Best Execution of Client Orders and Transactions Policy

Summary

The Best Execution of Client Orders and Transactions Policy (the “Policy”) aims to provide an overview of the policy and approach to Desjardins Securities Inc. (“Desjardins Securities, “we,” “our”) orders allowing for the best execution (term defined below) of clients’ orders and transactions.

Desjardins Securities is an indirect wholly owned subsidiary of the Fédération des caisses Desjardins du Québec (the “Federation”). Desjardins Securities is an investment dealer registered in all Canadian provinces and territories.

Desjardins Securities conducts its securities brokerage activities under the trade names Desjardins Wealth Management, Desjardins Wealth Management Securities and Desjardins Wealth Management Private Wealth Management, according to the network. Its online brokerage activities are carried out under the trade name Desjardins Online Brokerage. Desjardins Securities products and services for institutional sector clients are offered under the trade name Desjardins Capital Markets. Through its wholly owned subsidiary, Desjardins Securities International Inc., Desjardins Securities provides trading services on Canadian markets to institutional clients in the United States.

The policy is posted and updated as needed on our website.

Definitions

Derivative: Option, swap, futures contract, forward contract, futures contract option, contract for difference or any other financial or commodity contract or instrument whose market price, value or delivery, payment or settlement obligations depend on an underlying interest, including a value, price, rate, variable, index, event, probability or thing.

Listed derivative: A derivative traded on an exchange pursuant to standardized terms and conditions set out by that exchange and whose trades are cleared and settled by a clearing agency.

Over-the-counter derivative: Any derivative other than a listed derivative.

Last sale price: The price of the last sale of at least one standard trading unit of:

a) A particular security displayed in a consolidated market display but does not include the price of a sale resulting from an order that is a:

1. Basis order
2. Call market order
3. Closing price order
4. Special terms order, unless the order has been executed with an order or orders other than a special terms order
5. Volume-weighted average price order

b) A particular option traded on an exchange

Marketplace: The following entities:

a) A recognized exchange or a commodity futures exchange registered in a jurisdiction of Canada

b) A recognized quotation and trade reporting system

c) A person or company not included in clause a) or b) above that facilitates the trading of securities or derivatives in a jurisdiction of Canada and meets the following conditions:

1. Constitutes, maintains or provides a market or facility for bringing together buyers and sellers of securities or derivatives
2. Brings together the orders for securities or derivatives of multiple buyers and sellers
3. Uses established, non-discretionary methods under which the orders interact with each other, and the buyers and sellers entering the orders agree to the terms of a trade.

Unprotected marketplace: A marketplace where orders are not protected, either because it does not offer automated trading functionality, does not meet the established market share threshold or does not display orders.

Foreign organized regulated market: A marketplace located outside Canada that functions as an exchange, a trade reporting and quotation system, an alternative trading system, or a similar facility or function recognized by or registered with a securities regulatory authority that is an ordinary member of the International Organization of Securities Commissions (IOSCO).

Protected marketplace: A marketplace that displays orders in accordance with the Order Protection Rule (OPR), either because it meets the established market share threshold or because the orders pertain to securities that are listed by and traded on that marketplace.

Smart order router: Software that optimizes execution by using advanced routing rules and algorithms to direct orders to multiple markets.

Speed bump: A systematic delay in order processing.

Best execution: The most advantageous execution terms that can reasonably be obtained under the circumstances.

Opening order: An order for the purchase or sale of a security entered on a marketplace prior to the opening of trading on that marketplace on a trading day for the purpose of calculating and executing at the opening price of the security on that marketplace on that trading day provided an order shall cease to be an opening order if the order does not trade at the opening of trading of that security on that marketplace on that trading day.

Order Protection Rule (OPR): The Order Protection Rule requires markets to establish and maintain written policies and procedures that are reasonably designed to prevent off-market trades at inferior prices or the execution of orders ahead of better-priced, visible and directly accessible limit orders.

Security: Any security as defined within the relevant securities law other than a derivative.

Foreign exchange-traded security: A security, other than a listed security, that is listed on a foreign organized regulated market.

Over-the-counter security: Any security other than a listed security, a foreign exchange-traded security, a security that is undergoing a primary market transaction and a derivative.

Scope

The Policy applies to all Desjardins Securities business networks and Desjardins Securities International. It presents the process designed to ensure the best execution for all clients (retail or institutional).

Best execution – Overview

Best execution represents Desjardins Securities’ obligation to execute each client order and transaction on the most advantageous terms that can reasonably be obtained according to the state of the market at the time of execution.

