Pre-Hedging Policy of Banco Bilbao Vizcaya Argentaria, S.A.

Introduction

At Banco Bilbao Vizcaya Argentaria, S.A. (“BBVA”), we value transparency in our operations and we strive to provide the best possible execution for our clients’ trades while managing the inherent risks associated with them. As part of this activity, we may engage in pre-hedging activities, which are aligned with industry standards and relevant regulations.

This document provides detailed information on our role as principal, the purpose and conditions of pre-hedging, and any potential risks or conflicts of interest that may arise. By proceeding with transactions with BBVA, you agree to the terms outlined below.

Our Role as Principal

When we act as principal in transactions, we manage our own risk positions and do not act as intermediaries, fiduciaries or financial advisors for our clients, unless explicitly agreed otherwise. As a principal, BBVA may take positions in the market before, during, or after dealing with our clients to efficiently and appropriately manage risk and procure liquidity.

Definition and Purpose of Pre-Hedging

Pre-hedging refers to the practice of entering into market transactions before a client’s trade  is fully executed, with the goal of managing the risk associated with the anticipated client’s transaction in a manner intended to facilitate our client’s trade request.

Pre-hedging is intended to:

• Facilitate smoother execution of large or illiquid potential trades.
• Reduce the potential for significant price impact caused by the transaction.
• Manage the bank’s exposure to market fluctuations arising from anticipated client transactions on the assumption of possible future inventory risk.

Our Commitments in Pre-Hedging Execution

In all our pre-hedging activities, we commit to the following:

• Responsible Risk Management: Pre-hedging is conducted to manage risks arising from potential client transactions while seeking to  avoid meaningful market disruption and disadvantage to the client .
• Transparency: We communicate to our clients our ability to engage in pre-hedging and the implications for their transactions. Should you have any doubt about  how our pre-hedging activities may affect your transaction, please contact us.
• Regulatory Compliance: All our pre-hedging operations align with applicable regulations and take into account supervisory recommendations and best practices.

Pre-Hedging practices

To procure that our pre-hedging activities are transparent and do not disadvantage our clients, we have adopted the following practices:

• Transparency and Client Consent: We hereby inform  clients that their transactions may involve pre-hedging. By placing orders with BBVA, you consent to the potential use of pre-hedging. If you do not wish for BBVA to  engage in pre-hedging with respect to your order, you must notify us in writing.
• Principal: We only engage in pre-hedging when acting as principal and counterparty of our clients, not as agents.
• Justification for Pre-Hedging: We only engage in pre-hedging when the anticipated client transaction is of a size or nature that warrants prior risk management. We also aim to avoid execution of excessive transactions.
• Expectation: we will engage in pre-hedging only when we have a reasonable expectation that (i) it will minimize risk, facilitate better pricing to provide a successful quote to our clients for a future potential transaction potentially and benefit  our client; and (ii) the transaction will be executed.
• Confidentiality: Client transactions are confidential and BBVA does not misuse  sensitive information, or share it unless required by law.
• Risk Assumption: Pre-hedging is conducted at the bank’s own risk, without shifting market risk to the client before the transaction is executed.

Potential Risks of Pre-Hedging

While pre-hedging is designed to manage market risk and procure a smoother preparation for large or sensitive client trades, there are certain risks that clients should be aware of:

• Market Impact Risk: Although the intention of pre-hedging is to limit the impact of orders on the market, the pre-hedging activity itself may influence market prices and negatively impact the  price for the client transaction.
• Liquidity Risk: Pre-hedging involves us taking market positions before executing a client trade. In certain market conditions, this may affect available liquidity at the time of  trading, possibly leading to less favorable pricing for the client.
• Conflicts of Interest: As pre-hedging involves us acting as principal and managing our own risk, there may be circumstances where our pre-hedging activity is not necessarily in your best interest. However, we strive to minimize these conflicts by adhering to strict internal controls and transparency measures. You can find a summary of BBVA conflict of interest policy in this link.
• Timing and Price Variability: Pre-hedging could affect the timing and pricing of a client trade. Pre-hedging timing varies and, in some instances, pre-hedging transactions can be entered into minutes or seconds before a client trade is executed. Market movements caused by pre-hedging activity may lead to price fluctuations between the time we start pre-hedging and when the client transaction is executed, which could result in execution at a price that differs from the one initially anticipated.
• Disclosure of Information: While we take all measures to protect the confidentiality of your transactions, our pre-hedging activities might signal to the market that a significant transaction is about to occur, potentially causing adverse market movements that could impact the execution of your transaction.
• Increased Volatility: In highly illiquid markets, pre-hedging could exacerbate price volatility, which may influence the ultimate price of  your transaction , especially in large transactions.

Although BBVA has established internal procedures and controls to manage these risks and will make every effort to prevent them from materializing, we cannot guarantee that such risks will not occur. Consequently, you should be aware of and accept the risks associated with pre-hedging activities. In case you have any doubt or need any further explanation in connection with our pre-hedging activities, please let us know.

If you do not agree with BBVA conducting pre hedging activities in relation to your trade or potential trade, please let us know.

Client Acknowledgement

By proceeding with transactions through BBVA, you acknowledge that you have been informed of our pre-hedging practices, the potential risks involved, and any conflicts of interest that may arise. You consent to BBVA engaging in pre-hedging unless you have opted out in writing.

If you have any concerns or wish to discuss alternative execution strategies, please contact us directly.