FX Disclosures

Terms of Dealing
GTS Securities LLC (“GTS” or “the Firm”) acts solely as a principal for FX transactions. As a principal, GTS deals with counterparties in an arm’s-length capacity, and does not act as agent, fiduciary or in any advisory capacity for any FX transaction. Each counterparty should independently evaluate its own risk specific to each FX transaction that it contemplates with GTS. All GTS spot FX transactions are made for the benefit of its own account as a principal only, whether GTS is undertaking proprietary trading activities or acting as a quote provider. GTS is committed to conducting its FX-related activities in compliance with the principles of the FX Global Code.

GTS Spot FX Business
GTS may establish and maintain spot FX positions, or positions in any other product or asset class, each for a variety of purposes including risk management or speculation. GTS enters into these transactions with the sole purpose of benefiting its own trading account, whether in the course of proprietary trading or as a principal quote provider. As such, GTS does not act as an agent or fiduciary, or in any other similar capacity, on behalf of any counterparty.

GTS understands that each counterparty it transacts with may have specific goals and requirements for a given transaction. It is GTS’s intent to engage each counterparty in a transparent manner, consistent with the express agreement between the parties. In its capacity as a quote provider, GTS provides indicative pricing accordingly, while simultaneously accounting for the market impacts and expected volumes stemming from trading. In this capacity, GTS offers both firm and non-firm pricing. The specific requirements of a counterparty, upon request and approval, will ultimately determine the feed that GTS provides.

GTS acknowledges that counterparty risk profiles and market trading volumes may change over time and could impact a counterparty’s desired price feed, thus GTS may agree upon request to provide a different type of price feed. The tailoring of price feeds may result in differences in pricing and trade acceptance rates between counterparties, even those with similar profiles. Any counterparty may obtain further information as to the type of price feed it receives from GTS by contacting its GTS representative.

Conflicts of Interest
As a principal, GTS engages in both liquidity removal and traditional liquidity additive strategies. GTS’s interest as a principal quote provider and proprietary trading entity may be in direct opposition to the interests of its counterparties. Due to GTS’s involvement in proprietary trading, its activities may be influenced by risks stemming from existing GTS positions and speculative market outlook. The Firm may choose to hedge, hedge in part, or refrain from hedging any position resulting from a transaction with any counterparty, separately or in conjunction with any orders received in the course of its trading activities. This activity can inadvertently trigger stop-loss orders, barriers, knock-outs, knock-ins, and similar events, but is never done with the intent to disrupt the market.

GTS’s proprietary trading strategies will impact the indicative pricing provided to the counterparty as quotes for trading, as well as corresponding liquidity levels available for the execution of your entire request.

GTS may maintain or enter into relationships with trading venues or platforms that cause GTS to directly benefit from its trading activities with its counterparties. These benefits accrue solely to GTS and will not be shared or passed through to counterparties.

Pricing Factors as a Quote Provider
GTS price quotes are presented in good faith and are reasonably adjusted according to market conditions and risk. Price quotes may differ depending on venue and counterparty. Any order or indicative price quote is determined by a large set of criteria at the sole discretion of GTS based on proprietary methodologies.

In considering price, GTS will generally assess the following factors associated with a potential transaction:

• Size of the transaction
• Expenses in facilitating the transaction
• Credit and settlement risk
• Operational risk
• Potential profitability to GTS
• Market conditions
• GTS current risk profile

Additionally, the following aspects of a counterparty trading profile may also be used to determine the prices quoted by GTS and orders accepted:

• History of transaction size and frequency
• Historical gains and losses
• Tendency to buy or sell
• Variation from expected behavior
• Nature of the relationship with consideration for the level of service that we provide to you

Other factors that may contribute to differences between GTS’s pricing on unique platforms or venues include, but are not limited to, the following:

• Conventions of the platform or venue
• Minimum price increment
• On-the-wire time
• Parameters for accepting or rejecting orders or trade requests
• Available order or trade types
• Underlying technology or latency
• Fees and other economic considerations unique to the platform or venue
• Historic experience with the platform or venue

Electronic Order Processing and “Last Look”
GTS streams continuously updating indicative spot FX prices across a range of currency pairs via direct and indirect electronic trading platforms (collectively, “Electronic Trading Platforms”). These price feeds may be revised or withdrawn by GTS without notice, may vary by counterparty, and may differ from the spot FX prices quoted by GTS or other quote providers for identical or similar transactions.

GTS offers both Last Look indicative pricing and firm pricing. “Last Look” is a widely accepted practice that permits a quote provider to apply trade execution checks (described below) to a counterparty trade request before accepting or rejecting the request. Last Look prices are indicative prices subject to rejection if they fail any pre-trade execution checks, whereas requests at firm prices must only pass a Status Check (See Trade Execution below). Counterparties receiving firm prices may still experience rejects where their request fails Status Check, however, firm pricing feeds generally provide lower rejection rates than Last Look feeds. Additionally, counterparties should understand that firm price bid-offer spreads will likely be wider than their Last Look counterparts due to GTS’s increased risk of filling trade requests at prices unfavorable to GTS, as compared to those quoted across FX markets.

A counterparty may submit a request on an Electronic Trading Platform to trade spot FX with GTS at a streamed price or at a price specified by the counterparty. Once received by GTS, each trade request will pass through a Trade Execution phase, as described below.

