THOMSON REUTERS DEALING OPERATIONAL PROCEDURES Page 1
Thomson Reuters 2016. All Rights Reserved. This document is confidential and intended solely for the readership of Thomson Reuters Dealing Services Clients. If you are not the intended recipient, you are notified that disclosing, copying, distributing or taking any action in reliance on the contents of this information is strictly prohibited. All content provided in this document (the "Thomson Reuters Content") is proprietary to Thomson Reuters and/or its affiliates and protected by international copyright laws. Thomson Reuters retains all proprietary rights to the Thomson Reuters Content. The trademarks, service marks, trade names and logos in this document are trademarks of Thomson Reuters and/or its affiliates. Page 2
Contents About this document... 4 Chapter 1 General Provisions... 5 Chapter 2 Amendments to Operational Procedures... 6 Chapter 3 Access and Accountability... 7 Chapter 4 Client Classification & Eligibility Criteria... 8 Chapter 5 Compliance with the Regulatory Environment... 9 Chapter 6 Market Conduct...11 Chapter 7 Execution, Clearing & Settlement...13 Chapter 8 Agency Transactions...14 Chapter 9 Disputes...15 Chapter 10 Rule Breach Complaints, Investigations & Disciplinary Sanctions...16 Chapter 11 Records Management...18 Chapter 12 FX Trading Roaming...19 Chapter 13 Definitions...20 Page 3
About this document About this document Intended readership This document is applicable to Thomson Reuters Dealing Clients. Clients are required to be familiar with the contents of these Operational Procedures and ensure that their Users comply with them at all times. The Operational Procedures aim to promote the highest standards of integrity, professionalism and ethical behaviour when using Thomson Reuters Dealing. Capitalised terms used in this document are defined in the Definitions section.. Page 4
Chapter 1 General Provisions 1.1 Clients must comply at all times with the letter and spirit of these Operational Procedures in addition to any other regulatory obligations applicable to Clients, when conducting investment and/or non-investment instrument activity. The Operational Procedures are transparent, objective and non-discretionary, defining the highest standards of integrity, professionalism and ethical behaviour, promoting efficient, fair and orderly market environments. 1.2 Clients agree to comply with any relevant supplementary operational procedures, rule books, technical specifications, manuals, directions or other guidance issued by Thomson Reuters from time to time in respect to Dealing ( Supplementary Procedures ). This includes the Dealing Coordinator Guide referenced in Chapter 3. 1.3 Thomson Reuters is not a party to, and will not have any liability, or maintain any trading accounts with respect to Transactions initiated on Dealing. Execution, payment and settlement of Transactions is the sole responsibility of the two Counterparties concerned and occurs outside of the Dealing platform (see Chapter 7). 1.4 Thomson Reuters is not responsible for and shall not be liable for the default of any Client on any Transaction. 1.5 Clients are responsible for fulfilling their own (if any) Transaction reporting and EMIR reporting requirements (or any other applicable regulatory reporting requirements) in respect of any Transactions conducted on Dealing.. 1.6 Relevant swap products subject to Dodd-Frank regulation must be executed on a Swap Execution Facility (SEF). Clients of the Thomson Reuters Swap Execution Facility are bound by the Thomson Reuters SEF Rule Book. Dealing is not a registered SEF. 1.7 In the event of any conflict between the Supplementary Procedures and these Operational Procedures the Supplementary Procedures shall take precedence. 1.8 All provisions of these Operational Procedures shall be construed in accordance with the laws of England and Wales. In the event of any inconsistency between the English version of these Operational Procedures and a translated version, the English version shall be considered to be the binding version. Page 5
Chapter 2 Amendments to Operational Procedures 2.1 Thomson Reuters may amend or add to these Operational Procedures at any time, providing Clients with thirty (30) days prior notice. Clients will be notified via the Thomson Reuters Dealing Xtra website: https://dxtra.markets.reuters.com 2.2 Thomson Reuters reserves the right to make a change to these Operational Procedures at any time, without prior notice, where such change is required by law of regulation (or, in Thomson Reuters view, acting reasonably at all times, that such change is required or expected by a Competent Authority). However, any changes of this nature shall still be notified to Clients after the change is made. 2.3 Thomson Reuters may make non-material changes to these Operational Procedures at any time without notice. Page 6
