Summary of BBVA s order execution policy Banco Bilbao Vizcaya Argentaria, S.A. is a duly authorised bank registered on the Bank of Spain s Register of Special Banks and Bankers Register number 3 under code number 0182. Banco Bilbao Vizcaya Argentaria, S.A. is subject to the control and supervision of the Bank of Spain (Alcalá 48, 28014 Madrid). 1 Introduction The Directive on Markets in Financial Instruments (Directive 2004/39/CE of the European Parliament and of the Council, Directive 2006/73/CE of the Commission and Regulation (CE) 1287/2006 of the Commission), ( MiFID ) requires all financial institutions which provide investment services or carry out investment activities to develop an order execution policy (hereinafter, the Execution Policy or Policy ) with the aim of obtaining the best possible results for clients ( Clients ) when executing orders relating to securities on their behalf, or arranging for any such orders to be executed with or through the agency of an intermediate broker (the Intermediaries ). Under MiFID, Clients must also be informed of the key aspects of the Policy and of any significant change to it. The purpose of this document is to provide Clients with a summary of the Order Execution Policy of BBVA and to obtain their consent to such Policy. Capitalised terms defined in MiFID have the same meaning when used in this document unless defined in this document or the context otherwise requires. 2 Scope of the Order Execution Policy The Execution Policy applies only: (i) to retail and professional Clients, unless expressly stated otherwise in this document; and (ii) for the following types of Financial Instruments (hereinafter, also Instruments ) traded or admitted to trading on a Regulated Market (hereinafter, the Market ): Participations in listed mutual funds Shares Fixed income instruments admitted to trading on the Sistema de Interconexión Bursatil Español ( SIBE ) Derivatives traded on a Market Warrants admitted to trading Preference shares issued by the BBVA Group BBVA accepts no obligation to apply the Execution Policy in relation to a specific order if the Client is an eligible counterparty. The Execution Policy shall apply where BBVA acts in accordance with a mandate from the Client to execute orders on a Client s behalf or receive and transmit orders on behalf of the Client for execution in relation to: The execution venue where the orders will be executed; and/or The Intermediary to be used to achieve such execution. Reg. Mer. Vizcaya -Tomo 3858, Folio 1, Hoja BI-17 BIS-A, Inscripción 1035ª C.I.F.: A48265169 1 / 7
The Policy will also apply in relation to orders transmitted by BBVA in the name and on behalf of the Client by virtue of discretionary portfolio management contracts. 3 General Order Execution Policy When receiving and transmitting or executing orders in relation to Financial Instruments on behalf of Clients, BBVA will take all reasonable steps to achieve best execution. This does not mean that BBVA must obtain the best possible result in the execution of every order it receives from its Clients but rather that its obligation is to apply this Execution Policy to every order from its Clients with the aim of achieving the best possible result in line with the criteria set out in it. It therefore has an obligation to act (to execute the orders of its Clients in accordance with an Execution Policy read and accepted in advance by its Clients) and not to achieve (i.e. to always obtain the best possible result for every order). The aim of this Summary of BBVA s Execution Policy is to ensure that Clients and potential Clients have access to the appropriate information on which to base an informed decision when choosing a supplier or suppliers of an order execution service. BBVA has identified two groups of Instruments in determining its Execution Policy. 3.1 Instruments listed on Markets This category includes orders from Clients on Instruments for which there is a liquid Market for the management of order books and on which it is possible to execute third-party orders. This group includes the following Financial Instruments traded or admitted to trading on a Market: Participations in listed mutual funds Shares Fixed income securities admitted to trading on the Sistema de Interconexión Bursatil ( SIBE ) Derivatives traded on a Market Warrants admitted to trading Execution Venues and Intermediaries Execution Factors The factors that will be taken into account to obtain the best possible result for the Client are: price, costs, speed, likelihood of execution and settlement, volume, type of the order or any other consideration relevant to the execution of the order. Execution Criteria When determining the relative importance of the execution factors mentioned above, the criteria that will be taken into account are the characteristics of: the Client, including their categorisation as a Retail or Professional Client; the Client s order; the Financial Instruments that are the subject of the order; the Execution Venues to which the order can be