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MIFID policy

The Market in Financial Instruments Directive (MiFID) has been effective since 1 November 2007. The directive’s objective is to ensure the transparency of information that we disclose to our clients. Explanations of BNP Paribas Investment Partners (THEAM’s) current practices and policies.

SUMMARY
A – Our best selection and best execution policy
B – Scope and Classification of our clients
C – THEAM’s selects its intermediaries and monitors their execution policies in the interests of its clients
D – THEAM acts or may act as a counterparty in certain financial instruments
E – Undertakings, controls and compliance
F – Reviewing our selection and execution policy
G – Consent of our clients for our selection and execution policy
H – Who to contact at THEAM?

A. Our best selection and best execution policy

Our aim is to set out our current practices and future intentions regarding our policy on the best selection of financial intermediaries and best execution that we are owed by these intermediaries. We would also like to summarise the consequences of the reception and transmission of orders and, where necessary, our policy regarding the negotiation of orders when we are acting as counterparty in the market.

The present document is intended to provide information on the current status of our policy. This is subject to change following consultation with, and any subsequent decisions taken by, groups such as: the Financial Markets Authority (Autorité des marchés financiers – AMF) in France, other European regulators and the ESMA ( European Securities and Market Authority’s) which has recently replaced the former CESR (Committee of European Securities Supervisors). Our policy and procedures could also change following any future developments as a result of their implementation by the various EU Member States.

The Market in Financial Instruments Directive (MiFID) offered THEAM the opportunity to clarify our investment decision implementation and execution process, as it applies to managing our clients’ mandates and investment funds, by defining and putting into operation an execution policy on selection of intermediaries, processes undertaken and reporting systems.

This policy contains:
The principles allowing intermediaries to execute orders;
The principles governing order execution according to: type of investment process, type of financial instrument, the execution criteria mentioned in the Directive (type of order, price, costs, likelihood and speed of execution, size of order and any other criteria relevant to the execution of the order).

THEAM regards best execution as a continuous process and has established a permanent monitoring body through the Global Counterparty Committee to enable BNP IP to obtain the best possible result for our clients.

THEAM, as an Asset Management company is required to monitor the effectiveness of this policy, to adapt it and, if necessary, to add to it. The Directive also required us to notify our clients of the MiFID policy that we adopted prior to 1 November 2007.

B. Scope and Classification of our clients

As an Asset Management company, THEAM provides portfolio management services on behalf of third parties. In that capacity, THEAM transmits orders in financial instruments as an extension of the investment processes that it has developed in order to carry out the financial management of the mandates and investment funds for which it is responsible.

THEAM transmits its orders in financial instruments either directly or through BNP Paribas Dealing Services, a BNP Paribas SA Group subsidiary authorised as a bank by the Credit Institutions and Investment Firms Committee (Comité des Etablissements de Crédit et des Entreprises d’Investissement – CECEI). The main financial instruments that may be involved are equities, interest-rate instruments, listed derivatives and OTC derivatives.

The obligations of this selection and execution policy are owed to all our clients, who are in principle deemed to be “Professional clients” within the meaning of MiFID.

This policy aims to define the most appropriate means to ensure the best execution for each category of financial instruments according to our defined investment policies and the execution venues.

C. THEAM selects its intermediaries and monitors their execution policies in the interests of its clients

THEAM has had a formal methodology for selecting intermediaries since 1998; it is based on their qualities in providing services according to the traded instrument in question: the best advice, the best execution price, the best execution quality and even, if applicable, an appropriate technological platform etc.

There is a formal review of the selection process at least annually however BNP IP is continuiously monitoring the quality of its intermediaries and any issues can be escalated to the Global Counterparty Committee which meets on a quarterly basis.

THEAM has established a combination of various negotiation functions (which are intended to be brought further into line with BNP Paribas Dealing Services). These enable it to choose, according to the financial instrument and fund concerned, from among the selected intermediaries. We look for the intermediary which provides execution in line with THEAM’s best execution procedure in terms of three main considerations: financial instrument, management policy applied to the mandate or fund and type of order.

THEAM and its Partners have drawn up, on behalf of their clients, several management policies specific to each management team according to the nature of their investment processes.

Each management team combines an investment process with an order-placing process which, in particular, selects and prioritises criteria and, if the need arises, execution venues for the financial instruments used.

If need be, additional arrangements apply to capital operations, especially initial public offerings, private placements and secondary public offerings.

D. THEAM and its Partners act or may act as a counterparty in certain financial instruments

In accordance with market practices and in order to comply with the management processes that it has undertaken to adhere to, THEAM, either directly or through BNP Paribas Dealing Services, may access the market directly in some jutisdictions, especially for interest-rate and OTC instruments on cash platforms.

In practice, this means that for such transactions, especially in interest-rate instruments or OTC products, THEAM and/or BNP Paribas Dealing Services may act as the direct counterparty of a market-maker. THEAM undertakes, within the meaning defined by the European Directive, to “take all reasonable steps to obtain the best execution for its clients”.

Wherever it can and as a matter of course, THEAM gives and will give preference to organising an invitation to tender in instruments traded bilaterally as a preliminary to the negotiation of a transaction.

E. Undertakings, controls and compliance

THEAM undertakes to take all reasonable steps to enable it to obtain the best execution for its clients either by selecting its intermediaries or by acting as counterparty in the markets concerned. THEAM is happy to share with clients the details of all the execution procedures for your orders executed and to show you how these procedures are linked with our execution policy.

Whenever THEAM receives specific instructions from the client regarding the execution of orders in its mandate or dedicated investment fund, THEAM will follow these instructions and, in so doing, is not subject to its best execution obligations applicable to the type or types of financial instrument affected by the specific instructions. These specific instructions shall be compatible with the provisions specified contractually beforehand upon the signing of the mutual mandate or investment fund undertakings.

F. Reviewing our selection and execution policy

The Global Counterparty Committee acts as the forum for discussing, desciding and acting upon commercial, operational, compliance, legal and risk issues related to eligible counterparties.
This Committee is steered by the Head of Risk Control or in his absence the Head of Compliance. Furthermore, THEAM has established a formal system for reviewing and monitoring and the best execution policy and the policy is reviewed at least annually.

G. Consent of our clients for our selection and execution policy

THEAM is required to obtain the consent of its clients regarding the application of the policy within the framework of our relationship. The present policy is an integral part of THEAM’s contractual relationship with its clients. THEAM will assume that implied consent is given if the client expresses no specific objection within one month of being sent details of the policy by appropriate mail.

H. Who to contact at THEAM?

If you would like any further information, please contact your sales team

Investments in the aforementioned fund are subject to market fluctuation and risks inherent in investing in securities. The value of investments and the revenue they generate can increase or decrease and it is possible that investors will not recover their initial investment. Source: BNP Paribas Investment Partners.