Financial Regulation - ICAP.com

Financial Regulation

ICAP Group
ICAP Compliance Contacts
ICAP Group Companies Regulated in the EU
ICAP Anti-Money Laundering/Financial Crime Policy Statement
ICAP Multilateral Trading Facility(MTF)- Market Identifier Code(MIC)
ICAP Execution and Order Handling Policy effective 1 November 2007
ICAP Execution Venues
ICAP Terms of Business for Professional Clients effective 1 November 2007
ICAP Conflicts of Interest Policy
ICAP Regulatory Factsheet for Fund and Portfolio Managers 
Electronic Broking Data

ICAP Group

ICAP plc is the holding company of ICAP Group.

The majority of ICAP Group operating companies are licensed by financial services regulators in the jurisdictions they operate in around the world.

ICAP companies are licensed and regulated by the following authorities:

Europe

UK Financial Services Authority
Danish Finanstilsynet
German Bundesanstalt für Finanzdienstleistungsaufsicht
Polish Financial Services Commission

Africa

Reserve Bank of South Africa
Bond Exchange of South Africa

Americas

US Securities and Exchange Commission
New York Stock Exchange
US National Futures Association
National Association of Securities Dealers

Asia Pacific

Australian Securities and Exchange Commission
Hong Kong Monetary Authority
Bank Negara Malaysia and Malaysian Securities Commission
Bank Indonesia
Korean Ministry of Finance and Economy
Japanese Financial Services Agency
China Banking Regulatory Commission
Foreign Exchange Dealers Association of India and Securities and Exchange Board of India
Monetary Authority of Singapore
Bahrain Monetary Agency

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ICAP Compliance Contacts

Europe, Middle East and Africa

General Counsel, Europe
ICAP
2 Broadgate
London
EC2M 7UR
United Kingdom

+44 (0)20 7000 5000

Americas

General Counsel, Americas
ICAP
Harborside Financial Center
1100 Plaza Five
12th Floor Jersey City
New Jersey 07311 4996
United States of America

+1 212 341 9900

Asia Pacific

General Counsel, Asia Pacific
ICAP (Hong Kong) Limited
12th Floor, Chater House
8 Connaught Road
Central, Hong Kong
China

+ 852 2532 0888

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ICAP Group Companies Regulated in the EU

The following firms are regulated by various EU regulators. These details might be useful to those wishing to carry out ‘Know Your Customer’ checks upon ICAP firms based in the EU only. For more information or assistance please contact newaccounts@icap.com

This information also satisfies certain requirements under FSA Rules regarding the European Directive.

The Financial Services Authority registration numbers given above are in the public domain and can easily be verified by using FSA’s register at: http://www.fsa.gov.uk/Pages/register/

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ICAP Anti-Money Laundering/Financial Crime Policy Statement

ICAP is committed to the prevention of financial crime such as money laundering and the funding of terrorist activity. Through risk-based internal procedures, policies, systems and controls, ICAP strives to ensure that high standards of crime prevention and awareness are maintained by its management and staff around the globe.

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ICAP Multilateral Trading Facility (MTF) – Market Identifier Code (MIC)

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ICAP Execution and Order Handling Policy effective 1 November 2007

This Policy applies to broker services provided to you by the regulated members of the ICAP Group referred to in our standard terms of business, as notified to you from time to time (“Broker”). This Policy should be read in conjunction with the Broker’s standard terms of business.

The Policy sets out the arrangements ICAP has put in place to meet its obligations under the Markets in Financial Instruments Directive (MiFID) to give best execution to Professional Clients and to comply with client order handling rules. MiFID’s best execution regime requires us to take all reasonable steps to obtain the best overall trading result for Customers, taking into account price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to order execution whether we are executing orders, on behalf of Customers or placing orders with, or passing orders, to others for execution.

Introduction

When providing a brokerage service to you in relation to financial instruments (as set out in Annex 1), the Broker will take reasonable steps to achieve the best overall trading result for you. This means that the Broker will aim to provide “best execution” subject to and taking into account the nature of your orders, the prices available to the Broker in the market, the nature of the market in question and a reasonable assessment of any overlapping and conflicting execution factors (which are detailed below).

The Broker’s intention, so far as possible, is to exercise consistent standards and operate the same processes across all markets, clients and financial instruments in which the Broker operates. The Broker also intends to provide you and other market participants with access (where possible) to tradable prices on a non-discriminatory basis. However, the diversity in those markets and instruments, the Broker’s knowledge of your own trading intentions, and the kind of orders that you may place, mean that different factors will have to be taken into account in relation to any particular transaction.

Further details on the nature of the service the Broker, as an Inter-Dealer Broker (IDB), provides to its clients can be found at:

http://www.wmba.org.uk/execution_policy/annex_2.doc

Exemptions from the provision of Best Execution

Notwithstanding the intentions expressed above, the Broker does not undertake to provide “best execution” in the following circumstances:

Eligible Counterparties

• If you are classified as an Eligible Counterparty you will not be entitled to best execution under the UK Financial Services Authority (“FSA”), or equivalent EU rules. This is in line with Article 24 of MiFID which provides that the best execution obligation under Article 21 will not apply.

