Law 1338, of September 7, 2007, on the organizational requirements and operating conditions of the operating entities of the financial system, investor protection, market abuse and financial guarantee agreements, equates the Community Directive 2004/ 39/EC of the European Parliament and of the Council, of April 21, 2004, known as MiFID, to the Monegasque financial system.

As a complement to the quality standards and regulations of Alkimia Capital Monaco, we have established a customer relationship market that is divided into three phases:

The Precontractual Phase

It consists of providing the potential client with information about the entity and its protection policies against it:

• Information about Alkimia Capital Monaco and the services it provides
• Financing instruments, investment strategies and risks
• Measures to protect and safeguard clients' assets
• Order execution policy
• Conflict of interest identification and management policy
• Fees

The contractual phase

It consists of obtaining information about the financial situation and investment objectives, as well as evaluating the client's financial knowledge for classification and protection, as well as formalizing the conditions of service provision:

• Clients' financial knowledge and experience are evaluated for classification in accordance with regulations
• A risk profile is created to adapt the client's investment to their risk profile, financial situation and investment objective.
• Documentary registration and formalization of a contract that sets out the rights and obligations of the client and Alkimia Capital is carried out.

The service phase

During the service phase, mechanisms are established to provide route information, including a periodic review of the Risk Profile:

• Periodic information on the situation and performance of the portfolio
• Periodic Risk Profile

  1. Customer classification policy

Andorran regulations related to MiFID and investor protection require that clients to whom investment services are provided be classified into 3 categories based on their degree of information, training and investment experience, according to the following nomenclature:

• Retail Client: maximum level of protection
• Professional Client: limited level of protection, with only knowledge of the financial markets and the associated risks.
• Eligible Counterparty: rights of the financial system

The retail client has the right to request in writing the change of classification to a professional client, after evaluating compliance with at least two of the three requirements required by the Law.

• Having carried out operations of significant volumes in a securities market in the last four quarters with an average frequency of 10 operations per quarter.
• That the value of the client's financial instrument portfolio, composed of cash or financial instruments, exceeds 500,000 euros.
• Hold or have held in the past, for at least one year, a professional position in the financial sector that requires knowledge of the services or operations provided.

Alkimia Capital Monaco must warn professional clients clearly and in writing about the protections and rights of compensation, of which they may be deprived, and clients must declare in writing, in a document separate from the contract, that they are aware of the consequences of your waiver of these protections.

2. Product and service classification policy

Alkimia Capital bases its activity on:

• Financial advice

The provision of this service is preceded by a Risk Profile.

In the event that Alkimia Capital Monaco wants to invest in complex financial products that are not contemplated by the client's Risk Profile, the bank's execution order will be signed. According to MiFID, the products that are considered complex and require this signature are the following:

• Preferred stock
• Non-traditional investment funds (hedge funds, private equity, commodity funds, etc.)
• Derivatives (options, warrants, etc.)
• Structured products

3. Financial instruments policy and associated risks

3.1. General principles

Profitability/risk binomial

• Profitability is the return on investment.

Naturally, profitability is a positive element for the investor. In this way, the higher the return on an investment, the higher it will be for the investor.

• Risk is represented by the variability of performance. It is a negative element for the rational investor, which he will try to minimize.

In addition to the simple analysis of these two variables, there is a basic duality that the investor must consider: the profitability of the investment - risk. The question is to choose the alternative that best relates both variables.

Any investment is characterized by expected risk and return. The general rule for all of them is that when the risk is greater, the expected return is greater and vice versa.

Investor profile

It is essential to know the client's investment profile to determine the type of investor that best suits their risk sensitivity and profitability objectives.

To do this, and in anticipation of the services provided, the company prepares a Risk Profile of its clients in order to classify them.

This profile is defined based on the following aspects:

• Financial situation of the investor: knowing the expectations of short or long-term returns, or the cash needs that they will need at any given time to meet their personal obligations.
• Reversal schedule: determine whether the term in which reversal returns are expected to be obtained is longer or shorter.
• Objective of the investor: determine the returns that the investor expects to obtain and the moment in which he wants to obtain them. Keep in mind what level of losses you will be willing to assume taking into account the risk factors.
• Risk profile: identify the degree of risk aversion.
• Concepts and expectations: evaluate the experience and general concepts that the investor has regarding financial products and services.

