Trader Order Driven Execution Overview The way that BenchMark Finance executes client trade requests is changing from a Quote Driven Model (green pricing) to an Order Driven Model (Quick Trade). This applies to FX Spot, FX Forwards and CFD Indices, Commodities, Interest Rates and Bonds. FX Options are out of scope and will continue to trade on a Quote Driven Model (green pricing).

What is a Quote Driven Model (green pricing)? A Quote Driven Model (green pricing) provides an executable full amount price (market-made BenchMark Finance price). It is liquid model but lacks transparency by creating a ‘Liquidity Mirage’ i.e. allowing clients to transfer their risk to BenchMark Finance (in a given size) at a guaranteed price, when there may be no such thing in a disorderly market.

What is an Order Driven Model? An Order Driven Model provides an executable price provided to BenchMark Finance clients that is based on Saxo’s own liquidity, in addition to liquidity available on a DMA basis in the broader market. The client is provided with greater control over the way that their order is traded through user defined Price Tolerance, with the potential for benefiting from price improvement. An Order Driven Model may result in partial fills, but under normal market conditions a Market IOC order will be filled in full immediately. Why is BenchMark Finance changing to an Order Driven Model?  To become more transparent in the way that we handle client orders, thus enhancing our best execution practices. Early adoption of regulatory requirements (MIFID II Best Execution Policy) and the forthcoming release of the FX Global Code are the key drivers in defining ourselves as the most transparent and responsible FX and CFD trading provider.  To extend the breadth of FX liquidity available to clients. We will be able to connect to a broader set of market venues (i.e. ECNs) that typically only operate under an Order Driven Model. This means that it will be quicker and easier to get client orders into these venues, rather than having to rely on manual execution.  To improve our risk management procedures. By removing the promise of providing firm liquidity at a guaranteed price when there may be no such thing in a disorderly market, we avoid the risk of exposing ourselves to an SNB type situation.  To create easier cross sell opportunities by aligning FX Spot/Forward and CFD Indices, Commodity, Interest Rate and Bond products with the order execution methodologies of other asset classes.  To enhance FX functionality with the introduction of partial fills, user defined tolerances and price improvements. Offering our clients greater access, transparency and control helps to further our position as a trusted partner while democratising investment and trading.

What Order Types do we support? Quick Trade Orders: Type Description

Time-to-Live (TTL) Execution side Trigger Side Trigger Point Attribute Execution Price

Examples

Type Description

Time-to-Live (TTL) Execution side Trigger Side Trigger Point

Limit IOC (Immediate-or-Cancel) An instruction to buy or sell as much of the order as possible within pre-defined tolerances of a limit price, immediately. Immediately means the order is placed with a 5 second Time-to-Live (TTL). This can result in a partial fills. The order will not continue working until the full amount is filled. If a partial amount is done, any residual amount will be cancelled. 5 seconds Offer for Buy, Bid for Sell N/A N/A N/A The specified limit price. If a tolerance is set, the client will be filled if the price is within their tolerance. Improvements will be passed on as well as if the price is worse than the limit set (as long as it was within the tolerance).  If a client has a Limit IOC to buy 1M EURUSD with a tolerance of 1 pip and a limit price of 1.10. In this case the range of prices for filling the order is (1.0999 – 1.1001) meaning the order will be filled at the best price within the range for the available liquidity of the order amount or the full notional of the order amount. If there is 1M available at 1.0999 the client will get the improvement and get done at 1.0999. If there is 1M available at 1.1001 the client will get the worse fill at 1.1001 as long as it is within the specified Price Tolerance.  If a client has a Limit IOC to buy 1M EURUSD with a tolerance of 0 and a limit price of 1.10 then the order is essentially to fill as much of the order amount as possible at a price of 1.10. If there is 1M Liquidity available at 1.10 the client will get the order done. If there is 500K available at 1.10 the client will get 500K done. The residual 500K will be cancelled. If the price moves to 1.1001 the order will not be done at all.  If a client has a Limit IOC order to buy 10M EURUSD and Saxo no liquidity available the order will be routed DMA. In the event that there is 10M liquidity available in a stack of 1M, 2M, 3M, 4M the client will get a volume-weighted average price (VWAP) and the execution will be sweep execution. Market IOC (Immediate-or-Cancel) An instruction to buy or sell as much of the order as possible, immediately. Immediately means the order is placed with a 5 second Time-to-Live (TTL). This can result in a partial fills. The order will not continue working until the full amount is filled. If a partial amount is done, any residual amount will be cancelled. Price Tolerance cannot be added to a Market IOC order, meaning that a client cannot the execution price range. 5 seconds Offer for Buy, Bid for Sell N/A N/A

Attribute Execution price Examples

N/A The price for the available liquidity of the order amount or the full notional of the order amount.  If a client has a Market IOC to buy 1M EURUSD, if there is available liquidity in Saxo for 1M the client will get the 1M done at the best price available for the client.  If a client has a Market IOC to buy 10M EURUSD and Saxo’s stack is 1M, 2M, 4M then we will fill 7M at the best price for 4M. Similarly if the stack is 1M, 2M, 5M then we will fill 8M at the best price for 5M. The client will not get a VWAP and Saxo will not sweep. If a partial amount is done, any residual amount will be cancelled.  If a client has a Market IOC to buy 10M EURUSD and there is ample liquidity they will get the order done for 10M at the best price for 10M.  If a client has a Market IOC to buy 10M EURUSD and Saxo has no liquidity available, the order will be routed DMA. In the event that there is 10M liquidity available in a stack of 1M, 2M, 3M, 4M the client will get a VWAP and the execution will be sweep execution.

