CLSA (UK)
ORDER EXECUTION POLICY
1

General Information about this Policy

1.1

Background
CLSA UK (“CLSA”) provides general broker dealer and other ancillary services to
its clients. It is authorised and regulated by the Financial Conduct Authority of theUnited Kingdom (the "FCA") and is an investment firm subject to the requirementsof the rules of the FCA (the “FCA Rules”) that implement the Markets in Financial
Instruments Directive 2014/65/EU ("MiFID II").
CLSA executes orders in relation to financial instruments on behalf of its clients.
There are two methods that it can use to execute those orders that are
distinguished for the purposes of the FCA Rules.
(A)

First, CLSA can execute the relevant transaction on behalf of the client
directly with a counterparty or on an exchange or other trading system (e.g.,
by dealing directly with a market maker on a “request for quote” basis). The
counterparty, exchange or trading system with which CLSA chooses to
execute such a transaction is referred to in this policy as an “Execution
Venue”. In accordance with the FCA Rules, an Execution Venue can include
an EEA regulated market, or other exchange, a multilateral trading facility,
organised trading facility, a systematic internaliser, a market maker or otherliquidity provider or non-EEA entity performing similar functions to the
Execution Venues listed above.

(B)

Secondly, CLSA can place an order as agent with a third party (e.g., anotherbroker or investment bank) and/or any of its affiliates for that third party oraffiliate to execute on behalf of the client. Such entities are referred to inthis policy as “Brokers”.

CLSA will generally execute orders on behalf of its clients with third party Execution
Venues or Brokers by dealing as agent for its clients. However in relation to fixedincome and currency instruments and trading in certain equity depositary receipts
CLSA may act as principal.
1.2

CLSA’s Core Best Execution Obligations
In accordance with the FCA Rules, CLSA is required to take all sufficient steps to
obtain the best possible result for its clients when executing orders for its clients(i.e., to obtain best execution).
The obligation to take all sufficient steps to obtain the best possible result for clients
does not apply where CLSA has categorised its clients as “eligible
counterparties” for the purposes of the FCA Rules (except where CLSA has agreed
with an eligible counterparty that it will take all sufficient steps to obtain the best
possible result). In relation to its dealings with eligible counterparties, however,
CLSA will strive to act in such clients’ best interests and will take reasonable steps
to prevent or manage any conflicts of interest that it may have in accordance with
its obligations under the FCA Rules.

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CLSA (UK)In seeking to obtain best execution, CLSA is required:(A)

to take all sufficient steps to obtain the best possible result for its clients,
taking into account certain "execution factors" - price; costs; speed;
likelihood of execution and settlement; size of the transaction; nature of thetransaction; or any other consideration relevant to execution. Under CLSA's
policy, such other considerations can include (without limitation) the overall
cost of the transaction (including any commissions received by CLSA and/or
its affiliates or any costs for executing the order on an execution venue);
timely execution availability of price improvement; the potential impact of
the transaction on price; importance of retaining commercial confidentiality
in relation to trading activities or intentions; liquidity of the market (which
may make it difficult to execute an order); order information leakage;
trading conflict; market conduct; market impact; venue liquidity andcounterparty risk.

The relative importance of these factors shall be determined by reference to the"execution factors" being:

(B)

(1)

the characteristics of the client including the categorisation of theclient as a professional client;(2)

the characteristics of the client order;(3)

the characteristics of the financial instrument that is subject to theorder; and(4)

the characteristics of the Brokers and/or Execution Venues to whichthat order can be directed;

to establish and implement a policy (set out in section 2 below) to enable it
to comply with the obligation to take all sufficient steps to obtain the best
possible result for its clients. The policy must identify, in respect of eachrelevant class of instruments:(1)

in the case of orders that CLSA places with a Broker for execution,
each such Broker. The Brokers identified must have execution
arrangements that will enable CLSA to comply with its obligations inrelation to best execution;(2)in the case of transactions that CLSA itself executes directly onbehalf of its clients, the Execution Venues on or with which it
executes those transactions. The Execution Venues identified must atleast include those that enable CLSA to obtain on a consistent basis
the best possible result for the execution of client orders; and(3)

the factors affecting CLSA's choice of Brokers and Execution Venues;(C)

to provide appropriate information (some of which is prescribed by the FCA
Rules) to its clients on the policy and to obtain clients’ consent to the policy;(D)

to monitor on a regular basis the effectiveness of the policy and, inparticular, the execution quality of the Brokers and Execution Venues

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CLSA (UK)identified in that policy and, where appropriate, correct any deficiencies;
and(E)

to review the policy at least annually and whenever a material change occursthat affects the firm's ability to continue to obtain the best possible resultfor its clients; and to notify you of any material changes to our order
execution arrangements or this policy.

