March 2022

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1. Introduction to best execution and order allocation

1.1 Best execution

Best execution refers to the duty of a firm that transmits or executes orders on behalf of clients to ensure that the best execution possible is achieved for their clients' orders. Some of the factors the firm must consider when seeking best execution of their clients' orders include the opportunity to obtain a better price and the likelihood and speed of execution.

Mintus Trading Limited (“MTL”) is subject to the best execution standards set out in COBS 11.2 and COBS 11.2A. MTL’s clients are the AIFs it manages. It is these funds to which the firm is responsible when carrying out best execution. These procedures apply whether transactions are conducted on a trading venue or off-market.

1.2 Order allocation

In accordance with COBS 11.3, MTL must have in place an order allocation policy that ensures the prompt, fair and expeditious execution of client orders relative to other client orders (and, where applicable, the firm’s own orders).

guiding principles within COBS 11.3 are that:

• Customers should be treated fairly;
• Business is conducted with integrity; and
• There is a written policy which is consistently applied.

2. Governance

The Compliance Officer has responsibility for implementing this policy, and will therefore:

1. ensure that all relevant staff are aware of this policy and operate in accordance with it;
2. monitor transactions for best execution and compliance with this policy; and
3. evaluate our best execution arrangements on an ongoing basis to identify and implement any appropriate enhancements to our policy.

3. Monitoring and review

The Compliance Officer or another Senior Manager will review this policy, and our best execution arrangements, at least annually to consider whether the firm has satisfied the obligation to take all reasonable or sufficient steps (as the case may be) to obtain the best possible result for clients. The review will include whether to:

• Include execution venues;
• Assign different relative importance to the execution factors; and
• Modify any other aspects of this policy and/or the best execution arrangements.

The Compliance Officer will also carry out a review if a material change occurs that could affect our ability to obtain the best possible results for the execution of our client orders, on a consistent basis. We will also assess if we need to make changes to the relative importance of the best execution factors so we can continue to meet our overall best execution obligation.

4. Best Execution

4.1 MTL’s client and specific instructions

MTL’s clients are the AIFs it manages and it is these funds to which the firm owes best execution obligations. MTL acts for investors collectively in a fund when executing orders. Therefore, underlying fund investors will be unable to give specific instructions about the execution of an order. Investors in our funds sign agreements that allow MTL to execute transactions generally, in line with the fund strategy set out in the Information Memorandum. In the unlikely event that an investor gives specific instructions to MTL, MTL is entitled to rely on those instructions even though it may not result in the firm obtaining the best outcome for that investor. However, in practice, specific instructions from underlying fund investors are not expected to occur due to the way the funds are collectively managed.

4.2 Consent

MTL is required to obtain prior consent from its client to its order execution policy. The funds will be deemed to have provided consent to this policy by entering into the agreement under the terms of which they appoint MTL as AIFM.

4.3 The financial instruments

Because of the nature of MTL’s funds and the limited types of assets in which they can invest, MTL expects to be acquiring artwork and other illiquid, real assets.

4.4 The execution venues

Again, because of the nature of the fund and the financial instruments involved, there are no established venues for the acquisition of artwork and other illiquid, real assets and all such transactions will be made outside regulated markets. It is likely that disposals (if any) will also be made outside regulated markets.

4.5 Execution criteria

We have an obligation to take all reasonable steps to obtain the best possible result when acting as AIFM to the AIFs we manage when executing and transmitting their client orders. If a client has provided specific instructions, we will meet our obligation to obtain the best possible result by following those instructions.

The steps we take to ensure that we obtain the best possible result for our funds include:

• Having a detailed best execution policy, which is up to date, compliant and adhered to;
• Ensuring our monitoring processes are appropriate; and
• Identifying any failings and implementing corrective actions.

MTL will take all reasonable steps to obtain the best possible outcome for the client. In determining the importance of the execution factors set out in 4.6 below, MTL takes into account:

• the investment strategy of the fund;
• the complexity of the transaction itself; and
• the financial instruments that are the subject of the order.

Best execution is not achieved solely through price, but through a balanced appreciation of all of the above features. MTL considers that it will be demonstrated that all reasonable steps have been taken to obtain the best possible result when executing a client order in an artwork and other illiquid, real asset in accordance with:

• the investment objectives of the fund, as detailed in the relevant offering document and/or the document constituting the fund; and
• the factors set out in the investment management agreement or other documentation.

4.6 Execution factors

In meeting its best execution obligation, MTL will take into account the following execution factors set out below in light of the fund’s investment strategy and objectives. The funds MTL manage often have specific and restrictive investment parameters and these need to be balanced against the execution factors.

1. PriceA key factor in determining the result MTL obtains for funds will be the price paid for the securities acquired. The price of artwork and other illiquid, real assets is typically determined with reference to the asset values. Such costs are predominantly negotiated on an arms’ length basis which helps with establishing price, although it may be difficult to obtain independent information about the value of artwork and other illiquid, real assets. Before executing transactions, MTL will have conducted due diligence and other price related research to substantiate and understand that the price to be paid is in the best interests of the fund’s investors.
2. CostsMTL will endeavour to minimise so far as possible the transaction costs (if any) borne by its clients and, in any case, will ensure that these are fixed or readily calculable and that our clients are informed of the basis on which they are to be determined before transactions take place.
3. Speed of executionTypically, opportunities to invest in artwork and other illiquid, real assets are negotiated and executed over a period of months. This is factored into a fund’s investment strategy and is set out in a fund’s offering document.
4. Likelihood of executionAs part of the early and ongoing analysis that MTL carries out on potential investment opportunities it assesses the likelihood of a transaction completing, balanced against the availability of other suitable investments, before committing a fund to making an investment. MTL maintains its formal investment procedures in this regard which includes processes for ongoing assessment and sign off on opportunities by MTL’s Board or Investment Committee, taking into account their likelihood of success.
5. Likelihood of settlementSettlement risk (e.g. the risk that a counterparty does not deliver under the terms of an agreement for the purchase of securities) is low in venture capital transactions.

