Investment Bank

Principal Marketplace:

UBS will consider CIRO’s yearly determination of the principal marketplace for all securities in conjunction with other factors that contribute to the best execution of a client order when UBS determines routing decisions of passive orders at the individual security level.

Potential Conflicts:

• Handling Multiple Orders: When handling multiple orders in the same security from different clients or for the Firm’s own account, UBS applies a fair and equitable method of allocating executions among those orders in compliance with regulatory requirements. Our allocation methodology may be conducted on the basis of time priority, even split, proportional split, or another methodology that we determine to be fair and equitable.
•  Fees and Payments: UBS pays fees to and receives rebates for orders executed on certain marketplaces as part of "Maker-Taker" programs. These payments generally offset fees for accessing orders or for other services provided by market centers. Any net payments are retained by us and are utilized to reduce our overall expenses in providing services to our clients. Fees and rebates may be passed on to clients, in certain circumstances where such an agreement has been made with a specific client. We make routing decisions on the basis of the quality of execution offered and not on the receipt of payments. However, we do consider costs, including rebates and fees, in comparing market centers with comparable performance.
• Exchange Ownership: UBS SC does not currently hold an ownership stake in any marketplace that we route to. If UBS SC does take an ownership stake in any such marketplaces, the required disclosures will be made to clients.
• Client Principal trading: UBS SC adheres to all CIRO client principal trading rules when executing client orders, including UMIR 5.3 Client Priority, UMIR 8.1 Client Principal Trading, and Principal Disclosures on client confirmations.

Guaranteed Orders. A ”guaranteed order” is one in which UBS has agreed to execute, as principal, a trade with a client in a specified or unknown security at a price based on an agreed-upon benchmark or other pricing formula, such as the closing price or volume-weighted average price of the security. When UBS accepts a guaranteed order, we may also engage in hedging, facilitation, or other risk-mitigating trading activity, which could potentially impact the market for the security involved in the transaction.

Stop Loss (Stop Limit) Order. A special terms order placed with the intention of trading when the price of the stock reaches the specified stop (trigger) price. UBS order handling procedures treat stop orders in Canada “synthetically”. The client will enter the stop order with a trigger price, and has the option of adding a limit price for the triggered order ("secondary limit"). Where the client has not entered a secondary limit, or has entered a market order in place of the secondary limit, a mandatory secondary limit price at 8% away from the trigger price will be applied. The order is then held in the firm's Order Management System (OMS) until the stop trigger price is reached. Once the stop trigger price is triggered (based on last trade price), the order will be sent through a Smart Order Router with the secondary limit price.

CIRO guidance on the management of Stop-Loss Orders note that while dealer's best execution procedures may favour "immediacy of execution" over price of execution, the orders cannot be executed at "clearly erroneous" prices. CIRO considers that the execution of an order could be disruptive of a fair and orderly market if the execution would: (a) result in the triggering of a Single Stock Circuit Breaker; or (b) exceed the " no touch zone" limits that are publicly disclosed by CIRO for price movement for which there would be no regulatory intervention for the variation or cancellation of trades.

Order Routing Methodology:

When directing client orders to Canadian marketplaces, UBS uses smart order router (SOR) technology that sprays all marketplaces simultaneously at the top of the book allowing the order to interact with any Iceberg orders. The SOR sends all UBS orders to visible marketplaces as Directed Action Orders.

Some orders are directed to marketplaces directly bypassing the SOR. Odd lots (and odd lot portions of mixed lots) entered into an interlisted UBS algo strategy are directed to the US. In addition, traders can direct crosses directly to a marketplace where that marketplace protects the orders from trading through better priced orders on other marketplaces by offering an OPR order type or built in system protection. Such orders are tested via trade through testing accordance with trade through obligations under the order protection rule.

Despite any instruction or consent of the client, achieving best execution for a client order for any listed security is subject to compliance with the Order Protection Rule under Part 6 of the Trading Rules by: (a) the marketplace on which the order is entered; (b) UBS, if UBS has marked the order as a directed-action order in accordance with UMIR 6.2.

A detailed routing table that includes updated routing priorities, which take into account Best Execution and Order Protection obligations, is maintained as part of the Canada/LatAm Institutional Equity Liquidity Forum. For passive orders, the default posting logic (unless the client instructs otherwise) is to post to the largest and most liquid venues. UBS may move an order entered on one marketplace to another marketplace at the request of a client, and or if better execution can be obtained based on a change in market conditions, or marketplace performance. Order and trade information for both protected and unprotected (as defined by CIRO) marketplaces is included within the consolidated market data utilized for making routing decisions.

