ANTI MONEY LAUNDERING
Summary of Anti-Money Laundering (AML) Related Information
Company Status with Regulators
SMBC Nikko is a registered broker-dealer with the SEC and a member of the securities self-regulatory organization, FINRA. As such, SMBC Nikko is considered a "covered financial institution" for purposes of the U.S. Bank Secrecy Act, as amended by the USA PATRIOT Act and is subject to its regulations as well as the rules and oversight of the federal regulatory agency and self-regulatory organization listed above.
Our policy is to prohibit and actively prevent money laundering and any activity that facilitates money laundering or the funding of terrorist or criminal activities. Money laundering generally is defined as engaging in acts designed to conceal or disguise the true origins of criminally derived proceeds so that the unlawful proceeds appear to have been derived from legitimate origins or constitute legitimate assets.
Customer Identification Program
To help the government fight the funding of terrorism and money laundering activities, federal law requires us to obtain, verify and record information that identifies each person or entity who opens an account.
When you open an account, we are required to ask for certain identifying information such as your legal name, address, and other information that will allow us to identify you. We also may ask to see identifying documents to verify your identity and to screen your name against various government databases.
Notice Regarding Entities Identified As Being of Primary Money Laundering Concern
Pursuant to U.S. regulations issued under section 311 of the USA PATRIOT Act, 31 CFR 103.192, we are prohibited from opening or maintaining a correspondent account for, or on behalf of, certain Specified Banks. The regulations also require us to notify you that your correspondent account (if applicable) with our financial institution may not be used to provide the Specified Banks with access to our financial institution. If we become aware that the Specified Banks are indirectly using the correspondent account (if applicable) you hold at our financial institution, we will be required to take appropriate steps to prevent such access, including terminating your account.
Business Continuity Plan
SMBC Nikko has developed a Business Continuity Plan on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to maintain flexibility in responding to actual events as they occur. With that in mind, we are providing you with this information on our business continuity plan.
Our Business Continuity Plan
We plan to quickly recover and resume business operations after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the firm's books and records, and allowing our customers to transact business. In short, our business continuity plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption.
Our business continuity plan addresses: data backup and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; critical supplier, contractor, bank and counter-party impact; and regulatory reporting.
Significant business disruptions can vary in their scope, such as only our firm, a single building housing our firm, the business district where our firm is located, the city where we are located or larger region. Within each of these areas, the severity of the disruption also can vary from minimal to severe. In a disruption only to our firm or a building housing our firm, we will transfer our operations to our U.S. back-up site when needed and expect to recover and resume business within 24 hours. In a disruption affecting our business district or city, we will transfer our operations to our back-up site. Should a disruption affect both our main and U.S. back-up facilities, a London-based affiliate of the firm would perform the functions with respect to customer obligations existing at such time. If we are able to operate from our U.S. back-up facility, we plan to continue in business, and notify our customers through means still available to us. If the significant business disruption is so severe that it prevents use of both U.S. facilities, our London-based affiliate will close out existing positions.
The recovery and business continuity plans of SMBC Nikko are subject to modification without notice. Updates will be mailed to our customers.
SMBC Nikko does not and cannot guarantee that for every event or business disruption: (i) such plans will be successfully implemented; or (ii) such plans, if implemented will be sufficient and appropriate to avoid, deter, or mitigate the event or business disruption. In addition, because SMBC Nikko is dependent upon various infrastructure systems (e.g., transportation, telecommunications, exchanges, industry utilities), our ability to implement these plans may be impacted by issues with such infrastructure systems.
SEC Exchange Act Rule 606
Under Securities Exchange Act Rule 606, broker-dealers that route orders on behalf of customers are required to prepare quarterly reports that disclose the following information. Another part of this rule requires annual public notification that the detail is available. Customers can request details, from SMBC Nikko, on the identity of the venue to which the customer's Regulation NMS orders were routed for execution in the six months prior to the request, whether the orders were directed, at the customer's request, to a specific venue for execution and the time of the executions, if any, that resulted from those orders. Customers also may request up to six months of this information in hard copy through a representative on all Regulation NMS orders for a specific time period and/or on individual Regulation NMS securities.
