Europe plc will not be acting on the client s behalf when executing such orders and will not owe clients a duty of best execution under the Financial Conduct Authority Rules (to the extent such rules are applicable). Fixed income securities; OTC foreign exchange derivatives or other OTC Interest Rate and Financial Derivatives Scotiabank Europe plc may arrange or effect transactions either by introducing clients to or, arranging transactions between clients and Scotiabank Europe plc s parent company, The Bank of Nova Scotia, Inc., its affiliate, Scotia Capital Inc., or other affiliates or entering into transactions with clients on behalf of The Bank of Nova Scotia, Scotia Capital Inc., or other affiliates. Such entities will be the execution venue/liquidity source for any such transactions. Transactions entered into with The Bank of Nova Scotia, Scotia Capital, Inc., or other affiliates on the basis described above will normally either be individually negotiated or entered into on the basis of quotes, prices or rates provided by them.

6 SCOTIABANK ORDER EXECUTION POLICY - APPENDIX SCOTIA CAPITAL INC: (i) The following is a list of those execution venues that Scotia Capital Inc will consider when executing orders on behalf of clients in cash equities, in accordance with the Scotiabank Order Execution Policy: Equities Canadian Toronto Stock Exchange (TSX) TSX Venture Exchange Canadian Trading and Quotation System (CNQ) Canadian based ATSs Equities US New York Stock Exchange (NYSE) American Stock Exchange (AMEX) NASDAQ U.S. based ECNs (ii) The following is a list of execution venues that Scotia Capital Inc. will consider when executing orders on behalf of clients in equity derivatives, in accordance with the Scotiabank Order Execution Policy: Equity derivatives Canadian Montreal Options Exchange Equity derivatives - US Please note that Scotia Capital Inc. may pass orders in equity derivatives to members of other exchanges where appropriate further details are available on request. Please note that transactions in the instruments traded on the above-noted exchanges will not be required to be reported under the rules of MiFID. However, they will form part of the exchange records for the day on which they are traded. (iii) Where clients wish to deal in non-equity financial instruments (such as fixed income securities), Scotia Capital Inc. will be dealing as principal and, unless otherwise agreed, the client will be selecting Scotia Capital Inc. as the execution venue/liquidity source. Scotia Capital Inc. will not normally charge a commission, but will benefit from any dealing spread, mark up or mark down. Scotia Capital Inc. will normally be acting as a dealer, providing a quote, price or rate at which it is prepared to deal. These activities will generally be undertaken in the professional/wholesale markets in which it is conventional to expect that clients may consider prices available in the market and determine to whether or not to transact on the basis of quotes, prices or rates offered. In such circumstances Scotia Capital Inc. will not be acting on the client s behalf when executing such orders and will not owe clients a duty of best execution under the Financial Conduct Authority Rules (to the extent such rules are applicable).

7 SCOTIABANK ORDER EXECUTION POLICY - APPENDIX BANK OF NOVA SCOTIA: The Bank of Nova Scotia will enter into transactions as principal and, unless otherwise agreed, the client will be selecting The Bank of Nova Scotia as the execution venue/liquidity source in the following MiFID financial instruments: Money market instruments; Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, or other derivative instruments, financial indices or financial measures which may be settled physically or in cash; Options, futures, swaps, forward rate agreements and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default or other termination event); Options, futures, swaps, and any other derivative contract relating to commodities that can be physically settled provided that they are traded on a regulated market and/or an MTF; Options, futures, swaps, forwards and any other derivative contract relating to commodities, that can be physically settled not otherwise mentioned in the preceding bullet point and not being for commercial purposes, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are cleared and settled through recognised clearing houses or are subject to regular margin calls; Derivative instruments for the transfer of credit risk; Financial contracts for differences; Options, futures, swaps, forward rate agreements, and any other derivative contract relating to climatic variables, freight rates, emission allowances or inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties (other than by reason of a default or other termination event), as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned above, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market or an MTF, are cleared and settled through recognised clearing houses or are subject to regular margin calls. 30 January 2012