Chapter 3 Access and Accountability 3.1 Clients must ensure that their Users are adequately trained, supervised and competent and that they comply with these Operational Procedures, relevant laws, regulations and codes of conduct in relation to the markets in which their Users operate. 3.2 Clients are responsible for the actions of their Users, including ensuring that Users hold all necessary regulatory permissions and authority to commit to Transactions. 3.3 Clients must authorise and appoint two Dealing Coordinators per Dealing code who shall be responsible for day-to-day operational management of Client s use of Dealing under each Dealing code. The Dealing Coordinator will act as the main contact with Thomson Reuters for co-ordinating support issues. Full details of the Dealing Coordinator s responsibilities are contained in the Dealing Coordinator User Guide which can be accessed via Thomson Reuters Dealing Xtra website: https://dxtra.markets.reuters.com, under the Documentation section. 3.4 Clients must provide Thomson Reuters with an up-to-date global list of contact details, enabling appropriate resolution of any service issues impacting Dealing. 3.5 Clients must ensure that their Users never operate Dealing under the profile identifier of another User, only access Dealing using their own User ID and password, never disclosing login information to another person, and lock, log off or shut down unattended platforms. 3.6 Client acknowledges that Dealing conversations conducted between Counterparties on FX Trading will result in the individual trader s email address (for both Counterparties) being disclosed on Dealing tickets and any printer outputs of such conversations from FX Trading. This is due to each User s login ID to FX Trading comprising of their e-mail address. Clients will at all times process any Personally Identifiable Information (PII) received from FX Trading in accordance with applicable laws or regulations governing the processing of PII. Such PII may only be used in respect to the negotiation, execution, clearing and settlement of the Transaction with the relevant Counterparty. By using FX Trading, Users consent to such disclosure and use of their e-mail address as set out in this clause. Page 7
Chapter 4 Client Classification & Eligibility Criteria 4.1 Subject to section 4.2 below, Thomson Reuters only accepts clients which meet the criteria of Eligible Counterparties (either per se or elective) as defined in the Financial Conduct Authority (FCA) Conduct of Business Sourcebook (COBS 3.6). 4.2 Clients using Dealing in the United States or otherwise conducting Transactions subject to United States laws and/or regulations, agree that they are classified as an Eligible Contract Participant (ECP) as defined in the Commodity Exchange Act (CEA) and that, if the Client is trading on behalf of other persons or customers, such persons or customers are classified as ECPs. 4.3 Clients must be fit and proper, acting with honesty, integrity, skill and due diligence, and hold sufficient competence, capability, resources, financial soundness, management and control when conducting activities on Dealing. Page 8
Chapter 5 Compliance with the Regulatory Environment 5.1 Clients must comply with any domestic currency restrictions. Countries identified with currency restrictions include, but are not limited to Brazil, China, India, Indonesia, Malaysia, Philippines, South Korea, Taiwan and Thailand. 5.2 Clients must comply with these Operational Procedures in addition to all applicable laws, regulations, codes of conduct and market practice to which Clients are bound. This includes any applicable laws and regulations relating to money laundering, proceeds of crime and any other financial crime legislation in force in any jurisdictions. 5.3 Where Thomson Reuters is of the view that, by continuing to provide Dealing to a Client, it would be at risk of becoming involved in an arrangement which it knows or suspects facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person, it may terminate access to Dealing, either temporarily or permanently, without prior notice and with immediate effect. 5.4 In addition, Clients must refrain from using Dealing in connection with any activity that is covered under economic sanctions or trade controls restrictions imposed by the United States and the European Union at any time, which may mean Clients are unable to use Dealing or that their use is limited. Failure to comply with this clause may result in termination from Dealing without prior notice and with immediate effect. 5.5 Dealing Clients who are U.S. Persons may use Dealing for negotiation of Swap Transactions, however any execution of Swap Transactions must occur on a SEF or through bilateral discussions outside of Dealing, as applicable. Any relevant Swap Transaction subject to Dodd-Frank regulation purportedly agreed by U.S. Persons on or through Dealing is not legally binding and shall be null and void. 5.6 The following table provides examples of codes of conduct and market practice. As these are subject to change from time to time, Thomson Reuters does not warrant or represent as to their validity or applicability: Codes of Conduct & Market Practice Organisation Title Link Financial Markets Association (ACI) London Foreign Exchange Joint Standing Committee (FXJSC) Hong Kong Treasury Markets Association New York Foreign Exchange Committee ACI - The Model Code (The International Code of Conduct and Practice for the Financial Markets) The Non-Investment Products (NIPS) Code Code of Conduct and Practice Guidelines for Foreign Exchange Trading Activities http://www.aciforex.org/ http://www.bankofengland.co.uk/ markets/pages/forex/fxjsc/default. aspx http://www.tma.org.hk/pubfile/tm acode.pdf http://www.ny.frb.org/fxc/2010/tr adingguidelinesnov2010.pdf Page 9
