BINCKBANK N.V. ORDER EXECUTION POLICY BINCKBANK N.V. ORDER EXECUTION POLICY

About Best Execution

Introduction to obtain the best possible result when executing client orders or when placing orders with, or trans- Scope mitting orders to, other entities to execute. This order execution policy (the “Policy”) provides an overview of how BinckBank N.V. (“BinckBank”) Your agreement to this Policy executes orders on behalf of clients, the factors This Policy has been provided to help clients un- that can affect the timing of execution and the way derstand how BinckBank executes client orders so in which market volatility plays a part in handling that they can make an informed choice on whether orders when buying or selling a financial instrument. to use BinckBank’s services. You should ensure that you have read and understood its contents. This Policy applies to BinckBank’s execution of orders on behalf of retail clients and professional If you proceed to place an order with us, we clients according to the Rules, as defined below. will take that as your consent to BinckBank executing that order in accordance with this Upon acceptance of a client order and when there is Policy. no specific client instruction regarding the execution method, BinckBank will execute an order in accor- What does Bincbank mean by dance with this Policy. ‘Best Execution’? Best Execution is the process by which BinckBank This Policy is subject to BinckBank’s General Busi- N.V. seeks to obtain the best possible result when ness Terms and other business terms from time to executing client orders. The definition of best pos- time governing the relationship between the client sible result will vary as BinckBank must take into and BinckBank N.V. Further information on order account a range of execution factors and determine execution, including BinckBank executing broker’s their relative importance based on the character- market making function, can be found in BinckBank’s istics of its clients, the orders that it receives and General Business Terms. the markets in which it operates. These factors are further described in this Policy. Why are we doing this? This Policy is issued pursuant to, and in compliance Execution Factors with, EU Directive 2004/39/EC of 21 April 2004 on BinckBank has considered a number of criteria that Markets in Financial Instruments (“MiFID”) and the might be important to clients. These are called the Dutch legislation implementing MiFID (the “Rules”) Execution Factors: that applies to BinckBank. • Price – the market price at which the order is executed. Our commitment • Costs – any additional charges that may be When dealing with clients, BinckBank has a general incurred in executing the order in a particular duty to act honestly, fairly, professionally and in the way over and above BinckBank’s normal charges. best interest of the client. In relation to order execu- • Speed of execution – this can be particularly tion, BinckBank is required to take all sufficient steps important in fast moving markets.

2 • Likelihood of execution and settlement – the best Execution Venues price is of little use if BinckBank cannot execute Based on its assessment of the Execution Factors at it or if the transaction fails to complete. and the Execution Criteria, BinckBank will select one • Size and Nature of the transaction – the way that or more venue(s) for the execution of the client’s BinckBank executes an unusual order (for exam- order. Venues used might include: ple, one that is larger than the normal market • Regulated Markets size or has unusual features such as an extended • Multilateral Trading Facilities or shortened settlement period) may differ from • Order Crossing Networks and other electronic the way it executes a standard order. platforms • Market Impact – the effect that executing a • Liquidity provided from BinckBank’s our own client’s order, or showing it to other market par- internal flow aggregation book ticipants, might have upon the market. • Other brokers, dealers and market makers • Other factors relevant to particular order types – as applicable. BinckBank will take reasonable care not to discrim- inate between execution venues other than on the When BinckBank executes orders on behalf of basis of the Execution Factors relevant to the order clients, Best Execution is determined on the basis of concerned. the total consideration paid to or by the client, un- less the objective of execution of the order dictates Where executing orders against liquidity provided otherwise. Total consideration is the price of the by its own internal flow aggregation book, BinckBank financial instrument and the costs related to exe- will aggregate the risk from client transactions with cution, including all expenses incurred by the client risks arising on other clients’ orders and will under- which are directly related to the execution of the take hedging activities at other dealing venues in the order such as venue execution fees, clearing and manner that it considers to be most efficient. settlement fees and any other fees paid to third par- ties involved in the execution of the order. When as- The prices that BinckBank makes available to clients sessing whether best execution has been achieved, under this model will be based upon the prices BinckBank does not take account of its standard available to it from its selected hedging venues. charges that will be paid by the client irrespective of how the order is executed. BinckBank is through its execution broker a mem- ber of NASDAQ OMX Copenhagen and Chicago Execution Criteria Mercantile Exchange (“CME“) and additionally uses a The relative importance that BinckBank attaches to number of external financial institutions and bro- the Execution Factors in any particular case may be kers in the process of receiving and relaying orders affected by the circumstances of the order. These or to directly execute listed financial instruments are called the Execution Criteria. which are not listed on NASDAQ OMX Copenhagen • Client Characteristics – professional customers and CME. may have different needs to retail customers. • Transaction Characteristics – such as the poten- Top 5 venues tial for it to have an impact on the market. BinckBank makes public on an annual basis, for • Financial Instrument Characteristics – such as each class of financial service, the top five execution liquidity and whether there is a recognised cen- venues and the top five entities (brokers) used in tralised market. the preceding year in terms of trading volumes; and • Venue Characteristics – particular features of the the provision of information on the quality of execu- liquidity sources available to BinckBank. tion obtained. • Other relevant circumstances – as applicable.

