MEMBER ORDER TRANSMISSION POLICY

1. PURPOSE, SCOPE AND USERS

Xapo policies are formal statements produced or supported by management that document and communicate the philosophy, rules and expectations of the organization. Xapo policies form an integral part of Xapo’s Risk Management Framework (“RMF”) and the Xapo Information Security Management System (“ISMS”).

Xapo policies cover Xapo Holdings Limited (“XHL”), the parent company of all Xapo entities, and each of its subsidiaries, at all locations as well as the locations of remote associates, unless otherwise indicated.

XHL and its subsidiaries are collectively referred to as “Xapo” or the “Group”. Xapo policies apply to all officers, employees, contractors, consultants, casual workers and agency workers (collectively referred to as “staff”), unless otherwise indicated.

Xapo policy users may also include third party service providers and vendors of Xapo that have access to information of Xapo or its Members, or those who manage portions of Xapo systems that collect, process, store or communicate information of Xapo or its Members.

2. PURPOSE OF THIS POLICY

The purpose of this Policy is to set out:

1. How Xapo will comply with its overarching requirement to take all sufficient steps to consistently obtain when transmitting orders, the best possible results for its Members;
2. How Xapo selects and appoints third party vendors for order execution when it receives and transmits orders on its Members’ behalf.

3. POLICY STATEMENT

It is in the interests of Xapo’s Members that we obtain the best possible result when transmitting orders received from our Members to third parties for execution. Xapo is committed to taking all sufficient steps to obtaining, on a consistent basis, the best possible result for its Members when transmitting orders for execution on its Members behalf.

4. SCOPE OF THIS POLICY

This Policy applies to Xapo when it acts on behalf of its Members when transmitting orders in relation to equities to third parties for execution e.g., DriveWealth, and it has agreed to provide Members with the best possible result with respect to the transmission of that order.

5. WHO MUST COMPLY WITH THIS POLICY?

This Policy applies to all Xapo staff regardless of the type of engagement, level or affiliated entity they work for.

6. ROLES AND RESPONSIBILITIES

The following table sets out the respective roles and responsibilities within Xapo for Xapo’s best execution arrangements:

Who	Responsibilities
Board
	Overall responsibility for the Policy and its implementation; Reviewing the effectiveness of this Policy and; the adequacy of Xapo’s Best Execution arrangements; Ensuring there is adequate control and oversight over Xapo’s order execution processes; The final approval of third parties for the execution of orders transmitted by Xapo.
Risk Management Committee
	Oversight and monitoring of the quality of execution obtained for orders transmitted to third parties for execution by Xapo.
Compliance
	Monitoring the achievement of best execution on behalf of Xapo’s Members as well as the quality of execution obtained; Ensuring that staff receive adequate training on best execution and how this is achieved by Xapo.
All staff
	Being aware of this policy; Escalating and immediately reporting any concerns/breaches of this Policy to the Head of Compliance.

7. WHAT IS BEST EXECUTION?

Best Execution refers to the overarching requirement for Xapo to take all “sufficient steps” to obtain the best possible result for each Member on a consistent basis. In order to do this, Xapo must take into account certain execution factors.

In achieving best execution on a consistent basis, it should be noted that this does not require Xapo to undertake a transaction by transaction analysis, but rather to take all sufficient steps to obtain the best overall results having regard to the best execution factors as described within this policy.

8. XAPO ARRANGEMENTS FOR ACHIEVING BEST EXECUTION

In order to meet its obligations with respect to the achievement of best execution for the transmission of its Members’ orders, Xapo has put the following arrangements in place to ensure the prompt, fair and expeditious execution of Member orders, relative to other Member orders or the trading interests of Xapo:

1. Xapo has established, implemented and maintains a Member Order Transmission policy which is designed to achieve the best possible result (taking into account all relevant factors as described further below), across all Member orders on a consistent basis;
2. Xapo only utilizes third parties for its Member orders where it is satisfied that those third parties will effectively obtain best execution;
3. Xapo takes steps to monitor the quality of execution obtained;
4. Xapo reviews and updates this policy on a regular basis (at least annually) to ensure that it continues to achieve the best possible outcome on a consistent basis for its Members.

9. THE BEST EXECUTION FACTORS

In achieving best execution, Xapo takes into account a number of factors (unless otherwise instructed by a Member, as discussed below). These include:

1. Price – the price a financial instrument is or may be executed at (including external costs and Xapo’s fees and charges);
2. Cost – any “external” cost relevant to the execution of the Member order (e.g.; any costs charged by third parties which are related to the execution of a transaction, and which are directly passed on to the Member such as: execution venue fees, clearing and settlement fees and any other fees paid to third parties);
3. Speed – the potential time it might take to execute a transaction;
4. Likelihood of execution and settlement – the likelihood that we will be able to complete a Member transaction, including (but not limited to) an assessment of any counterparty being used to execute the order;
5. Size of the Order – the size, or quantum, of the transaction;
6. Nature of the Order;
7. Any other considerations relevant to the execution of the order.

