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RESET SERVICE TERMS

Version 1.0 3 Jan 2018

 

GENERAL

By using the RESET Service (as hereinafter described), You (meaning, for the purposes of these Terms, both individual traders and the institution that they represent) understand and agree that the RESET Service will be provided on the basis of the terms and conditions set out in these RESET Service Terms and on any applicable Product Specific Terms set out below or available at www.reset.net (together the “Terms”).   You will be deemed to agree to these Terms each time You submit any Participant Data (as hereinafter defined) for inclusion in any RESET Session (as hereinafter defined).

If You do not agree to these Terms, BrokerTec Europe Limited (“BEL”) is unwilling to provide the RESET Service to You and You must cease submitting any Participant Data (as hereinafter defined) for inclusion in any RESET Session.  Your compliance with these user terms is a condition of Your continued access to, and use of, the RESET Service.

BEL reserves the right to amend the Terms from time to time. Any changes will be notified to You via www.reset.net (the “Website”).

 

SUMMARY OF RESET SERVICE

BEL is the provider of a service designed to mitigate risk by matching positions in derivatives and other financial instruments between institutions who are participants of the service and who are holding opposite risk to each other (the “RESET Service”). Transactions are identified by BEL (“Identified Transactions”) and then arranged between the relevant participants as further described in these Terms.

 

REGULATORY INFORMATION

BEL is a subsidiary of NEX Group Plc and, amongst others, is authorized and regulated by the Financial Conduct Authority of the United Kingdom (and/or its successors) (the “FCA”).  In providing the RESET Service, unless otherwise set out in these Terms, BEL only acts as an arranging or executing broker and is not a counterparty to any Identified Transaction.

For further information please visit www.nex.com or for more specific information on the RESET Service please visit www.reset.net.  If you have any questions about the RESET Service please contact: reset@reset.net.

Details of our Privacy Statement can be found at www.reset.net/privacy-statement.

 

PARTICIPATION IN A RESET SESSION

The Reset Service is run in regular sessions (each a “RESET Session”) depending on the product and the currency.  The schedule of the RESET Sessions and any changes will be communicated directly to BEL’s RESET Service customers.

To participate in a RESET Session, You must provide BEL with the data specified by RESET Service, including position and trade data and any risk criteria within which You wish for any Identified Transactions to be arranged (the “Participant Data”).  BEL will specify the method by which You may submit Your Participant Data.   You remain solely responsible for verifying the accuracy and completeness of all Participant Data supplied in any RESET Session and You shall have no claim against BEL in respect of such Participant Data howsoever arising.  BEL is under no obligation to conduct any investigation as to the completeness or accuracy of any Participant Data provided by You.

For any RESET Session You will be required to submit Your Participant Data and confirm Your participation by a time specified by BEL (“Session Cut-Off Time”).  You may only withdraw or cancel Your participation in a RESET Session after the Session Cut-Off Time with the agreement of BEL.

By submitting Your Participant Data to and participating in a Reset Session, You (i) are deemed to authorise BEL to arrange or execute, as the case may be, all Identified Transactions to which You will be counterparty (b) agree to be bound by every Identified Transaction in that RESET Session and (iii) shall be legally obliged to settle all of Your Identified Transactions in accordance with these Terms.  BEL will provide You with details of Your Identified Transactions following Your participation in a RESET Session, enabling You to settle them.

The prices of all Identified Transactions shall be determined based on a price curve established by BEL (the “Curve”).  The Curve will be made available to participants in a RESET Session.  Any amendments to the Curve will be communicated to participants in a RESET Session before any Identified Transactions become legally binding.

 

USING RESET DATA

All market and pricing data (including, without limitation, any Curve) and any output provided to You by BEL (“RESET Data”) is confidential and is the intellectual property of BEL and/or its group companies or licensors. Use of the RESET Data for any purpose other than that which is directly related to Your use of the RESET Service or participation in a RESET Session is not permitted. Should You wish to use the RESET Data for other purposes (e.g. in internal or external applications, or in calculation of indices for internal or external purposes), an appropriate data licence will be required.

For further information regarding obtaining a data licence in respect of the RESET Data, please contact NEX Data at enquiries@nexdata.com.