3 BinckBank has access to a number of exchanges • Opening prices that may differ substantially from and other execution venues through its order rout- the previous day’s close. ing vendors. • Locked (the bid equals the offer) and crossed (the bid is higher than the offer) markets, which A list of the main execution venues including may prevent the execution of client orders. brokers used by BinckBank is available on • Price volatility is one factor that can affect order www.binckank.com and as an Appendix to this execution. When there is a high volume of orders Policy. in the market, order imbalances and back logs can occur. This implies that more time is needed When does Best Execution apply? to execute the pending orders. Such delays are Best execution applies when BinckBank executes usually caused by the occurrence of different a transaction on behalf of a client in financial factors: instruments and products as defined by the Rules (i) the number and size of orders to be pro- including: cessed, • Bonds (ii) the speed at which current quotations (or • Cash Equities last-sale information) are provided to Binck- • Futures Bank and other brokerage firms; and • Listed Options (iii) the system capacity constraints applicable to • Rolling Foreign Exchange Spot the given exchange, as well as to BinckBank • Foreign Exchange Options and other firms.

When does Best Execution NOT apply? BinckBank is obligated to take necessary steps to Best execution does not apply to: keep an orderly market. Therefore BinckBank oper- • Spot foreign exchange transactions undertaken ates with “Compliance” order filters. Such Compli- with the intention of converting money from one ance order filters are also present at exchanges and currency to another – including transactions other brokers that might be used by BinckBank to undertaken to facilitate settlement of other route the order to the designated market. The filters transactions. might result in orders with a large expected market • Transactions arising from the exercise of an impact to be paused or traded using an algorithm option. BinckBank will treat an instruction to potentially causing slippage from the expected arriv- exercise an option as a specific instruction from al price. Stop orders are also at BinckBank’s discre- the client to exercise his rights under the option tion grouped into larger orders and then traded as contract and will not take account of the state of an algorithm to prevent cascading market impact or the underlying market at the time. large market impact in general. BinckBank cannot be held liable for price slippage caused by acting to Risks of dealing in volatile markets keep an orderly market. Clients should be aware of the following risks asso- ciated with volatile markets, especially at or near the Regular Review open or close of the standard trading session: BinckBank will review this Policy annually and when- • Execution at a substantially different price from ever a material change occurs that affects Binck- the quoted bid or offer or the last reported Bank’s ability to obtain the best possible result for price at the time of order entry, as well as partial the execution of client orders. executions or execution of large orders in several transactions at different prices. BinckBank regularly reviews the overall quality of • Delays in executing orders for financial instru- its order executions and its order routing practices, ments that BinckBank must send to external including its order routing vendors and the avail- market makers and manually routed or manually able exchanges. Binckank will amend this Policy executed orders. on the basis of such reviews if it considers it to be

4 necessary. Any new policy will be made available on Specific Instructions BinckBank’s websites and will be in force as from Clients may ask BinckBank to execute their orders in publication. accordance with specific instructions – either gen- erally or on a case by case basis. To the extent that About BinckBank’s Charges BinckBank is able to accommodate such requests, it BinckBank charges for its services. These may vary will do so. However: depending on factors such as the service it is provid- • Where the specific instructions will result in ing to the client; the manner in which they are used; higher costs, BinckBank may reflect those ad- and the pricing plan that the client has agreed to. ditional costs in its charges to the client. In this Details of BinckBank’s charges are available on its case, BinckBank will notify the client of its revised website. Where it provides liquidity from its internal charges before accepting the order(s). flow aggregation book, BinckBank will provide the • Where the specific instructions conflict with its client with a two way dealing price. In normal cir- normal processes, BinckBank will give the specific cumstances, the difference between the bid price (at instructions precedence. This may result in a which BinckBank is willing to buy) and the ask price different outcome for the transaction. (at which it is willing to sell) will constitute part of • Where there is no conflict, BinckBank will contin- its charges for the service BinckBank provides. For ue to follow its normal execution Policy. the purpose of assessing whether it has achieved Best Execution, BinckBank will not take its standard Direct Market Access charges that apply to a client’s transactions irrespec- Clients may ask BinckBank to provide them with tive of the venue at which they are executed into direct access to the market. BinckBank will treat this account BinckBank will, however, take account of as a Specific Instruction from the client and will ac- any charges levied by a third party or incorporated cordingly consider whether it is able to do this and into its prices to reflect cost differentials of dealing on what terms. at different execution venues. Where BinckBank provides clients with direct market Information Handling access, BinckBank will select one or more execution BinckBank may have access to, use and provide venues that it believes will provide the best out- counterparties with information on an anonymous comes for that client’s transactions. This may be a and aggregated basis, including but not limited to, different selection of venues than it otherwise uses your orders (i.e., orders executed in full or part, can- for execution of similar transactions or for its own celled, or expired), positions, trade and other data hedging purposes. This may result in a different and analytics (collectively, “Anonymous and Aggre- outcome for the client’s transactions. gated Data”). This Anonymous and Aggregated Data may be used for market information, analytical tools, Dealing on Quotes risk management strategies for market making and When trading OTC derivatives with BinckBank, liquidity provision and other BinckBank products clients are trading on BinckBank’s price. There are and services. The nature of any Anonymous and a number of factors that can be used to construct Aggregated Data provided to you may differ from a derivative price, and these will vary depending that provided to other counterparties in terms of on the asset class traded, the nature of the market quantity, scope, methodology or otherwise and may and the characteristics and terms of the transac- be changed from time to time without notice to you. tion and any special market or credit risks posed by it. BinckBank applies a standardised method of calculation for these types of derivatives to ensure that the price that it is offering at any given time is always considered the best price it can obtain on the client’s behalf.