Market Practices

• In the wholesale over the counter (OTC) derivatives and bond markets (and, for the avoidance of doubt, this includes derivatives in Equities, Energy and Commodities) in which the Broker operates it is normal market practice for buyers and sellers to “shop around” by approaching several brokers/dealers for a quote. This market practice is recognised by the European Commission. In these circumstances there is no expectation between the parties that the broker/dealer chosen will owe best execution.

Unless you, as a sophisticated participant in the wholesale markets, advise us to the contrary we will assume that this is your normal trading behaviour.

Transactions arranged in a name-passing capacity

• Brokers acting in a name-passing capacity are receivers and transmitters of orders but in carrying out their activities they do not receive and transmit orders for execution. Where orders are not transmitted for execution, the requirement to provide best execution will not apply. For further details please refer to the WMBA guidance document titled, “The Role of the Name-Passing Broker” which can be found at:

http://www.wmba.org.uk/execution_policy/role_of_name_passing_broker.doc

Client Instructions

• Where you provide the Broker with a specific instruction in relation to your entire order, or any particular aspect of your order, including an instruction for your trade to be executed on a particular venue, the Broker will execute the order in accordance with your instructions. However, please note that in following your instructions, the Broker will be deemed to have taken all reasonable steps to provide the best possible result for you in respect of the order, or aspect of the order, covered by your specific instructions.

Note that when you give an offer, take a bid or place an order on a multilateral trading facility (MTF), the best execution provisions of MiFID will not apply to the operator of the MTF and these obligations will fall on the user of the system. Your order will be classified as a specific instruction and hence the best execution provisions of MiFID will not apply.

Clients

Except in exceptional circumstances, the Broker will only deal with Eligible Counterparties and Professional Clients as defined in MiFID and by the FSA.

Because the Broker always intends to handle orders and expressions of interest in an equitable and consistent manner, once a client is classified as an Eligible Counterparty for the purposes of a particular instrument, that client may not then elect to be re-classified for the purposes of any transaction of a type it customarily undertakes. Exceptional circumstances may be taken into account at the time, with the consent of the Broker (the Broker may decline to provide a service should a reclassification be requested).

Execution Venue

This Execution Policy sets out the venues on whch the Broker will most regularly seek to execute your orders and which the Broker believes offer the best prospects for achieving the best possible results for you, taking into account the execution factors detailed below.

The Broker is able to transact trades on your behalf on any of the following execution venues:

• The Broker’s customer base in the OTC markets;
• Any MTF operated by the Broker or to which the Broker subscribes from time to time; and
• Various Exchanges to which the Broker has access and which are listed on the Broker’s website.

When selecting the venue on which to transact trades, the Broker will take reasonable measures to ensure that the selected venue obtains the best possible trading result for its clients, subject to the following factors:

• In the OTC markets in which the Broker operates it can only give clients visibility to prices that have been communicated to the Broker by other clients that operate in the same market. Accordingly any “best outcome” will solely be within these limits;
• The Broker will provide details of all tradable bids and offers (subject to the other matters referred to below);
• Time availability of prices – in many markets there are lulls and spikes in trading as negotiations align trading interests at different times and different parts of the curve. Accordingly the “last traded” price may not always be available or act as a reliable indicator of current price;
• The Broker cannot allow clients to trade in a market unless it is reasonably satisfied that the client (via an agent or otherwise) is operationally capable of settling the relevant trade;
• The Broker cannot control either the cost of credit (credit premium) or credit acceptance between its clients;
• Rates of brokerage will vary between clients, based on agreements and levels of activity.

Execution Factors

In the absence of express instructions from you, the Broker will exercise its own discretion in determining the factors that the Broker needs to take into account for the purpose of providing you with the best possible result.

These execution factors in the wholesale markets in which the Broker operates will include, but are not restricted to, the following:

• classification of the client;
• size, nature and characteristic of the order;
• likelihood and speed of execution;
• price and costs of execution; and
• exchange settled block trades, or positions larger than standard market size, may be crossed at a particular stage in the trading day, or kept anonymous to the majority of market participants; unless otherwise directed, the Broker will only show the price and size to parties that it believes may have an interest in executing or crossing such a position.

Monitoring and review

The Broker will monitor the effectiveness of its order execution arrangements and order execution policy in order to identify and, where appropriate, incorporate any amendments to procedures. The Broker will assess, on a regular basis, whether the execution venues included in the order execution policy provide for the best possible result for its clients or whether the Broker needs to make changes to its execution arrangements. The Broker will review its order execution arrangements and order execution policy at least annually or whenever a material change occurs that affects its ability to continue to obtain the best possible result for the execution of client orders on a consistent basis using the venues included in its order execution policy. The Broker will notify you of any material changes to its order execution arrangements or order execution policy as described above by posting the information on the Broker’s website.

No Fiduciary Relationship

The Broker’s commitment to provide you with “best execution” does not mean that it owes you any fiduciary responsibilities over and above the specific regulatory obligations placed upon it or as may be otherwise contracted between the Broker and yourself. You remain responsible for your own investment decisions and the Broker will not be responsible for any market or trading loss you suffer as a result of those decisions.

To download a copy of the Financial Instruments As Defined by MiFID, please click here

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ICAP Execution Venues

The ICAP Execution and Order Handling Policy sets out the arrangements that ICAP has put in place to meet its obligations under the Markets in Financial Instruments Directive (MiFID) to provide professional clients with best execution within the liquidity pools available to it.

