Disclosures

The Company's disclosures on capital and risk management are available below. This information will be updated, at a minimum, on an annual basis.

Interbank Offered Rates (“IBORs”), including the London Interbank Offered Rate (“LIBOR”), are widely used for determining interest rates in relation to a wide range of financial products such as derivatives, bonds, loans, structured products and mortgages.

The Financial Conduct Authority (“FCA”) has stated that after 2021 it will no longer compel banks to make submission of certain rates used for the calculation of LIBOR. Globally, regulators are encouraging firms to transition from the use of IBOR’s to alternative reference rates. Please see below selected references* if you would like more general information on interest rate reform and IBOR transition.

An FCA announcement on 5th March 2021 confirmed that all 35 LIBOR settings will either cease to be provided by any administrator or no longer be representative:

• Immediately after 31st December 2021, in the case of all sterling, euro, Swiss franc and Japanese yen settings, and the 1-week and 2-month US dollar settings; and
• Immediately after 30th June 2023, in the case of the remaining US dollar settings.

Daiwa has an established cross-divisional and cross-functional change program to assess and address the impact of the IBOR transition on our processes, systems, documentation, product and service offering. Daiwa has already conducted a number of outreach programmes to develop our discussions with our counterparties on the specifics of any relevant open transactions, for instance where we may need to modify the reference rate-linked provisions in such transactions, which would raise remediation points to be agreed with our counterparties including in relation to commercial, operational and legal matters. See below for further details regarding ISDA IBOR Fallbacks Protocol (the “Protocol”).

ISDA IBOR Fallbacks Supplement and Protocol

Following publication of the ISDA IBOR Fallbacks Supplement (the “Supplement”) and Protocol on 23rd October 2020, Daiwa Capital Markets Europe Limited and our parent Daiwa Securities Co. Ltd. have already adhered to the Protocol. Please see below selected references** if you would like more general information on the Protocol.

A communication was sent in December 2020 to all counterparties that may have one or more contracts with Daiwa Capital Markets Europe Limited falling within the scope of the Protocol. We are encouraging our clients to also adhere to the Protocol to mitigate potential legal and/or economic consequences associated with the cessation of IBOR rates.

Background

• Regulators are promoting industrywide timely adherence to the Protocol which incorporates industry-agreed fallback rate provisions into certain in-scope legacy contracts.
• If market participants do not adhere to the Protocol (or do not adopt the provisions through a bilateral negotiation) then existing contracts will remain under the existing contractual fallback provisions, which when drafted, may not have foreseen a permanent cessation of IBOR.
• All new contracts that incorporate the 2006 ISDA Definitions and that are entered into on or after the 25 January 2021 will include the triggers and fallbacks set out in the 2006 ISDA Definitions as amended by the Supplement. Parties will not need to take any additional steps to include the new fallbacks when entering into new derivative transactions that incorporate the 2006 ISDA Definitions after 25 January 2021.

Impact on Existing Transactions

• The Supplement came into effect on 25 January 2021. Adherence to the Protocol incorporates the Supplement into legacy, in-scope IBOR-based uncleared derivatives and certain agreement types dated prior to the Protocol effective date on 25 January 2021.
• Where both counterparties have adhered to the Protocol prior to the 25 January 2021, the new contractual fallback provisions will become effective for existing in-scope contracts from 25 January 2021.

Where one or both counterparties adhere to the Protocol after 25 January 2021, the new contractual fallback provisions will become effective for existing in-scope contracts on the date the second counterparty adheres.

