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Important Information

Order Execution Policy

Effective as of 6 November 2017

1. Application

This order execution and transmission policy (“Execution Policy”) applies to clients of SG Kleinwort Hambros Bank Limited (“Kleinwort Hambros”) who held investment accounts with Kleinwort Benson Bank Limited  prior to 6 November 2017.

2. Best Execution Obligation

2.1 Order execution and transmission is provided as part of the investment services provided by Kleinwort Hambros to clients.

2.2 When executing orders in financial instruments on behalf of its clients (in the absence of any specific instructions from the client), Kleinwort Hambros will seek to attain what is called “best execution”.

2.3 When passing on orders to other institutions for execution on behalf of its clients (in the absence of specific instructions from the client), Kleinwort Hambros will seek to attain the best overall result for the client.

2.4 This Execution Policy applies to retail and professional clients. The Execution Policy and procedures are designed to obtain the best possible execution result on a consistent basis, providing the best balance across a range of sometimes conflicting factors.

2.5 The factors considered in attempting to achieve “best execution” include, but are not limited to:

  • price
  • costs
  • speed
  • size
  • likelihood of execution or settlement
  • market liquidity
  • nature of the transaction

However, the total consideration will be dominant amongst these factors.

2.6 Whilst Kleinwort Hambros will take all reasonable steps, based on the resources available to it, to satisfy itself that procedures are in place that may be expected to lead to the delivery of best execution of client orders, it cannot guarantee that these will provide “best execution” for each and every order executed.

2.7 The obligation to obtain “best execution” does not extend to the primary issuance of securities.

3. Warning about Specific Instructions

3.1 It should be noted that where specific dealing instructions have been received from the client, these may prevent Kleinwort Hambros from following the Execution Policy and procedures and consequently may result in a failure to achieve what otherwise would have been “best execution”.

4. Considerations affecting all financial instruments

4.1 With regard to likelihood of settlement, Kleinwort Hambros maintains an approved counterparty limit list to be utilised by the business. The “Approved Counterparty” list is reviewed on a regular basis by the Risk Department. Any exceptions to this have to be individually considered and approved by the Executive Risk Committee or the Broker Committee. There is daily monitoring undertaken by the Operations Department to ensure full settlement with a clear escalation process to Risk and senior management if there are any identified issues

4.2 For certain types of financial instruments, e.g. derivatives, factors such as the quality of service and arrangements regarding margining procedures will also be significant in determining “Approved Counterparty” status.

4.3 All orders have to be executed through the Dealing Department, exceptions are only permitted for a limited number of individuals to deal “out-of-hours” when there are no dealers available. Such trades must be reported as soon as possible to the Dealing Department. The Dealing Department is responsible for ensuring that all orders are executed in line with this Execution Policy. In addition, the Kleinwort Hambros Compliance Department will carry out a regular independent review of adherence to this Execution Policy.

5. Considerations affecting specific financial instruments

When executing orders for retail clients (in the absence of specific client instructions) in UK listed equities:

5.1 The total consideration, representing the price of the financial instrument and the costs related to execution, will normally be the primary factor considered in delivering best execution. However where the order is of such a size or nature that the Dealing Department believes that its immediate execution would lead to a poorer total consideration for the client due to market impact, then the Dealing Department will seek to manage the order in such a way as to deliver the best total consideration for the client. The speed of execution will then be a lesser factor in the execution decision.

5.2 Kleinwort Hambros will use as its primary execution venue(s) for UK equities:

  • The London Stock Exchange (all markets);
  • Plus Markets; and
  • Multilateral Trading Facilities (Chi-x, Turquoise, BATS Europe).

A Multilateral Trading Facility (“MTF“) means a multilateral system, operated by an investment firm or a market operator, which brings together multiple third-party buying and selling interests in financial instruments in a way that results in a contract in accordance with applicable regulations.