Investment diversification

Although it is impossible to eliminate risk when managing a range of financial products, it is possible to reduce specific risk by diversifying into specific activities:

• types of business
• currencies
• sectoral and geographic markets
• issuer and financial entities

3.2 Risks associated with financial instruments

The price of a financial asset depends on the expectations of profitability and the risks associated with that asset. Price variations of a financial asset occur because of changes in profitability or risk expectations, among which we highlight the following:

Credit or insolvency risk

Credit or insolvency risk is the risk that the issuer or counterparty is unable or unwilling to return within the expected period the interest or capital that it had initially agreed to return.

Market liquidity risk

It corresponds to the possibility that an investor has of selling his investment as quickly as possible without having to accept a reduction in its price. In general, an issue will be more liquid the larger it is, since this will make it possible for it to be distributed among more investors, with a greater volume of transactions. Financial assets that are listed on organized markets tend to be more liquid than those that are not listed on organized markets.

Exchange or currency risk

The purchase of a financial asset denominated in a currency other than that of your domestic economy exposes the investor to exchange risk, that is, the risk that this currency depreciates in relation to your national currency.

Interest rate and reinvestment risk

Interest rate risk is the risk that an investor bears when interest rates change in a direction other than expected.

Rate risk, in turn, is divided into two others: market risk and reinvestment risk. The first is the one that causes capital losses due to an increase in interest rates. The greater or lesser sensitivity of the price to the variations that may occur in market interest rates will depend on the characteristics of the asset. Reinvestment risk materializes when the reinvestment of the asset itself or the cash flows must be carried out at rates lower than those expected and, as in the previous case, the greater or lesser incidence of this effect will depend on the specific characteristics of the asset.

Market risks or price risk

It is the risk of loss in the value of financial assets due to changes in their risk factors that have led to adverse movements, which influence their price.

Market risk is the main risk of liquid and organized markets such as equities, currencies or raw materials.

Risk country

It is one that, due to political and State problems, does not allow it to meet its payment commitments. The causes may be political, social, economic, circumstantial, etc...

Specific risks linked to investment in derivative products

Warrants and options react with an incremental effect on price variations of the underlying asset. In the event of purchasing one of these assets, the instrument loses all value if, at the expiration of the call option, the price of the underlying is lower than the exercise price provided for by the contract, or if, at the expiration of the put option is superior. In the event of the sale of derivative products or futures transactions, not hedged by underlying assets, the risks of losses are a priori unlimited.

In the event of the sale of derivative products or futures transactions, not hedged by underlying assets, the risks of losses are a priori unlimited.

3.3 Classification of financial instruments

According to MiFID, two types of products can be distinguished depending on their complexity and risks:

Non-complex products

• Variable income/shares listed on organized markets
• Fixed income negotiated in organized markets
• Money market instruments (public debt, promissory notes...)
• Investment fund and SICAV (except Hedge Funds and other non-traditional funds such as private equity, real estate, commodities).
• Mortgage certificates.

Complex products that previously require a suitability test:

• Preferred shares, convertible bonds, perpetual bonds, subordinated debt, etc.
• Non-traditional investment funds (Hedge Funds, Private Equity, Real Estate Funds, Commodity Funds, etc.)
• Derivative products (futures, options, warrants, exchange insurance, etc.)
• Structured products
• Credit Default Swaps (CDS), Credit Notes (CDO)
• Atypical financial contracts

Description of the main MiFID products, risks and features:

Preferred stock

They are securities issued by a company that do not confer participation in its capital or voting rights. They are perpetual (they do not expire) and their profitability is not guaranteed. It is a complex and high-risk instrument, which may lead to the loss of the invested capital.

These instruments usually have liquidity through a secondary market with many limitations, with the issuers themselves normally providing it.

Convertible debentures, perpetual debentures, subordinated debt

a) Convertible obligations; They are obligations that are issued with the option that the subscriber can exchange them for shares or other types of obligations of the issuer, which facilitates their placement in the market.

