Principles of Best Execution
1. Introduction
This document set forth Principles of Best Execution of Deutsche Securities Inc. as required by the Financial Instruments and Exchange Law.
2. Scope
This policy applies to all staff of Deutsche Securities Inc.
3. Principles
The Principles of Best Execution sets out the principles and methods used to execute client orders on the most favorable trading terms for the client pursuant to the provision of Article 40-2, Paragraph 1 of the Financial Instruments and Exchange Law ("FIEL").
When Deutsche Securities Inc. ("DSI") receives orders from clients for securities listed on domestic financial instruments exchanges and where no instruction is given from them as to how their orders should be executed, DSI will endeavor to execute such orders in accordance with the principle described below.
I . Applicable securities
II . Best execution methods
III. The reasons for selecting this method
IV . Other
4. Roles and Responsibilities
All business units are responsible for implementing this policy and for adopting any necessary supplemental policies or procedures in their respective business units and supervisory procedures.
Individual staff must comply with the requirements of this policy and supervisors are responsible for ensuring compliance.
This document set forth Principles of Best Execution of Deutsche Securities Inc. as required by the Financial Instruments and Exchange Law.
2. Scope
This policy applies to all staff of Deutsche Securities Inc.
3. Principles
The Principles of Best Execution sets out the principles and methods used to execute client orders on the most favorable trading terms for the client pursuant to the provision of Article 40-2, Paragraph 1 of the Financial Instruments and Exchange Law ("FIEL").
When Deutsche Securities Inc. ("DSI") receives orders from clients for securities listed on domestic financial instruments exchanges and where no instruction is given from them as to how their orders should be executed, DSI will endeavor to execute such orders in accordance with the principle described below.
I . Applicable securities
1. "Listed Equities, etc." as defined in Article 16-6 of the Enforcement Order of the FIEL, including, but without limitation, stocks, bonds with stock acquisition rights (convertible bonds), ETFs (beneficiary certificates of stock price index-linked investment trusts), and REITs (investment securities of real estate investment trusts), which are listed on domestic financial instruments exchanges.
2. "Other Allowed Equity Securities" (toriatsukai yuka shoken) as defined in Article 67, Paragraph 18, Item 4 of the FIEL including, but without limitation, stocks, and bonds with stock acquisition rights (convertible bonds), which are Phoenix issues.
II . Best execution methods
1. Listed Equities, etc.
(1) If DSI receives from clients instructions as to how to execute agency orders, DSI will execute the agency orders in accordance with such instructions. If DSI does not receive such instructions, DSI will promptly forward the agency orders to a financial instruments exchange selected by it pursuant to the provisions of (2)(b) below.
(2) For the purpose of (1), agency orders will be forwarded to financial instruments exchanges in the following manner.
(a) If the security is listed on one financial instruments exchange (single listing), the order is forwarded to such financial instruments exchange.
(b) If the security is listed on two or more financial instruments exchanges (multiple listing), in principle, the order is forwarded to a financial instruments exchange selected by Nikkei NEEDS (vendor-supplied market data) based on the trading volume and other factors for a certain period of time using the calculation method prescribed by Nihon Keizai Shimbun, Inc.
(c) If DSI is not a trading participant or member of the financial instruments exchange selected pursuant to (a) or (b), DSI will forward the order to such financial instruments exchange through a trading participant or member of such financial instruments exchange with whom DSI has entered into an agreement regarding the forwarding of orders to such financial instruments exchange.
2. Other Allowed Equity Securities (toriatsukai yuka shoken) (Phoenix issues) DSI does not, in principle, accept orders for such securities.
3. Professional Investor as defined under Article 2, Paragraph 31 of the FIEL
Notwithstanding the methods described in 1. above, if DSI does not receive from clients instructions as to how to execute agency orders, DSI will execute as per the following conditions when the orders come from the Professional Investors.
Notwithstanding the methods described in 1. above, if DSI does not receive from clients instructions as to how to execute agency orders, DSI will execute as per the following conditions when the orders come from the Professional Investors.
(1) DSI may execute all or part of the agency orders through cross-trading with orders from other clients or those for its own account, on or off any financial instruments exchange, if it is deemed to be the best execution for the clients, taking into consideration all factors available to it at the time of execution, including but without limitation, prices, liquidity, and quickness of execution; provided, further, that DSI may forward the agency orders to a proprietary trading system (PTS) or other financial instrument business operators if it is deemed the best execution for the clients.
(2) If the condition described in 1.(2) above applies, DSI may execute on any financial instruments exchanges where DSI determines, based on the trading volume and other factors related to the security during a given period of time that there is no substantial difference in liquidity among the financial instruments exchanges, and where the trading volume on a particular financial instruments exchange is expected to be larger than usual due to listed futures and options expirations, inclusion of the security in any index, or other reasons. In such a case, the order is forwarded to a financial instruments exchange selected by DSI taking into account the liquidity and expected market impact of the order. DSI will provide detailed information about its selection to clients who inquire.
