Download - MiFID Information Brochure
MiFID Information Brochure
SMBC Nikko Capital Markets Europe GmbH
01 April 2021
Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland Registergericht: Amtsgericht Frankfurt am Main, HRB 110304
Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger Vorsitzender des Aufsichtsrats: Antony Yates
VAT-ID DE317644645
Contents
1. MiFID at SMBC Nikko Capital Markets Europe GmbH ...................................................... 5
2. Information about the financial services company and its investment banking services .... 6
2.1 Information about the financial institution ............................................................. 6
2.2 Information about services ................................................................................... 6
3. General Information on Financial Instruments and Related Risks ..................................... 8
3.1 Shares ................................................................................................................. 8
3.2 Bonds .................................................................................................................. 8
3.3 Derivatives ......................................................................................................... 10
3.4 Foreign markets ................................................................................................. 10
3.5 Collateral ........................................................................................................... 11
3.6 Commissions ..................................................................................................... 11
3.7 Suspensions of trading ...................................................................................... 11
3.8 Clearing house protections ................................................................................ 11
3.9 Insolvency ......................................................................................................... 11
4. Cost and Charges Disclosure .......................................................................................... 12
4.1 Costs and Charges ............................................................................................ 12
4.2 Product Specific Disclosures ............................................................................. 13
4.3 Derivatives Products Ex-Ante Costs & Charges Disclosure ............................... 13
4.4 Securities Products (“SPG”) Ex-Ante Costs & Charges Disclosure .................... 15
4.5 Other Matters to Note ........................................................................................ 17
5. Conflicts of Interest Policy ............................................................................................... 20
5.1 Purpose and short summary .............................................................................. 20
5.2 Scope ................................................................................................................ 20
5.3 Identifying Conflicts of Interest ........................................................................... 21
5.4 Procedures and Measures for Managing Conflicts of Interest ............................ 22
5.5 Disclosure of Conflicts of Interest ...................................................................... 23
5.6 General types of situations leading to conflicts of interest .................................. 24
5.7 Regulatory references ....................................................................................... 27
5.8 Record-keeping and approval ............................................................................ 27
5.9 Roles with respect to managing conflicts of interest ........................................... 27
5.10 Identification and management of transactional conflicts of interest. ................ 28
5.11 Training & Awareness ...................................................................................... 28
6. Order Execution Policy .................................................................................................... 29
Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland Registergericht: Amtsgericht Frankfurt am Main, HRB 110304
Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger Vorsitzender des Aufsichtsrats: Antony Yates
VAT-ID DE317644645
6.1 Introduction ........................................................................................................ 29
6.2 What is best execution ....................................................................................... 29
6.3 When does Best Execution apply? .................................................................... 30
6.4 Specific Instructions ........................................................................................... 31
6.5 Specific Instructions ........................................................................................... 32
6.6 Execution Venues we use ................................................................................. 32
6.7 Consent to execute away from a Regulated Market or MTF .............................. 33
6.8 Aggregation and allocation of orders ................................................................. 33
6.9 Monitoring and Notification ................................................................................ 34
6.10 Appendix for Order Execution: Asset Class Information ................................... 34
7. Product Governance ....................................................................................................... 42
7.1 SMBC Nikko as a Distributor ............................................................................. 42
7.2 Onward distribution ............................................................................................ 42
7.3 Proportionality Types ......................................................................................... 42
7.4 Appropriateness ................................................................................................ 42
7.5 Current product list and categorisation .............................................................. 43
8. Information about investment firm and Systematic Internaliser ....................................... 46
8.1 Scope ................................................................................................................ 46
8.2 Provision of quotes ............................................................................................ 46
8.3 Publication mechanism ...................................................................................... 46
8.4 Access to quotes ............................................................................................... 46
8.5 Access criteria ................................................................................................... 46
8.6 Quote validity ..................................................................................................... 47
8.7 Reporting Obligations ........................................................................................ 47
9. General Terms of Business ............................................................................................. 48
9.1 General Information ........................................................................................... 48
9.2 Client Categorisation ......................................................................................... 48
9.3 Applicable Regulations and Exchange Action .................................................... 49
9.4 Services............................................................................................................. 49
9.5 Appropriateness ................................................................................................ 50
9.6 Use of Brokers, Introductory, Arranging and Order Routing Services ................ 51
9.7 Third Party Services .......................................................................................... 52
9.8 Execution Policy ................................................................................................ 52
9.9 Order Execution ................................................................................................. 53
9.10 Direct Electronic Access .................................................................................. 53
Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland Registergericht: Amtsgericht Frankfurt am Main, HRB 110304
Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger Vorsitzender des Aufsichtsrats: Antony Yates
VAT-ID DE317644645
9.11 Instructions ...................................................................................................... 53
9.12 Unsettled Positions .......................................................................................... 54
9.13 Payment and Delivery ...................................................................................... 54
9.14 Position Limits ................................................................................................. 54
9.15 Short-selling .................................................................................................... 55
9.16 Power to Borrow or Buy Securities .................................................................. 55
9.17 No holding of Client Money or Client Assets .................................................... 55
9.18 Compensation Scheme ................................................................................... 55
9.19 Communications and Notices .......................................................................... 56
9.20 Reporting Trading Information ......................................................................... 56
9.21 Information provision ....................................................................................... 57
9.22 Your Representations, Warranties and Undertakings ...................................... 57
9.23 Appointment of an Agent ................................................................................. 58
9.24 Liability ............................................................................................................ 59
9.25 Indemnity ......................................................................................................... 59
9.26 Default ............................................................................................................. 60
9.27 Conflicts Policy ................................................................................................ 61
9.28 Client Reports .................................................................................................. 61
9.29 Fees, Charges and Payments ......................................................................... 61
9.30 Taxes .............................................................................................................. 62
9.31 Confidentiality and Privacy .............................................................................. 62
9.32 Termination ..................................................................................................... 62
9.33 General............................................................................................................ 62
9.34 Interpretation ................................................................................................... 64
10. Your Notes .................................................................................................................... 68
Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland Registergericht: Amtsgericht Frankfurt am Main, HRB 110304
Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger Vorsitzender des Aufsichtsrats: Antony Yates
VAT-ID DE317644645
Glossary
Term Definition
Compliance The Compliance Department of CMFRA
CMFRA SMBC Nikko Capital Markets Europe GmbH
Company CMFRA
DMA Direct Market Access
EEA European Economic Area
Management
Management means the senior management and department
heads of the respective companies
MAR Market Abuse Regulation
MiFID II Markets in Financial Instruments Directive
MiFIR Markets in Financial Instruments Regulation
MTF Multilateral Trading Facilities
OTF Organised Trading Facilities
RFP Request for Proposal
RFQ Request for Quote
ToSTNeT Tokyo Stock Exchange Trading Network
WpHG Wertpapierhandelsgesetz (Securities Trading Act)
5 Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland
Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
1. MiFID at SMBC Nikko Capital Markets Europe GmbH
The Markets in Financial Instruments Regulation (“MIFIR”) and the Markets in Financial
Instruments Directive (“MIFID”), together “MIFID II”, enter into application on 3 January 2018.
MiFID II seeks to provide a European-wide legislative framework for regulating the operation
of financial markets in the EU. It represents a major overhaul of the existing law, building on
and extending the scope of the first Markets in Financial Instruments Directive, which originally
came into force in November 2007.
In broad terms, MiFID II is concerned with the framework of trading venues/structures in which
financial instruments are traded, whereas MiFIR focuses on regulating the operation of those
trading venues/structures, looking to processes, systems and governance measures adopted
by market participants and to their future supervision.
The Commission set out four objectives for the revised legislation:
strengthen investor protection
reduce the risks of a disorderly market
reduce systemic risks, and
increase the efficiency of financial markets and reduce unnecessary costs for
participants
In the following chapters there are a number of important informational and legal information
that we recommend you to read carefully.
6 Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland
Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
2. Information about the financial services company and its
investment banking services
In accordance with the requirements of Art. 47 (1) of the Delegated Regulation (EU) 2017/565
and § 83 (5) WpHG, we hereby provide you with the following information about SMBC Nikko
Capital Markets Europe GmbH (“CMFRA” or “we”) and our investment services.
2.1 Information about the financial institution
SMBC Nikko Capital Markets Europe GmbH
Neue Mainzer Str. 52-58
60311 Frankfurt am Main
Germany
T: +49 (0)69 2222 9 850
SMBC Nikko Paris Branch
1-5 rue Paul Cézanne
75008 Paris
France
More information can be found at
http://www.de.smbcnikko-cm.com/
In case you have any questions regarding MiFID related topcis, please contact:
Intermediary
In connection with the provision of our services, we use contractually bound intermediaries
who are registered in the Federal Republic of Germany.
Banking permission
We hold a banking permission according to § 32 German Banking Act (Kreditwesengesetz).
Competent supervisory authority
Supervisory authority responsible for the authorisation: European Central Bank,
Sonnemannstraße 20, 60314 Frankfurt am Main (Internet: www.ecb.europa.eu ).
Supervisory authority responsible for consumer protection: Federal Financial Supervisory
Authority, Graurheindorfer Straße 108, 53117 Bonn, and Marie-Curie-Strasse 24-28, 60439
Frankfurt am Main, Germany. (Internet: www.bafin.de).
2.2 Information about services
SMBC Nikko Capital Markets Europe GmbH is a financial services company providing
specialist investment banking services, expert insights and innovative solutions in global
capital markets. We are a subsidiary of SMBC Nikko Securities Inc., one of the largest
securities companies in Japan and of Sumitomo Mitsui Banking Corporation, one of the largest
7 Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland
Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
commercial banks in Japan. Therefore we are ideally positioned to provide our clients with
additional value as a partner for investments in the increasingly important Japanese financial
markets.
We do not offer investment advice. In the case of advisory-free business, you make your
investment decision independently of any investment recommendation on our part. In this case
we only obtain the necessary information about your knowledge and experience; this does not
include information about your investment objectives and financial circumstances.
CMFRA is committed to providing a wider range of high value-added financial products,
services and solutions in order to become a long-term strategic partner for all our clients. We
conduct all customary banking business (in particular securities and derivatives products) and
consists of three Business Units: Debt Capital Markets (DCM)/Equity Capital Markets (ECM),
Fixed Income Sales and Trading (FIST)/ Equity Sales and Trading (EST) and Derivatives
Products Group (DPG).
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
3. General Information on Financial Instruments and Related Risks
Please note that this notice cannot disclose all the risks and other significant aspects of trading
under the Terms. You should not deal in these products unless you understand their nature
and the extent of your exposure to risk. You should also be satisfied that the product is suitable
for you in the light of your circumstances and financial position.
3.1 Shares
A share is an instrument representing a shareholder’s rights in a company. Shares may be
issued in bearer or registered form and may be certificated or non-certificated. One share
represents a fraction of a corporation's share capital. Dividend payments and an increase in
the value of the security are both possible, although not guaranteed. The shareholder has
financial and ownership rights which are determined by law and the issuing company’s articles
of association. Unless otherwise provided, transfers of bearer shares do not entail any
formalities. However, transfers of registered shares are often subject to limitations.
Dealing in shares may involve risks including but not limited to the following:
Company Risk
Company risk: a share purchaser does not lend funds to the company, but becomes a co-
owner of the company. He or she thus participates in its development as well as in chances
for profits and losses, which makes it difficult to forecast the precise yield on such an
investment. An extreme case would be if the company went bankrupt, thereby wiping out the
total sums invested.
Price Risk
Share prices may undergo unforeseeable price fluctuations causing risks of loss. Price
increases and decreases in the short, medium and long-term alternate without it being
possible to determine the duration of those cycles. General market risk must be distinguished
from the specific risk attached to the company itself. Both risks, jointly or in aggregate,
influence share prices.
Dividend Risk
The dividend per share mainly depends on the issuing company's earnings and on its dividend
policy. In case of low profits or losses, dividend payments may be reduced or not made at all.
3.2 Bonds
A bond is a negotiable debt instrument issued in bearer or registered form by a company or a
government body to creditors and whose par value at issuance represents a fraction of the
total amount of the debt. The duration of the debt as well as the terms and conditions of
repayment are determined in advance. Unless stipulated otherwise, a bond is repaid either at
the maturity date, or by means of annual payments, or at different rates determined by drawing
lots. The interest payments on bonds may be either: (i) fixed for the entire duration; or (ii)
9 Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland
Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
variable and often linked to reference rates, e.g.Interbank Offered Rate (IBOR)). The
purchaser of a bond (the creditor) has a claim against the issuer (the debtor).
Dealing in bonds may involve risks including but not limited to the following:
Insolvency risk:
The issuer may become temporarily or permanently insolvent, resulting in its incapacity to
repay the interest or redeem the bond. The solvency of an issuer may change due to one or
more of a range of factors depending on the issuing company, the issuer’s economic sector
and/or the political and economic status of the countries concerned. The deterioration of the
issuer’s solvency will influence the price of the securities that it issues.
Interest rate risk:
Uncertainty concerning interest rate movements means that purchasers of fixed-rate
securities carry the risk of a fall in the prices of the securities if interest rates rise. The longer
the duration of the loan and the lower the interest rate, the higher a bond's sensitivity to a rise
in the market rates.
Credit risk
The value of a bond will fall in the event of a default or reduced credit rating of the issuer.
Generally, the higher the relative rate of interest (that is, relative to the interest rate on a risk-
free security of similar maturity and interest rate structure), the higher the perceived credit risk
of the issuer.
Early redemption risk
The issuer of a bond may include a provision allowing early redemption of the bond if market
interest rates fall. Such early redemption may result in a change to the expected yield.
Risks specific to bonds redeemable by drawing:
Bonds redeemable by drawing have a maturity that is difficult to determine, so unexpected
changes in the yield on these bonds may occur.
Risks specific to certain types of bond
Additional risks may be associated with certain types of bond, for example floating rate notes,
reverse floating rate notes, zero coupon bonds, foreign currency bonds, convertible bonds,
reverse convertible notes, structured bonds, high yield bonds, indexed bonds and
subordinated bonds. For such bonds, you are advised to make inquiries about the risks
referred to in the issuance prospectus and not to purchase such securities before being certain
that all risks are fully understood. In the case of subordinated bonds, you are advised to
enquire about the ranking of the debenture compared with the issuer’s other debentures.
Indeed, if the issuer becomes bankrupt, those bonds will only be redeemed after repayment
of all higher ranked creditors and as such there is a risk that you will not be reimbursed. In the
10 Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland
Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
case of reverse convertible notes, there is a risk that you will not be entirely reimbursed, but
will receive only an amount equivalent to the underlying securities at maturity.
3.3 Derivatives
A derivative is a type of financial instrument whose value is based upon the value of an
underlying asset, index, rate or reference point. Derivatives involve the transfer of risk from
one party to another. They can be used to limit a party's exposure to a variable or allow a party
to gain exposure to that variable.
Understanding the risk of derivative products:
You should not deal in derivative products unless you understand the nature of the contract
you are entering into and the extent of your exposure to risk. You should also be satisfied that
the contract is suitable for you in light of your circumstances and financial position. Although
derivatives can be utilised for the management of investment and liability risk, some of these
products are unsuitable for many investors. Derivative products will not always act in the same
way. Relationships with us may differ depending on the product and nature of the transaction,
and clearing houses may not always owe you a direct commitment. Different products involve
different levels of exposure to risk and in deciding whether to trade in such products you should
be aware of the following points.
Off-exchange transactions:
When trading financial derivative products with us, you will be entering into off exchange
derivative transactions. All positions entered into with us must be executed with us and cannot
be executed with any other entity. Transactions in off-exchange derivatives may involve
greater risk than investing in on-exchange derivatives because there is no exchange market
on which to close an open position. It may be impossible to liquidate an existing position, to
assess the value of the position arising from an off-exchange transaction or to assess the
exposure to risk. Bid prices and offer prices need not be quoted by us, and, even where they
are, we may find it difficult to establish a fair price, particularly when the relevant exchange or
market for the underlying is closed or suspended.
