POLICY FOR EXECUTION OF CLIENT ORDERS FOR TRANSACTIONS WITH FINANCIAL INSTRUMENTS OF "TBI Bank" EAD AS INVESTMENT INTERMEDIARY Section I GENERAL PROVISIONS AND PRINCIPLES Art. 1. The current Policy for execution of client orders for transactions with financial instruments of TBI Bank EAD as Investment Intermediary hereinafter referred to as the "policy" regulates specific aspects of the activities of "TBI Bank" EAD in its capacity as an Investment intermediary, hereinafter referred to as "the Bank" or "Investment intermediary", depending on the context. The policy includes information on the venues for the execution of client orders, the advantages and disadvantages of each venue (according to the volume, price and cost of execution) for each class of financial instruments and on the venues where the intermediary can achieve the best execution, when: A. executing orders on behalf of clients; B. giving orders for execution of transactions on behalf of clients in relation to a client's investment portfolio managed by the Investment intermediary. Art. 2. The policy applies to retail and professional clients of Investment intermediary "TBI Bank" EAD in case the relevant law applies to the respective client and / or the transaction concluded on his behalf. This policy applies to all financial instruments traded on or outside a regulated market or Multilateral Trading System (MTS) or the Organized Trading System (OTS) and to which the Investment intermediary has access and as long as this Policy does not provide otherwise. Art. 3. This policy does not apply to the classification of a client as an "eligible counterparty" or when an order is executed under special client instructions. 1. If the customer is classified as an eligible counterparty, he does not enjoy any protection for best performance under this Policy. Such a client may explicitly request not to be considered an eligible party in general or for a specific transaction. 2. Where the client provides specific instructions regarding the entire order or for a certain part of the order, the Investment intermediary executes the order in accordance with these instructions. Thus, it is considered that the Investment intermediary has taken all reasonable and necessary actions to achieve the best result for the client in respect of the entire order or the aspect of the order contained in the client's instructions. 3. In cases where a customer submits an order via the electronic trading platform COBOS, since the customer selects all the parameters of the order, the latter is classified as submitted by special instructions and it is assumed that the Page 1 of 7
Investment intermediary has complied with its obligation to achieve the best execution for the client. Art. 4. The Investment intermediary executes the client's order by acting in his best interest according to this Policy, taking into account the following factors: price, cost, volume and nature of the order, speed of execution, likelihood of execution and settlement. Art. 5. In cases where the client's instructions relate only to a part of the order, the Investment intermediary will apply this Policy with regard to those aspects of the order that are not covered by the specific instructions of the client. Art. 6. Where a client gives specific instructions to the Investment intermediary regarding the performance of a particular order, he should take into account the fact that these instructions can prevent the Investment intermediary from taking the necessary actions identified in the Policy with respect to that part of the order which is covered by the specific instructions. Section II FACTORS INVOLVED IN THE ASSESSMENT OF THE EXECUTION OF AN ORDER IN THE BEST INTEREST OF THE CLIENT Art. 7. Investment intermediary "TBI Bank" EAD achieves the best result for the client based on the following factors: 1. Price - the investment intermediary considers the price factor of the venues for execution of orders for financial instruments that are the subject of a client's order, in order to determine which venue is the most cost-effective, taking into account the costs of the relevant venue of execution; 2. Costs - the costs associated with the execution include all costs directly related to the execution of the order, namely fees for the place of execution, fees for clearing and settlement, and other fees/ royalties payable to third parties concerning the execution of the order; 3. Volume and nature of the order - the volume of the financial instruments subject to the client's order has a direct relation to the price of the financial instruments and the transaction costs. Different venues for executing a client order may be selected, depending on the order volume and the nature of the order, namely purchase / sale / exchange or at a market or limited price; 4. Speed of execution - the speed of execution on a regulated market or multilateral trading facility is largely determined by the type of market model, namely the organization of trade on a particular market, as regulate by its rules and the applicable legislation. The speed of execution depends on the price of a financial instrument and is reported by the firm at the selection of the venue of execution; 5. Likelihood of execution and settlement - the likelihood of an order being executed on a regulated market or multilateral trading facility is determined to a large extent by the liquidity of the financial instruments subject to a client's order at the relevant venue. Likelihood of settlement, as determined by Investment Page 2 of 7