Trade Execution Checks
Counterparties that request a Last Look price feed will be subject to the pre-trade execution checks explained in more detail below. It is the hold time, applied for the purpose of the “Price Check”, that is generally known throughout the FX trading industry as Last Look. Upon receipt of a trade request from these counterparties, GTS undertakes a two-step process in order to determine whether to accept or reject the trade request:

1. Status Check – GTS assesses the validity of the trade request from operational and credit risk management perspectives (the “Status Check”). When a trade request is received, GTS confirms (i) that the transactional details contained in the trade request are appropriate from an operational perspective; (ii) that the legal entity submitting the trade request has sufficient available credit with its prime broker to enter into the transaction contemplated by the trade request; and (iii) that GTS itself has sufficient available credit to enter into the transaction contemplated by the trade request. GTS may reject the trade request if the trade request fails any component of the Status Check.
2. Price Check – GTS determines whether the trade request may be executed at the requested trade price (the “Price Check”). Following a successful Status Check, GTS performs the Price Check to determine whether the requested order price is within the execution tolerance range that either of the counterparties is willing to transact. Trade requests that fall within tolerance will be accepted. Execution tolerance is determined solely by GTS and may vary by, but is not limited to, FX pair, time of day, volatility, and/or outlook on market conditions.
• Order Rejects: GTS may reject orders asymmetrically. GTS believes that a symmetrical execution tolerance will impact the counterparty in an adverse manner. While GTS curates each counterparty feed according to the terms of the trading agreement, the Firm will also apply good faith principles in rejecting counterparty requests. If a counterparty determines that a symmetrical execution tolerance applied during price check is more appropriate, GTS may accommodate at the express request from the counterparty. The counterparty should understand that a symmetrical execution tolerance will likely result in lower trade request acceptance rates.

More on Last Look
For Last Look counterparties, prices quoted are not firm offers to trade, but rather indications of prices at which GTS is most likely to transact. These price quotes are indicative of reasonable prices as determined by GTS’s proprietary valuation methods and use a variety of pricing factors as specified above. (See “Pricing Factors”). When a counterparty submits a request to GTS to transact at a GTS indicative price, the Firm will assess a number of factors during Price Verification before executing the request in full or in part. Factors considered may include, but are not limited to the following:

• Available inventory;
• Liquidity;
• Prevailing market prices;
• Prevailing market conditions;
• Anticipated loss or gain based on GTS modeling;
• GTS’s trading experience with the counterparty and/or other market participants; and/or
• Credit and product terms and filters GTS may employ for the purpose of implementing credit limits, position limits or other limits on electronic trading activities.

The above factors are illustrative only and do not limit GTS’s capacity to accept or reject any trade requests from a counterparty in any way. Additionally, these factors may be changed from time to time without notice to a counterparty. Furthermore, these factors can be applied to a counterparty differently than they are applied to other GTS counterparties.

Last Look will be applied in accordance with the parameters of execution tolerance determined by GTS. Counterparties will either be filled at the requested price or rejected.

Pre-Hedging
GTS may utilize “Pre-Hedging” as permitted by the FX Global Code. GTS may pre-hedge counterparty trade requests where GTS is acting as principal, and does so for the benefit of the counterparty. If GTS does pre-hedge a counterparty trade request, all of the pre-hedged quantity will be passed through to the counterparty, unless express counterparty agreements or exchange rules prohibit partial fills. GTS engages in pre-hedging with the intent to advantage the counterparty with optimal fill rates, but also may receive a benefit from pre-hedging the transaction.

• At times, GTS may deploy orders as pre-hedges in order to facilitate a counterparty trade request. This strategy can possibly result in an “over-hedge” of the amount initially requested by the counterparty. While done so with the knowledge that an over-hedge might result, this approach is only used with the intent to secure the counterparty’s trade request for the benefit of the counterparty. GTS, in its sole capacity as a principal, fully accepts the risks associated with the resulting over-hedge position and does not use the strategy if it believes that it would disadvantage the counterparty’s objective trade request.

Confirmations
GTS will confirm FX trades as soon as practicable after execution, amendment, or cancellation. GTS has a fully-automated confirmation solution, which is operated and monitored by an independent back office team, separate from traders.

While this disclosure applies to confirmations of trades that occur within the range of normal trading, GTS retains the right to return an accepted trade request to the customer at any time, and acceptance of a trade request does not oblige GTS to enter into any FX transaction with a customer, in whole or in part. This right is only applied in good faith to unique transactions involving substantial technical errors or severe market disruptions that do not embody the natural intents of either party to a particular transaction.

Confidential Information
All of a counterparty’s data obtained by GTS may be used by GTS and provided to counterparties on an anonymous and aggregated basis for the purpose of data analysis, risk management, compliance and proprietary trading. Order data includes, but is not limited to, the following:

• Orders executed in full or part;
• Cancelled or expired orders;
• Indications of interest;
• Quotes;
• Positions;
• Trades; and
• Other data and analytics utilizing order data.

Protecting the confidentiality and security of counterparty information is a priority for GTS. As such, reasonable measures and controls designed to safeguard confidential information are in place. In addition to the uses of counterparty data noted above, GTS may also share counterparty information as required by its legal and regulatory requirements.

Communications with GTS
Any and all communications regarding GTS’s FX business, its relationship with the counterparty, specific trade inquiries, and how this disclosure applies therein, should be directed to compliance@gtsx.com