Best Execution Policy

Revised on April 1st, 2024
CLSA Securities Japan Co., Ltd

This Best Execution Policy sets forth the policies and methods for executing orders on the best terms andconditions for clients in accordance with the provisions of Article 40-2-1 of the Financial Instruments andExchange Law.
With respect to securities listed on Japanese stock exchanges, we will execute client orders in accordancewith this policy unless clients give us specific instructions on the execution of their orders.
＊ Unless otherwise instructed by clients, we shall not be the principal party to the transaction facing clients,
but we shall intermediate client orders to the financial markets as agency orders. Securities transactions inforeign markets handled by our overseas affiliates shall be executed in accordance with the respective Best
Execution Policies, based on the contractual terms between clients and our overseas affiliates.

1.

Smart order routing
Our best execution is in principle carried out through our smart order routing ("SOR")1 system
operated by us. If clients choose to use SOR, their orders will be routed to the exchanges or private
trading systems ("PTS(s) ")2 in accordance with their settings.
If clients select Crossing Engine ("CE") that is our internal trading system3 (aka dark pool (" DP(s)")), SOR will forward client orders to CE and External DPs in addition to the routing mentionedabove. Client orders matched by CE are executed at ToSTNeT through us, and client orders matchedby external DPs are executed by ToSTNeT through external vendors.
In our default settings, the use of SOR and CE is automatically selected unless otherwise requestedby clients. In light of the increasing liquidity of listed stocks in the PTSs and DPs in recent years, webelieve that providing execution opportunities in PTSs and DPs in addition to the exchanges best
meets the interest of the clients who chose this setting.

123In-house system that automatically selects the most advantageous execution price from multiple venues. Also referred to as smart order routing system.
Private Trading System as defined in Article 26-2, Paragraph 7 of the Order for Enforcement of the Financial Instruments and Exchange Act.
In-house trading system as defined in Article 70-2, Paragraph 7 of the Cabinet Office Ordinance on Financial Instruments Business, etc.

12.

Eligible securities
Eligible securities include stocks, bonds with stock acquisition rights, ETFs (exchange-tradedfunds), and REITs (real estate investment trusts), listed on domestic exchanges, as specified inArticle 16-6 of the Order for Enforcement of the Financial Instruments and Exchange Act. We do nottrade Phoenix names (i.e., delisted stocks and bonds with stock acquisition rights) that are defined as
tradable securities in Item 4 of Article 67-18 of the Financial Instruments and Exchange Law.

3.

Markets to compare prices
Among the markets available, we have selected the following four markets4 (collectively andseverally, "Market(s)") and DPs, which we have assessed to be sufficiently liquid to our clients. (Notethat there is no capital relationship between CLSA Group and the securities brokers that operate thefollowing PTSs and external DPs.)

4.

•

Tokyo Stock Exchange (“TSE”)—we are a trading participant•

J-Market (Japannext Co., Ltd.)•X-Market (Japannext Co., Ltd.)•Cboe Alpha (Cboe Japan Limited)•Crossing Engine (Our DP)•External DPs (DPs operated by an external vendors)

Methods and rationales for executing at the best trading terms
The following explains the terms and conditions for best execution by using SOR and not using
SOR.
Routed toMarkets and DPs

Markets Only

DPs only

On

Cell 1

Cell 2Cell 3

Off

Cell 4Cell 5Cell 6

SOR settings(1)

When using SOR
In accordance with the above SOR characteristics, client orders will be forwarded toMarkets and DPs as follows: we deem it to be the preference of the clients who chose thissetting.

4Exchanges and PTSs as defined in the main clause of Article 124(2) of a Cabinet Office Order on Financial Instruments Business, etc.

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i.

For settings that use SOR and forward to Markets and DPs (Cell 1)(a) SOR automatically selects a Market or DP where the best price is offered.
(b) In (a) above, if there is more than one Market or DP with the most favorable
price being simultaneously quoted, SOR automatically selects the most liquid
Market or DP.
(c) In (b) above, if multiple Markets or DPs with equal liquidity are identified,
SOR automatically selects a Market with the highest probability that clientorders are executed.
(d) If multiple Markets or DPs are identified as a result of following the selection
method in (c) above, client orders are sliced and sent simultaneously to theselected Markets or DPs.
(e) In DPs, client orders are matched only when the matching prices in DPs are(i) the same as or better than the best bid/ask in Markets, and (ii) within therange of the highest and lowest prices in Markets for the day.
(f)

If the whole or part of a client order has not been executed (e.g. if the size ofthe client order is larger than the size of the matched order), then the nonexecuted part of the order is attempted to be executed again as above, until allof the client order is executed.

(g) To prevent latency arbitrage5, client orders are placed as IOC (immediate orcancel) orders6 when routed to a single Market, and placed simultaneously
when routed to across multiple Markets. In addition, orders from our groupcompanies are always deferred to client orders when placed in DPs.
ii.

When using SOR and forwarding to Markets only (Cell 2)
Client orders are automatically selected and forwarded to one or multiple Markets
at the most favorable price by SOR. In this case, except that client orders are notforwarded to DPs, SOR routes client orders in the same manner as i. above.

iii.

