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Tower Research Capital LLC and its affiliates (together, “Tower”) is committed to conducting our foreign exchange market activities in a manner consistent with the principles of the FX Global Code. The Global Foreign Exchange Committee has developed disclosure cover sheets for liquidity providers to improve the accessibility and clarity of existing disclosures. Please see our disclosure cover sheet which is available upon request and posted on the GFXC register.
Please note that cover sheets should be read alongside the below disclosures, and are not a substitute for reading the disclosures.
The below disclosures provide transparency on Tower’s algorithmic execution practices with respect to its liquidity providing activities in the FX market. These disclosures may be updated from time to time. Tower has signed a Statement of Commitment adhering to the FX Global Code for its foreign currency trading business. We are committed to conducting our foreign exchange market activities in a manner consistent with the principles of the Code. These disclosures are relevant to the business described above. If you have any questions or would like any further information, please contact your Tower business representative.
Tower is a quantitative-driven electronic trading firm operating on exchanges and e-trading venues globally. Tower’s trading is almost exclusively fully automated. In relation to its market making activities, Tower may enter into transactions in order to source liquidity as part of its own trading activity and in order to manage its risk. Such transactions may impact the prices that Tower offers. Tower only trades in a principal capacity.
Tower’s trading is an automated trading system. The firm does not accept orders at the fixing rate and therefore has no conflict trading during the window in which the fixing rate is determined. All counterparty orders are either fully filled or fully rejected, as the trading model’s logic will give no partial fills to the orders it receives, and all counterparties can have bespoke pricing and hedging options for each session.
LAST LOOK
Every counterparty has its own trading style and liquidity requirements which can vary greatly from counterparty to counterparty. Tower may tailor the liquidity it provides on a case by case basis, so as to meet each counterparty’s specific needs and requirements, while considering the market impact and volume of their anticipated trading. The impact of this tailoring of liquidity may result in differences in pricing and trade acceptance rates for specific counterparties. Two clients simultaneously submitting identical Request for Executions (RFEs) to access Tower liquidity may result in the cancellation of one counterparty’s order while the other’s is executed. All of the controls can be customized with the counterparty to suit its trading strategy, execution objectives and trade flow behavior, but Tower reserves the right to determine tolerances in its sole discretion.
Tower may engage in Last Look practices and Pre-Hedging when it receives a RFE as outlined below. If you require any further information as to how your specific market making stream is configured, please contact your Tower business representative.
Tower’s use of Last Look and Pre-Hedging can vary based on many factors, including the nature of the Counterparty’s flow, market conditions, and the operational conditions of the platform or venue on which the activity takes place.
The Firm may employ Last Look with a Last Look window ranging from 0m/s (“Zero Hold Time”) to 275 m/s once an RFE is received by the trading model. With Zero Hold Time, as soon as the RFE is received (which may vary depending on technology and the location of the matching engine), the model compares the price at which the RFE is made with the then current market price and ensures that the trade request is within the credit, settlement and other operational limits to which the firm’s trading is subject to. Reasonable price check validation is asymmetrical but can be symmetrical or customized based on agreement with the counterparty. The RFE is not subject to any additional holding period or delay before the checks are applied.
A Last Look holding time may be applied to an RFE in addition to the initial risk checks described above. This may be to prevent adverse selection in counterparty order flow. Last Look acceptance is applied based on counterparty settings. Acceptance may be based on market decay and individual session dollar loss configuration. By default, when applied, the Last Look RFE acceptance is asymmetrical, but can be customized or symmetrical upon agreement with the counterparty.
Tower does not conduct trading activity during the last look window that utilizes information from the Client’s trade request before accepting or rejecting it. The only exception to this is Tower may pre-hedge an RFE within the Last Look window. In the event that the terms of orders Tower sends to pre-hedge are accepted in the market, the Firm will accept the full RFE. If the hedge is not filled, the model may subsequently reject it. If the hedge arrives later than the RFE response time, the model may or may not accept the RFE.
Your information will remain confidential within Tower or its affiliates and will only be disclosed externally where required by applicable law, rules or regulation, upon request from any court of competent authority or any regulator, or as otherwise agreed by the counterparty.
In line with market practice, Tower may utilize your identity and observed transaction execution characteristics to determine how it manages the risk that it accepts. This means that Tower will have the ability to tailor its risk management strategy (including the period of time for which it holds the risk in relation to your executed transactions) to your transaction execution characteristics. If your RFE is rejected, Tower will not use this information to interact with the market to adversely impact your interest. For more information, please contact your Tower business representative.
Unless otherwise requested, any trade request accepted by Tower’s trading models shall be executed in its entirety. There will be no partial fills of trade requests.
Tower does not apply mark-up to any of its prices. The prices provided only include a bid-offer spread which may vary from counterparty to counterparty for the same or similar transactions. The spread may also vary for different RFEs sent for the same type of transaction. The factors considered to determine the bid-ask spread includes, but is not limited to, market conditions, the relevant trading venue, and the size, type and direction of the RFE.