XTX Markets Limited (“XTX”) believes in greater transparency in the foreign exchange market for its end users. As part of its efforts to promote this, the below disclosures provide transparency on XTX’s business practices and the pricing streams that XTX provides. Your entry into foreign exchange transactions with XTX will be on the basis that you have read and understood the below disclosures. These disclosures may be updated from time to time by notice to you and your continued trading with XTX following such notice shall be deemed to constitute acceptance and acknowledgement that you have read and understood the terms. If you have any questions or would like any further information, please contact your XTX representative.
XTX’s view is that the manner in which it trades, and the level of transparency (as outlined below) that it provides, reflects best market practice and should be a standard to which all market participants should adhere to. If you have any questions or would like any further information, please contact your XTX representative.
About XTX’s eFX Business
XTX is a leading quantitative-driven electronic market maker that provides liquidity to counterparties, exchanges and e-trading venues globally. XTX provides liquidity to many different counterparties and trading venues. In relation to its market making activities, XTX will also enter into transactions in order to source liquidity, as part of its own trading activity and in order to manage its risk. Such transactions may impact the prices that XTX offers you. Although trades are given up to XTX’s prime broker, XTX trades in a principal capacity when dealing with you and does not act as agent or in any other advisory capacity.
XTX’s trading is fully automated. It has no human discretionary traders and does not accept orders from counterparties or offer agency execution. XTX only streams quotes. As there is no human discretion involved with any execution of your trade request by XTX, conflict issues which may arise with other liquidity providers who utilise human discretionary traders (i.e. deciding at what time that order is executed as against other counterparty orders and orders in relation to own account activity, how orders at a fixing rate are executed, what venue the order should be executed on and how that order should be handled given the person’s knowledge of the counterparty’s intended trading activity) are unlikely to occur. Conflict of interests may also arise between counterparty orders and the dealer’s own discretionary positions. As XTX does not take orders and its own trading positions are not discretionary, no conflicts of interest arise. Also, XTX does not take orders at a fixing rate, so no conflict arises with respect to any trading activity carried out at times when a fixing rate is being determined.
Liquidity Streams/Last Look/No Last Look Disclosures
Every counterparty has its own trading style and liquidity requirements, which can vary greatly from counterparty to counterparty. XTX aims to tailor the liquidity it provides to each counterparty on a case by case basis, so as to meet each counterparty’s specific needs and requirements, while taking into account the market impact and volume of their anticipated trading. In order to do this, XTX provides two different types of liquidity streams, each as outlined below. Following a discussion with you as to your requirements, and with your agreement, XTX will provide you with one of the below streams. Over time, your liquidity requirements and trading volumes may change and, upon your request, XTX may agree to change the type of stream that you receive. The impact of this tailoring of liquidity are differences in pricing and trade acceptance rates between counterparties. If you require any further information as to any of the below streams, please contact your XTX representative.
Last Look Stream: When you submit a request to trade at the price currently displayed, it will be subject to a “last look” by XTX. “Last look” is a widely used term in the spot FX electronic trading market but it can mean different things to different market participants. At XTX, “last look” is used as a risk control to compare the price at which the trade request is made with the then current market price. If the difference between the two prices is within XTX’s pricing tolerance, then the trade request will be accepted and a binding trade entered into at the price that you requested. If the difference between the two prices is outside XTX’s pricing tolerance, then the trade request will be rejected and there will be no binding trade. Your request will be subject to a brief delay before an acceptance or rejection is received to allow XTX to carry out this “last look”. Retaining a “last look” enables XTX to mitigate against substantial price movements, so as to provide you with competitive market pricing and the tightest possible spreads. This does mean though that not all of your trade requests will be executed and your fill ratio will be lower than a ‘No Last Look’ stream.
Upon request, XTX can provide you with further details as to what the pricing tolerance is and how long your order will be held before “last look” is applied.