 

TRANSACTIONS

Unless otherwise required by applicable law, any Identified Transactions may be arranged or executed by BEL as follows:

  1. bilaterally between the counterparties to the Identified Transactions;
  2. on the EBS multilateral trading facility, RESET Segment operated by BEL (the “EBS MTF: RESET Segment”); or
  3. on the swap execution facility operated by NEX SEF Limited (the “NEX SEF”).

Subject to the remainder of this paragraph, prior to Your participation in a RESET Session, You are required to inform BEL of Your preferences for (a) having Your Identified Transactions (i) arranged bilaterally (ii), on the EBS MTF: RESET Segment and/or (iii) on the NEX SEF and (b) clearing any Identified Transactions.  You shall notify BEL of any changes thereto as soon as reasonably practicable.   Notwithstanding the foregoing, all Identified Transactions involving a U.S Person, as defined under U.S Dodd-Frank (Wall Street Reform and Consumer Protection) Act and the rules of the United States Commodity Futures Trading Commission (the “CFTC”), will be executed by BEL on the NEX SEF.

 

Transactions on the EBS MTF: RESET Segment

If You elect for Your Identified Transactions to be executed on the EBS MTF: RESET Segment:

  1. You authorise BEL to execute the Identified Transactions on the EBS MTF: RESET Segment on Your behalf;
  1. You must be classified as an eligible counterparty (an “EC”) within the meaning of the rules of the FCA and You shall immediately inform BEL if at any time You cease to be an EC;
  1. You agree that the terms of the EBS MTF Rulebook and RESET Segment Appendix (the “EBS MTF Rulebook”) shall apply to such Identified Transactions (“MTF Transactions”). A copy of the EBS MTF Rulebook can be found at nexmarkets.com or such successor website;
  1. You agree to be bound by the EBS MTF Rulebook in relation to any MTF Transactions; and
  1. For any MTF Transaction that must be cleared (“Clearable MTF Transaction”), You agree that unless and until such Clearable MTF Transaction is accepted for clearing, You shall be responsible for all obligations in respect of that Clearable MTF Transaction. If You are not a clearing member, prior to entering into any Clearable MTF Transaction via the RESET Service, in accordance with the EBS MTF Rulebook, You must provide to BEL a representation from a clearing member in the form required by the EBS MTF: RESET Segment.

 

Transactions on the NEX SEF

If You elect for Your Identified Transactions to be executed on the NEX SEF:

  1. You authorise BEL to execute the Identified Transactions on the NEX SEF on Your behalf;
  1. You must be an eligible contract participant (a “CEA ECP”) within the meaning of section 1a of the CEA (as hereinafter defined) and You shall immediately inform BEL if at any time You cease to be a CEA ECP;
  1. You agree that all Indentified Transactions executed on the NEX SEF (“SEF Transactions“) and all orders for such SEF Transactions, will be governed by the Commodity Exchange Act (“CEA”), the regulations of the CFTC and the NEX SEF Rulebook. A copy of the NEX SEF Rulebook can be found at nexsef.com;
  2. You (i) consent to the jurisdiction of the NEX SEF (ii) agree to keep the required books and records for the minimum term required by the NEX SEF Rulebook and (iii) will be deemed to review regularly the “Notices” section of the NEX SEF website;
  1. You agree to provide BEL with all information reasonably requested by BEL from time to time, including any information required by the NEX SEF such as the information set out in Appendix 1 to these Terms and any information reasonably required by BEL, the NEX SEF, or any derivatives clearing organization or swap data repository, to maintain the integrity of its systems or to comply with applicable law or regulation from time to time . You agree to notify BEL of any updates to that information;
  1. You warrant and represent that all such information provided to BEL in support of these Terms is accurate in all respects as of the date it is provided and is permitted by the individuals to whom it pertains to be disclosed to the NEX SEF;
  1. You agree that BEL and/or the NEX SEF may undertake credit checks on You and/or any guarantor; and
  1. For any SEF Transaction that must be cleared (“Clearable SEF Transaction”), You agree that unless and until such Clearable SEF Transaction is accepted for clearing, You shall be responsible for all obligations in respect of that Clearable SEF Transaction. Prior to entering into any Clearable SEF Transaction via the RESET Service, in accordance with the NEX SEF Rulebook, You must provide to BEL a representation or guarantee from a clearing member in the form required by the NEX SEF.

