Last updated June 2016
Trading with DNB as a counterpart
Agreement for trading with DNB ASA in interest rate products, foreign exchange, commodities and related derivatives.
Various financial instruments can be used to reduce the risk of changes in commodity prices, interest rates or exchange rates. This applies to import and export companies.
Information about trading in interest rate products, foreign exchange, commodites and related derivatives
DNB Bank ASA, acting through its DNB Markets division, (“DNB”) offers trading in a range of financial instruments. Trading through DNB is governed by our terms of businessand specific agreements with clients. In our trading with clients, we will protect client interests in the best manner and adhere to laws, regulations and market standards set by relevant marketplaces and industry organizations. The objective of this notice is to provide information on DNB's trading with clients in interest rate products, foreign exchange (fx), commodities and related derivatives.
What to expect as our client?
The foreign exchange, interest rate and commodity markets have changed in recent years. As a client of DNB you can expect competitive prices and terms. We recommend nevertheless that you also check prices from other market participants before engaging in a transaction with DNB. By trading with DNB, you may rest assured that information on client trades is treated confidentially, before, during and after transactions are executed.
For terms related to fx trading, interest rates and commodities, see the bottom of this page
About Market view and the client’s responsibility
DNB provides market information based on our best judgment. DNB’s provision of market color and market views through analysis, comments and statements should not be regarded as a proposal or advice to you as a client. We expect that anyone who is considering entering into transactions with DNB will make their own thorough evaluation of those transactions and decide whether these transactions are appropriate or suitable for that particular client’s own purposes. DNB’s client trading and order execution DNB will always be the client’s counterparty when clients execute trades in interest rate products, foreign exchange, commodities and related derivatives through DNB.
DNB as a counterpart and Order Execution
DNB assumes market risk and will, for each transaction, assess whether the particular client trade is to form a part of DNB's exposure or be covered in the market.
This is dependent in part on the financial instrument and compliance with legal and regulatory requirements, in particular the “Volcker Rule” for trading in the United States and with U.S. persons. DNB carries out these activities as “principal,” through trading for its own account. DNB does not act as the client’s agent or partner, or any similar role, when trading with a client in foreign exchange, interest rate and commodity instruments unless this is specifically agreed pursuant to a written agreement between the client and DNB.
The Client's transaction is an independent transaction
The client’s transaction with DNB is an independent transaction that is not connected to any other transactions that may be executed by DNB in the various markets. Nevertheless the prices and products that DNB offers to clients will be a function of what is traded in the various markets.
DNB uses the markets actively for risk management purposes. In transactions that are offered, DNB may obtain liquidity from several different market venues and liquidity providers. This includes price provision and liquidity from internal market operation units, external trading platforms and other venues that are relevant for executing transactions.
The quoted price
The price, exchange rate or interest rate that DNB offers clients may include a profit margin for DNB, in addition to the price, exchange rate or interest rate that DNB can obtain in the relevant market.
DNB will on receiving a request for a quote provide a bid and/or offer price/exchange rate/interest rate that the client, upon its own decision and discretion, may accept or reject. When the client accepts the quoted price/exchange rate/interest rate from, the transaction is executed between the client and DNB and is binding for the client. Unless otherwise agreed, a price, exchange rate or interest rate that DNB quotes will be an “all-in” price that may include a margin to DNB. The client may give orders in spot foreign exchange to DNB. In handling such orders, DNB will look for market opportunities that enable the orders to be executed. The order will be executed when the market reaches the price level that the order indicates, with the addition/deduction of a margin to DNB. This can also mean that it may be impossible to execute the order if the market opportunities are not available. When executing orders, DNB will assume that a partial fill of an order placed by a client will always be accepted by the client unless it is otherwise specifically stated when the order is placed by the client. Partial fill of an order will occur when DNB is not in position to obtain all of the requested volume in a relevant transaction. Unless specifically agreed otherwise by the client and DNB, DNB will in its sole judgment decide how, where and when an order is executed, including also the extent to which an order can be fully or partly executed.
Exceptions to the principle of best execution
DNB acts as principal and has thereby no obligation to execute transactions based on “best execution.” DNB will nevertheless endeavour to protect client interests in the best manner by providing competitive prices and handling orders in a responsible manner.
DNB is not obliged to provide information on DNB’s margin on a specific transaction with a client or DNB's aggregate profit or loss from its transaction business with clients. DNB is free to offer different prices, exchange rates and interest rates to different clients for identical or corresponding transactions and products.
DNB's trading in the markets and consequences for client orders
Client transactions and DNB’s own trading Trading in interest rate products, foreign exchange, commodities and related derivatives does normally take place outside exchanges whereby market participants quote prices at which they are willing to trade directly with DNB as a counterparty. This type of trading is called over-the-counter (OTC) and is described below.
DNB trades interest rate and commodity futures on various exchanges such as London Metal Exchange (LME), CME Group Exchanges, NASDAQ and ICE futures exchange. DNB also acts as principal in such trading.
DNB trades in the market both as a provider of prices and liquidity (“market maker”) and as a market participant (“market taker”). DNB quotes its own prices, receives prices from other market participants, receives OTC orders, executes OTC orders, and enters into and carries out financial transactions and related activities. DNB is an active market taker and market maker in a number of products and product classes. This means that DNB may execute transactions in advance of or in parallel with client transactions. Such actions take place in connection with risk management, liquidity management and/or in order to execute transactions or orders on behalf clients.
DNB's own activity in the market may affect prices and market liquidity and may thus affect the likelihood of a client order being filled. The price the client obtains may vary with market conditions in markets where DNB also participates.
Information handling and managing potential conflicts of interest
DNB has established an internal framework designed to contribute to secure handling of information about client trades. Information on individual client’s trading interests and strategies, margins and other relevant factors are to be handled confidentially and only shared if there is a business need for such sharing, for example in connection with execution and risk coverage of client transactions. Information on transactions with clients will be included in internal analyses, such as measurement of counterparty risk and measurement of client-related activities.
Internal routines for avoiding conflicts
DNB has internal routines for avoiding conflicts of interest between DNB and its clients and conflicts of interest between different clients. Within foreign exchange, interest rate and commodity trading, the sales traders are placed in units separate from the units that have responsibility for the bank’s own trading in financial instruments. System barriers have been established between the units, and regular training sessions are held that focus on the duty of confidentiality and conflicts of interest. DNB also has a separate unit that follows up observance of internal routines and rules.
Any questions on the contents of this notice or DNB’s trading in financial instruments can be directed to your contact person at DNB.