Policy for Conflict of Interest Management
EVOLUTION JAPAN Securities Co, Ltd. (“EJS”) and its subsidiaries and affiliates (collectively, “EVO Group”) shall establish the following policy for conflicts of interest management and take all necessary actions to ensure all officers and employees to comply with the policy and not to falsely harm clients’ interest and materialize customer-oriented business conduct.
1. Conflicts of Interest
A conflict of interest means the situation where an EVO Group’s client’s interest conflicts with EVO Group’s or one EVO Group’s client’s interest conflicts with other EVO Group’s clients’. While such conflicts of interest occur on a day-to-day basis as a result of conglomerations of financial institutions and diversification of financial trading, EVO Group shall establish appropriate business management and compliance system to prevent adverse effects from conflicts of interest within the Group.
2. Types of Transactions That May Cause Conflicts of Interests; Process of Identification, Etc.
The following are outlined as types of transactions that may conflict with EJS or EVO Group:
① If EJS or EVO Group may gain economic benefits or avoid economic losses due to the sacrifice of the customer’s interests.
② If EJS or EVO Group may benefit in the form of money, goods or services other than the normal fee or expenses in connection with transactions with persons other than the customer, or in the future, there is possibility that such benefit may arise and the customer’s profit will be damaged.
③ If EJS conducts transactions for the counterparty who deals with the customer.
④ If EJS conducts a transaction with a counterparty who will be in competition between the customer.
⑤ If EJS or EVO Group profits using the non-public information of the customer.
Specific examples of transactions that fall under the above categories are as follows:
① When providing advice etc. on financing to multiple customers in competitive or conflicting relationships.
② When providing principal investment, purchase of assets or other transactions from the customer while providing advice on financing to the customer.
③ When EJS or EVO Group receives a gifts and entertainment (including non-monetary items) that may have an impactful conflict with the customer’s interests.
④ When EVO Group deals with clients’ securities on its account while having information of potential transaction of the customer.
⑤ When EVO Group’s investment manager uses EVO Group’s securities function to place orders for entrusted client assets.
3. Companies with Requirement for Conflicts of Interest Management
EVO Group companies conducting Managed Businesses shall be required to develop appropriate management system for conflicts of interest.
Examples of companies with requirement for conflicts of interest management include:
(1) EVOLUTION JAPAN Asset Management Co., Ltd.
(2) In addition to above entities, any EVO Group company among the companies that engage in financial product trading business, advisory business, investment management business, investment business, etc. belonging to the EVO Group including overseas which are determined to be applicable for management of conflict of interest by the Group’s compliance department are included.
4. Measures for Management of Conflicts of Interest
With the following measures EVO Group shall prevent adverse effects from conflicts of interest issues and avoid falsely damaging clients’ interest.
(1)Separating a division/company conducting a transaction with potential risk of adverse effects by conflicts of interest from other divisions/companies
(2)Changing the conditions/methods of either/both transactions with potential risk of adverse effects by conflicts of interest
(3)Terminating either one of transactions with potential risk of adverse effects by conflicts of interest
(4)Notifying clients of potential risk of adverse effects by conflicts of interest
5. Conflict of Interest Management System
EVO will appoint a Conflict of Interest Management Control Division, and the Compliance Division Manager will serve as chief of such division. The Conflict of Interest Management Control Division will be independent from the Sales Division, and will never receive any direction or order regarding the treatment of specific cases from the Sales Division. The Conflict of Interest
Management Control Division will control EVO-wide management system regarding the identification of transactions that may cause conflicts of interests and the management of conflicts of interests.