 

CLEARING AND SETTLEMENT OF IDENTIFIED TRANSACTIONS

You and Your counterparty to each Identified Transaction are responsible for settling and, if applicable, clearing any Identified Transactions that are notified to You.  BEL has no responsibility for the settlement or clearing of these transactions.

You are responsible for any underlying documentation with Your counterparties and, unless otherwise set out in any applicable rulebook or otherwise agreed with Your counterparty, there is an assumption that basic terms and conditions are as per the standard documentation published by ISDA.

 

FEES

The fees charged in relation to the RESET Service shall be agreed between the parties from time to time and shall be paid (without any right of set-off or deduction) on the submission of an invoice or on demand.  All such fees are exclusive of any applicable sales or value added tax.

 

INTELLECTUAL PROPERTY AND DATA RIGHTS

You agree that all intellectual property rights in and to any software, database, any website, tools, documentation processes, data or material used in or produced by the RESET Service (the “RESET Materials”) are owned by, or licensed to, BEL or its licensors and You agree that such intellectual property rights shall remain vested exclusively in BEL and/or its licensors (other than You) and/or their respective successors.  You shall not attempt to encumber or gain any rights whatsoever to any of the RESET Materials.

BEL agrees that all right, title and interest in and to all Participant Data shall belong to You.  You hereby consent to and grant to BEL and affiliates a worldwide, non‐exclusive and royalty‐free licence to use, copy, modify and adapt the Participant Data to the extent reasonably required for the RESET Service (such licence shall include, but not be limited to, a right to prepare RESET Materials and make such RESET Materials available in accordance with these Terms), including use of NEX Group Plc’s other services or solutions for which You have an agreement with a NEX Group Plc affiliate.

You grant BEL and its affiliates a worldwide, non-exclusive and royalty‐free licence to use any data on Identified Transactions (“Transaction Data”) to create Derived Data for its and their business purposes as BEL and its affiliates see fit. For these purposes, “Derived Data” means data of any kind resulting from the manipulation, derivation, calculation and/or analysis of the Transaction Data, whether generated by human or machine, provided that such Derived Data is in an Anonymised Form and that it is created in such a way that it is not possible for a third party to reverse engineer the Transaction Data or any part of it. “Anonymised Form” means, in respect of Transaction Data, in such form as would neither enable the transaction parties to be identified, nor their trading positions or strategies, nor specifics of individual transactions, nor containing any personal data. You acknowledge and agree that BEL owns all intellectual property rights in the Derived Data and that you do not have any rights to, or in, the Derived Data.

 

NO WARRANTY

Except to the extent specifically set forth in these Terms, BEL makes no other representation or warranty with respect to the RESET Service, the RESET Materials or any data or materials retrieved, obtained, provided or transmitted by BEL or through the RESET Service.  Except to the extent specifically set forth in these Terms, the RESET Service, the RESET Materials and all data and materials retrieved therefrom are being provided to the You “as is” and BEL hereby disclaims, in respect of the RESET Materials and any such data, any and all other representations or warranties, whether express or implied, including without limitation, any representation or warranty as to merchantability, fitness for a particular purpose or timeliness, any representations or warranties arising from course of dealing or course of performance, and any representations or warranties of accuracy, reliability or functionality.

You acknowledge that any pricing data provided by BEL through Your use of the RESET Service is obtained from sources believed to be reliable and may also be based on opinions, estimates, projections and extrapolations constituting BEL’s judgement (including that of its relevant group companies and/or their respective licensors) and therefore should not be taken in substitution for the exercise of Your own commercial judgement and should not be construed as an offer, bid or solicitation in relation to any financial instrument.

 

LIABILITY

Nothing in these Terms excludes or limits either BEL’s or Your liability for wilful misconduct, fraud or for death or personal injury arising from their respective negligence or any other liability that cannot be excluded by law.

BEL and its affiliates shall be under no obligation to ascertain or confirm Your authority or capacity for any purpose in connection with these Terms or the use of the RESET Service.  BEL accepts no liability for the commercial advisability of any Identified Transaction or for any information supplied by any participant in relation to any Identified Transactions.