If you have any questions of Daiwa Capital Markets Europe Limited, we would be grateful if you could contact your regular Daiwa coverage individual or our IBOR Transition team directly at: DCME_IBORTransition@uk.daiwacm.com

* selected references for general information

Financial Conduct Authority (FCA)

• Transition from LIBOR
• FCA announcement on future cessation and loss of representativeness of the LIBOR benchmarks

Bank of England (BoE)

• Transition from LIBOR to risk-free rates
• Working Group on Sterling Risk-Free Reference Rates (RFRWG) Roadmap

International Swaps and Derivatives Association (ISDA)

• ISDA: Benchmark Reform at a Glance

Financial Stability Board (FSB)

• Global Transition Roadmap for LIBOR

** selected references for ISDA Fallbacks Information

ISDA

• ISDA 2020 IBOR Fallbacks Protocol: Overview and FAQ
• ISDA: Understanding IBOR Benchmark Fallbacks

Background

The recast of Market in Financial Instruments Directive 2014/65/EU (MIFID II) and the Markets in Financial Instruments Regulation 600/2014/EU (MIFIR), collectively require MIFID investment firms trading in financial instruments for which they are Systematic Internaliser (SI) outside a regulated market (RM), Multilateral Trading Facility (MTF) and Organised Trading Facility (OTF), to comply with pre-trade transparency obligation (the SI requirements). The purpose of these obligations is to support efficient price discovery around trading activities taking place off trading venues and to promote a level of playing filed with on-venue trading.

Under MiFID II, a SI is defined as ‘an investment firm which, on an organised, frequent, systematic and substantial basis, deals on its own account when executing client orders outside a RM, an MTF or an OTF without operating a multilateral system’.

Daiwa Capital Market Europe Limited SI

After careful consideration and evaluation, Daiwa Capital Markets Europe Ltd has made the decision to opt out of the Systematic Internaliser (SI) regime based on recent changes in our business strategy, operational considerations and the FCA removing the Post Trade Transparency obligation from the SI regime. This is effective from 28 June 2024.

If you have any queries, please contact ComplianceAdvisory@uk.daiwacm.com

Please see below information about Daiwa Capital Markets Limited's UK Tax Strategy.

Click here for up to date information about Daiwa Securities Group’s ratings.

Please see below for information about Daiwa Capital Markets Europe Limited's adoption of the Treasury Markets Practices Group's recommendations for US securities fails.

Conflicts of Interest Summary

Daiwa Capital Markets Europe Limited (Daiwa Europe) is part of the Daiwa Securities Group Inc, an independent full-service securities group providing an extensive range of financial services centred on retail, wholesale and investment banking business and asset management business. Daiwa Securities Group Inc., parent company of Daiwa Europe, is responsible for providing corporate clients and institutional investors with sales & trading and investment banking services.

We continue to recognise that in the normal course of our business, circumstances may arise that could result in our interests conflicting with the interest of, or with the duties we owe to, our clients. These could include conflicts between the interests of Daiwa Europe, or other group companies and our clients, or between the interests of different clients.

Daiwa Europe has always sought to ensure that conflicts are identified and managed at an appropriate level. Procedures have therefore been established to protect the interests of our clients and ensure that all parties are treated fairly and reasonably. In particular, arrangements exist to control the flow and use of non-public, price sensitive information, the execution of client orders, staff’s personal account dealing and their receipt of gifts or other inducements from clients or suppliers.

Where necessary, we segregate the activities of staff working in areas where conflicts of interest may arise. Where we feel that our procedures in themselves may be insufficient to manage the risk we will look to disclose the potential conflict to our client and obtain their agreement to precede. Ultimately we will decline to act where we feel the risks cannot be managed or mitigated. Daiwa Europe may share information regarding investment banking relationships with other group companies. The list of group companies is available on our website.

The risks and associated controls relating to conflicts of interest have been documented internally and are subject to regular review.

Daiwa Capital Markets Europe Limited ("DCME") sets outs the Allocation Policy in accordance with the requirements of MiFID II and relevant regulations and for the purpose of effective arrangement to identify, prevent and manage conflicts of interests.

Daiwa Capital Markets Europe Limited (“DCME”) is committed to high ethical standards. DCME’s policies on anti-money laundering, sanctions, and anti-bribery and corruption aim to ensure that risks identified by the firm are appropriately mitigated. This is achieved by establishing and implementing appropriate processes, systems and controls to protect DCME, its customers, shareholders, employees, and the communities it serves from money-laundering and other forms of financial crime.

Below is our Wolfsberg Questionnaire. If you have any questions, please reach out to our Financial Crime team.