2

The Execution Policy

2.1This is the policy referred to above which is required by the FCA Rules.

2.2

All CLSA employees who are responsible for placing orders with Brokers for
execution by those Brokers and/or for directly executing transactions on behalf ofclients must ensure that any such activities are conducted in accordance with therequirements and guidance set out in this Policy.
Application

2.3

2.4

This policy will not apply to the extent that CLSA:(A)

follows specific instructions from a client when executing client orders or
placing an order with, or transmitting an order to, another entity forexecution. CLSA will execute in accordance with those instructions. Clientsshould be aware that following specific client instructions may
prevent CLSA from taking steps it has designed and implemented inthis Policy to obtain the best possible execution result for thoseorders. Where a client’s specific instructions only relate to part of an order,
this policy will apply to those aspects of the order not covered by the specificinstructions. CLSA may be in receipt of specific instructions from clientswhere it receives orders from clients via a direct market access system which
specify the Execution Venue on which such orders are to be executed. In
following specific instructions, CLSA shall be deemed to have taken all
sufficient steps to obtain the best possible result in respect of an order for
its client;(B)

only provides prices to its clients at which it would be willing to buy or sell(without dealing); or(C)deals with its clients on a ‘request for quote’ (“RFQ”) basis and the quote
would meet the firm’s obligations to take all sufficient steps to obtain thebest possible result if the firm executed that quote at the time it wasprovided (unless the quote is manifestly out of date).

CLSA does not, and does not have permission to, deal with retail clients (as definedin the FCA Rules). This means that CLSA is entitled to assess the best possible
result for its clients in terms of the various execution factors and not simply on thebasis of the total consideration (price and cost). As explained above, CLSA shallnot owe an obligation to obtain best execution when it deals with clients whom it
has categorised as eligible counterparties for the purposes of the FCA Rules (except
where CLSA has agreed with an eligible counterparty that it will take all sufficient
steps to obtain the best possible result).

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CLSA (UK)
Fixed Income and Equity Derivatives (EQD)
2.5

CLSA’s Fixed Income and EQD departments only operates on a RFQ basis whereby
clients are not legitimately relying on CLSA in relation to the execution oftransaction on the basis that the nature of the market is that a client will generally
request quotes from a number of different dealers from which the client will havetransparency and choice of the prices at which transactions can be effected in themarket. In accordance with the FCA Rules, RFQ markets are not subject to thegeneral provisions of the FCA’s Best Execution requirements and therefore do not
apply.
Execution Venues

2.6

CLSA may use one or more of the types of Execution Venue as set out in section
1.1(A) above.

2.7

CLSA may execute orders on behalf of clients directly on exchanges, multilateral
trading facilities or organised trading facilities.

2.8

Schedule 1 to this policy lists the particular venues regional affiliates and third party
brokers by financial instrument used by CLSA to execute orders.
Placing Orders with Brokers

2.9

In choosing the Brokers that appear in Schedule 1, CLSA has taken care to selectthose Brokers that, in CLSA’s view, consistently provide a high quality execution
service, taking account of the relevant execution factors for the relevant Instrument
Class. In general CLSA will select affiliates as Brokers where possible. When it is
not possible to select an affiliate, CLSA will enter into arrangements with Brokers
based upon cost, their ability to execute independently, their market reputation,
their technology and their competitive positioning. Where CLSA places an orderwith a Broker for execution by that Broker, CLSA is not responsible for controllingor influencing the arrangements made by the Broker relating to the execution ofthat order (e.g., CLSA does not control the Broker’s choice of execution venues,
such as exchanges, multilateral trading facilities or organised trading facilities).
CLSA is not required to duplicate the efforts of the Broker to whom an order ispassed in ensuring the best possible result.
Direct Execution of Orders

2.10

In choosing the Execution Venues that appear in Schedule 1, CLSA has taken care
to select those Execution Venues that, in CLSA’s view, enable it to obtain on aconsistent basis the best possible results for its clients. The selection process takes
into account such factors as liquidity, integrity of marketplace and price formation.
CLSA may use direct market access facilities (e.g., trading systems provided by its
Brokers that allow it to transact (in the Broker’s name) directly on a regulated
market) to effect the execution of trades on behalf of its clients.