When using SOR and forwarding to DPs only (Cell 3)
Client orders will be forwarded to DPs only. In this case, client orders are routed toCE or external DPs, whichever can execute at the most favorable price.

(2)

When SOR is not used
If clients choose not to use SOR, all client orders will be processed as agency orders andpromptly routed either to TSE or CE in the manner described below, unless otherwise
specifically instructed by clients. Client orders will not be forwarded to PTSs or externalDPs.
i.

Forwarding to TSE and CE without SOR (Cell 4)

5
The act of abusing the time difference (latency) between multiple markets when routing an order to multiple markets. It involves obtaining a quote from thefirst market reached and attempting to execute at more favorable prices in other markets.
6
The order that allows for immediate execution of a partial or full order at the specified price or a more favorable price, while canceling any unfulfilled orderquantity

3Client orders are first forwarded to CE. In accordance with its specifications (see (1) i.
(e) above), CE will compare between CE and the TSE and execute client orders byselecting the most favorable price.
ii.

Forwarding to TSE only without SOR (Cell 5)
Client orders are forwarded to TSE only.

iii.

Forwarding only to CE without using SOR (Cell 6)
Client orders are forwarded to CE only.

5.

When clients instruct to trade at the exchanges that we are not a participant ofIf clients instruct us to trade securities listed on the exchanges that we are not a member of (including
cases where the same securities are also listed on TSE), we will route such orders to relevant
exchanges via Nomura Securities Co., Ltd, our intermediary broker for such orders.
Unless specifically instructed by clients, if clients have opted out for SOR, we will not handle offexchange orders including those at PTSs and DPs.

6.

Miscellaneous
If the settings you have selected are different from your preferences, please let us know. We willpropose the settings that meet your preferences to the extent technically possible. Transactions of odd
lots will be handed over to the securities brokers specialized in odd lots.
Due to system failures, etc., we may have to execute client orders differently from this policy. Even inthat case, we will execute at the best conditions available at the time.
We do not onboard individuals as clients, or deal in discretionary investment contracts and margincontracts. For those client orders for which execution methods are specified in the terms andconditions of our contract, we will execute them in accordance with the specified execution methods.
Agency orders received outside trading hours of the exchanges will be sent to the exchanges fromwhen they are reopened.
The obligation to execute at the best terms and conditions is an obligation that obligates us tocomprehensively consider not only price level but also various factors such as cost, speed, andcertainty of execution. Thus, depending on the market condition, priorities of each factor may vary,and the price may not always be the dominant factor (for example, in the case of illiquid securities,
the speed and probability of execution and settlement may be more important than the price). Even if
it may not be the best execution, post facto, if solely focused on the price, it does not necessarily
constitute a breach of the best execution obligation. In addition, the price at which a client order ismatched by DPs does not necessarily guarantee a favorable price at the time of execution.
Please also refer to CLSA Group Policy for the control and administration of the Best Execution
Policy, as attached Appendix.

4Appendix

1.

Monitoring and Control mechanisms
CLSA has an obligation to monitor the effectiveness of its order execution arrangements and this policy.
This obligation has been incorporated into CLSA’s general compliance monitoring process and businessprocedures and policies. CLSA assesses, on a regular basis, whether the execution venues provide thebest possible result for clients or whether it needs to make changes to its execution arrangements. The
assessment takes into account the information on execution quality distributed by execution venues andBrokers where available. CLSA conducts regular reviews and post trade checking through random
sampling of transactions to ascertain whether the best possible result was obtained in respect of thosetransactions. The performance of electronic trading algorithms against the intended benchmarks (whereapplicable) is ongoing and prompts a continual enhancement cycle and a feedback loop with users withrespect to their usage of electronic trading tools.

2.

Review of Policy
Once every two years, CLSA will review this policy and its execution arrangements. The review will
focus on whether CLSA would obtain better results for its clients if it was to: (A) include additional ordifferent execution venues or brokers; (B) modify the process by which execution venues and Brokers
are selected; and (C) modify any other aspects of this policy and/or its execution arrangements. CLSA
will also review this policy and/or its execution arrangements whenever a material change occurs that
could affect its ability to obtain the best possible result for the execution of its client orders on aconsistent basis. CLSA will provide staff with periodic training on best execution as well as updates oninternal policies and regulatory and technology developments.

3.

Client Disclosure
CLSA will provide its clients with appropriate information on this policy. To the extent that CLSA
makes any material changes to this policy, it will notify the changes to its clients by publishing anupdated version of this policy on the company web-site.

4.

Roles of the Operational and control functions
CLSA has implemented a Best Execution Committee consisting of senior management which isresponsible for overseeing the best execution arrangements to protect clients’ best interest, ensure fairtreatment and to minimize conflict of interest. Responsibility for monitoring day to day activities withrespect to best execution lies with the relevant desk who will assess execution quality against appropriate
metrics and reference benchmarks. The Compliance department samples transactions to review thequality of execution and detect and address anomalies. The Internal Audit department will undertake
periodic audits which may include a review of execution quality.

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