Our terms of dealing for brokers

The Terms of Dealing documents set out some of the key aspects of the relationship between HSBC and its brokers when transacting in various products. These Terms of Dealing documents can be found within the following pages and may be updated from time to time.

In connection with any broking, introducing and arranging services provided to the Global Markets division of HSBC Bank plc (“HSBC”) by a party (the “Broker” or “you”)(the “Broking Services”)and in accordance with the rules of the UK Financial Conduct Authority (“FCA”), the Commodity Futures Trading Commission (“CFTC”), and other applicable regulatory requirements, 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.

Service standard

HSBC requires the Broker at all terms 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, the FCA’s prohibition on payment for order flow 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.

Best Execution

To the extent that the Broking Services include order execution services to HSBC, 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, in no 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, the Broker’s order execution policy or the Broker’s terms of business, the provisions of this clause 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.

Transaction reporting

In the event that the Broker is authorised and regulated by a regulator of an EEA member state, HSBC hereby instructs the Broker to transaction report executed transactions to an appropriate exchange or authorised reporting entity. Where this clause applies, the Broker must notify HSBC prior to any change in regulatory status.

Trade repository reporting

Under Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories and Title VII of the US Dodd-Frank Wall Street Reform and Consumer Protection Act, HSBC has certain trade repository reporting obligations (the “Reporting Obligations”). Where the Reporting Obligations apply to transactions entered into through the Broking Services, 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.

Pre-trade Disclosure and Suitability Obligations

As a registered Swap Dealer (‘SD’) under the Dodd-Frank Wall Street Reform and Consumer Protection Act ('DFA'), HSBC owes certain U.S. Person counterparties as defined under Title VII (‘U.S Persons’) a number of pre-trade disclosure and suitability related obligations. Under the final guidance, the CFTC’s interpretation of the term ‘U.S Person’ generally encompasses: (1) persons (or classes of persons) located within the United States; and (2) entities that may be domiciled in the United States or entities that operate outside the United States with swap activities that have a "direct and significant connection with activities in, or effect on, commerce of the United States."

As a SD these obligations cannot be satisfied if the Broker transacts with such counterparties on an anonymous basis either (i) in the voice market or (ii) when transacting on a venue that is not a Swap Execution Facility (“SEF”) or Designated Contract Market (“DCM”). These requirements exclude other swap dealers or major swap participants (“Eligible Persons”).

Accordingly, the terms set out below apply to any Broker when facilitating anonymous (i) voice executed transactions for HSBC or (ii) quotes electronically not on a SEF or DCM:

(i) all executable or “firm” quotes in respect of Swap transactions (“Quotes”) that are provided by HSBC through the Broker and transmitted by the Broker to counterparties whose identity is not known to HSBC on or prior to the time of transmission (such Quotes, “Anonymous Quotes”) are intended by HSBC solely for transmission to, and are only valid with respect to counterparties that are Eligible Persons.

(ii) HSBC will not be bound to enter into any Swap transaction that is based on an Anonymous Quote if the counterparty procured by the Broker is a US Person who is not an Eligible Person. HSBC will not be responsible for any liabilities or penalties arising from the Broker’s transmission of Anonymous Quotes to non-Eligible Persons.

Contact us

To discuss service offerings from Global Banking and Markets, kindly speak to your relationship manager.