Choosing Between Order Placement and Direct Execution

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CLSA (UK)
2.11

CLSA will determine whether to place an order with a Broker or to execute an orderdirectly on an Execution Venue according to the nature of the order and the market
in which the relevant order is to be executed. In determining whether to place anorder with a Broker or to execute directly, CLSA will have regard to the relative
importance of the execution factors. In certain markets, it will only be possible toexecute client orders by placing them with a Broker in the relevant market.
Executing / Placing Orders with Execution Venues / Brokers that are notlisted in Schedule 1

2.12

CLSA employees must not directly execute orders with an Execution Venue or placeorders with a Broker that is not listed in Schedule 1 to this policy unless there are
exceptional circumstances. Exceptional circumstances might include where CLSA
wishes to trade in an unusual financial instrument that cannot be executed with orby one of the Execution Venues or Brokers already listed (either at all or in amanner that would be likely to achieve the best possible result for the client). Any
execution of a transaction with an Execution Venue or placing of an order with a
Broker that falls outside the list of Execution Venues and Brokers must be preapproved by CLSA’s Best Execution Committee. CLSA’s procedures for assessing
new Brokers and Execution Venues include a requirement for them to be assessedin terms of their ability to enable CLSA to comply with its obligations under thispolicy and to be included within Schedule 1 before trading with, or on, them cancommence.
Relative importance of execution factors for Equities

2.13

Each order is reviewed by a sales trader who will evaluate the order in the context
of the client instructions and execution factors, and trade directly as appropriate ortransmit the order to a Broker with specific trading instructions.

2.14

CLSA or its Broker will take into account a range of execution factors. The usual
order of priority will be as follows:(A)

price;(B)

speed;(C)

likelihood of execution;

(D)

size;

(E)

costs; and(F)

any other relevant execution factor (including those set out in paragraph
1.2(A) above).

2.15

However, various execution factors may be more or less important in certain
circumstances, and the prioritisation will be subject to any specific instructions
CLSA receives from the client.

2.16

In particular, in illiquid markets CLSA will prioritise the key execution factors in thefollowing way:

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CLSA (UK)(A)

likelihood of execution;(B)

price;(C)

speed;

(D)

size;

(E)

costs;(F)

any other relevant execution factors.

Relative importance of execution factors for Fixed Income and EQD
2.17

As described in paragraph 2.5 above, CLSA only operates on RFQ basis in respectof Fixed Income and so is not required to comply with the FCA's Best Execution
rules.
Execution strategies

2.18

The sales trader may consult the client to discuss the trade execution strategy
which may involve discussing various execution factors. Information provided by
the client may impact the execution strategy CLSA uses. CLSA's strategy may
include executing orders immediately, or working orders over a period of time.

2.19

These considerations are part of all sufficient steps CLSA takes to obtain the best
possible execution result on a consistent basis in accordance with the FCA Rules.
Limit orders
Clients have the option to give a limit order to CLSA. Unless a client expressly
instructs otherwise, CLSA must, in the case of a client limit order in respect ofshares admitted to trading on a regulated market or traded on a trading venue
which is not immediately executed under prevailing market conditions, takemeasures to facilitate the earliest possible execution of that order.
Aggregation of orders

2.20

CLSA will generally not aggregate any client orders with other orders, whether
belonging to other clients or to a member of the CLSA Group or its clients. However,in certain circumstances aggregation of client orders may occur when the following
conditions are met:(A)

It is unlikely that the aggregation of orders and transactions will work overall
to the disadvantage of any client whose order is to be aggregated;(B)

It is disclosed to each client whose order is to be aggregated that the effectof aggregation may work to its disadvantage in relation to a particular order;(C)

An order allocation policy is established and effectively implemented by
CLSA providing for the fair allocation of aggregated orders and transactions
including how the volume and price of orders determines allocations and thetreatment of partial executions.

2.21
The factors affecting the choice of Execution Venue or Broker

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CLSA (UK)2.22

In relation to an order, an Execution Venue or Broker will be selected as isappropriate in view of the size and nature of the relevant order. CLSA will selectExecution Venues and Brokers based on their track records of achieving the best
result in terms of the execution factors taking into account, in particular, thegeographic and market coverage of the relevant Execution Venue or Broker.
Over-the counter trades

2.23

When executing orders or using a Broker to deal in financial instruments over-thecounter, CLSA will check that the price quoted is fair by taking into account market
data, including comparing that price with similar instruments (where available).

2.24

There may be counterparty risk when executing an order outside a trading venue.
On request by the client, CLSA can provide additional information about thepotential impact on the execution of orders when executing over-the-counter.
Monitoring and Reviewing this Policy

2.25

CLSA has an obligation to monitor the effectiveness of its order execution
arrangements and this policy. This obligation has been incorporated into CLSA’sgeneral compliance monitoring process and business procedures and policies.

2.26

CLSA assesses, on a regular basis, whether the execution venues listed in Schedule
1 provide the best 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 published by execution venues and brokers in accordance with
MiFID II. CLSA also conducts regular reviews through random sampling oftransactions to ascertain whether the best possible result was obtained in respectof those transactions.
Review of Policy

2.27

At least annually, 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 wasto:(A)

include additional or different Execution Venues or Brokers;(B)

assign a different relative importance to the execution factors; or(C)modify the process by which Execution Brokers and Venues are selected(D)

modify any other aspects of this policy and/or its execution arrangements.