ICAP has access to the following Exchanges and external MTF’s:

Equities

Futures

· ICE Futures Europe (ICE)

· Chicago Mercantile Exchange Group (CME/CBOT)

· EUREX AG (EUREX)

· New York Mercantile Exchange (NYMEX)

· South African Futures Exchange (SAFEX)

· Sidney Futures Exchange (SFE)

· Tokyo International Financial Futures Exchange (TIFFE)

· Tokyo Stock Exchange (TSE)

· New York Board of Trade (NYBOT)

· Singapore International Mercantile Exchange (SIMEX)

· European Energy Exchange (EEX)

· Hong Kong Futures Exchange (HKFE)

 Amsterdam Exchange (AEX)

· Spanish Financial Futures Market (MEFF)

· International Maritime Exchange (IMAREX)

· Euronet-LIFFE London /Paris (LIFFE)

· OMX London (OMX)

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ICAP Terms of Business for Professional Clients effective 1 November 2007

1. COMMENCEMENT

1.1 This Agreement, as amended from time to time, defines the basis on which we will provide you with certain services. This Agreement creates a contractual relationship between us that has legal consequences.

1.2 This Agreement constitutes the entire agreement between us and supersedes any prior agreement relating to the subject matter of this Agreement or any prior declaration or statement we may have made.

1.3 This Agreement is deemed to be accepted by you every time you enter into a transaction with us.

1.4 For the purposes of this Agreement, ICAP shall be deemed to be the relevant ICAP Group Company providing the service to you from time to time. Each such ICAP Group Company shall have an interest in, take the benefit of, and be bound by the terms of this Agreement, as applicable. ICAP Group Company shall mean any affiliate of ICAP plc where the term “Affiliate” shall mean, in respect of any party, persons who control, are controlled by or are under common control with such party.

1.5 This Agreement incorporates any Execution Policy as we may agree with you from time to time. Your entry into transactions with us deems your continued consent to such Execution Policy.

2. REGULATION

2.1 The following entities are regulated by the Financial Services Authority (the FSA):
(1) ICAP Electronic Broking Limited;
(2) ICAP Energy Limited;
(3) ICAP Europe Limited;
(4) ICAP Futures LLC (London Branch);
(5) ICAP Hyde Derivatives Limited;
(6) ICAP Securities Limited;
(7) ICAP Securities USA LLC (London Branch);
(8) ICAP WCLK Limited;
(9) T & M Securities Limited; and
These entities may be amended by us on written notice from time to time.

2.2 The relevant ICAP Group Company arranging your transaction shall be notified to you in writing from time to time.

3. OUR SERVICES

3.1 We may provide investment and dealing services which may include the following investments:
(1) Transferable Securities;
(2) Moneymarket Instruments;
(3) Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates and yields or other derivative instruments, financial indices or financial measures which may be settled physically or in cash;
(4) Options, futures, swaps, forward rate agreements and any other derivative contracts relating to commodities that may be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of default or other terminal event);
(5) Options, futures, swaps and any other derivative contract relating to commodities that can be physically settled provided they are traded on a regulated market and/or an MTF;
(6) Options, futures, swaps, forwards and any other derivative contract relating to commodities that can be physically settled not otherwise mentioned in 5 and not being for commercial purposes, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are cleared and settled through recognised clearing houses or are subject to margin calls;
(7) Derivative instruments for the transfer of credit risk;
(8) Financial contracts for differences; and
(9) Options, futures, swaps, forward rate agreements and other derivative contracts relating to climatic variables, emission allowances or inflation rates or other economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of default or other terminal event), as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in this section, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market or an MTF, are cleared and settled through recognised clearing houses or are subject to regular margin calls.
We may also provide other services as agreed between us from time to time.

3.2 Unless agreed in writing we will not provide you with specific advice or personnel recommendations. You acknowledge that you enter into any transaction solely on the basis of your own judgment and have not relied on any investment research or advice provided by us.

3.3 We may enter into any transaction with you as principal or may act on your behalf as name passing or introducing broker. This agreement applies to all methods or mechanisms used to provide our services, including, where applicable, electronic mechanisms and systems.

3.4 We may, when you have instructed us to do so, deal for you in non-readily realisable investments. These are investments in which the market is limited or could become so; they can be difficult to deal in and it can be difficult to assess what would be a proper market price or value for them.

4. INVESTMENT OBJECTIVES, RESTRICTIONS AND DECISIONS

4.1 Unless otherwise advised in writing, you confirm that your objectives are based upon either:

(1) hedging current exposures;
(2) maximising income; or
(3) long term capital growth.

4.2 Unless otherwise indicated in writing, we shall assume that there are no restrictions to the type of transaction we may enter into with you or the markets upon which transactions may be effected.

5. AUTHORITY AND INSTRUCTIONS

We may act upon any transaction which we reasonably believe to have been given by an authorised representative of you. No liability shall attach to us if a transaction which we have accepted and acted upon bona fide is subsequently discovered to have been given forged, falsified or amended without your authority.

6. OUR CHARGES OR COMMISSION

6.1 Unless otherwise agreed and where we are not acting as principal, our charges will be levied in accordance with our rates in effect at the time the charges are incurred or as otherwise notified to you (including those relating to holding custody investments), verbally or in writing prior to dealing. Any alteration to these charges will be notified to you at or before the time of the change.