intermediary "TBI Bank" EAD, is the risk of a problematic settlement in the transfer of financial instruments, which in turn may have an unfavorable effect on the delivery or payment of the financial instruments. The investment intermediary makes an assessment of the specific venue of execution of the client's order. Section III CRITERIA FOR DETERMINING THE RELEVANT WEIGHT OF THE FACTORS IN THE EXECUTION OF CLIENT ORDERS Art. 8. The performance criteria that will be considered when executing client orders are: 1. client characteristics, including categorizing the client as a professional or a retail client; 2. the characteristics of the financial instruments that are the subject of the order; 3. the characteristics of the execution venues, to which the client's order may be directed; 4. characteristics of the client's order, including where the order relates to a securities financing transaction. Art. 9. The investment intermediary shall make an assessment of the factors referred to in Art. 7 based on the client categorization as: 1. Retail client upon the execution of an order, the best possible result is determined by the total value of the transaction, including the price of the financial instrument and the costs associated with the execution. The execution costs include all costs directly related to the execution of the order, including venue fees, clearing and settlement fees, and other fees and charges paid to third parties involved in the execution of the order. In order to achieve the best possible outcome in cases where there are multiple competing venues for executing an order in relation to financial instruments and in making a judgment and comparison of the results that can be achieved for a retail client in the execution of the order on each of the execution venues listed in the Policy, which are appropriate for its implementation, the commission and the costs for execution of the order of each of the possible execution venues shall be taken into consideration. 2. Professional clients - the decisive factor in executing an order of a professional investor is the total value of the transaction, including the cost of the financial instrument and the costs associated with the execution. In addition, the investment intermediary will assess the weight of the factors specified in Art. 7 of this Policy, taking into account the specific characteristics and requirements of the professional clients. 3. Eligible counterparty may include - an Investment intermediary, credit institution, insurance company, collective investment scheme, managing companies, pension insurance companies, pension funds, other financial institutions that are licensed or regulated by the legislation of the European Union and the Member States, Page 3 of 7
national governments, government bodies that manage sovereign debt, central banks and international institutions, as well as such persons from third parties, regulated by requirements equivalent to the requirements of the EU legislation. With regard to specific orders or the relevant supplementary service with an eligible counterparty, the Investment intermediary may not comply with the requirements of Art. 70, Art. 71, para. 1, Art. 72, 73, 74, 77, 78, 82, 84, 85, 86 and 87 of MFIA. 3.1. Where an eligible counterparty explicitly requests treatment as a retail client, the Investment intermediary shall treat the eligible counterparty as a retail client by applying the provisions with respect to requests for treatment as a retail client, 3.2. Where a client requests treatment as an eligible counterparty, the following procedure shall apply: (a) the Investment intermediary provides the client with a clear written warning about the consequences of such a request for the client, including the types of protection the client may lose; 3.3. (b) the client confirms in writing the request for treatment as an eligible counterparty in general or in respect of one or more investment services or transactions or types of transactions or products, as well as that he understands the consequences of losing the protection as a result of the request. Where an eligible counterparty requests treatment as a client whose business relationship with the Investment intermediary is subject to Articles 24, 25, 27 and 28 of Directive 2014/65/EC, the request shall be made in writing and shall indicate whether the treatment as a retail client or as a professional client refers to one or more investment services or transactions or to one or more types of transactions or products. 3.4. Where an eligible counterparty requests treatment as a client whose business relationship with the Investment intermediary is subject to Articles 24, 25, 27 and 28 of Directive 2014/65/EC, but does not expressly request treatment as a retail client, the Investment intermediary treats this eligible counterparty as a professional client. Art. 10. The Investment Intermediary takes into account the characteristics of financial instruments to determine the relative weight of the factors described herein above. Section IV VENUES FOR EXECUTION OF CLIENT ORDERS Art. 11. (1) Client orders for transactions in shares, bonds, compensatory instruments and other financial instruments are executed directly by Investment intermediary "TBI Bank" EAD on the Bulgarian Stock Exchange - Sofia AD. Client orders may also be executed directly by the Investment intermediary outside the regulated market or multilateral trading facility, provided that the clients are informed in advance and have explicitly given their consent. (2) The Investment intermediary reserves the right to add other execution venues it deems appropriate in view of this Policy and achieving best execution for the client. Clients shall inform themselves periodically of the updated list of venues at www.tbibank.bg. Art. 12. Orders for financial instruments admitted to trading on a regulated market abroad are executed on the relevant market indirectly by Investment intermediary "TBI Bank" EAD, as Page 4 of 7
