Spot Foreign Exchange Disclosure

This Disclosure sets out the nature of the trading relationship between Bank One Limited and its clients where Bank One Limited trades in the spot foreign exchange market (“FX Spot Market”) as a market maker acting in a principal capacity.

To the extent that Bank One Limited enters into spot FX transactions with its clients and unless otherwise agreed with a client or otherwise required by law or regulation, it will be on the basis of this Disclosure.

Bank One Limited’s approach to FX Spot Trading

Bank One Limited operates as a market maker and principal in the FX Spot Market. Bank One Limited quotes prices, accepts orders and executes trades as a principal. Bank One Limited enters into risk positions within the normal course of its market making business, in fulfilment of client requests and in expectation of future client demand. A consequence of providing market making only, and not an advisory service, is that Bank One Limited enters into spot FX transactions only with those counterparts who it reasonably believes to be capable of judging the suitability and appropriateness of any transaction to be entered for themselves, based on that counterpart’s own knowledge of the FX Spot Market and of their own specific circumstances and requirements. Bank One Limited shall not be construed as making any recommendations, or acting as a financial advisor, as an agent, fiduciary, or acting in any similar capacity when engaging in spot FX transactions.

Bank One Limited aims to conduct business with transparency and integrity and to implement the guidelines and requirements of industry groups and regulatory bodies in all its relationships with clients. However, Bank One Limited hereby draws attention to the fact that due to the nature of the business, Bank One Limited and its clients may have divergent or conflicting interests.

As a market maker, Bank One Limited manages a portfolio of risks arising from trades with many counterparties with divergent interests as well as positions acquired in expectation of future client demand. A market maker may trade before or at the same time as a client’s transaction to enable that market maker to conduct efficient risk management, or to be able to execute with other counterparties, or to manage orders placed previously with it. These activities may have an impact on market prices and may trigger stop losses or barriers on foreign exchange option trades. Bank One Limited takes reasonable measures to avoid undue market impact, but dependent on the size, execution style, and market conditions, such impact cannot be eliminated completely.

Unless otherwise agreed, the rate at which Bank One Limited transacts is an all-in rate. It includes any margin above the price at which Bank One Limited may be able to transact with other counterparties regardless of how the client becomes informed of the rate. Bank One Limited is not obliged to disclose any such margin or revenue that Bank One Limited may earn from any transaction, however if we do so, then, in accordance with all our business dealings, we will do so truthfully. Bank One Limited reserves the right to offer different clients different rates for similar or identical transactions. Relevant staff of Bank One Limited may consult together on a need to know basis in order to understand a client’s trading behaviour, expectations and interests and thereby to manage spreads and mark-ups applied, for the purpose of managing Bank One Limited’s market making activities and risk positions and for managing other counterparties’ transactions.

Orders

Under normal circumstances, Bank One Limited will accept stop-loss or limit orders and other variants of orders across multiple currency pairs, but Bank One Limited is under no obligation to accept clients’ orders and reserves the right to cancel a client’s orders by giving reasonable notice to the client.

As a general principle, Bank One Limited will always execute any order only on a best efforts basis and only when market levels reach the specified trigger rates. Bank One Limited determines, at its discretion, acting in good faith and in a commercially reasonable fashion, when this has occurred. In addition, Bank One Limited will not execute an order if Bank One Limited has reason to believe that executing the order would be a breach of an applicable law or regulation.

Limit orders may be executed in whole, in part, or not at all, depending on the liquidity available to Bank One Limited and Bank One Limited’s risk preferences in its role as principal to the trade.
In the event of market events or system failure, stop-loss orders may be executed in whole, in part, or not at all, with a slippage that Bank One Limited considers, acting in good faith and in a commercially reasonable fashion, appropriate for the size of the trade and market conditions.

At-best orders will be executed by Bank One Limited at a rate determined by Bank One Limited, post-execution of the order, acting in good faith and in a commercially reasonable fashion that is a fair reflection of the aggregate rate achieved. At-best orders rates include a commercially reasonable mark-up.

Bank One Limited will execute orders either directly on FX markets available to Bank One Limited, or by retaining the resulting trade within its own portfolio of trades. Execution of an order at a given rate does not imply that Bank One Limited will trade at the specified level in the future, or that it has traded at that level in the past, or that there is a tradable market at all at that level. While Bank One Limited is under no obligation to explain why orders were or were not executed or how the rate for the order was achieved, Bank One Limited will make commercially practicable efforts to explain these upon request in a transparent manner.

Bank One Limited will not deliberately use orders placed by clients for its own benefit to the detriment of clients. For example, Bank One Limited will not attempt to trade in the market to trigger stop-losses. If Bank One Limited places orders in the market to attempt to satisfy limit orders, Bank One Limited will give the whole of the filled amount to the client and not partially fill such orders to take advantage of market movement. Neither will Bank One Limited take advantage of large orders and anticipated market movement for its own benefit to the detriment of clients. However, it should be noted that when solicited for, and prior to a transaction, Bank One Limited may risk-mitigate any potential future exposure that might arise should such a transaction be executed, within the normal operation of its market making activities.

Information handling

Bank One Limited treats all client information with strict confidentiality. However, clients’ transactions are analysed on an individual or aggregate basis for purposes such as risk management (including counterparty risk management), relationship management and sales coverage. Bank One Limited may be forced to disclose specific counterparty information as required by applicable law, regulation or a regulatory body. Bank One Limited may use aggregated and anonymised foreign exchange flow information derived from executed transactions to provide its counterparties with market colour.

For transactions of large market size, Bank One Limited may use anonymised information to help source liquidity or to execute transactions to reduce market risk.

Should you have any questions please speak to your Bank One Limited’s contact.
This Disclosure may be updated from time to time to address legal, regulatory or industry developments.