III. The reasons for selecting this method
1. Listed Equities, etc.
When investor demand is concentrated on financial instruments exchanges and trading thereon is considered better than off-exchange trading in terms of liquidity, likelihood of execution, trading speed, etc. in many cases. Therefore, DSI will forward orders to financial instruments exchanges, because it believes that executing client orders on financial instruments exchanges is the most reasonable method for the clients.
For securities listed on two or more financial instrument exchanges, DSI believes that executing client orders on the securities exchange with the highest liquidity is the most reasonable method for the clients.
Notwithstanding the foregoing, if DSI determines it will be able to execute client orders in better conditions through cross-trading with orders from other clients or those for its own account, or through a PTS or other financial instrument business operators, than by forwarding them to a financial instruments exchange, DSI will endeavor to achieve the best execution by adopting an appropriate method when the order comes from professional investor.
When investor demand is concentrated on financial instruments exchanges and trading thereon is considered better than off-exchange trading in terms of liquidity, likelihood of execution, trading speed, etc. in many cases. Therefore, DSI will forward orders to financial instruments exchanges, because it believes that executing client orders on financial instruments exchanges is the most reasonable method for the clients.
For securities listed on two or more financial instrument exchanges, DSI believes that executing client orders on the securities exchange with the highest liquidity is the most reasonable method for the clients.
Notwithstanding the foregoing, if DSI determines it will be able to execute client orders in better conditions through cross-trading with orders from other clients or those for its own account, or through a PTS or other financial instrument business operators, than by forwarding them to a financial instruments exchange, DSI will endeavor to achieve the best execution by adopting an appropriate method when the order comes from professional investor.
2. Other Allowed Equity Securities (toriatsukai yuka shoken)
DSI does not, in principle, accept orders for Other Allowed Equity Securities.
DSI does not, in principle, accept orders for Other Allowed Equity Securities.
IV . Other
1. Notwithstanding the methods described in II. above, trades listed below will be executed in the manner specified.
(1) Trades in respect of which clients instruct the execution method (e.g. the client wants DSI to enter into a principal trade as a direct counterparty to the client; the client specifies a financial instruments exchange on which the order is executed; the client wants the trade to take place during specified hours).
The execution method instructed by the client.
The execution method instructed by the client.
(2) Execution under a discretionary investment agreement, etc.
The method selected by DSI to the extent of the services that are requested by the client to be provided under such agreement, etc.
The method selected by DSI to the extent of the services that are requested by the client to be provided under such agreement, etc.
(3) Trades whose execution method is specified by the general trading terms and conditions, etc., including, but without limitation, cumulative stock investments and mini stock investments.
The execution method specified by the general trading terms and conditions, etc.
The execution method specified by the general trading terms and conditions, etc.
(4) Trades in fractional shares and odd lots.
Currently, DSI, as a broker, does not forward client orders to financial instruments firms that handle fractional shares and odd lots. These orders are dealt with as off-exchange trades to which DSI as principal is a direct counterparty to the client.
Currently, DSI, as a broker, does not forward client orders to financial instruments firms that handle fractional shares and odd lots. These orders are dealt with as off-exchange trades to which DSI as principal is a direct counterparty to the client.
2. Due to systems failures or other unavoidable reasons, DSI may execute orders in a method that differs from the method selected pursuant to the Principles of Best Execution. Even in such a case, however, DSI will endeavor to execute orders on the best terms available at the time of execution.
3. Due to the situations such as disaster, calamity or regulatory requirements, the clients’ orders may not be received, or may not be executed after receiving them in accordance with the policy.
4. The best execution obligation is the obligation to execute orders by taking into account not just the price, but the cost, speed, certainty of execution and other various factors in a comprehensive manner.
Therefore, an execution that in hindsight was found not to have achieved the best price does not necessarily constitute a breach of the best execution obligation.
Therefore, an execution that in hindsight was found not to have achieved the best price does not necessarily constitute a breach of the best execution obligation.
4. Roles and Responsibilities
All business units are responsible for implementing this policy and for adopting any necessary supplemental policies or procedures in their respective business units and supervisory procedures.
Individual staff must comply with the requirements of this policy and supervisors are responsible for ensuring compliance.
January 1, 2006(established)
September 30, 2007(revised)
June 1, 2008 (revised)
November 15, 2010 (revised)
September 30, 2007(revised)
June 1, 2008 (revised)
November 15, 2010 (revised)
May 7, 2018 (revised)
Deutsche Securities Inc.
Deutsche Securities Inc.