Accordingly, Desjardins Securities commits to making all reasonable efforts to ensure that clients obtain the best execution of their orders for listed securities, foreign exchange-traded securities, listed derivatives, over-the-counter securities and over-the-counter derivatives.

The Policy complies with the requirements of Part C of Rule 3100 of the Canadian Investment Regulatory Organization (CIRO) – Best Execution of Client Orders and Transactions.

The Policy also takes into account the best execution requirements from the following Rules:

• Rules of the Montréal Exchange, Article 7.3 – Best Execution Required
• FINRA Rule 5310 – Best Execution and Interpositioning
• FINRA Rule 2121 – Fair Prices and Commissions

Best execution factors taken into consideration

Listed securities, foreign exchange-traded securities or listed derivatives

When executing client orders for listed securities, foreign exchange-traded securities or listed derivatives, Desjardins Securities considers the following factors (the “Broad Factors”):

• The price at which the client’s order would be executed
• The speed of execution of the client’s order
• The certainty of execution/percentage of execution of the client’s orders
• The overall cost of the transaction, when costs are passed on to clients

Listed securities and foreign exchange-traded securities (other factors)

When executing client orders for listed securities and foreign exchange-traded securities, in addition to the Broad Factors, Desjardins Securities considers:

1. The considerations taken into account when determining appropriate routing strategies for client orders
2. The considerations for fair pricing of opening orders when determining where to enter an opening order
3. The considerations when not all marketplaces are open and available for trading
4. How order and trade information from all appropriate marketplaces, including unprotected marketplaces and foreign organized regulated markets, is taken into account
5. The factors related to executing client orders on unprotected marketplaces
6. The factors related to sending client orders to a foreign intermediary for execution

When manually handling client orders for trades on a marketplace, Desjardins Securities takes into account factors used to achieve best execution, including the following factors related to “prevailing market conditions:”

1. The direction of the market for the security or derivative
2. The depth of the posted market
3. The last sale price and the prices and volumes of previous trades
4. The size of the spread
5. The liquidity of the security or derivative

Over-the-counter security or derivative transactions

Regarding transactions involving over-the-counter securities or derivatives, Desjardins Securities has implemented best execution measures to ensure client transactions are executed in a manner that establishes a fair price.

Fair pricing when Desjardins Securities acts as a principal

To ensure fair pricing, when acting as a principal, Desjardins Securities:

• Does not purchase over-the-counter securities from a client for its own account
• Does not sell over-the-counter securities from its own account to a client
• Does not transact in over-the-counter derivatives with a client

However, the factors above do not apply when a transaction is executed by Desjardins Securities as a principal if the transaction is executed at an aggregate price (including any markup or markdown) that is fair and reasonable, taking into consideration all relevant factors, including the following:

• In the case of a transaction in over-the-counter securities, the fair market value of the securities and of any securities exchanged or traded in connection with the transaction at the time of the transaction
• In the case of transactions in over-the-counter derivatives:
  • The fair market value or settlement price of the equivalent listed derivative
  • The fair market value of the derivatives underlying interest and of any related derivatives involved in the same trading strategy, at the time of the transaction
• The expense involved in effecting the transaction or transactions
• The fact that Desjardins Securities is entitled to a profit
• The total dollar amount or dollar amount at risk of the transaction or transactions

Fair pricing when Desjardins Securities acts as an agent

To ensure fair pricing when acting as an agent, Desjardins Securities does not purchase over-the-counter securities, sell over-the-counter securities, or transact in over-the-counter derivatives on behalf of a client for a commission or service charge in excess of a fair and reasonable amount, taking into consideration all relevant factors, including the following:

• The availability of the securities or derivatives involved in the transaction
• The expense involved in effecting the transaction or transactions
• The value of the services rendered by Desjardins Securities
• The amount of any other compensation received or to be received by Desjardins Securities in connection with the transaction

Order handling and routing practice

Background

Subject to its obligations under CIRO requirements and securities laws, Desjardins Securities is required to consider client instructions for orders or transactions.

In compliance with these obligations, Desjardins Securities has implemented policies and procedures that specifically address how to ensure best execution and that we execute and allocate your orders promptly and fairly, while managing any material conflicts of interest that may arise.

We will execute your order in conjunction with other comparable client orders on a sequential basis and promptly, unless: i) it is not possible due to features of your order or market conditions; or ii) your interests require a different approach.

In accordance with our obligation to ensure best execution, we may refuse or modify your order when we deem it necessary, without having to notify you of such refusal or change. We are not liable for any loss, fees or damage you may incur if we reject or modify any instructions related to your order.