5.3 All execution venues are reviewed at least annually.

When executing orders for retail clients (in the absence of specific client instructions) in non-UK listed equities:

5.4 Kleinwort Hambros will act as an order transmitter, and appoint an agent (who is an “Approved Counterparty” as set out above) to seek best execution for it in the appropriate international market. Commissions are typically payable in international markets to such agents, and within each market, e.g. US, France, Japan, Hong Kong, a similar rate of commission will be paid to agents. Total consideration will normally be the primary factor considered in achieving the best overall result for the client. Where the order is of such a size or nature that the Dealing Department believes that its immediate execution would lead to a poorer total consideration for the client due to market impact, then the Dealing Department will seek to manage the order in such a way as to deliver the best total consideration for the client. The speed of execution will then be a lesser factor in the execution decision.

5.5 We may place reliance on third party brokers to execute transactions when we act as agent on a client’s behalf. When we do so, we will take reasonable steps to ensure that the dealing arrangements of the brokers we use are sufficient to provide appropriate execution quality, having regard to this Execution Policy where relevant.

5.6 In most circumstances our EEA Approved Counterparty will be expected to execute our orders either in a regulated market or MTF.

When executing orders for retail clients (in the absence of specific client instructions) in bonds:

5.7 Kleinwort Hambros will seek to identify at least three Approved Counterparties who make a market in the relevant instrument, and will ask for a price quotation from them. Total consideration will normally be the primary factors considered in delivering best execution. Where the order is of such a size or nature that the Dealing Department believes that its immediate execution would lead to a poorer total consideration for the client due to market impact, then the Dealing Department will seek to manage the order in such a way as to deliver the best total consideration for the client. The speed of execution will then be a lesser factor in the execution decision.

5.8 In normal circumstances our execution will be outside of a regulated market or MTF which clients have expressly consented to in our Terms of Business. The Counterparties with whom Kleinwort Hambros will execute will be part of the Approved Counterparty list.

When executing orders for retail clients (in the absence of specific client instructions) in exchange-traded derivatives:

 5.9 Kleinwort Hambros will act as an order transmitter, and appoint an agent (who is an Approved Counterparty) to obtain best execution for it in the appropriate international market. Commissions are typically payable in derivative markets to such agents. Total consideration and speed of execution will normally be the primary factors considered in achieving the best overall result for the client.

5.10 In normal circumstances our EEA Approved Counterparty will be expected to execute our orders either in a regulated market or MTF.

When executing orders for retail clients (in the absence of specific client instructions) in OTC derivatives:

5.11 Kleinwort Hambros will make a decision on how many counterparties should be approached to provide a quotation. Normally Kleinwort Hambros will seek to identify at least three Approved Counterparties who make a market in the relevant instrument, and will ask for a price quotation from them. Total consideration will normally be the primary factor considered in delivering best execution. However there will be occasions when the nature of the transaction is so complex and/or proprietary that, taking into account the whole nature of the transaction, Kleinwort Hambros believes that it would be appropriate to involve only one or two counterparties.

5.12 In normal circumstances our execution will be outside of a regulated market or MTF which clients have expressly consented to in our Terms of Business. The counterparties with whom Kleinwort Hambros will execute will be part of the Approved Counterparty list.

When executing orders for retail clients (in the absence of specific client instructions) in Collective Investment Schemes (funds):

5.13 Generally the fund itself is the only venue in which to execute a transaction in a particular fund. Individual funds will state in their prospectus the manner in which subscriptions and/ or redemptions should be effected. This information will normally include how frequently liquidity is provided and the time frames for the calculation on the net asset value and receiving orders.

5.14 Where the subscription and redemption rules for a fund require that the subscription or redemption application be submitted before a particular time, we may operate our own cut-off time for the acceptance and processing of the order. Where an order is received from you after our cut-off time, the order will be dealt with at the valuation point on the next available dealing day. Furthermore, where the subscription and redemption rules require that the subscription or redemption application be submitted in a particular manner (including, but not limited to, a requirement for further documentation being entered into by any relevant party) this may delay the order being dealt with in accordance with the procedure described above.

6. Order Handling

6.1 Kleinwort Hambros has implemented procedures and arrangements to handle all client orders promptly, fairly and in an expeditious manner. Otherwise comparable client orders will be executed sequentially in accordance with the time of their receipt unless:

  • otherwise instructed by the client;
  • the characteristics of the order or the prevailing market conditions make this
  • impracticable; or,
  • the interests of the client require otherwise.

DISCLAIMER