The mission of Nippon Institutional Securities Co., Ltd. (the “Company”) is to offer growing global investment opportunities to investors throughout Japan and the world. The Company is fully committed to and engaged in fulfilling the fiduciary duties and other responsibilities entrusted to it by both Japanese and global investors. Given that other Nikko Asset Management Group companies and related parties provide a variety of services, in order to ensure that the interests of the Company’s customers are not unduly harmed, the Company conforms to the laws listed below and hereby publicly discloses a summary of its Conflict of Interest Control Policy. The Company shall properly manage transactions or conduct with possible conflicts of interests by following the Policy.

1. Transactions or conduct with Possible Conflicts of Interests

Transactions or conduct with possible conflicts of interests are defined as transactions or conduct engaged in by the Company in which the interests of customers of the Company in the conduct of its financial instruments business could be unduly harmed, such as transactions involving business contracts between the company and other Nikko Asset Management Group companies (hereinafter “group companies”) or securities issued by group companies, and include the cases listed below*

  • When a conflict of interest occurs between a customer and group companies or other customers
  • When there is competition between a customer and group companies or other customers
  • When group companies use information obtained from a customer to the benefit of group companies or other customers

* Group companies are listed in the appendix.

2. Types of Transactions or Conduct with Possible Conflicts of Interests

Transactions or conduct with possible conflicts of interests are specified as transactions or conduct to be controlled based on the below classifications in internal regulations, and are controlled in order to prevent the interests of customers from being unduly harmed:

  1. Typical conflicts of interests
    Transactions or conduct that have possible conflicts of interests and are deemed by laws and regulations as applicable to separate rules of conduct, prohibited activities or damage prevention measures.
    (Main transaction forms)
    ・Excess provision or receipt of gift or entertainment to extent likely to create conflicts of interests
  2. Offering of products created within group
    Sale or recommendation by group companies of products or services provided by other group companies or products or services developed using assets of other group companies
    (Main transaction forms)
    ・Involvement of group company as related party for fund handled (recommended) by the Company (as trustee, custody bank, investment advisor or distributor)
    ・Receipt of outsourcing fees or other such payments from a firm providing funds in line with activities to recommend funds to customers
  3. Exercising of influence
    Investment management, engagement or exercising of voting rights by investment management departments in group companies that handle the assets of customers in regard to the stocks of companies that have business relationships with the institutional sales departments of said group companies or other group companies
  4. Transactions or conduct other than those listed above in which the interests of customers may be unduly harmed

3. Controlling Conflicts of Interests

Transactions or conduct with possible conflicts of interests, in principle, are controlled with the following methods in suitable combinations with others. However, group companies that must protect the confidentiality of parties related to transactions or conduct with possible conflicts of interests shall control any issues without disclosing details on said transactions or conduct with possible conflicts of interests. In addition, if there are logical reasons for doing so upon consideration of the degree of the conflict of interest and other circumstances, different standards and degrees of control may be established.

  1. Isolate the departments that handle transactions or engage in conduct with possible conflicts of interests and the departments that handle transactions with customers from each other by such means as information blocking
  2. Change the conditions and methods for handling transactions or engaging in conduct with possible conflicts of interests and transactions with customers
  3. Stop transactions or conduct involving possible conflicts of interests and transactions with customers
  4. In cases where customers’ interests may be unduly harmed by transactions or conduct with possible conflicts of interests, properly disclose information to said customers and, if necessary, obtain consent from them.
  5. Ensure fair conditions for transactions or conduct with possible conflicts of interests
  6. Monitor people who share certain information related to transactions or conduct with possible conflicts of interests

In principle, control methods applicable to classification types A through C listed in 2 above are:

  1. Typical conflicts of interests
    In accordance with the intentions of the regulations, comply with the laws so that the interests of customers are not harmed unduly. Also, prevent the inappropriate use of customer information through information blocking practices.
  2. Offering of products created within group
    Take measures such as verifying fairness of transaction conditions when involvement of group companies from multiple standpoints risks unduly harming the interests of customers.
  3. Exercising of influence
    In order to prevent group companies or others from influencing investment management decisions such as when exercising voting rights on stocks held as trust assets, and to ensure such activities are carried out properly, the Company’s parent company (Nikko Asset Management) stipulates rational decision criteria and other such standards, and ensures that its proxy voting activities are supervised by the Stewardship and Proxy Voting Committee as well as monitored and overseen by the Stewardship and Voting Rights Policy Oversight Committee, the majority of whose members are from outside Nikko Asset Management, including the chairperson.