5 In monitoring best execution for these types of broker will source a minimum of three separate instruments, BinckBank will monitor the calculation indicative prices to gauge the best price based on method to ensure that it is applied consistently at all the order size. For highly illiquid bonds, BinckBank’s times. executing broker seeks to derive a mid-price based on all indicative pricing information available to it, Event of Default (Automatic margin and then quotes a bid/offer spread to the client close-out) factoring in a predefined additional spread. In an Event of Default, BinckBank shall seek to immediately terminate, cancel and close-out any ONLINE TRADING: and all outstanding positions. BinckBank retains BinckBank’s executing broker trades as a principal discretion as to how to handle the automatic margin towards the client, however with the technology and close-out, including with respect to order execution, connectivity available for the bonds traded online, fill quantity, aggregation, priority and pricing. the execution methodology is different than offline.

About Markets Bonds traded via BinckBank’s online bond offering The following schedules set out the specific details are carefully selected based on sustainable liquidity, relating to the markets in which clients can trade hence sufficient indicative prices and active dealers. with BinckBank. The Client can place a market order, where Binck- Schedule 1: Bonds Bank’s indicative composite price will work as the upper (buy)/lower (Sell) limit. The indicative composite Products in Scope: price is made up from several indicative price data Purchase and sale of global Bonds points, and remodelled to reflect the real firm mar- Order Types Available ket as much as possible. The pricing model strives • Market order towards a high execution ratio (90-95%) but at the • Limit Order same time to appear as competitive as possible.

BinckBank’s selected venue Each client order is automatically routed to a Bonds are normally traded on an inter-dealer basis. multi-dealer RFQ competition where a number of BinckBank may source liquidity from: dealers are selected automatically, prioritized ac- • Orders that it is working for other clients; cording to their indicative prices. Also other parame- • Its own trading book; ters decide the prioritization, based on historic data • Other dealers in the market and the relevance of the dealers’ indicative price as well as speed of quoting a firm price. All parameters Price formation are changeable and optimized with the single aim of OFFLINE TRADING: having the best price possible, within a given time- Pricing and execution of Bonds is a manual pro- frame. cess, with many orders still negotiated over the telephone. The market is characterised by indicative When receiving firm live pricing from the multi-deal- OTC prices. For bonds traded offline BinckBank’s er RFQ competition, the algorithm will take into execution broker splits all bonds into one of three consideration: baskets based on the relevant bond’s liquidity. For • Number of firm quotes (at least 2 – up to 6) highly liquid bonds, BinckBank’s executing broker • Time to Fill the order (a maximum of between will offer a bid/offer price equal or better than that 30-45 seconds depending on market) shown in any attainable firm market (this includes public exchanges to which BinckBank’s executing broker has access, as well as OTC counterparts). For bonds with lower liquidity, BinckBank’s executing

6 When at least 2 firm prices have been achieved Order Types Available within the timeframe of 30-45 seconds, the algo- • Market order rithm compares the prices to the maximum limit With a market order the client instructs a finan- price (the indicative composite price) and executes cial institution or trading counterparty to execute on the best firm price if that is better than or equal a trade of a certain size as promptly as possible to the limit price. at the prevailing market price. Financial insti- tutions are required to execute market orders If no prices are better than or equal to the limit, or without regard to price changes. Therefore, if if only one quote comes up, the order is killed after the market price moves significantly during the 30- 45 seconds (depending on market). The order is time it takes to fill a client’s order, the order will hereafter cancelled automatically. most likely be exposed to the risk of execution at a price substantially different from the price Clients are able to place limit orders on selected when the order was entered. Certain exchanges European exchanges, and such orders are auto- do not support market orders. If the client places matically routed to Banca IMI Market HUB. The limit a market order in these markets, BinckBank will order function exists for certain bonds which are automatically translate the order to an aggres- expected to have sufficient liquidity on the relevant sive limit order within a certain percentage limit exchanges. The benchmark for the order will reflect “in the money”. It is the client’s own responsibility the price action seen on the exchange and Market to check if the order is traded in the market after Hub’s smart order exchange routing platform. order entry. If the client experiences or suspects any errors with his/her order the client should Clients may experience that their order is not done, contact BinckBank immediately. despite placed on the most relevant exchange and Orders may be traded using an algorithm poten- indications in OTC prices that the order should be tially causing slippage from the expected arrival done. This is due to the fact that exchanges often price. This is done by BinckBank in an attempt to lack liquidity and are not yet the preferred vehicle prevent large market impact and live up to our for bond trading. obligations to keep an orderly market. Binck- Bank cannot be held responsible for missing fills Relevant Execution Factors when using such algorithms to minimize market The ranking of execution factors for bonds is: impact. 1. Price • Limit Order 2. Expected impact of execution With a limit order, the client sets the maximum 3. Likelihood of execution and settlement purchase price, or minimum sale price, at which 4. Order size & type the trade is to be executed. As a limit order may 5. Costs be entered away from the current market price, 6. Speed it may not be executed immediately. A client that 7. Other factors leaves a limit order must be aware that he/she is giving up the certainty of immediate execution Schedule 2: Cash Equities in exchange for the expectation of getting an improved price in the future. Limit orders may be Products in Scope: routed to an exchange without human interven- Purchase and sale of cash equities and equity-like tion. products. Where a limit order is placed in a share admitted to trading on a regulated market, BinckBank shall Not in Scope: not be obliged to publish that limit order if it Transactions arising from the exercise of an option cannot be immediately executed under prevailing market conditions.

