In connection with any broking, introducing and arranging services provided to the Global Markets division of HSBC Group (“HSBC” or “we”) by a party (the “Broker” or “you”) (the “Broking Services”), HSBC hereby notifies Brokers of its minimum requirements as set out below the “Minimum Service Terms”. In the event that you are unable to comply with the Minimum Service Terms, then you must contact your HSBC representative and/or Relationship Manager in order to discuss.
HSBC requires the Broker at all times to adhere to the following standards:
(a) the Broker will provide the Broking Services with reasonable skill and care in accordance with best industry practice;
(b) the Broker will provide the Broking Services in compliance with the legal and regulatory requirements that are applicable to it (including, for instance, without limitation, the prohibition on payment for order flow by the UK Financial Conduct Authority (“FCA”) to the extent that such prohibition is applicable to it in respect of the Broking Services concerned); and
(c) the Broker will provide HSBC with access to those tradable prices that are available to it on a non-discriminatory basis.
To the extent that the Broking Services include order execution services to HSBC, the Broker must comply with the following:
(a) The Broker shall in accordance with its order execution policy take all reasonable steps to obtain the best possible overall result for HSBC, taking into account the following execution factors which are in no particular order of priority:
- the price at which the order could be executed;
- the costs that will be payable by the client as a result of the execution of the order;
- the size and nature of the order;
- the speed of execution and settlement of the order;
- the likelihood that the order will be executed and settled; and
any other consideration that is relevant to the execution of the order.
(b) The Broker acknowledges that price will generally merit a high relative importance when obtaining the best possible result for HSBC, and will also take into account the following criteria when determining the relative importance of the execution factors which may result in our affording higher priority to one of the other execution factors:
- the characteristics of HSBC;
- the size and any other characteristics of the order;
- the characteristics of the financial instruments that are the subject of the order; and/or
- the characteristics of the execution venues to which the order may be directed.
except to the extent that the Broker executes the order following a specific instruction from HSBC, in which case the specific instruction may supersede one or more of the above factors.
(c) The Broker will act in accordance with the best interests of HSBC when placing orders with other entities, or transmitting orders to other entities, for execution. The Broker will also take all reasonable steps to obtain the best possible result for HSBC in accordance with its order execution policy, except to the extent that the Broker places an order with, or transmits an order to, another entity for execution following a specific instruction from HSBC.
(d) The Broker shall have in place systems (to be reviewed annually) to evidence that the Broker is providing HSBC with best execution in full compliance with the obligations. The Broker shall provide such evidence promptly upon HSBC’s request.
(e) To the extent that the Broker may owe any obligation to HSBC under the rules of the FCA or relevant European Economic Area (“EEA”) regulations, the Broker shall treat the obligation set out in this clause 2 as distinct, applying irrespective of whether the Broker operates within or outside of the EEA.
(f) In the event of any inconsistency between the provisions of this clause 2, the Broker’s order execution policy or the Broker’s terms of business, the provisions of this clause 2 shall prevail.
(g) In the event that the Broker arranges for any order to be effected with or through the agency of an intermediate broker, who may be the Broker‘s affiliate, and may not be in the United Kingdom, the Broker shall exercise reasonable care in the selection of intermediate brokers and other agents selected in connection with this letter. Prior to such selection of the intermediary broker, the Broker shall undertake know-your–customer checks and other required due diligence using a standard of care expected of the Broker under the rules, applicable law, regulation or fiscal requirement, operating procedures or market practice of any relevant exchange, regulator, clearing system or market (“Applicable Rules”). The Broker remains responsible in such capacity of a principal to HSBC for any act or omission of an intermediate broker or agent. No responsibility will be accepted for intermediate brokers or agents selected by HSBC.
HSBC hereby instructs the Broker to transaction report executed transactions to an appropriate exchange or authorised reporting entity to the extent required by applicable laws and regulations. Where this clause 3 applies, the Broker must notify HSBC prior to any change in the Broker’s regulatory status.