6.2 We may share our charges or commission with or receive remuneration from intermediaries introducing business to us, associated companies or other third parties and will provide details to you on request.

6.3 All amounts (including without limitation all fees and charges) payable by you shall be due on demand without set off, counterclaim or deduction.

6.4 Unless otherwise agreed in writing, you will be responsible for any applicable taxes applied to or levied in respect of any transactions.

7. REPORTING TO YOU

7.1 You will be deemed to have received a trade confirmation or other notification from us at the time of the conversation in respect of a verbal notification or confirmation and in the case of notification or communication by facsimile or other electronic means, the same day, otherwise not more than three (or, in the case of overseas clients, seven) business days from the date of despatch.

7.2 You will notify us immediately upon receipt if you are not in agreement with any trade confirmation or other notification from us. In the absence of such immediate notification by you, the trade confirmation or notification will (in the absence of manifest error) be binding on you.

8. CONFLICTS OF INTEREST

8.1 Your attention is drawn to the fact that when we enter into or arrange a transaction for you we, an associated company or some other person connected with us may have an interest, relationship or arrangement that is material in relation to the transactions, investments or service concerned and you agree that we shall not be obliged to disclose this to you or to account to you for any profit. However, our employees are required to comply with a policy of independence and disregard any such interest when entering into a transaction for you.

8.2 When we enter into or arrange a transaction for you:
(1) we or one of our associated companies could for example be matching your transaction with that of another client by acting on his behalf as well as yours; or
(2) one of our associated companies could be dealing as principal for its own account by selling the investment concerned to you or buying it from you.

8.3 Where we, or an associate, issues research, we or an associate, may undertake or have undertaken own account transactions in the investment concerned or any related investment.

9. RIGHTS OF SET-OFF AND RETENTION OF YOUR FUNDS

9.1 We shall be entitled at any time to retain or make deductions from or set off amounts or credit balances which we owe to you or you owe to us (including, without limitation, the proceeds of any sale) in order to meet any liabilities which you may have incurred to us or which we may have incurred on your behalf under this Agreement including, for example, when appropriate;
(1) sums to be paid in settlement of transactions;
(2) settlement of our fees, commissions or charges or any other amounts referred to in clause 6 (Our Charges) or any liabilities or costs incurred when exercising rights under Appendix 1 Clause 3 (Power to Sell or Close Out) or any other provision of this Agreement;
(3) any interest payable to us; and
(4) payments to us pursuant to any indemnity.

9.2 Until you have paid or discharged in full all monies and liabilities owed to us any monies from time to time outstanding to the credit of any of your accounts with us shall not be due and payable although we may in our absolute discretion make payments to you from such accounts, or otherwise exercise our rights of set off and/or combination and/or consolidation.

9.3 You hereby grant a first fixed charge and first priority security interest with full title guarantee over all monies and any collateral or other property held by us at any time (including, without limitation, the benefit of all contractual rights and obligations and any proceeds of sale) as security for the performance of your obligations under this Agreement and under any transaction. We shall have, to the greatest extent permitted by law, all of the rights of a secured party with respect to any money or other assets charged to us and you will, at our request take such action as we may require to perfect or enforce any security interest and irrevocably appoint us as your attorney to take any such action on your behalf.

10. REPRESENTATIONS

You represent, warrant and undertake to us that, both at the date of this Agreement and at the time of any transaction we may enter into with or for you:

10.1 You have full power and authority to enter into this Agreement and to instruct us to execute or arrange any transaction in investments specified in clause 3.1 above and to perform all your obligations hereunder. You have adequate resources to enter into and perform any such transaction which you decide to undertake;

10.2 All information you have given to us is true and complete as of the date of this Agreement and at the time of any transaction and any changes to the information given to us will be promptly notified to us;

10.3 You will ensure that all relevant investments or any documents of title and/or transfer forms and/or any relevant payments are delivered, paid or transferred to us or to whomever we may direct in sufficient time on or before the contractual settlement date to enable us to settle the transaction in accordance with market requirements;

10.4 Unless otherwise agreed in writing:
(1) you will always contract as principal only and no person other than yourself has or will have any interest in any transaction or in any account that we hold on your behalf; and
(2) all cash, securities or other assets transferred to us pursuant to the terms of this Agreement are your sole and beneficial property and will be transferred to or held by us free and clear of any lien, charge or other encumbrance and that you will not charge, assign or otherwise dispose of or create any interest therein.

11 DISCLOSURE

You consent to disclosure by us to the FSA (or any successor to the FSA), any relevant exchange, or any other regulatory body or authority in the United Kingdom or elsewhere and to any of our associated companies of such information relating to services provided to you pursuant to this Agreement as may be requested by them or we may otherwise be required to disclose.

12 LIABILITY

12.1 We shall not be liable for any loss of opportunity whereby the value of your account may have been increased nor for any reduction in the value of your account as a result of market movements. We shall not be liable for the taxation consequences of any transaction nor shall we be liable for taxation charges arising for any reason.

12.2 Neither we nor any person connected with us nor any of our agents shall be under any liability whatsoever for any loss or damage sustained by you as a result of or in connection with the services to which this Agreement applies and the provisions of this Agreement except insofar as and then only to the extent that such loss or damage is caused by negligence or wilful default or any failure to comply with all applicable rules of the FSA or the provisions of the Financial Services and Markets Act 2000 (FSMA).