Neither BEL nor its affiliates will be deemed to have recommended that any Identified Transaction should be accepted, nor will BEL or its affiliates have any responsibility for knowledge of or compliance with any applicable laws, regulations or rules applicable to You that limit Your authority to conduct Your business using the RESET Service.  Neither BEL or its affiliates shall have any liability for losses resulting from any unauthorised use of the RESET Service.

Neither You, BEL and its affiliates, or their respective partners, officers, employees, directors, agents, contractors, representatives, successors and assigns, shall be liable to the other or anyone claiming under or through them for loss of profit, capital, interest, revenue, data, money, business, anticipated savings or any indirect or consequential loss or damages under or in connection with these Terms, any Identified Transaction or the receipt or use of the RESET Service, including without limitation, damages for loss of capital, interest, revenue, data or use, or interruption of business, even if such party had been advised of the possibility of such damages.

You acknowledge that e-mail is not a secure or guaranteed medium, and that e-mails may be lost, delayed, corrupted, accessed, modified or spoofed in transit.  Where You communicate with BEL, You agree that BEL shall not be liable for any losses attributable to any delay in receipt of any email or unauthorised access, modification or spoofing of any e-mail by any third party.

You acknowledge the RESET Service is dependent on third party services, including telecommunication services, trade reporting and affirmation services and central counterparties.  BEL shall have no liability for any failure of, or otherwise arising out of or in connection with, any such third party services.

You agree that the limitations and exclusions set out in these Terms are reasonable having regard to the levels of risk associated with the obligations under these Terms.

 

REPRESENTATIONS AND WARRANTIES

You and BEL each represent and warrant to each other that (i) the warrantor has the power and authority to execute, deliver and perform under these Terms; (ii) these Terms constitute legal, valid and binding obligations, enforceable against the warrantor in accordance with these Terms; and (iii) the warrantor’s performance of its obligations under these Terms will not violate any applicable laws or regulations, or any agreement by which it is bound or by which any of its assets are affected.

On each submission of Your Participant Data, You warrant and represent that as at the date of submission:

  • You are, and will remain, in compliance with all applicable/relevant laws and regulations of any relevant jurisdiction;
  • Your participation in any RESET Session will be in compliance with all applicable laws, rules and regulations and accepted trading rules, market customs and conventions and any applicable rulebooks;
  • all Participant Data or other information submitted from time to time by You shall be accurate and complete in all material respects as of the time of submission;
  • each Identified Transaction entered into by You is based on Your independent judgement and not on any recommendation or advice provided by BEL or the RESET Service;
  • Your participation in any RESET Session is solely on the exercise of your own commercial judgment. These Terms and any RESET Service spreadsheet and information contained therein is not, and should not be construed as, an offer or solicitation to sell or buy any product, investment, security or any other financial instrument;
  • unless agreed otherwise, You will enter into Identified Transactions only as principal for Your own account, and not as an intermediary on behalf of any third party or with the assets of any third party;
  • You have, and will continue to have, the right and authority to agree to Identified Transactions in the manner contemplated by these Terms and each of such Identified Transaction shall constitute Your legal, valid and binding obligation, enforceable against You in accordance with its terms; and
  • You and Your counterparty to each Identified Transaction alone are responsible for identifying and entering into relevant legal agreements, setting any relevant credit limits and arranging settlement of any Identified Transaction and BEL shall not be responsible in any way for any failure to do so.

 

CONFIDENTIALITY

Other than as provided for in these Terms, You and BEL (each a “Recipient“) undertake to the other (“Disclosing Party“) to treat as confidential all information in any medium or format (whether marked “confidential” or not) which the Recipient receives from the Disclosing Party either directly or from any person, firm, company or organisation associated with the Disclosing Party, which concerns the transactions, business, operations or customers of any or all of the Disclosing Party and its affiliates including, without limitation, information arising from any RESET Session, which for the avoidance of doubt, shall include all Participant Data and Transaction Data arising from a RESET Session (“Confidential Information“).   Other than as set out in these Terms, the Recipient may only use the Confidential Information for the purpose of participating in or providing (as the case may be) the RESET Service as contemplated by these Terms. BEL may disclose the fact that You are participating in a RESET Session to other participants.