3.4 Exchange Risk
When investing in a currency other than euro, there is inevitably an exchange or currency risk.
The exchange risk is the probability that an adverse trend in the currency being invested in
will reduce the return of the investment. If the trend in the currency is adverse, the return will
be eroded following the shortfall in profit due to the conversion to euro. There is a risk that a
change in exchange rates between currencies may cause the investment or the income from
it to fall or rise.
3.5 Foreign markets
Foreign markets will involve different risks from the German market. In some cases the risks
will be greater. The potential for profit or loss from transactions on foreign markets or in foreign-
denominated contracts will be affected by fluctuations in foreign exchange rates.
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
3.6 Collateral
The way in which collateral will be treated will vary according to the type of transaction and
where such collateral is traded. There could be significant differences in the treatment of your
collateral, depending on whether you are trading on a recognised or designated investment
exchange, with the rules of that exchange (and the associated clearing house) applying, or
trading off-exchange. We reserve the right to implement a higher margining requirement than
the exchange. Deposited collateral may lose its identity as your property once dealings on
your behalf are undertaken. Even if your dealings should ultimately prove profitable, you may
not get back the same assets which you deposited, and may have to accept payment in cash.
3.7 Commissions
Before you begin to trade, you should obtain details of all commissions and other charges for
which you will be liable. If any charges are not expressed in money terms (but, for example,
as a percentage of contract value), you should obtain a clear and written explanation, including
appropriate examples, to establish what such charges are likely to mean in specific money
terms.
3.8 Suspensions of trading
Under certain trading conditions it may be difficult or impossible to liquidate a position. This
may occur, for example, at times of rapid price movement if the price rises or falls in one
trading session to such an extent that under the rules of the relevant exchange trading is
suspended or restricted. Placing a stop-loss order will not necessarily limit your losses to the
intended amounts, because market conditions may make it impossible to execute such an
order at the price stipulated.
3.9 Clearing house protections
On many exchanges, the performance of a transaction is ‘guaranteed’ by the exchange or
clearing house. However, this guarantee is unlikely in most circumstances to cover you, the
client, and may not protect you if we or another party defaults on its obligations to you.
Additionally, in relation to Derivatives Business, Transactions are not executed on any
exchange or through any clearing house; although if required in accordance with the EMIR,
Transactions will be cleared though a central counterparty.
3.10 Insolvency
Our insolvency or default, or that of any other brokers involved with your transaction, may lead
to positions being liquidated or closed out without your consent. In certain circumstances, you
may not get back the actual assets which you lodged as collateral and you may have to accept
any available payments in cash.
12 Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland
Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
4. Cost and Charges Disclosure
In accordance with the Markets in Financial Instruments Directive (“MIFID II”) Articles 24 of
Directive 2014/65/EU and Articles 11 and 50 of MiFID II Delegated Regulation, this statement
provides ex-ante information on costs & charges related to the provision of Investment
Services and Activities or Ancillary Services as defined in MiFID II by SMBC Nikko Capital
Markets Europe GmbH (“CMFRA” or “we”) to its Clients.
CMFRA may act in different capacities and trade in a variety of markets and transactional
scenarios (e.g. executing of orders on behalf of clients, systematic internaliser, market maker,
liquidity provider, or primary issuer). As such, you may be charged in different ways for
different products or services you receive from us.
As permitted by MIFID II, given the investment services provided to professional clients and
eligible counterparties, CMFRA wherever possible will limit the application of the costs and
charges disclosure requirement including (but not limited to) the ex ante and ex post costs
cumulative disclosures and currency conversion as outlined in section 4.5 below.
MIFID II Costs and Charges obligations apply to transactions in ‘financial instruments’ as
defined under MIFID II. Costs and Charges associated with particular transaction, but to the
extent indicated may not reflect the Costs and Charges associated with any specific financial
instrument.
Price formation in CMFRA generally takes into account the following factors:
observable market prices,
executed transactions,
volatility data,
other market data,
internal models and
observable trade flows.
The final client price is generally determined by the application of Costs and Charges to
products to mid-price. The difference between the mid price and the final client price shall
generally be deemed to constitute the Costs and Charges to the client.
4.1 Costs and Charges
The Costs and Charges that CMFRA applies to financial instruments vary depending upon a
number of client specific and non-client specific factors. These factors can include but are not
limited to: the risk profile of the relevant business, client behaviour, counterparty credit risk,
funding costs, capital usage, margin costs, hedging costs and, where applicable, sales mark-
up or mark-down.
The following factors that may impact the level of Costs and Charges applied:
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
Credit support: Where a client has in place an ISDA and Credit Support Annex with
CMFRA, this may decrease the level of credit charges applied to derivatives falling
under the ISDA.
Clearing: Where derivatives entered into between the client and CMFRA are cleared
through a central counterparty clearing house, this may decrease the level of credit
charges applied to such trades.
Maturity: Where a derivatives trade has a greater maturity, this may increase the level
of funding and credit charges applied to such trade.
Liquidity: Where a trade is executed at a time of lower liquidity, this may increase the
level of hedging costs associated with such trade.
Unless notified otherwise, Costs and Charges for CMFRA’s products are embedded in
the final price received by the client.
Client-specific factors, such as credit quality and our collateral terms with you; and impact
or importance of each factor on the price you receive will differ based on the specific
circumstances of the transaction and additional factors may also be relevant. The relevant
impact or importance of each factor on the price you receive will differ based on the specific
circumstances of the transaction and additional factors may also be relevant. The type of
product, transaction and market in which the product would be traded, such as:
i. the trading venue;
ii. the type of instruction or order and the degree of risk we take in meeting it;
iii. the size, type and direction of the transaction;
iv. the liquidity of the instrument;
v. market conditions, including market events, volatility and time of execution;
vi. transparency of the market, including visible liquidity, trading volume and available
external venues or platforms; and
vii. the accessibility of third party quotations and other pricing information
viii. Internal costs to CMFRA, such as counterparty credit risk, hedging, structuring and
market risk, funding, and capital;
4.2 Product Specific Disclosures
The sections below provide clients with important information about costs and charges relating
to certain financial instruments as required under Article 24(4) of the Markets in Financial
Instruments Directive II.
4.3 Derivatives Products Ex-Ante Costs & Charges Disclosure
Overview & Background:
This statement seeks to inform Clients about estimated average transaction costs & charges
as a spread or margin from bid side, offer side or mid-market for a range of products by
currency & tenor.
The ranges contained in the tables reflect a typical range of charges for Investment Grade
Clients, trading on an un-collateralised, un-cleared basis.
14 Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland
Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
Cost Disclosure Tables
Costs & charges will depend on, but are not limited to:
Nature of the financial instrument - Cross Currency Swaps will generally generate
higher costs and charges than Interest Rate Swaps.
Tenor - Long-dated trades generally generate higher costs & charges than short
dated trades.
Trade direction - This will be currency dependent.
Client credit quality - Highly rated Clients will generally attract lower costs and
charges than less highly rated Clients.
Credit mitigation - Unmitigated deals will generally attract higher charges than
collateralised or cleared trades
Funding. Trades with high funding costs (to CMFRA) will generally generate higher
costs & charges, than trades with low funding costs.
Currency liquidity - Emerging market currencies generally attract higher costs and
charges than G7 currencies.
Timing - "Out of hours trading" (i.e. when markets are "closed") may lead to higher
costs and charges due to reduced liquidity.
Deal complexity - Complex trades will generally attract higher costs and charges
than more vanilla trades.
Capital impact - Trades with a high capital or regulatory impact may attract higher
costs and charges than those with a benign impact.
Deal size or notional - Very large, or very small trades may attract higher costs and
charges than "market- size" trades.
Portfolio effect - Clients with existing portfolios may benefit from portfolio netting
which may lead to reduced costs and charges.
CMFRA specialises in bespoke, rather than generic over-the-counter derivative contracts. In
all cases, each trade opportunity will be individually priced, using our in-house pricing models,
taking all the above factors into account. We will provide indications, upon our receipt of a
satisfactory termsheet (and discussion of terms).
CMFRA can only trade with Clients who have been fully on-boarded. This will generally
include:
Credit approval (not required for "sold” options with Client premium paid up-front)
Satisfactory Legal documentation. We will generally require a fully executed Swap
Master Agreement (e.g.: ISDA, FBF, DRV). Fully agreed long-form confirmations may
be satisfactory in certain circumstances
Fully completed client due diligence and satisfaction of Regulatory requirements.
Additional Information
CMFRA can quote from bid, mid, or offer.
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We generally quote "all-in” on an indicative or executable basis. When you enter into
a transaction, the price of the instrument includes the costs and charges of the
instrument. We do not charge these costs separately.
Costs and charges quoted will be subject to change, as market conditions change
Once a trade is closed, it will be subject to the Swap Master Agreement & Trade Confirmation
(or Long-form confirmation). No further costs and charges will be applied.
Detailed below are the estimated average transaction costs & charges for the primary products
offered by CMFRA.
4.3.2.1 Interest Rate Swaps EUR; GBP; USD; JPY
Cost Type 5 year 10 year 15 year
Investment services and/or ancillary services
0 bppa 0 bppa 0 bppa
Financial Instruments 0 – 15 bppa 0 – 25 bppa 0 – 35 bppa
Other payments made or received - excluding intra-group fees
0 bppa 0 bppa 0 bppa
Total costs and charges 0 – 15 bppa 0 – 25 bppa 0 – 35 bppa
4.3.2.2 Cross Currency Product GBPUSD; EURUSD; JPYUSD (Fixed
Currency v USD Float)
Cost Type 5 year 10 year 15 year
Investment services and/or ancillary services
0 bppa 0 bppa 0 bppa
Financial Instruments 0 - 25 bppa 0 – 50 bppa 0 – 75 bppa
Other payments made or received - excluding intra-group fees
0 bppa 0 bppa 0 bppa
Total costs and charges 0 – 25 bppa 0 – 50 bppa 0 – 75 bppa
For estimated pre trade costs and charges related to other financial instruments offered by
CMFRA not included in this disclosure please contact your usual Relationship Manager.
Additionally as a client, should you require detailed information on any specific transaction
please contact your usual CMFRA Relationship Manager.
4.4 Securities Products (“SPG”) Ex-Ante Costs & Charges Disclosure
Overview & Background:
This document seeks to inform clients about the estimated average transaction costs and
charges, as a margin from mid-market on financial instruments, when dealing with CMFRA.
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These estimations take into account all costs and charges. The figures contained in the tables
herein are reasonable estimations of maximum or average cost ranges, and have not been
personalised to any specific client activity or market conditions. These estimations have
typically been derived with reference to existing fee schedules or historical data. The range of
costs outlined in this document is highly dependent on a number of factors, including but not
limited to, the type of financial instrument, the cost, time, and potential risks to CMFRA, the
degree of liquidity, standardisation, credit risk, and capital impact of the Financial Instrument.
These elements determine the total price for financial instrument.
The cost of services and the cost related to the financial instruments are important elements
which should be taken into consideration when transacting with CMFRA.
Cost Disclosure Tables
While reading this document, please take the following into account:
We generally quote "all-in” on an indicative or executable basis. When you enter into
a transaction, the price of the instrument includes the costs and charges of the
instrument. We do not charge these costs separately.
The cost of the investment service, as well as the cost of the financial instrument, are
related to the transaction. You will not be charged other costs, such as incidental or
on-going costs. This document does not include product costs (mid-price), as those
costs vary per product and transaction.
The transaction costs compensate for, amongst others, risks, costs and capital
consumption considerations and may include sales margins. Actual transaction costs
are determined by a number of factors including, but not limited to, transaction size,
market environment, liquidity, clearing and settlement fees, broker/platform costs,
market and counterparty risk and your past trading activity.
The figures displayed are no guarantee of future transaction costs and are subject to
change. The figures presented are an estimation and do not take into account specific
client situations or unusual conditions (including market volatility) which may influence
costs.
The actual amount of transaction costs may vary according to the unique
circumstances of a particular transaction. Additionally, pricing will be offered in
accordance with our Order Execution Policy, where applicable.
Should clients have any queries in relation to this disclosure, they should contact their usual
Relationship Manager. For details of charges relating to Research and Corporate Access
please refer to your Research & Corporate Access Agreement.
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4.4.2.1 Credit Products (Corporate Bonds, Sovereign Bonds, Other Bonds)
Cost Type Percentage Range
(estimated Low/High) Cash Equivalent
Cost estimates for the above products are based on volume of EUR 100,000, and provided in averages rather than the maximum range, given the implicit nature of any costs and charges applied.
Investment services and/or ancillary services
0% € 0
Financial Instruments 0 – 1% 0 – €1,000
Other payments made or received - excluding intra-group fees
0% € 0
Total costs and charges 0 – 1% 0 – €1,000
4.4.2.2 Equities (incl. Low and High touch execution Risk Pricing)
Cost Type Percentage Range
(estimated Low/High) Cash Equivalent
Estimated ranges are based on a total consideration of EUR 100,000. For other total considerations the cost and charges figure will change accordingly.
Investment services and/or ancillary services
1 – 30 bps €10 – €300
Financial Instruments 0 bps € 0
Other payments made or received - excluding intra-group fees
0 bps € 0
Total costs and charges 1 – 30 bps €10 – €300
4.4.2.3 Convertible Bonds
Cost Type Percentage Range
(estimated Low/High)
Cash Equivalent
Cost estimates for the above products are based on volume of EUR 100,000, and provided in averages rather than the maximum range, given the implicit nature of any costs and charges applied.
Investment services and/or ancillary
services
0% € 0
Financial Instruments 0.125 – 0.5% €125 – €500
Other payments made or received -
excluding intra-group fees
0% € 0
Total costs and charges 0.125 – 0.5% €125 – €500
4.5 Other Matters to Note
a) Aggregated Costs & Charges and Cumulative Effect Disclosures
In addition to your choice taken in the consent letter at the beginning of your relationship with
CMFRA you can always request the annual ‘ex post’ summary of accrued costs and charges.
In such case it would start after receiving your renewed instruction with data from the last
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completed calendar year. At any time you could change your original instruction obtaining this
summary, please inform us or ask your relationship manager. Please note summaries which
would only show a zero cost or charge will not be issued.
b) Commissions and fees
Where we act in executing orders on your behalf, or providing access to a particular source
of liquidity, we may charge you a pre-agreed commission or fee on the trade.
Commissions or fees at which CMFRA generally expects to trade with you are agreed with
you, and as such these commissions or fees may be amended periodically and any changes
agreed with you.
c) Securities lending repo and financing fees
For securities lending transactions, where you are the borrower, you will be charged a lending
fee. For repo transactions, a pricing rate will be payable. For equity swaps you will be charged
a financing rate.
The rates and the basis on which CMFRA generally expects to trade with you may be agreed
with you at the initiation of business and set out in our fee schedule. In all other cases, they
will be agreed on a trade-by-trade basis, prior to trading, and will be based on some or all of
the following factors: the type of product and underlying security, type and size of the
transaction, market conditions, market transparency, availability of liquidity providers and
other considerations that are in existence at the time of the transaction and the type of and
the amount of collateral provided.
d) Product or transaction specific fees
Additional product specific fees may be agreed with you for certain financial instruments,
services, engagements and/or transactions. Information on such fees will be provided in
specific service or engagement documentation.
e) Taxes
Taxes may also be payable in accordance with the rates set by the relevant tax authorities at
the time of the transaction. Such rates are publicly available, may be affected by factors such
as the type of security, type or value of the transaction and/or your tax status and may change
at any time.
f) Currency conversions
If your transaction involves a currency conversion (e.g. if the security being purchased is
denominated in a different currency), currency exchange costs may also apply, which will be
determined by reference to a number of factors, including exchange rates applicable at the
time of your transaction.
g) Risk price
When you ask us to provide you with a quote in a particular financial instrument or where we
will be trading with you in as principal “on risk” (i.e. as a systematic internaliser, market marker
or liquidity provider), unless we agree otherwise, the price of any transaction we execute with
you may include what we believe to be a reasonable spread. This spread is not an explicit
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transaction charge; rather the price reflects the risk price at which CMFRA is willing to trade
that instrument with you.
