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.

OTC-trading

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.

Currencies, interest rates and commodities – terms and conditions

Click on the link below to find information on trading in interest rate, currency and commodity instruments with DNB as the counterparty.

Interest rate, currency and commodities trading terms and conditions

Brief summary:

As a customer, when you trade currency, interest rate and commodity instruments with DNB, DNB will always be your counterparty.

DNB takes the market risk and, for every instrument and every transaction, assess whether the customer’s trade should be included in the bank’s exposure or covered in the market. DNB executes these activities as the ‘principal’ by trading on its own account, risk and benefit. DNB does not act as the customer’s agent, partner or equivalent when trading in currency, interest rate and commodity instruments, unless this is regulated separately with a written agreement.

The customer’s transaction with DNB is thus an independent transaction and not related to any of DNB’s transactions in the various markets.

Find out more about order execution, pricing, information gathering and handling of any conflicts of interest in the complete agreement terms and conditions for trading in interest rate, currency and commodity instruments here.

All cross-border transactions must be reported to the Norwegian Tax Administration

The Currency Register Act requires all banks and financial institutions to report all international transactions to the Norwegian Tax Administration. The reporting requirement applies to both corporate customers and retail customers.

Payments of amounts exceeding NOK 100 000 (in foreign currency or Norwegian kroner), require additional information about what the amount is for. This additional information is reported by supplementing the transaction with a payment type code, see link below. In the online bank, the payment type codes are made available via a separate drop-down menu. In addition to the payment type code, you must briefly describe what the transfer is for.

Customers who send documents to the bank must ensure that these foreign transfers are in accordance with rules for reporting to the Norwegian Tax Administration.

This applies to the following transactions:

All transfers to or from a foreign country
Card usage in a foreign country (individual transactions exceeding NOK 25 000 are reported separately)
Buying and selling of foreign bank notes that exceed NOK 5 000
Foreign issued cards used in Norway will also be reported to the currency register according to the same guidelines.

More information about the Act and payment type codes can be found on the following websites:

The Currency Register Act

The Act’s regulations

Payment type codes

All interest rate, currency and commodity derivatives are traded using a request for quote (RFQ). When DNB trades such derivatives with professional and non-professional customers, DNB will act as the principal. This means that DNB is the customer’s counterparty.

DNB will quote a price, consisting of a market-based bid and/or ask price plus a margin. In our price, the included margin covers the bank’s costs associated with market risk, counterparty risk, financing, capital requirements, operational costs, taxes and fees, marketplace turnover, clearing, settlement costs and the bank’s profit.

The margin will vary from customer to customer and from instrument to instrument, depending on the transaction’s size and term, the counterparty risk the customer represents, the liquidity in the relevant market, and historical and expected turnover, including trading behaviours, for each individual customer.

Bonds and commercial papers are traded using a request for quote (RFQ). When DNB trades such products with professional and non-professional customers, DNB will act as the principal, meaning that DNB is the customer’s counterparty.

DNB will quote a price, consisting of a market-based bid and/or ask price plus a margin.

In our price, the included margin covers the bank’s costs associated with market risk, counterparty risk, financing, capital requirements, operational costs, taxes and fees, marketplace turnover, clearing, settlement costs and the bank’s profit.

Margin on an Investment Grade bond loan will typically be 0.005–0.05 per cent per year. For example, 0.01 per cent margin per year for a bond loan with 3 years’ duration gives a cost of round 0.03 per cent of the nominal amount.

For High Yield bonds, the margin will typically be between 0.125–0.25 per cent of the nominal amount.

The margin may deviate from these margin ranges, for example when trading in bonds that are rarely traded, in volatile markets, and/or where there are other events that can influence the price of bond loans — these can be market, sector and/or company specific.

To Bond product page