7 • Immediate or Cancel (IOC) Relevant Execution Factors An immediate or cancel order (IOC) is an order BinckBank’s execution broker trades as agent with to buy or sell that must be executed immediate- respect to cash equity trades with clients. BinckBank ly, and any portion of the order that cannot be has access to a number of Smart Order Routers immediately filled is cancelled. IOC order may fill that are able to check multiple different execution completely or partially, or it may not fill at all. venues when trying to execute a cash equity order. • Stop Order Not only does this allow BinckBank to potentially Different from a limit order, a stop order allows access better prices, it also gives access to addition- selling below the current market price or buying al liquidity, meaning that there is a greater likelihood above the current market price if the stop price of obtaining an execution. The ranking of execution is reached or breached. A stop order is therefore factors for cash equities is: a “sleeping” market order until the stop price is 1. Price reached or breached. 2. Expected impact of execution • Trailing Stop Order 3. Likelihood of execution and settlement The trailing stop order is a stop order as de- 4. Costs scribed above but the trailing stop price moves 5. Speed according to parameters set by the client. This 6. Other factors way the trailing stop can be used to sell if the price drops more than a specified distance from Price formation the highest price traded or to buy if the price Prices are determined on the different venues to trades above a set level from the lowest traded which orders may be routed by BinckBank’s Smart price. Order Routers. • Stop Limit Order BinckBank calculates its own cost of carry that fac- A stop limit order is a variation of a stop order as tors in future expectations of dividends and interest described above with a lower (higher) limit price rates, and this can include both internal and exter- to suspend trading if the price falls (rises) too far nal inputs. before the order is filled restricting trading to a predefined price range. Schedule 3: Futures • Algorithmic Order An Algorithmic Order is an order executed by Products in Scope: an automated strategy according to specific • Purchase and sale of Futures for speculative and parameters or conditions. Algorithmic Orders hedging purposes are intended to minimize the market impact created from placing larger orders or achieving a Not in Scope: recognized trading benchmark such as VWAP etc. BinckBank does not support physical delivery of the The orders can also be used to follow a volume underlying security on expiry of a futures. participation or in general to achieve a better Therefore, BinckBank advises clients to take note of overall execution. BinckBank facilitates a number the expiry and first notice dates (FND) of any futures of different algorithmic order types, specific infor- in which they have positions and ensure they are mation about these can be found in the informa- closed before the appropriate day, as described tion text on the BinckBank Self Investing. below.

Given the risks that arise when trading in volatile If the FND is before the expiry date, positions need markets, the client may want to consider using to be closed the day before the FND. If the expiry different types of orders to limit risk and manage date is before the FND positions need to be closed investment strategies no later than on the expiry date.

8 If futures positions are not closed before the rele- • Stop Order vant date, BinckBank will close the position on the Different from a limit order, a stop order allows client’s behalf at the first available opportunity at the selling below the current market price or buying prevailing market rate. Any resulting costs, gains or above the current market price if the stop price losses will be passed on to the client. is reached or breached. A stop order is therefore a “sleeping” order until the stop price is reached Order Types Available or breached. • Market order • Trailing Stop Order With a market order the client instructs a finan- The trailing stop order is a stop order as de- cial institution or trading counterparty to execute scribed above but the trailing stop price moves a trade of a certain size as promptly as possible according to parameters set by the client. This at the prevailing market price. Financial insti- way the trailing stop can be used to sell if the tutions are required to execute market orders price drops more than a specified distance from without regard to price changes. Therefore, if the the highest price traded or to buy if the price market price moves significantly during the time trades above a set level from the lowest traded it takes to fill a client’s order, the order will most price. likely be exposed to the risk of execution at a • Stop Limit Order price substantially different from the price when A stop limit order is a variation of a stop order as the order was entered. Orders may be traded described above with a lower (higher) limit price using an algorithm potentially causing slippage to suspend trading if the price falls (rises) too far from the expected arrival price. This is done by before the order is filled restricting trading to a BinckBank in an attempt to prevent large market predefined price range. impact and live up to our obligations to keep • Algorithmic Order an orderly market. BinckBank cannot be held An Algorithmic Order is an order executed by an responsible for missing fills when using such automated strategy according to specific pa- algorithms to minimize market impact. rameters or conditions. Algorithmic Orders are • Limit Order intended to minimize the market impact created With a limit order, the client sets the maximum from placing larger orders or achieving a rec- purchase price, or minimum sale price, at which ognized trading benchmark such as VWAP etc. the trade is to be executed. As a limit order may The orders can also be used to follow a volume be entered away from the current market price, participation or in general to achieve a better it may not be executed immediately. A client that overall execution. BinckBank facilitates a num- leaves a limit order must be aware that he/she ber of different algorithmic order types, specific is giving up the certainty of immediate execu- information about these can be found in the tion in exchange for the expectation of getting information text on the BinckBank Self Investing an improved price in the future. Limit orders Pro. may be routed to an exchange without human intervention. Where a limit order is placed in a Given the risks that arise when trading in volatile share admitted to trading on a regulated market, markets, the client may want to consider using BinckBank shall not be obliged to pub- lish that different types of orders to limit risk and manage limit order if it cannot be immediately executed investment strategies. under prevailing market conditions. Relevant Execution Factors BinckBank’s executing broker trades as principal with respect to futures trades with clients. Exchange traded futures and other futures traded on a mul- tilateral basis are traded on a centrally regulated venue so the opportunity to shop around is limited