5 Order Allocation

Generally, the specific investment objective of the funds MTL manages vary and do not conflict with each other. Furthermore, MTL does not aggregate orders for its funds with those of other funds or the firm itself.

However, there may be instances where the investment strategy and objectives of two or more of MTL’s funds overlap, meaning that an investment proposal is suitable for two or more funds. In addition, an order aggregation could be advantageous for the funds in this situation. MTL has put in place the following allocation and aggregation policy to deal with these potential scenarios.

The aim of the firm’s order allocation policy is to ensure fair allocation of investments in any case, including how the volume and price of orders determine respective allocation and how partial executions are treated.

MTL’s policy is to allocate any investments fairly across all funds it manages, taking into account factors such as each fund’s respective investment objectives and particular time constraints. Sometimes there may be reasons for proceeding with a specific allocation, and it may be that considerations such as timing will be more important to one fund than another at different points in any fund’s lifetime. MTL’s policy is that taken over the whole life of any one fund, it should - bearing in mind potentially differing strategies and investment objectives - be treated fairly and equitably as compared to any other fund. Ultimately, MTL has discretion in the ranking of order allocation, based on its understanding of its funds.

The guiding principles within COBS 11.3 which requires fair allocation of orders are that:

• customers should be treated fairly;
• business is conducted with integrity; and
• there is a written policy which is consistently applied.

MTL’s obligation is to execute orders for the funds that it manages promptly, fairly and expeditiously, relative to other orders being placed either for other funds or on its own account. In more detail, when executing orders MTL will:

1. ensure that orders executed promptly and are accurately allocated and recorded;
2. carry out otherwise comparable orders sequentially and promptly unless the characteristics of the order or prevailing market conditions make this impracticable/impossible or the interests of the fund require otherwise; and
3. inform underlying investors of any material difficulty relevant to the proper carrying out of orders promptly upon becoming aware of the difficulty.

5.1 Aggregation

MTL may carry out an order for a fund in aggregation with that for another fund and/or other clients or members of MTL if the following conditions are met:

1. It is unlikely that the aggregation of orders and transactions will work overall to the disadvantage of any fund whose order is to be aggregated;
2. If aggregation may work to the disadvantage of a fund, then this fact has been disclosed to each fund whose order is to be aggregated and who may suffer such disadvantage.

In such cases, transactions will be allocated on what is deemed to be a fair and a reasonable basis that is in accordance with FCA Rules.

When any order is aggregated with another order, the allocation of the securities to the relevant acquirers must occur promptly.

MTL may execute an aggregated order in part, where it is not possible to execute the order in full.

An underlying investor must agree before the event (e.g. by agreeing to relevant terms that are set out in a fund’s governing document) that aggregation may delay the execution of a transaction, and that it may operate to the underlying investor’s advantage or disadvantage on some occasions.

Where an instruction is given on behalf of a number of funds and where a pre-allocation has been made for those funds, assets should be allocated on a pro-rata basis unless there are sound reasons for applying alternative allocation criteria. MTL reserves the right to apply an alternative allocation method in circumstances where it deems there is sufficient evidence to do so, bearing in mind the guiding principles above.

Where an aggregated order is executed, in the subsequent allocation, preference will not be given unfairly to own account orders, staff personal account deals, or indeed to any of those for whom MTL may have dealt. Where a fund order and an own account order and/or staff personal account deal have been aggregated, priority will be given to the fund order if the full aggregate total of all the orders cannot be completed, unless it is possible to demonstrate reasonably that without the participation of MTL it would not have been able to execute those orders on such favourable terms, or at all.

6.1 Error Handling

Where an error is identified in either the intended basis of allocation or the actual allocation a revised allocation may be calculated in respect of an aggregated order. In such circumstances, a record must be made of the reasoning behind the reallocation and recorded in an error log.

The re-allocation must then be completed within one business day of the original error being identified. A revised allocation may also be made in such a scenario where an order is only partially executed resulting in an uneconomic allocation to certain clients and in this situation MTL will act to ensure that any re-allocation is in the best interests of the clients for whom the firm has traded.

6.2 Record keeping

An aggregated order that has been executed and that includes one, or more, client orders will be recorded and the identity of each client involved will be retained.

A record will also be made of the proposed allocation as soon as is practicable. The date and time of allocation, the relevant product, the identity of the eligible counterparty concerned, and the amount allocated to each party involved should all also be recorded in writing.

Any records made must be retained for a period of at least five years from the date of allocation or subsequent reallocation.

6.3 Misuse of information

It is not permitted to use (misuse) information relating to a fund’s pending orders to facilitate orders for other funds, or MTL own account orders, or MTL staff personal trades. Accordingly, MTL will take all reasonable steps to prevent and/or censure the misuse of information.

7. Use of this policy

This policy is being provided to our funds’ investors, and their agreement to it has been obtained, prior to any transactions being executed on behalf of those clients by virtue of them having signed up to the Investment Terms and Conditions.

This policy will be reviewed on an annual basis and amended as necessary in the event of changes to the situations it covers.