FX Disclosure Statement

Introduction

This FX Disclosure Statement (“Statement”) describes the relationship between clients and Vanward (“Vanward”)1 and/or its affiliates (collectively “Vanward”) and discloses certain practices of Vanward in pricing, handling and executing FX transactions in relation to its currency dealing business or currency execution services business. Vanward may provide other products and/or services to clients, however unless explicitly referenced herein such products and/or services are not contemplated in this Statement.

This Statement supplements but does not supersede contracts governing the relationships between clients and Vanward. In case of any conflict between this Statement and a contract, the contract shall take precedence.

Clients who have questions about this Statement or how Vanward prices, handles or executes FX transactions may contact their FX Relationship Manager.

1. General practices
a. Communication methods

Clients may communicate with Vanward electronically, by phone or through other permissible channels.2 Vanward may, at its discretion, agree to accept certain client instructions via email. Clients may be required to execute certain documents and/or meet specific Vanward requirements prior to Vanward accepting such instructions via email.

b. Information handling

Vanward has in place policies and procedures reasonably designed to protect the confidentiality of client and counterparty information by restricting the dissemination and use of confidential information. These policies and procedures generally restrict the dissemination of client confidential information to parties who ‘need to know’ in order to execute transactions or otherwise perform under the agreed upon arrangement, and manage subsequent events related to such execution or performance. They also provide that client confidential information may only be used for legitimate business purposes to provide a product, perform a service or conduct oversight of a product or service that Vanward has been contracted, or is expected, to perform. However, Vanward may use sufficiently aggregated and anonymized client confidential information to form views on market trends that it may share with clients (for example, market color). Additionally, as a regulated entity, Vanward may be required to share client confidential information with relevant global regulators.

c. Conflicts of interest

Although Vanward takes all reasonable steps to prevent conflicts of interest from adversely affecting the interests of its clients, Vanward’s own interest may at times conflict with the interests of its clients and its clients’ interests may conflict with one another. For example, Vanward may execute transactions and carry positions in various FX products including spot, forwards (including non-deliverable forwards) and swaps on its book in connection with actual or anticipated client trade requests, hedging strategies or otherwise. Vanward’s activities in connection with such transactions and positions could impact prices and available liquidity, potentially to the detriment of a client. When Vanward accepts and attempts to fill a client order, it may be engaged in FX trading activities for its own benefit in the same or similar FX products. Where Vanward provides other products and/or services to a client, the provision of such products and/or services may also lead to other conflicts of interest.

2. Vanward transacts with clients in a principal capacity

Vanward executes FX transactions on a principal basis as counterparty to its clients. When acting in a principal capacity, Vanward: (i) trades for its own account, at its own risk, for its benefit; and (ii) does not act as an agent, fiduciary, financial advisor or other similar capacity for or on behalf of clients. Clients who trade with Vanward acting in a principal capacity are expected to independently evaluate the appropriateness of any proposed transaction. Furthermore, any statement(s) made by Vanward trading personnel or distributed through a Vanward electronic system must not be construed or relied upon as advice or a recommendation.

a. Pricing

Any price quotes or streaming rates Vanward provides are an ‘all in’ indicative price. Vanward exercises discretion in tailoring its indicative pricing for individual clients / transactions taking into account a variety of commercial factors. These factors may include, but are not limited to: (i) prevailing market conditions; (ii) the size of the order; (iii) time of day; (iv) liquidity of the currency(ies); (v) Vanward’s relationship with the client; (vi) the costs Vanward may incur in connection with the transaction; and (vii) the credit, settlement, operational and other risks of the transaction. Vanward may differentiate its indicative pricing by trading venue, platform or communication method. As such, Vanward may provide different indicative prices for the same or similar transactions to different clients. Vanward may change its pricing strategies without notice and is not obliged to disclose the components of its ‘all in’ price.

Vanward may from time to time agree to execute orders using alternative pricing arrangements (see for example, Benchmark and fixing rates and Algorithms).

b. Pre-hedging and pre-positioning

Vanward may engage in pre-hedging and hedging activities based on its knowledge of its clients’ trading activities. Vanward will endeavor to conduct such pre-hedging and hedging activities in a manner that does not disadvantage clients and with an intent to avoid materially impacting market prices. Vanward conducts pre-hedging and hedging activities on a principal basis in respect of its principal activities, at its own risk, and not as an agent for clients.

c. Benchmark and fixing rates

Vanward may agree to execute a client order based on a benchmark or fixing rate. While Vanward does not intentionally attempt to affect benchmark or fixing rates, it may engage in hedging or other FX activities that may impact ultimate benchmark or fixing rates.

d. Order handling

When Vanward acknowledges, accepts or states that it is willing to ‘work’ a client order, it will attempt but is not contractually bound to execute the trade at or near the requested price and quantity. Vanward is not obligated to accept client orders and may accept or reject any order for any reason in its sole discretion. The fact that a condition to which an order is subject (for example, a stop loss order) has been triggered does not mean that Vanward can or will complete the order at the requested price and/or quantity. Vanward may sequence / prioritize client orders in its sole discretion and may aggregate client orders for the purpose of pricing.

e. Handling of requests received via electronic trading platforms (Last look)

Any price quotes or streaming rates that Vanward provides are an ‘all in’ indicative price. Clients may submit an electronic trade request (an offer) to trade with Vanward in response to such ‘all in’ indicative prices and, if so, Vanward may accept or reject that electronic trade request in its sole discretion.

f. Algorithmic trading

Vanward may employ algorithmic trading strategies in executing principal FX trades for its own risk management purposes. Vanward may also provide clients access to its algorithmic execution service (“Algo Execution Service”). The Algo Execution Service allow a client to request to enter into an FX transaction with Vanward, at a price based on rate(s) derived from offsetting trade(s) between Vanward and liquidity provider(s) and subject to any agreed upon mark-ups/downs by Vanward. Under the Algo Execution Service, the aforementioned offsetting trade(s) between Vanward and liquidity provider(s) would be arrived at based on the client’s requested algorithm and other parameters in accordance with the applicable Algorithmic Execution Terms & Conditions.

3. Agency FX
a. Currency Execution Services

Vanward Investor Services Limited (“VanwardISL”) may agree to act as an agent in executing client trades with client designated clearing brokers or approved bank counterparties as a part of its Currency Execution Services (“CES trades”). The pricing of CES trades will be based upon rates derived from a panel of liquidity providers plus, as applicable, a prearranged fee. Agency trades are conducted in accordance with the VanwardISL Order Handling Policy. VanwardISL may delegate responsibility for discharging certain functions related to CES trades to Vanward, which also engages in a principal trading business. As such, there is a risk of a conflict of interest between Vanward’s agency and principal trading businesses.

VanwardISL may in its discretion aggregate the CES trades of multiple clients for pricing purposes. While it is unlikely that the aggregation of orders and transactions will work overall to the disadvantage of any client whose orders are to be aggregated, the effect of aggregation may work to a client’s disadvantage in relation to a particular order.

b. Other Agency activities

In certain other instances, Vanward may execute FX transactions as an agent for its clients. In such instances, Vanward acts as an agent solely for purposes of execution and does not otherwise act as an agent, fiduciary, financial advisor or other similar capacity for or on behalf of clients.

c. Pre-hedging and pre-positioning

VanwardISL does not engage in pre-hedging or pre-positioning when acting in an agency capacity.

¹ As of the date of publication of this Statement, Vanward is the only Vanward entity that executes FX transactions on a principal basis.
² Vanward may record phone communications as permitted under applicable local rules.

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