12.3 You irrevocably and unconditionally agree to indemnify us and our agents on demand and keep us fully and effectively indemnified (whether before or after termination of this Agreement) against any claims, liabilities or expenses of any kind which may be incurred by us as a direct or indirect result of our acting under this Agreement. However, this indemnity shall not apply to any loss or liability to the extent it arises or results from our negligence or wilful default or any contravention by us of the rules of the FSA or the provisions of the FSMA.

13. ILLEGALITY

If any provision or term of this Agreement or any part thereof shall become or be declared illegal, invalid or unenforceable for any reason whatsoever, such term or provision shall be divisible from this Agreement and shall be deemed to be deleted from this Agreement provided always that, if any such deletion substantially affects or alters the commercial basis of this Agreement, we reserve the right to amend and modify the provisions and terms of this Agreement in such fashion as may be necessary or desirable in the circumstances.

14. ASSIGNMENT

You may not assign any of your rights or obligations under this Agreement to any other person without our prior written agreement. We may assign our rights or obligations to any of our associated companies or to any person or entity who may acquire the whole or any part of our business or assets.

15. TIME OF THE ESSENCE

Time shall be of the essence with respect to any payment, delivery or other obligation you may have to us under this Agreement

16. FORCE MAJEURE

We shall not be in breach of our obligations under this Agreement if there is any total or partial failure of performance of our duties and obligations occasioned by any act of God, fire, act of government or state, war, civil commotion, insurrection, embargo, inability to communicate with market makers for whatever reason, failure of any computer dealing or settlement system, prevention from or hindrance in obtaining any energy or other supplies, labour disputes of whatever nature or late or mistaken delivery or payment by any bank or counterparty or any other reason (whether or not similar in kind to any of the above) beyond our control.

17. TERMINATION

17.1 You may terminate this Agreement at any time by written notice to us subject to your having no outstanding obligation to us. We may terminate this Agreement at any time by written notice to you.

17.2 Termination shall not affect your obligation to settle transactions effected prior to the date of termination and shall not prejudice any right or obligation that may already have arisen. We shall also continue to have the right to disclose information where required to a UK or overseas regulator.

18. VARIATION

18.1 We may, from time to time, by written notice to you, make such modifications, amendments and additions to this Agreement as we consider necessary or desirable to comply with any applicable law or the requirements of any governmental or other regulatory body or to comply with the rules of an exchange or clearing house.

18.2 All such modifications, amendments or additions shall be effective on a date specified in the notice which will not, unless it is impracticable in the circumstances, be less than ten business days after provision of the notice, save that amendments or additions required for regulatory purposes shall, if we so determine, have immediate effect.

19. NOTICES

19.1 All notices between us shall be in writing and may be served personally or by facsimile, or by first class post to us at the address set out at the head of this Agreement or as we may provide in writing from time to time:

19.2 With the exception of dealing instructions to us (which must be communicated in accordance with clause 7) notices shall be deemed to have been served three (or, in the case of overseas clients, seven) business days after having been posted, or if sent by facsimile or other electronic means, one business day after transmission. A business day is any day when investment business is generally conducted in London or such other financial centre as is notified to us by you prior to the relevant transaction.

20. EXCLUSIVE JURISDICTION

You agree that the courts of England are to have exclusive jurisdiction to settle any disputes, which may arise out of or in connection with this Agreement. Nothing contained in this clause shall limit our right to take proceedings against you in any other court of competent jurisdiction.

21. GOVERNING LAW

The provisions of this Agreement shall be governed by English law.

APPENDIX 1 (APPLICABLE TO THOSE TRANSACTIONS INVOLVING SECURITIES WHERE ICAP ACTS AS A MATCHED PRINCIPAL BROKER)

1. DEALING INSTRUCTIONS

1.1 You may communicate your dealing instructions to us in writing (for example by letter or fax) verbally or electronically. If you give us instruction in writing, such instructions must be received by us during normal business hours allowing sufficient time for us to act upon them. You agree that acceptance of an instruction to withdraw or amend an existing instruction is always subject to our receiving the instruction in time for the appropriate action to be taken. You agree that we may in our absolute discretion, refuse to accept an order or any other instruction for your account.

1.2 We shall be entitled to rely on and treat as binding any instructions which we believe to be from you or from your agent(s) (whether received by telephone, electronically, telex, facsimile or otherwise in writing) which we have accepted in good faith.

1.3 You agree that all telephone conversations, which we may have with you (or any third party), may be recorded and such recordings may be used as evidence in the event of a dispute. Such recordings will be accepted by you as conclusive evidence of instructions received from you.

2. DEALING

2.1 When we accept a dealing instruction from you we will seek to action it as soon as reasonably practicable in the circumstances.

2.2 All dealings with or for you are subject to the rules, provisions and usages of the markets, exchanges and associations being used for the trading of your account.

2.3 If for any reason a conflict or dispute arises between us in relation to our services we will endeavour to resolve these informally. If however this is not possible and you wish to make a formal complaint this should be made in writing. Your formal complaint will then be investigated internally.

2.4 Where we act as a principal in executing a transaction in an investment which is not a packaged product or readily realisable security (as defined by the FSA), the unit price of the transaction shall be arrived at by reference to the market price for the investment then available on the market on which such investments are generally traded or, if no such price is available, on a best efforts basis, and any reference in a confirmation to a market price shall be construed accordingly.

