CF Global Trading, LLC Disclosures
- Customer Identification Program
- Summary & Disclosure of Business Continuity Plan
- SEC Rule 606 Order Routing Disclosure
- Customer Complaints
- FINRA Broker Check
- SIPC Disclosure
- Statement to Clients
- Extended Hours Trading Risk Disclosure
CF Global Trading (UK) Ltd Disclosures
CF Global Trading (UK) Ltd is authorised and regulated by the Financial Conduct Authority, No. 211134. It is a separate but affiliated entity of CF Global Trading, LLC.
CF Global Trading (Hong Kong) Limited Disclosures
CF Global Trading (Hong Kong) Limited is licensed and regulated by the Securities and Futures Commission. It is a separate but affiliated entity of CF Global Trading, LLC.
CF Global Trading, L.L.C. (“CF Global” or “We”) understands that our clients’ privacy is important and we are committed to maintaining their confidentiality. The following disclosure explains our policy regarding non-public information and the process we have in place to protect our clients’ privacy and the confidential information we receive from our clients.
We collect non-public information about clients and counterparties from various sources, which include the following:
- Information we receive on applications and other forms (such as name, address, e-mail address, telephone number, Social Security Number, assets and income);
- Information about our clients’ financial transactions with us or others; and
- Information that we receive from non-affiliated third parties (such as credit rating agencies) or other entities who may service our clients’ accounts from time to time.
We may use our clients’ information in order to operate our business in a prudent manner in accordance with industry standards and applicable law, which may include servicing and maintaining accounts and transactions, offering a broad range of services and products, verifying income and assets, responding to inquiries and requests, preventing fraud, monitoring and archiving communications and verifying our clients’ identity in accordance with the USA PATRIOT Act.
We do not disclose any non-public information to any non-affiliated third parties other than as permitted by law. We may disclose or share non-public information about our clients to our affiliates or third parties involved in servicing our clients’ accounts. We do not otherwise provide information about our clients to outside firms, organizations or individuals except to our attorneys, accountants and auditors and as permitted by law. We will, however, release information about our client if directed to do so by such client or if compelled or required to do so by law or self-regulatory organization (“SRO”) regulations.
We restrict access to our clients’ information to those employees who need to know such information to provide products or services to our clients. We maintain physical, electronic and procedural safeguards to guard and protect all clients’ information from unauthorized access, accidental or intentional manipulation, loss and destruction. Employees who violate these policies are subject to disciplinary action, including termination. Our clients’ information is secure and is not shared with a third party unless such third party is involved in servicing our clients’ relationship with CF Global or as required, in limited situations, by law or SRO regulations.
To help the U.S. government fight the funding of terrorism and money laundering activities, Federal law requires all U.S. financial institutions, such as CF Global, to obtain, verify and record information that identifies each individual or institution that establishes a customer relationship with such financial institutions.
If a client enters into a customer relationship with CF Global, which includes opening an account at CF Global, we will request certain financial and legal information about such client, including such client’s legal name, tax identification number and address, and the identity of any individuals with any authority or control over such client. We also verify such information to the extent required as follows:
- Taking steps to check the information provided – to verify that the clients are who they say they are.
- Consult applicable governmental agency lists of known or suspected criminals, terrorists and terrorist organizations to determine if anyone on any such list is attempting to open or maintain an account.
- Conduct, in certain instances, additional due diligence when accounts are opened for foreign persons, institutions or other clients.
The U.S. Department of the Treasury, U.S. Securities and Exchange Commission (the “SEC”) and FINRA rules already require clients to provide most of this information.
If a client refuses to provide the information requested or a client’s identity cannot be verified, CF Global may not be able to establish or maintain a business relationship with such client. If such client has already established a relationship with CF Global, we may have to terminate such relationship. If a client establishes a relationship with CF Global and refuses to provide this information, we may be required to report such refusal to appropriate governmental authorities.