Canada/LatAm Institutional Equity Liquidity Forum

Best Execution and any potential changes to the routing table are periodically assessed at the monthly Canada/LatAm Institutional Equity Liquidity Forum (“the Forum”) meetings attended by the Head of Global Markets, CCO (or delegate), and any additional invitees. Factors considered with any potential routing changes include:

• The launch or termination of a new marketplace or order type
• A significant change to trading functionality offered by any of the existing marketplaces
• A change to the functionality of the existing smart order router, or consideration of other smart order router products based on features that may enhance best execution
• Experience with outages and failures at a particular venue
• CIRO’s annual determination of the principal marketplace for each security
• Changes to marketplace fee structures, or other costs relating to trade execution

The Forum routinely reviews which unprotected marketplaces to route to. Factors for the inclusion of an unprotected marketplace include: functionality, liquidity, adoption rate by other firms, and client requests. The Forum includes participants from our US affiliate UBS Securities LLC to provide details on and discuss which FORMs that the inter-listed router connects to, and the committee routinely reviews the list of forms to ensure that they are appropriate.

Standard Trading Hours:

UBS SC standard trading hours will be 9:30 a.m. to 4:00 p.m. ET, Monday to Friday, with the exception of Canadian marketplace holidays. Some Canadian marketplaces trade outside of UBS SC standard trading hours: for example, the CSE, Nasdaq, and Aequitas marketplaces are open from 8:00 a.m. to 5:00 p.m. UBS SC does not trade outside of standard trading hours.

Day Order:

A day order is only valid on the day it is received, for execution during standard trading hours. All orders are assumed to be day orders unless instructed otherwise by the client. A day order received prior to the opening of the principal marketplace at 9:30 a.m. will not route to an alternative marketplace. Instead, the order will route into the opening sequence/auction of the principal marketplace for that particular security. All orders not filled in full will expire at the closing time of the principal marketplace, currently 4:00 p.m. An order received after 4:00 p.m. will be entered the next business day to the opening auction of the principal marketplace, unless instructed otherwise by the client. When entering orders into the pre-open as instructed and/or agreed to by the client, or into the opening auction of the primary marketplace, consideration is given to the fair pricing of the execution. In addition, all general order handling and Best Execution factors (listed above) are taken into consideration when trading in the pre-open.

Over-the-Counter and Off Exchange Securities

UBS may not purchase over-the-counter securities for its own account from a client or sell over-the-counter securities for its own account to a client except at an aggregate price (including any mark-up or mark-down) that is fair and reasonable, taking into consideration all relevant factors, including the fair market value of the securities at the time of the transaction and of any securities exchanged or traded in connection with the transaction, the expense involved in effecting the transaction, the fact that the UBS is entitled to a profit, and the total dollar amount of the transaction; and

UBS may not purchase or sell over-the-counter securities as agent for a client for a commission or service charge in excess of a fair and reasonable amount, taking into consideration all relevant factors, including the availability of the securities involved in the transaction, the expense of executing or filling the customer’s order, the value of the services rendered by the UBS, and the amount of any other compensation received or to be received by the UBS in connection with the transaction.

UBS may purchase or sell listed securities off exchange, or agent, under a UMIR 6.4(2) exemption. Consideration must be given to fair pricing, given the existing market conditions, liquidity of the security and the volume of the transaction.

Review of Best Execution Policies and Procedures

In accordance with CIRO Investment Dealer and Partially Consolidated Rules Rule 3126 UBS reviews its Best Execution Policies and Procedures at least annually and specifically whenever there is a material change to the trading environment or market structure (e.g. new marketplace) that may impact a Dealer Member's ability to achieve best execution for its clients. Specifically, in each Canada/LatAm Institutional Equity Liquidity Forum, the participants will conduct a review of Best Execution over the previous quarter, with respect to routing methodology (including the consideration of any new markets, or markets not currently connected to) and any relevant order handling practices. The following will also be assessed: Compliance trade desk review best execution testing results; any client feedback on Best Execution; any specific Best Execution issues over the period; algorithmic strategy performance; and Inter-listed router statistical summary. Any changes to Best Execution Policies and Procedures will be reflected in this manual and in the Order Handling and Best Execution disclosure on UBS's website. Results of the Best execution Policies and Procedures Review will be maintained in the Canada/LatAm Institutional Equity Liquidity Forum minutes and a summary of the review will be reported to the UBS Board of Directors within the Compliance report to the Board. Review records, and any material decisions made as a result of the review are retained for at least five years.

Disclosure of Best Execution Policies

In accordance with CIRO Investment Dealer and Partially Consolidated Rules Rule 3129 UBS provides in writing to our clients: (a) a description of our obligation under the rules; (b) a description of the factors that UBS considers for the purpose of achieving Best Execution; and (c) a description of UBS's order handling and routing practices intended to achieve best execution for client orders for listed securities through a disclosure on our website. If any changes are made to the website disclosure, the changes identified and maintained on the website for at least 6 months.

Best Execution Training

UBS ensures, through periodic training sessions and subsequent affirmations, that relevant employees know and understand the application of UBS's best execution policies and procedures that they must follow.

Pre-Borrow Requirements Prior to a Short Sale:

Arrangements must be made to borrow securities that would be necessary to settle any short sale order prior to the entry of the order on a marketplace if:

1. the security has been designated by CIRO as a “pre-borrow security”. The trader or client, when using UBS’s order management and trading systems, will be prompted to confirm the pre-borrow location to enter an order in a “pre-borrow security”.
2. the client on whose behalf the short sale order is being entered has previously executed an “Extended Failed Trade”, or
3. UBS had executed, as principal, an “Extended Failed Trade” in that particular security

Short Sale Orders:

The client must advise that an order is a short sale when communicating the order to the trading desk. Any orders that are designated as short sale orders must be marked short on the marketplace.

