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Best Execution Policy

Best Execution Policy

Established in April, 2005
Revised on April 3, 2008

This Best Execution Policy (the "Policy") sets forth the policy and execution methodology of Shinsei Securities Co., Ltd. (the "Company") on the best terms for customers in accordance with Article 40-2, Clause 1 of the Financial Instruments and Exchange Law.
Upon acceptance of a customer order for securities listed on a financial instrument trading market (hereinafter, referred to as the "Market") in Japan, and in the absence of particular customer instructions regarding execution, the Company will execute the order via another financial instruments dealer which owns a membership. Such order will be executed in accordance with an agreement concluded between the Company and the financial instruments dealer. Accordingly, the following Policy takes into account provisions stipulated by the financial instruments dealer. Occasionally, due to a systems failure or otherwise, there is the possibility that the Company will have no alternative but to execute an order using a method other than the method selected based on the Policy. Even in such cases, the Company will endeavor to execute the order on the best terms possible at the time.

1.Securities Covered by the Policy
Securities covered by the Policy are "Listed Share Certificate and so forth" provided in Article 16-6 of the Enforcement Ordinance of the Financial Instruments and Exchange Law, such as stocks, corporate bonds with stock acquisition rights, ETFs (beneficiary interest in stock price index-linked investment trusts) and REIT (real estate investment trust securities) listed on the Market in Japan. The Company will not handle share certificates, bonds with stock acquisition rights, or "securities handled" as provided in Article 67, Clause 18, Paragraph 4 of the Financial Instruments and Exchange Law that are green sheet issues.
2.Method for Execution on the Best Terms
The following is the best execution policy of the financial instruments dealer under contract with the Company.
The company will not act as a direct counterparty with respect to customer orders but will place all orders as agency orders on the Market in which the company participates.
- Method for handling Listed Share Certificates and so forth
The company will handle all orders from customers in connection with Listed Share Certificates and so forth by placing the order on the domestic Market in which the company participates and the company will not place such orders on a PTS (proprietary trading system).
(1)Upon receiving an agency order from a customer, the company will promptly place the order on the domestic Market where the relevant issue is listed. If an agency order is received during off-market hours of the Market, the company will place the order on the Market after the Market is reopened. However, if a customer requests an execution based on a method other than the above method (the company acting as a direct counterparty in transactions, off-board trading, or off-floor trading, etc.), the company may execute the customer order based on the method agreed with the customer.
(2)The agency order provided in (1) will be placed on the Market as follows.
  1. If the relevant issue is listed on one Market (a "Single Listing"), the order will be placed on the said Market.
  2. If the relevant issue is listed on more than one Market (a "Multiple Listing"), the order will be placed on the Market which is selected by the company as the most liquid Market that has the highest trading volume of the said issue
    (in terms of the median, for 21 days).
    Customers can make inquiries to the company staff in charge about further specific details in relation to the Market selected for each issue.
  3. The company places no orders on Markets in which the company is not a participant.
    Therefore, the company does not handle any issues which are listed singly on such Markets.
    In the case of a Multiple Listing, the company will place the order on the Market which is selected as the most liquid Market, excluding the above Markets.
3.Reasons for Selecting the Said Method
For "Listed Share Certificate and so forth," most investor supply and demand is concentrated in the Market and it is considered that executing orders in the Market is advantageous in terms of liquidity, probability of execution and speed, as compared to executing orders off exchange. The Company therefore believes that it is most advantageous for customers to execute transactions in the Market.
Furthermore, when the relevant issue is listed on multiple Markets, the Company also believes that it is most advantageous for customers to execute transactions in the Market that has the highest liquidity.
4.Others
Regardless of the methods provided in 2 above, the Company will execute the following transactions as follows.
  1. A transaction with respect to which a specific instruction for execution has been received from a customer (for example, by requesting the Company to act as a direct counterparty in its proprietary transactions, by specifying the Market where the order is executed, by requesting off-floor trading or by specifying the execution hours and so forth) and the method of execution so requested.
  2. Execution under a discretionary trading agreement and so forth
    The method selected by the Company within the range of discretion permitted by a customer in the relevant agreement and so forth.

(Note) When receiving from a customer a specific instruction for executing a transaction (for example, by requesting the Company to act as a direct counterparty in its proprietary transactions, by specifying the Market where the order is executed or by specifying the execution hours and so forth), the Company will execute the transaction in accordance with the said instruction.

End

Company Overview

Trade name, etc.:
Shinsei Securities Co., Ltd.; Financial Instruments Dealer; Registration No. 95 (Financial Instruments) filed with the Director General of the Kanto Local Finance Bureau
Location of the Head Office:
1-8, Uchisaiwaicho 2-chome, Chiyoda-ku, Tokyo 100-0011
Associations joined by the Company:
Japan Securities Dealers Association; and Financial Futures Association of Japan
Main business:
Financial instrument business
Foundation:
December 2000

The duty of best execution relates not only to price but also involves the consideration of various factors including costs, speed and certainty of execution. Therefore, the mere fact that an execution may not result in the best price will not necessarily mean that there has been a contravention of such duty.

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