CLSA will also review this policy and/or its execution arrangements whenever amaterial change occurs that could affect its ability to obtain the best possible result
for the execution of its clients' orders on a consistent basis, for example, asignificant event that could impact the parameters of best execution such as theexecution factors specified in Section 2 above. CLSA will assess whether a materialchange has occurred and consider making changes to the relative importance ofthe best execution factors.

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CLSA (UK)The reviews will be supervised by Compliance and this requirement has been
incorporated into CLSA’s compliance monitoring process.
Client Notification / Consent Requirements
2.28

CLSA has an obligation to provide its clients with appropriate information on thispolicy. Where CLSA executes orders on behalf of a client, it will also have an
obligation to obtain the client’s consent to this policy. By accepting our terms ofbusiness, you consent to your transactions being executed in accordance with thispolicy.

2.29

To the extent that CLSA makes any material changes to this policy (whether
pursuant to the review process or otherwise), it will notify the changes to its clients.
Compliance will ensure that such notifications are made.

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CLSA (UK)
Schedule 1 - Execution Venues and Financial Instruments
The classes of financial instruments are set out in Annex 1 of Delegated Regulation(EU) 2017/576.
Asset Class

Bonds

Region Venues, regional affiliates, or third party
brokers who may be used to execute CLSA
(UK) client orders
GlobalBLOOMBERG TRADING FACILITY B.V. MTF

Bonds

GlobalBLOOMBERG TRADING FACILITY LIMITED MTF

Bonds

GlobalCSI Capital Management Limited

Bonds

Global

MARKETAXESS EUROPE LIMITED MTF

Bonds

Global

MARKETAXESS NL B.V. MTF

EquitiesAMER

CLSA Americas LLC

Equities

APAC

Alfalah CLSA Securities (Private) Limited

Equities

APAC

CL Securities Taiwan Co. Ltd.

Equities

APAC

CLSA Australia Pty. Ltd.

Equities

APAC

CLSA India Private Limited

Equities

APAC

CLSA Limited

Equities

APAC

CLSA Philippines, Inc.

Equities

APAC

CLSA Securities (Thailand) Ltd.

Equities

APAC

CLSA Securities Japan Co., Ltd.

Equities

APAC

CLSA Securities Korea Ltd.

Equities

APAC

CLSA Securities Malaysia Sdn. Bhd

Equities

APAC

CLSA Singapore Pte Ltd.

Equities

APAC

CT CLSA Holdings Limited

EquitiesAPAC

PT CLSA Sekuritas Indonesia

Equities

EMEA

Arqaam Capital Limited

Equities

EMEA

Banque Pictet & Cie SA

Equities

EMEA

Barclays Capital Securities Limited

Equities

EMEA

BCS Prime Brokerage Limited

Equities

EMEA

BGC Brokers LP

Equities

EMEA

Davy Securities

Equities

EMEA

Financial Brokerage Group (FBG) SAE

Equities

EMEA

Forte Securities Limited London

Equities

EMEA

Goldman Sachs International

Equities

EMEA

Goodbody Stockbrokers Unlimited Company

Equities

EMEA

Israel Brokerage and Investments, I.B.I. Ltd.

Equities

EMEA

Intermonte SIM S.p.A

Equities

EMEA

Jane Street Financial Ltd.

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CLSA (UK)
Equities

EMEA

Joh Berenberg Gossler & Co KG

Equities

EMEA

Merrill Lynch International London

Equities

EMEA

Optima Bank

Equities

EMEA

RBC Europe Limited

Equities

EMEA

Virtu ITG Europe Limited

Equities

EMEA

London Stock Exchange

Equities

EMEA

Six Swiss Exchange

Equities

EMEA

Winterfloods Securities Limited

Equities

GlobalCLSA Global Markets Pte Ltd.

Exchange Traded
Products
Exchange Traded
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Exchange Traded
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Exchange Traded
Products
Exchange Traded
Products
Exchange Traded
Products
Exchange Traded
Products
Exchange Traded
Products
Exchange Traded
Products
Exchange Traded
Products
Exchange Traded
Products
Exchange Traded
Products
Exchange Traded
Products
Exchange Traded
Products

GlobalBloomberg Tradebook Singapore PTE LTD

GlobalBloomberg Tradebook LLC

GlobalDRW Europe B.V.

GlobalFlow Trader BV

GlobalJane Street Financial Ltd.

Global

Old Mission Europe LLP

GlobalOptiver vof

GlobalOptiver Australia Ptd Ltd

GlobalTradeweb EU B.V.

GlobalTradeweb Europe Limited

GlobalTradeweb Europe Limited – Hong Kong

GlobalTradeweb Europe Limited - Singapore

GlobalTradeweb Japan KK - PTS

GlobalTradeweb LLC

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