MiFID

The purpose of this document is to publish the strategy of executing orders by OTP Banka Slovensko a.s. in implementing trades with financial tools, and to provide the information required by law to the clients of the Bank.


1. Main terms

Bank - OTP Banka Slovensko, a.s.,
Financial tool – a tool of the financial market included in Appendix No 1 to the Strategy,
Client – a professional or retail client in line with Act No 566/2001 Coll. on securities and investment services, amending some Acts, as last amended,
Execution venue – the place where the bank executes the orders of its clients, including a regulated market, a multi-lateral trading facility (MTF), a systematic internaliser, a market maker, another provider of liquidity, or a person performing similar activities in a non-member state,
MiFID – directive of the European Parliament and the Council EC/2004/39 of 21 April 2004 on markets of financial tools,
Multi-lateral trading facility (MTF) – means a multilateral system operated by an investment company, or a market organizer that connects interests of several third parties to buy and sell financial instruments and in line with anti-discriminatory rules in a manner result of which is a contract in line with provisions of MiFID,
OTC market – (Over-the-counter market) represents all the markets except the regulated market, the multi-lateral trading facilities (MTF), and the systematic internaliser, whereby they are mainly markets in which the liquidity necessary for executing the order is provided by the market maker, another provider of the liquidity or a person performing similar activities in a non-member state,
Retail client – a client of the Bank included in the category of retail clients in line with the Act on Securities,
Order – an order of the client for purchase or sale of a financial tool, accepted by the Bank for the purpose of its execution or transfer to a third party for executing on client’s account,
Professional client – a client included in the category of professional clients in line with the Act on Securities,
Regulated market – a multi-lateral system operated and/or controlled by the market organizer that connects or enables to connect interest of several third parties to sell and buy financial instruments in the system and in line with the anti-discriminatory rules in a manner the result of which is a contract related to financial instruments adopted for trading in line with its rules and/or systems, and that is authorized and functions regularly and in line with provisions of MiFID,
Strategy – a strategy to execute orders,
Systematic internaliser – a securities trader that on an organized, repeated and systematic basis trades on own account whereby the orders of the client are executed outside a regulated market or outside a multi-lateral trading system,
Binding quotation – a direct request of the client addressed to the Bank for providing binding quotation of the financial instrument price for the purpose of implementing the trade on client’s account,
Act on Securities – Act No 566/2001 Coll. on securities and investment services, amending some Acts, as last amended.


2. Application scope of the Strategy

The Strategy is applied to the following investment services:

• a) reception and forward of client’s order related to one or several financial instruments,
• b) execution of client’s order on client’s account.

The Bank shall apply the procedures included in the strategy when it executes an order of the client on client’s account, and the Bank is involved as a procurer, broker or executor, when the bank takes action and follows procedures leading to execution of the order, which may influence the result of execution of the order.

The Strategy is not applied:

• when the Bank proceeds in accordance with a particular instruction of the client,
• when the client is classified as an eligible counterpart in line with Article 73 of the Act on Securities,
• when the Bank provides the binding quotation of the financial instrument upon the client’s request, and the transaction is carried out based on this quotation.

3. Financial instruments
Financial instruments governed by this Strategy are listed in Appendix No 1. This Strategy is not applicable to spot foreign exchange transactions. The Bank divides the financial tools into tools that are traded on the regulated market, financial tools that are traded only on the OTC market, and financial tools that are traded on both markets simultaneously.


4. Criteria of executing orders
For the purpose of executing orders of its clients, the Bank adopted a set of appropriate measures to achieve the best possible results for the client under given circumstances. The execution of an order is mainly influenced by factors as price, costs, speed, probability of execution, probability of settlement.

The Bank takes into account these facts in determining importance of particular criteria:

• characteristics of the client, including client’s category, and his categorization as a retail client or a professional client,
• the nature of client’s order,
• characteristics of the financial instruments that are subject of the order,
• characteristics of trading venue where the order may be forwarded.

In executing the orders, the Bank sets the highest importance to the price and costs of the transaction. To achieve the best possible result for the client, the Bank may, at its discretion, consider priority of the criteria, such as price, costs, probability of execution, probability of settlement for the purpose of achieving the best possible result of settling the order of the client.

When the Bank executes an order of the client with the financial instrument that is traded on the OTC market, then the Bank uses as the priority criterion the probability of execution and settlement of the order. After receiving an order from the client with a financial tool that is exclusively traded on the OTC markets, and after getting the consent of the client to execute the order on the OTC market, it provides for execution of the client’s order based on the probability of execution and settlement of the order.

With regard to trades with financial tools that are traded on the OTC markets, the Bank may act as an active counterpart, and in some cases it may define the price based on its own internal models.

In the case of trades on the OTC markets, the transactions are implemented and settled outside the organized trading system, and the Bank may not be held responsible for a failure of exerting maximum efforts to provide for obligations resulting from this Strategy when the execution or settlement of the instruction does not take place due to a violation on the client’s side. For the purpose of identification of the best possible result of executing the order of the client, the Bank does not compare the results that may be achieved based on application of this Strategy with the result that could be achieved for the client by another financial institution applying a strategy of execution of such an institution, or based on another structure of fees.

