FX Disclosure

Terms of Dealing
HC Technologies (“HCT” or “the Firm”) acts solely as a principal for FX transactions. As a principal, HCT deals with counterparties in an arm’s-length capacity, and does not act as agent, fiduciary or in any advisory capacity for any FX transaction. Each counterparty should independently evaluate its own risk specific to each FX transaction that it contemplates with HCT. All HCT spot FX dealings are made for the benefit of its own account as a principal only, both in the capacity of a proprietary trading entity or a quote provider. HCT never acts as an agent to a counterparty for any transaction. HCT has committed itself to the FX Global Code of Conduct and diligently applies the underlying principles to all of its FX business.

HC Technologies Spot FX Business
HCT may establish and maintain spot FX positions in addition to any other product or asset class for the purpose of risk management or speculation. HCT enters into these transactions with the sole purpose of benefiting its trading account, either in the course of proprietary trading or as a principal quote provider. As such, HCT does not act as an agent or fiduciary, or in any other similar capacity, on your behalf as a counterparty.

HCT understands that each counterparty has specific needs and requirements. It is HCT’s intent to engage each counterparty in a transparent manner, consistent with the express agreement between the parties. In its capacity as a quote provider, HCT provides indicative pricing accordingly, while simultaneously accounting for the market impacts and expected volumes stemming from trading. In this capacity, HCT offers both firm and non firm pricing. The specific requirements of a counterparty, upon request and approval, will ultimately determine the feed that HCT provides.

Risk profiles and trading volumes may change over time and, upon further request, HCT may agree to provide a different type of price feed. The tailoring of price feeds may result in differences in pricing and trade acceptance rates between counterparties, even those with similar profiles. If you require any further information as to the type of price feed you receive from HCT, please contact your HCT representative.

Conflicts of Interest
As a principal, HCT engages both liquidity removal and traditional liquidity additive strategies. HCT’s interest as a principal quote provider and proprietary trading entity may be in direct opposition to the interests of its counterparties. Due to HCT’s involvement in proprietary trading, its activities may be influenced by risks stemming from existing HCT positions and speculative market outlook. The Firm may choose to hedge, hedge in part, or refrain from hedging any position resulting from a transaction with any counterparty, separately or in conjunction with any orders received in the course of its trading activities. This activity can inadvertently trigger stop-loss orders, barriers, knock-outs, knock-ins, and similar events, but is never done with the intent to disrupt the market.

HCT’s proprietary trading strategies will impact the indicative pricing provided to the counterparty as quotes for trading, as well as corresponding liquidity levels available for the execution of your entire request.

HCT may maintain or enter into relationships with other trading venues or platforms that cause HCT to directly benefit from its trading activities with you. These benefits accrue solely to HCT and will not be shared or passed through to you.

Pricing Factors as a Quote Provider
HCT price quotes are presented in good faith and are reasonably adjusted according to market conditions and risk. Price quotes may differ depending on venue and counterparty. Any order or indicative price quote is determined by a large set of criteria at the sole discretion of HCT proprietary methodologies.

In considering price, HCT will assess the factors associated with a potential transaction:

  • Size of the transaction
  • Expenses in facilitating the transaction
  • Credit and settlement risk
  • Operational risk
  • Potential profitability to HCT
  • Market conditions
  • HCT current risk profile

Additionally, the following aspects of your trading profile may also be used to determine the prices quoted by HCT and orders accepted:

  • History of transaction size and frequency
  • Historical gains and losses
  • Tendency to buy or sell
  • Variation from expected behavior
  • Nature of the relationship with consideration for the level of service that we provide to you

Other factors that contribute to inconsistencies between unique platform or venues include, but are not limited to, the following:

  • Conventions of the platform or venue
  • Minimum price increment
  • On-the-wire time
  • Parameters for accepting or rejecting orders or trade requests
  • Available order or trade types
  • Underlying technology or latency
  • Fees and other economic considerations unique to the platform or venue
  • Historic experience with the platform or venue

Electronic Order Processing and “Last Look”
HCT streams continuously updating indicative spot FX prices across a range of currency pairs via direct and indirect electronic trading platforms (collectively, “Electronic Trading Platforms”). These price feeds may be revised or withdrawn by HCT without notice, may vary by counterparty, and may differ from the spot FX prices quoted by HCT or other quote providers for identical or similar transactions.

HCT offers both Last Look indicative pricing and firm pricing. “Last Look” is a widely accepted practice that permits a quote provider to apply trade execution checks (described below) to a counterparty trade request before accepting or rejecting the request. Last Look prices are indicative prices subject to rejection if they fail any pre-trade execution checks, whereas requests at firm prices must only pass a Status Check (See Trade Execution). Counterparties receiving firm prices may still experience rejects where their request fails Status Check, however, firm pricing feeds generally provide lower rejection rates than Last Look feeds. Additionally, counterparties should understand that firm price bid-offer spreads will likely be wider than their Last Look counterparts due to HCT’s increased risk of filling trade requests at prices unfavorable to HCT, as compared to those quoted across FX markets.

A counterparty may submit a request on an Electronic Trading Platform to trade spot FX with HCT at a streamed price or at a price specified by the counterparty. Once received by HCT, each trade request will pass through a Trade Execution phase, as described below.