Pursuant to U.S. regulations issued under section 311 of the USA PATRIOT Act, 31 CFR 103.192, we are prohibited from opening or maintaining a correspondent account for, or on behalf of, Banco Delta Asia, Commercial Bank of Syria, Syrian Lebanese Commercial Bank, Halawi Exchange Co., Infobank, Belmetalnergo, Trustbank, Lebanese Canadian Bank SAL, Myanmar Mayflower Bank, Kassem Rmeiti & Co and JSC CredexBank (the “Specified Institutions”). The regulations also require us to notify you that your correspondent account with our financial institution may not be used to provide the Specified Banks with access to our financial institution. If we become aware that the Specified Banks are indirectly using the correspondent account you hold at our financial institution, we will be required to take appropriate steps to prevent such access, including terminating your account.
CF Global has prepared, and has always maintained a current Business Continuity Plan (“BCP”) in compliance with Financial Industry Regulatory Authority (“FINRA”) Rule 4370. This document outlines our plans to continue our business and meet our existing obligations to our clients in the event of a significant business disruption (“SBD”). Our BCP is summarized below:
CF Global’s policy is to respond to a SBD by safeguarding our employees’ lives and our property, making a financial and operational assessment, quickly recovering and resuming operations, protecting all of our books and records and allowing our clients to transact business. We will make every reasonable effort to meet our obligations to our clients at all times. We have in place a BCP that outlines essential parts of our business and discusses in detail:
(1) Data back-up and recovery (hard copy and electronic);
(2) All mission critical systems;
(3) Financial and operational assessments;
(4) Alternate communications between our clients and us;
(5) Alternate communications between our employees and us;
(6) Alternate physical location of our employees;
(7) Critical business constituents, banks, and counter-party impact;
(8) Regulatory reporting;
(9) Communications with regulators; and
(10) How CF Global shall assure our clients’ prompt access to their funds and securities (if applicable) in the event that we determine that we are unable to continue our business.
During the time that CF Global may not be in operation, we shall provide alternative contact information to our clients via our website at www.cfglobal.com in order to effect transactions and for any other required client activity. In the event you are unable to reach us via the information provided on our website or by calling us at 212.888.4711, please contact our clearing firm Broadcort, a division of Bank of America Merrill Lynch, at 201.557.4260.
SEC Rule 606 requires all brokers and dealers to make publicly available for each calendar quarter a report on its routing of non-directed orders in national market system securities during that quarter. The reports must identify the significant venues to which clients’ orders were routed for execution during the applicable quarter and disclose certain aspects of the broker or dealer’s relationship with such venues. The most recent such quarterly report for CF Global can be found at the following link: http://vrs.vista-one-solutions.com/reports/1-6/cfgt/.
Furthermore, pursuant to SEC Rule 606(b), at the request of any of our clients, we will provide to such requesting client information regarding the identity of the venue to which such requesting client’s orders were routed for execution in the six (6) months prior to such request, whether such orders were directed orders or non-directed orders and the time of the transactions, if any, that resulted from such orders. Should you require such information, please send an email to CFGTcompliance@cfglobal.com with a subject line of “Rule 606 Request” and all pertinent information necessary to identify the orders(s) subject to the request.
Any customer complaint should be forwarded to CF Global’s Chief Compliance Officer via email at CFGTCompliance@cfglobal.com or via telephone at 212.888.4911. Physical mail in relation to these items should be directed to: CF Global Trading, L.L.C., Attn: Compliance, 99 Park Avenue, Suite 1710, New York, NY 10016.
The FINRA BrokerCheck program allows the public to learn current regulatory information about FINRA members and registered representatives. You can obtain more information by visiting: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/.
CF Global is a member of the Securities Investor Protection (“SIPC”). Information about account protection coverage provided by SIPC can be obtained by visiting their website atwww.sipc.org.
Pursuant to the international dealer registration exemption in National Instrument 31-103, the Company is informing you of the following:
- CF Global Trading LLC (the “Company”) is not registered in Canada and is advising you, its client, in reliance upon an exemption from the dealer registration requirement under National Instrument 31-103.