9 because of the consequential concentration of the Where a limit order is placed in a share admitted to liquidity on those venues. For futures, the ranking of trading on a regulated market, BinckBank shall not the applicable execution factors is: be obliged to pub- lish that limit order if it cannot 1. Price be immediately executed under prevailing market 2. Expected impact of execution conditions. 3. Likelihood of execution and settlement 4. Costs Relevant Execution Factors 5. Speed BinckBank’s executing broker trades as principal 6. Other factors with respect to listed options trades with clients. Exchange traded options and other options traded BinckBank’s selected venue on a multilateral basis are traded on a centrally reg- BinckBank offers Direct Market Access (DMA) to the ulated venue so the opportunity to shop around is Futures Exchanges. limited because of the consequential concentration of the liquidity of those venues. For listed options, Where similar products are offered on multiple ex- the ranking of the applicable execution factors is: changes, BinckBank will normally provide access to 1. Price the market offering the best liquidity because this is 2. Expected impact of execution generally where the best prices will be found. 3. Likelihood of execution and settlement 4. Costs Other markets may be available on request. 5. Speed 6. Other factors Price formation Client orders will be routed to the electronic order BinckBank’s selected venue book of the relevant exchange. Price formation will BinckBank offers Direct Market Access (DMA) to the be according to the rules of the exchange. Exchange Traded Options. Schedule 4: Listed Options Price formation Products in Scope: Client orders will be routed to the electronic order • Purchase and sale of Exchange Traded Options book of the relevant exchange. Price formation will for speculative and hedging purposes be according to the rules of the exchange.

Order Types Available Schedule 5: Rolling Foreign Exchange Spot • Limit Order With a limit order, the client sets the maximum Products in Scope: purchase price, or minimum sale price, at which • Purchase and sale of rolling foreign exchange the trade is to be executed. As a limit order may spot contracts. be entered away from the current market price, it may not be executed immediately. A client that Not in Scope: leaves a limit order must be aware that he/she • Spot foreign exchange transactions undertaken is giving up the certainty of immediate execution with the intention of converting money from one in exchange for the expectation of getting an currency to another – including transactions un- improved price in the future. Limit orders may be dertaken to facilitate settlement of other transac- routed to an exchange without human interven- tions. tion. • Transactions undertaken to roll forward the value date of a client position which do not result in a change to the client’s FX market exposure.

10 Order Types Available terms immediately available for a transaction of • Immediate or Cancel (IOC) Market Order that size and will transact on those terms. Finan- An Immediate or Cancel (IOC) Market order is cial institutions are required to execute Market similar to a standard Market order (described orders as soon as reasonably possible without below). It is an instruction to trade immediately regard to price changes. Therefore, although on the best available terms. However, BinckBank BinckBank will seek to obtain the best terms will not continue to work the order if it is unable immediately available, if the market price moves to fill it immediately within three seconds. significantly during the time it takes to fill the client’s order or if only limited liquidity is available Although BinckBank will take all reasonable steps at the best price, the order will be exposed to the to obtain the best terms available at the time, risk of execution at a price which could be sub- in illiquid market conditions the best available stantially different from the price when the order terms may be substantially worse than the previ- was entered. ous (or even the next) price. A Market IOC order is for immediate execution. BinckBank will not A Market Order will be treated as good for the delay execution in the hope that market condi- day. If BinckBank believes it is able to execute a tions will improve. Market order immediately from its own liquidity then it will do so. Otherwise it will route the order BinckBank monitors the prices available to it at to a third party to attempt execution. If the order its selected external venues. If BinckBank be- cannot be filled in full immediately, BinckBank will lieves it is able to execute a Market IOC order im- continue to work the order until the official close mediately from its own liquidity then it will do so. of the relevant market. Otherwise it will route the order to a third party to attempt execution. Where an order has not Some of the external venues to which Binck- been filled after three seconds then the order Bank may route orders may not support Market will be cancelled. orders. In this case the client’s order may be converted to an aggressive limit order. This will Clients should note that where their orders are give the client some protection from a bad fill. routed externally, they cannot be cancelled until However, it also introduces a risk that the order BinckBank receives confirmation from its cho- will not be filled if the market moves sharply. sen external venue that they have cancelled the order. • Immediate or Cancel (IOC) Limit Order A Limit IOC order is an order to trade at the price Some of the external venues to which Binck- the client sees on his screen if it is still available Bank may route orders may not support market subject to a defined tolerance (see below). orders. In this case the client’s order may be converted to an aggressive limit order. This will When BinckBank receives a Limit IOC order, it give the client some protection from a bad fill. will treat it in a similar way to a Market IOC order However, it also introduces a risk that the order (see above) except that it will only fill the order if will not be filled if the market moves sharply. it is possible at the client’s specified limit price, or better. For internally routed orders, if this is • Market Order not immediately possible then the order (or any A Market Order is a traditional ‘at best’ instruc- unexecuted part thereof) will be cancelled. tion to trade as much of the order as possible on the best available terms in the market. A Mar- When placing a Limit IOC order, a client may ket order will normally be filled immediately (or specify a tolerance. Tolerance can be specified failing that in a relatively short time). BinckBank either as a fixed price increment or as a per- will take all reasonable steps to identify the best centage of the current market price. If the client

11 specifies a tolerance, BinckBank may fill the order A Limit order will be triggered when the market at a worse price than the client had seen on the price observed on one of BinckBank’s main execu- screen, provided the price difference does not tion venues reaches the limit price. If BinckBank be- exceed the client’s specified tolerance. lieves it is able to execute a Limit order immediately from its own liquidity then it will do so. Otherwise If a better price is available, BinckBank will give it will route the order to a third party to attempt the client the full benefit of the available improve- execution. At any time when there is not enough ment by filling the client order at the better price liquidity available from BinckBank’s own book or ex- no matter how much better it is. ternally, to fill the order in full at the specified price or better, the remaining order will revert to a ‘resting As with a Market IOC order, if BinckBank is order’. unable to supply sufficient liquidity from its own book, it may route the order externally. The order • Stop Order will be cancelled after three seconds, but clients A Stop order is usually used to close a position should note that where their orders are routed when the market is going against it with a view externally, they can’t be cancelled until BinckBank to prevent further losses. It may also be used to receives confirmation from the external venue open a position when the market moves through that they have cancelled the order. a chosen level.

