Terms & Policies

1. Purpose

The purpose of this Policy is to specify the procedures put in place by StoneX Europe (hereafter the ‘Company’), for identifying and responsibly preventing or managing and controlling and, where necessary, disclosing the conflicts of interests arising in relation to its business and to reduce the risk of the Client disadvantage and reduce the risk of legal liability, regulatory censure or damage to Company’s commercial interests and reputation and to ensure that it complies with legislative requirements and the departmental and general procedures which are set by its Internal Operations Manual (IOM).

2. Legal Framework

Generally, in accordance with legal framework governing Cyprus Investment Firms (hereafter ‘CIFs’) and in particular, the Investment Services and Activities and Regulated Markets Law of 2007 (“Law” or “L. 87(I)/2017”) and Delegated Regulation 2017/565, CIFs are required to establish, implement and maintain an effective conflict of interest policy set out in writing and appropriate to the size and organization of the CIF and the nature, scale and complexity of its business.

3. Policy

For the purposes of identifying possible conflicts of interest, the Company has established and maintains this Policy which is set out in writing and is available to any of the (Prospective) Clients of the Company through its website.

The Policy contain, inter alia, provisions on the following:

a) identify with reference to the investment and ancillary services carried out by the Company, the circumstances which constitute or may give rise to a conflict of interest entailing a material risk of damage to the interests of one or more Clients’

b) specify procedures to be followed and measures to be adopted in order to prevent or manage such conflicts.

a) The Company or a relevant person, or a person directly or indirectly linked by control to the Company, is likely to make a financial gain or avoid a financial loss, at the expense of the Client;

b) The Company or a relevant person, or a person directly or indirectly linked by control to the Company, has an interest in the outcome of a service provided to the Client, or of the transaction carried out on behalf of the Client, which is distinct from the Client’s interest in that outcome;

c) The Company or a relevant person, or a person directly or indirectly linked by control to the Company, has a financial or other incentive to favour the interest of another Client or group of Clients over the interests of the Client;

d) The Company or a relevant person, or a person directly or indirectly linked by control to the Company, carries on the same business as the Client;

e) The Company or a relevant person, or a person directly or indirectly linked by control to the Company, receives or will receive from a person other than the Client an inducement in relation to a service provided to the Client, in the form of money, goods or services, other than the standard commission or fee for that service.

4. Personal Transaction of Employees

All employees of the Company that are involved in the investment activities that the Company is authorized to provide, must be aware of the restrictions on personal transactions detailed below. This section also includes personal transactions which may be performed by persons who are employed by companies which perform an outsourced activity to the Company, if any. If any prohibited personal transactions are entered into, the Company must be notified promptly.

Employees of the Company that are involved in the provision of investment services or other activities must not enter into the personal transactions which will cause the following:

• Transactions which are prohibited under section 9 of the Insider Dealing and Market Manipulation (Market Abuse) Law;

• misuse or cause improper disclosure of confidential information;

• enter into a transaction that is likely to conflict with any obligations of the Company, or the employee, that are stated under the law.

5. Internal Reporting Conflicts of Interests

In the case of identification of a possible conflict of interest, a staff member must refer it initially to his immediate supervisor to assist in the assessment of a material risk of damage and send a completed Conflict of Interest Notification Form together with full details to allow regulatory scrutiny of:

• corrective and preventive actions;

• how these actions were considered appropriate;

• any conditions imposed; and 

• whether there are still ongoing conflicts, how these are being managed and advised to the Client; 

6. Management of Conflicts of Interests

Independence

The following measures have been adopted by the Company for ensuring the requisite degree of independence:

• Measures to prevent or control the exchange of information between relevant persons engaged in activities involving a risk of a conflict of interest by establishing Chinese walls amongst the various departments with clear reporting lines);

• Separate supervision of relevant persons whose principal functions involve carrying out activities on behalf of, or providing services to, Clients whose interests may conflict, or who otherwise represent different interests that may conflict, including those of the Company. The Company’s departments whose interests may conflict with Clients of the Brokerage and Dealing on Own Account Departments;

• Removal of any direct link between the remuneration of relevant persons principally engaged with one activity and the remuneration of, or revenues generated by, different relevant persons principally engaged in another activity, where a conflict of interest may arise in relation to those activities:

i. Dealing Desk Department employees do not relate their remuneration with the Clients’ performance;

ii. Dealing on Own Account Department employees do not relate their remuneration with the Clients’ or Company’s performance.

• Measures to prevent or limit any person from exercising inappropriate influence over the way in which a relevant person carries out investment or ancillary services or activities. Additionally, the person who decides or influences an individual’s bonus may exert undue influence over that individual’s integrity of judgment. The company has established control mechanisms such as monitoring of client communication, training of all its employees according to their daily tasks and set up a two persons signatories rule whenever this is deemed necessary;

• Measures to prevent or control the simultaneous or sequential involvement of a relevant person in separate investment or ancillary services or activities such as reception and transmission of Clients’ orders. The company secures that every department is staffed by knowledgeable and professional employees and that all functions are performed from different teams under separate supervision.