The risk price at which you trade with CMFRA will depend on a number of factors which reflect
the level of risk CMFRA expects to incur when transacting with you, which may include those
set out below. This list is not exhaustive and CMFRA may take into account other factors that
it considers appropriate in determining that price.
h) Costs related to Ancillary or other services
CMFRA may charge you for ancillary or other services we provide you, such as research and
corporate access services. Any such fees are agreed with you and may be amended
periodically and you will be notified of any changes.
i) Third-party payments
From time to time, we may receive remuneration from third parties (excluding our affiliates) in
respect of transactions we carry out with or for you, or we may provide or receive non-
monetary benefits in connection with the provision of services to you, provided that the
payment or benefit:
(i) is designed to enhance the quality of the services that we provide to you; and
(ii) does not impair compliance with our duty to act honestly, fairly and professionally in
accordance with your best interests.
Where we pay or receive such amounts or benefits, we will disclose the existence, nature and
amount of the payment or benefit separately to you (which may be via a client platform or
portal). Minor non-monetary benefits e.g. participation in conferences, may be described in a
generic way.
If you have any questions in relation to the Costs and Charges associated with any particular
financial instrument, please raise these with your usual CMFRA Representative.
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5. Conflicts of Interest Policy
5.1 Purpose and short summary
As a multi-service financial institutions engaging in a variety of activities and offering a wide
variety of products and services to a broad and diverse client base, SMBC Nikko Capital
Markets Europe GmbH will from time to time encounter actual and potential conflicts of interest
that arise from SMBC Nikko Capital Markets Europe GmbH as well as from all entities of
SMBC taking multiple roles in a transaction, or providing products and services across
different desks, divisions, legal entities or SMBC Nikko Capital Markets Europe GmbH
operated trading venues.
A conflict of interest is generally a situation in which the firm or part of the firm or a business
unit or any of its employees and contingent workers has a business or personal interest which
potentially competes with such an interest of any or more of a client, the firm or part of a firm
and business unit. Whereby client means existing client, a potential client or past client where
fiduciary or other duties remain.
In accordance with the regulatory obligations set by the Markets in Financial Instruments
Directive II, as amended and implemented nationally, SMBC Nikko Capital Markets Europe
GmbH will manage conflicts fairly and will put in place policies and procedures to ensure that
any actual or potential conflicts of interest are identified and managed effectively. In this way,
the SMBC Nikko Capital Markets Europe GmbH seeks to avoid the risk of material damage to
the interests of the clients.
SMBC Nikko Capital Markets Europe GmbH has the obligation to manage conflicts of interest
effectively by implementing adequate procedures and a robust control environment with
effective systems to identify, mitigate and manage the risks. Not doing so risks clients’
interests being overlooked in favour of commercial or personal interests.
Conflicts identification and resolution is a critical tool to prevent conflicts arising that could
result in: legal/regulatory risk, reputational risk and damage to client relationships. One policy
cannot describe all circumstances in which conflicts of interest arise. Rather, it is the aim to
provide an overarching framework for the identification and management of conflicts of interest.
Therefore, this policy is to be revised annually, and aims at setting out key principles and
relevant measures.
Where actual or potential conflicts of interest were identified, their materiality has to be
assessed; they should be prevented where possible or mitigated appropriately. In any case,
an actual or potential conflict of interest has to be located within the conflicts of interest register.
Disclosing a conflict of interest remains to be the last resort (ultima ratio principle), meaning
that all other instruments which are suitable for handling the conflict of interest will be preferred.
5.2 Scope
This policy applies to:
all permanent staff;
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all temporary staff;
any contractors, representatives and any tied agents of SMBC Nikko Capital Markets
Europe GmbH who has access to SMBC’s systems (whether actual or incidental)
who are herein after referred to as “Employees”.
This policy is to be revised annually, and shall identify the situations in which conflicts of
interest may arise and should state how these conflicts should be managed. Managing
conflicts of interest must aim at acting in the best interest of our clients. SMBC Nikko Capital
Markets Europe GmbH is obliged to treat their clients fairly and with integrity across all its
business activities.
The conflict might be:
a. between the interests of two or more clients; or between SMBC Nikko Capital Markets
Europe GmbH own interests and those of a client or clients; or
b. between the interests of the employee and those of a client or clients of SMBC Nikko
Capital Markets Europe GmbH; or
c. between the interest of the employee of SMBC Nikko Capital Markets Europe GmbH
and SMBC Nikko Capital Markets Europe GmbH itself; or d. between SMBC Nikko Capital
Markets Europe GmbH and the members of both its management body and its supervisory
board
5.3 Identifying Conflicts of Interest
SMBC Nikko Capital Markets Europe GmbH and its employees have to undertake all
appropriate steps to identify conflicts of interest that arise or could arise with regards to
conducting business.
For the purposes of identifying the types of conflicts of interest that arise or may arise in the
context of providing a service which entails a risk of damage to the interests or our client or
the integrity of the financial market, SMBC Nikko Capital Markets Europe GmbH and its
employees must take into account whether:
SMBC Nikko Capital Markets Europe GmbH is likely to make a financial gain, or avoid
a financial loss, at the expense of the client;
SMBC Nikko Capital Markets Europe GmbH has an interest in the outcome of a service
provided to the client or of a transaction carried out on behalf of the client, which is
distinct from the client’s interest in that outcome;
SMBC Nikko Capital Markets Europe GmbH has a financial or other incentive to favour
the interests of one client or group of clients over the interests over another;
SMBC Nikko Capital Markets Europe GmbH receives or will receive a monetary or
non-monetary inducement from a third party or another Sumitomo Mitsui Financial
Group entity or related division in relation to a service provided to the client;
The interests of one client may be preferred to those of another;
SMBC Nikko Capital Markets Europe GmbH or its employees carry on the same
business as the client;
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Employees of SMBC Nikko Capital Markets Europe GmbH have multiple roles across
more than one legal entity or have multiple roles outside of the company with an impact
on the client relationship;
Business is being placed on behalf of the client with another group entity, which may
not be in the client’s best interest.
These criteria should be taken into account when considering, if a behaviour entails or may
entail a conflict of interest. Self-understanding, the mentioned criteria are a non-exhaustive list
and other factors need to be considered on a case-by-case basis.
Where identified through the above outlined criteria, conflicts of interest must be recorded
immediately within the conflicts of interest register.
5.4 Procedures and Measures for Managing Conflicts of Interest
In order to manage any conflicts of interest under this policy the following measures and
procedures should be applied through a combination:
Methods of Conflicts Management
Segregation of Duties - establishing adequate segregation of duties, e.g. entrusting conflicting
activities within the chain of transactions or of services to different employees, or entrusting
supervisory and reporting responsibilities for conflicting activities to different employees.
Information Barriers - establishing information barriers and physical separation of certain
departments specifically between private and public side business lines in order to prevent
information flow between conflicting business activities. This also includes system access
restrictions.
Outside Activities - preventing employees who are also active outside the institution from
having inappropriate influence within the institution regarding those other activities; This also
includes preventing members of the management body from holding directorships in
competing institutions.
Multi-Level-Procedures and Deal-Treeing - establishing adequate procedures for transactions
with related parties (e.g. requiring transactions to be conducted at arm's length; requiring that
all relevant internal control procedures fully apply to such transactions; requiring a binding
consultative advice by members of the supervisory board; an approval by shareholders of the
most relevant transactions; limits to the exposure of such transactions).
Consent
Where SMBC Nikko Capital Markets Europe GmbH is not reasonably confident that the
arrangements it has in place to manage conflicts of interest are sufficient to ensure that the
risk of damage to the interest of the client may be prevented, SMBC Nikko Capital Markets
Europe GmbH must disclose the general nature and/or source of the conflict to the client which
may be impacted, if it wishes to proceed to undertake the business for that client.
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Consenting conflicts of interest should aim at enabling existing or potential clients or third
parties to make an informed decision before conducting business with SMBC Nikko Capital
Markets Europe GmbH
Declining to act
In certain circumstances, bearing in mind the nature of the conflict and the risks involved,
SMBC Nikko Capital Markets Europe GmbH may wish to refrain from acting for the client.
Therefore, each division must ensure that its established organizational and administrative
arrangements are effective to identify and manage relevant conflicts of interest.
In the case that applied measures and procedures are not effective it has to be decided
whether 1) the Conflict of Interest will be disclosed (3.2) or 2) acting for the client or undoing
an action which would lead to harming the client’s interest or potentially harming the interests
of the client is the adequate measure. With special regards to transactions refusing,
discontinuing or changing any part of the transaction is the remaining option.
5.5 Disclosure of Conflicts of Interest
Where there is no reasonable confidence that the arrangements that are in place to manage
conflicts of interest are sufficient to ensure that the risk of damage to the client’s interests will
be prevented, SMBC Nikko Capital Markets Europe GmbH must disclose the general nature
and/or source of the conflict to the client or potential client. Disclosure is not a sole measure
being used to manage the conflict but it should be highlighted, that disclosing a conflict of
interests as a measure remains a last resort.
The disclosure has to be provided promptly and clearly. It has to include a description of the
conflict of interest and potential risk of the conflict in sufficient detail which needs to be written
in a suitable way so that it is understood by the client. The disclosure has to include the
statement, that organizational and administrative measures set out by SMBC Nikko Capital
Markets Europe GmbH to prevent or manage the conflict are not sufficient in order to ensure
with confidence that the risk of damage to the clients’ interest will be prevented.
The disclosure must be made in a durable medium (paper or any other instrument which
enables the client to store the information for future reference for an adequate period of time
and which allows for the unchanged reproduction of that information) and must include
sufficient detail, taking into account the nature of the client, to enable that client to take an
informed decision with respect to the service, in the context of which the conflict of interest
arises.
The disclosure must be addressed personally to the client.
Procedures & Policy Application
SMBC Nikko Capital Markets Europe GmbH will manage conflicts of interest where the client's
interest threatens to be unduly harmed and will manage the conflicts of interest.
Therefore, various arrangements have been established by Compliance, designed to achieve
these objectives:
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Relevant policies and procedures for inter client conflicts including policies for order
management and execution, allocation policies and procedures for treeing.
Identification of actual, potential or perceived conflicts of interest for advisory
transactions is managed through the group wide Sumitomo Mitsui Financial Group
Conflicts process where all relevant client transactions are reported;
Controls over the handling and flows of confidential and inside information are outlined
in the Information Barriers policies;
Restricted lists are in place in order to prevent before entering a relationship and check
an ongoing base whether relationships are effected by sanctions or other restrictions
Policy Application
Employees who identify a conflict within SMBC Nikko Capital Markets Europe GmbH must
notify their responsible line manager or the Compliance Department immediately e.g. where
they have outside affiliations or identify potential or actual conflicts, Managers are requested
to inform the Compliance Department of any conflicts reported to them and provide all
essential information on the transaction, the client/s, the relevant staff, etc.
Based upon the information provided and discussions held with the relevant employee, the
Compliance Department will perform a thorough assessment of the conflict and will report it to
the CM FRA in a first step.
In the event this is required Local Compliance and the relevant business area will be notified
with full details of the conflict, Local Compliance will agree steps to be taken to resolve the
matter, time-frame for resolution, and any other concerns and/or risks associated with the
conflict.
Furthermore, a Conflicts of Interest Record will be kept outlining any risk or concerns resulting
from conflicts of interest. This will be provided to the periodic RCC2 via a written report on the
situations contained in the Conflicts of Interest record.
5.6 General types of situations leading to conflicts of interest
Mandatory information about outside business interests / affiliations
Every business activity (e.g. consultancy, management positions, heading a trust, business
participations or ventures) outside SMBC Nikko Capital Markets Europe GmbH needs to be
reported and the approval of the responsible business area head / board member is required.
Human Resources will inform Compliance about granted approvals. Where either new joiners
or existing employees have affiliations or personal relationships which could conflict with their
roles, these should be disclosed.
Personal Account Dealing
Personal trading or outside business activities (including board memberships/directorships) or
investments could raise potential conflicts with a client, SMBC Nikko Capital Markets Europe
GmbH or the SMBC group.
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SMBC Nikko Capital Markets Europe GmbH’s Compliance Manual sets out the conditions for
the Employees’ personal account dealing activities. The main goal, besides avoiding market
abuse, is to avoid conflicts of interest between clients of the firm and Employees of the firm.
Remuneration
Compensation arrangements or incentives could affect whether particular investment
business or a particular transaction is presented to a client.
SMBC Nikko Capital Markets Europe GmbH has remuneration policies and practices are in
place in accordance with regulatory requirements, taking into account the interests of all the
clients, and designed to ensure that clients are treated fairly and their interests are not
impaired by the remuneration practices.
Gifts & Entertainment
Giving or receiving gifts or entertainment (to or from individuals, brokers or firms with whom
SMBC Nikko Capital Markets Europe GmbH conducts or intends to conduct business), of a
value or frequency that may be perceived to be an improper inducement.
It is prohibited for all Employees to receive or offer gifts and entertainment for themselves or
their families which would negatively influence their integrity which might constitute an
inappropriate incentive. Further information concerning this topic is specified in the Gifts and
Entertainment chapter of the SMBC Nikko Capital Markets Europe GmbH Compliance Manual.
Financial Analyst
For Research Analysts and the Research department 3 for the production of investment
research, the Group’s guidelines will apply, which explains the disclosure requirements for
conflicts of interest and the responsible analyst. The Research Department has its own
specified policies and procedures for dealing with conflicts of interest, including special
personal account dealing regulations apply. SMBC Nikko Capital Markets Europe GmbH does
not have a Research Department producing research. In general, Conflict of Interest(s)
(“COI(s)”) regarding production of research is managed by Nikko Tokyo in accordance with
generally accepted COI provisions. Where the distribution of Research is relevant, COI
management and approval processes need to be in place and complied with.
Order Execution
SMBC Nikko Capital Markets Europe GmbH has defined and implemented an Order Execution
policy which describes how clients’ orders are executed. The Order Execution policy sets out
how SMBC Nikko Capital Markets Europe GmbH deals with clients’ orders to act in their best
interest.
New Business
All new business undertaken by SMBC Nikko Capital Markets Europe GmbH shall be
assessed prior to transacting, to ensure that it does not create a conflict, and/or compromise
an existing relationship/transaction with another client, or dealings transacted by employees
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themselves. Employees are required to report to the Compliance Department on any occasion
where they suspect a conflict may arise. The Compliance Department will then advise what
further action is to be taken to address the situation.
Additionally, according to the type of product area, the following situations may create
conflicts:
Intragroup conflicts
An Sumitomo Mitsui Financial Group entity provides loans to the client which is an
issuer client of SMBC Nikko Securities Inc.;
An Sumitomo Mitsui Financial Group entity or affiliate provides financing to multiple
competing bidders for a single asset;
SMBC Nikko Capital Markets Europe GmbH is underwriting bonds where proceeds
are used to repay group company loan.
Pricing and allocations conflicts
The firm’s allocations of instruments in which the firm or affiliates has a position;
The method in which the firm allocate financial instruments to investor clients;
Information risk conflicts:
Employees of the firm may possess material or privileged non-public information
related to clients and the incentive to share material or privileged non-public
information to further enhance the firm's business objectives may conflict with the best
interests of its client(s).
Transactional conflicts:
Carrying out dealing activities in which SMBC Nikko Capital Markets Europe GmbH is
originating positions may conflict with its clients’ activities where SMBC Nikko Capital
Markets Europe GmbH may not act in the best interests of the client or fail to provide
best execution where it has the obligation to do so;
Any instance where SMBC Nikko Capital Markets Europe GmbH is contemplating
providing financing to more than one potential client with respect to the same target
business or assets;
SMBC Nikko Capital Markets Europe GmbH could determine valuation as calculation
agent in the case of transactions, which could set valuations that favour its position;
Strategic / Proprietary Information
SMBC Nikko Capital Markets Europe GmbH employees will have access to information
relating to its clients, employees, service providers, controls, policies & procedures, security
and data which must be safeguarded and treated as confidential. SMBC Nikko Capital Markets
Europe GmbH has Information Security policies and controls in place which must be adhered
to.