These confidentiality obligations shall not apply to any information which:

  • enters the public domain other than as a result of a breach of this clause;
  • is received from a third party which is under no confidentiality obligation in respect of that information; or
  • is independently developed by the Recipient without use of the Disclosing Party’s Confidential Information.

The Recipient may disclose Confidential Information where required to do so by law or by any competent regulatory authority. Other than in ordinary course of fulfilling its reporting obligations to a competent regulatory authority, the Recipient shall give the Disclosing Party prompt advance written notice of the disclosure (where lawful and practical to do so) so that the Disclosing Party has sufficient opportunity (where possible) to prevent or control the manner of disclosure by appropriate legal means. Notwithstanding the foregoing, the Recipient may retain Confidential Information which it is obliged under law, regulation, code of practice or other similar legislation in any relevant jurisdiction to retain and disclose that Confidential Information in connection with any inquiry or other request by a regulatory authority or self-regulatory authority with jurisdiction over the Recipient.

 

MISCELLANEOUS

BEL may make changes to the processes and functioning of the RESET Service from time to time without notice to you, provided, however, that any such variation shall not be material and shall not change the fundamental nature of the RESET Service.

Any notices made under or in connection with these Terms must be in writing and, unless otherwise stated, may be given in person, prepaid first class post, fax or by electronic communication in accordance with the contact information held, as applicable, by BEL and You.  For the purpose of these Terms, an electronic communication will be treated as being in writing.

You acknowledge that any telephone call made to BEL or any of its affiliates may be recorded and that any such recording is BEL’s property and may be used by BEL or any of its affiliates in evidence.

 

GOVERNING LAW

These Terms shall be construed in accordance with and governed by the laws of England and Wales (without regard to the principles of conflicts of laws) and the parties hereby submit to the non-exclusive jurisdiction of the courts of England and Wales for all matters arising hereunder.

 


PRODUCT SPECIFIC TERMS

 

Submission requirements, position matching and hedge pricing information

All Identified Transactions will follow the market standard holiday convention as defined by the International Swaps and Derivatives Association (“ISDA”).

 

Non Deliverable Forwards (NDF)

The RESET Service will only match long and short positions submitted to it. The total nominal amount of long and short positions generated using a bilateral matching option will be equal.

 

Forward Rate Agreements and Single Period Swaps (FRA/SPS)

The RESET Service will only match long and short positions submitted to it. The total nominal amount of long and short positions generated using a bilateral matching option will be equal. For hedging currencies, it may be necessary to buy or sell an unequal amount to effectively manage any net delta created when matching notional amounts over varied day counts in the hedging process.

Credit limit notionals are expressed as six month equivalents and will be multiplied by the relevant factors when converted to calculate alternate tenor exposures.

 

Basis Swaps

The RESET Service will only match long and short positions submitted to it. The total nominal amount of long and short positions generated using a bilateral matching option will be duration neutral at the durations declared.

In principle all calculations are based on the longer floating index duration IRS. The duration factors are calculated using standard market practices but because of varying calculation methods within institutions, these may not exactly match Your internal calculations.

Credit limits are expressed as a Trade/No Trade within 3 terms: up to 10y, up to 20y, 20y and longer.

Fees will be applied to a single Identified Transaction according to a standard methodology in Your brokerage agreement with BEL.

 

Inflation Swaps (INF)

Positions must be submitted in the form of overnight orders. The RESET Service will only match long and short positions submitted to it. The total nominal amount of long and short positions generated using a bilateral matching option will be matched neutrally at the ratios declared.

Credit limit notionals are expressed as two year equivalents and will be multiplied by the relevant factors when converted to calculate alternate tenor exposures.

 

Options

The RESET Service will match long and short strike risk in puts or calls. The RESET Service will match puts with puts or calls with calls unless indicated on a given strike that puts can be matched with calls.

The RESET Service attempts to return a gamma and/or vega neutral package with a delta hedge within Your portfolio of Identified Transactions.

The spot price for the delta hedge is set at the same time as the Curve. The RESET Service does not eliminate Your risk completely but aims to reduce it to within acceptable parameters. As a result, any potential profit and loss impact from any spot moves is significantly reduced. The delta hedge Identified Transaction is shown separately within Your results (such hedge service is provided free of charge and no brokerage will be charged on this Identified Transaction).

 


Links

APPENDIX 1