A. BEST EXECUTION FOR MUTUAL FUNDS – TRANSACTIONS ENTERED INTO ON THE MUTUAL FUND’S BEHALF AND EXECUTION OF ORDERS BY THIRD PARTIES FOR TRANSACTIONS INVOLVING THE PORTFOLIO OF MUTUAL FUNDS MANAGED BY THE COMPANY
The Company serves the interests of the Mutual Funds it manages in the best possible way (a) when it decides to deal on behalf of the Mutual Funds it manages (by executing orders), when managing the Funds’ portfolios and (b) when it sends orders to third parties to be executed on behalf of the Mutual Funds it manages, when managing the Funds’ portfolios.
FACTORS TAKEN INTO ACCOUNT
The Company takes all reasonable measures to achieve the best possible results for the Mutual Funds it manages, taking into account factors such as price, cost, speed, market conditions, the likelihood of execution and settlement, the volume and nature of the transaction orders or any other factor relevant to execution of the order. These factors are weighted by taking into account the following criteria:
a) the investment objective, the investment policy and risks to which the Mutual Fund is exposed, based on the information contained in the prospectus and the Mutual Fund’s regulation.
b) The features of the order
c) The characteristics of the financial instruments that are relevant to the order; and
d) The characteristics of the execution venues to which the order can be directed.
PROCEDURES FOR GUARANTEEING BEST OUTCOMES
The Company has put in place procedures that ensure that the best outcomes, in terms of the Mutual Funds it manages, are achieved both when deciding to enter into transactions and when sending orders relevant to the Mutual Fund portfolio to third parties to be executed, in line with the factors outlined directly above. Those procedures are implemented by its Investment Department.
Investment decisions to enter into transactions involving the Mutual Fund portfolio are taken by the manager of each individual Mutual Fund and the Company’s Investment Officer, taking into account the recommendations made by the investment committee, having examined the financial results and analyses of listed companies, as well as economic and political developments in Greece and Europe.
When selecting a specific counterparty, the Counterparty Evaluation Committee identifies those counterparties which are approved for transactions in Greece and abroad and which have the highest overall rating (in terms of execution costs, quality analyses, response to questions / requests, etc.) and therefore must receive the highest volume of orders and be selected on a preferential basis. In all events, the manager evaluates and records information about how well orders are executed over the next 6 months, and at the end of that period the counterparty is re-assessed.
In the case of transactions involving shares listed on a regulated market, the price or range of prices at which an order can be executed is set by the manager, and is irrespective of the counterparty who will execute the order.
In the case of transactions involving debt securities, prices / quotes are checked with at least two approved counterparties, and the best price is chosen. Quotes are printed out and kept on file.
The Company’s approved counterparties (securities companies, banks, international clearing houses, etc.) have also put in place and implement similar best execution policies for their clients’ orders, which require that instructions be sent immediately for execution.
The Company can demonstrate that orders executed as part of Mutual Fund portfolio transactions are in line with its execution policy, and that it sent orders involving the portfolio of Mutual Funds it manages, in line with the policy it has adopted.
RE-EXAMINATION OF PROCEDURES
The Company’s Investment Officer, working in cooperation with the relevant Investment Committee, regularly monitors the effectiveness of the arrangements and Order Execution Policy, and the quality of execution by third parties to which orders have been sent for execution, to identify (and if necessary) correct any inadequacies.
The Counterparty Evaluation Committee meets twice a year to evaluate how Company counterparties are performing and to select those who best respond to the criteria it has adopted.
Each year the Company re-examines the policy and procedures adopted to achieve the best result in the interests of the Mutual Funds it manages, both when taking decisions to enter into transactions and when sending orders to third parties for execution relating to the fund portfolio. The issue is also re-examined every time that there is a material change which affects the Company’s ability to continue to achieve the best results for the Funds it manages.
For each category of financial instruments, the Company identifies the third parties to whom orders can be sent to be executed, in line with the procedures set out in Annex V hereof.
Suitable information about the Company’s policy relating to (a) best execution of orders on behalf of the Mutual Funds it manages and (b) the policy for orders being executed by third parties, and updates to that information are available in electronic format at the Company’s website, www.ingim.gr.
B. BEST EXECUTION FOR CLIENT PORTFOLIOS when providing investment services under Article 12(2) of Law 4099/2012
Law 3606/2007, which transposes the MIFID Directive into Greek law, states that the Company is obliged to adopt a Best Execution Policy to serve the interests of its clients in the best possible way when it manages portfolios, and gives orders to third parties to deal in financial instruments on behalf of its clients.
The Execution Policy applies to all Company clients, whether retail or professional clients, and includes the following:
The order execution factors relevant to the execution of transactions in financial instruments on behalf of clients
The execution criteria for executing transactions in financial instruments on behalf of clients
The method for selecting counterparties which handle the execution
The markets and permissible execution methods for instructions that can be used by counterparties that handle the execution
The financial instruments that execution policy relates to
Monitoring, updating and revision of the execution policy.