Short Marking Exempt Orders:

UBS SC will determine, based on CIRO rules, as to whether an account qualifies for the use of the "short marking exempt" (SME) order designation. Orders for accounts that qualify will carry the SME designation on all buy and sell orders, and will not also carry the short sale designation, even though the sale order may be from a short position. No clients currently qualify for the SME order designation.

Self-Help: Declaration, Trading During and Revocation

As per CSA Staff Notice 23-309, it is expected that a marketplace’s or marketplace participant’s policies and procedures should include the circumstances in which it would invoke self-help.
The following details the basis for declaring self-help, communication on declaration, trading during self-help declaration, revoking self-help, and reporting/recording instances of self-help.

Basis to Declare Self Help:

A declaration of self-help can be made in the following circumstances:

• Material malfunction or interruption of order entry connectivity to marketplace (orders are not being received or processed) affecting several participants.
• Material malfunction or interruption of data connectivity / feeds affecting several participants.
• General marketplace system failure.
• Pattern of unreliable order execution.

Upon receipt of a marketplace notification of an unplanned service interruption or Self-Help Declaration that affects UBS SC, the CCO and Head of Global Markets (or designate) will determine the appropriate course of action. C&ORC will notify CIRO Surveillance as required. Alternatively, in the event of an unplanned marketplace service interruption which affects UBS SC but for which a marketplace notification has not been issued and/or received, the CCO or Head of Global Markets (or designate) will determine the most appropriate course of action. If there is evidence of a widespread issue UBS SC may declare Self-Help and C&ORC will notify CIRO Surveillance accordingly.

Once Self-Help is invoked, the marketplace experiencing the service interruption can be removed from all order routing decisions. UBS should reinstate the affected marketplace into all routing decisions promptly upon being notified that Self-Help is no longer in effect.

Appropriate records should be kept of all Self Help declaration and revocations.

Guaranteeing Outperformance:

On occasion UBS will offer guaranteed outperformance trades, as principal, at a trade price that “outperforms” a benchmark price prior to UBS undertaking any hedging activities specific to the client order and prior to the benchmark price being established.

CIRO is prepared to accept a guaranteed outperformance up to a maximum of the greater of 1) 50% of UBS’s historical realized outperformance of the benchmark over the prior calendar quarter; and 2) 25 basis points. However, UBS will not track historical realized outperformance, and will therefore only guarantee outperformance up to a maximum of 25 basis points.

Guaranteeing Prices/Outperformance Notification Requirement:

UBS must provide a written notice to CIRO immediately upon agreeing to guarantee the price of a trade to a client. The written notice must include the following:

• the security
• whether the trade is a buy or a sell
• the trade volume
• the method of determining the price which will be guaranteed, i.e., the closing price of a security on a particular marketplace; a VWAP calculated for a specific period; or any other CIRO approved benchmark price
• the details of any profit sharing agreement entered into between UBS and the client
• the details of any guaranteed outperformance, including the amount of outperformance being guaranteed
• the time and the marketplace on which the trade will be executed

Net Price Trades:

On occasion, UBS will execute a trade as a net price trade upon a request from a client. When the net price trade is confirmed to the client, the trade confirmation will state that the trade was “net disclosed to client” and will identify the commission portion of the net price.

Trade Confirmation:

For an order executed on one or more marketplaces, the trade confirmation shall state:" Traded on one or more marketplaces or markets, details available upon request" If an order is executed at an average price on one or more marketplace, the trade confirmation must state that the order was executed at an average price. For any Foreign "OTC" trades the trade confirmation should state " we today confirm the following [Buy or Sell] for your account Over The Counter – Canada". Finally, if the order was crossed with Principal intentionally or unintentionally, the trade confirmation must indicate that UBS SC acted as Principal.

Trading in Unlisted Securities:

UBS SC does not currently offer trading in Unlisted Securities.

Reporting of Trade Variations and Cancellations:

A Trade Variation and Cancellation Report (TVCR) is required by UBS when it is a party to a trade, and a variation or cancellation is made to that trade after its initial settlement date. The TVCR report allows CIRO to review the changes to the trade and to ensure that the variation or cancellation of that trade is for a bona fide reason and not as part of a manipulative or deceptive manner of trading.

A TVCR is meant to advise CIRO if one of the essential terms of a trade has been varied or the trade has been cancelled and notice has not otherwise been provided to CIRO by the marketplace where the trade was executed or by the clearing agency which handled the settlement of the trade. A TVCR is not required in respect of a correction handled through the firm's error account.

The TVCR must be filed with CIRO immediately following the variation or cancellation of a settled trade. The TVCR must be filed with the Trading Review and Analysis Department of CIRO. An email indicating the intent to file a TVCR report must be sent to TVCReporting@ciro.ca. CIRO will then send an encrypted link where trade details can be submitted.