2.5 We may aggregate your order with an own account order or an order of another client of ours. The effect of this aggregation may work to your disadvantage on some occasions.

3. POWER TO SELL OR CLOSE OUT

3.1 If, at any time, we have any reason to believe that you may be unable or unwilling to meet any liabilities which you have incurred to us or which we may have incurred on your behalf or to comply with any other obligations under this Agreement, we shall be entitled (and are irrevocably authorised by you) to take all or any of the following actions without prior notice to you:
(1) sell any investments bought on your behalf but for which you have not paid on or before the relevant settlement day;
(2) close or rescind open positions on your account. We may do so, for example, if any cash or investments have not been delivered by you on or before the relevant settlement day; and
(3) take any other steps (whether or not similar to the above) we may consider to be necessary to meet any obligations which you have to comply with under this Agreement or otherwise to protect our position.
Any costs or losses incurred by us in effecting any or all of clause 3.1(1), (2) or (3) will be paid by you to us.

3.2 Any restrictions on our power to sell or otherwise deal with assets of yours charged to us or held by us, contained in the Law of Property Act 1925 or any other applicable law are, to the extent permitted by law, excluded.

4. SETTLEMENT

4.1 Unless otherwise specifically agreed with you, settlement of all transactions with or for you must be made in accordance with the usual terms for settlement of the appropriate exchange, market or clearing house where applicable and/or market convention.

4.2 Unless we expressly agree to the contrary, all amounts of every kind which are payable by you to us and vice versa in relation to the settlement of trades will be payable on delivery against payment basis.

4.3 We are not obliged to settle any transactions whether we are acting as principal or as agent or account to you unless and until we (or our settlement agents) have received all necessary documents or cleared funds. Our obligations to deliver investments to you or to your account or to account to you for the proceeds of the disposal of investments are conditional on prior receipt by us of appropriate documents or cleared funds from you.

4.4 In the case of securities, which have already been committed to a take-over offer, settlement may be delayed if the transaction can only be completed with securities issued by the offeror.

4.5 You will indemnify us and our employees and agents against any cost, loss, liability, penalty or expense arising from your failure to deliver securities or funds to us when they are due.

4.6 We shall be entitled, without prior notice to you, to make the currency conversions necessary or desirable for the purposes of fulfilling your trading obligations. Any such conversion shall normally be made by us, as principal, at a rate which reflects the size, liquidity and timing of the transaction. We shall disclose to you the relevant rate on the contract note or confirmation but will be entitled to retain any profit we or any associate may derive from the transaction. Any foreign exchange risk arising from any contract, our compliance with our obligations or any exercise of our rights under this Agreement shall be borne by you.

4.7 In order to effect transactions for you, you confirm that we may (subject to an obligation to account to you for property of the same nature and description but not necessarily identical to the property originally delivered to us and subject to our other rights under this Agreement) without prior notice to you deposit, charge or pledge any collateral you may deliver to us to any exchange, clearing house, broker or other third party on terms that such third party may enforce such deposit, charge or pledge in satisfaction of any obligations that we may incur to such third party or of any such obligations incurred by you or by any other client.

5 CLIENT ASSETS

5.1 In the normal course of business it is very unlikely that we will hold assets belonging to you and unless specifically agreed in writing we do not provide a safe custody service. However if such a situation does occur we will treat any such assets in accordance with the FSA Client Assets rules.

5.2 Safe custody investments may be registered or recorded in your name, the name of a nominee or custodian or in our name. Where a safe custody investment is registered in our name or in the name of the nominee and/ or custodian, the safe custody investment may not be segregated from our designated investments or that of the nominee or custodian, and, in the event of our default or the default of the nominee or custodian, your assets may not be as well protected from claims made on behalf of our general creditors or the creditors of the nominee or custodian. We do not accept responsibility for the default of any such nominee or custodian.

5.3 Where the safe custody investments are subject to the law or market practice of an overseas jurisdiction or it is in your best interest to do so, we may hold safe custody investments outside England and Wales. Where we hold safe custody investments outside England and Wales, there may be different settlement, legal and regulatory requirements in these overseas jurisdictions from those applying in England and Wales, and there may be different practices for the separate identification of safe custody investments. The safe custody investments may not be segregated and may be treated in a different manner from that which would apply if the assets where held in England or Wales.

5.4 We may hold client money in a client bank account outside England and Wales. In these circumstances the legal and regulatory regime applying to the approved bank will be different from that of the England and Wales and, in the event of a failure of the bank, your money may be treated in a different manner from that which would apply if the client money was held in England or Wales. We may hold client money with an overseas bank whether or not it has accepted that it has no right of offset or counterclaim against money held in a client money bank account in respect of any sum owed on any other account of ours.

5.5 Your money may be passed to a person (e.g. an intermediate broker, settlement agent or OTC counterparty) outside England and Wales. In these circumstances the legal and regulatory regime applying to this person will be different from that of England and Wales and, in the event of a failure of the person, your money may be treated in a different manner from that which would apply if the your money was held by a person held in England and Wales.