- The name and address of the agent for service of Company in Ontario is:
Laurie J. Cook
Borden Ladner Gervais LLP
4400 – 40 King Street West
- Clients may have some difficulty in enforcing any legal rights they may have against the Company because the Company is resident outside Canada and all or a substantial portion of its assets are situated outside Canada. The Company is not fully subject to the requirements of the Securities Act (Ontario) and the regulations thereunder concerning proficiency, capital, insurance, record keeping, segregation of funds and securities, statements of account and portfolio, and conflicts of interest.
You should consider the following points before engaging in extended hours trading. “Extended hours trading” means trading outside of regular trading hours.” “Regular trading hours” generally means the time between 9:30 a.m. and 4:00 p.m. Eastern Standard Time.
Risk of Lower Liquidity: Liquidity refers to the ability of market participants to buy and sell securities. Generally, the more orders that are available in a market, the greater the liquidity. Liquidity is important because with greater liquidity it is easier for investors to buy or sell securities, and as a result, investors are more likely to pay or receive a competitive price for securities purchased or sold. There may be lower liquidity in extended hours trading as compared to regular trading hours. As a result, your order may only be partially executed, or not at all.
Risk of Higher Volatility: Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. There may be greater volatility in extended hours trading than in regular trading hours. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price when engaging in extended hours trading than you would during regular trading hours.
Risk of Changing Prices: The prices of securities traded in extended hours trading may not reflect the prices either at the end of regular Trading hours, or upon the opening the next morning. As a result, you may receive an inferior price when engaging in extended hours trading than you would during regular trading hours.
Risk of Unlinked Markets: Depending on the extended hours trading system or the time of day, the prices displayed on a particular Extended hours trading system may not reflect the prices in other concurrently operating extended hours trading systems dealing in the same securities. Accordingly, you may receive an inferior price in one extended hours trading system than you would in another extended hours trading system.
Risk of News Announcements: Normally, issuers make news announcements that may affect the price of their securities after regular trading hours. Similarly, important financial information is frequently announced outside of regular trading hours. In extended hours trading, these announcements may occur during trading, and if combined with lower liquidity and higher volatility, may cause an exaggerated and unsustainable effect on the price of a security.
Risk of Wider Spreads: The spread refers to the difference in price between what you can buy a security for and what you can sell it for. Lower liquidity and higher volatility in extended hours trading may result in wider than normal spreads for a particular security.
CF Global Trading (UK) Ltd (“CF Global”) is committed to obtaining the best possible executions for its clients and we believe that the regulatory obligations introduced under MiFID’s Best Execution regime reflect our existing practice.
We have put in place arrangements to enable us to deliver Best Execution on a consistent basis, including an Order Execution Policy, information about which is set out below.
This policy is applicable to CF Global’s Professional Clients as determined in accordance with the client classification rules of the Financial Conduct Authority (“FCA”). CF Global only deals with Professional Clients and does not engage in any retail business.
The Quality of Execution
CF Global’s policy in providing Best Execution is so far as possible, and subject to the processes set out below, to exercise the same standards and operate the same processes across all the different markets on which it executes your orders.
When we execute an order on your behalf, or receive and transmit an order for execution on your behalf, we take all reasonable steps to achieve best possible result for your order in accordance with MiFID and our Execution Policy, subject to any specific instructions that you give us, the priorities you place upon us in filling the order, the nature of your order, the market or the source of liquidity (“venue”) in question and any other factors relevant to execution.
The diversity in markets and venues mean that different factors including price, costs, the need for a timely execution, the liquidity of the market, the size of the order, whether it is executed on a regulated market or OTC will have to be taken into account when assessing Best Execution. Price is not always the final determinate: Where liquidity is a priority, the best reflected price may be irrelevant. In the absence of express and explicit instructions from you, we will exercise our own discretion in determining the factors that need to be taken into account to provide you with the best possible execution including our understanding and experience of the market in question, our knowledge of your investment process, and the nature of the trading service you require of CF Global.