In relation to the application of the pricing tolerance, your trade request will be rejected only in the circumstances where the price moves substantially against XTX (i.e. outside of our pricing tolerance) which usually occurs due to the market impact of your execution strategy. XTX is happy to provide further detail of how this last look stream operates and how to mitigate the number of trade request rejections you may receive. If you determine that this application of last look does not suit your trading strategy, you can opt for symmetrical last look (i.e. the pricing tolerance is applied automatically to price movements in either direction, whether the pricing moves against, or in the favour of, XTX) but this may increase the number of trade request rejections that you receive and/or widen the spreads provided by XTX. For further information on the operation of our last look streams, please contact your XTX representative.
No Last Look Stream: When you submit a request to trade at the price currently displayed, it will be accepted by XTX regardless of whether there is any difference between the trade request price and the then current market price, except in the case where your trade request is for an amount larger than the maximum transaction amount that XTX displays or where such transaction if executed would breach position and/or risk limits. A counterparty on this stream will get certainty of execution but the spreads provided by XTX will be wider than a ‘Last Look’ stream, the availability of the pricing stream is subject to latency thresholds and the pricing stream may be unavailable at times of market announcements, so that XTX can manage the increased risk to which XTX is exposed.
No Hedging in the Last Look Window
Where last look applies, XTX is not active in the market during the last look window in relation to your trade request. Further, if your trade request is rejected, XTX is not active in the market after the last look window in relation to your rejected trade request. XTX is only active in the market in relation to your trade request after it has been accepted.
Use of Counterparty Information
XTX understands that the confidentiality and security of your information is paramount and it has reasonable controls in place to ensure such information is protected. As per the terms of XTX’s eFX agreements (and other than where it is aggregated and anonymised with other counterparty data), your information will remain confidential within XTX and shall only be disclosed externally where required by applicable law, rules or regulation, upon request from any court of competent authority or any regulator, or, where applicable, through the use of XTX-ray (see below), or as otherwise agreed by you.
In line with market practice and to ensure that XTX can provide you with competitive pricing, XTX may utilise your identity and observed transaction execution characteristics to determine how it manages the risk that it accepts. This means that XTX will have the ability to tailor its risk management strategy (including the period of time for which it holds the risk in relation to your executed transactions) to your transaction execution characteristics. However, XTX will never use information from rejected trade requests for this purpose and nor will it pre-hedge in the last look window (as described above); only information from executed transactions is used. Counterparties have the ability to opt-out of their information being used in this manner, provided that this is consistent with its trading with all other liquidity providers. For more information, please contact your XTX representative.
No Partial Fills
Unless otherwise requested, any trade request accepted by XTX shall be executed in its entirety. There will be no partial fills of trade requests.
No Application of Mark-Up
XTX does not apply mark-up to any of its prices. The prices that XTX provides to you will only include a bid-offer spread which may vary from counterparty to counterparty for the same or similar transactions. The spread may also vary for different trade requests that you send for the same type of transaction. The factors that XTX take into account to determine the amount of spread to be applied includes, but is not limited to, market conditions, the trading venue which we deal with you on and the size, type and direction of the transaction. However, XTX does include any cost of staff or capital charges as part of any spread. For further information on the factors taken into account to determine the amount of spread, please contact your XTX representative.
Use of XTX-ray (if applicable)
This section applies if you have elected to use XTX-ray (xray.xtxmarkets.com) (“XTX-ray”) for the purpose of viewing post-trade analytics in respect of your trading activity. In order to facilitate your access to, and use of, XTX-ray, XTX may need to disclose certain Confidential Information (as defined in the eFX Agreement), including your Transaction data, to an internet-based third-party application service provider (a “Storage Provider”) for the sole purpose of hosting and maintaining XTX-ray. The Storage Provider will receive your Transaction data delimited per currency pair, but aggregated over at least a ten minute time horizon.
The Storage Provider may store the Confidential Information on their internet-based platform until you terminate your use of XTX-ray or your trading activity with XTX. XTX has taken all reasonable steps to ensure that the Storage Provider holds Confidential Information in accordance with standards which are acceptable to XTX. XTX will periodically review the manner in which the Storage Provider holds Confidential Information and the security measures in place to prevent unauthorised access. To the extent this falls below XTX’s acceptable standards, XTX will use an alternative Storage Provider and make reasonable efforts to ensure the destruction of Confidential Information on the terminated Storage Provider’s systems.