Terms of Brokerage

The purpose of this Statement of Brokerage Services is to set out the basis and framework upon which STX Services B.V. ("STX") provides brokerage services to its customers. It contains an overview of certain market conventions and practices adopted by STX.

Markets in particular products may also follow other conventions and practices so this statement is not an exhaustive summary of all practices. The broking practices described in this document address STX's provision of broking and execution services but do not modify or supersede contractual arrangements with customers.

Brokerage Function

STX provides broking services to its customers by acting as an intermediary or arranger of transactions to facilitate the agreement between principals to consummate a transaction. STX's client base varies by product and includes industrial parties, utilities, banks and other market counterparties. STX adds value to its customers by (i) improving price discovery and transparency, (ii) enhancing liquidity, (iii) facilitating information flow, and (iv) providing a degree of anonymity and confidentiality appropriate to each marketplace.

STX works with multiple customers as it sources liquidity for its customers. The interests of its customers may well be in conflict. STX aims to balance the interests and expectations of multiple participants involved in or contemplating a particular transaction, as well as to act in a manner that furthers the interests of all participants in the maintenance of an active marketplace. It does not serve as a fiduciary to its customers who must decide for themselves whether or not to enter a transaction.

Name Give up and Matched Principal Brokerage

STX provides brokerage services both on a name give-up and matched principal basis, depending upon the nature of the particular product, the market and client requirements:

  1. Name Give Up. STX acts as an "arranger" to connect buyers and sellers and to assist in the negotiation of the price and other material terms of the transaction. STX generally discloses the identity of the counterparties only at the point at which the parties agree and commit to other terms so that at that stage the transaction is subject only to credit approval of the counterparty. Following disclosure of the identities of the parties the transaction is binding conditional only on a credit check and approval. A party may only withdraw from the transaction for bona fide credit reasons.

    The buyer and the seller clear and settle the transaction directly either through the relevant exchange, or the appropriate market mechanism. In some markets STX matches buyers and sellers and submits executed trades in its own name to the relevant exchange and/or clearing house prior to those trades being given up to the underlying counterparties' clearers.

  2. Matched Principal Capacity. For certain products, STX serves as the counterparty for the identified buyers and sellers in matching, in whole or in part, reciprocal back-to-back trades and earns a margin in the capacity of a "matched principal".

Price Disclosure

Voice Brokered Markets. In voice brokered markets, price discovery is generally done by voice and through electronic communications. STX may seek to source a counterparty based on a firm request from a customer that specifies some or all of the trade parameters. In other situations, STX may be asked or expected to work a contingent order, and to do this may adjust the contingent order to reflect changes in the price of, or shifts in the curves relating to, underlying instruments or indices with which the instrument(s) that is the subject of the order correlate.

Electronic Markets. In electronic and hybrid markets, including STX Auctions, the price discovery process takes place through information posted on screens. In pure electronic markets all posted orders are firm and sorted by time, price, size and priority according to the non-discretionary rules of the system.

Brokerage Fees

In Name Give-up markets, STX will charge a fee that is separate from the transaction price. In Matched Principal markets, the fee will typically take the form of a margin between the buy and sell transaction prices.

For certain products, a brokerage fee is paid by both participants in the trade. For other products, the brokerage fee is paid by one of the participants in the trade.

The brokerage fee paid to STX may be negotiated on a deal by deal basis or be charged at a standard agreed rate.

Anonymity and Disclosure

In accordance with general market practice, in Name Give-up products markets STX generally operates in an anonymous fashion prior to the point of execution. Liquidity and transparency in the marketplace are best served by maintenance of confidentiality. Counterparty names are only disclosed once the parameters are agreed and the counterparties request disclosure to complete the transaction. On disclosure, the counterparties are committed to the transaction subject only to credit approval, and counterparties must not unreasonably withhold or delay that approval.

In matched principal markets, STX employs reasonable efforts to maintain the confidentiality and anonymity of the identity of customers involved in or contemplating participating in a transaction. Similarly, in "name give up" markets, STX seeks to employ reasonable efforts to maintain anonymity during the pre-matching period, and during the post-trade period, it will generally disclose the identity of a customer participating in a trade only to the other participants in that trade.

There may be circumstances where the identity or creditworthiness of a customer is a material term of the transaction or price that could adversely affect the broker's ability to reflect an accurate market. In such situations, STX reserves the right without prior notice to disclose the identity of a customer to the extent it reasonably believes such information could constitute a material term for another party contemplating participating in such a transaction.

Non Circumvention

Introduction by STX of a potential counterparty may lead to a transaction and to STX earning a commission. The customers who receive an introduction shall not circumvent or attempt to circumvent the terms of the brokerage agreements or payment of a commission to STX. In the interests of retaining a liquid and transparent market, upon disclosure of a counterparty identity by STX, a party should not endeavor to circumvent STX in that or subsequent transactions to contact and deal direct.

Publication of Trade Information

In hybrid markets, a transaction is carried out through a voice broker, STX is able to publish a record of that transaction on the screen used for electronic brokerage of that product or by other means so that it is made available to other participants in the marketplace. In the absence of a request from its customer not to publish the transaction, STX will publish the record of such transactions.

STX recognizes that its customers may in certain situations prefer that such transactions not be published on the screen (such as block trades or trades in illiquid or volatile assets) and, when requested to refrain from such publication, STX will seek to honour its customer's request to the extent practicable, and to the extent that other participants in the trade agree to the request. STX believes that in most circumstances the marketplace is best served when trades conducted through voice brokers are published on screen, and encourages its customers to share and act upon that view.

Telephone Conversations Recorded

STX records all telephone conversations, conducted with its Clients and such recordings may be used as evidence in the event of a dispute and by conducting business with STX the clients consent to this recording. The Client must notify its employees of this consent and obtain their consent to that recording if required by law.

Entertainment Policy

STX views business entertainment with its customers as an opportunity to strengthen its business relationships with customers and STX's and its customers mutual understanding of each other's business needs and concerns. STX company policy stipulates that business entertainment not be excessive, too frequent, lavish or inappropriate, and that conflicts of interest are avoided.