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CFTC Swap Dealer Disclosures and Notices

Coex Partners is a division of Tullett Prebon Securities Ltd (TPSL).  TPSL is provisionally registered with the U.S. Commodity Futures Trading Commission (CFTC) as a non-U.S. swap dealer (NFA ID: 0304063. LEI number: 549300BMVW85YF9FGN67) pursuant to the Commodity Exchange Act (CEA), as amended by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act). The CEA and the CFTC rules promulgated thereunder impose regulatory requirements on swap dealers, including business conduct standards with respect to the execution of swaps with certain counterparties.

These business conduct standards mandate that TPSL provide certain disclosures of material information at a reasonably sufficient time prior to entering into a swap transaction with its swap counterparties (other than counterparties that are swap dealers, major swap participants, security-based swap dealers or major security-based swap participants) to allow the counterparty to assess the material risks and material characteristics of the swap and the material incentives and conflicts of interest that TPSL may have in connection with the swap.

If you are a swap dealer, major swap participant, security-based swap dealer or major security-based swap participant or if you are a non-U.S. person to which TPSL is not required by the CFTC to provide these disclosures, the disclosures outlined below are not intended nor provided for your use.

Disclosure of Material Information

Pursuant to CFTC Regulation 23.431(a), TPSL is hereby providing you with the ISDA General Disclosure Statement and Disclosure Annex relating to particular swap transaction types, which describing the following:

  • Material characteristics and risks of swaps transactions
  • Material characteristics of swaps transactions related to certain underlying reference asset
  • Material incentives and conflicts of interests that might exist when entering into a swap transaction with TPSL

 

These disclosures documents, including certain asset-class-specific disclosures relating to interest rate may be found here:

https://www.isda.org/2018/03/01/general-disclosure-statement/
https://www.isda.org/2018/03/01/interest-rate-derivatives-disclosure-annex/

These disclosures shall be deemed to be supplemented by any such additional information and disclosures included in any transaction-specific documentation exchanged between us, including any derivatives master agreement or amendment thereto, swap transaction term sheet, pre-trade confirmation or master confirmation agreement, or such other communications exchanged between us incorporating such additional information with respect to a swap or proposed swap (“Transaction Disclosures”). In the event of any conflict between such Transaction Disclosures and other (more generic) disclosures, the Transaction Disclosures shall prevail.

You should not construe the content of any of the materials herein or disclosures provided as legal, financial, tax, accounting or other advice, and you should consult your own attorney, financial advisor, tax advisor or accountant as to legal, financial, tax, accounting and related matters concerning the materials and disclosures provided.

Nothing in the materials or disclosures provided amends or supersedes the express terms of any swap transaction between you and us.

In the context of discussing, proposing or entering into a swap with TPSL, you should refer to any transaction-specific disclosures, material economic terms and any other documentation provided to you by TPSL, as well as to the disclosures provided in this communication.

Copyright for ISDA disclosures

ISDA (or its affiliates) holds copyrights to certain of the documents to which hyperlinks are provided herein.  Those documents may not be reproduced or distributed without ISDA’s written permission, as applicable; provided, however, that the ISDA Master Agreements, ISDA Credit Support Documents and standardized general and product-specific risk disclosures published by ISDA and other documents expressly excepted on ISDA’s website, as applicable, may be reproduced and distributed solely for use in documenting specific commercial transactions. ISDA provides certain disclaimers to the documents to which hyperlinks are provided herein that you are hereby deemed to have read and are incorporated into this website, as applicable.

Material Economic Terms

Prior to entering into a swap with TPSL, we will communicate to you what we believe to be the material economic terms of that swap. Please contact your TPSL representative if you believe that a material economic term of that swap has been not been provided to you.

Please see the relevant link below for the market standard material economic terms (“MET”) of Swaps required to be provided to you pursuant to CFTC Regulation 23.431(a)(2).

In the event of any conflict between transaction-specific pre trade information provided by TPSL to you and any template, standard product terms or market convention or any standardized product disclosures, the transaction –specific information provided to you by TPSL will govern your swap.