When the Company sends orders to counterparties to be executed when it is managing its clients’ portfolios, it takes all necessary measures to achieve the best possible result for its clients.
When providing investment services to clients the Company acts impartially, honestly and professionally, to serve its clients’ interests in the best possible way. Since the Company does not execute orders directly, but sends client order to market makers to be executed, it relies on the Order Execution Policy the latter implements, having examined that it is compatible with:
a) the client’s express written instructions, if applicable or
b) the execution principles that it uses.
ORDER EXECUTION CRITERIA
To execute orders, the Company takes all measures to confirm that the orders sent for execution are in fact executed in the interests of the client, and in a manner that safeguards market integrity. Criteria such as price, liquidity, speed and cost are taken into account depending on their importance and depending on the type of order which has been sent for execution by portfolio managers or by investment advisors on instructions from the client. When executing orders given by managers on behalf of clients, in order to determine the weighting of the said factors, the Company takes into account the following criteria:
The client’s characteristics including whether he is classed as a retail or professional client;
The characteristics of the client’s order;
The characteristics of the financial instruments that are the subject of that order;
The characteristics of the execution venues to which the order can be directed.
The commission collected by the market maker or the Company itself
To achieve this, the Company keeps a record of orders that includes all orders given by portfolio managers or express written execution instructions that the client may have given. Execution orders are checked when the order is being sent and also in relation to the outcome of the execution process by the counterparty market maker. The results are pooled and are used as criteria when revising the choice of counterparty and the execution methods selected by the market maker or the company.
EXECUTION VENUES AND METHODS
The Company executes orders on behalf of its clients when managing their portfolios, using selected market makers that it collaborates with. These market makers have access to different trading venues to ensure the best possible execution of orders in line with their own Order Execution Policy. That policy may also include the option to internalise the order. The choice of execution venue or method primarily depends on the execution policy adopted by the counterparty market maker. However, in choosing the most suitable counterparty to execute a specific order, the Company does have mechanisms in place to ensure that the execution policy of the counterparty market makers it uses is not contrary to Company policy or the goals of the Fund managers giving the order. Moreover, the Company can give specific instructions about the execution venue or method at its discretion. These mechanisms are explained in more detail below.
If orders relate to transferable securities on a regulated market in Greece, the orders can be executed by selected market makers on the Securities Exchange main market or on the Alternative Market or by systematic internalisers.
With the exception of any specific orders from clients, the Company may use third party counterparties (with which it has signed collaboration agreements) to execute a client order in various ways:
on a regulated market or Multilateral Trading Facility (MTF) or
outside a regulated market or MTF, when the Company has obtained the client’s consent in advance
Within the limits of the provisions of law in force from time to time, the Company may pool or allocate client orders along with the orders of other clients, provided that this is not detrimental to the interests of clients.
The Company and the market makers it collaborates with may decide to change any terms, conditions and procedures for executing orders (venues, criteria, systems, etc.) provided they ensure the best possible results for clients.
MONITORING AND REVISION OF ORDER EXECUTION POLICY
The Company has procedures to monitor when orders comply with this execution policy. In particular, the Company ensures that orders executed on behalf of clients are rapidly and accurately registered and that they are executed in the sequence decided on by their managers, unless the nature of the order or prior market conditions make that impossible, or unless the interests of clients require that orders be sent in a different sequence.
At least once a year, or in extraordinary cases where the circumstances so require, the Company re-examines its Order Execution Policy, including its policy for selecting counterparties assigned the task of executing orders. The Company may revise its policy because of material changes affecting its ability to continue to achieve the best possible result for its clients.
The Company informs clients about any material change it makes to its Order Execution Policy by posting a revised version of the policy on its website, provided it has obtained their consent. If that consent has not been given, information is provided using a durable medium. The Company regularly evaluates the counterparties it used, and the execution venues and methods they use, to select those who contribute to achieving the best possible results for its clients from a best execution perspective. After any re-assessment that is necessary, the list of counterparties or permissible execution venues is amended accordingly.
The Company ensures that its clients consent to its Order Execution Policy. Clients will be presumed to have consented if, after 1.11.2007 the Company enters into any transaction on the client’s behalf in the context of the investment services it provides.If a client expresses its opposition to this Order Execution Policy in writing, the client can provide special or general instructions concerning the counterparty or the execution method, or execution venue it wants the Company to use on its behalf.
The Company’s Order Execution Policy is available at the website www.3kip.gr. The Company is not obliged to inform each client individually about any change to its Order Execution Policy, provided the Company has obtained an express confirmation from the client that he/it has frequent access to the internet.