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5.7 Regulatory references
Provisions of Part 11 of the German Securities Trading Act (WpHG) and the German
Ordinance specifying the rules of conduct and organisational requirements for investment
service providers (WpDVerOV)
BaFin’s Minimum Requirements for the Compliance Function and Additional
Requirements Governing Rules of Conduct, Organisation and Transparency (MaComp)
BaFin’s Minimum Requirements for Risk Management (MaRisk)
BaFin’s Issuer guideline (Emittentenleitfaden)
Final MiFID II Delegated acts on Inducements and Conflicts of Interest (April 07, 2016)
and associated Regulatory Technical Standards;
The EBA Guidelines on internal governance (GL 44).
5.8 Record-keeping and approval
SMBC Nikko Capital Markets Europe GmbH have an external Conflicts of Interest Summary
Policy available on the website and also disclose potential conflicts of interest as part of
transactional documentation e.g. Offering Circulars. In the event a decision is made by SMBC
Nikko Capital Markets Europe GmbH to make a specific disclosure to a client or potential client
pursuant to this policy, the proposed disclosure should be agreed by the relevant Department
Head and the Compliance Department prior to it being sent to the client or potential client.
Once approved, a complete record of the disclosure including: the date; time; names of
employees involved; name of the client; contact name at the client; the type of durable medium
used to record the disclosure and a copy of the disclosure made, which must be kept by the
relevant department making the disclosure and the /relevant compliance officer.
5.9 Roles with respect to managing conflicts of interest
Role of the Management Board
The Management Board is generally responsible for the establishment of an effective
governance and policy framework including an effective management and control framework
concerning actual and potential conflicts of interest.
Role of the Supervisory Board
The voluntary Supervisory Board should oversee the implementation and maintenance of
effective policies to identify, manage and mitigate actual and potential conflicts of interest.
Role of Compliance
Compliance is committed to the implementation of measures to identify and avoid or
appropriately manage actual or potential conflicts of interest.
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Role of Employees
It is the responsibility of all employees to identify actual or perceived conflicts of which they
become aware. If there is not a process in place for measuring or adequately managing and
addressing a specific conflict or if employees are in doubt, they should refer to Compliance.
Role of Risk, RCSA processes
The business must consider conflicts in any relevant RCSA process, identifying key operating
risks inherent in managing their business and conflicts are part of the global risk taxonomy
that must be taken into consideration in the identification process.
Role of Internal Audit
Internal Audit will include conflicts and actual or potential issues with conflict management
strategies in
5.10 Identification and management of transactional conflicts of interest.
Transactional conflicts of interest will principally be identified via the Conflict Clearance
process, which is coordinated at a Sumitomo Mitsui Financial Group level and when necessary
within the Compliance Control Room. All Employees of SMBC Nikko Capital Markets Europe
GmbH who become aware of a transactional conflict of interest must seek advice from the
Compliance Control Room and the Local Compliance Department.
5.11 Training & Awareness
All SMBC Nikko Capital Markets Europe GmbH employees have to receive a COI training as
part of the new joiner induction process. Furthermore all business divisions are responsible
for ensuring their employees understand the responsibilities under this policy for the
identification, management and escalation of conflicts of interest. Each department is
responsible to extend the relevant training material in order to suit their divisional requirements.
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6. Order Execution Policy
6.1 Introduction
This Client Order Execution Policy (“Policy”) explains how SMBC Nikko Capital Markets
Europe GmbH (“CMFRA”) seeks to provide best execution.
CMFRA is obligated to take all sufficient steps to obtain the best possible result for its clients,
taking into account all relevant execution factors (“best execution”), when executing, receiving
and transmitting applicable client orders or quotes (“orders”).
This policy sets out general information in respect to CMFRA’s approach to best execution.
Further information is provided by class of financial instrument in the Appendices to this
Policy. Specific information by asset class will include, but is not limited to:
The application of best execution,
The relative importance given to execution factors; and
Details of execution venues where CMFRA may place significant reliance.
These Appendices that should be read in conjunction with this policy cover the following
products:
Cash Equities,
Equity linked products (including Convertible Bonds and Covered Warrants,
Credit,
Rates, and
Derivatives.
This Client Order Execution Policy applies to Professional Clients (the “client”) of CMFRA
regardless of whether you are an Elective Professional Client or Per Se Professional Client
and it is not applicable to business conducted with Eligible Counterparties. It is not directed at,
or intended, for Retail Clients and should not be considered for such persons. The policy
should be read in conjunction with our Terms of Business, which you will already have
received along with a letter notifying you of your classification.
The requirements relating to obtaining the best possible result for clients will be applied to any
relevant transaction, in a MiFID II Financial Instrument with CMFRA or affiliates as indicated
or where any part of the origination or execution of the client order or transaction involves a
sales person or trader located in the EEA who has a direct relationship with the client,
regardless of where the client is established.
6.2 What is best execution
Best execution is the requirement to take all sufficient steps to obtain the best possible result
when either executing transactions on your behalf or using other affiliates or brokers to
execute transactions on your behalf, taking into account the following execution factors:
Price – the price at which the transaction could be executed,
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Cost – the costs that will be payable by the client as a result of the execution of the
transaction,
Speed settlement – the speed of execution and settlement of the order,
Likelihood of Execution and Settlement – the likelihood that the transaction will be
executed and settled; and
Nature of the transaction and any other consideration relevant to the execution
In coming to our determination with regards to the priority of such execution factors, a variety
of criteria are taken into account which may include, but are not limited to, the type of financial
instrument that is the subject to the order, the type of order and its specific characteristics,
such as the size of the order or the liquidity of the underlying, as well as the execution venues
to which the order could be directed. Appropriate consideration will be made based on a
transaction by transaction basis and will vary per asset class.
6.3 When does Best Execution apply?
The obligation to provide best execution will always arise in circumstances where CMFRA
receives instructions from a client to execute a transaction on their behalf, that gives rise to
contractual or agency obligations owed by CMFRA to the client. Such contractual or agency
obligations will arise where we are required to exercise discretion in relation to the execution
of your instruction or order and you legitimately rely on us in relation to the exercise of that
discretion e.g. in an agency or riskless principal capacity.
The best execution obligation may also apply when CMFRA deals on its own account, acting
in a principal capacity, and you are placing a legitimate reliance on us to protect your interest
in relation to the execution of a transaction. To determine whether you are placing “legitimate
reliance” on us we will take into account a number of relevant considerations (the four-fold
test):
which party initiates the transaction - where we approach you and suggest that you
should enter into a transaction, it is more likely that you will be placing reliance on us,
market practice and the existence of a convention to ‘shop around’ - where the practice
in the market in which a business area operates suggests you take responsibility for
the pricing and other
elements of the transaction (e.g. there is a market convention to “shop around” for a
quote), it is less likely that you will be placing reliance on us,
the relative levels of price transparency within a market – if we have access to prices
in the market in which we operate, whereas you do not, it is more likely that you will be
placing reliance on us, whereas if our access to pricing transparency is equal or similar
or to yours, it is less likely that you will be placing reliance on us; and
the information provided by CMFRA and any agreement reached.
The obligation to provide best execution will not generally apply where:
You ask us to provide you with a quote in a particular Financial Instrument;
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We will be trading with you as principal “on risk”, in a market where the usual practice
of clients is
to ask several dealers for quotes;
Your access to prices in the market means you are able to, and in practice can be
expected to
assess our quotes against those provided by other dealers;
You specify the price/quote and the trade is executed on risk; or
You apply other conditions which may be considered as specific instructions.
6.4 Specific Instructions
Where we receive specific instructions from you in relation to every aspect of a transaction,
such that we have no discretion over how an order is executed, we will execute so far as
reasonably possible the transaction in accordance with those instructions. Specific instructions
may prevent us from taking some or all of the steps set out in this policy that are designed to
obtain best execution. By following your specific instructions we will satisfy our obligation to
provide best execution in relation to the order. In respect of those aspects of execution which
are not covered by the specific instruction, we will process the order in accordance with this
Order Execution Policy.
When does Best Execution apply?
The obligation to provide best execution will always arise in circumstances where CMFRA
receives instructions from a client to execute a transaction on their behalf, that gives rise to
contractual or agency obligations owed by CMFRA to the client.
Such contractual or agency obligations will arise where we are required to exercise discretion
in relation to the execution of a client instruction or order and where a client legitimately relies
on us in relation to the exercise of that discretion e.g. in an agency or riskless principal capacity.
The best execution obligation may also apply when CMFRA deals on its own account, acting
in a principal capacity, and a client is placing a legitimate reliance on us to protect their interest
in relation to the execution of a transaction. To determine whether a client is placing “legitimate
reliance” on us we will take into account a number of relevant considerations (the four-fold
test):
Which party initiates the transaction - where we approach a client and suggest that
they enter into a transaction, it is more likely that they will be placing reliance on us.
Where a client initiates the transaction it is less likely that they will be placing reliance
on us
Market practice and the existence of a convention to ‘shop around’ - where the practice
in the market in which a business area operates suggests clients take responsibility for
the pricing and other elements of the transaction (e.g. there is a market convention to
“shop around” for a quote), it is less likely that they will be placing reliance on us
Relative levels of price transparency within a market - if we have ready access to prices
in the market in which we operate, whereas a client does not, it is more likely that they
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will be placing reliance on us, whereas if our access to pricing transparency is equal
or similar or to a clients, it is less likely that they will be placing reliance on us
Information provided by CMFRA and any agreement reached.
The obligation to provide best execution will not generally apply where:
Clients ask us to provide them with a quote in a particular Financial Instrument
We will be trading with clients as principal “on risk”, in a market where the usual
practice of clients is to ask several dealers for quotes
Clients access to prices in the market means they are able to, and in practice can be
expected to assess our quotes against those provided by other dealers
Clients specify the price/quote and the trade is executed on risk, or
Clients apply other conditions which may be considered as specific instructions.
6.5 Specific Instructions
Where we receive specific instructions from clients in relation to every aspect of a transaction,
such that we have no discretion over how an order is executed, you will execute so far as
reasonably possible the transaction in accordance with those instructions. Specific instructions
may prevent us from taking some or all of the steps set out in the Policy that are designed to
obtain best execution. By following client specific instructions we will satisfy our obligation to
provide best execution in relation to the order. In respect of those aspects of execution which
are not covered by the specific instruction, you will process the order in accordance with this
Order Execution Policy.
6.6 Execution Venues we use
When executing your transactions or when placing your orders with (or transmitting your
orders to) other entities (including affiliates) to execute, CMFRA will take all reasonable steps
in order to obtain on a consistent basis the best possible result.
The factors affecting choice of execution venue include, but are not limited to financial
instrument, price, market liquidity, the size and nature of the order, credit and settlement risk,
realized performance (latency, liquidity, price improvement), and whether you have informed
us you do not consent to your orders being executed outside of a regulated market or MTF.
The factors affecting choice of execution venue include, but are not limited to financial
instrument, price, market liquidity, the size and nature of the order, credit and settlement risk,
realized performance (latency, liquidity, price improvement, and whether a client has informed
us they do not consent to their orders being executed outside of a regulated market or MTF.
Our choice of venue may be constrained by the fact that there may be only one venue where
an order can be executed due to the nature of the instrument, your order or your individual
requirements.
Venues:
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Regulated Markets, Multilateral Trading Facilities and Organised Trading Facilities
CMFRA and its Affiliates where we internalise orders (either on a risk or as a riskless
principal basis)
Other exchanges that are not Regulated Markets,
Systematic Internalisers,
Market makers or other liquidity providers
Non-EEA entities performing a similar function to any of the above.
Execution venues can include venues of which we are direct members or participant and
venues that we access through third party brokers or dealers.
CMFRA is not a member of any exchanges or other regulated markets. For the purposes of
ensuring efficiency and access to a wider range of markets, particularly in relation to Japanese
equities, CMFRA has entered into agreements with third party brokers, including SMBC Nikko
Securities Inc. (“SMBC Nikko”). In addition CMFRA may be a member of MTFs and transact
with a number of third parties who may be an OTF or Systematic Internaliser. Accordingly, the
"execution venues" referred to herein are SMBC Nikko, MTFs, OTFs, Systemic Internalisers
and other third party brokers.
Where CMFRA has access to multiple venues for execution, CMFRA will select the most
appropriate execution venue.
6.7 Consent to execute away from a Regulated Market or MTF
CMFRA may execute all or part of your order outside of a Regulated Market or MTF. An
opportunity to formally consent or disagree with this approach is included in our account
opening documentation that has been provided to you. In the absence of an explicit response
from you to the contrary in relation to this information, if you place an order with us, we will
treat you as having provided us with consent to trade outside a Regulated Market or MTF, as
we believe it is in your best interests for us to do so (i.e. it allows us the flexibility to choose
from a wider range of execution venues) and recognises that in fixed income markets you are
executing directly with CMFRA and not expecting us to route transactions to a Regulated
Market or MTF other than where required to do so by regulation.
6.8 Aggregation and allocation of orders
CMFRA may aggregate orders of (i) multiple clients and (ii) one or more clients and its own
orders, where CMFRA believes the aggregation to be fair and equitable taking into account
received, any relevant instructions received from the client, the relative sizes of the orders and
the current liquidity of the market for the relevant financial product, and CMFRA’s obligations
to act in the interests of its clients and to avoid conflicts of interest.
Where CMFRA executes an aggregated order, unfair preference will not be given to own
account orders, or to any particular client, in the subsequent allocation procedure. Where a
client order and an own account order have been aggregated, priority will be given to satisfying
the client order if the aggregate total of all orders cannot be satisfied, unless CMFRA can
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demonstrate on reasonable grounds that without CMFRA’s participation it would not have
been possible to execute those orders on such favourable terms, or at all.
6.9 Monitoring and Notification
CMFRA will monitor the effectiveness of its execution arrangements and Order Execution
Policy and assess on a regular basis whether the execution venues it has selected provide for
the best possible result for orders it executes on your behalf.
CMFRA will review this Order Execution Policy, including its appendices, and its order
execution arrangement at least annually. CMFRA will also notify you of any material changes
to its order execution arrangements or this policy; such notification may be made via the
CMFRA website.
6.10 Appendix for Order Execution: Asset Class Information
Introduction
This Appendix provides further details with regards to the application of best execution in
relation to Cash, Equities, Equity Linked Products, Credit, Rates and Derivatives.
General
CMFRA owes a duty of best execution when executing Client Orders on your behalf. We
consider ourselves to be in receipt of an order where an execution instruction is given to us
that give rise to contractual or agency-like obligations to you. Specifically, this will be the case
where you commit to a trade that is not immediately executable, leaving discretion with us as
to the manner of execution and exact terms of the resulting transaction; and the execution can
be booked to your account, without the need to re-confirm the price, size or any other factor(s)
with you; or where we execute an order usually on a riskless principal basis on your behalf.
Best execution obligations are unlikely to apply where you have asked us for a quote (RFQ),
as we generally take the view that in the context of the four-fold considerations there is no
legitimate reliance being placed on us to meet the relevant best execution requirements.
However, this should be reviewed on a transaction by transaction basis depending on the
circumstances of the request. Furthermore, where clients provide us with a specific instruction,
such as the time an order should be placed, to the extent that we follow such instructions, we
have satisfied any best execution requirements with respect to that aspect of the order.
Cash Equities
For the majority of Cash Equity executions, except in certain circumstances, the obligation to
provide best execution will ordinarily apply.
CMFRA is not a member of any exchanges or other regulated markets, nor is it a systematic
internaliser in cash equities. For the purposes of ensuring access to Japanese exchanges and
markets in relation to Japanese equities, CMFRA has entered into execution agreements with
SMBC Nikko Securities Inc. (“SMBC Nikko”).
