Home>Management Policy for Conflict of Interest(Outline)

Management Policy for Conflict of Interest(Outline)

Management Policy for Conflict of Interest(Outline)

Establishment: June 1, 2009
Revised on December 15, 2016
Shinsei Securities Co., Ltd.
1.Purpose
In order to prevent the interests of customers from being unfairly impaired, Shinsei Securities., Ltd (hereinafter "the Company") has hereby established the Management Policy for Conflict of Interest (hereinafter, the "Policy"), which provides for basic items to develop the management system for conflict of interest for the Company and the parent financial institutions (hereinafter, collectively, the "Group Companies") under provisions of the Financial Instruments and Exchange Act.
Outline of the Policy shall be publicly announced as follows under the relevant laws and regulations:
2.Scope of Parent Financial Institutions
The scope of the parent financial institutions, etc. with respect to which the Company controls conflict of interest is as per the Attached Table.
3.Types of Transactions Possibly Causing a Conflict of Interest and Examples
(1)Types of Transactions Possibly Causing a Conflict of Interest
The following transactions are considered to be "transactions possibly causing a conflict of interest." However, they are merely the criteria for judgment of existence or non-existence of "transactions possibly causing a conflict of interest." It does not mean that a transaction falling under this category is automatically a "transaction possibly causing a conflict of interest." It should also be noted that there may be future additions or revisions.
  1. Instances where a conflict of interest occurs between the Group Companies and the customers of the Company.
  2. Instances where a conflict of interest occurs between the customers of the Group Companies and the customers of the Company.
  3. Instances which are similar to the preceding two and other instances where a customerís interest is unreasonably impaired.
    In making judgment on existence or non-existence of a conflict of interest regarding a particular transaction, the Company will comprehensively take into account various factors, such as possible impacts on the reputation of the relevant Group Companies, etc.
(2)Examples
The following transactions and those which are similar to these are examples of "transactions possibly causing a conflict of interest."
  1. Examples of (a) of the preceding Paragraph
  1. (i) Providing advisory services, etc. for fundraising or M&A to a customer who is the counterparty to or competing with Group Companies considering investment or sale to be made in relation to a proprietary investment.
  2. (ii) While on the one hand providing advisory services, etc. for underwriting or issuance of securities to a customer of the Company and, on the other hand recommending deals of the subject securities to another customer of the Company.
  3. (iii) Providing advisory services for fundraising or M&A to the Companyís customer who is opposing to or competing with another customer of the Group Companies.
  4. (iv) While on the one hand providing advisory services for fundraising or M&A to a customer of the Company and, on the other hand making a proprietary investment in the same customer, purchasing properties from the customer, and so forth.
  5. (v) Being involved in any way, through proprietary trading, participation in underwriting, etc., in securities for which the Company was placed an order to buy or sell from a customer of the Company.
  6. (vi) Doing proprietary trading for certain securities, in knowledge of potential information about a customer of the Company in relation to the relevant securities.
  7. (vii) Internalizing a deal when a wide range of services are being provided.
  8. (viii) Recommending or selling to customers securities that were issued or organized by interested parties or doing so when the Group Companies are granting back-up financing.
  9. (ix) Making profits for the Group Companies, by using, against the customerís intention, information on deals.
  1. Examples of (b) of the preceding Paragraph
  1. (i) Providing advisory services for fundraising or M&A to several customers involved in deals having competitive or opposing relationships.
  2. (ii) Making profits for another customers of, by using, against the intention of the Companyís customer, information on deals.

4.How to Manage a Transactions Which May Involve Conflict of Interest (hereinafter, "Subject Transaction")
When any transaction is judged to fall under the subject category, the Company will make its best effort to ensure customerís protection by adopting any of the following or other alternatives or a set of two or more alternatives.
  1. Separate a business organization conducting the Subject Transaction and a business organization conducting the transaction with the relevant customer.
  2. Change the terms and conditions or method of the Subject Transaction or the transaction with the relevant customer.
  3. Cancel the Subject Transaction or transactions with the relevant customer.
  4. Appropriately disclose to the relevant customer that the Subject Transaction could unreasonably impair the interest of the relevant customer. (However, this method may be used only in instances where it does not conflict with the confidentiality obligation of the Group Companies.)

5.Organizational System to Control Conflict of Interest
(1)Designation of Section to Control Conflict of Interest
  1. The Legal & Compliance Division of the Company is designated as the Section to Control Conflict of Interest.
  2. The Section to Control Conflict of Interest shall not be subject to any direction from any person responsible for any other business organization with respect to a specific transaction. Its independence shall be ensured with respect to the administration of control over conflict of interest.
  3. The Section to Control Conflict of Interest shall identify transactions possibly causing a conflict of interest and shall be responsible for overall control of the organizational system for control over conflict of interest in the Company.
(2)Duties of Section to Control Conflict of Interest
The Section to Control Conflict of Interest shall perform the following duties from a standpoint which is independent from sections in charge of business and parent financial institution, etc. However, when the Section to Control Conflict of Interest submits reports to the parent financial institution, etc., or when the parent financial institution, etc. submits reports to the Section to Control Conflict of Interest, the report shall be made through the section responsible for internal control in the parent financial institution, etc.
  1. Identify the Subject Transaction, and direct the section in charge of the transaction of the Company to take appropriate measures to control conflict of interest with respect to the Subject Transaction.
  2. The Section to Control Conflict of Interest shall submit to the Compliance Committee quarterly reports on ďtransactions possibly causing a conflict of interestĒ which were identified and controlled. However, matters which may have material managerial impacts or materially impair customerís interest shall be promptly reported to the Board of Directors.
  3. To receive reports on the management status, etc. of conflict of interest for Subject Transactions, including Subject Transactions of the Group companies, on a regular basis or from time to time, to verify implementation of appropriate management and to review procedures and systems for the management of conflict of interest, as required.
  4. When the customerís interest is likely to be unreasonably impaired, the Section to Control Conflict of Interest shall direct the section in charge of the transaction to appropriately control conflict of interest or to review the transaction itself, as deemed necessary.
  5. The Section to Control Conflict of Interest shall train, on a regular basis, for Directors and staff of the Company on the control over conflict of interest in line with this Policy and the Rules for Control over Conflict of Interest, and make sure that everybody appropriately understands the control over transactions which may cause a conflict of interest.
(3)Preparation and Retention of Records for Control over Conflict of Interest
Identification and control over Subject Transactions and measures taken for appropriate protection of customers shall be recorded. Such records shall be retained for a period of five years from the date of preparation.
End
<Attached Table>Parent Financial Institutions, etc. Subject to Control over Conflict of Interest (as of December 15, 2016)
Shinsei Bank, Ltd.
Shinsei Trust and Banking Co., Ltd.
Shinsei International Limited
Shinsei Investment Management Co., Ltd.
Shinsei Principal Investments Ltd.
Showa Leasing Co., Ltd.
Shinsei Corporate Investment Ltd.
Other Group companies that filed their Special Business Activities for Qualified Institutional Investors

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