The Markets in Financial Instruments Directive ('MiFlD') becomes effective from 1 November 2007. This policy adopted by SG Hambros Bank Limited (“SGH”) responds to the MiFID requirements.

We categorise all our clients Retail Clients in respect of all the investment services we provide under MiFlD and accord them the relevant protections associated with this categorisation. SGH has always endeavoured to provide their clients with best execution services and the regulatory obligations introduced by MiFID are fully consistent with our existing commercial practice. It is also recommended that the SGH entities located outside the EU follow this policy as “best practice” to the extent that this is practical.

When executing orders on your behalf in relation to financial instruments, we will take all reasonable steps to achieve what is called “best execution” of your orders. This means that we will have in place a policy and procedures which are designed to obtain the best possible execution result, subject to and taking into account the nature of your orders, the priorities you place upon us in filling those orders and the market in question and which provides, in our view, the best balance across a range of sometimes conflicting factors. This policy applies, subject to market conditions, when SGH:

• Receives and transmits client orders;and/or

• Executes orders on a client's behalf.

SGH is seen as executing orders "on a client’s behalf" where the client legitimately relies on SGH to protect his or her interests in relation to pricing or other aspects of the transaction that may be affected by how SGH executes the order. This includes, but it is not limited to, execution of orders undertaken by SGH under its discretionary mandates to manage client portfolios. Other examples of executing orders on a "on a client’s behalf" are execution of orders by dealing as agent, execution of orders dealing as risk-less principal, or working orders given by clients.

We will take into consideration a range of different factors which include not just price, but which may also include such other factors as the cost of the transaction, the need for timely execution, the liquidity of the market (which may make it difficult to even execute an order), the size of the order and the nature of the financial transaction including whether it is executed on a regulated market or over the counter.

We will also take into account your understanding and experience of the market in question, your dealing profile, the nature of the dealing service you require of us and the specific and general instructions given to us by you which may prioritise how we are to fill your orders.

In the absence of express instructions from you, we will exercise our own discretion in determining the factors that we need to take into account for the purpose of providing you with “best execution”.

Our commitment to provide you with “best execution” does not mean that we owe you any fiduciary responsibilities over and above the specific regulatory  obligations placed upon us or as may be otherwise contracted between us.

We have set out in Part Three below information on the criteria which determines how we select the different venues on which we may execute your order and have identified those venues on which we will most regularly seek to execute your orders and which we believe offer the best prospects for affording you best execution. We will also assess, on a regular basis, the quality of execution afforded by those venues on which we execute your orders and whether we need to change our execution arrangements.

In selecting the most appropriate venues for the purpose of executing your orders, we will take into full account the factors relevant to the order, including those identified in Part One above;

(a) what we reasonably assess to be your best interests in terms of executing your orders; and

(b) such other factors as may be appropriate, including the ability of the venue to manage complex orders, the speed of execution, the credit worthiness of the venue and the quality of any related clearing and settlement facilities.

As a Retail Client, we will also provide you with additional details in Part Three regarding:

• the importance that we intend to place on the various factors affecting best execution (such as price, costs, speed, likelihood of execution and settlement, size, nature or any other relevant consideration) and the process by which we determine the importance of these factors; and

• a list of the types of execution venues on which we rely in meeting our obligation to take all reasonable steps to obtain the best possible result for the execution of your orders.

Whilst we will take all reasonable steps to satisfy ourselves that we have processes in place that can reasonably be expected to lead to the delivery of best execution of your orders, there may be circumstances including system failure where we cannot guarantee best execution of every order executed on your behalf.

Our policy, in providing you with best execution, is, so far as possible and subject to the processes set out in Part 3, to exercise the same standards and operate the same processes across all the different markets and financial instruments on which we execute your orders. However, the diversity in those markets and instruments and the kind of orders that you may place with us mean that different factors will have to be taken into account when we assess the nature of our execution policy in the context of different instruments and different markets. For example, there is no formalised market or settlement infrastructure for over the counter transactions. In some markets, price volatility may mean that the timeliness of execution is a priority, whereas, in other markets that have low liquidity, the fact of execution may itself constitute best execution. In other cases, our choice of venue may be limited (even to the fact that there may only be one platform/market upon which we can execute your orders) because of the nature of your order or of your requirements.

Best Execution

Subject to any specific instructions that may be given by client, when executing orders we will take all reasonable steps to obtain the best possible result for clients taking into account the Execution Factors listed below. We will determine the relative importance of the Execution Factors by using our commercial judgment and experience in light of market information available and taking into account the Execution Criteria.