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The Cash Equities Desk of CMFRA and/or SMBC Nikko assess each client order based on
their accompanying instructions. Client specific instructions determine how each order is split
into components and also dictate how these are executed. Consequently, the prioritisation of
execution factors may vary on a per-order basis.
Outside of any specific instructions provided by the client, the most important execution factor
when handling orders will be the price of the relevant financial instrument. Subject to any
specific instruction, the following provides an example of the execution factors prioritisation
that may be applied:
1. Price
2. Likelihood of Execution
3. Size
4. Costs
5. Speed
6. Other Considerations
Once an order has been received it is split for execution in accordance with any accompanying
Specific Instructions. As part of assessing how to split a client order, this may be done
manually, via an algorithm provided by SMBC Nikko or by a combination of the two. This
process will follow a differing priority of execution factors to meet the desired overall objective
on a per order basis. Client Specific Instructions permitting, market impact is taken into
consideration.
In order to meet the obligation to take all necessary steps to obtain on a consistent basis the
best possible result for the execution of client orders SMBC Nikko (the Cash Equities Desk)
may use one or more of the execution venues listed below:
Execution venues
Chi-X Japan
Fukuoka Stock Exchange
Nagoya Stock Exchange
Sapporo Stock Exchange
SBI Japan Next
Tokyo Stock Exchange
ToSTNET.
Direct Markets Access (“DMA”) orders received by CMFRA are passed through a Smart Order
Router unless a specific venue is instructed. In circumstances, when we do not take an active
role in determining client execution parameters, we will seek to transact that order in
accordance with their instructions. CMFRA reserves the right however to intervene in the
routing and execution of DMA orders where the original parameters could result in adverse
market impact.
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Equity Linked Products
For Equity Linked Products, CMFRA primarily trades in a principal capacity providing
responses to client’s Requests for Quotes (RFQ) and therefore we may act as a liquidity
provider. As CMFRA operates in a competitive market for the execution of clients RFQ’s in
Equity Linked Products, the expectation is that clients have access to multiple dealers and
pricing sources and hence are in competition.
As with RFQ/reverse inquiries, if CMFRA provides quotes or negotiates a price on an RFP
basis with you based on your requirements, we will not generally presume to receive a Client
Order where best execution will apply.
In both of the above circumstances, we will make a determination of the transaction at the
time of quoting whether you are legitimately reliant on us. This will be based on the four-fold
considerations outlined in the Order Execution Policy, meaning:
Where we deem clients to request or take a price in a competitive market, and where
they are not placing legitimate reliance on CMFRA, best execution will not apply. We
expect this to be the case in the majority of circumstances
Where clients legitimately rely on us to get the best possible outcome, we will provide
best execution. We expect this to be the case only in limited circumstances.
Typically executions in convertible bond markets are undertaken via two main approaches,
through a RFQ or via a Resting Order. In a resting order in the over-the-counter markets,
clients give us an instruction to buy or sell on their behalf a specified size in a specified
convertible bond with the aim of achieving the best possible outcome within the available
appetite or supply in the market. We will attempt to fill their Resting Order on an over-the-
counter basis.
When seeking to execute a client resting order CMFRA will seek to fill the transaction as soon
as possible, at the target price or a better price, whilst applying a mark-up or spread as
compensation for our work and (residual) risks. This mark-up or spread should be within a
range of what we consider reasonable for the product type, tenor and size of the trade.
CMFRA does not charge a commission but we do impose a mark-up/down or spread on where
we execute trades in the market and where we execute them with clients (there is no agreed
consistent mark up and reasonableness is based on a number of factors such as time of day,
market conditions, order size, maturity of the transaction, counterparty credit risk).
Generally, an important execution factor for our clients will be the price the relevant financial
instrument is executed at. As part of the price finding process for Equity Linked Product
transactions, we will also take into consideration a number of other execution factors such as
liquidity of the underlying, maturity of the transaction, counterparty credit risk and
platform/technology dependencies.
However, depending on the complexity of the product, client engagement in creating the
product/transaction and bespoke nature of the transaction, the primary execution factors may
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vary, with likelihood and speed of execution potentially being a more important factor than
price.
For equity linked products, the following provides an example of the execution factors
prioritisation that may be applied:
1. Price
2. Size
3. Costs
4. Speed
5. Likelihood of Execution
6. Other Considerations.
As we trade Equity Linked Products on a principal basis, the execution venue will usually be
CMFRA and its affiliates. CMFRA will look to hedge its risks through a variety of Trading
Venues including brokers, exchanges and other dealers.
Bloomberg AllQ
BGC
CHU
CME
GFI
Nagoya Stock Exchange
Osaka Exchange
OTC
SBU
SGX Singapore Stock Exchange
ToSTNET
Tradeweb
Tradition
Tokyo Stock Exchange
Vantage Capital Markets LLP.
Credit
Typically executions in Credit securities are undertaken via two main approaches, via a resting
order or through a RFQ.
Most trading in the market for Credit securities happens through RFQ. When clients request
us to give them a quote, we will look at the four-fold test outlined in the CMFRA Client Order
Execution Policy to determine whether or not they are placing a legitimate reliance upon us
and will apply best execution only if it is determined that they are placing a legitimate reliance
upon us.
When seeking to execute a client resting order CMFRA will seek to fill their transaction as
soon as possible, at the target price or a better price, whilst applying a mark-up or spread as
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compensation for our work and (residual) risks. This mark-up or spread will be within a range
of what we consider reasonable for the product type, tenor and size of the trade.
Generally, the most important execution factor for our clients will be the price the relevant
financial instrument is executed at. However, in more illiquid markets, the primary execution
factors may vary, as such, likelihood of execution may become the primary execution factor.
Subject to any Specific Instruction, the following provides an example of the execution factors
prioritisation that may be applied:
1. Price
2. Likelihood of Execution
3. Size
4. Costs
5. Speed
6. Other Considerations.
As we trade Credit securities on a principal basis often, the execution venue will usually be
CMFRA or our affiliates. Below, we list the other execution venues that we use frequently to
hedge our own market risk, or as a riskless principal, we may use them to fill a resting order
that you have left with us.
Barx
Bloomberg AllQ
BGC
Chicago Board Options Exchange
EMSX
Eurex
GFI
ICAP
Market Axess
OTC
Tradeweb
Tradition.
Rates
Typically executions in Rates securities are undertaken via two main approaches, via a resting
order or through a RFQ.
Most trading in the market for Rates securities instruments happens through RFQ. When you
request us to give them a quote, we will look at the four-fold test outlined in the CMFRA Client
Order Execution Policy to determine whether or not they are placing a legitimate reliance upon
us and will apply best execution only if it is determined that you are placing a legitimate reliance
upon us.
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When seeking to execute your order CMFRA will seek to fill their transaction as soon as
possible, at the target price or a better price, whilst applying a mark-up or spread as
compensation for our work and (residual) risks. This mark-up or spread will be within a range
of what we consider reasonable for the product type, tenor and size of the trade.
Generally, the most important execution factor for our clients will be the price the relevant
financial instrument is executed at. However, in more illiquid markets, the primary execution
factors may vary, as such likelihood of execution may become the primary execution factor.
Subject to any Specific Instruction, the following provides an example of the execution factors
prioritisation that may be applied:
1. Price
2. Likelihood of Execution
3. Size
4. Costs
5. Speed
6. Other Considerations.
As we always trade Interest Rate Products on a principal or riskless principal basis, the
execution venue will usually be CFRA or our affiliates. Below, we list the other execution
venues that we use frequently to hedge our own market risk, or as a riskless principal, we may
use them to fill a resting order that a client has left with us.
Barx
BGG
Bloomberg AllQ
Bond Broker
EMSX
Eurex
Osaka Exchange
OTC
Tradeweb
Tradition
Tokyo Stock Exchange.
Derivatives
CMFRA arranges derivative transactions between its clients and approved group booking
entities and does not execute derivative transactions on a principal basis. Thus the provision
of Best Execution will be a relatively rare occurrence.
For Derivative products, CMDP primarily trades in principal capacity providing responses to
client’s RFQ’s. As CMFRA operates in a competitive market for the execution of client RFQ’s
in derivatives, the expectation is that clients have access to multiple dealers and pricing
sources or alternatively employ independent benchmark advisers to assess market prices and
hence are in competition. Best execution obligations are unlikely to apply where clients have
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asked us for a quote, as we generally take the view that in the context of the four-fold test
considerations there is no legitimate reliance being placed on us to meet the relevant best
execution requirements; however in all cases we endeavour to provide the most competitive
pricing achievable.
The markets for vanilla and complex interest rate, foreign exchange, cross currency and
commodity derivatives are in most instances well established and competitive, whereby
multiple market participants will stand ready to respond to clients’ RFQ/reverse inquiry or
requests for proposal (RFP). Such processes are carried out via direct requests through
meetings, voice, email or electronic messaging.
In relation to RFQs or reverse inquiries (e.g. the client approaches CMFRA to provide banking
services), where we provide quotes or negotiate a price with clients on request, we will not
generally presume to be receiving a Client Order where best execution will apply.
When transacting on a RFP basis, clients will usually, after an initial broad contest, choose a
small number of providers to discuss the transaction in detail. This process will eventually lead
to a (potentially exclusive) quote based on the parameters requested by a client. The time
between the initial client contact and the quote varies from a few days to a very protracted
period. As with RFQ/reverse inquiries, if CMFRA provides quotes or negotiates a price with
you based on your requirements, we will not generally presume to receive a Client Order
where best execution will apply.
In both of the above circumstances, we will make a determination of the transaction at the
time of quoting whether you are legitimately reliant on us. This will be based on the four-fold
considerations outlined in the CMFRA Client Order Execution Policy, meaning:
Where we deem a client to request or take a price in a competitive market, and where
they are not placing legitimate reliance on CMFRA, best execution will not apply. We
expect this to be the case in the majority of circumstances
Where clients legitimately rely on us to get them the best possible outcome, we will
provide best execution. We expect this to be the case only in exceptional
circumstances.
Furthermore, where you provide us with a specific instruction, such as the time an order should
be placed, to the extent that we follow such instructions, we have satisfied any best execution
requirements with respect to that aspect of the order.
CMFRA does not charge a commission but we do impose a mark-up/down or spread on where
the relevant group entities execute trades in the market and where we execute them with
clients (there is no agreed consistent mark up and reasonableness is based on a number of
factors such as, but not limited to, time of day, market conditions, order size, maturity of the
transaction, counterparty credit risk).
When seeking to execute a resting order CMFRA will seek to fill the transaction as soon as
possible, at the target price or a better price, whilst applying a mark-up or spread as
compensation for our work and (residual) risks. This mark-up or spread will be within a range
of what we consider reasonable for the product type, tenor and size of the trade.
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Generally, an important execution factor for our clients will be the price the relevant financial
instrument is executed at. As part of the price finding process for Derivative transactions, we
will also take into consideration a number of other execution factors such as liquidity of the
underlying, maturity of the transaction, counterparty credit risk and platform/technology
dependencies.
However, depending on the complexity of the product, client engagement in creating the
product/transaction and bespoke nature of the transaction, the primary execution factors may
vary, with likelihood and speed of execution potentially being a more important factor than
price.
Subject to any Specific Instruction, the following provides an example of the execution factors
prioritisation that may be applied:
1. Price
2. Likelihood of Execution
3. Size
4. Costs
5. Speed
6. Other Considerations.
As we trade Derivatives on a principal basis, the counterparty to the transaction will usually
be CMFRA and/or its affiliates. CMFRA will look to hedge its risks through a variety of trading
venues including brokers, exchanges and other dealers or on the OTC market; e.g.:
360T
Autobahn
Barx
Bloomberg FXGo
Bloomberg BBTI
OTC
Thompson Reuters FXAll
Tradeweb
XTrader
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Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
7. Product Governance
7.1 SMBC Nikko Capital Markets Europe GmbH as a Distributor
As a distributor of financial products we have certain obligations, including a requirement to
check the target market of the manufacturer and if necessary to identify a target market for
the products we distribute. We distribute products which have been manufactured either by
us or by third parties. We will distribute products and/or related services to you, only if they
are appropriate to you.
7.2 Onward distribution
To the extent you are not the end investor in any distribution chain for a particular product,
you will define your own target market for the relevant product having regard to your
knowledge of your own client base. Since we do not possess sufficient information in order to
assess whether all purchasers of products distributed by us fall within the relevant target
market, you should take into account the target market identified by the manufacturer and
confirm in each case that the relevant product meets your investment needs and objectives or
those of your underlying clients as the case may be.
7.3 Proportionality Types
We have categorised our investment products according to their risk and complexity into one
of three types:
Type 1 (Low) are those non-complex products (e.g. government bonds) for which it is
determined that our existing governance arrangements adequately address the
requirements of the product governance rules.
Type 2 (Medium) are those investment products (e.g. convertible bond or fixed/float
swap) for which it is determined that our existing governance arrangements provide a
strong framework to support the requirements of the product governance rules but that
certain additional protections are required.
Type 3 (High) are those investment products (e.g. structured notes or deal contingent
hedges) which require the highest level of protections to ensure compliance with
product governance rules. While existing governance arrangements and the additional
enhancements for Type 2 products provide a strong framework for Type 3 products,
certain additional protections are required
The overview of all products with their proportionality types can be found in section 7.5
7.4 Appropriateness
Since we offer only products to clients that are available to both professional clients and ECPs and only ever deal with Professional Clients and ECPs, thus there is no need at the current stage to consider the client category when perform a target market reconciliation / appropriateness test. When assessing appropriateness for non-advised services, a firm is also required to determine whether the client has the necessary experience and knowledge in order to understand the
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risks involved in relation to the product or service offered or demanded. Where such an appropriateness test requirement applies in respect of a client, the firm may assume that a professional client or ECP has the necessary experience and knowledge in order to understand the risks involved in relation to those particular investment services or transactions, or types of transaction or product, for which the client is classified as a professional client or ECP. Thus, we take the following approach for the appropriateness test:
Where you request at your own initiative the provision of services in relation to the execution
or reception and transmission of your orders in respect of type 1 and 2 products, then, unless
otherwise agreed, we are not required to assess the appropriateness of such transaction or
service for you and you will not, therefore, have the benefit of certain conduct of business
regulations relating to the assessment of appropriateness.
Since type 3 products are highly complex and require specific background we will perform an
appropriateness check on a case-by-case basis (for the point of sale) if you wish to trade such
product and we may inform you on this assessment. Only if you have sufficient knowledge
and experience and understand the risks of type 3 products, thus are deemed appropriate you
may enter into a transaction.