10. THE ROLE OF PRICE

While total consideration (price and cost) are generally key factors in achieving best execution, the overall assessment of achieving the best possible result may be affected by the other factors listed above. For example, the relative importance of each of the factors will differ depending on:

1. The characteristics of the Member including their categorisation as a retail or professional client;
2. The characteristics of the Member’s order;
3. The characteristics of the financial instruments that are the subject of that order;
4. The characteristics of the execution venues to which that order can be directed.

For retail Members, the price and cost of execution will normally be the most important aspect in achieving the best possible result. However, in the absence of specific Member instructions, Xapo will take into consideration all factors that will allow it to deliver the best possible result in terms of the total consideration, representing the price of the financial instrument and the costs related to execution insofar as they are instrumental in delivering the best possible result in terms of the total cost to the retail Member.

11. MEMBER SPECIFIC INSTRUCTIONS

Xapo makes all decisions as to where its Members’ orders are placed and who it places Member orders with. Xapo does not accept client specific instructions. Should Xapo accept Member specific instructions, this may affect Xapo’s ability to obtain the best possible result for its Members.

12. EXECUTION VENUES AND THIRD PARTY BROKERS

An execution venue is effectively a trading venue such as a regulated stock exchange where investment transactions are executed. Xapo does not execute orders or deal directly with execution venues.

Instead, Xapo transmits Member orders to an investment platform operated by a Third Party Broker who executes the order on the Member’s behalf.

The Third Party Brokers utilized by Xapo have in turn their own responsibilities to obtain, on a consistent basis, the best possible results for Xapo’s Members when executing or handling orders on behalf of Xapo’s Members. Xapo undertakes periodic monitoring to ensure it is meeting its best execution obligations when transmission orders on its Members’ behalf.

Xapo will carry out due diligence on such third parties to ensure that it is satisfied that such third parties are enabling Xapo to comply with its Best Execution obligations. In selecting third parties for Member order execution, Xapo considers at least the following factors: liquidity and price; credit and settlement risk; operating models and infrastructure; execution venue costs; and speed and likelihood of execution.

12.1 Use of Single Execution Venue and Third Party Brokers

When selecting Execution Venues and Third Party Brokers, Xapo will utilize a single counterparty only when it is able to show that this allows it to obtain the best possible results for its Members on a consistent basis. Xapo will monitor its use of single counterparties to ensure that it can continue to reasonably expect that the selected counterparty will enable Xapo to obtain results for its Members that are at least as good as the results Xapo could reasonably expect from using alternative counterparties for Member order execution. Xapo’s ongoing monitoring will be supported by relevant data published in accordance with Article 27 of Directive 2014/65/EU and other internal analyses conducted by Xapo.

‍12.2 Third Party Payments/Inducements

Xapo does not receive any inducements or payments from brokers, venues or other third parties for execution services. Xapo may, however, receive services which would be considered as minor non-monetary benefits. All Xapo staff are subject to the Xapo Gifts, Entertainment & Inducements Policy and any receipt of such activities from brokers or other third parties must come within this policy otherwise they cannot be accepted.

13. COUNTERPARTY MANAGEMENT

Xapo only utilizes preferred Third Party Brokers who have the skills, resources and capabilities to provide favourable access to suitable liquidity and a greater potential for an advantageous outcome in the execution process.

Xapo conducts a commensurate level of independent due diligence, including an assessment of potential conflicts of interest prior to any Third Party Broker being approved and added to the approved list.

Xapo only places orders to be executed with approved Third Party Brokers. The list of approved Third Party Brokers is reviewed regularly and may change over time. The performance of Third Party Brokers in providing Best Execution for Xapo’s Members is evaluated regularly.

14. CHARGES

It is Xapo’s policy that commission and charging structures will not influence either the selection or third parties to which it places Member orders, or the order flow that follows, as a result of the execution process.

15. MONITORING AND OVERSIGHT

Xapo will monitor the effectiveness of its Best Execution arrangements as documented in this Policy on a regular basis (and at least annually) in order to identify any enhancements necessary to ensure the achievement of the best possible result on a consistent basis for its Members and will update its policy and arrangements as required in order to incorporate such changes.

16. BREACHES OF POLICY

Any breaches of this policy will be taken very seriously and could lead to disciplinary action for staff, including up to dismissal and/or termination of a third party relationship.

17. POLICY REVIEW

This policy will be regularly reviewed (on at least an annual basis or more frequently if required) and updated as necessary.

Appendix 1 – List of Execution Venues

Below is a list of venues that Xapo uses to obtain Best Execution for its Members:

1. DriveWealth LLC - Equities