Execution Factors

The Execution Factors that will be taken into account are: price; cost; speed; likelihood of execution and settlement; size; or any other consideration relevant to the execution of the order. Price will have normally a higher relative importance in obtaining the best possible result. However, in some circumstances, for some clients, financial instruments or markets, we may appropriately determine that other Execution Factors are more important than price in obtaining the best possible execution.

Execution Criteria

The Execution Criteria that will be taken into account are the characteristics of the:

• Client;
• Order;
• Financial Instruments that are the subject of that order; and
• Execution venues to which orders can be directed.

Execution Venues

Eligible for inclusion on the list of Execution Venues are the following venue types:

• Regulated Markets
• MTFs
• Systematic Internalisers
• Third-party investments firms, brokers and affiliates acting as market makers or liquidity providers or other entities providing similar functions.
• SG Group internal sources of liquidity.

A list of the Execution Venues used by us can be found on our website www.sghambros.com . This list of Execution Venues is not exhaustive but comprises those Execution Venues on which we place significant reliance. We reserve the right to use other Execution Venues deemed appropriate in accordance with our MiFID order execution policy and may add or remove any Execution Venues from this list. We will regularly assess the Execution Venues available in respect of any products that we trade to identify those that will enable us on a consistent basis, to obtain the best possible result when executing orders. The list of Execution Venues will then be updated, where necessary, following such assessment. We are not required to notify separately our clients of any changes to these venues.

Subject to any specific instructions that may be given by clients, we will use the following methodology in order to select an Execution Venue for an order:

• Subject to proper consideration of the Execution Criteria and Execution Factors, where we believe that we can trade to the advantage of the client (or at no disadvantage to) a SG Group entity or affiliate may be used as the Execution Venue.
• Subject to the above, when placing orders on a Regulated Market or MTF we will select the Execution Venue that we consider the most appropriate.

In all cases, we will consider all sources of reasonably available information, including MTFs, local exchanges, brokers and data vendors to obtain the best possible result for the order.

Methods of Execution

Subject to any specific instructions that may be given by the client we will execute an Order by one of the following methods or combination of methods:

• Directly on a Regulated Market or MTF or, where we are not a direct member of the relevant Regulated Market or MTF, with a third-party participant with whom we have entered into an agreement for handling orders for that Regulated Market or MTF
• Directly with SG Group internal sources of liquidity
• Executing the order with a matching order from another SGH client when this in the best interest of both client and does not leave the clients worse off than it would be the case if the orders were executed on another venue.

Specific Client Instructions

When clients give us a specific instruction as to the execution of an order we will execute the order in accordance with those specific instructions. When instructions relate to only part of the order, we will continue to apply our MiFID order execution policy to those aspects of the order not covered by specific instructions.

Clients should be aware that providing specific instructions to us in relation to the execution of a particular order may prevent us from taking the steps set out in our MiFID order execution policy to obtain the best possible result with respect of the elements covered by those instructions.

Reception and Transmission of Orders

Subject to any specific instructions that may be given by the client, we may transmit for execution an order received from a client to one of our Execution Venue, either an SG Group entity or an external entity, such as a third-party broker. In doing so, we must act in the client’s best interest and also comply with all aspects of this policy.

Monitoring and Review

Compliance with this MiFID order execution policy will be monitored by SGH on an ongoing basis.
 
SGH will review its MiFID order execution annually and clients will be notified of material changes. Also, whenever a material change occurs that affects our ability to obtain the best possible execution, clients will be accordingly notified. We will also update the list Execution Venues on when necessary. Clients will not be notified separately of changes to these venues, but a list will be made available on request.

Clients will be deemed to have given consent to our execution policy when they give us orders after 1 November 2007. Discretionary portfolio clients are deemed to have given consent to our execution policy if their investment management agreements are still in place after 1 November 2007.

Definitions

Financial Instruments – include, but are not limited to:

• Transferable securities;
• Money-market instruments;
• Units in collective investments;
• Various options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, or other derivatives instruments. Financial indices, financial measures or commodities:
• Derivative instruments for the transfer of credit risk; and
• Financial contracts for differences.

MiFID -means the Directive 2004/39/EC of the European Parliament and the Council of 21 April 2004 on Markets in Financial Instruments and any implementing directives and regulations.

Multilateral Trading Facility (MTF) - means a multilateral system, operated by an investment firm or a market operator, which brings together multiple third-party buying and selling interests in Financial Instruments in a way that results in a contract in accordance with the provisions of MiFID.

Order - means an instruction to buy or sell a Financial Instrument which is accepted by SGH for execution or transmission to a third party.

Regulated Market - means a multilateral system operated and/or managed by a market operator which brings together or facilitates the bringing together of multiple third-party buying and selling interests in Financial Instruments - in accordance with its nondiscretionary rules - in a way that results in a contract, in respect of the Financial instruments admitted to trading under its rules.