This disclosure sets out certain information we provide to our clients in connection with Rates Reference Price Transactions (as defined below). You are not required to take any action and do not have to acknowledge or respond to this disclosure. The contents of these disclosures should not be treated as investment, regulatory or legal advice.
Reference Price Transactions
You may request that Barclays enter into cash transactions and derivatives transactions in respect of government bonds (including, without limitation, bond forwards, single bond total return swaps and index total return swaps) where the execution price is based on a reference rate price (these transactions are referred to in this disclosure as Reference Price Transactions, the reference rate prices are referred to as Reference Price and the time a Reference Price is fixed is referred to as the Reference Time).
Please note that Barclays does not consider a Reference Price Transaction to be a discretionary price order.
Conflicts of interest
If Barclays agrees to enter into a Reference Price Transaction with you, potential conflicts of interest may arise as a result of Barclays acting as a submitter or contributor to the Reference Price or hedging the transaction ahead of or around the fixing time of the Reference Price (as the hedging activity may, but is not intended to, impact the level of the Reference Price).
As a result, while entering into a Reference Price Transaction allows you to remove the uncertainty over the difference between the Reference Price and the execution price for the transaction, you still bear the risk that market activity following entry into the Reference Price Transaction (including any hedging activity) could result in an adverse price movement for you before the Reference Time.
Management of conflicts of interest
Barclays manages this potential conflict of interest in the following way:
1. Restrictions on Reference Price Transactions: Barclays does not enter into Reference Price Transactions where Barclays is the administrator or expects to be the sole provider of the Reference Price. Barclays may enter into Reference Price Transactions if Barclays is one of multiple submitters or contributors to the Reference Price or is not connected with the determination of the Reference Price.
This does not mean that Barclays will always enter into a Reference Price Transaction based on a permitted Reference Price as any execution is always at the discretion of Barclays.
2. Desk procedures: Barclays has in place desk procedures regarding the hedging of Reference Price Transactions, trading around the fixing time of the Reference Price and supervision of that activity.
3. Governance for benchmark submissions and contributions: Where Barclays acts as one of multiple submitters or contributors to the Reference Price, additional controls and governance apply to manage the potential conflicts of interest that can arise from price submissions or contributions and to comply with applicable benchmark regulations.
All client transactions are considered confidential and discussed within Barclays on a need-to-know basis only (for example, in order to execute, hedge or settle the transaction), subject to any applicable regulations relating to confidentiality, data privacy or banking secrecy.
Terms of Reference Price Transactions
If you request Barclays to enter into a Reference Price Transaction, Barclays will treat you as being aware of and accepting the contents of this disclosure. Barclays will not access the market to hedge a Reference Price Transaction if you specifically ask Barclays not to do so. However, Barclays may not be able to enter into a Reference Price Transaction if it is unable to hedge the transaction.
Please contact your usual Sales representative if you have any queries about the contents of this disclosure.