Global. Local. Pershing in Europe.

Compliance Disclosures

Execution Policy
Conflicts Disclosure
Execution Venues

Introduction
From 1 November 2007, and in accordance with regulatory requirements set out by the Financial Services Authority (“FSA”), we are required to provide clients with information about the steps we take to obtain the best possible result when executing their order. These are set out in our ‘Execution Policy’, a summary of which is shown below.

Scope
Our Execution Policy is applicable to you if you are a Pershing client who has been categorised as a Professional Client and where we have been given an order:

• to execute on your behalf in respect of financial instruments covered by the Markets in Financial Instruments Directive¹
• which we pass on (i.e. transmit) at our discretion to another broker or dealer (“third party”) for execution.

You should note that where you give us specific instructions in respect of an order, this may prevent us from taking steps that we have designed and implemented to obtain the best possible result for the execution of your order.

Direct Market Access orders (where your order is routed through our system) will be executed in accordance with your specific instructions.

Pershing will not be considered to be executing orders on your behalf where you route orders though our electronic trading platform to Retail Service Providers. As a result, our Execution Policy does not apply to these orders.

For the avoidance of doubt, Pershing does not have any obligations in respect of execution where our name² has been given-up on a transaction.

Execution Factors
In considering how we might achieve the best possible result for your order, we will take a number of factors into account, including price, costs, speed, likelihood of execution and settlement, size, nature of the order or any other considerations relevant to the execution of your order.

In determining the relative importance of these factors, we will use our own commercial experience and judgement, as well as take into account your status as a Professional Client, together with the size and nature of your order, the characteristics of the financial instruments to which the order relates, as well as the possible execution venues to which that order can be directed.

In general, we will regard price as the most important of these factors for obtaining the best possible result. However, we recognise that there may from time to time be circumstances for some clients, particular instruments or markets where other factors may be deemed to have a higher priority.

Execution Venues
In establishing our Execution Policy, we have identified a variety of different execution venues that we intend to use. We consider that these enable us to obtain the best possible result on a consistent basis when executing orders on behalf of clients. It is therefore possible that your order may be executed on a venue which is not a Regulated Market or a Multilateral Trading Facility (“MTF”). You should also note that some financial instruments may only be traded on one venue (notably if we execute a trade for units in a fund, the venue will be the fund manager or the fund itself).

A list of the execution venues on which we place significant reliance can be found on our website (www.pershing.com/europe). We will regularly assess the execution venues available so that we can continue to include those which enable us to obtain the best possible result on a consistent basis. You should, from time to time, refer to our website for the current list of principal execution venues, as changes will not be separately notified.

We may transmit your order to another broker or dealer for execution. In such cases we may:

• determine the ultimate execution venue ourselves by accessing specific execution venues through such third parties; or
• instruct this other broker or dealer accordingly (having already satisfied ourselves that they have arrangements in place to enable us to comply with our execution obligations to you).

Limit Orders
There may occasions where you have given us a “limit” order to execute and we are not able to execute it immediately. Consequently, in accordance with regulatory requirements and unless otherwise specifically instructed by you, any unexecuted part of such limit order will be made public.

Consent
Regulations require that we must obtain your prior consent to this Policy. We will deem that you have provided such consent where you give us an order on or after 1 November 2007.

We must, however, obtain your express consent, prior to executing an order in an instrument admitted to trading on a Regulated Market or an MTF outside of such a Regulated Market or MTF. We therefore request that you sign and return the EP07 consent form as soon as possible, since we will otherwise be prevented from achieving the best possible result where this is achieved by executing your order outside of a Regulated Market or MTF.

Conflicts Disclosure
In accordance with regulatory requirements, we have taken reasonable steps to identify conflicts of interest that exist, or may exist, between Pershing Europe ¹ entities and their clients or between one client and another.

We have also reviewed the organisational and administrative arrangements in place to manage such conflicts and are of the view that, save for the matters outlined below, they are sufficient to ensure with reasonable confidence, that risk of damage to clients’ interests will be prevented.

From our Conflicts of Interest Policy, we have identified the following areas where we are not certain that we can manage the conflict (or potential conflicts) fully and thus we hereby advise our clients of this fact: The general nature and/or source of these conflicts are:

• Pershing Europe provides integrated execution, clearing, settlement and custody services to a number of financial services organisations and therefore has potentially competing client interests.
• Pershing Europe entities hold positions and/or provide transactional related services for more than one client and such clients may have competing objectives in relation to a position or transaction.
• Pershing Europe entities may enter into a transaction in relation to which a Pershing Europe entity has indirectly or directly, a material interest or relationship.
• Pershing Europe entities may combine orders received from one client with those received for the accounts of other clients (and exceptionally may combine with its own orders). Such aggregation may operate on some occasions to a client’s advantage and on some occasions to their disadvantage. Where orders have been aggregated, they will be allocated out to clients on a pro-rata basis.
• Pershing Europe entities may pass orders to an affiliated company for execution. This will, however, be done in accordance with its Execution Policy.
• Where Pershing Europe entities exercise a right to vote in relation to a corporate action, it will do so in accordance with clients’ instructions and these may reflect competing interests.
• Pershing Europe entities may place money held on behalf of clients and/or their underlying clients with a bank (in accordance with the relevant regulatory requirements) and earn and retain interest payments from such bank.
• Pershing Europe entities may receive remuneration from fund managers in connection with providing services to them through Pershing Nexus Funds. These payments are calculated by reference to the value of assets that Pershing Europe entities hold in custody for clients.
• Pershing Europe entities may have other business relationships with a company in relation to whose securities you are entering into a transaction e.g. as a client, supplier, custodian or banker.
• As a result of Pershing Europe’s relationships with its customers and with customers across the Bank of New York Mellon Corporation (“BNYM”) Group, there may be circumstances in which we are unable to execute transactions with or for clients, in relation to particular counterparties or in particular investments and we shall not be obliged to disclose the reason why or provide any further information thereto.
• It is possible that an affiliate and member of BNYM Group may have a material interest or a conflict of interest in the service or transactions we carry out with or for you. While there may be some cross-board memberships, the day-today management of Pershing Europe act independently.
• In carrying out Pershing Europe’s business, employees may learn confidential or proprietary information about its clients, their underlying clients, prospective clients and underlying clients or other third parties. Employees are required to maintain the confidentiality of all such information entrusted to them, except where disclosure is otherwise authorised or legally mandated. Further, employees are not permitted to use such information for their personal gain.
• Pershing Europe employees are not permitted to trade in the shares of its clients unless the client’s shares are widely traded on a regulated market and where the service provided by Pershing Europe represents a very small fraction of the client’s total business.
• Pershing Europe employees are required to disclose and in most cases must obtain approval for any outside business interest or employment.