(Basic Principles)
In order to ensure fairness in trading and to achieve best execution, we may aggregate and place buy and sell orders for multiple managed assets with same terms and conditions where the trading conditions are identical, including the type and issue of the relevant securities, buy/sell, type of transaction, and the order price/range.
When orders are placed on an aggregated basis, execution and settlement may be conducted at the average price. The average price shall be calculated by dividing the total executed amount for the batched order by the total executed quantity. In the event that fractional amounts arise, the number of decimal places and the rounding method shall be determined in advance in agreement with the broker through which the orders are placed.
(Scope of Securities and Transactions)
The Securities and other financial instruments for which we can batch the order execution shall be listed securities or other securities registered on a domestic financial instruments exchange market, a foreign financial instruments market, or an over-the-counter financial instruments market.
Eligible transactions may include, in addition to cash transactions, margin transactions and derivative transactions.
(Method of Allocation of Executed Trades)
In the case of a partial fill (where the total executed quantity is less than the total order quantity) for a batched order, allocation shall be made as follows:
- The executed quantity shall be allocated on a pro rata basis in accordance with the following formula:
Each account’s order quantity × (total executed quantity ÷ total order quantity)
The fractional shares which are amounts below the minimum trading unit shall be rounded down.
2. Any remaining quantity (in minimum trading units) resulting from the above calculation shall be allocated, one minimum trading unit at a time, to the accounts with the largest fractional remainders (i.e., the portions that were rounded down). In other words. after the fractional shares are aggregated, and it is reached at the quantity of the unit of trading, such unit shall be allocated to the account having a larger number of fractions.
3. The executed amount for each account shall be calculated by multiplying the quantity allocated pursuant to the above by the average execution price.
4. The above allocation shall be carried out mechanically through the order management system. If, due to a system malfunction or similar issue, minor discrepancies arise between the actual allocation and the above method (where the total number of shares subject to discrepancy does not exceed the number of order accounts multiplied by one trading unit, and the total discrepancy amount does not exceed 0.05% of the most recent assets under management), Middle Office shall, while eliminating arbitrariness and ensuring fairness, make individual adjustments as necessary.
(Best Execution Policy)
We shall seek best execution by comprehensively considering market conditions, prices, and other relevant factors, and may, when necessary, divide orders into multiple tranches (the transactions for each client account may be completed separately and independently).
(Internal Control Framework)
In implementing batched order execution, we shall establish internal rules and procedures, and Middle Office shall review and verify the internal control, operational framework for batched order execution.