EBSI Forex

Introduction

The purpose of this document is to present to our clients the principles and methods governing the execution of clients’ orders under the best order execution policy.  This document serves as a basis for our clients’ consent to our Order Execution Policy for leveraged foreign exchange contracts.

CES Forex (HK) Limited (“CESFXHK”) is a member of Everbright Securities International (EBSI). CESFXHK is licensed by the Hong Kong Securities and Futures Commission under Type 3 license, which enables CESFXHK to offer leveraged foreign exchange contracts. Further, CESFXHK is a joint equity partnership between Everbright Securities International and Macquarie FX Investments Pty Ltd, a subsidiary of Macquarie Bank. Macquarie Bank is a global provider of banking, financial, advisory, investment and fund management services.

Execution Model

CESFXHK operates under a Straight Through Processing (STP) model, under which all clients’ orders are executed with its liquidity providers. Our liquidity providers include leading global financial institutions to ensure ”The best bid, best offer” execution for CESFXHK clients. CESFXHK is independent from its liquidity providers.

CESFXHK clients have a choice of two leveraged FX trading platforms with STP access to FX pricing.  MT4 is suitable for desktop and mobile devices and can be utilized for EA script trading strategies. FX Trader Pro is a desktop-based downloadable platform with API price feed capabilities.

Best Order Execution Criteria

CESFXHK is regulated to take all reasonable steps to obtain the best possible price for its clients when executing orders. The best order execution policy takes into account the following factors when CESFXHK acts on behalf of its clients:

1. Price
2. Total execution costs
3. Possible impact of execution
4. Likelihood of execution and settlement
5. Speed of execution

Price

CESFXHK takes the prices provided by a group of leading financial institutions; those prices are then aggregated and the best price at the “top of the book” will be automatically selected as the core price. The prices CESFXHK displays to clients are tradeable on the CESFXHK trading platforms and are generated by applying a spread to the core price.

Order Handling

Orders received from clients through CESFXHK trading platforms are executed promptly by the system. The various types of orders available to clients include:

Market Order – A market order is an order to buy or sell a currency pair at the best available price in the market at the time the order is entered.

Limit Order – A limit order is an order either to buy below the current market price or sell above the current market price. The limit order will be executed when the quoted price is reached in the market.

Stop Loss Order - A stop loss order is designed to stop additional losses of the client in the situation where the price has moved against the client’s position. The order is executed when the market quote reaches the client’s pre-set stop loss price.

Take Profit Order – A take profit order is designed to realize the profit of the client where the price has moved in favor of the client’s position. The order is executed when the market quote reaches the client’s pre-set take profit price.

Liquidation Order – A liquidation order is automatically executed by the system when the client’s margin percentage reaches 1%. This risk management setting adheres to regulatory requirements. MT4 is a ticket-based system, which will result in the client’s individual trades being liquidated until the margin percentage returns to above 1%. Alternatively, FX Trader Pro will liquidate the client’s total position/positions when the margin percentage reaches 1%.

One-Cancels-the-Other Order (OCO) (Threshold Order) - A one-cancels-the-other order (OCO) (threshold order) is a pair of conditional orders that if one order (lower or upper limit) is executed, then the other order (upper or lower limit) will automatically be canceled. For MT4, download EA to place OCO orders.

If-Done Order- An if-done order is designed for trading with risk management, allowing the client to place a pre-set stop loss or take profit order automatically after a market order, limit order, stop order or OCO order is filled. For MT4, download EA to place if-done orders.

Trailing Stop - A trailing stop order allows the client to manage risk of their portfolio by modifying the stop loss price against market fluctuations. By setting a specific fixed amount against the market price, once the pre-set limit is reached, the stop-loss order will be placed and modified as the market moves in favor of the client, allowing the client to lock in the profit, and manage the risk as the stop loss price remains unchanged if the market moves against the client.

Slippage Handling

Slippage can be a common occurrence in forex trading. Clients should familiarize themselves with how slippage can occur, so as to effectively manage associated risks. Slippage refers to an order being filled at a price different from the client’s order price. This could happen during periods of high volatility or pricing gaps in the market due to unexpected news or economic data announcements, etc. When an order is filled at a more favorable price, it is known as positive slippage; alternatively, when an order is filled at an unfavorable price to the original order, it is referred to as negative slippage.

Trading Limit

Each client’s trading account will be assigned a trading limit according to the client’s trading experience, financial information and investment objective declared during the account opening stage. The trading limit will be the maximum gross nominal position the client can hold in the trading account, which will be displayed on the client’s daily statement. The client’s trading account will also adhere to the SFC margin requirements of 5% initial margin, and 3% maintenance margin with liquidation at 1%.

Order Execution Risk

There are various execution risks associated with the trading of leveraged foreign exchange contracts. CESFXHK encourages all clients to understand the nature and risks associated with leveraged foreign exchange contracts and be knowledgeable about risk management strategies to minimize potential losses. For further information clients should refer to the risk disclosure statements in the client agreement

Management Review

The CESFXHK management is required to monitor the effectiveness of its order execution policy. The CESFXHK management will review this policy and its arrangements at least annually or as the need arises to ensure it continues to strive for the best possible order execution. Material changes to the policy will be communicated through the CESFXHK website and notification to all clients.