• Limit Order A Stop order may have a duration similar to a A Limit order is an order to trade at a specified Limit order. These are described in the section price or better if it is possible to do so within a on Limit orders above. Where an order is at- specified time. The following order durations are tached to an open position, it will automatically available: be cancelled if the position is closed. • Day Order (DO): Valid until the official close of trading on the day the order is placed (or A Stop order to sell will be triggered when the on the subsequent business day for orders offer price observed on one of BinckBank’s main accepted during the weekend). execution venues, at which the client could un- • Good Till Date (GTD): Valid until the official dertake a transaction of equivalent size, reaches close of trading on a date of the client’s the specified price level. Once triggered, the choice. order will be treated as a Market order. • Good Till Cancelled (GTC): Valid indefinitely unless or until specifically cancelled by the A Stop order to buy will be triggered when the client. Where an order is attached to an open bid price observed on one of BinckBank’s main position, it will automatically be cancelled if execution venues, at which the client could un- the position is closed. dertake a transaction of equivalent size, reaches the specified price level. Once triggered, the When BinckBank executes a Limit order, the client order will be treated as a Market order. will have specified the price at which he wishes to trade. BinckBank will seek to achieve execution at This arrangement is designed to protect clients this price as soon as reasonably possible. BinckBank from the risk that their Stop order is executed as will not seek to improve upon the price that the a result of spreads widening without the mar- client has specified if this may cause a delay to the ket actually moving. This can happen around execution of his order. the release of economic statistics or at times of reduced liquidity such as during a value date roll or during the close and opening of the market.

12 Clients should note, however, that this means a Market Making and Risk Management stop order will never be executed at their spec- Market making and risk management activities may ified level but always at a price that is worse for impact the prices communicated to you for a trans- the client (typically the spread away from the action and the availability of liquidity at levels nec- client’s stop level). essary to execute your orders. These activities may The trigger level for a Stop order can be specified also trigger or prevent triggering of stop loss orders, to trail the market. In this case, when the market take profit orders, barriers, knock-outs, knock-ins moves in the client’s favour, the trigger level for and similar terms or conditions. BinckBank retains the order moves the same way. discretion as to how to satisfy competing interests, including with respect to order execution, fill quanti- The trigger level for a trailing stop moves in steps ty, aggregation, priority and pricing. which are defined when the order is placed. Last Look When a Stop order is triggered it will be execut- BinckBank utilises two types of liquidity; order driven ed at the first possible opportunity on the best liquidity for Rolling FX Spot and FX Forward, and terms immediately available in the market. This quote driven liquidity for FX Options. means that the client is exposed to the risk of a worse fill in gapping or illiquid markets. Quote driven liquidity gives BinckBank the ability to see the order and choose to fill or reject the order, • Stop Limit Order before execution. At BinckBank, last look is used to A Stop Limit order rests in the same way as a check whether trade requests are made at prices Stop order. However, once triggered, rather than that are within BinckBank’s price tolerance for exe- execute at the next available price it converts to cution. This control will be applied immediately upon a Limit order at a pre-agreed Limit price. From receipt of a trade request. In each case, the current that point on, the order is treated as a Limit price is compared to the trade request price. If the order. current price has not moved in either direction from the trade request price by more than a defined This type of order gives the client some protec- tolerance, and other pre-trade controls are passed, tion from a bad fill in a gapping or illiquid market. BinckBank will accept the trade request. If the However, that protection comes at a cost. In current price differs from the trade request price by some circumstances the order may not be exe- more than a defined tolerance, BinckBank will reject cuted at all. the trade request. Other factors such as technical and pricing errors may also cause trade requests to Trailing Stop Limit orders are not available. be rejected by last look. The primary purpose of last look is to protect against trading on prices that do Relevant Execution Factors not reflect the current market, and against certain Except for Limit orders, BinckBank will place the trading behaviour. highest priority on total consideration (the combina- tion of price and costs associated with dealing). For order driven liquidity where BinckBank may route the order externally to a third party to attempt For Limit orders, where the client has stipulated a execution, a form of last look may be applied by price that is not immediately available in the market, other liquidity providers that may result in the order BinckBank will place the highest priority on execu- being filled completely or partially, or it may not fill tion at the client’s specified price at the first possible at all. opportunity. This means that BinckBank will priori- tise speed and certainty of execution.