5.6 Sub custodians may hold the custody assets at your risk and on such terms and conditions as the sub custodian may require. We shall be entitled to grant to sub custodians liens and/or other security interests over the custody assets. We shall not be liable for the acts, default or insolvency of any sub custodian, nor for any expense, loss or damage suffered by or occasioned to you in connection with those acts, default or insolvency in the absence of fraud, gross negligence or wilful default by us in the initial selection of any sub custodian. We will assume responsibility for claiming and receiving dividends, interest payments and other rights. We will act on your instructions regarding the exercise of conversion, subscription and voting rights, and in respect of take-overs, capital reorganisations and other offers but shall not be liable to you for failing to act in circumstances where no such instructions have been received. We shall provide information, including statements, to you regarding your safe custody investments as required by the FSA rules. We may pool your safe custody investment with those of one or more of our other clients.

5.7 Subject to the rules of the FSA we may hold your cash at such financial institutions as we deem fit

5.8 You consent to us ceasing to treat any money held for you or on your behalf as client money where there has been no movement on your balance for a period of at least six years, notwithstanding any payments or receipts of charges, interest or similar items. Before doing this however we will write to you at your last known address in order for you to claim such money and we undertake to make good any valid claims even if we have ceased treating your money as client money.

5.9 Interest will not be payable to you in respect of any money which we hold for you (including, in particular, funds received in advance of the due date for settlement or representing dividends) unless specifically agreed between us.

APPENDIX 2 INFORMATION ABOUT DESIGNATED BUSINESS

Where we provide execution services in designated investments we are obliged to inform you of the risks involved in the transactions in such designated investments that you undertake with us. However, based on the information we hold on you we have assumed that that any business that you undertake with us you have the expertise and knowledge of those products and are aware of the associated risks involved unless you inform us otherwise.

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ICAP Business Conflicts of Interest Policy

Under FSA’s Principles for Businesses, Principle 8 requires a firm to “manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.” Under the Markets in Financial Instruments Directive (“MiFID”) ICAP is required to maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to identify, monitor and manage such conflicts of interest. The ICAP Group of companies has put in place a policy to meet this obligation and set out below is a summary of that policy and the key information that is needed by clients and counterparties (together “customers”) to understand the measures ICAP is taking to safeguard the interests of its customers.

ICAP’s Conflict of Interest Policy

ICAP seeks to:

· identify circumstances which may give rise to conflicts of interest entailing a material risk of damage to customers’ interests;

· establish appropriate mechanisms and systems to manage those conflicts; and

· maintain systems in an effort to prevent actual damage to customers’ interests through the identified conflicts.

What is a conflict of interest?

A conflict of interest under MiFID is a conflict that arises in any area of ICAP’s business in the course of providing its customers with a service which may benefit ICAP (or another customer for whom ICAP is acting) whilst potentially materially damaging another customer where ICAP owes a duty to the customer. There may be a conflict where ICAP (or anyone connected to ICAP including another ICAP affiliate):

· is likely to make a financial gain (or avoid a loss) at the expense of its customer;

· is interested in the outcome of the service provided to its customer where the interests of ICAP is distinct from that of the customer;

· has a financial or other incentive to favour the interests of one customer over another;

· carries on the same business as a customer;

· receives money, goods or services from a third party in relation to services provided to a customer other than standard fees or commissions.

ICAP has sought to identify conflicts of interest that exist in its business and has put in place measures it considers appropriate to the relevant conflict in an effort to monitor, manage and control the potential impact of those conflicts on its customers. The conflicts identified include:

· those between customers with competing interests;

· those between customers and ICAP where their respective interests in a particular outcome may be different; and

· those between the personal interests of staff of ICAP and the interests of ICAP or its customers where those interests may be different.

Policies and procedures

ICAP has adopted numerous internal policies and procedures, often set out in its Compliance Manual or in its procedures manuals, in order to manage recognised conflicts of interests. These policies and procedures will be subject to our normal monitoring and review processes and include:

(a) Integrity and Standards of Conduct

ICAP insists that in its dealings with customers its staff must use the highest standard of integrity in their actions at all times. The induction programme, Training & Competency procedures and monitoring programme at ICAP are designed to ensure that all relevant staff are familiar with and observe, inter alia, the FSA Principles for Businesses and the Statements of Principle and Code of Practice for Approved Persons.

(b) Customer Orders

In order to ensure as fair treatment as possible for customers, the ICAP Execution Policy requires ICAP to take all reasonable steps to achieve the best overall trading result for customers; to exercise consistent standards; and operate the same processes across all markets, clients and financial instruments in which it operates.

No undue preference should be given to any customer when trades are aggregated. Re-allocation to any individual customer may only be made to correct an error or to adjust an uneconomic initial allocation e.g. on a partial fill of an order

There may be occasions when customer orders may have a material affect on a relevant securities price. In order to ensure that a broker does not take advantage of the situation by dealing on his/her own account or encouraging a third party to deal, ICAP has a strict “no front running” policy.

In order to ensure a fair and orderly dealing environment within the market, ICAP further ensures that its staff comply with the revised Code of Market Conduct reflecting the provisions of the Market Abuse Directive, as well as the relevant FSA Rules, which aim to prevent insider trading, the misuse of information and market manipulation.

(c) Personal Account Dealing (“PAD”)

ICAP has a policy on Personal Account Dealing and the rules are signed off as understood by all relevant employees regardless of their position within the ICAP Group.

Staff may not deal the same way for personal account as a customer order or potential order before it is executed or where a customer’s interest could be adversely affected.

