Order Execution Policy (Best Execution)

This policy outlines the process that the regulated investment management subsidiaries of Aberdeen Asset Management PLC (together “Aberdeen”) follow in executing trades or transmitting orders for execution to a third party on behalf of clients.

Scope and best execution

Aberdeen’s approach to best execution is that it applies to professional and retail clients and to all financial instruments dealt in the course of carrying out investment management business. It is a multi-factored test, with a requirement for Aberdeen to take all reasonable steps to consistently obtain the best possible result for clients through its order execution policy.

Aberdeen’s order execution policy ensures that regulatory and industry best practice is followed in the criteria that it includes in its definition of best execution, and therefore in the execution venues it uses.

Execution factors

Aberdeen, when executing trades or transmitting orders for execution, takes into account various execution factors whilst taking all reasonable steps to obtain the best possible result. Whilst it is acknowledged that the market for different asset classes may put stress on different aspects of transactions, the list below contains overall those execution factors which Aberdeen considers and takes into account in its analysis of whether it, or the execution venues it uses, are delivering best execution.

Within this context, Aberdeen views best execution holistically, taking account of both quantitative and qualitative factors. In addition, Aberdeen routinely considers the available execution venues as part of the order execution process. Aberdeen determines the relative importance of the execution factors by using its industry experience, expertise and judgement in light of available market information with the prime aim of prompt, fair and expeditious execution of trades. This applies to all types of financial instrument dealt.

Execution factors include, but are not limited to:

• Price
• Cost or commissions of execution
• The current liquidity for the relevant instrument
• The size and nature of the order
• Market impact of the transaction
• The quality of order execution
• Execution capability
• Financial status, responsibility and solvency of the counterparty
• Responsiveness of the broker or venue
• The quality and efficiency of the settlement process post execution

Execution venues

This order execution policy limits venues with whom or within which Aberdeen will transact orders to those venues that are regulated by a recognised regulatory body or have otherwise been assessed by Aberdeen as having systems in place which enable the delivery of best execution to Aberdeen’s satisfaction and in the interests of Aberdeen’s clients.

The specific execution venues that Aberdeen employs for order execution is deemed to be commercially sensitive information, and as a result, a list of venues does not form part of this policy statement. This list is formally reviewed and approved annually for each asset class, and is available to clients upon request. It is not an exhaustive list but comprises those venues on which Aberdeen places significant reliance.

Aberdeen reserves the right to use other execution venues where it deems this to be appropriate in accordance with this order execution policy, and as such the list may change periodically. The overriding consideration when using execution venues is that the venue concerned has systems in place which enable the delivery of best execution to the satisfaction of Aberdeen, whether Aberdeen is itself executing trades or transmitting orders for execution.

Regulated and unregulated markets

Aberdeen executes trades or transmits orders both in and outside of regulated markets or within multilateral trading facilities.

Client express instructions

Aberdeen transacts orders or transmit orders for execution in accordance with express instructions from clients. These transactions may not specifically meet the Aberdeen best execution factor considerations, but will be deemed to achieve the best possible result for clients,.

Execution orders with client conditions attached

Orders with client conditions attached are executed in accordance with this policy and, as far as possible, with client requirements as long as the overriding responsibility to achieve the best possible result for clients is not compromised. Examples of such orders include, but are not limited to, orders with directed brokerage arrangements attached (commission recapture).

Order handling policy and record keeping

The Charles River (“CR”) dealing system is the platform employed by Aberdeen for trade order management. All client orders are promptly and accurately recorded and allocated on the CR platform, and details of executed trades are maintained on the CR platform indefinitely.

Aggregation and allocation

Aberdeen maintains policies surrounding the aggregation of orders within its operating procedures. Comparable orders are in general executed in bloc format if the orders are generated simultaneously, and allocated in line with Aberdeen’s fair allocation procedures.

Responsibilities and execution criteria

Responsibility for day-to-day fulfilment of best execution lies with the executor of the trade, whether this is the “fund manager” directly or a dealer. Aberdeen’s protocol is that all asset classes follow this best execution policy but trade executors have tailored order execution procedures based on market characteristics of the subject asset class. The execution criteria that are taken into account include execution factors, client, order, instrument type (or asset class) and available execution venues. Aberdeen will monitor compliance of its best execution policy in a manner appropriate to each asset class.

Oversight of order execution policy

Aberdeen delegates ongoing responsibility to its Trade Order Management Committee to keep the policy on best execution under annual review and ensure that any regulatory developments in this area are identified.