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Order execution policy & Money laundering policy
This Policy Statement takes effect from 1st November 2007 and specifically relates to the EU Markets in Financial Instruments Directive (MiFID). In terms of this directive, Caxton FX is required to put in place an Order execution policy and to take all reasonable steps to obtain the best possible results (or 'best execution') on behalf of its Professional Clients, either when executing client Orders or receiving Orders for execution. This document summarises for Professional Clients information on Caxton FX's MiFID order execution policy. Definitions of those words highlighted in bold italics are provided at the end of the document.
We are also required to obtain consent from each Client with regard to the policy; however, the policy will not apply if you have been categorised as an Eligible Counterparty. There are two consent requirements:
Scope of Policy
Caxton FX's MiFID order execution policy applies only to Professional Clients and to regulated Financial Instruments.
Financial Instruments (see Glossary for full list) include:
Client Order Execution Policy
Caxton FX's MiFID Order execution policy applies where Caxton FX in the UK either receives an Order(s) from a Client and/or executes an Order(s) on a Client's behalf. In the case where a Client approaches Caxton FX and requests a quote, this will not be treated as an Order; the Client will conclude the transaction on the basis of the quote provided.
Client Order Execution Factors and Execution Criteria
When executing Orders on a Client's behalf, and subject to any specific instructions that may be given, Caxton FX will take all reasonable steps to obtain the best possible result for the Client taking into account the following Execution Factors:
We will determine the relative importance of each of the above factors taking account of the following Execution Criteria:
Ordinarily, price will merit a high relative importance in obtaining the best possible result. However, in some circumstances, we may appropriately decide that other factors are more important than price in obtaining the best possible execution result.
Currently, all transactions conducted with Caxton FX will be 'Over-the-counter' rather an on-exchange or MTF transaction.
A list of Execution Venues is subject to amendment from time to time and Clients should periodically check the list of Execution Venues on the site. You will not be automatically advised of any changes.
An assessment of the Execution Venues will be periodically performed with regard to each type of Financial Instrument in which Caxton FX provides execution to ensure we are able to obtain the best result for Clients when executing Orders.
In considering selection of the most appropriate Execution Venue, and subject to specific instructions that may be given by you, Caxton FX will, after due regard to the Execution Factors and Execution Criteria set out above, adopt the following practice:
We will consider all sources of reasonably available information, including MTFs, local exchanges, brokers and data vendors, to obtain the best possible result for the Client Order where Caxton FX acts as the Execution Venue.
Methods of Execution
Subject to any specific instructions that may be given by you, Caxton FX will implement its best execution policy using one or a mixture of methods.
Conditional upon having obtained your prior express consent (please see the Consent section at the beginning of the document), in cases where we are executing outside a Regulated Market or MTF, the Order may be matched with an Order from another Caxton FX Client and/or Caxton FX will act as the Execution Venue.
Execution can take place directly on a Regulated Market or MTF or, where we are not a direct member of the relevant Regulated Market or MTF, Caxton FX will execute with a third party participant with whom we have entered into an agreement for handling Orders for that Regulated Market or MTF. Specific Client instructions
Where you give us a specific instruction with regard to the execution of an Order, we will execute the Order in accordance with those specific instructions. Where instructions are given by you that relate only to part of the Order, Caxton FX will continue to apply its MiFID Order execution policy to those elements of the Order not covered by your specific instructions.
You should be aware that providing specific instructions to us in relation to the execution of a particular Order may prevent us from acting wholly or partly in accordance with our MiFID Order execution policy to obtain the best possible result in respect of the elements covered by those instructions.
Monitoring and Review
Caxton FX will monitor the effectiveness of its MiFID Order execution policy and, where applicable, correct any shortfalls that we may identify.
We will review our Order execution arrangements periodically. We will also review our MiFID Order execution policy annually, and whenever a material change occurs that affects our ability to continue to obtain the best possible results for our Clients.
We will notify you of any material changes to our execution arrangements or our MiFID Order execution policy by posting an updated version of this document on www.caxtonfx.com
Throughout this document, each of the terms that are highlighted in bold italics is defined as follows:
Client - has the same meaning as Professional Client (see definition below).
Eligible Counterparty - each of the following is a per se Eligible Counterparty:
Additionally, a firm may treat a client as an elective Eligible Counterparty if:
Execution Venue - means a Regulated Market, an MTF, a market maker or other liquidity provider or an entity that performs a similar function to that performed by any of the foregoing.
Financial Instruments - includes instruments specified in Section C of Annex I of MiFID, that is:
For clarity, "Financial Instruments" do not include spot transactions, loans and certain exclusions apply to commodities.