Relevant employees shall not deal in stock within 5 days of a research recommendation being published and in no circumstances where a client order is pending

Further, PAD procedures require relevant areas of the business to obtain pre-approval by the Compliance Department and all broking staff are required to report any investment activity to the Compliance Department

All staff are regularly reminded of the Personal Account Dealing rules through general all staff emails.

(d) Confidentiality and Information barriers

ICAP has put in place procedures to control or prevent the flow of information between ICAP business units and entities where the interests of customers of one business unit or entity may conflict with the interests of customers of another ICAP business unit or entity or with ICAP’s own interests. Further ICAP insists on strict customer confidentiality to ensure that information is disclosed only to those entitled to receive it or otherwise with the prior approval of the Compliance Department.

(e) Gilt IDB and Gilt Agency Desks

ICAP operates two Gilt desks; one operating as principal in the Inter-Dealer Broker (“IDB”) market under the rules of the London Stock Exchange amongst a closed user group comprising Gilt Edged Market Makers (“GEMMS”) and one acting as agent for customers off-exchange wishing to access the gilt market. GEMMS quote prices with the spread when trading vie the Gilt IDB desk and these details are not seen by non-GEMMS. A conflict of interest, potentially giving an unfair advantage to customers of the agency desk, may arise if the agency desk becomes aware of the prices and spreads quoted by the IDB desk.

In order to manage this conflict of interest, ICAP has ensured that the two desks: (a) operate under different legal entities; (b) use different systems to broadcast prices and book tickets, with neither desk having access to the other’s system; and (c ) are separated by Chinese walls on different floors of the building. Further staff are made aware of the potential conflict and informed of ICAP’s policy to ensure fair dealing.

(f) Local Authority Treasury Management

ICAP operates two desks servicing Local Authorities; one providing a treasury management advisory service in respect of debt management and one providing a broking service in moneymarket instruments. A conflict of interest may arise if the customer’s dealing strategy is passed to the broking desk.

In order to manage this conflict the two desks are located on separate floors of the building and staff are made aware of the potential conflict and reminded of ICAP’s independence policy to ensure far dealing

(g) Inducements to Employees from Customers

Staff are not allowed to accept gifts, entertainment or any other inducement from any person which might benefit one customer at the expense of other when conducting investment business. For example, where two customers give similar orders and one customer agrees to pay more commission, priority or better execution terms must not be granted to that customer’s order when it conflicts with obligations owed to the other customer.

ICAP staff are not allowed to place undue pressure upon customers to persuade the customer to trade through the firm to the extent that this might give rise to a conflict of interest between that customer and its own underlying customers

(h) Group Companies

Customers are to be informed of the relationship where the counterparty to the deal is another ICAP Group Company or where the services of another ICAP Group Company is recommended.

(i) Remuneration Policy

All relevant staff who are open to a conflict of interest are paid a basic salary including those in key support areas such as Compliance, Finance and Operations. This salary is not dependent on company performance. A bonus structure does exist which is linked to company performance, team performance or the individual’s performance. It is at the discretion of the senior management and notified only on payment.

(j) Separate supervision and segregation of function

Where appropriate, ICAP has arranged for the separate supervision of those carrying out functions for customers whose interests may conflict, or where the interests of customers and ICAP may conflict and has taken steps to prevent the simultaneous or sequential involvement of a relevant person in separate services or activities where such involvement may impair the proper management of conflicts of interest.

(k) Disclosure

As a last resort, where there is no other means of managing the conflict or where the measures in place do not, in the view of ICAP, sufficiently protect the interests of customers, the conflict of interest will be disclosed to customers to enable an informed decision to be made by the customer as to whether they wish to continue doing business with ICAP in that particular situation.

(l) Declining to Act

Finally, where ICAP considers it is not able to manage the conflict of interest in any other way it may decline to act for a customer.

Further copies of this Conflicts of Interest Policy is available on www.ICAP.com If you would like further detail regarding our policy please contact your ICAP contact advisor who will be happy to assist. Alternatively details may be obtained by contacting the Compliance Department on: +44 (0)20 7000 5794.

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ICAP Regulatory Factsheet for Fund and Portfolio Managers

Client Classification

Term of Business

A copy of ICAP’s Terms of Business is enclosed. A copy can also be found on ICAP’s website.

Acting as Agent

ICAP acknowledges that in dealing with us you are executing a client order as agent for that client and that all dealing instructions will be given by you, as agent, and all trades are settled by you as agent via your omnibus account. However, in accordance with the FSA rules, when ICAP provides you with investment services in respect of instruments covered by MiFID they will classify you as their client for regulatory purposes and will afford you the protections relevant to your classification as a Professional Client.

Conflicts of Interest

MiFID imposes new requirements for managing conflicts of interest and inducements. It also requires firms to: (a) maintain a record of all identified activities which entail a material risk of damage to a client’s interest; and (b) have a Conflicts of Interest policy.

As a result of these new requirements ICAP has reviewed its business activities and order handling policies. A summary of the conflicts it has identified together with the policies it adopts to manage the conflicts identified is enclosed. A copy can also be found on ICAP’s website.

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Electronic Broking Data

ICAP operates a number of ‘Multilateral trading facilities’ (alternative trading systems). Under relevant rules, and for some of our client-facing facilities, regulations require us to provide details of transactions for certain instruments conducted by UK/FSA regulated firms. Click here for details.

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