Execution of orders with the best possible results is not applied in the case of a particular instruction of the client. The Bank gives an order in line with this instruction, and thus the Bank satisfies its obligation to execute orders with the best possible result.


5. Execution venue

Execution venue means regulated market, multi-lateral trading facility, systematic internaliser, market maker, another provider of liquidity or a person performing similar activities in a non-member state.

The Bank may, when it finds it appropriate, add or reduce the execution venues in connection with application of the strategy The Bank is entitled to reassess the execution venues for particular financial tools so that they enable the Bank to get the best possible result for execution of client’s orders. The updated list of execution venues is given at www.otpbanka.sk (Appendix No 2). The Bank does not inform clients individually about the changes in the list of execution venues. The Bank undertakes not to determine or charge fees and commissions related to executing orders by a way which would discriminate some execution venues.

In executing client’s orders, the Bank will apply the following rules to select the execution venue:

• a) in the case of financial instruments traded on regulated markets to which the Bank has access, the Bank executes the order of the client on the regulated market provided that the Bank comes to the conclusion that the result achieved by this execution of the order will represent for the client the best possible result of execution of the order,
• b) in the case of financial instruments traded on regulated markets to which the Bank does not have a direct access, the Bank may transfer the order of the client to a third person through which it enters the regulated market provided that the Bank comes to the conclusion that the result achieved by such an execution of the order will represent for the client the best possible result of execution of the order,
• c) in the case of financial instruments traded on the OTC markets, the Bank executes the order on the OTC markets,
• d) the Bank will act as a venue of the execution in the cases provided that the Bank comes to the conclusion that the result achieved by this execution of the order will represent for the client the best possible result of execution of the order,
• e) in the case of financial instruments traded on regulated markets the Bank may execute an order on the OTC markets provided that the Bank comes to the conclusion that the result achieved by this execution of the order will represent for the client the best possible result of execution of the order.

When the Bank acts as a venue of execution, and executes an order of the client against its own portfolio, in setting the price, the Bank takes into account the type of the financial instrument, the liquidity of given financial instrument, or other facts that influence the price of the financial instruments, and uses all available information from sources that is deemed reliable, including information available from regulated markets, and information from mediators of real data for the purpose of achieving the best possible result of executing the order. The Bank uses the method of execution of the order into its own portfolio only when it is justified to assume that the execution of the order into the own portfolio will provide for achieving the best possible result of executing the order.


6. Specific instructions from the client

When the client gives specific instructions for executing the order, the Bank will execute the order based on these specific instructions of the client. In such a case:

• a) the Bank will not be able to implement all the procedures of achieving the best possible result of the order execution given in this strategy,
• b) the Bank will not be responsible for executing the order in the sense of this strategy,
• c) the result achieved by executing such an order will be considered the best possible result,
• d) the Bank may not guarantee the execution of the order.

7. Monitoring and updating of the strategy

The Bank will regularly monitor, and at least once a year update the strategy of executing orders with the aim to provide for achieving the best possible results of executing orders of its clients. The Bank will inform the clients about any substantial changes in its measures of order execution, or any changes in the strategy by publishing the updated version of the strategy at www.otpbanka.sk.

The Bank will update the list of venues of execution published at www.otpbanka.sk, while the Bank is not obliged to inform the client about changes made in the list of venues of execution.


The list of financial instruments in line with Article 5 of Act No 566/2001 Coll. (Appendix No1)

The following are financial instruments:

• a) transferable securities;
• b) money market instruments;
• c) fund shares or securities issued by foreign collective investment undertakings;
• d) options, futures, swaps, forwards and any other derivate contracts relating to securities, currencies, interest rates or yields, or other derivative instruments, financial indices or financial measures which may be settled physically or in cash;
• e) options, futures, swaps, forwards and any other derivative contracts relating to commodities 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 a default or other termination event);
• f) options, futures, swaps and any other derivative contract relating to commodities that can be settled in cash provided that they are traded on a regulated market or a multilateral trading facility,
• g) options, futures, swaps, forwards and any other derivative contracts relating to commodities that can be settled in cash and are not mentioned in subparagraph (f), and not being for commercial purposes, which have the characteristics of other derivative financial instruments, having regard to whether they are cleared or settled through the clearing and settlement system or are subject to regular margin calls;
• h) derivative instruments for the transfer of credit risk;
• i) financial contracts for differences;
• j) options, futures, swaps, forwards and any other derivates concerning climatic variables, freight rates, emission allowances or inflation rates or other official economic statistics that must be settled in cash or may be settled at the option of one of the parties (otherwise than by reason of insolvency or other termination event), as well as any other derivatives concerning assets, rights, obligations, indices and other factors not otherwise mentioned in subparagraphs (a) to (i), which have the characteristics of other derivative financial instruments, having regard to whether they are traded on a regulated market or multilateral trading facility, are cleared or settled through the clearing and settlement system or are subject to regular margin calls.

List of venues of execution (Appendix No 2)

Financial instrument	Venue of execution
Shares	Bratislava Stock Exchange
	Prague Stock Exchange*
	XETRA Frankfurt*
	Budapest Stock Exchange*
Bonds	Bratislava Stock Exchange
	OTC
	OTP Banka Slovensko, a.s.
Currency and interest derivates	OTP Banka Slovensko, a.s.