Chinese Walls

Chinese walls are essentially information barriers which are used to prevent inside, or highly confidential information possessed by one part of the business from being inappropriately passed to, or obtained by, another part of the business.

When a Chinese wall is used as a way of managing conflicts of interests, individuals on the other side of the wall will not be regarded as being in possession of knowledge denied to them as a result of the Chinese wall. For example, where arrangements have been put in place to ensure that entities belonging to the same group operate independently of each other with effective Chinese walls, the entities shall not be deemed to have knowledge of each other for conflicts of interest purposes.

Segregation of Duties

The Company strives to ensure that the performance of multiple functions by its relevant persons does not and is not likely to prevent those persons from discharging any particular functions soundly, honestly and professionally.

The Company is aware that effective segregation of duties is an important element in the internal controls of a firm in the prudential context. In particular, it helps to ensure that no one individual is completely free to commit the firm’s assets or incur liabilities on its behalf. Segregation also help to ensure that the firm’s governing body receives objective and accurate information on financial performance, the risks faced by the firm and the adequacy of its systems.

Dealing Own Account

The Company deals as a counterparty to the Clients’ transactions, which inherent conflicts of interest.

The following measures were implemented by the Company so as to comply with its obligations to prevent and manage conflicts of interest as well as to act honestly, fairly and professionally in accordance with the best interests of its clients, and to execute orders on terms most favourable to the client:

a) Leverage

The Company implements has set up the following leverage limits in order to mitigate the potential conflict of interest between the Company and retail client stemming from the use of leverage:

• 30:1 for major currency pairs;
• 20:1 for non-major currency pairs, gold and major indices;
• 10:1 for commodities other than gold and non-major equity indices;
• 5:1 for individual equities and other reference values and
• 2:1 for cryptocurrencies.

b) A margin close out rule on a per account basis.

This will standardize the percentage of margin (at 50% of minimum required margin) at which providers are required to close out one or more retail clients’ open CFDs accounts;

c) Negative balance protection on a per account basis.

This will provide an overall guaranteed limit on retail client losses;

d) Restrictions on the incentives offered to trade CFDs;

e) Standardized risk warning, including the percentage of losses on a CFD provider’s retail investor accounts.

 
  Conflicts of Interest Policy

Business Model

The Company does not outsource the responsibility of executing clients’ orders to any other third party as this is one of the core aspects of our business and the main obligation towards our clients. According with the Company’s Order Execution and Dealing on Own Account policies, the Company shall always remain responsible for the execution of Clients’ orders. Considering the responsibilities of the Company in regard to the execution of Clients’ Orders as a Market Maker, it is noted that the Company takes all the reasonable steps to obtain, when executing orders, the best possible results for its clients taking into account prices, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order. To mitigate the conflict of interest arising from dealing with our clients as a counterparty, the Company operates under the Matched Principal Model, and as a result all our trades are fully hedged on a back-to-back basis with another entity of the StoneX group, always under best execution arrangements. Therefore, the Company secures that its profit will result only from the spread and commissions (where applicable) and not by the clients’ profit or loss based on their trading activity.

Further to the above, SEL does not provide any Investment Advice to its Customers in order not to influence in any way the Customers’ trading decisions.

Selection of Liquidity Provider

The criteria that have been taken into consideration from the Company for its decision to collaborate with StoneX Financial Limited (hereafter ‘SFL’ or ‘LP’), are the following:

a) Availability of the financial instruments the Company wishes to trade;
b) Price and costs;
c) Speed;
d) Likelihood of execution and settlement;
e) Regulatory status;
f) Reputation of the execution venue;
g) Other Best execution criteria.

To secure that quality and Best Execution services are offered to the clients, the Company will periodically evaluate the factors and metrics and specific trading statistics resulting from the offered services such as the frequency of requotes or rejected orders.

StoneX Europe on a going basis evaluate and monitor the quality of Best Execution, it records any discrepancies, escalates any serious deficiencies to the Senior Management and takes corrective measures.

Overall, the Company has implemented a governance structure to ensure that its best execution arrangements deliver the best possible result on a consistent basis in terms of total consideration (the price of the financial instrument and the cost for the client related to execution). Monitoring and regular reviews are crucial to ensure compliance with Best Execution practices.

Additional Measures

The Risk Management department will ensure by means of regular checks and inspections that the abovementioned procedures and controls are being followed. Furthermore, the Internal Auditor shall be responsible for monitoring and supervising all the procedures and controls regarding the Company’s conflict of interest policy, at least once a year.

Record Keeping

The Company keeps and regularly updates a record of the kinds of investment and ancillary service or investment activity carried out by or on behalf of the Company in which a conflict of interest entailing a material risk of damage to the interests of one or more Clients has arisen or, in the case of an ongoing service or activity, may arise.