Codes of Conduct & Market Practice Organisation Title Link Singapore Foreign Exchange Market Committee Tokyo Foreign Exchange Committee European Securities and Markets Authority (ESMA) National Futures Association (NFA) Bank Negara Malaysia (BNM) The Singapore Guide to Conduct and Market Practices for Treasury Activities (Blue Book) Tokyo Code of Conduct (Orange Book) Guidelines - Systems and controls in automated trading environments Rules Governing the Business Conduct of Members Registered with the Commission The Malaysian Code of Conduct for Principals and Brokers in the Wholesale Money and Foreign Exchange Markets http://www.sfemc.org/pdf/singapo rebluebook_april2012.pdf http://www.fxcomtky.com/coc/cod e_of_conduct_e.pdf http://www.esma.europa.eu/syste m/files/esma_2012_122_en.pdf http://www.nfa.futures.org/nfa manual/nfamanualtoc.aspx?section=4 http://www.bnm.gov.my/ Page 10
Chapter 6 Market Conduct 6.1 Clients must ensure that all Orders are made with a clear, genuine intent to trade. Prices that are not intended to be tradable must be clearly marked as indicative. 6.2 Clients must not use Dealing to send messages that are fraudulent, harassing, libellous, slanderous, obscene, or a violation of any rights of publicity or privacy, that facilitate criminal transactions or contravene any applicable law. 6.3 Clients are responsible for monitoring their activity on Dealing to identify breaches of compliance with these Operational Procedures, including identifying suspicions of disorderly trading conditions or conduct that may involve market abuse, and for reporting any breaches or concerns identified directly to FRCompliance@thomsonreuters.com 6.4 Thomson Reuters will make every effort to monitor activity on Dealing to identify breaches of compliance with these Operational Procedures, including identifying suspicions of disorderly trading conditions or abusive conduct (as defined in 6.7 below). Thomson Reuters will comply with its regulatory obligations to report suspicious activity to the relevant regulator, competent authority or law enforcement agency. 6.5 Clients using algorithms to access Dealing must monitor automatically the algorithms to ensure compliance with these Operational Procedures, preventing disorderly trading conditions and abusive market behaviour, and must report system malfunctions or breaches to FRCompliance@thomsonreuters.com. 6.6 Clients offering proprietary or third party algorithms or benchmark orders to their counterparties through Dealing represent and warrant to Thomson Reuters that they have all necessary rights and authority to provide such algorithms and benchmarks. 6.7 The following types of behaviour (collectively described as abusive conduct ), whether intentional or accidental, manual or automated, and whether individually or in collusion with others, are prohibited on Dealing: 6.7.1 Committing any act or course of conduct which creates, or is likely to create, a false or misleading impression of the market in, or the price, supply, or value of, any instrument traded on that platform, or any instrument, benchmark or reference, whose value depends on that instrument; 6.7.2 Creating Money Market strategies (whether automated or manual) designed to intercept other Users trading strategies or provoke order entry responses from other participants, where there is no intention of, or real economic rationale, for trading at the rates specified in the orders; 6.7.3 Submitting fictitious orders, i.e. orders with a fictitious quantity or price, or entering into, or attempting to enter into, artificial transactions; 6.7.4 Committing any act which is likely to damage the fairness or integrity of the Transactional Services markets, platforms or environments; 6.7.5 Committing any act or engaging in any course of conduct which causes, or contributes to, a breach of these rules by another Client; Page 11
6.7.6 Effecting a pre-arranged transaction that is designed to give the market a false view of supply, demand or pricing of an instrument; 6.7.7 Committing any act of deception, fraud or contrivance in relation to Dealing, or to any markets, benchmarks or references, whose value depends on instruments admitted to the platforms and markets operated by Thomson Reuters. 6.7.8 Any activity whatsoever that could be interpreted by a competent authority or law enforcement agency as a breach of abusive conduct regulations or laws. 6.7.9 It is also prohibited to encourage another party to conduct these types of behaviour. Page 12
