Prices of Fractional Bonds will be established by the Arranger on behalf of the Issuer based on the pricing policy set out below. The pricing policy is subject to change at any time.
Prices of the Fractional Bonds are different from the prices of its corresponding underlying investment (the “Underlying Investment”). Prices of Fractional Bonds will however be dependent on the price of the Underlying Investment.
Prices of the Underlying Investment will ordinarily and initially be sourced from Bloomberg as being at “offer” (the “UI Price”)
Where the Arranger deems that Bloomberg is not available, relevant or accurate for any particular Underlying Investment, the UI Price will be sourced from such other provider of pricing services for debt obligations as may be determined by the Arranger.
Where the Arranger determines that no electronic pricing source is available for the Underlying Investment or that any such UI Price is not relevant or accurate, the Arranger may source the price directly from third party broker/dealers.
Where the UI Price cannot be obtained from these sources, and/or where the Arranger determines that the provided is not an accurate representation of the fair value of the Underlying Investment, the Arranger may in good faith and in its sole and absolute discretion determine a UI Price that more accurately reflects the relevant Underlying Investment’s fair value. It should be noted that the UI Price is intended to reflect the market “offer” price of the relevant Underlying Investment and the Arranger may reflect the liquidity of or other factors relating to the Underlying Investment in any fair value adjustment of the UI Price (including, for example, a “bid – offer” spread that would market for the relevant Underlying Investment).
The UI Price may be sourced in this manner as set out above on such frequency as the Arranger determines.
Once the UI Price has been established as set out above, the same price is listed on the Platform (ie the website) for an investment in the relevant Fractional Bonds (the “FB Subscription Price”).
All Fractional Bonds are listed on the “Market” page of the Platform (whether available to invest or not) with an FB Subscription Price.
The repurchase price of the Fractional Bonds, reflecting a purchase by the Issuer of the investor’s tendered Fractional Bonds, will be the FB Subscription Price, save that a “sales fee” equal to 0.25% of the principal amount of the Fractional Bonds being redeemed will be deducted from the investor’s redemption amount in respect of an early redemption (the“FB Early Redemption Price”) (see https://www.wisealpha.com/fees). Note that the “sales fee” may be increased and that the Issuer is not obliged to repurchase any Fractional Bonds and may offer to repurchase any such Fractional Bonds at any price. As set out above, the Issuer’s current policy is to repurchase the FB Early Redemption Price but that policy may change and, in particular, the sales fee may be increased to reflect prevailing market ”bid-offer” spreads where 0.25% is deemed by the Arranger in its sole and absolute discretion to be not reflective of such market.
The FB Subscription Price and FB Early Redemption Price will be made available on a daily basis and may be updated at any time (to reflect the price of the Underlying Investment and other factors impacting on the Fractional Bonds).
DP World Senior Secured Bonds is an Underlying Investment listed on the “Market” page of the Platform
It is available both for subscription and redemption
The price of this Underlying Investment, as sourced in accordance with the “Pricing of Underlying Investments” procedure described above, as at 7 May 2020, is 91.0
This means that a direct investor in this Underlying Investment could acquire the Underlying Investment at 91% of the bond’s face value
The FB Subscription Price of the Fractional Bond (that represents this Underlying Investment) is also 91.0 (being the same as the Underlying Investment) which means that:
The current FB Early Redemption Price available to an investor seeking to redeem any such Fractional Bond will be 90.75, meaning that, if the Issuer agrees to re-purchase the relevant Fractional Bond, the investor will receive £90.75 (being £91 less £0.25, being the“sales fee”)
WiseAlpha has a potential conflict of interest with its Platform clients when it has discretion to exercise voting authority in respect to corporate bonds and other investments that may underlie the Fractional Bonds. The Issuer will rely on WiseAlpha Technologies ("WAT") to advise it in relation to any suchvotes.
WAT’s voting policy is to advise the Issuer to vote any such securities in what it perceives to be the best interests of the holders of the Fractional Bonds.
To continue to be as transparent as we can about how we do business, WAT has established systems and processes that allow us to identify, prevent or manage any conflicts of interest, which may arise when we provide services to our customers.
Our Operations & Compliance teams monitor the effectiveness of these systems and processes on an ongoing basis.