CLEARING DISCLOSURES

For swaps required to be cleared - If you are not a Regulated Swap Entity (i.e. a swap dealer), with respect to any swap entered into between you and TPSL under any applicable agreement that is subject to the mandatory clearing requirements under Section 2(h) of the Commodity Exchange Act, you have the sole right to select the Derivatives Clearing Organization (DCO) at which the Swap will be cleared. TPSL is not obligated, however, to execute a swap for clearing on a DCO where TPSL does not have clearing rights through a clearing intermediary.

For swaps not required to be cleared - If you are not a Regulated Swap Entity, with respect to any Swap entered into you and TPSL under any applicable agreement that is not subject to the mandatory clearing requirements under Section 2(h) of the Commodity Exchange Act, you may elect to clear such Swap and have the sole right to select the DCO at which the Swap will be cleared. TPSL is not obligated, however, to execute a swap for clearing on a DCO where TPSL does not have clearing rights through a clearing intermediary

Upon acceptance of a swap by a DCO:

  • The original pre-cleared swap is extinguished
  • The original swap is replaced by equal and opposite swaps with the DCO
  • All terms of the swap shall confirm to the product specifications of the cleared swap established under the DCO’s rule

Currently TPSL only trades swaps cleared at the LCH.

Pre-trade Mid-Market Mark

Any pre-trade mid-market mark (PTMMM) that TPSL may provide to you in connection with a swap pursuant to CFTC Regulation 23.431(a)(3)(i) will not include amounts for profit, credit reserve, hedging, funding, liquidity, or any other costs and adjustments, and may not necessarily: 

  • Be a price at which either TPSL or you would agree to replace or terminate the swap;
  • Unless otherwise expressly agreed, be the basis for margin calls and maintenance of collateral; and
  • Be the value of the swap that is marked on TPSL’s books and records.

We will generally provide the PTMMM to you either:

  • In writing via electronic mail, Bloomberg chat or any other means of electronic communication notified by us to you to the email address that you have provided; or
  • Orally, whether over the telephone or any other similar communication device and followed up with a post-trade written confirmation to the email or Bloomberg address that you have provided for such purposes (provided that you have either consented in writing or made the relevant election under the ISDA 2012 DF Protocol and Questionnaire to receive oral pre-trade mid-market marks).

TPSL makes no representations or warranties to you that the prices at which TPSL offers or values swaps are the best prices available in the marketplace. You may wish to seek representative quotations from other participants in the relevant market to compare prices or to determine the intrinsic or current market value of a particular swap.

You should not regard any PTMMM that we provide to be an offer to enter into or terminate the relevant swap at that value or price, unless we identify that value or price as firm or binding with respect to a specific quantity or notional amount of the swap. TPSL makes no representations or warranties that any such PTMMM are suitable for complying with any financial or tax reporting obligation, determining net asset value, computing any tax liability or any other purpose, matters which you should discuss with your own financial, legal, tax, accounting and other professional advisors and, except as otherwise agreed, TPSL disclaims any liability for any such use or reliance thereon, whether losses or damages are direct, indirect, incidental or consequential, even if TPSL is advised of their possibility.

To the extent that you do not wish to receive a PTMMM, you may, under certain limited circumstances and with respect to certain limited products, waive your right to a PTMMM.  Please contact your TPSL relationship contact for further details.

If you have any further questions regarding TPSL’s calculation of the mid-market mark for any particular product, please discuss with your TPSL relationship contact.

Daily Marks

It is required by CFTC rule 23.431(d)(2) that TPSL provide you with a daily mark for all uncleared swaps subject to CFTC regulation under the Dodd-Frank Act. Please note that TPSL does NOT transact any uncleared swaps.

With respect to cleared swaps originally executed between you and TPSL, you can obtain daily marks for such cleared swaps from the CFTC-registered futures commission merchant or FCM through which you clear swaps or the relevant DCO. 

Scenario Analysis

With respect to scenario analysis, TPSL hereby notifies you that prior to entering into a swap transaction with TPSL you have the right to request scenario analysis. Scenario analysis may help you assess potential exposure in connection with the swap transaction.

If you wish to receive scenario analysis, please contact your relevant TPSL relationship contact.

Potential Conflicts of Interest

If TPSL determines that it may have a conflict of interest in connection with a particular swap or that it may have received compensation or other material incentives from a source other than the counterparty to the swap in connection with such swap, TPSL will notify such counterparty of such apparent conflicts of interest or material incentives.

If you have any questions, please contact your TPSL relationship manager.