To obtain a copy of our publically disclosed – SEC Rule 606 Report, visit IHS Markit website at https://vrs.vista-one-solutions.com/sec606rule.aspx?clientid=sumi
FINRA RULE 2266 – SIPC INFORMATION
Pursuant to FINRA Rule 2266, we are required to notify you of the following:
- Customers may obtain information about insurance provided by the Securities Investor Protection Corporation or SIPC, including the SIPC brochure, by contacting SIPC
- SIPC’s web site address www.sipc.org and telephone number (202) 371-8300
FINRA RULE 2267 – INVESTOR EDUCATION AND PROTECTION
FINRA runs a public disclosure program known as BrokerCheck that provides information about brokerage firms and their registered persons.
To obtain an investor brochure that includes information about BrokerCheck or to obtain additional information, contact the FINRA public disclosure hotline at (800) 289-9999 or visit the BrokerCheck website at http://brokercheck.finra.org/. FINRA’s general website is located at http://www.finra.org/
FINRA RULE 5310 – BEST EXECUTION
In any equity transaction for a customer, SMBC Nikko will use reasonable care in seeking to obtain the most advantageous terms reasonably available under the circumstances for the execution of a customer’s order. In determining where to send customers’ orders SMBC Nikko takes into consideration in, among other things, the size and type of order, the terms and instructions of the order, the trading characteristics of the security, the character of the market for the security, the accessibility of quotations, transaction costs, the opportunity for price or size improvement, the speed of execution, the availability of efficient and reliable order handling systems, the level of service provided by the market venue and the customer’s overall objectives with respect to the market conditions at the time of the order. SMBC Nikko regularly reviews transactions for quality of execution.
FINRA RULE 5320 - TRADE ALONG, NOT HELD ORDERS
Customer Equity orders received by SMBC Nikko are deemed “Not Held” orders unless you (customer) specifically request and provide other specific order instructions. A “not held” order means you are giving SMBC Nikko time and price discretion in seeking to obtain the best execution of your order.
When handling “not held” limit orders for institutional customers, SMBC Nikko is generally not required by regulation to display or protect the limit order. SMBC Nikko may trade for its own account at prices equal to, or better than, those of “not held” orders. However, SMBC Nikko is still obligated to provide best execution.
Handling orders on a Not Held basis also means that SMBC Nikko may on occasion simultaneously conduct same-side principal trading in the same or related products while your order is outstanding. Principal trading while in possession of a customer order is allowed and may occur with knowledge of the customer order, as pre-positioning and anticipatory hedging for the overall benefit of the customer order.
IEX RULE 8.110 - AVAILABILITY OF IEX RULES
To obtain a copy of IEX Rules, visit IEX website at https://iextrading.com/trading/documents
MSRB Rule G-29 - AVAILABILITY OF MSRB RULES
To obtain a copy of MSRB Rules, contact the MSRB at (202)-838-1500 or visit MSRB website at http://www.msrb.org
MUNICIPALS ENTITIES AND OBLIGATED PERSONS DISCLAIMER
If you are a municipal entity or obligated person, (a) SMBC Nikko is not recommending to you any action; (b) SMBC Nikko is not acting as an advisor to you and does not owe a fiduciary duty pursuant to Section 15B of the Securities Exchange Act to you with respect to the information and material contained in this communication; (c) SMBC Nikko is acting for its own interests; and (d) you should discuss any information and material contained in this communication with any and all internal or external advisors and experts that you deem appropriate before acting on this information or material.
Compensation of Research Analysts
The research analysts principally responsible for SMBC Nikko research reports do not receive any compensation that is directly or indirectly related to the specific recommendations or views expressed by that research analyst. The research analysts may receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues.
Research Reports Prepared by Foreign Affiliates
SMBC Nikko may distribute research reports prepared by its foreign affiliates. Persons wishing to effect transactions in securities discussed in such reports should contact SMBC Nikko. Research reports prepared by our foreign affiliates will be authored by analysts employed by the foreign affiliate; such persons are not registered with FINRA or associated persons of SMBC Nikko. Employees of our foreign affiliates are not subject to the restrictions set forth in FINRA Rules 2241 and 2242 on communications with a subject company, public appearances and trading securities held by a research analyst account.
For more information -- If you have any questions, you can contact us at:
SMBC Nikko Securities America, Inc.
277 Park Avenue, 5th Floor
New York, NY 10172
Attention: Compliance Department