directed. In general, when choosing Execution Venues for Client orders, BBVA will place a relatively high importance on price as a factor for obtaining the best possible execution result, with the understanding that this will be obtained consistently on the most liquid Market (1) for each Financial Instrument. Accordingly, BBVA will prefer to execute transactions at the Execution Venues listed in Appendix 1 of this document. This list will be kept up-to-date and will be available on BBVA s website (www.bbva.es) and in all its offices. In exceptional circumstances, BBVA may determine that other executions factors are more important than price in obtaining the best possible execution result. Consequently BBVA may occasionally, and with good reason, use other Execution Venues and/or Intermediaries provided that, in its opinion, this will obtain a better result for the Client, only, however, in the event of: Unusual market conditions (temporary interruption of the market or access to it, severe liquidity distortions) (1) In this respect, the Execution Venue where the largest number of the same assets have been traded during the twelve months prior to the revision date of the Execution Policy shall be considered the most liquid. Only Venues which have been operating for more than three months will be considered. In this event, the liquidity of the Venue will be annualised with the aim of obtaining data that can be compared with that of other venues. Reg. Mer. Vizcaya -Tomo 3858, Folio 1, Hoja BI-17 BIS-A, Inscripción 1035ª C.I.F.: A48265169 2 / 7
Unusual characteristics of an order (high volume in relation to the liquidity of the market) The Professional nature of the Customer Requests to trade unusual Financial Instruments Any other unforeseen situation which BBVA considers exceptional to the best of its knowledge. The best possible result in the execution of orders will be determined in terms of total consideration, that is the price of the Financial Instrument and the costs related to execution, including all costs incurred by the Client which are directly related with the execution of the order, including the fees of the Execution Venue, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order. BBVA will not charge its Clients fees in such a way as to discriminate unfairly between Execution Venues. BBVA will inform its Clients of any possible difficulty arising in the execution of their orders. In relation to the transmission of orders for execution to Intermediaries, including Intermediaries belonging to the BBVA Group: a) Execution agreements will be established with one or more Intermediaries with the aim of complying with the obligations established when an order is given or transmitted to these Intermediaries for execution. b) The execution conditions of the Intermediary, along with costs, settlement conditions, integration with BBVA systems and the overall service offered by these Intermediaries will be key factors in their selection. c) The broad range of Execution Venues covered by the agreements reached with an Intermediary, to the extent that these permit the application of a simplified and reasonably priced tariff regime for Clients, and which make it possible to achieve a level of mechanisation in the management of the operation sufficient to reduce operational risks and, therefore, increase the quality and speed of the service, will be an important factor in the selection of these Intermediaries. Where the involvement of an Intermediary is required, BBVA will use the order execution services of this Intermediary to execute the order issued by the Customer to BBVA in the respective Execution Venue. In such circumstances, BBVA acts as the transmitter of the order to this Intermediary, who is ultimately responsible for the execution of this order at the relevant Execution Venue. Appendix 1 provides details of the Intermediaries used by BBVA for each type of Instrument. This list will be kept up-to-date and will be available on BBVA s website (www.bbva.es) and in all its offices. 3.2 BBVA Preference Shares Preference Shares issued by subsidiaries of the BBVA Group are traded on the AIAF Fixed Income Market ( AIAF ). BBVA does not offer itself as a counterparty to its Clients who wish to buy or sell Preference Shares issued by the BBVA Group and traded on the AIAF. However, BBVA will provide a centralised service for the buy and sell orders it receives at its offices from its Clients, thereby facilitating trade matching. Once crossed, the trade will be notified to AIAF, indicating the volume and price and any other information required by the AIAF. 4 Specific execution instructions from Clients Where a Client gives BBVA any specific instruction to execute an order in a particular way, BBVA will execute such order in accordance with such specific instructions. The receipt by BBVA of any specific instruction from a Client in relation to the execution of a particular order could prevent BBVA from taking the steps set out in its Execution Policy to obtain the best possible result in relation to the aspects covered by such specific instructions. BBVA reserves the right not to accept orders with specific instructions. 