Chapter 7 Execution, Clearing & Settlement 7.1 Clients may use Dealing to communicate, negotiate and agree commercial terms in respect of Transactions however execution, clearing and settlement of Transactions occurs outside of Dealing in the back office of the respective Counterparties. 7.2 Clients are responsible for ensuring the prompt exchange and processing of Transaction confirmations directly with their Counterparties in accordance with market practice. 7.3 Clients are responsible for the post-trade clearing and settlement of all executed Orders bi-laterally, except where the Client is acting as an agent (see Chapter 8). Page 13
Chapter 8 Agency Transactions 8.1 Clients acting in the capacity as agent (i.e. conducting Transactions on behalf of any person other than itself, referred to herein as a principal ), must be appropriately authorised to act as such principal s agent in conducting Transactions on Dealing. For example, these Clients include Inter-Dealer Brokers. 8.2 The Client is solely responsible for all aspects of the Client s relationship with its principals and compliance with all applicable regulations and codes of conduct (e.g. FCA Approved Persons Regime and Principles for Business), including the Financial Markets Association (ACI) Model Code, the London Foreign Exchange Joint Standing Committee (FXJSC) and the Non-Investment Products (NIPS) Code. 8.3 Transactions conducted on an agency basis create legal, valid, binding and enforceable obligations of the relevant principal enforceable by the Client and the applicable counterparty in accordance with their terms. 8.4 The Client must: i) assess the suitability of each Order it submits on behalf of a principal; (ii) provide support to its principals, including addressing all inquiries from a principal regarding Transactions; and (iii) provide its principals with all required disclosures in connection with any Transaction. 8.5 Section 7.3 of Chapter 7 is not applicable to Clients trading on an agency basis. Payment and settlement of a Transaction executed by a Client acting in the capacity as agent is the sole responsibility of the relevant counterparty (on whose behalf the Client conducts the Transaction). Page 14
Chapter 9 Disputes 9.1 Clients must act with integrity and mutual respect to promptly resolve disputes directly with their counterparty, including agreeing Transaction cancellation and amendments. Page 15
Chapter 10 Rule Breach Complaints, Investigations & Disciplinary Sanctions 10.1 Clients are responsible for monitoring their use of Dealing to identify breaches of these Operational Procedures, including identifying suspicious or disorderly trading conditions or conduct that may involve market abuse. Any breaches or concerns identified should be reported to marketconduct@thomsonreuters.com. Clients shall provide all information in a timely manner to enable the matter to be investigated. This is in addition to any obligations Clients have to make a Suspicious Transaction Report ( STR ) to relevant Competent Authorities where they reasonably suspect that a Transaction might constitute insider dealing or market manipulation. 10.2 Clients must cooperate with Thomson Reuters and any regulatory investigation, including facilitating the monitoring of compliance with conduct rules, in an open and honest manner. and providing either soft or hard copies of data or records upon request promptly. 10.3 Thomson Reuters has a regulatory obligation to report significant breaches of these Operational Procedures, disorderly trading conditions and market abuse suspicions to the Financial Conduct Authority (FCA). 10.4 Thomson Reuters will assist any Competent Authority, in any investigation of fraudulent or abusive conduct as requested. In this respect, we may disclose any information, data or documents received from any Client in connection with its use of Dealing to any Competent Authority, where these are required in connection with an investigation, inquiry or proceedings by such authority. 10.5 In the interests of maintaining a fair and orderly market, Thomson Reuters will impose any of the following sanctions in respect of breaches of these Operational Procedures at its discretion: Verbal Warning Written Warning Temporary Suspension Termination of Membership. 10.6 Where appropriate, instances of breaches of these Operational Procedures may be referred to the F&R Disciplinary Committee for consideration. 10.7 Thomson Reuters may publish, with or without disclosing the identity of the Client concerned, in part, in summary, or in full, findings of the F&R Disciplinary Committee or Appeals Panel, where it believes that to do so would be of assistance to the market. 10.8 All appeals against the findings of the F&R Disciplinary Committee must be addressed in writing within five business days of notification of the penalty to the General Counsel, Europe, F&R Legal Department of Thomson Reuters at the following address: General Counsel, Europe, F&R Legal Department, Thomson Reuters, 30 South Colonnade, Canary Wharf, London E14 5EP Page 16
The name of the firm, the decision appealed against and the date of the decision must be clearly stated. Page 17
Chapter 11 Records Management 11.1 Thomson Reuters requires Clients to maintain records of their trading activity on Dealing for a minimum of five years., 11.2 In addition to clause 12.1, Clients must maintain records of their trading activity that comply with their legal and regulatory record keeping obligations. Dealing is not a trade repository or archiving substitute for Client s own books and records obligations. Page 18