7.5 Current product list and categorisation
Nr. Product Dept Product complexity Product type
1 Listed Japanese equities (incl. listed preferred stock)
ECM Non-complex 1
2 Listed J-REITs and Infrafunds ECM Non-complex 1
3 Non-Japanese equities / rights issues ECM Non-complex 1
4 Convertible Bonds ECM Complex 2
5 Third party allotment of Convertible Bond ECM Complex 2
6 Japanese Equities Equities Non-complex 1
7 Convertible Bonds Equities Complex 2
8 Covered Warrants Equities Complex 2
9 Repackaged warrants Equities Complex 2
10 Repackaged notes Equities Complex 2
11 Govt. bonds DCM Non-complex 1
12 Corporate bonds DCM Non-complex 1
13 Structured bonds (ABS etc.) DCM (SF) Complex 2
14 Structured Notes (inc. CoCo' AT1, CLN's etc.)
DCM (SF) Complex 2
15 Project Bonds DCM (SF) Complex 2
16 MTNs (private placement) DCM (SF) Non-complex 1
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Nr. Product Dept Product complexity Product type
17 Uridashi DCM Complex 2
18 Namensschuldverschreibung DCM Non-complex 1
19 Corporate Bonds FIST Non-complex 1
20 Government Bonds FIST Non-complex 1
21 Structured notes ("self-led") FIST Complex 2
22 Structured notes FIST Complex 2
23 Nikko Warrants FIST Complex 2
24 Repackaged notes FIST Complex 2
25 Sukuk FIST Non-complex 1
26 Credit Default Swap (CDS) FIST Complex 2
27 Repo (internal) FIST Non-complex 1
28 Interest Rate Swap DPG Complex 2
29 Single Currency Basis Swap DPG Complex 2
30 Cap DPG Complex 2
31 Floor DPG Complex 2
32 Swaption DPG Complex 2
33 Caption DPG Complex 2
34 FRA DPG Complex 2
35 ND IRS DPG Complex 2
36 Cross Currency Swap DPG Complex 2
37 Long Term FX DPG Complex 2
38 FX Forward DPG Complex 2
39 EX Strategy DPG Complex 2
40 ND FX Forward DPG Complex 2
41 ND Cross Currency Swap DPG Complex 2
42 FX Swap DPG Complex 2
43 Mark to Market Basis Swap DPG Complex 2
44 Commodity Swap DPG Complex 2
45 Inflation Swap DPG Complex 2
46 Index CDS (internaI hedging only) DPG Complex 2
47 Single Name CDS ( internaI hedging only) DPG Complex 2
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Nr. Product Dept Product complexity Product type
48 Deal Contingent Hedge (FX and IRS) DPG Complex 3
49 Flexible Start Swap DPG Complex 3
50
Exotic/Bespoke/Highly Complex Derivative products (may be a combination of Type 2 (medium) products above or other Exotic type product)
DPG Complex 3
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
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8. Information about investment firm and Systematic Internaliser
8.1 Scope
SMBC Nikko Capital Markets Europe GmbH has elected to be a Systematic Internaliser (SI)
for the following non-equity asset classes / sub asset classes that are “Traded on a Trading
Venue” (TOTV) where we provide quotes:
Structured Finance Products
Sovereign Bonds
Other Public Bonds
Corporate Bonds
Convertible Bonds
Covered Bond
8.2 Provision of quotes
As an SI when we are requested for a quote in respect of a financial instrument which is traded
on trading venue and agree to provide a quote (an “SI quote”) outside of a trading venue, we
will make public such an SI quote where the quote is in respect of a “liquid instrument” and is
at or below the size specific to the instrument (SSTI). Note that we are not required to publish
(or to give you access to) quotes in instruments that are not deemed liquid by the European
Securities and Markets Authority (ESMA) or where the quote size is above SSTI.
8.3 Publication mechanism
Where we are obliged to make SI quotes public, these will be made available through
traxapa.com, which is our selected quote publication service.
Quote Identification
SI quotes published by SMBC Nikko Capital Markets Europe GmbH can be identified as
follows: Market Identifier Code (MIC) NCML
8.4 Access to quotes
If as an on-boarded client you are interested in trading on the same terms as a published SI
quote, you should note the SI quote ID and enquire with your usual SMBC Nikko Capital
Markets Europe GmbH contact via your regular method of communication who will confirm
whether the SI quote is still executable
8.5 Access criteria
We have established access criteria which we will take into account when determining whether
you may be given access to a published quote, which we apply in an objective and non-
discriminatory way. We may decline to trade with you at the published SI quote on the basis
of:
(a) commercial considerations, including risk limits and capital costs associated with our
relationship with you and the economic value of our relationship with you;
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(b) operational considerations, including any operational preferences or requirements you may
have;
(c) legal and regulatory considerations, including whether you are on-boarded and in
compliance with the terms of any agreements with us, and whether there are any legal or
regulatory restrictions preventing us from dealing with you.
8.6 Quote validity
If the SI quote is no longer executable you may be offered an updated SI quote. We reserve
the right to update our published SI quotes at any time or withdraw such SI quotes without
cancelling or amending the published information due to exceptional market conditions.
Factors influencing whether the SI quote is still available include whether the SI quote has
already been executed against by another client, price movements, market conditions,
inventory status and the time elapsed since the provision of the SI quote. In any event SMBC
Nikko Capital Markets Europe GmbH reserves the right to limit the number of transactions it
is willing to enter into on the basis of a published SI quote to one transaction.
8.7 Reporting Obligations
Where we act as an SI and enter into a transaction in a TOTV instrument, we will support you
by virtue of our responsibility to make a post trade report.
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9. General Terms of Business
9.1 General Information
1.1 These Standard Terms of Business, any accompanying documents as amended from time
to time, (together, these “Terms”), set out the terms of the contract between you and us. These
Terms constitute a contractual agreement having legal effect which you accept by beginning
or continuing to undertake business with us following receipt of these Terms.
1.2 Subject as otherwise stated herein, these Terms supersede any previous written or oral
agreement between the parties in relation to the matters dealt with in these Terms and contain
the entire agreement between the parties relating to the subject matter of these Terms at the
date hereof to the exclusion of any terms implied by law which may be excluded by contract.
1.3 To the extent there is a conflict between these Terms and any agreement referred to in
Clause 10 of this Terms, any Research and Corporate Access Agreement or any Research
Charge Collection Agreement (each a “Relevant Agreement”), the terms of such Relevant
Agreement will prevail.
1.4 Unless otherwise specified, these Terms govern all business transacted by us with or for
you and all Services provided by us to you, whether as principal, or as agent for our Affiliates,
in connection with Financial Instruments Business.
9.2 Client Categorisation
2.1 We have separately notified you of your status as a “professional client” or an “eligible
counterparty”. Subject to your right to request a different status referred to below, we will treat
you as such for all purposes. Categorisation is undertaken on the basis of our internal client
categorisation process. Different rules and different levels of protection apply to you depending
upon your client categorisation.
2.2 You have the right to request a different client categorisation from our categorisation of
you. In the event we intended to categorise you as a “professional client” and you request
categorisation as an “eligible counterparty”, should we agree to such categorisation, you
understand and are required to confirm in writing to us that you will be afforded a lesser degree
of protection. In such case, we will provide you with additional information for your confirmation.
If you request categorisation as a “retail client”, we will not provide you with any Services.
2.3 You agree that you are responsible for keeping us informed about any change that could
affect your client categorisation. Should we become aware that you no longer fulfil the
conditions that made you eligible for professional client or eligible counterparty treatment (as
applicable), we will reassess your circumstances and reclassify you accordingly.
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9.3 Applicable Regulations and Exchange Action
3.1 These Terms, the provision of Services by us and/or any Affiliate and all Transactions are
subject to Applicable
Regulations so that: (i) if there is any conflict between these Terms and any Applicable
Regulations, the latter will prevail; and (ii) we and any Affiliate acting on our behalf may take
or omit to take any action we consider reasonably necessary to ensure compliance with any
Applicable Regulations and whatever we do or omit to do in order to comply with them will be
binding on you.
3.2 From time to time, an Exchange may require us in respect of Transactions in Financial
Instruments, to meet certain disclosure requirements or otherwise provide you with notice of
certain Exchange requirements. Any such requirement or notice will be deemed to form part
of these Terms when provided to you and will be binding on you accordingly.
3.3 If an Exchange (or intermediate broker, Clearing Member or agent, acting at the direction
of, or as a result of action taken by, an Exchange) takes any action which affects a Transaction
(including an action in respect of an Exchange Transaction), then we may take any reasonable
action which we, or the Exchange (or intermediate broker, Clearing Member or agent, acting
at the direction of, or as a result of action taken by an Exchange), at our, or its discretion,
considers desirable to correspond with such action or to mitigate any loss incurred as a result
of such action. Any such action will be binding on you.
3.4 We may refuse to enter into, execute, transmit, deal in or otherwise arrange any
Transaction, provide any Service or perform any obligation pursuant to these Terms where
such action or performance: (i) would cause us to breach any prohibition or restriction imposed
or specified by Applicable Regulations and/or an Applicable Regulator; (ii) would be prohibited,
or made impracticable to effect on reasonable commercial terms, by any suspension or
removal from trading of a Financial Instrument imposed by Applicable Regulations or an
Applicable Regulator pursuant to Applicable Regulations; or (iii) where we have agreed with
you or any other person that we are not obliged to, or shall not, make public or otherwise report
a Transaction, but we are nonetheless required by Applicable Regulations to report, publish
or arrange the publication of such Transaction (pursuant to a market transparency requirement
or otherwise), however, notwithstanding such agreement, we may publish or arrange the
publication of such Transaction and may delegate such reporting or publication to another
person.
9.4 Services
4.1 Pursuant to these Terms, we may provide in our sole discretion and in accordance with
Applicable Regulations, the following services in respect of Financial Instruments, unless
otherwise specified:
(a) execute Transactions upon your Instructions as principal (Eigenhandel or
Finanzkommissionsgeschäft) or agent (Abschlussvermittlung) in accordance with these
Terms, as appropriate;
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(b) deal with (Eigenhandel) or for you as principal (Finanzkommissionsgeschäft) and/or as
your agent (Abschlussvermittlung) as appropriate, or arrange deals (Anlagevermittlung) in
accordance with these Terms;
(c) transmit orders on your behalf in accordance with these Terms (Anlagevermittlung);
(d) perform services in relation to underlyings rendered in connection with other Services
(“Services in relation to underlyings”); and
(e) provide other such services as may from time to time be agreed between you and us
(“Services”).
4.2 Our Services may be provided in relation to, amongst others, Derivatives and Securities
traded on Exchanges, including in Europe, the United States of America and Japan/other
Asian Exchanges.
4.3 We set out under chapter 3 above to these Terms a non-exhaustive list of the descriptions
of the risks involved in Transactions in certain types of Securities and Derivatives. By entering
into these Terms, you acknowledge and confirm you have read, understand and accept the
risk statements contained in chapter 3 above to these Terms.
4.4 Unless agreed in writing separately to these Terms, we will not provide any investment
advice or otherwise act on your behalf in deciding to effect Transactions nor do we recommend
whether or not a particular Transaction is suitable for you. We will not make any investment
or other decisions on your behalf. You have sole responsibility for making any investment
decisions. We will not give you investment, legal or tax advice in relation to any Transactions
or Services.
4.5 Notwithstanding Clause 4.4 of this Terms, we may, from time to time and at our own
discretion, provide you with information about Financial Instruments. However, we are not
obliged to provide you with continuous information nor advice in relation to any Financial
Instruments purchased (or proposed to be purchased) by you pursuant to these Terms or
otherwise and we give no representation, warranty or guarantee as to the accuracy or
completeness of such information.
9.5 Appropriateness
5.1 In respect of the Services, we may require you to provide information in relation to your
knowledge and experience in the investment field relevant to the specific type of product or
service (and updates to such information as necessary) relating to you, your agents,
employees, or others and you agree to provide such information as we may require.
5.2 Pursuant to Clause 2.1 of this Terms, on the basis that we have categorised you as a
“professional client” or an “eligible counterparty”, we assume, as we are entitled to do, that
you have the necessary experience and knowledge in order to understand the risks involved
in Transactions in respect of the Services for the purposes of assessing whether a Transaction
is appropriate for you (where we have an obligation to make such an assessment).
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5.3 Where you request at your own initiative the provision of Services in relation to the
execution or reception and transmission of your orders in respect of Non-complex Instruments,
then, unless otherwise agreed, we are not required to assess the appropriateness of such
Transaction or Service for you and you will not, therefore, have the benefit of certain conduct
of business regulations relating to the assessment of appropriateness.
9.6 Use of Brokers, Introductory, Arranging and Order Routing Services
6.1 To effect Transactions in Financial Instruments, CM FRA may instruct a broker (“Broker”).
A Broker instructed by CM FRA may be an Affiliate. Unless agreed in writing to the contrary,
for Securities Business, CM FRA will remain
your counterparty to Transactions, when acting as principal.
6.2 Where agreed in writing, separately from these Terms, we may act solely in the role of an
introducer and introduce you to a Broker dealing in the relevant Financial Instruments for the
purposes of marketing and/or effecting any transactions in Financial Instruments (“Introduced
Broker”). In such circumstances, the Introduced Broker will be acting as principal as your
contractual counterparty to the Transactions. For the avoidance of doubt, we will not be your
contractual counterparty in respect of any Transactions entered into by you when carried out
by an Introduced Broker and in relation to any such Transactions in which you will be the client
of that Introduced Broker.
6.3 Where you deal with or through a Routing Broker or Introduced Broker, where relevant, its
execution policy will apply to the execution of the order.
6.4 CM FRA may provide an order routing service in Financial Instruments. Orders will be
routed to a Routing Broker. You are responsible for the proper entry and transmission of the
data relating to an order.
6.5 CM FRA reserves the right to refuse to route an order at any time and shall be under no
obligation to divulge the reason.
6.6 You understand that when you are responsible for placing, amending and cancelling
orders, their placing, amendment and cancellation shall be governed by Applicable
Regulations. Accordingly, amendment and/or cancellation of orders is not guaranteed.
6.7 You must ensure that all orders and Transactions made pursuant to this Clause 6 of this
Terms comply with Applicable Regulations.
6.8 All Transactions between you and an Introduced Broker, or a Routing Broker in respect of
which CM FRA provides order routing services, shall be subject to the terms of business (if
any) and any other agreement or arrangement between the relevant Broker and you
(“Introduced/Routing Broker Terms”). You may be required to enter into written
Introduced/Routing Broker Terms as a pre-condition to CM FRA introducing/routing your
orders to such a Broker.
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6.9 As between CM FRA and you, if there is inconsistency between these Terms and
Introduced/Routing Broker Terms, these Terms will prevail.
6.10 CM FRA makes no representation or warranty as to the services provided by, or
creditworthiness of, Routing Brokers or Introduced Brokers. Where a Broker is an overseas
Broker then the services of that overseas Broker may not be regulated by BaFin.
6.11 You agree that:
(a) the acceptance or rejection of orders routed by CM FRA is at the discretion of the Routing
Broker or Introduced Broker (as applicable), and CM FRA has no responsibility therefore; and
(b) CM FRA shall not be liable for breach by a Routing Broker or an Introduced Broker of the
Broker’s terms.
9.7 Third Party Services
7.1 We may provide Services with or through our Affiliates or Third Party Providers. You
authorise us to use the services of Third Party Providers and Affiliates in our provision of the
Services without your further consent and on such terms as we may determine and without a
diminution of our rights.
7.2 Third Party Providers may include Exchanges. Exchanges have certain rules and
regulations with which we must comply. You must read such rules and regulations and
represent and warrant to us that you shall comply with such rules and regulations (to the extent
applicable) and any other terms and conditions that Third Party Providers require with respect
to your use of Third Party Services.
9.8 Execution Policy
8.1 Pursuant to section 82 WpHG, we are required to establish and implement an order
execution policy which demonstrates how we meet the requirement to obtain the best possible
result when executing and receiving and transmitting client orders. When executing orders on
behalf of clients, we will take all sufficient steps to achieve what is called "best execution" in
accordance with our best execution policy. We need to have in place policies and procedures
designed to obtain the best possible execution results.
8.2 Please be aware that where we act in response to a request for a quote, we will meet our
obligations to take all sufficient steps to obtain the best possible result for you by executing
the order immediately after the quote is provided if you accept the order immediately, or if the
quote is not accepted immediately, as soon as is reasonably practicable after the quote is
accepted by you, provided that, taking into account the changing market conditions and the
time elapsed between the offer and acceptance of the quote, the quote is not manifestly out
of date.
8.3 Where you give us specific instructions, including specifying the characteristics of a
bespoke product, either relating to an order or a particular aspect of an order, we will execute
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Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
so far as is reasonably possible in accordance with those instructions. This may prevent us
from taking the steps that we have put in place to obtain the best possible result for the
execution of your orders.
8.4 In the absence of express instructions from you, we will exercise our own discretion, having
regard for the terms of your order, in determining the relative importance of the execution
factors that we need to take into account for the purpose of providing you with Best Execution.
8.5 We may, in certain circumstances, execute your orders for Transactions outside a
regulated market, multilateral trading facility or organised trading facility.
8.6 We have the right to amend the execution policy in line with regulatory requirements and
we will inform you about any material change to our execution policy without undue delay by
the means of a communication pursuant to Clause 19 of this Terms.