Conflicts of interest can arise where our interests or the interests of our staff might conflict with our customers’ interests. They can also happen where our staff’s interests come into potential conflict with WAT’s interests. Some examples of potential conflicts that could occur would be where WAT could try to make a financial gain (or avoid a financial loss) at the expense of our customers or have a financial, or other incentive to favour the interest of one customer, or group of customers, over the interests of another.
We try to design and develop our operations in such a way that conflicts of interest are avoided. We have also established policies and procedures to ensure conflicts of interest are identified, managed and mitigated.
WAT has implemented governance arrangements. The Board takes all key business decisions. The Head of Compliance reports directly to the Board. WAT has in place rules governing staff conduct, including personal account dealing rules, which control and mitigate conflicts of interest. We keep a record of all identified conflicts of interest and monitor these to ensure that they are managed correctly. Where possible, duties are segregated to avoid conflicts of interest.
Where we are unable to put in place controls that are sufficient to mitigate the material risk or damage to a customer’s interests, we will disclose this conflict to the customer before carrying out any business on their behalf.
WAT provides services to:
customers who use the platform;
the Fractional Bond Issuer, WiseAlpha Plc (the “Issuer”); and
affiliates of WAT.
For example, WAT advises the Issuer on pricing of the Fractional Bonds. This could result in a conflict of interest with customers who are subscribing to the Fractional Bonds. To mitigate this, WAT follows a Pricing Policy, which is objective and which is disclosed to all customers on its website.
In return for services provided to the Issuer, WAT charges the Issuer a fee equal to 0.25% of the nominal amount of the Fractional Bonds issued. To offset the payment of this fee by the Issuer, WAT has agreed to pay certain fees, costs and expenses of the Issuer e.g., fees payable to the administrator and the Issuer’s corporate service provider. Therefore, WAT charges fees to both the Issuer and customers who subscribe and redeem Fractional Bonds from the Issuer for the different services it provides.
The Issuer does not charge any fees to investors in the Fractional Bonds and fully passes through the economic returns received from the underlying bonds corresponding to a Fractional Bond. However, fees are charged by WAT as set out https://www.wisealpha.com/fees.
Affiliates of WAT (being currently shareholders in WAT) and/or WAT staff may hold investments in Fractional Bonds and may make money from these activities. For example, , persons (being either affiliates, WAT staff and/or any other person) may invest in Fractional Bonds in order to allow the Issuer to issue such bonds in minimum sizes – typically of £100,000 and multiples thereof. In such circumstances, WAT will ordinarily waive the early redemption fee of 0.25% for such persons (on an arms’ length basis and in recognition of the financing service being provided) but this could result in a conflict of interest e.g., between an affiliate of WAT providing this service and customers of the platform relating to the subscription and redemption of the Fractional Bonds.
To mitigate this, save for the early redemption fee waiver for persons (affiliates, staff or independent persons) that may provide financing to expedite the issuance of Fractional Bonds, WAT treats affiliates and staff like its other customers in all respects in connection with such person’s subscription for and redemption of Fractional Bonds. And, save as described above, neither WAT’s affiliates nor WAT’s staff receive an economic or other benefit compared to WAT’s other customers.
WAT acts for multiple customers who use the platform, including the Issuer and affiliates of WAT. There is a potential for conflicts of interest to arise between customers of WAT, particularly in respect of the pricing the Fractional Bonds. To mitigate this, all prices are determined in accordance with the disclosed Pricing Policy and in all cases; WAT ensures equal disclosure of relevant information to customers.
The giving or receiving of gifts, entertainment, or any other form of gratuity or hospitality by or to the WAT’s staff may create the appearance of a lack of impartiality and may lead to a potential conflict between the interests of the donor/donee and the interests of customers. Staff are not permitted to accept gifts, hospitality or other benefits that might cause conflict with our obligation to act in the best interests of our customers.
Staff may engage in the trading of securities or other instruments for their own account. Such trading activities may put those employees and officers, or WAT, in conflict with the interests of WAT’s customers. WAT’s Personal Account Dealing Policy requires all staff to ensure that all personal dealing activity is appropriate and does not create an actual or potential disadvantage or loss to a customer. All personal dealing requires pre-approval from our Compliance Team.
All staff who are open to a conflict of interest are paid a basic salary including those who hold key support areas such as compliance. This salary is not dependent on business performance.
Remuneration and bonus structures are designed so as not to create any incentive for an employee to act contrary to customers’ interests.