MiFID - means the Directive 2004/39/EC of the European Parliament and the Council of 21 April 2004 on Markets in Financial Instruments and any implementing directives and regulations.
Multilateral Trading Facility ('MTF') - means a multilateral system, operated by an investment firm or a market operator, which brings together multiple third-party buying and selling interests in Financial Instruments - in the system and in accordance with non-discretionary rules - in a way that results in a contract in accordance with the provisions of Title II of MiFID. Caxton FX - means Caxton FX Limited, London Branch, which is authorised and regulated by the Financial Conduct Authority.
Order - means as instruction to buy or sell a Financial Instrument which is accepted by Caxton FX for execution or transmission to a third party.
Professional Client - The following are known as per se Professional Clients unless otherwise treated as an eligible counterparty:
1) An entity required to be authorised or regulated to operate in the financial markets. Including the following:
In relation to MiFID or equivalent third country business, a large undertaking meeting two of the following size requirements on a company basis:
3) A national or regional government, a public body that manages public debt, a central bank, an international or supranational institution (such as the World Bank, the IMF etc) or another international organisation.
4) Another institutional investor whose main activity is to invest in financial instruments (in relation to the firm's MiFID or equivalent third country business) or designated investments. This includes entities dedicated to the securitisation of assets or other financial transactions.
Elective Professional Clients - firms can decide to opt-up retail clients into Professional Clients based upon an assessment of their knowledge and experience and understanding of the risks involved.
Please see the criteria laid down in Annex II of MiFID for further details.
Regulated Market - means a multilateral system operated and/or managed by a market operator which brings together or facilitates the bringing together of multiple third-party buying and selling interests in Financial Instruments - in the system and in accordance with its non-discretionary rules - in a way that results in a contract, in respect of the Financial Instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with the provisions of Title II of MiFID
Caxton FX is fully committed to protecting the integrity of its transfer system - find here our strict Anti-Money Laundering policy.
What am I asked to do?
When you apply for a Caxton FX currency card, you will be asked to confirm your identity and other personal details. Caxton FX has established special verification systems to confirm your identity.
You could be asked to confirm your identity whether you are applying to be a new customer or have been a customer for some time. While our identity verification systems are designed to minimise any inconvenience for you, the verification process may take a day or so to complete.
Crime and terrorism need cash. Criminals turn the 'dirty' money made from drug smuggling, trafficking and other organised crime into clean money by using false identities or taking the names of innocent people - like you. Making sure that people are who they say they are is essential in the fight against crime and terrorism. This does not mean in any way that suspicion is falling on you. Any information about your identity is held confidentially and will help stop your identity being used falsely.
Who is involved?
HM Government and all organisations involved in financial services - all are united in their determination to stop the spread of financial crime as part of the international effort to protect us all against crime and terrorism.
Your co-operation is vital to the successful fight against crime and terrorism.
What the UK law requires
Payment Services Regulations
The new Payment Services Regulations ('PSRs') came into effect on 1 November 2009. These regulations are part of a Europe-wide directive that aims to harmonise the way that payments are made across the EEA, making them faster, easier and more transparent for the customer.
The regulating body in the UK is the Financial Conduct Authority (FCA). The PSRs require companies that offer "payment services" (ie transfer money for you) be either registered or authorised by the FCA. From 1st November 2009, such businesses are now known as Payment Institutions (PIs).
There are differences between 'Registered' and 'Authorised' firms, most notably that companies below a turnover of €3m per month may register as a smaller PI which carries less stringent regulatory requirements. However, they are required to abide by the Conduct of Business rules (COBs) which determine how companies may conduct their business with customers.
Larger companies that apply to be Authorised PIs must meet initial and ongoing requirements for maintaining certain levels of capital within their business and must comply with arrangements to safeguard their customer funds if they hold those funds overnight or longer. They will also have to meet stringent criteria set by the FCA in terms of corporate governance, solvency and risk identification and management.
As of 1st November 2009, Caxton FX Ltd is regulated and authorised for the provision of payment services. Please click here for a full list of our permissions. For more information on PSRs, please visit the FCA's website here: www.fca.gov.uk
The information below sets out the classes of business that Caxton FX is authorised to undertake.
Authorisations under PSR 2009: Authorised Payment Institution
Authorisations under EMR
Authorisations under FSMA 2000: Able to hold and control client money
Advising on investments
Caxton FX Ltd is registered with HM Revenue and Customs as a Money Service Business registration number 12149429. Caxton FX Ltd - Authorised and Regulated by the Financial Conduct Authority. Registered in England and Wales, No 431844. Registered Office: Portland House, Bressenden Place, London SW1E 5BH.
We have compiled a list of common questions in our FAQ section
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