Trade Execution Checks
Counterparties that request a Last Look price feed will be subject to the pre-trade execution checks explained in more detail below. It is the hold time, applied for the purpose of the “Price Check”, that is generally known throughout the FX trading industry as Last Look. Upon receipt of a trade request from these counterparties, HCT undertakes a two-step process in order to determine whether to accept or reject the trade request:

  1. Status Check - HCT assesses the validity of the trade request from operational and credit risk management perspectives (the “Status Check”). When a trade request is received, HCT confirms (i) that the transactional details contained in the trade request are appropriate from an operational perspective; (ii) that the legal entity submitting the trade request has sufficient available credit with its prime broker to enter into the transaction contemplated by the trade request; and (iii) that HCT itself has sufficient available credit to enter into the transaction contemplated by the trade request. HCT may reject the trade request if the trade request fails any component of the Status Check.
  2. Price Check- HCT determines whether the trade request may be executed at the requested trade price (the “Price Check”). Following a successful Status Check, HCT compares the requested trade price against the entire spectrum of price feeds known to HCT to determine the extent of difference between the two. HCT will determine a maximum price range on either side of the counterparty's requested price at which the counterparty is willing to transact. This price range will be known as the “execution tolerance”. When a price cannot be secured within a counterparty’s execution tolerance upon request, HCT must reject that trade request. Trade requests that fall within tolerance will be accepted. Execution tolerance is determined solely by HCT and may vary by, but is not limited to, FX pair, time of day, volatility, and/or outlook on market conditions.
    • Order Rejects: HCT may reject orders asymmetrically. HCT believes that a symmetrical execution tolerance will impact the counterparty in an adverse manner. While HCT curates each counterparty feed according to the terms of the trading agreement, the Firm will also apply good faith principles in rejecting counterparty requests. If a counterparty determines that a symmetrical execution tolerance applied during price check is more appropriate, HCT may accommodate at the express request from the counterparty. The counterparty should understand that a symmetrical execution tolerance will likely result in lower trade request acceptance rates.

More on Last Look
For Last Look counterparties, prices quoted are not firm offers to trade, but rather indications of prices at which HCT is most likely to transact. These price quotes are indicative of reasonable prices as determined by HCT’s proprietary valuation methods and use a variety of pricing factors as specified above. (See “Pricing Factors”). When you submit a request to HCT to transact at an HCT indicative price, the Firm will assess a number of factors during Price Verification before executing your request in full or in part. Factors considered may include, but are not limited to the following:

  • Available inventory;
  • Liquidity;
  • Prevailing market prices;
  • Prevailing market conditions;
  • Anticipated loss or gain based on HCT modeling;
  • Firm’s trading experience with you and/or other market participants; and/or
  • Credit and product terms and filters the Firm may employ for the purpose of implementing credit limits, position limits or other limits on electronic trading activities.

The above factors are illustrative only and do not limit HCT’s capacity to accept or reject any trade requests from you in any way. Additionally, these factors may be changed from time to time without notice to you. Furthermore, these factors can be applied to you differently than they are applied to other HCT counterparties.

Last Look will be applied in accordance with the parameters of execution tolerance determined by HCT. Counterparties will either be filled at the requested price or rejected.

HCT will utilize “Pre-Hedging” as permitted by the FX Global Code. HCT may pre-hedge counterparty trade requests where the quote provider is acting as principal, and does so for the benefit of the counterparty. If HCT does pre-hedge a counterparty trade request, all of the prehedged quantity will be passed through to the counterparty, unless express counterparty agreements or exchange rules prohibit partial fills. HCT engages in pre-hedging with the intent to advantage the counterparty with optimal fill rates, but also may receive a benefit from pre-hedging the transaction.

  • At times, HCT may deploy orders as pre-hedges in order to facilitate a counterparty trade request. This strategy can possibly result in an “over-hedge” of the amount initially requested by the counterparty. While done so with the knowledge that an over-hedge might result, this approach is only used with the intent to secure the counterparty’s trade request for the benefit of the counterparty. HCT, in its sole capacity as a principal, fully accepts the risks associated with the resulting over-hedge position and does not use strategy if it believes that it would disadvantage the counterparty’s objective trade request.

HCT will confirm FX trades as soon as practicable after execution, amendment, or cancellation. HCT has a fully-automated confirmation solution, which is operated and monitored by an independent back office team, separate from traders.

While this disclosure applies to confirmations of trade that occur within the range of normal trading, HCT retains the right to return an accepted trade request to the customer at any time, and acceptance of a trade request does not oblige HCT to enter into any FX transaction with a customer, in whole or in part. This right is only applied in good faith to unique transactions involving substantial technical errors or severe market disruptions that do not embody the natural intents of either party to a particular transaction.

Confidential Information
All of your order data obtained by HCT may be used by HCT and provided to counterparties on an anonymous and aggregated business for the purpose of data analysis, risk management, compliance and proprietary trading. Order data includes, but is not limited to, the following:

  • Orders executed in full or part;
  • Cancelled or expired orders;
  • Indications of interest;
  • Quotes;
  • Positions;
  • Trade; and
  • Other data and analytics utilizing order data.

Protecting the confidentiality and security of counterparty information is a priority for HCT. As such, reasonable measures and controls designed to safeguard confidential information are in place. The counterparty should understand that HCT uses information obtained through its trading relationship with the counterparty for the purpose of investment and risk management decision making. In addition, HCT may also share counterparty information as required by its legal and regulatory requirements.

Communications with HCT
Any and all communications regarding HCT’s FX business, its relationship with the counterparty, specific trade inquiries, and how this disclosure applies therein, should be directed to compliance@hctech.com.