5 Revision of the order Execution Policy BBVA will monitor the effectiveness of its order Execution Policy with the aim of detecting and, where necessary, correcting any deficiency in its application. It will also carry out periodic reviews to ensure that the selected Execution Venues and Intermediaries, as well as the relative importance assigned to each execution factor or any other aspect of the Policy, permit the best possible results to be obtained for its Clients on a consistent basis. This review will be conducted at least once a year and, in addition, whenever there is a significant change to the Execution Policy which affects BBVA s ability to continue offering its Clients the best possible results in accordance with the Policy. BBVA will inform its Clients of such changes to the Policy by posting an updated version on the BBVA website. Reg. Mer. Vizcaya -Tomo 3858, Folio 1, Hoja BI-17 BIS-A, Inscripción 1035ª C.I.F.: A48265169 3 / 7
BBVA will inform its Clients of the inclusion or exclusion of any Execution Venue, Intermediary or Instrument by posting an updated list of Execution Venues, Intermediaries or Instruments on the BBVA website. BBVA will always provide its Clients with appropriate information on its Execution Policy via the BBVA website or any of its offices. 6 Acceptance of the Execution Policy by Clients BBVA is required to obtain the Client s prior consent to this Policy. The Client will be deemed to provide such consent when an order is placed with BBVA by any of its Clients after 1 November 2007. 7 Bilateral contracts BBVA does not provide its Customer service on the execution, reception, or transmission of orders in Instruments other than those indicated in section 2 of this document ( Scope of the Execution Policy ). The following specific Instruments are excluded from the Execution Policy: Fixed income issues not traded on SIBE (with the exception of preference shares issued by the BBVA Group dealt with in section 3.2 of this document). Derivatives not traded on organised markets (OTC) Other Instruments expressly excluded from BBVA s Execution Policy: However, BBVA does allow for the possibility of its Customers contracting Instruments with BBVA for which the order execution service is not provided, acting in accordance with the investment service stipulated in article 63.1 c) of Spanish Stock Market Law 24/1998 of 28 July 1998, as proprietary trading. In these cases, when the Customer makes a request to contract any of these Instruments, they must bear in mind the following: (i) There is no mandate under which BBVA is obliged to offer the Customer a service; consequently, BBVA will in no circumstances act on the Customer s behalf agreeing either purchases or sales of financial Instruments referred to in this same section 7. (ii) In these cases, the Customer will act in their own name and on their own behalf with BBVA as their counterparty.(iii)the Customer therefore assumes that the services provided by BBVA on the Instruments referred to in this same section 7 relate to the proprietary trading referred to in article 63.1. c) of the Spanish Stock Market Law, and under no circumstances to the reception and transmission of customer orders referred to in section a) of this same article 63.1. (iv) When the Customer makes a request to contract any of these Instruments, BBVA may, at its discretion, offer firm trading prices to this Customer or decline the trade, but in no case will it be acting on behalf of the Customer, nor should the Customer understand that they have passed an execution order to BBVA. (v) The Customer may either accept the price offered by BBVA, in which case the transaction will be formalised, or reject it, thereby relinquishing the contracting of the Instrument. (vi) When it comes to deciding whether or not to go ahead with the bilateral transaction referred to in the aforementioned section (v), the Customer should bear in mind that BBVA is not subject to the best execution regime when it offers a price and conditions for a specific transaction, because in these cases the Bank is not taking an execution decision on a Customer order. The Customer is therefore not dependent on the execution service and experience of BBVA, which, by acting for its own account, limits itself, as far as the Instruments referred to in this section are concerned, to offering the Customer a price. Appendix: Execution Venues envisaged by BBVA Below is a list of the Execution and Intermediation Venues via which BBVA will execute or prefer to transmit orders for each type of financial instrument. The orders transmitted by Clients to BBVA for execution will be routed to the Execution Venue using, where appropriate, the Intermediary which BBVA has assigned permanently in advance to this Execution Venue with the aim of complying with the Execution Policy. Clients access to the Execution Venues presented here may depend on the contractual relationship between the Customer and BBVA. The Execution Venues for Retail Clients may not all be available for certain types of Professional Clients. Reg. Mer. Vizcaya -Tomo 3858, Folio 1, Hoja BI-17 BIS-A, Inscripción 1035ª C.I.F.: A48265169 4 / 7
