Best Execution Policy
This policy, in accordance with the provisions of Article 40-2-1 of the Financial Instruments and Exchange Act, stipulates the rules and methods for executing transactions under the best terms and conditions for customers with trading accounts with SPARX Asset Management Co., Ltd. (hereafter the Company).
When the Company receives an order for securities listed on a domestic financial instruments exchange and there are no execution instructions from the customer, the Company shall execute the order in accordance with the following policy.
- Applicable securities
Share certificates listed on a financial instruments exchange in Japan; Exchange Traded Funds (ETFs); Real Estate Investment Trusts (REITs); and other "listed share certificates, etc.," specified in Article 16-6 of the Order for Enforcement of the Financial Instruments and Exchange Act.
Note that the Company does not handle "tradable securities" specified in Article 67-18-4 of the Financial Instruments and Exchange Act. - Method for best execution
Customer orders for listed share certificates, etc., placed with the Company are not executed with the Company as the direct counterparty to the transaction. All orders handled on behalf of customers are executed via a contractual party (henceforth, "transmitting vendor") and are intermediated on financial instruments exchanges with the following guidelines. Note that the Company does not handle off-exchange trading, including intermediation on Private Trading Systems (PTS).
- Once an order is received from a customer, the Company will promptly act, via a transmitting vendor, to send the order to the financial instruments exchange in Japan on which the security is listed. Orders received after the trading session hours of a financial instruments exchange shall be sent via a transmitting vendor to the financial instruments exchange after the exchange reopens for trading.
- Intermediation of orders carried out with a financial instruments exchange via a transmitting vendor (as indicated in section II-1) shall follow the Best Execution Policy below, as stipulated by the transmitting vendor.
1. When the security is listed on a single financial instruments exchange (simple listing), intermediation shall be carried out with said exchange.
2. When the security is listed on multiple financial instruments exchanges (dual listing), intermediation shall be carried out with the first financial instruments exchange (said exchange selected on the basis of the highest trading volume during a fixed period, according to the QUICK Corp.'s calculation method) displaying stock price information when the trading code of the security in question is entered on the QUICK Corp. information terminal (situated in the office of the transmitting vendor) at the time of execution. Note that specific details on the selection in such a case can be furnished to customers upon request of the Company's head office.
Also note that the Company will continue using the exchange initially selected when receiving an order, since there are cases in which best execution may be negatively affected by delays caused by, for example, having to re-enter an order when the exchange selected by the aforementioned method is changed during the time period of a time-specific order. If the customer issues instructions to change exchanges, the order will be intermediated after the change is made.
- Reasons for using this method
Financial instruments exchanges receive focused demand from a large number of investors and, compared to off-exchange trading, in many cases offer superior advantages in terms of liquidity, obtaining a desired buy/sell price, transaction speed, and the like. Consequently, the Company has determined that executing trades on these exchanges is the most rational option for customers. Additionally, when a security is listed on multiple financial instruments exchanges, executing a trade on the exchange with the greatest liquidity is also deemed to be the most rational option for customers.
- Other matters
The following transactions shall be executed by the method indicated below, regardless of the method stipulated in II (Method for best execution).
- Transactions submitted with customer instructions regarding the execution method (such as requesting the Company be the direct buy/sell counterparty, requesting execution on a specific financial instruments exchange, requesting transaction execution during a specific time period, etc.)
=> The execution method specified in the customer's instructions - Execution based on a discretionary investment contract or the like
=> A method selected by the Company, within the scope allowed by the customer in the contract, etc. - Transactions with a specified execution method in the transaction agreement (or similar), such as cumulative stock investments, stock mini investments, etc.
=> The specified execution method - Transactions of fractional share units
=> The intermediation method using a financial instruments business operator handling fractional share units (note, however, that the Company does not handle fractional shares)
There are some unavoidable cases, such as system failures and the like, in which execution may be carried out by a method that differs from that indicated in the Best Execution Policy. Even in such cases, the Company shall strive for execution under the best transaction conditions available at that time.
- Transactions submitted with customer instructions regarding the execution method (such as requesting the Company be the direct buy/sell counterparty, requesting execution on a specific financial instruments exchange, requesting transaction execution during a specific time period, etc.)
Best execution is responsibly carried out with a comprehensive consideration of various factors besides price, such as expenses, speed, and certainty of execution. Accordingly, even if a transaction does not appear, after the fact, to be optimal solely from a price perspective, this in and of itself does not necessarily constitute a violation of the obligation for best execution.