During the execution of your order, we may decide to aggregate it with a transaction for our own account or that of another client. This aggregation may occur, for example, to obtain a better price or reduce costs by executing a larger number of transactions. If we are unable to execute an aggregated order in full, we will allocate the executed portion fairly and equitably. We will make reasonable efforts to notify you of the status of your order’s execution and allocation as soon as reasonably possible.

When you do not provide specific instructions, we will execute and allocate your order as soon as reasonably possible unless we believe it is in your best interest to delay execution.

Markets and intermediaries

Appendix 1 lists the markets where we route our clients’ listed security orders for handling and execution. This list may be updated from time to time.

The factors considered in selecting these markets may include the level of liquidity a particular market can offer, the probability of execution, execution speed, system reliability and availability, and historical trading activity.

Appendix 2 lists the US and Canadian intermediaries through which Desjardins Securities may route client orders for handling and execution. In these cases, the orders will be subject to the intermediaries’ order handling and routing practices.

Desjardins Securities, the Federation, or any other affiliated entity do not hold any ownership interest in any market or intermediary listed in appendixes 1 and 2. Additionally, Desjardins Securities, the Federation, or any other affiliated entity have not entered into any agreements of any kind with an intermediary listed in Appendix 2.

Primary market

Securities listed on the Toronto Stock Exchange (TSX), TSX Venture Exchange, Canadian Securities Exchange (CSE) or the Aequitas NEO Exchange may be traded on parallel markets.

Trading hours for Canadian-listed securities

The trading staff at Desjardins Securities is available to process orders between 9 a.m. and 4 p.m. (Eastern Time), Monday to Friday, excluding Canadian holidays. Although staff may be available beyond these hours, Desjardins Securities cannot guarantee the entry of orders or execution of transactions outside of the hours specified above.

Please note that, unless the specifics of a transaction require otherwise or an agreement has been made between a representative and the client:

a) An order received before 9:30 AM (Eastern Time) will be routed to the pre-market session.

b) An order received after 4 PM (Eastern Time) may be routed to after-hours trading if the market offers this and the specifics of the transaction allow for it. If received at a time when this is no longer available, the order will be registered for the pre-market session on the next business day.

Transaction details

Day order

A day order is an order that is valid only during the market’s trading hours for the duration of the day it is placed. A day order received after the opening of the primary market will be registered at the best market at the time of entry. The order may then be traded on any market to which Desjardins Securities has access or can access to ensure best execution. If the order is not executed in full, it will expire at the market’s close.

Special terms order

A special terms order cannot be executed on regular markets. This type of order will be registered only on the primary market’s special terms order market, currently the TSX, unless it can be executed on a parallel market upon entry, and will only be valid between 9:30 AM and 4 PM (Eastern Time).

Good till cancelled (GTC) order

A GTC order is an order that the client wants to remain open until a specified expiration date. These orders are routed to a market determined by Desjardins Securities’ smart order routing mechanism. The order will remain on the primary market until it is either executed or expires, whichever comes first. It is the client’s responsibility to be aware of the expiration date and contact their representative when that date arrives if they wish for the order to be renewed.

All or none order

An all or none order must be executed in full; no partial execution will be made or registered while awaiting its full execution. In a multi-market environment, an all or none order may not be executed due to limited volume spread across several markets.While the total volume across all markets may be sufficient to complete the order, the conditions of this type of order only apply to the market where it was registered. An all or none order received after the opening of the primary market will be registered at the best available market at that time.

An institutional all or none order is an order representing a large block of securities that can be executed in full at the time of receipt; otherwise, it cannot be registered on the markets. It can be executed on any market agreed upon between the parties at the time the order is received.

Market order

A market order instructs the dealer to buy or sell at any price currently available on a market that ensures the order is fully executed. These orders must be executed immediately. A market order received after the opening of the primary market will be registered at the best available market at that time. To avoid adverse market impacts, all market orders will be converted into limit orders with a reasonably high price before being completed on a market. This measure ensures that every market order is fully executed, except in cases of unusual liquidity conditions, erroneous trades materially affecting the markets, or when there is a high probability of breaching market liquidity thresholds. The order may be traded on any market to which Desjardins Securities has access or can access to ensure best execution. If the order is not fully executed and remains pending on a market, it will expire at market close.