This conversion of the obligations into shares will be profitable when the benefit of the dividends is higher than the coupon, or if it is desired to provide greater liquidity to the asset if the share is quotable on the secondary market.

b) Perpetual obligations: these are obligations that do not expire. Perpetual obligations pay coupons perpetually and cannot be redeemed.

c) Subordinated debt: these are fixed income securities with explicit yield, normally issued by credit institutions, which offer higher profitability than other debt assets. However, this greater profitability is achieved in exchange for losing collection capacity in the event of extinction and subsequent liquidation of the company, since it is subordinated to payment in order of priority in relation to ordinary creditors.

Main derivative products (options and warrants)

a) Options: the purchase of an option gives the right, but not the obligation, to buy (call) or sell (put) an underlying asset, at a price determined in advance, called the strike price, and at a future date. In any case, the seller of the option contract must accept the buyer's decision.

The combination of options can give rise to very complex strategies and, consequently, high risks, especially in the case of selling options. The option can be used to hedge a portfolio, limiting the risk of loss to only the price paid to purchase the option.

b) Warrants: are a form of publicly traded option, which gives the buyer the right, but not the obligation, to buy/sell an underlying asset (stock, future, etc.) at a certain price, at a future date also determined. In operating terms, warrants are included as a form of option.

Warrants are financial products with leverage, that is, they generate exposure to price variations of the underlying asset that is a multiple of the initial investment. They are mainly used to position oneself up or down on the price of the underlying asset, but the investor may face a total loss of the initial investment upon expiration. They also serve to cover a wallet against an unfavorable movement. The put warrant is commonly used as a hedging instrument to protect a portfolio against market variations.

Hedge Funds

They are collective investment funds organized privately and managed by professional companies, with a broad vocation ranging from pure speculation to the protection of capital in any environment. They can use derivative products. They offer additional diversification to traditional portfolios, since they are theoretically not correlated to the results of the stock and bond markets.

4. General asset safeguard policy

The regulations related to MiFID and investor protection require measures to protect assets, prevent their misuse, and allow the positions and ongoing operations of each client to be identified at any time.

Alkimia Capital Monaco is an independent financial investment entity. Its very nature does not authorize it to carry out transactions with securities on its own account or to act as a depositary, which guarantees independence and non-misuse of financial assets on its own account.

Alkimia Capital Monaco has policies, procedures, records and security systems to safeguard the integrity, availability and confidentiality of customer information, including the following:

4.1 Depositaries

The depositary entity is selected by the client himself, among the banking entities of the Principality of Monaco and international entities of recognized prestige, experience and international solvency.

In turn, these entities have their mechanisms to protect and evaluate the sub-custodies of international markets.

4.2 Use of clients' financial instruments

Alkimia Capital Monaco does not act on its own account and therefore guarantees the non-use of client assets for financing operations of its activity.

5. Summary of the general conflict of interest policy

5.1 Introduction

5.1.1 Objective

The objective is to avoid the existence of situations that generate potential conflicts of interest between the entity and its clients, or between the clients themselves.

In order to protect the client, the Entity has established appropriate policies, procedures and organizational measures for the prevention and elimination of possible conflicts of interest that may arise at the time of the provision of any investment service, or in the case of that they cannot be avoided or eliminated, their communication to the client.

5.1.2 Regulations

Within the framework of the regulations relating to MiFID and law 1338 of September 7, 2007, Alkimia Capital Monaco undertakes that, as an operating entity of the financial system, it will establish in writing the policy and procedures for the prevention and resolution of conflicts of interests adapted to their size, their organization, their volume and the complexity of their activities and this with the objective of safeguarding the organizational requirements and operating conditions of the operating entity, the protection of investors, market abuse and agreements of financial guarantee.

In addition to the conflict-of-interest policy, the entity has a Code on the ethical and conduct standards of all entities authorized to operate in the Monegasque financial system.

5.2 Definitions

5.2.1 Conflict of interest

Conflicts of interest constitute those situations that may arise when providing investment or auxiliary services, or a combination of these, the existence of which may lead to the impairment of the interests of a client, or between several clients.

By way of example, but not limitation, the following are identified:

a) The operating entity of the financial system or identified person can obtain a financial benefit, or avoid a financial loss, to the detriment of the client.

b) Alkimia Capital Monaco SAM or identified person has an interest in the result of a service provided to the client or of a transaction carried out on behalf of the client that is different from the client's interest in this result.

c) Alkimia Capital Monaco SAM or identified person has financial or other incentives to favor the interests of another client or group of clients over the interests of the client.

d) Alkimia Capital Monaco SAM or identified person carries out the same activity as the client.

e) Alkimia Capital Monaco SAM or the identified person receives or must receive from a person other than the client an incentive in relation to a service provided to the client, in the form of money, goods or services, apart from the usual commission or remuneration for this service .”

