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Policy on placing, aggregation and allocation of orders


As an asset management company, AS SEB Varahaldus (hereinafter “SEB Varahaldus”) holds a duty to act honestly, fairly and professionally in accordance with the best interests of the managed funds.

SEB Varahaldus has adopted an internal rule regarding measures to be taken to obtain the best possible result for the managed funds when placing orders to deal on behalf of such funds. This document gives a summary description of the principles which SEB Varahaldus will follow when placing orders to deal on behalf of investment funds it manages (hereinafter: “orders”). SEB Varahaldus will take all reasonable steps in accordance with this Policy in order to obtain the best possible results for its funds. Please note that although the measures taken by SEB Varahaldus are expected to produce the best possible result for the managed funds, there is no guarantee that circumstances will enable this to be achieved in every single transaction.

As SEB Varahaldus does not participate in regulated markets and therefore lacks direct access to execution venues, SEB Varahaldus does not execute orders, but places and transmits them to third party brokers.

Orders may be placed or executed only with or through brokers and with counterparties that meet prescribed minimum requirements applied by SEB Varahaldus.

SEB Varahaldus will make a careful assessment of any broker or counterparty it uses and will establish a relationship with it. When b-selecting a broker or counterparty, SEB Varahaldus will assess whether adding that broker or counterparty will improve the investment process by providing better coverage, lower costs, better execution or provides better investment analysis. In addition, SEB Varahaldus evaluates the financial condition of the broker or counterparty.

Due to longer-term counterparty risk exposure from OTC-derivatives, SEB Varahaldus pays special attention to the financial strength of such counterparties.

The selection and approval process for brokers and counterparties is specified in internal instructions.

The factors SEB Varahaldus considers when selecting a broker or counterparty of a specific trade, is described in the next section.

When transmitting an order, SEB Varahaldus will handle the placing of the order in the way it regards at the time as being in the best interest of managed fund.

When selecting a broker or counterparty through which or by which the order will be executed, SEB Varahaldus will consider factors such as price, costs, speed and likelihood of both execution and settlement, the size of the order and its impact on the market as well as other factors that might be significant at the time of placement and transmission of the order.

In determining the relative importance of these factors SEB Varahaldus takes into account the objectives, investment policy and risks specific to the fund, the nature of the order, the characteristics of the financial instruments to which the order relates and the characteristics of the execution venues to which orders can be directed.
The broker or counterparty to whom SEB Varahaldus places or transmits the order may choose to execute the order on Regulated Markets, on Multilateral Trading Facilities (MTFs), Organised Trading Facilities (OTFs) or on their own book. SEB Varahaldus has given explicit authorisation to its brokers and counterparties to carry out the execution of its orders on all these different execution venues.

Specific instruments (such as fixed income securities) lack or have very little trading on regulated markets. As a result, trades can be effected on OTC and not through regulated markets or MTFs. SEB Varahaldus will normally only transact on a delivery-versus-payment (DVP) basis. Non-DVP trades are allowed only on exceptional occasions.

Equities, exchange traded funds (ETFs)& listed derivatives

SEB Varahaldus usually uses AS SEB Pank (hereinafter SEB Pank) as its primary broker with respect to equities, and SEB AB (publ) with respect to exchange traded funds (ETFs) and listed derivatives.

Both SEB Pank and SEB AB (publ) have an adequate best execution policy in place. In SEB Varahal-dus’ opinion, both SEB Pank and SEB AB (publ) are able to execute orders in accordance with SEB Varahaldus’ best execution obligation. SEB Pank and SEB AB (publ) have been selected as primary brokers because SEB Varahaldus believes that they are able to achieve a result at least matching the result that SEB Varahaldus could reasonably expect to obtain through other brokers.

SEB Varahaldus will monitor the results SEB Pank and SEB AB (publ) have delivered. In case the results of the review so suggest SEB Varahaldus may change its primary broker or hire additional brokers.

Fixed Income

While fixed income securities are generally listed on one or several regulated markets, the trading usually takes place in the OTC-market (over-the-counter) between market participants. Therefore there may be limited or no information on the last trading price or volume available and as such, fixed income securities may have limited price transparency.

Due to limited price transparency market participants usually present only indicative prices. The fund manager usually asks for quotes from several counterparties to determine the best price.

OTC-derivatives and Foreign Exchange instruments

SEB Varahaldus usually uses SEB Pank as its primary broker.

SEB Varahaldus will monitor the terms of trade provided by SEB Pank. In case the results of the review so suggest SEB Varahaldus may change its primary broker or use other counterparties.

Unlisted fund units (shares)

SEB Varahaldus will carry out the managed fund’s order by transmitting it, directly or through an intermediary, to the fund management company (or equivalent). This principle applies to funds, which units (or shares) are not actively traded on a regulated market.

Subscription, redemption and conversion transactions are normally executed at net asset value (NAV).

Market Disruption and System Failures

In some cases, whether as a result of trading suspensions, cancellation of transactions by the execution venue, disrupted markets, system failures or otherwise, SEB Varahaldus may feel that it is in a fund’s best interests to transmit its order using a method different to that normally used for the instrument in question. In such cases, SEB Varahaldus will take all reasonable steps to achieve the best possible overall result for the fund under the prevailing circumstances.

Aggregation and allocation of orders

SEB Varahaldus will transmit otherwise comparable orders to selected broker or brokers sequentially and promptly unless the characteristics of the order or prevailing market conditions make this impracticable or SEB Varahaldus plans to aggregate the orders.

SEB Varahaldus may aggregate orders of different funds if this can be reasonably expected to result in a better price, lower transaction cost or overall better transaction terms and if it is unlikely that the aggregation of orders will work overall to the disadvantage of any fund which order is to be aggregated.

Partially executed aggregated orders shall be allocated between funds fairly on a pro rata basis. When allocating the combined trades of an aggregated order, funds will receive the execution price, unless this is not possible due to specific conditions given by a fund as regards the price.

SEB Varahaldus does not trade on its own account.

At least biennially, or so much sooner in case of a material event necessitating such, SEB Varahaldus will review whether the measures taken enable to obtain the best possible result for the managed funds when placing orders to deal on behalf of such funds.