CF Global always acts as an agent on your behalf and charges a transparent commission. A “net price” will only be shown when specifically requested by the client. CF Global never marks up or marks down the price of a security including OTC markets and never takes positions for ourselves except in the event of an error.
We believe the policy and processes defined below provide the best balance across a range of sometimes conflicting factors to achieve the most favourable terms reasonably available on a consistent basis. CF Global is however not under an obligation to obtain the best possible result for each individual order, and our commitment to provide you with Best Execution does not mean that we owe you any fiduciary or other responsibilities over and above our specific regulatory obligations.
Execution Process – Criteria
CF Global seeks to obtain the most favourable terms reasonably available when executing an order on your behalf. To achieve this CF Global will:
1. Ensure its regulatory obligations are met with regard to client classification;
2. Carefully consider the elements of order execution including the factors set out above, while taking into account
2.1. the characteristics of the client order
2.2. the client’s specific instructions and the sequence with which the order is received
2.3. the characteristics of financial instruments that are the subject of that order
2.4. the characteristics of the execution venues to which that order can be directed
3. Employ sophisticated technology for routing, monitoring and executing orders such that the execution outcome is competitive and in the best interests of the client on a consistent basis; and
4. Regularly and review overall execution quality.
Execution Process – Venue Selection
In meeting our obligation to take all reasonable steps to obtain the best possible result when executing your order in transferable securities, we may access various sources of liquidity, including: Regulated Markets. Multilateral Trading Facilities, Market makers and other alternative liquidity providers or non EEA entities performing similar functions.
CF Global considers the combined effect of all execution criteria and execution factors referred to above when determining the best venue for execution. Where comparative factors differ across execution venues (e.g. cost of execution, cost of settlement), CF Global applies the following priorities to determine the most appropriate venue unless specifically instructed otherwise:
1. Price and size improvement. Dependent on the nature of the order, CF Global may be able to obtain a more favourable outcome by accessing alternative pools of liquidity, or aggregating similar orders to realize benefits of scale. CF Global will also seek opportunities for client orders to benefit from order size guarantees offered by brokers, exchanges and other market participants;
2. Speed and certainty of execution. Especially during volatile market conditions CF Global will focus on execution venues that have a proven track record for providing liquidity and competitive pricing. At all times CF Global seeks to provide the fastest execution reasonably possible under the parameters of the client’s instructions; and
3. Overall execution quality and cost. When determining how and where to route or execute an order, CF Global draws on extensive experience with various markets, market makers and electronic networks focusing on prompt, reliable and cost effective solutions.
CF Global uses automated systems to route and execute some client orders. When a customer order is received it is routed to the Best Execution venue as determined by the criteria above. Certain large orders may require special handling to minimize market impact and be managed by CF Global’s trading desk in a manner consistent with CF Global’s Best Execution principles. This may include algorithmic trading tools where deemed appropriate by CF Global’s traders’ discretion.
CF Global uses Direct Market Access (DMA) mechanisms through various investment banks and local brokers and do not maintain membership to any exchanges. In these cases we maintain full control of the order. In other instances we may transmit the order to another broker as an agent or an introducing broker in which case we monitor the execution closely. We carefully select the brokers we use and satisfy ourselves that they have arrangements in place to enable us to comply with our Best Execution obligation to you. Orders in Asia and the Americas may be passed to a parent company or an affiliate.
In extreme volume and volatility situations, exchange system constraints require automated trading solutions to be switched off and/or electronic routing to be suspended in favour of manual execution. Such events lead to further execution delay and increased market volatility. Clients should be aware of the following risks associated with volatile markets, especially at or near the close of the standard trading session: an order may be executed at a substantially different price from the quoted bid or offer, or the last reported sale price at the time of the order entry, or an order may be only partially executed or may be executed in several transactions at different prices; and opening prices may differ substantially from the previous day’s close.
We continuously assess the execution venues available in respect to any product that we trade in order to ensure they continue to allow us to provide you with the best possible results for your orders.