Limit order

A limit order is an order with a maximum purchase price or minimum sale price set by the client. If a limit order cannot be immediately completed on a market as at 9:30 AM (Eastern Time), it will be routed to a designated market through Desjardins Securities’ smart order routing system. If not fully executed, the order will expire at the closing time of the market where the remaining portion remains pending.

Market disclosure

If an order is executed on one or more parallel markets in Canada or the United States, the client will be notified via a purchase or sale confirmation on a North American market. If the order was executed on multiple markets or at different prices, a statement to that effect will also be provided. Clients receiving such notifications are encouraged to contact their representative for further details.

Extended trading hours

Some markets offer extended trading hours for dealers and investors, allowing orders to be executed outside of primary markets’ regular hours (9:30 AM to 4 PM [Eastern Time]). Generally favoured by investment professionals, these trading sessions often feature low liquidity and wide bid-ask spreads, running the risk of obtaining less favourable prices compared to regular trading hours. An order placed during extended trading hours may not be executed at the desired time and could be executed at a lower or higher price than that quoted on another trading system during extended or regular market hours. Additionally, security prices during extended trading sessions do not always match closing market prices and can be highly volatile. Orders placed during extended trading hours are only valid for that specific session at the price at which they were placed. They will expire at its close.

Execution of orders on foreign organized regulated markets

Desjardins Securities will access liquidity on foreign organized regulated markets for securities or derivatives when market conditions indicate that this can be done on terms favourable to the client, considering both price and other best execution factors, taking into account Canadian market conditions.

Handling of market rebates and fees

Desjardins Securities incurs fees for executing client orders on Canadian and US markets. However, certain intermediaries may provide Desjardins Securities with cash rebates, which vary by market and security and are often based on factors such as the total volume of routed orders, the liquidity created by orders, or whether the order originates from a retail or institutional client. These fees and rebates are not directly charged or credited to clients. Desjardins Securities may consider execution costs (fees paid by Desjardins Securities and potential rebates) when determining its order routing strategy.

Use of smart order routing technology

Desjardins Securities will use the most advanced and relevant smart order routing technology available for its trading strategy and execution framework. Desjardins Securities also uses third-party smart order routing mechanisms and typically employs a spray strategy for order routing purposes.

Unprotected marketplaces

Unprotected marketplaces are considered if they have demonstrated a reasonable probability of liquidity for a given security based on the client’s order size.

Speed bumps

Markets with speed bumps are considered if they have demonstrated a reasonable probability of liquidity for a given security based on the client’s order size.

Review of intermediary order handling and routing practices

Desjardins Securities continuously reviews the order handling and routing practices of intermediaries involved in best execution to implement any necessary improvements. This includes reviewing how intermediaries handle and route client orders to ensure that their execution aligns as closely as possible with Desjardins Securities’ best execution standards.

Following its most recent review, Desjardins Securities is confident that its intermediaries’ order handling and routing practices provide reasonable assurance that best execution is achieved for client orders.

Policy review

Desjardins Securities conducts an annual review of this Policy to assess opportunities for improving the quality of client order execution. This may include adding or changing marketplaces, assessing the relative importance of execution factors in different circumstances or modifying other aspects of the Policy.

Additionally, the Policy is reviewed whenever material changes occur in the trading environment or market structure that could impact our ability to achieve best execution for our clients.

Information requests

If you have any questions about the Policy, email us.

Appendix 1 – Markets

The table below lists the markets that allow Desjardins Securities to achieve the best possible outcome when executing client orders and transactions.

Markets	Products
Toronto Stock Exchange	Equities
TSX Venture Exchange	Equities
Alpha Exchange Inc.	Equities
Aequitas NEO	Equities
Aequitas LIT	Equities
Canadian Securities Exchange (CSE)	Equities
Canadian Securities Exchange (CSE2)	Equities
Pure Market	Equities
Nasdaq CXC	Equities
Nasdaq CX2	Equities
Omega ATS / Lynx ATS	Equities
Canadian Unlisted Board	Equities
MATCH Now (operated by Cboe)	Equities
MATCH Now (exploité par Cboe)	Equities
Nasdaq Chi X Dark	Equities
NEO-D (Dark)	Equities
TSX Dark	Equities
Montréal Exchange	Equity options

Appendix 2 – Intermediaries

The table below lists the intermediaries to whom Desjardins Securities may route client orders for handling or execution.

Intermediary	Region	Products
Citadel Securities, LLC	US	Equities and options
StoneX Financial Inc.	US and foreign	Equities
Virtu Americas, LLC	US	Equities
BNY Pershing	US	Equities and options
Clearpool, Inc.	US	Equities