Listed collective investment schemes and institutions Execution Venues EXECUTION VENUE DESCRIPTION TYPE OF ACCESS SIBE Sistema de Interconexión Bursátil Español Direct/Intermediary (*) MADRID STOCK MARKET Madrid Stock Exchange ( Floor) Direct/Intermediary (*) BARCELONA STOCK MARKET Barcelona Stock Exchange ( Floor) Direct/Intermediary (*) BILBAO STOCK MARKET Bilbao Stock Exchange (Floor) Direct/Intermediary (*) VALENCIA STOCK MARKET Valencia Stock Exchange ( Floor) Direct/Intermediary (*) MILAN STOCK EXCHANGE Milan Stock Exchange Direct/Intermediary (*) XETRA German Stock Exchange Direct/Intermediary (*) EURONEXT Euronext Lisbon Direct/Intermediary (*) EURONEXT Euronext Amsterdam Direct/Intermediary (*) EURONEXT Euronext Paris Direct/Intermediary (*) EURONEXT Euronext Brussels Intermediary VIENNA STOCK EXCHANGE Vienna Stock Exchange Intermediary HELSINKI STOCK EXCHANGE Helsinki Stock Exchange Intermediary SETS London Stock Exchange Intermediary STOCKHOLM STOCK EXCHANGE Stockholm Stock Exchange Intermediary ZURICH STOCK EXCHANGE Zurich Stock Exchange Intermediary VIRT-X Virt-X Intermediary OSLO STOCK EXCHANGE Oslo Stock Exchange Intermediary COPENHAGEN STOCK EXCHANGE Copenhagen Stock Exchange Intermediary XONTRO Frankfurt Stock Exchange (Floor) Intermediary DUBLIN STOCK EXCHANGE Dublin Stock Exchange Intermediary ATHENS STOCK EXCHANGE Athens Stock Exchange Intermediary SEAQ London Stock Exchange (SEAQ) Intermediary AUSTRALIAN STOCK EXCHANGE Australia Stock Exchange Intermediary HONG KONG STOCK EXCHANGE Hong Kong Stock Exchange Intermediary JAPAN STOCK EXCHANGE Japan Stock Exchange Intermediary SOUTH KOREA STOCK EXCHANGE South Korea Stock Exchange Intermediary SINGAPORE STOCK EXCHANGE Singapore Stock Exchange Intermediary TAIWAN STOCK EXCHANGE Taiwan Stock Exchange Intermediary NEW ZEALAND STOCK EXCHANGE New Zealand Stock Exchange Intermediary THAILAND STOCK EXCHANGE Thailand Stock Exchange Intermediary MALAYSIA STOCK EXCHANGE Malaysia Stock Exchange Intermediary INDONESIA STOCK EXCHANGE Indonesia Stock Exchange Intermediary TORONTO STOCK EXCHANGE Toronto Stock Exchange Intermediary VSE Venture Stock Exchange (Canada) Intermediary USA. NYSE New York Stock Exchange Intermediary USA. AMEX American Stock Exchange Intermediary USA. NASDAQ National Association of Securities Dealer Automated Quotation Intermediary Reg. Mer. Vizcaya -Tomo 3858, Folio 1, Hoja BI-17 BIS-A, Inscripción 1035ª C.I.F.: A48265169 5 / 7
EXECUTION VENUE DESCRIPTION TYPE OF ACCESS USA BULLETIN BOARD Bulletin Board (.OB) Intermediary USA PINK SHEETS Pink Sheets (.PK) Market Makers Intermediary SOUTH AFRICA STOCK EXCHANGE Johannesburg Stock Exchange Intermediary JASDAQ - OTC Japan Securities Dealers Association Intermediary MEXICO STOCK EXCHANGE Bolsa Mexicana de Valores S.A. de C.V. Intermediary OSAKA STOCK EXCHANGE Osaka Securities Exchange Intermediary BOVESPA Sao Paolo Stock Exchange Intermediary (*) Depending on the service the Customer contracts with BBVA Intermediaries INTERMEDIARIES BCP CITIGROUP CITIC INTERNATIONAL SECURITIES CREDIT MUTUEL (*) CREDIT SUISSE DAIWA SECURITIES EFG BANK INSTINET JEFFERIES INTERNATIONAL LIMITED (JIL) KBC SECURITIES (**) KNIGHT SECURITIES NATWEST STOCKBROKERS (***) PICTET & CIE NOMURA INTERNATIONA ROYAL BANK OF SCOTLAND SANFORD BERNSTEIN LTD UNION BANCAIRE PRIVÉE (UBP) (*) Only for the execution of orders through the Paris branches network (**) Only for the execution of orders through the Brussels branches network (***) Only for the execution of orders for UK certificated shares Fixed income Execution Venues EXECUTION VENUE DESCRIPTION SIBE Sistema de Interconexíón Bursátil Español Warrants Access can be given, following specific instructions, to Instruments requested by Clients, provided that BBVA has access to the Execution Venue on which they are listed. Reg. Mer. Vizcaya -Tomo 3858, Folio 1, Hoja BI-17 BIS-A, Inscripción 1035ª C.I.F.: A48265169 6 / 7
Listed derivatives Execution Venues EXECUTION VENUE DESCRIPTION TYPE OF ACCESS MEFF Mercado Español de Futuros Financieros (Spanish Financial Futures Market) Direct / Intermediary(*) EUREX EUREX Intermediary LIFFE London Int. Financial Futures & Options Exchange Intermediary CBOT Chicago Board of Trade Intermediary CME Chicago Mercantile Exchange(CME/IMM/GEM) Intermediary NYBOT NY Board of Trade (incl. CSCE/NYCE) Intermediary (*) Depending on the service the Customer contracts with BBVA Each of these Execution Venues offers its own catalogue of Instruments, occasionally trading in the same underlying instrument, albeit with differing characteristics which distinguish the products from each other. Intermediaries INTERMEDIARIES Altura Markets (*) (*) Altura Markets is part of the BBVA Group Reg. Mer. Vizcaya -Tomo 3858, Folio 1, Hoja BI-17 BIS-A, Inscripción 1035ª C.I.F.: A48265169 7 / 7