Review & Monitoring
CF Global monitors the effectiveness of its order execution arrangements and order execution policy on an on-going basis to identify and, where appropriate, correct any deficiencies. CF Global will assess on a regular basis whether the execution venues the broker to whom we transmit orders for execution provide for the best possible result for our clients on a consistent basis or whether CF Global needs to make changes to its execution arrangements.
As part of the monitoring process, CF Global have access to sophisticated analytics which is available upon customer request.
Executing brokers used by CF Global within the European Economic area (other than EEA member states who have not yet implemented the Best Execution rules of MiFID) are required to have their own execution arrangements that enable CF Global to comply with this policy. CF Global will assess and where necessary seek appropriate assurances as to whether these brokers are meeting obligations regarding execution quality. CF Global will also assess and seek assurance that brokers in other jurisdictions are consistently providing quality execution.
CF Global will review this policy whenever a material event occurs that affects or contributes to the Best Execution outcome. Should no such event occur, the review will take place at least on an annual basis. Our most updated policy is available our website at www.cfglobal.com
Specific Client Instructions
Where you provide CF Global with a specific instruction in relation to an order or a part of the order or any particular aspect of it, including the selection of a venue, we will execute the order in accordance with these instructions and in doing so, CF Global will be deemed to have taken all reasonable steps to provide the best possible result in respect of that order or aspect of that order. This may prevent us from taking the steps that we have implemented to obtain the best possible result for your order. To the extent that your specific instructions are not comprehensive, we will apply this policy to those aspects not covered by your instructions. The particular execution roles and responsibilities of CF Global and its client will depend on the type of execution instruction received. At all times, the client passing the order to CF Global retains responsibility for Best Execution to its end client.
Client Limit Orders
The FCA requires unexecuted client limit orders to be made public immediately unless the client expressly instructs otherwise. By consenting to this policy, you are expressly instructing CF Global Trading (UK) Limited not to make such orders public unless we believe that by doing so, it will be to your advantage.
Execution an order in an instrument admitted to trading on a Regulated Market or an MTF outside of such a Regulated Market or MTF.
CF Global are required to gain express consent prior to executing an order in an instrument admitted to trading on a Regulated Market or an MTF outside of such a Regulated Market or MTF.
Please sign and return a copy of this notice to our compliance department since we will otherwise be prevented from achieving the best possible result where this is achieved by executing your order outside of a Regulated Market or MTF.
CONSENT FORM TO CF GLOBAL TRADING (UK) LIMITED ORDER EXECUTION POLICY
We consent to CF Global Trading (UK) Limited Order Execution Policy including inter alia:
a) CF Global Trading (UK) Limited executing orders outside a Regulated Market or MTF; and
b) Unexecuted limit orders not being made public immediately.
FOR AND ON BEHALF OF:
PRINT NAME (s):
Please note that we are required to obtain your prior consent to this policy. As a Professional Client you will be deemed to provide such consent when you give an order.
These disclosures are made in accordance with the rules of the Financial Conduct Authority which implement in the UK the EU directives regarding the revised capital adequacy framework agreed by the Basel Committee on Banking Supervision. It is this application of the Capital Requirement Directive and Basel ll that requires CF Global Trading (UK) Ltd. to make these disclosures.
The FCA framework now consists of three ‘Pillars’:
- Pillar 1: Minimum capital requirements
- Pillar 2: Supervisory review process: the need to assess whether the capital held under Pillar 1 is sufficient to meet the additional risks not covered by Pillar 1
- Pillar 3: Disclosure requirements allowing market participants to assess information on a firms’ risks, capital and risk management procedures
The Financial Conduct Authority, in BIPRU 11, outlines the minimum disclosure requirements. The information below satisfies CF Global Trading (UK) Ltd. Pillar 3 requirement.
Frequency of Disclosure
CF Global Trading (UK) Ltd. will report their Pillar 3 disclosure annually. These disclosures are based on the company’s position as at 31st December 2012. The Pillar 2 (ICAAP) capital requirements are excluded from this summary but are reviewed annually or upon material change.