9.9 Order Execution
9.1 Unless we have classified you as an eligible counterparty, we will execute your orders in
accordance with our execution policy.
9.2 Unless otherwise agreed between the parties in writing, you expressly consent to our
executing your orders outside of a regulated market, a multilateral trading facility or an
organised trading facility.
9.3 You expressly instruct us not to make public any limit order relating to a transaction in
Securities which is not immediately executed under prevailing market conditions.
9.4 We may, in certain circumstances, aggregate your order with our own orders and with
orders of other clients. In some cases, aggregation may result in you obtaining a less
favourable price than would otherwise have been the case.
9.10 Direct Electronic Access
Should CM FRA, or its Affiliates, provide you with direct electronic access, in relation to
Financial Instruments trading, to an Exchange: (i) without routing orders through CM FRA’s,
or its Affiliates’ internal electronic trading system; or (ii) through the use of a nominated
technical system or technical connection between us, your rights and obligations arising from
such provision will be set out in a separate, binding, written agreement.
9.11 Instructions
11.1 Unless otherwise notified by us, you may transmit your Instructions to us by any means
(including telephone and facsimile or in writing, including by email) and Instructions shall be
transmitted to us at your risk. Instructions shall not take effect unless actually received by us
and, in the case of any Instructions transmitted to any system, formally acknowledged by us.
We shall not be required to confirm any such Instruction prior to execution or otherwise, and
you agree to indemnify us and hold us harmless if you suffer any loss in reliance thereon.
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
11.2 We are not obliged to accept or execute any Instruction nor need we give any reasons
for declining to do so.
11.3 We shall be entitled to rely on and treat as binding any Instructions which we believe to
be from you and which we have accepted in good faith.
9.12 Unsettled Positions
12.1 Except as otherwise stated, CM FRA will have no responsibility for taking or failing to
take action in respect of any rights you may have under any Unsettled Position unless CM
FRA receives timely Instructions from you.
12.2 Where any action is taken by CM FRA or a third party pursuant to any Applicable
Regulations which affects any of your Unsettled Positions generally or corresponding
Exchange Transactions to which CM FRA is a party, CM FRA will make such allocation
amongst the affected customer Unsettled Positions as CM FRA thinks fit, to which allocation
you shall be bound. CM FRA shall use commercially reasonable efforts promptly to notify you
of such event, but will not be liable for any loss incurred by you as a result of such action or
any failure to notify.
9.13 Payment and Delivery
13.1 By entering into a Transaction in Financial Instruments you become unconditionally
obliged, in respect of each Unsettled Position resulting from such Transaction, to pay or deliver
such amount of cash or Financial Instruments to or at the direction of CM FRA within such
time as CM FRA may specify.
13.2 You will not be entitled to receive delivery of Financial Instruments or payment of cash
from CM FRA, nor to any right of ownership or other proprietary interest in or in relation to
such Financial Instruments or cash, in settlement of a Transaction unless and until you have
complied with Clause 13.1 of this Terms and CM FRA has received unconditional and final
delivery of such Financial Instrument (including, where relevant, payment or delivery of any
cash amounts or other assets that the Exchange or Clearing Member is permitted to make in
accordance with Applicable Regulations in lieu of, or in substitution for, its obligation to deliver
Securities) or payment of cash from the Exchange or Clearing Member.
13.3 If you fail to pay any sum when due in respect of a Transaction, interest will be payable
on the unpaid sum until payment is received. Interest will be calculated at one per cent above
EURIBOR. Such interest will be payable on demand and may be deducted by us from any
amount due to you from CM FRA or its Affiliates.
9.14 Position Limits
14.1 We will have the right, whenever we in our absolute discretion deem such action
necessary or desirable for the purposes of complying with Applicable Regulations, to limit or
require the reduction of the size and number of Unsettled Positions (net or gross) which may
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
at any time be outstanding, or to Close Out any one or more Unsettled Positions in order to
reduce the Unsettled Positions carried with us.
14.2 The BaFin or other national competent authorities will impose position limits in respect of
certain commodity derivatives, and position management controls may be imposed by an
Exchange. In order to ensure that such position limits and position management controls are
complied with, we may require you to limit, terminate or reduce positions at any time and we
may in our sole and absolute discretion close out any one or more Transactions.
9.15 Short-selling
You are required to advise CM FRA if any sale order given to CM FRA is a Short Sale and
CM FRA shall have the right to refuse to accept any Short Sale order.
9.16 Power to Borrow or Buy Securities
16.1 Without prejudice to any other remedy which CM FRA may have under these Terms or
Applicable Regulations, if at any time you fail to deliver Financial Instruments in compliance
with any obligation which you may have under these Terms, you authorise (but without
requiring) CM FRA:
(a) to borrow or to buy (for your account) such Financial Instruments necessary to make
delivery thereof and to deliver the same; and
(b) to purchase or otherwise acquire (for your account) Financial Instruments equivalent to
any Financial Instruments borrowed by us pursuant to our powers under sub-Clause (a) above
and to use such Financial Instruments to perform our obligations to the lender of such
Securities to deliver Securities equivalent to the borrowed Securities.
9.17 No holding of Client Money or Client Assets
17.1 Transactions will be settled on a delivery versus payment basis. Consequently, we will
not hold “client money” or “client assets” in the meaning of section 84 WpHG on your behalf
in connection with Transactions carried out under these Terms.
17.2 Where special circumstances result in us holding client money or client assets on your
behalf (such as upon the occurrence of a failed trade), we will hold those monies or assets in
accordance with the requirements stipulated in section 84 WpHG. As separately agreed
between you and us, you confirm that we may hold your money in an omnibus account.
9.18 Compensation Scheme
18.1 We are covered by the EdW. If you are an eligible claimant, you may be entitled to
compensation from the
scheme if we cannot meet our obligations. This depends on the type of business and the
circumstances of the claim. Claims under the EdW are subject to maximum limits on
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
compensation. The claim for compensation is limited to 90% of the liabilities from transactions
in Financial Instruments (with a maximum compensation limit of EUR 20,000).
18.2 Further information about the EdW is available on the EdW website (http://www.e-d-
w.de/en/index.html) and on request from your relationship manager.
9.19 Communications and Notices
19.1 Any notice or other communication in connection with these Terms shall be in writing and
sent by electronic mail to the email address most recently given. A notice or other
communication shall take effect from the time it is received. Notwithstanding the foregoing,
you consent to us communicating with you via notices posted to our website. We will
communicate with you, and you will communicate with us, in English.
19.2 The parties agree that electronic transmission of information cannot be guaranteed to be
secure or error free and could be intercepted, corrupted, lost, destroyed, arrive late or
incomplete or otherwise be adversely affected or unsafe to use and they will both use
commercially reasonable procedures to check for the then most commonly known viruses
before sending electronically. The parties recognise that such procedures cannot be a
guarantee that transmissions will be virus free and they shall each be responsible for
protecting their own interests in relation to electronic communications and for ensuring that an
electronic communication is not misaddressed.
9.20 Reporting Trading Information
20.1 We will not make any trade or transaction reports for you in respect of Transactions,
unless otherwise agreed with you in writing, or unless such obligation to report falls upon us
whilst acting as a Systematic Internaliser.
20.2 We may be required to report details in respect of Transactions to a relevant regulatory
authority pursuant to Applicable Regulations (including under Article 26 MiFIR) or to a trade
repository or otherwise in accordance with Applicable Regulations (“Transaction Reporting
Requirements”).
20.3 We may from time to time require you to provide all information (and updates to such
information as necessary) relating to you and your agents, employees, underlying principals
or others as we may reasonably require in order to comply with any market transparency
requirements and Transaction Reporting Requirements as we may reasonably believe may
arise in respect of your Transactions. You agree you will deliver to us such information and
represent to us that such information delivered is, at the time of delivery, true, accurate and
complete in every material respect and you acknowledge and agree that we may rely on the
information without investigation, unless and until you inform us otherwise. You undertake to
provide us, on reasonable notice, with any material changes or updates to this information.
20.4 We may refuse to enter into, execute, transmit, deal in or otherwise arrange any
Transaction where you have not provided such information (and waived or procured the waiver
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
of any confidentiality or data protection/privacy obligations in respect of such information) as
we may reasonably require: (i) in order for us to comply with any Transaction Reporting
Requirements or market transparency requirements in respect of a Transaction; or (ii) where
our non-receipt of such information (including, without limitation, an applicable legal identifier
code) would mean that we are prohibited by Applicable Regulations from entering into,
executing, transmitting, dealing or otherwise arranging (as the case may be) such Transaction.
20.5 The parties shall, before concluding a Transaction outside the rules of an Exchange
(whether acting as, or on behalf of, the buyer or seller thereof), confirm to each other whether
each is a Systematic Internaliser in respect of the relevant Transaction.
20.6 Unless otherwise agreed, we will provide you with trading confirmations promptly
following the execution of an order with essential information concerning the execution of the
order in accordance with applicable rules on reporting information to clients. We will supply to
you, on request, information about the status of your order.
9.21 Information provision
To the extent that we request information, documentation or assistance from you to comply
with internal policies and procedures and/or Applicable Regulation, this shall be promptly
provided to us. You acknowledge and agree that we are expressly permitted to make certain
information public and/or to provide information to one or more regulators, where we
reasonably consider that we are required to do so by Applicable Regulations. No prior notice
shall be given to you.
9.22 Your Representations, Warranties and Undertakings
22.1 You represent, warrant and undertake to us, as of the date of these Terms and as of the
date of each Transaction, that:
(a) you have all necessary authority, powers, consents, licences, approvals and authorisations,
and have taken all necessary action to enable you lawfully to enter into and perform your
obligations under these Terms and each Transaction;
(b) these Terms, each Transaction and the obligations created under them are binding upon
you and enforceable against you in accordance with their terms and do not and will not violate
the terms of any Applicable Regulations, charge or agreement by which you are bound;
(c) at the time of transfer by you of any Financial Instruments, you will have full and unqualified
right to make such transfer and upon such transfer the transferee will receive all right, title and
interest in and to those Securities free from any adverse interest;
(d) all information which you have and will provide to us is true, complete and accurate and
you will promptly provide us with any further information properly required from time to time
by any competent authority, Exchange, Affiliate, Third Party Provider or us, as applicable;
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
(e) you are familiar with the Exchange rules and you will not take any action or make any
omission that will cause any person to be in breach of or in default under the Exchange rules;
(f) in using the Services, you will comply at all times with, and not in any way violate, any
Applicable Regulations; and
(g) you represent and warrant that your use of the Electronic Services, as applicable, will be
for the purposes of your business, trade or profession. The parties acknowledge and agree
that the
requirements of the E-Commerce Directive (2000/31/EC), as implemented in the United
Kingdom and Germany, are excluded to the fullest extent permissible by law.
22.2 You will notify us promptly if there is any material change in any such information provided,
or if any of the above representations shall materially change or cease to be true and correct.
9.23 Appointment of an Agent
23.1 You may only appoint and use an agent or agents to act on your behalf in respect of your
dealings with us under these Terms, including entering into Transactions, performing your
obligations under these Terms and providing us with Instructions (“Agent”), if the following
conditions are met:
a) prior to acting as Agent, the Agent agrees to be bound by the contractual terms in Schedule
2 (“Agency Agreement”). Such agreement shall only be effective once Schedule 2 is returned
to us, completed and validly signed and dated by the Agent; and
(b) you fulfil your obligations in this Clause 23 of this Terms
23.2 You represent, warrant and undertake to us that:
(a) your appointment of the Agent is lawful and in compliance with Applicable Regulations;
(b) the Agent has the necessary authority from you to act on your behalf to contractually bind
you to these Terms and Transactions;
(c) the Agent has the necessary authority from you to act on your behalf to contractually bind
you to other agreements that are specifically contemplated in these Terms;
(d) the Agent has the necessary authority from you to act on your behalf to provide any
consents on your behalf and respond to the consent letter accompanying these Terms; and
(e) the Agent has the necessary authority from you to act on your behalf to undertake business
with us in accordance with these Terms, including entering into Transactions, performing your
obligations under these Terms and providing us with Instructions regarding Financial
Instruments Business.
23.3 Upon receipt of a validly signed and dated Agency Agreement, you agree that we may
discharge our obligations to you under these Terms by relying on and dealing with and
providing the Services to an Agent acting on your behalf.
23.4 You shall notify us immediately if a person is no longer appointed as your Agent. Upon
receipt of such notification, we shall cease to treat such person as your Agent.
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Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
23.5 Where you validly appoint an Agent, any actions of the Agent under these Terms,
including providing Instructions and orders, shall be deemed to be your own actions.
9.24 Liability
24.1 Subject to Clauses 24.2 to 24.5 of this Terms below and unless otherwise provided in
these Terms, we will not be liable for any loss, liability, damage or expense which may be
sustained by you unless such loss arises solely and directly from negligence, wilful default,
dishonesty or fraud by us or any of our officers, directors or employees.
24.2 We will have no liability for any partial or total non-performance of any Service if such
partial or total non-performance of results from any event or state of affairs beyond our
reasonable control including, without limitation, any failure of communication or computer
systems or equipment or suspension of trading by any Exchange, clearing bank or the
Custodian or any other Third Party Provider.
24.3 We accept no responsibility for any loss, liability, damage or expense that arises out of a
failure by you to provide information reasonably requested by us (or our Affiliates) or by reason
of such information being incomplete or inaccurate.
24.4 We accept no responsibility for:
(a) losses, whether direct or indirect, of profits, revenue or of data; or
(b) any indirect, consequential or incidental losses,
regardless of whether the possibility of such losses was disclosed to, or could reasonably have
been foreseen by us.
24.5 Nothing in these Terms shall exclude or limit any duty or liability which we may have
which may not be excluded or restricted pursuant to Applicable Regulations.
24.6 References in this Clause 24 and Clause 26 of this Terms to us include references to our
Affiliates and any Third Party Providers, and their respective officers, directors, employees,
agents and licensors.
9.25 Indemnity
25.1 You will indemnify us and our Affiliates and respective personnel on demand against all
proceedings, reasonable fees and expenses, payments, liabilities, injury, costs (including,
without limitation, the reasonable costs of professional advisors) and damages arising out of
any breach by you of these Terms.
25.2 You will indemnify and will keep us and our Affiliates and their respective personnel
indemnified against all reasonable costs, charges, liabilities and reasonable expenses
whatsoever incurred by any of them (including but not limited to all costs, charges, liabilities
and expenses arising out of any claims, actions or proceedings brought against us by Third
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
Party Providers) pursuant to or in connection with these Terms and the provision of the
Services (including but not limited to any Third Party Services) and including in connection
with any Transaction effected on your behalf, at your request or otherwise in order to comply
with your Instructions unless due to our wilful default, dishonesty or fraud, including in respect
of all fees, taxes, and charges incurred by us or otherwise payable by us.
9.26 Default
26.1 You must notify us immediately upon becoming aware that an Event of Default has
occurred.
26.2 Following the occurrence of an Event of Default we may, without prior notice to you, take
any and all actions that we reasonably consider to be necessary or desirable in the
circumstances, including (without limitation):
(a) to withhold delivery of Financial Instruments or payment of cash to you that we would
otherwise be required to make in connection with any Transactions;
(b) to buy-in or sell-out Financial Instruments for your account and at your risk in settlement of
an Unsettled Position;
(c) to charge you interest on any payment which is overdue from you at such rate and on such
basis as we customarily charge for unauthorised
overdrafts accruing from the date such payment is due; and
(d) we reserve the right to Close Out any Transaction if we determine in our reasonable
discretion that such action is required by Applicable Regulations or is otherwise necessary or
reasonable for the purposes of limiting risk and you agree to indemnify us for any loss we
suffer as a result of taking such action. In each case, we shall use commercially reasonable
efforts promptly to notify you of such event, but will not be liable for any loss incurred by you
as a result of such action or any failure to notify.
In each case, we may carry out any such action in such manner and on such terms as we in
our absolute discretion think fit and we shall not be responsible for any losses occasioned by
such action.