13 BinckBank’s selected venue BinckBank’s capacity to provide liquidity in any given For FX Spot and FX Forward, BinckBank is able to currency pair is subject to its internal exposure execute orders on a trade-by-trade basis either as limits. If a particular order would cause it to breach principal through liquidity provided from its internal those limits, BinckBank may suspend dealing on its flow aggregation book, or as agent when routing price until it is able to reduce its exposure. particular orders directly to one of BinckBank’s exe- cution venues. BinckBank’s Charges BinckBank’s charges may include the following, BinckBank will normally provide liquidity from its some of which may be included in the net price at internal flow aggregation book. BinckBank believes which the client trades: this provides the best outcome for clients because: • Price Mark Up/Mark Down. • BinckBank’s internal flow aggregation model BinckBank’s main dealing charges will normally allows it to place larger trades in the underlying be imposed through an addition to/subtraction market at prices that would not be available from the price at which the client deals with it. for the smaller trades usually undertaken by its This add-on or deduction will not form part of clients. the price for best execution comparison purpos- • Its continuous two-way order flow means that it es. usually able to use a single (mid-market) price to • Flat or percentage based commission which it adds its spread. charges. In less liquid market conditions, it may quote a In some cases, such as where BinckBank allows a two-way price. However, its pre-charge price is client direct access to the underlying market, the always within the best bid and offer prices avail- client will pay a commission based charge. This able to it in the underlying market. charge will be shown separately from the trade • The foreign exchange spot market is character- price. ised by rapid price movements relative to the • Financing Adjustments. costs of dealing. Providing liquidity from its own Where a client holds a position in a rolling spot book allows it to avoid the delays that would contract open overnight, BinckBank will make a arise in routing trades to the underlying market. cash adjustment to reflect the financing implica- tions of the position. This is based on the interest In limited circumstances, where BinckBank believe it rates of the currencies in question. Generally, is necessary to do so to enhance the experience of if the client is long the currency with the lower the majority of its customers, it may route particular interest rate, this adjustment will be a cost to orders directly to third party execution venues. the client. If the client is long the currency with the higher interest rate, it may be in the clients Price formation favour. There is a charge element in the interest BinckBank constantly monitors the prices avail- rates BinckBank uses to calculate these financing able to it in the wider market. Its price for foreign adjustments. exchange spot transactions is formed from these • Liquidity Utilisation Charges. prices (including any associated costs that it is able Where BinckBank acts as liquidity provider, it will to allocate on a trade-by-trade basis). provide executable prices to meet the majority of the orders it receives. However, BinckBank will BinckBank’s price is normally a single price valid for not be obliged to provide liquidity in excess of buying or selling, to which its charges are added. the liquidity available to it in the underlying mar- Depending on its risk appetite and proprietary in- ket. For larger transactions, BinckBank may add terests, BinckBank may set its single price anywhere an additional mark up or mark down to its price. between the best price at which it is able to sell the If a client undertakes repeated transactions, relevant currency pair and the best price at which it BinckBank will view them on a cumulative basis is able to buy it. for the purpose of determining the liquidity

14 utilisation charge until a period of 20 seconds Relevant Execution Factors has elapsed since his last trade. BinckBank will place the highest priority on total consideration – being the combination of price and Fixing Orders costs associated with dealing. BinckBank will also From time to time BinckBank may execute a trans- prioritise speed and certainty of execution and the action at a rate calculated by a third-party based on ability to trade in retail sizes. trading during a specified time of day (commonly referred to as the “Fixing Window”) or at a price de- The underlying market for foreign currency options termined at a specified time (commonly referred to is the ‘inter-bank market’. Transactions undertaken as a “Reference Time”). Risk management related to in this market are normally of a wholesale size. It is such transactions and other transactions conducted not normally practical to undertake individual small- in the ordinary course of business may lead Binck- er transactions. Bank to execute hedging transactions before, during or after the Fixing Window or Reference Time. Market Making and Risk Management BinckBank seeks to conduct such hedging activities See Foreign Exchange Spot for details. consistent with all applicable legal and regulatory requirements, although those hedging activities, as Last Look well as unrelated transactions and other ordinary See Foreign Exchange Spot for details. course of business activities executed by BinckBank prior to and during the Fixing Window or Reference BinckBank’s Selected Venue(s) Time, or at other times, may have an impact in some Option prices are based on a number of factors, the cases on the benchmark fixing or related markets. most significant of which are the spot price of the underlying and the ‘implied volatility’ of the relevant Schedule 6: Foreign Exchange Options currency pair.

Products in Scope: For the implied volatility BinckBank trades as prin- • Foreign Exchange Vanilla, Barrier and Binary cipal through liquidity provided from its internal Touch Options. flow aggregation book. This allows it to aggregate risks and undertake consolidated hedging trades in Not in Scope: the underlying market. These larger trades attract All foreign exchange options are in-scope. keener pricing that BinckBank is able to pass on to its clients. Order Types Available • Dealing on Quotes Price Formation BinckBank will provide prices for foreign ex- BinckBank uses the Black Scholes pricing model change options to clients on request. These to price options from its own liquidity. This model prices will be calculated to meet its obligation to generates a single mid-market price based on spot provide the client with the best possible outcome prices, interest rates and ‘implied volatilities’ for the on his transaction in terms of total consideration. currencies concerned.

If a client wishes to trade, he may elect to do so BinckBank constantly review its prices against prices at the price BinckBank has quoted. Acceptance available to it in the inter-bank market to ensure of the trade is subject to filters based on time that its mid points are within the best bid and offer elapsed and/or price movements in the underly- prices available to it. ing market since the price was quoted.

15 BinckBank’s premium for any given option is de- rived from three factors which it internally treats as separate markets. BinckBank’s net spread for an option trade is derived from the spread it quotes on each component. The net spread on any particular option transaction will be disclosed before the client trades. Spreads will normally be wider for longer dated options than for shorter dated ones; and wid- er for closer to the money options than for deeper in or out of the money ones.

BinckBank’s Charges BinckBank’s charges may include the following, some of which may be included in the net price at which the client trades:

• Price Mark Up/Mark Down. BinckBank’s main dealing charges will normally be imposed through an addition to/subtraction from the price at which the client deal with it. This add-on or deduction will not form part of the price for best execution comparison purpos- es. • Flat or percentage based commission charges. In some cases the client will pay a commission based charge. This charge will be shown sepa- rately from the trade price.

