1st November 2007
2. Guidelines for executing orders in respect of
financial instruments in order-driven markets
Guidelines for executing orders 7
GUIDELINES FOR EXECUTING ORDERS IN RESPECT OF
FINANCIAL INSTRUMENTS IN ORDER-DRIVEN MARKETS
(SHARES, PRIMARY CAPITAL CERTIFICATES, ETF)
As at 01.11.2007
1. Introduction
Fondsfinans has a duty under the terms of the Securities Trading Act to take all reason able measures to achieve the “best possible result”1 for clients when executing client
orders (“Best Result”). Upon receiving a client order, Fondsfinans will assess how to execute the order to achieve the Best Result.
This assessment will be based on the guidelines for the execution of orders given below (the “Guidelines”).
2. Exemptions from the Guidelines – Specific instructions
If the client gives specific instructions, this may prevent Fondsfinans from implementing measures as laid down in the Guidelines below to ensure the Best Result. Special agreements may be entered into between the client and Fondsfinans stating that orders received in special situations will be processed as specific instructions.
3. Factors relevant to the choice of execution method
When choosing an execution method, Fondsfinans will take into account price, cost, speed of execution, certainty of execution and settlement, size and type of order and other relevant factors.
4. Weighting of relevant factors
When Fondsfinans executes orders on behalf of clients, the following features will be considered when weighting the relevance of the factors mentioned above (item 3):
Type of client (retail/professional) •
Characteristics of the client order •
Characteristics of the financial instruments which make up the order •
Characteristics of the trading systems where orders may be placed •
In executing orders for Retail clients, the Best Result will be decided on the basis of the overall cost to the client of executing the order.
5. Alternative methods for executing orders
Fondsfinans will execute a client’s order in one of the following ways:
5.1 On a regulated market or MTF:
(a) by placing orders in a trading system (regulated market, MTF, market maker etc.)
(b) by transmitting the order to another investment firm if Fondsfinans is not a member of a relevant regulated market or MTF.
5.2 Other than on a regulated market or MTF:
(c) by purchasing from or selling to other clients (clienttoclient trading) (d) by becoming a counterparty for part or all of the trade (ownaccount trading) (e) by transmitting the order to another investment firm
Re. a) Fondsfinans considers that the following trading systems are suitable for
achieving the Best Result when executing orders: Oslo Stock Exchange
•
Oslo Axess •
OMX Stockholm Exchange •
ABM (Alternative Bond Market) •
This list is not exhaustive. From time to time, execution may take place on other trading systems provided that this is in accordance with these guidelines in other respects. If the financial instrument in question is traded in several trading systems (including Oslo Børs/Oslo Axess), the order will normally be executed through Oslo Børs/Oslo Axess, since Fondsfinans considers that this choice of venue will give the Best Result for the client. However, if Fondsfinans considers that another trading system will give the Best Result for the client, Fondsfinans will execute the order through such other trading system.
Re. c) If Fondsfinans receives orders for both the purchase and sale of the same financial
instrument, and these orders can be matched internally, Fondsfinans will normally place the orders in Oslo Stock Exchange/Oslo Axess trading system, provided that the finan cial instrument is listed on Oslo Stock Exchange/Oslo Axess. The trading system will automatically match the orders at market price. Alternatively, orders will be executed by Fondsfinans concluding the contract on behalf of clients. Fondsfinans will in such circumstances protect clients’ interests with the same care and determine the price of the financial instruments based on market price or, if the market price is not available, a price which is reasonable in relation to the state of the market.
Guidelines for executing orders 9
Re. d) Where Fondsfinans is a counterparty to a trade, this will be specified on
the contract note or other type of confirmation. Where Fondsfinans assumes the role of counterparty (ownaccount trading) in relation to a client order, the price will be equivalent to or better than the best obtainable price in a trading system, for example the market price. An exception to this rule will be if Fondsfinans, in its capacity as market maker, is directly asked by a client to quote a price at which Fondsfinans will either buy or sell the relevant financial instruments, and the client accepts this price.
6. Trading in unlisted shares
If an unlisted share (or other financial instrument) is registered on the Norwegian OTC list, Fondsfinans will place the order as an interest order in the OTC system and then contact another firm that has registered an opposing interest order in the OTC system. Fondsfinans will negotiate with the firm in question to achieve the best possible price for the client.
7. When will the order the executed?
In the absence of specific instructions from the client, Fondsfinans will commence the execution of an order immediately the order is received from the client. This means that Fondsfinans will process incoming orders based on time priority unless Fondsfinans considers that the Best Result can be achieved by combining an order with other orders. Fondsfinans reserves the right to aggregate client orders with orders from other clients, individuals or companies, regardless of whether or not they are associated with Fondsfinans. The aggregation of orders may take place if it is unlikely that aggregation in general will entail a disadvantage for any of the clients involved. However, clients are asked to note that the aggregation of orders may in certain cases entail a disadvantage.
Fondsfinans reserves the right to aggregate client orders with transactions made for Fondsfinans’ own account. If the total order is only partially executed, clients’ orders will be given priority over Fondsfinans’ orders. However, exceptions will apply if Fondsfinans is not able to trade under correspondingly favourable conditions without aggregation.
When allocating orders, Fondsfinans will normally take into account factors such as the time the order was entered and the size of the order.
If orders are received outside the marketplace’s opening hours, orders will normally be executed when the marketplace reopens.
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Fondsfinans ASA
Visiting address: Haakon VIIs gt. 2, 6.etg, N0161 Oslo Postal address: P.O.Box 1782 Vika, 0122 NOslo
Telephone: +47 23 11 30 00 Telefax: +47 23 11 30 03 Email: [email protected] Homepage: www.fondsfinans.no