4. Conflict of Interest Control Framework

In order to properly control transactions or conduct with possible conflicts of interests, the Company has appointed the Compliance Department as the department responsible for conflict of interest control and the head of the Compliance Department as the manager responsible for overseeing conflict of interest control. They are charged with maintaining the conflict of interest control framework and periodically verifying its effectiveness, as well as continuously striving to improve it; and also communicating all aspects of conflict of interest control to officers and employees through education and training practices.

Appendix: Related Group Companies

  • Sumitomo Mitsui Trust Holdings, Inc.
  • Sumitomo Mitsui Trust Bank, Limited.
  • Sumitomo Mitsui Trust Research Institute Co., Ltd.
  • Sumitomo Mitsui Trust Asset Management Co., Ltd.
  • Japan Trustee Services Bank, Ltd.
  • SBI Sumishin Net Bank, Ltd.
  • Sumitomo Mitsui Trust Card Co., Ltd.
  • Sumitomo Mitsui Trust Loan & Finance Co., Ltd.
  • Sumitomo Mitsui Trust Panasonic Finance Co., Ltd.
  • Sumitomo Mitsui Trust Leasing (SINGAPORE) Pte, Ltd.
  • Sumitomo Mitsui Trust Investment Co., Ltd.
  • Sumitomo Mitsui Trust (Hong Kong) Limited
  • Tokyo Securities Transfer Agent Co., Ltd.
  • Japan Securities Agents, Ltd.
  • Sumitomo Mitsui Trust Realty Co., Ltd.
  • Sumitomo Mitsui Trust Real Estate Investment Management Co., Ltd.
  • Mitsui & Co., Logistics Partners Ltd.
  • Nikko Asset Management Co., Ltd.
  • Nikko Asset Management Americas, Inc.
  • Nikko Asset Management Asia Limited
  • Nikko Asset Management Australia Limited
  • Nikko Asset Management Europe Ltd.
  • Nikko AM Limited
  • Nikko Asset Management International Limited
  • Asian Islamic Investment Management Sdn. Bhd.
  • Nikko Asset Management New Zealand Limited
  • Nikko Asset Management Hong Kong Limited
  • Nikko AM Equities Australia Pty Limited
  • Affin Hwang Asset Management Berhad
  • Sumitomo Mitsui Trust International Limited
  • Sumitomo Mitsui Trust Bank (Luxembourg) S.A.
  • Sumitomo Mitsui Trust Bank (U.S.A) Limited
  • Sumitomo Mitsui Trust (UK) Limited
  • OIF (PANAMA) S.A.
  • STB Finance Cayman Ltd.
  • Fresco Asset Funding Corporation
  • Crecer Asset Funding Corporation
  • Vector Asset Funding Corporation
  • Nexus Asset Funding Corporation
  • Affin Capital Services Berhad
  • Sky Ocean Asset Management Co., Ltd.
  • Sea Bridge Finance Limited
  • Trust Capital Mezzanine 2015 Investment Partnership
  • Trust Capital Mezzanine 2016 Investment Partnership
  • Trust Capital Private Equity Partners Investment Partnership VIII
  • Sumitomo Mitsui Trust Bank (Thai) Public Company Limited
  • SBI Card Co., Ltd.
  • JP Asset Management Co., Ltd.
  • FA Leasing Co., Ltd.
  • Sumitomo Mitsui Trust Club Co., Ltd
  • Enex Asset Management Co., Ltd.
  • Cardif Assurances Risques Divers Japan
  • Cardif Assurance Vie Japan
  • Nippon Institutional Securities Co., Ltd.
  • Trust & Custody Services Bank, Ltd.

(As of October 1, 2018)