Best Execution Policy

As of January, 2024
Mizuho Securities Co., Ltd.

This Best Execution Policy sets forth the policy on and methods for execution of transactions on terms and conditions that are best for clients pursuant to the provisions of Paragraph 1, Article 40-2 of the Financial Instruments and Exchange Act of Japan (“FIEA”).
Upon acceptance of a client order for securities listed on a financial instruments exchange (hereinafter “exchange”) in Japan, we will endeavor to execute the order in accordance with the following policy when there are no execution instructions from the client:

1.Securities Covered by the Policy

1. “Listed Securities, etc.” including, but not limited to, stocks, bonds with stock acquisition rights, ETFs (beneficiary certificates in investment trusts linked to a stock index), and REITs (investment certificates in real estate investment trusts), etc. which are listed on exchanges in Japan as defined in Article 16-6 of the Financial Instruments and Exchange Law Enforcement Order; and
2. “Phoenix Securities” which include bonds with stock acquisition rights as defined in Item 4, Article 67-18 of FIEA are not handled by us.

 

2.Methods for Executing Transactions on the Best Terms and Conditions

• Listed Securities, etc.
  We will execute orders for Listed Securities, etc., as follows:

 

1. If we receive an agency order from a client (“Agency Order”), we will promptly forward such order to an exchange in Japan where the ordered security is listed. Agency Orders received after trading hours will be placed on an exchange after the exchange has reopened.
   If, however, the client prefers a method of execution different from that above (such as where we act as the direct counterparty, off-exchange trading (including using a Proprietary Trading System (“PTS”)) and off-floor trading at exchanges), we will execute the order in accordance with the wishes of the client.
2. For the purpose of (i), Agency Orders will be forwarded to exchanges in the following manner:
   1. If the relevant security is listed on only one exchange (single listing), we will forward the order to that exchange.
   2. If the security is listed on multiple exchanges (multiple listings), we will forward the order to the exchange stock price information for which is displayed first when the security code of the security is entered into a QUICK Corp. terminal at the time of execution. This exchange (hereinafter the “Selected Exchange”) is selected on the basis of the highest set-period trading volume according to QUICK Corp.’s computational method. Please contact our head office or branches for inquiries regarding the Selected Exchange.

 

3.Reasons for Selecting the Above Execution Method

• Listed Securities, etc.
  For listed securities, etc. we believe the most rational choice for our clients is to execute orders on exchanges because trading on exchanges is superior to off-exchange transactions in terms of liquidity, likelihood of execution, trading speed, etc. as exchanges tend to have a high concentration of investor demand.
  Furthermore, regarding securities listed on multiple exchanges, we believe the most rational choice is for our clients to execute orders on the exchange with the highest liquidity.
  
  Smart Order Routing (“SOR”), a system which automatically selects the market with the best price from multiple exchange markets and then executes the order, is scheduled to be introduced by around 2025, as it is expected to place higher priority on pricing. Since the introduction of the system requires a significant amount of time for development, we will send you a revised best execution policy after the introduction date has been determined. During the period before such introduction in accordance with the current best execution policy, orders will be executed with consideration of various factors, such as cost, speed and certainty of execution, as well as price.

 

4.Other

1. Notwithstanding the methods provided in section “2.” above, we will execute each of the following types of transactions in the applicable manner described below:
   1. Custom-made transactions in which client specifies the execution method (e.g., a request for us to act as the direct counterparty, a request for the order to be executed on a specific exchange, a request for execution during certain trading hours or the need for the execution of orders in a single lot):
      We will execute as instructed.
   2. Execution under an investment management agreement, etc.:
      Under such agreements, execution shall be conducted by a method of our choice within the range of discretion granted by the client.
   3. Transactions for which the execution method is specified in terms of business, etc.:
      We will execute as specified.
   4. Transactions of shares of less than one trading unit:
      We will forward the transaction to a financial instruments broker that handles shares of less than one trading unit.
   5. There may be cases where a fixed-date order (an order that remains effective until a designated date) for Listed Securities, etc. listed on multiple exchanges will be executed at an exchange that would not be the Selected Exchange at the time of execution because the initially-selected Selected Exchange continues as the exchange for the order.
   6. For standardized margin transactions, since their structure is based on the assumption that new positions and corresponding reverse trades are executed on the same exchange, the corresponding reverse trade shall be executed on the same exchange as the new position, even if the Selected Exchange has changed by the time the reverse trade is executed.
   7. Sell orders for foreign securities that are listed on both domestic (Japan) and overseas exchanges and that are in the custody of a foreign custodian, etc. will be executed on overseas exchanges.
2. There may be cases where, due to system failure or other reasons, we have no alternative but to execute an order using a method other than a method selected pursuant to the Best Execution Policy. In such cases, we will endeavor to execute on the best terms possible at the time of execution.

 

For corporate clients with transactions with the Global Markets Division