16 APPENDIX TO BINCKBANK’S BEST EXECUTION POLICY

SAXO BANK ORDER EXECUTION POLICY List of main execution venues – January 1, 2018

SHARES, ETFS, CERTIFICATES, FUTURES / OPTIONS BONDS FX WARRANTS, MUTUAL FUNDS Alpha BATS Options MarkeT Online trading Barclays Bank Aquis Exchange BM & F Bovespa ABN AMRO Citibank ASX Centre Point Borsa Italiana SpA/ ANZ Banking Group Deutsche Bank Italian Exchange ATD Auto Bourse de Montreal Inc. Banca IMI Goldman Sachs Athens Exchange BOX Options Exchange Bank of America/Merrill JP Morgan Chase LLC Lynch Australian Securities Exchange C2 Options Exchange, Barclays Bank UBS Incorporated BATS Dark Chicago board of trade BBVA XTX Markets BIDS Chicago Board Option BNP Paribas EBS Exchange BME Spanish Exchange Chicago Mercantile Citigroup Reuters Exchange BNP BIX Citadel Commerzbank Hotspot BofAML MLXN Comex Credit Agricole Currenex Borsa Italiana/MilanStock Eurex Credit Suisse Exchange Budapest Stock Exchange Euronext Daiwa Capital Markets BXE (BATS) Dark Pool Hong Kong Exchanges Deutsche Bank BXE (BATS) Lit Book ICE Futures Europe DZ Bank Chi-X Australia ICE Futures U.S. Goldman Sachs Chi-X Canada International Securities HSBC Bank Exchange, LLC Chi-X Chi Delta ISE Gemini, LLC ING Bank Chi-X Japan JP Morgan Jeffries International Citadel Connect MIAX Options Exchange JP Morgan Citi Cross Morgan Stanley Lloyds Bank CLSA Dark Pool NASDAQ OMX BX, Inc. Millennium Europe Commerzbank NASDAQ OMX PHLX, Mitsubishi LLC Commonwealth Bank of Australia NASDAQ OMX Morgan Stanley Stockholm

17 SHARES, ETFS, CERTIFICATES, FUTURES / OPTIONS BONDS FX WARRANTS, MUTUAL FUNDS ConvergEx Millenium NASDAQ Options MPS Capital Market ConvergEx Vortex New York Mercantile Natixis exchange Credit Suisse CrossFinder Nomura Nomura CS Light Pool NYSE Amex Options Oddo CX2 NYSE Arca Options Rabobank CXE (CHI-X) Dark Book Options Price Reporting Royal Bank of Canada Authority CXE (CHI-X) Lit Book Osaka Exchange Inc. Royal Bank of Scotland Deutsche Bank SuperX Oslo Børs/Oslo Stock Santander Exchange Deutsche Börse (Xetra) Singapore Exchange Societe Generale Derivatives Trading Ltd. Equiduct Spanish Official Standard Chartered Exchange Bank Euronext Amsterdam Sydney Futures Toronto Dominion Bank Exchange Corp. Ltd. Euronext Brussels UBS Euronext Lisbon Unicredit Euronext Paris Wells Fargo Fidelity CrossStream NASDAQ OMX Copenhagen GS Sigma X Offline trading Hong Kong Exchange Arctic Securities ICX BLX Danske Bank ICX VWAPX DNB Bank IEX Jyske Bank Instinet Market Axess Instinet BlockMatch Nedbank Instinet BLX Australia NIBC Markets Instinet BLX US Pershing Instinet CBX Hong Kong SEB Bank Instinet CBX Japan Tradition Instinet CBX US VTB Capital Instinet JapanCrossing Zurich Cantonalbank Instinet Nighthawk VWAP Instinet VWAPX Europe Instinet VWAPX US Irish Stock Exchange ITG POSIT Johannesburg Stock Exchange JP Morgan JP Morgan JPMX KCG GETMatched

18 SHARES, ETFS, CERTIFICATES, FUTURES / OPTIONS BONDS FX WARRANTS, MUTUAL FUNDS Knight Link Knight Match LavaFlow ECN Level ATS Liquidnet H2O Liquidnet Negotiated London Stock Exchange Lynx Macquarie XEN MATCH Now Morgan Stanley MS Trajectory Cross NASDAQ NASDAQ OMX Copenhagen NASDAQ OMX Helsinki NASDAQ OMX Nordic@Mid NASDAQ OMX Stockholm New York Stock Exchange New York Stock Exchange (ARCA) Nighthawk VWAP Nomura Nomura NX Japan NYSE MKT (American Stock Exchange) Omega Oslo Børs/Oslo Stock Exchange OTC Bulletin Board OTC Markets Group (Pink Sheets) PDQ Potamus Prague Stock Exchange Pure SBI Japannext Singapore Exchange SIX Swiss Exchange SmartPool SSGM BlockCross TMX Select Tokyo Stock Exchange TORA Crosspoint Toronto Stock Exchange TSX Venture Exchange Turquoise Turquoise Dark

19 SHARES, ETFS, CERTIFICATES, FUTURES / OPTIONS BONDS FX WARRANTS, MUTUAL FUNDS Turquoise MidPoint UBS UBS PIN Warsaw Stock Exchange Wells Fargo WELX Wiener Börse/Vienna Stock Exchange Xetra MidPoint

YOUR NUMBER ONE INVESTMENTBANK IN SPAIN BinckBank Spain Edif. Aries Urb. La Carolina Local N 29602 Marbella

20 BinckBank N.V. Barbara Strozzilaan 310 1083 HN Amsterdam The Netherlands

BinckBank Spain Urb. La Carolina Edf. Aries Local N 29602 Marbella

+34 951 565 656 [email protected] www.binckbank.com

BB/AS/OEP/0118