The perception by the Entity of commissions and fees paid directly by the client as a consequence of the provision of investment services, in accordance with the tariff framework and/or management or financial advice contract, does not constitute a conflict of interest.

5.2.2 Subject persons

The people subject to the Conflict-of-Interest Policy are:

• The entity itself

• Group entities and their subsidiaries

• The Administrators of the entity

• Members of the Management Committee

• The General Directorate

• The staff

• The financial agents that provide investment services designated by the entity, and, where applicable, its partners, administrators, directors or employees.

• The clients themselves

5.2.3 Incentive

Incentives are fees, commissions or non-monetary benefits paid or received from third parties, related to the provision of an investment service to their clients with respect to financial instruments within the scope of application of the MiFID.

Incentives must in any case increase the quality of the service provided to the client and cannot hinder compliance with acting in the optimal interest of the client.

5.3 Measures and procedures for the prevention, identification, elimination, or disclosure of conflicts of interest.

Alkimia Capital Monaco has taken various organizational and administrative measures, which will be reviewed periodically and expanded to the extent deemed appropriate:

5.3.1 Prevention measures

The entity has various measures to prevent conflicts of interest, among which the following stand out:

5.3.1.1 Internal control measures

• Physical and technological measures to preserve the confidentiality and protection of client data and information

• Segregation of functions between people

• Preventive measures in the selection of investment service managers, advisors and agents, evaluation of their reputation, confidentiality, professionalism and independence.

5.3.1.2 With partners, administrators, directors and staff of the entity

• All partners, administrators and employees of the Entity have received and signed the conflict-of-interest policy (included in the entity's regulatory compliance manual)

• The entity does not establish incentives in the remuneration policy of its collaborators that could generate potential conflicts of interest with its clients.

• Collaborators cannot accept any type of compensation, whether monetary or in kind, from the client themselves. If the client insists, the collaborator must inform the general management.

5.3.2 Identification measures

Any subject person has the obligation to communicate in writing to the email address This email address is being protected from spambots. You need JavaScript enabled to view it. the existence of a potential conflict of interest situation, no matter how insignificant it may be. The management will analyze the situation and proceed to include potential situations in the register or, where appropriate, to take measures to eliminate or communicate them.

Alkimia Capital Monaco carries out training for the identification, prevention, and management of conflicts of interest in new collaborators.

5.3.3 Measures for elimination or resolution

When a conflict of interest cannot be avoided, the following rules will be followed:

• • Generally, whenever there is a conflict of interest between the subject entity or persons and the client, the interest of the latter will be safeguarded.
• • In the event of a conflict of interest between clients, appropriate measures will be taken to resolve the conflict. If its elimination is possible, actions will be taken to minimize the detriment of one client with respect to the other.

The management of the resolution of the conflict of interest will be resolved by the general management.

5.3.4 Measures through communication

If the measures adopted are insufficient, the nature and origin of the conflict will be communicated to those affected, and the services or operations in which the conflict arises may be carried out only if the client consents.

Revealing the existence of a conflict of interest does not exempt the Entity from adopting and applying effective organizational and administrative measures to avoid it.

5.4 Registration

The general management has an updated register of possible conflicts of interest.

5.5 Continuous improvement

Alkimia Capital Monaco, through periodic review of potential conflict of interest situations and its own experience of management and resolution records, will apply continuous improvements to its conflict-of-interest policy, to guarantee investor protection and honest action. impartiality and professionalism of the subject persons, in the best interest of the clients.

6. Order execution and management policy

International regulations related to MiFID and investor protection require us to take all reasonable measures to obtain the best possible result for our clients when executing orders.

Alkimia Capital Monaco is an independent financial investment entity. Its very nature does not authorize it to directly execute orders with securities, nor does it have direct access to the markets. Consequently, the service provided is limited to financial advice, in the indirect modality, with the client choosing their financial institution. Hence, Alkimia Capital cannot execute orders for clients.