Trade repository reporting
To the extent that HSBC has any trade repository reporting obligations which apply to transactions entered into through the Broking Services under any applicable law or regulation in any jurisdiction, the Broker must provide HSBC with counterparty information promptly to enable HSBC to meet its reporting obligations.
Anti-Bribery, Anti-Money Laundering and Sanctions Compliance
HSBC agrees to accept the Broking Services on condition that the Broker (i) has not violated and will not violate any applicable anti-bribery or anti-corruption or anti-money laundering or sanctions laws; and (ii) has instituted and maintained policies and procedures designed to promote and achieve compliance with such laws (the “Financial Crime Conditions”).
The Broker will immediately notify HSBC if the Broker is at any time unable to comply with the Financial Crime Conditions
The Broker shall:
(a) refrain from directly or indirectly using any payment received from HSBC for any purpose which would result or could reasonably be expected to result in a breach of the Financial Crime Conditions; (ii) conduct its business in compliance with applicable anti-bribery, anti-corruption, anti-money laundering and sanctions laws; and (iii) maintain policies and procedures designed to promote and achieve compliance with the Financial Crime Conditions;
(b) promptly do all such acts as HSBC may reasonably specify to facilitate HSBC’s compliance with applicable anti-bribery, anti-corruption, anti-money laundering and sanctions laws in connection with the Broking Services.
HSBC reserves the right to suspend or terminate the Broking Services on immediate written notice if HSBC becomes aware of a breach of the Financial Crime Conditions. Such termination shall be without prejudice to the completion of transactions entered into but not completed prior to termination. The Broker shall not accept any new orders following termination, but will be obliged to settle any outstanding transactions under the Applicable Rules. If applicable, the Broker shall, as soon as reasonably practicable after termination of the Broking Services, deliver to HSBC any cash or securities it may hold belonging to HSBC.
Use of Social Media
HSBC is committed to complying with the highest standards of business conduct. As part of this commitment, all HSBC employees in Markets and Securities Services (MSS) undertake periodic training regarding the use of mobile phones and other remote devices. In particular, MSS personnel are prohibited from using any form of social media (including, but not limited to, WhatsApp, LINE, Confide and Facebook Messenger) to communicate with external parties, including Brokers, with respect to any of the bank’s business activity, whether regulated or unregulated.
HSBC would request the Broker community to respect this policy and to notify their personnel to refrain from using social media with MSS personnel other than for strictly non-business communications. If you identify prohibited communications as described above with HSBC personnel, please notify us immediately.
Gifts and Entertainment policy pertaining to Brokers.
HSBC operates a no tolerance approach to bribery and corruption, which includes any attempt to use gifts, entertainment, or other advantages to improperly influence, bribe, or corrupt. The below points apply to all HSBC staff and HSBC requests and requires that you do not propose any activities to HSBC staff which contradict the below:
- Receiving gifts sent by Brokers is not permitted except for low value branded marketing items.
- Attending an entertainment event provided and paid for by a broker (e.g. sporting events) is not permitted.
Breakfasts, lunches or dinners with a Broker are allowed on the basis that HSBC is paying for its proportional share subject to HSBC internal pre-approval.
Market Liquidity Information.
HSBC has internal guidelines on market liquidity information and requests and requires you to observe the following:
- the counterparties’ names (either explicitly or using code names or in other identifiable way) should not be shared with HSBC staff, unless (i) such information is generally available in the public domain, (ii) the counterparty’s name is a factor of pricing e.g. Credit Support Annex, or (iii) where disclosure of the counterparty name is required to conclude an agreed broker transaction with the said counterparty (e.g. as is the practice in the name passing broker model), and in each case does not breach any client confidentiality;
- the geographical region of those counterparties can be shared with HSBC staff;
- similarly, we expect you to apply the same disciplines and protocols, as stated above, when communicating to your clients with respect to HSBC; and
- permanent chat rooms with brokers can be set up, subject to two HSBC traders being present, including at least one senior trader.
Failure to comply with the Minimum Service Terms of HSBC as set out in these Terms of Dealing for Brokers will negatively affect HSBC’s relationship with a Broker and may lead ultimately to HSBC’s ceasing to use a Broker’s services.