Regulatory Technical Standard 28 (RTS 28) Reporting

January 2018 - December 2018

  1. Summary


    Tera Europe Limited trading as TeraFX (“TE”, the “Firm”) is a Straight through processing (“STP”) broker. TE’s execution quality as an STP broker is very much dependent on liquidity and availability of instruments from its liquidity providers (“LPs”). TE monitors orders execution regularly and works with a number of LPs to continuously improve execution quality.

    During 2018, TE had retail and professional clients and offered two classes of financial instruments, namely Contract for Differences (“CFD”) and Equities. TE offers CFDs in Indices, Commodities and Precious Metals and listed equities.

    TE’s execution policy for retail and professional clients is not to give precedence to execution factors other than price and costs (“Total Consideration”) unless they are instrumental in delivering the best possible results for client’s order execution.

  2. CFDs Quality of Execution


    In terms of costs, the automated system will seek out the best overall outcome for the transaction and this is likely to be the most important execution factor to our clients. The Firm employs a transparent cost structure with no hidden commissions or fees. Main cost items for clients are spread and swap costs. In addition, the Firm monitors average raw spreads of LPs in all products on daily basis. In terms of prices, TE’s benchmark is 95% of CFH Clearing Limited.

    During the year, the Firm’s usual LPs’ order reject ratio was below 0.8%. There were two occasions caused by political news in Turkey and the UK where the reject ratio has increased. In Aug 18, due to lower liquidity and extreme market moves on Turkish Lira, the Firm’s reject ratio was 5%. In Dec 18, reject ratio was 3.3% due to Brexit uncertainty, resulting in extreme market moves and significant lower liquidity on GBP pairs from TE’s LPs.

    Table 1. ORDER REJECT RATIOS -LPS 2018 ANNUAL DATA:


    image


    During 2018, orders’ execution latency was within reasonable range: 99 milliseconds on average.

    Table 3. AVERAGE DURATION OF ORDERS PER MONTH IN 2018



    2018

    Average Duration (ms)

    Average Max Duration top 10% (ms)

    Average Min Duration bottom 10% (ms)


    Total orders

    Jan

    102

    209

    7

    149773

    Feb

    94

    168

    7

    191145

    Mar

    100

    208

    7

    177664

    Apr

    111

    275

    7

    170668

    May

    140

    573

    9

    186711

    Jun

    95

    142

    9

    172741

    Jul

    95

    150

    7

    134041

    Aug

    94

    170

    7

    50480

    Sep

    99

    184

    15

    43958

    Oct

    92

    144

    8

    57190

    Nov

    87

    145

    10

    62940

    Dec

    84

    172

    12

    55287

    * ms: millisecond

    2018 AVERAGE 99 212 9

    For information regarding PROFESSIONAL clients as per Annex II of Commission Delegated Regulation (EU) 2017/575 see table 3 below.

    Table 3. PROFESSIONAL CLIENTS

    Class of Instrument

    Contracts for Difference

    Notification if <1 average trade per business day in the previous year

    N


    Top five execution venues ranked in terms of trading volumes (descending order)

    Proportion of volume executed as a percentage of total in that class

    Proportion of orders executed as percentage of total in that class


    Percentage of passive orders


    Percentage of aggressive orders


    Percentage of directed orders

    ALPHA (2138003C3AQBXS54WM47)

    0.0001

    0.0015

    0.00%

    100.00%

    0.00%

    CFH (549300FSY1BKNGVUOR59)

    9.13

    6.37

    0.00%

    100.00%

    0.00%

    ISPRIME (549300F62BRRDZKCUZ58)

    34.07

    21.01

    0.00%

    100.00%

    0.00%

    SQ (H6IQ3SWWWBLDBI06ZX04)

    0.99

    0.57

    0.00%

    100.00%

    0.00%

    SQUARED (635400GNRY1S6JXJSV51)

    42.81

    19.66

    0.00%

    100.00%

    0.00%

    TMP (529900WZQBZ6KA701930)

    13.00

    52.39

    0.00%

    100.00%

    0.00%


    For information regarding RETAIL clients as per Annex II of Commission Delegated Regulation (EU) 2017/575 see table 4 below.


    Table 4. RETAIL CLIENTS

    Class of Instrument

    Contracts for Difference

    Notification if <1 average trade per business day in the previous year

    N


    Top five execution venues ranked in terms of trading volumes (descending order)

    Proportion of volume executed as a percentage of total in that class

    Proportion of orders executed as percentage of total in that class


    Percentage of passive orders


    Percentage of aggressive orders


    Percentage of directed orders

    ALPHA (2138003C3AQBXS54WM47)

    0.01

    0.03

    0.00%

    100.00%

    0.00%

    CFH (549300FSY1BKNGVUOR59)

    8.36

    5.11

    0.00%

    100.00%

    0.00%

    ISPRIME (549300F62BRRDZKCUZ58)

    5.06

    4.28

    0.00%

    100.00%

    0.00%

    SQ (H6IQ3SWWWBLDBI06ZX04)

    3.54

    2.96

    0.00%

    100.00%

    0.00%

    SQUARED (635400GNRY1S6JXJSV51)

    7.75

    4.09

    0.00%

    100.00%

    0.00%

    TMP (529900WZQBZ6KA701930)

    75.28

    83.53

    0.00%

    100.00%

    0.00%


  3. Equities Quality of Execution


In July 2017, TE launched listed equity trading as part of its execution services. LP for equity products is Global Prime Partners (“GPP”).

For information regarding PROFESSIONAL clients as per Annex II of Commission Delegated Regulation (EU) 2017/575, see table 5 below.


Table 5. PROFESSIONAL CLIENTS

Class of Instrument

(a) Equity - Shares (i) Tick size liquidity bands 5 and 6 (from 2000 trades per day)

Notification if <1 average trade per business day in the previous year


Y


Top five execution venues ranked in terms of trading volumes (descending order)

Proportion of volume executed as a percentage of total in that class

Proportion of orders executed as percentage of total in that class


Percentage of passive orders


Percentage of aggressive orders


Percentage of directed orders

GPP (213800P92PNWWOSITY17)

100%

100%

0%

100%

0%


Information regarding RETAIL clients as per Annex II of Commission Delegated Regulation (EU) 2017/575: TE had no retail clients trading in “(a) Equities – Shares & Depositary Receipts” class of financial instrument.


Other

Close links, conflicts of interests, and common ownerships: Among the Clearers, TE uses sister company Tera Yatırım Menkul Degerler (“TMP”). However, TMP does not provide price feed. There are no close links with other LPs. No conflict of interest was identified between TE and its LPs.

Specific arrangements with execution venues: TE being an STP broker has negative balance protection from TMP for retail clients irrespective of LP used. TE has no other relevant arrangements or monetary and non-monetary benefits with any of its LPs.

Change in the list of execution venues: For CFDs, in 2018 vs 2017, TE cancelled LP agreement with ADS (213800FPNEZWDW42FZ90) and added IS Prime UK Limited (ISPRIME). Reason for change in LP: business conditions. TE entered into LP agreement with a prime broker Global Prime Partners (“GPP”) for equity brokerage.

Execution differences according to client categorisation: TE’s Best Execution Policy applies to both Retail and Professional client categories. There are no major differences; total consideration is the main factor in the execution.

Data or tools relating to the quality of execution: TE monitors LPs latency and slippages for client orders regularly. TE switches and updates list of LPs based on the analysis of LPs’ performance, which includes execution quality, product portfolio and margin requirements offered.


More information on Tera Europe’s products and services


London +44 20 7073 0494

Warsaw +48 22 308 1406

customerservices@terafx.co.uk