the Investment intermediary transmits the execution orders to its partners, who are members of the relevant market directly or through another broker. The brokers with whom Investment intermediary has partnership relations, are listed at www.tbibank.bg. Sections V TERMS AND CONDITIONS FOR EXECUTION AND AGGREGATION OF CLIENT ORDERS Art. 13. The Investment intermediary executes client orders under the following conditions: 1. immediate and accurate registration and allocation of orders for execution; 2. executes comparable client orders in a consistent and immediate manner, unless this is impracticable due to the characteristics of the order or the prevailing market conditions or if the client's interests require the opposite; 3. informs the retail client for any significant difficulty associated with the proper execution of the orders, immediately upon learning of the difficulty; 4. where the Investment intermediary is responsible for overseeing or arranging the settlement of an executed order, it shall take all reasonable measures to ensure that any client financial instruments or client funds received as part of the settlement of the executed order, are promptly and correctly delivered to the account of the client concerned; 5. does not misuse information relating to pending client orders and must take all reasonable steps to prevent the misuse of such information by any of its relevant persons. Art. 14. The Investment intermediary does not execute a client order or transaction for its own account grouped with an order of another client, unless the following conditions are met: 1. it is unlikely that grouping of orders and transactions in general will be detrimental to any client whose order will be aggregated; 2. the Investment intermediary has brought to the attention of each client whose order will be aggregated, that the aggregation may have consequences which are detrimental to a specific order; 3. applies the Policy for order allocation, which provides for fair allocation of aggregated orders and transactions, including ways in which the volume and price of orders determine the allocations and the treatment of partial executions; 4. where the Investment intermediary groups an order with one or more client orders and the aggregated order is partially executed, the related transactions are allocated in accordance with this policy. Art. 15. The Investment intermediary aggregates customer orders in the following cases: Page 5 of 7
1. in case of orders from customers with the same price and at the venue of execution the best offer is for a quantity and price that satisfies both orders. Orders are executed at the same price but the order first accepted is processed first; 2. in cases where the clients orders are at different prices and at the venue of execution the best counter offer is for a quantity and price that satisfies both orders. Orders are executed at the same price but the order first accepted is processed first; 3. in the event that when an aggregated order is introduced, the counter offer is changed and the aggregated offer is executed in several parts at different prices or even partially executed, priority is given to the earlier client order. Art. 16. The Investment intermediary may aggregate orders for transactions in financial instruments submitted in connection with the management of client portfolios. Such an order may be combined with other customer orders under this Policy and, in case of partial execution of the order, the financial instruments shall be allocated proportionately. Art. 17. Aggregation and allocation of transactions for own account: 1. when an Investment intermediary aggregates transactions for its own account with one or more client orders, it shall not allocate the related transactions in a way that damages the client 's interests; 2. where the Investment intermediary aggregates a client order with a transaction for own account and the aggregated order is partially executed, it allocates the transactions related to the client with priority to those of the firm. Section VI POLICY REVISION AND AMENDMENTS Art. 18. The investment intermediary monitors the compliance with and the effectiveness of this Policy. Art. 19. The Investment intermediary revises the Policy once a year, as well as upon the occurrence of significant changes that would influence its ability to achieve the best results possible for its clients. Art. 20. In case of an amendment of the policy the Investment intermediary informs its clients at www.tbibank.bg. Section VII FINAL PROVISIONS Art. 21. By signing the General Terms and Conditions applicable to contracts with clients for the provision of investment and ancillary services, the client declares that he is familiar with this Policy for execution of client orders for transactions with financial instruments, that he has reviewed it, understood it, and he accepts it. Page 6 of 7
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