Chapter 12 FX Trading Roaming 12.1 The following terms apply to any User accessing FX Trading outside their primary location (such locations knows as Roaming Locations ). A User s primary location is the location in which the User is contracted and billed from, as set out on the Client FX Trading Order Form. 12.2 Clients use of FX Trading in Roaming Locations is permitted on an ad hoc and infrequent basis only. If a User changes its primary location to another country, Clients shall notify Thomson Reuters as soon as practicable and the continued use of FX Trading from that new primary location may be subject to that Client entering into an appropriate local Order Form (provided that FX Trading is available for sale in that location). 12.3 Clients shall ensure they have obtained and maintain any applicable registrations, authorisations and/or licenses or meets any other applicable legal or regulatory requirements in any Roaming Location in which its Users undertake trading activity on FX Trading. 12.4 Each Client acknowledges that any tax liabilities in respect of that Client s decision to allow its Users access and/or use of FX Trading from the Roaming Locations shall be the responsibility of that Client. 12.5 Thomson Reuters may withdraw or restrict rights to use FX Trading in Roaming Locations if reasonably required to ensure the stability of FX Trading for technical/security reasons or if required by the applicable law or regulation. 12.6 Clients continue to be responsible for ensuring each User is aware of and complies with the obligations in these Operational Procedures and any Supplementary Procedures irrespective of whether they are accessing FX Trading in a Roaming Location or otherwise. Page 19
Chapter 13 Definitions Capitalised terms used in this document are defined as follows: Table of Definitions Term Definition ACI Administrator Client(s) Client Agreement Competent Authority Counterparty Dealing Dealing Coordinator EMIR FCA FXJSC FX Trading Inter-Dealer Broker (IDB) NIPS Code Operational Procedures Order(s) The Financial Markets Association A person nominated by Client to authorize certain Users to access the applicable Transactional Service the Client entity that has subscribed to Dealing as identified on the Order Form The agreement entered into between a Client and RTSL pursuant to which RTSL provides that Client with access to Dealing Any person or organization that has the legally delegated or invested authority, capacity, or power to perform a designated function, such as a financial services regulator The opposite party in a bilateral agreement, contract, or transaction Thomson Reuters Dealing, including any successor product, if applicable (accessed via FX Trading or legacy Dealing keystation) a person nominated by a Client to be responsible for day-to-day operational management of Client s trading activity on Dealing at specific Client locations, and who acts as the main contact with Thomson Reuters for co-ordinating support issues European Markets Infrastructure Regulation Financial Conduct Authority London Foreign Exchange Joint Standing Committee Thomson Reuters FX Trading, including any successor product, if applicable. FX Trading provides access to various Thomson Reuters FX platforms (including Dealing). For the purposes of these Operational Procedures, references to FX Trading in Chapter 3 and Chapter 12 mean Dealing as accessed via FX Trading. Inter-Dealer Broker means any Client acting as in an agency capacity as an intermediary or arranger of Transactions using Dealing FXJSC Non-Investment Products (NIPS) Code these Operational Procedures An expression of willingness to buy or sell a specified quantity of a specified currency (or security) at a specified or better price Page 20
Table of Definitions Order Form Personally Identifiable Information (PII) The Thomson Reuters form signed by Client under which Client subscribes to Dealing Any information that, alone or in combination with other information, can be used to identify, locate or contact an individual, including information constituting personal data as defined in the European Union Data Protection Directive (94/46/EC). SEF Suspicious Transaction Report (STR) Swap Transaction(s) Thomson Reuters U.S. Persons User(s) Swap Execution Facility Reports to competent authorities required under Article 6(9) of MAD where a person professionally arranging transactions reasonably suspects that a transaction might constitute insider dealing or market manipulation a swap, as defined in Section 1a(47) of the Commodity Exchange Act, and the Commodity Futures Trading Commission. s rules and regulations promulgated thereunder. A Transaction in respect of any financial instrument The Thomson Reuters Group of companies (including Reuters Transaction Services Limited) Has the meaning prescribed in interpretative guidance issued by the US Commodity Futures Trading Commission (CFTC) from time to time A person authorised by a Client to use Dealing on behalf of that Client. Page 21