Location and Verification
These disclosures have been validated by the board. These disclosures are not subject to an audit except to the extent where they are equivalent to disclosures made under accounting requirements.
Scope of Application
This disclosure is made on an individual basis. CF Trading (UK) Ltd is a wholly owned subsidiary of CF Global Trading LLC based in New York.
The directors of the firm, in addition to the risk mapping structure of the ICAAP, are very much involved with the day to day running of the company including the continual assessment of risk. They meet on a regular basis to discuss current projections for profitability, regulatory capital management, business planning and risk management. The Directors manage the firm’s risks through a framework of policy and procedures having regard to relevant laws, standards, principles and rules (including FCA principles and rules) with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required.
The firm is relatively small with an operational infrastructure appropriate to it size.
The ICAAP has identified the most significant risk types to which CF Global Trading (UK) to be as follows:
- Operational Risk:
This is the risk associated with inadequate, or the failure of, internal processes or external factors such as regulation.
There is a risk that a client or broker may have a dispute over the execution or non execution of an order resulting in an error. This is mitigated by a large errors and omissions insurance policy and constantly reviewed systems and procedures to help remove the likelihood of any error occurring in the first place.
There is a risk that certain key performers could leave the company, leading to reduced income. This is mitigated by a bonus related pay structure and potential membership being offered to certain key personnel.
There is a risk that the key IT systems could fail. This is mitigated by a robust Business Continuity Plan involving battery backup systems and automated telephone switching systems
- Credit Risk
This is the risk that clients and counterparties fail to meet their financial and commercial obligations.
There is a risk that CF Global’s clients and counterparties fail to accept a trade for whatever reason. The mitigation is that the trades are given up on a daily basis, ensuring that the risk is that of a movement of an overnight position. Positions are monitored daily to ensure no excessive exposure to one particular client.
Capital Resources December 2012 (figures in thousands of pounds sterling)
Core Tier 1 Capital: 1,289
Permanent Share Capital: 450
Profit and loss a/c plus other reserves: 839
Total Tier 1 Capital after deductions: 1,289
Total Tier 2 Capital: 0
Capital Resources: 1,289
Capital adequacy in compliance with BIPRU 3, 4 6, 7 & 10 (BIPRU 11.5.4)
CF Global have forecasts in place to ensure that they will continue to meet they regulatory capital requirement an ongoing basis.
CF Global is a BIPRU €50k limited Licence firm and, as such, is not required to calculate its operational risk capital requirement under Pillar 1 in accordance with BIPRU 6. Instead they are required to calculate a Fixed Overhead requirement in accordance with GENPRU 2.1.53R
The Credit Risk Capital Requirement is made up of the Credit Risk Capital Component and the Counterparty Risk Capital Component.
The Credit Risk Capital Component is calculated in accordance with BIPRU 3.5 – The Simplified Method. The company makes an 8% adjustment on all fixed assets, debtors and prepayments and a 1.6% adjustment on all bank balances in accordance with BIPRU 3.4.127 – 3.1.133, resulting in a Credit Risk Capital Component of £49,000.
The Counterparty Risk Capital Component is calculated in accordance with BIPRU 14.2.1, and is zero.
The total Market Risk requirement, (BIPRU 11.5.12), has been calculated at £82,000 which comprises solely of Foreign Currency PRR. The Commodity PRR is zero.
BIPRU 11.5.18 requires that a firm makes a disclosure of details regarding its remuneration policy.
Given the relatively small size of the business, remuneration for all employees is set by the board. The board formally reviews all employees and based upon individual and company performance, the overall level of remuneration is set in the form of a base salary and bonus.
CF Global Trading (UK) Limited has been identified as a Tier four firm and the number of current code staff has been established as eight.
Should you have any queries please contact:
Scott Chace Chief Executive Officer
CF Global Trading (UK) Ltd.
48 Chancery Lane