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Best Execution Policy

November 28, 2016
Mizuho Securities Co., Ltd.

The Best Execution Policy sets forth the policy and methods used to execute transactions on the best terms and conditions for clients pursuant to the provision of Paragraph 1, Article 40-2 of the Financial Instruments and Exchange Law of Japan ("FIEL").
Upon acceptance of a client order for securities listed on a financial instruments exchange (hereinafter “exchange”) in Japan or Green Sheet Securities, etc. (defined below), 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 in the Policy
    1. (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 financial exchanges in Japan as defined in Article 16-6 of the Financial Instruments and Exchange Law Enforcement Order; and
    2. (2)"Green Sheet Securities, etc." which includes bonds with stock acquisition rights etc. as defined in Item 4, Article 67-18 of FIEL.
  2. Methods for Executing Transactions on the Best Terms and Conditions
    1. (1)Listed Securities, etc.
      We will execute orders for Listed Securities, etc., as follows:
      1. (i)If we receive an agency order from a client (“Agency Order”), we will promptly forward such an 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 exchanges have reopened.
        If, however, the client prefers different execution methods from the above (such as a method where we act as the direct counterparty, method of off-floor trading at exchanges (including methods using a Proprietary Trading System ("PTS") and off-floor trading of financial instrument exchanges), etc., we will execute the order in line with the wishes of the client.
      2. (ii)For the purpose of (1) (i), Agency Orders will be forwarded to exchanges in the following manner:
        1. (a) If the ordered security is listed on only one exchange (single listing), we will forward the order to that particular exchange.
        2. (b) If the security is listed on multiple exchanges (multiple listing), we will forward the order to the exchange which displays its stock price information first when the security code of the security is entered into a QUICK Corp. terminal at the time of execution. (You can see this for yourself at our head office or branches. The exchange is selected (hereinafter the "Selected Exchange") on the basis of highest set-period trading volume according to QUICK Corp. computational method).
    2. (2)Green Sheet Securities, etc.
      The following methods will be used to execute sell/buy orders for Green Sheet Securities, etc.
      1. (i)Regarding sell/buy orders for Green Sheet securities, etc. which we have reported to JSDA as comprising Mizuho Securities principal accounts, we will execute such orders by becoming the direct counterparty (execute against Mizuho Securities principal accounts).
        Regarding details of securities which we have reported to JSDA as comprising our principal accounts are posted on our company's website (https://www.mizuho-sc.com/)please contact our head office or branches.
      2. (ii)Regarding Green Sheet Securities, etc. not part of Mizuho Securities principal account As a rule, we do not accept orders for Green Sheet securities, etc. which cannot be executed against Mizuho Securities principal accounts.
  3. Reasons for Selecting the Above Execution Method
    1. (1)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.
    2. (2)Green Sheet Securities, etc.
      1. (i)Securities which we have reported to JSDA as comprising Mizuho Securities principal accounts For securities which we have reported to JSDA as comprising our principal accounts, we believe the most rational choice is for clients to directly trade against our principal accounts as this method ensures the highest level of trading safety and accuracy.
      2. (ii)Regarding Green Sheet Securities, etc. not part of Mizuho Securities principal account As a rule, we do not accept orders for Green Sheet securities, etc. which cannot be executed against Mizuho Securities principal accounts.
  4. Other
    1. (1)Notwithstanding the methods provided in section “2.” above, we will execute the following types of transactions in the manner described below:
      1. (i)Custom-made transactions in which clients specify the execution method (e.g. a request for us to act as the direct counterparty, a request for orders to be executed on a specific exchange, a request for certain trading hours and the need for the execution of orders in lump sum): We will execute as instructed.
      2. (ii)Execution under an investment management agreement:
        Under such agreements, etc., execution shall be conducted by a method of our choice within the range of discretion granted by the client.
      3. (iii)If our order matching system is used, orders shall be executed in accordance with stated execution methods.
      4. (iv)Transactions under discretionary trading agreements, etc. shall be executed in accordance with said agreements.
      5. (v)Transactions of shares of less than one trading unit:
        We will forward transactions to financial instruments brokers that handle shares of less than one trading unit.
      6. (vi)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 a Selected Exchange different from the initially Selected Exchange as the latter continues as the exchange for an initial order.
      7. (vii)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.
      8. (viii)Orders from qualified institutional investors and equivalent overseas corporate clients (who have agreed in advance that all or part of their orders can be executed as off-exchange or off-floor trading against our principal accounts or against the orders of our clients) may be executed according to such agreements when we believe the aforementioned execution methods are best for them in terms of price, speed and/or possibility of execution when their orders are notably large and/or diverse.
      9. (ix)Sell orders for foreign securities listed on both domestic (Japan) and overseas exchanges and in custody of foreign institutions will be executed on overseas exchanges
    2. (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.

The duty of best execution not only relates to price but also involves various other factors including cost, speed, and probability of execution.
Even if a trade appears not to have been executed at the best possible price in hindsight, it does not necessarily constitute a violation of the duty of best execution.

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