26.3 Following the occurrence of an Event of Default, we may by notice to you:
(a) terminate or suspend these Terms in whole or with respect to one or more Exchanges with
immediate effect;
(b) demand performance by you of your obligations to us in such manner as is determined by
us; or
(c) seek repayment of any losses suffered by us in consequence of the Event of Default.
26.4 Upon the occurrence of an Event of Default, we shall have the right without prior notice
to you to set off or apply any obligation of yours owed to us or any of our Affiliates (whether or
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
not arising under these Terms, matured or contingent and irrespective of currency, place of
payment or booking office of the obligation) against any obligation owed to you by us or any
of our Affiliates (whether or not arising under these Terms, matured or contingent and
irrespective of currency, place of payment or booking office of the obligation). For the purpose
of cross-currency set-off, we may convert either obligation at the applicable market exchange
rate selected by us on the relevant date. If an obligation is unascertained, we may estimate
that amount and set-off in respect of that estimate, subject to the relevant party accounting to
the other when the amount of the obligation is ascertained. Nothing in this Clause 26 of this
Terms will be effective to create a charge or other security interest.
9.27 Conflicts Policy
We have policies and procedures to identify, consider and manage potential conflicts of
interest and protect the integrity of our relationships with our clients. Our personnel are
required to comply with such policies and procedures and may not do anything directly or
indirectly that is prohibited thereunder. A copy of our conflicts policy is available on request.
9.28 Client Reports
28.1 We shall provide reports to you in relation to the execution of Transactions as may be
required in accordance with Applicable Regulations.
9.29 Fees, Charges and Payments
29.1 We will notify our charges to you separately from time to time.
29.2 You agree that, notwithstanding our requirement to provide you with information on costs
and associated charges under
Applicable Regulations, and excluding any costs and charges in connection with any
Transactions that embed a derivative, we may provide you with only certain details in respect
of such costs and charges where agreed with you.
29.3 Where permitted by Applicable Regulations, we may share charges with, or receive
remuneration from, third parties (including Affiliates) in respect of Transactions we carry out
with or for you, or we may be acting on both sides of the Transaction. We will provide you with
further details in respect of any such charges.
29.4 Without prejudice to Clause 8 or 9 of this Terms, we may, in certain circumstances, apply
a mark-up or mark-down in the price of a Transaction in Financial Instruments, which is likely
to vary on a transaction-by-transaction basis. Any mark-up or mark-down applied to client
Transactions by us will be fair and reasonable, and shall be included in the final price of a
Transaction in order to compensate us (as the market participant) for a number of
considerations, which might include risks taken, costs incurred, and services rendered.
29.5 Unless we agree otherwise, all money payable by you will be paid using immediately
available, freely convertible funds in the relevant currency on the due date regardless of any
right of equity, set-off or counterclaim that you may allege against us.
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Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
9.30 Taxes
30.1 All sums payable by you will be paid free and clear of any taxes, unless you are required
by law to withhold or deduct tax. In this case, unless we agree otherwise, you will pay an
additional amount so that we receive an amount after withholding or deduction of tax that
equals the amount that we would have received without such withholding or deduction.
30.2 You are responsible for paying any taxes due and making claims relating to taxes (such
as for exemption from withholding tax), for filing any tax returns and for providing information
to the tax authorities in relation to any business we carry on with or for you. You agree to
reimburse us for any fees (including irrecoverable VAT, if any) we incur on your behalf or
otherwise in connection with the provision of the Services to you in accordance with these
Terms.
9.31 Confidentiality and Privacy
31.1 We are not obliged to disclose to you, or to take into consideration in providing the
Services, information where the disclosure of it to you would be a breach of duty or confidence
to any other person.
31.2 Neither party will disclose any information relating to the other party obtained in
connection with these Terms, including information relating to these Terms, the Services or
any Transaction, to any third party except: (i) with the consent of the other party; (ii) as is
reasonably necessary to implement or perform these Terms, including (without limitation)
disclosure to Exchanges, clearing houses, brokers and other intermediaries and
counterparties; (iii) as is required by court order or otherwise by Applicable Regulations; (iv)
to Applicable Regulators, on their request; (v) to its personnel, professional advisers, other
service providers and insurers on a need to know basis; and (vi) to its Affiliates which are
subject to confidentiality obligations.
9.32 Termination
32.1 These Terms shall continue in full force and effect until terminated by us or you by written
notice from one party to the other. Such notice may be given no less than thirty (30)
days prior to the date of termination, provided that such notice may be immediately effective
following your Event of Default.
32.2 Termination shall be without prejudice to the completion of Transactions already initiated
and will not affect outstanding rights or liabilities.
9.33 General
33.1 Notwithstanding any other provision of these Terms, we may delegate the performance
of all or part of our duties and obligations to an Affiliate. Our liability under these Terms shall
not be affected by any such delegation.
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Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
33.2 Neither the relationship between us and you, nor the Services to be provided by us nor
any information provided to you, nor any other matter, shall give rise to any fiduciary or
equitable duties on our part which would oblige us (or any of our Affiliates or agents) to accept
responsibilities more extensive than those set out in these Terms.
33.3 These Terms may be amended or supplemented by us by delivery to you of the
amendments or revised Terms. An amendment or supplement which is made to reflect a
change of Applicable Regulations may take effect immediately or otherwise as we may specify.
Any other amendment or supplement will take effect no earlier than ten (10) days after we
deliver the notice. No other amendment to these Terms shall be effective unless in writing and
signed by a duly authorised representative of us.
33.4 Neither these Terms nor any rights, powers, liabilities or obligations under or pursuant to
these Terms may be transferred or assigned by you or by us without the prior consent of the
other party (such consent not to be unreasonably withheld or delayed), save that we may,
upon dispatch of written notice to you, transfer to an Affiliate any or all of our rights, powers,
liabilities and obligations under or pursuant to these Terms. The parties agree that these
Terms shall extend to and be binding upon their respective successors and assigns.
33.5 Our rights and remedies under these Terms are cumulative and are not exclusive of any
rights or remedies provided by law or by any other agreement. No waiver by us of any Event
of Default or breach of any obligation arising under these Terms shall constitute a waiver of
any other such event or breach and no exercise or partial exercise by us of any remedy shall
constitute a waiver of the right subsequently to exercise that or any other remedy.
33.6 Each provision of these terms is severable and if any provision (or any part of any
provision) of these Terms is or becomes invalid under, or contravenes, any Applicable
Regulations, the remaining provisions (and, where applicable, the remainder of the provision
in question) shall not be affected and shall remain in full force.
33.7 So far as is permitted by Applicable Regulations and except in the case of fraud, you
agree and acknowledge that your only rights and remedies in relation to any representation,
warranty or undertaking made or given in connection with these Terms shall be for breach of
the terms of these Terms, to the exclusion of all other rights and remedies (including those in
tort or arising under statute).
33.8 Subject to Clauses 24and 25 of this Terms (which shall confer rights upon third parties
as contemplated therein), nothing in these Terms is intended to confer any rights on any
person not a party under the Contracts (Rights of Third Parties) Act 1999. No consent of any
third party shall be needed for the termination or amendment of any terms of these Terms.
33.9 These Terms and any non-contractual matters in connection with them will be governed
by and construed in accordance with English law. The parties agree that the courts of England
have exclusive jurisdiction to settle any dispute arising out of or in connection with these Terms
(including a dispute regarding the existence, validity or termination of these Terms) or the
consequences of their nullity (a "Dispute"). The parties agree that the courts of England are
64 Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland
Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
the most appropriate and convenient courts to settle Disputes and, accordingly, that they will
not argue to the contrary.
33.10 If you do not have your registered office or principal place of business in England, you
must immediately appoint a party as an agent for service in England and notify us of such
appointment as soon as is practically possible.
33.11 Each provision of these Terms shall only apply to those Financial Instruments as is
relevant and applicable.
9.34 Interpretation
34.1 In these Terms, the following words and expressions have the following meanings:
Agency Agreement has the meaning defined in Clause 23.1(a) of this Terms;
Agent has the meaning defined in Clause 23.1 of this Terms;
Affiliate means any entity that directly or indirectly controls, is controlled by or is under
common control with us, including, without limitation, joint ventures;
Applicable Regulator means each of the BaFin, Deutsche Bundesbank, the European
Securities and Markets Authority and any other relevant regulatory authority regulating us
and/or you in any jurisdiction;
Applicable Regulations means any laws or regulation of Germany, the European Union
(including MiFID2, MiFIR, and all delegated acts issued thereunder) and any other jurisdiction
applicable to the provision of services to you by us under, or in connection with, these Terms;
and any other applicable principle, rule, guidance, decision, determination, ruling, article, by-
law, procedure, usage and custom of the BaFin, Bundesbank or other relevant regulatory body,
Exchange, clearing system, custodian to the provision of services to you by us under, or in
connection with, these Terms, as may be amended, extended, consolidated, substituted or re-
enacted from time to time;
BaFin means the Bundesanstalt für Finanzdienstleistungsaufsicht;
Broker has the meaning defined in Clause 6.1 of this Terms;
CCP has the meaning given to it Article 2(1) of EMIR;
Clearing Member means any third party which is a clearing member of any CCP or Exchange
and which has been appointed by us to provide us with clearing and settlement services in
respect of orders placed by you;
Close Out means, in relation to a Transaction, to close out, unwind, cancel or otherwise
terminate or allow to expire, and Closing Out and Closed Out shall be interpreted
accordingly;
CM FRA means SMBC Nikko Capital Markets Europe GmbH;
Custodian means the person you have designated to safeguard and administer your assets;
Derivatives means Exchange-traded and/or over the counter derivatives;
Derivatives Business means all business undertaken by us in respect of Derivatives,
including the trading of Derivatives;
Dispute has the meaning defined in Clause 33.9 of this Terms;
EdW means Entschädigungseinrichtung der Wertpapierhandelsunternehmen, the German
statutory compensation scheme established under the German implementation of Council
Directive 97/9/EC;
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Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
EEA means the European Economic Area from time to time, which currently comprises the
member states of the European Union, Iceland, Liechtenstein, Norway and, where the context
requires, references to an EEA State include references to Gibraltar as appropriate;
Electronic Services includes all electronic communications between you and us including
but not limited to access to and use of systems that route orders and any related software or
hardware we may provide to you to enable you to use such services including those which
may be provided pursuant to Clause 10 of this Terms;
EMIR means the Regulation (EU) No 648/2012 of the European Parliament and of the Council
of 4 July 2012 on OTC derivatives, central counterparties and trade repositories;
EU Market Abuse Regulation means Regulation (EU) No 596/2014 of the European
Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation)
and repealing Directive 2003/6/EC of the European Parliament and of the Council and
Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC;
Event of Default means any of:
(a) a material breach of any of your obligations under these Terms or any other agreement
entered into with us;
(b) any representation or warranty by you is incorrect when made or repeated or deemed to
have been made or repeated;
(c) the initiation of any criminal, disciplinary or enforcement action against you by any
regulatory authority or Exchange,
(d) the commencement of any insolvency, liquidation, administration, reorganisation or
analogous proceeding with respect to you; and/or
(e) an event of default or similar event occurs under any other agreement between us;
Exchange means any market (including a multilateral trading facility, organised trading facility
or alternative trading system) on which we agree to provide dealing services to you under
these Terms;
Exchange Transaction means a transaction entered into on an Exchange to which we are
party as principal or agent;
Execution Venue means a trading venue (or its operator), a Systematic Internaliser or a
market maker or liquidity provider (each within the meaning contemplated under MiFID2);
Financial Instruments refers to the definition of Finanzinstrument provided for in the WpHG;
Financial Instrument Business means all business undertaken by us in respect of Financial
Instruments, including the sale, purchase and trading of Financial Instruments, including but
not limited to Securities Business and Derivatives Business;
Instructions means any instructions given by you in respect of your account, allocations to
such accounts, or the Services provided to you by us pursuant to these Terms including,
without limitation, an instruction to enter into a Transaction with or for you;
Introduced Broker has the meaning defined in Clause 6.2 of this Terms;
Introduced/Routing Broker Terms has the meaning defined in Clause 6.8 of this Terms;
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
loss includes any loss, cost, liability, expense or damage (including without limitation all
reasonable legal fees and expenses);
MiFID2 means the Directive 2014/65/EU of the European Parliament and the Council of 15
May 2014 on markets in financial instruments and amending Directive 2002/92/EC;
MiFID2 Delegated Regulation means the Commission Delegated Regulation (EU) 2017/565
of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and the
Council as regards organisational requirements and operating conditions for investment firms
and defined terms for the purposes of that Directive;
MiFIR means Regulation (EU) No 600/2014 of the European Parliament and the Council of
15 May 2014 on markets in financial instruments amending Regulation (EU) No 648/2012;
Non-complex Instrument means a financial instrument listed in section 63 para. 11 no 1
WpHG which is considered to be non-complex for the purposes of Article 25(4)(a) of MiFID2
in accordance with Article 57 of the MiFID 2 Delegated Regulation;
parties means the parties to these Terms;
Relevant Agreement has the meaning defined in Clause 1.3 of this Terms;
Research and Corporate Access Agreement means any contract titled as “Research
Agreement”, “Corporate Access Agreement” and/or “Research and Corporate Access
Agreement” entered into between the parties or any contract under which we agree to provide
research services and/or the service of introducing corporate issuers to you;
Research Charge Collection Agreement means any contract titled as “Research Charge
Collection Agreement” or any contract under which we agree to provide the service of
collecting fees paid by you for research;
Routing Broker means a broker specified by you to which you wish us to route an order;
Securities means any of debt instruments or shares;
Securities Business means all business undertaken by us in respect of Securities, including
the sale, purchase and trading of Securities;
Securities Financing Transaction has the meaning given to it in Article 1(3) of the
Commission Delegated Directive (EU) 2017/593 of 7 April 2016 supplementing Directive
2014/65/EU of the European Parliament and of the Council with regard to the safeguarding of
financial instruments and funds belonging to clients, product governance obligations and the
rules applicable to the provision or reception of fees, commissions or any monetary or non-
monetary benefit;
Services has the meaning defined in Clause 4.1 of this Terms;
Services in relation to underlyings refers to the services referenced in sect. 2(9) no 7 of the
WpHG;
Short Sale has the meaning given to it in Article 2(1)(b) of the Short Selling Regulation;
Short Selling Regulation means Regulation (EU) No 236/2012;
Systematic Internaliser has the meaning given to it in Article 4(20) of MiFID2;
Terms has the meaning defined in Clause 1.1 of this Terms;
Third Party Provider means any third party appointed by us and/or our Affiliates to provide
Services or access pursuant to Clause 7 of this Terms;
Third Party Services means Services provided through our Affiliates or Third Party Providers;
Transaction means any transaction contemplated or executed by or between you and us, or
any third party, pursuant to these Terms;
Transaction Reporting Requirements has the meaning defined in Clause 20.2 of this Terms;
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Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
Unsettled Position means, at any time, any Transaction, in respect of which your obligations
to either deliver Financial Instruments or to pay cash to CM FRA which remains to be fulfilled,
either in full or in part; and
WpHG means the German Securities Trading Act (Gesetz über den Wertpapierhandel –
Wertpapierhandelsgesetz).
34.2 In these Terms:
(a) references to any provision of any Applicable Regulations include a reference to that
provision as amended, extended, consolidated, substituted or re-enacted from time to time;
and
(b) words defined in Applicable Regulations shall have the same meaning as in those
Applicable Regulations, unless otherwise defined herein or the context requires otherwise.
68 Sitz der Gesellschaft: Neue Mainzer Str. 52-58, 60311 Frankfurt am Main, Deutschland
Registergericht: Amtsgericht Frankfurt am Main, HRB 110304 Geschäftsführer: Naoki Okubo, Mats Carlström, Dr. Uwe Bischoff, Björn Alexander Senger
Vorsitzender des Aufsichtsrats: Antony Yates VAT-ID DE317644645
10. Your Notes