Resting Orders: Type Description

Time-to-Live (TTL) Execution side Trigger Side Trigger Point Attribute Execution price Examples

Type Description Time-to-Live (TTL)

Market An instruction to buy or sell as much of the order as possible immediately, at the best price available. This can result in a partial fills. The order will potentially rest and continue working the full amount for the duration of the order (see TTL). Day Order (DO) only Offer for Buy, Bid for Sell Offer for Buy, Bid for Sell N/A N/A The price for the available liquidity of the order amount or the full notional of the order amount.  If a client has an order to buy 10M EURUSD and there is 7M available. The client will get the 7M done similarly to the Quick Trade Market IOC, however since it is a day order the residual 3M will continue being worked until either the day order expires or the 3M is done. In the rare event that 3M is available within the reload period after the 7M fill. The 7M will be filled at a price for 7M and the 3M will be filled at a price for 10M. If the 3M is filled after the reload period it will be for a price of 3M.  If a client has an order to buy 10M EURUSD and there is 10M available the client will be filled for a price of 10M.  If a client has an order to buy 10M EURUSD and there is no liquidity available the order will be routed DMA and subject to sweep execution and a VWAP. Limit A Limit order that rests at Saxo until the price is triggered. The order will work for the TTL (see below) selected. Day Order (DO), Good- til-Cancelled (GTC), Good-til-Date (GTD)

Execution side Trigger Side Trigger Point Attribute Execution price Examples

Offer for Buy, Bid for Sell Offer for Buy, Bid for Sell Once the specified limit price is touched N/A The limit price set by the client. In fast moving markets slippage may occur.  If a client has an order to buy 1M EURUSD at a limit price of 1.10. Once the offer price touches 1.10 the order will be triggered and provided liquidity is available the order will get done. The order will be subject to slippage in fast moving markets.  If a client has an order to buy 10M EURUSD at a limit price of 1.10. If there is only liquidity for 5M available at 1.10, 5M will be partially filled and the residual amount will continue working for the set duration. If the next 5M is within the reload period it will be for a price of 10M, if after it will be for a price of 5M.  If there is no liquidity available the order will be routed DMA and subject to sweep execution and partial fills.

Type Description

Take Profit A Limit order that rests at Saxo and upon being triggered is handled as a Limit Order. Good- til-Cancelled (GTC) Offer for Buy, Bid for Sell Offer for Buy, Bid for Sell Once the specified limit price is touched on the trigger side. I.e. a limit order to buy @ 1.10 is triggered when the offer price touches 1.10. N/A The limit price set by the client. In fast moving markets slippage may occur.  If a client has an order to buy 1M EURUSD at a limit price of 1.10. Once the offer price touches 1.10 the order will be triggered and provided liquidity is available the order will get done. The order will be subject to slippage in fast moving markets.  If a client has an order to buy 10M EURUSD at a limit price of 1.10. If there is only liquidity for 5M available at 1.10, 5M will be partially filled and the residual amount will continue working for the set duration. If the next 5M is within the reload period it will be for a price of 10M, if after it will be for a price of 5M.  If there is no liquidity available the order will be routed DMA and subject to sweep execution and partial fills.

Time-to-Live (TTL) Execution side Trigger Side Trigger Point Attribute Execution price Examples

Type Description Time-to-Live (TTL) Execution side Trigger Side Trigger Point

Stop A Stop order that rests at Saxo and upon being triggered is handled as a Market Order Good- til-Cancelled (GTC) Offer for Buy, Bid for Sell Bid for Buy, Offer for Sell Once the price trades through the specified stop level i.e. a Stop order to sell at 1.10 is triggered when the offer price touches 1.10

Attribute

Execution price

Examples

Type Description Time-to-Live (TTL) Execution side Trigger Side Trigger Point Attribute

Execution price Examples

Trailing Stops are available as an attribute to the Stop Order. If the market moves against your position and your original stop level is triggered then the order will function as a Stop Market. If the market moves in your favor the stop level will move in predefined steps. The further in the money your position moves, the stop level will continue to move with it, still in the predefined steps. Once triggered it will function as a Stop Order. The order once triggered will function as a Market GTC. A stop order to sell will be triggered on the offer and executed on the bid (the spread away) and will continue working until the full amount is done.  If a client has a stop to buy 1M EURUSD at a price of 1.10. Once the bid price touches 1.10 the order will be triggered and provided liquidity is available the order will get executed on the offer (the spread away).  If a client has a stop order to buy 10M EURUSD at a price of 1.10. If there is only liquidity for 5M available at 1.10, 5M will be partially filled and the residual amount will continue working until done. If the next 5M is within the reload period it will be for a price of 10M, if after it will be for a price of 5M.  If there is no liquidity available the order will be routed DMA and subject to sweep execution and partial fills. Stop Limit A Stop order that rests at Saxo and upon being triggered is handled as a Limit Order Good- til-Cancelled (GTC) Offer for Buy, Bid for Sell Bid for Buy, Offer for Sell Once the price trades through the specified stop level i.e. a Stop order to sell at 1.10 is triggered when the offer price touches 1.10 Trailing Stops are available as an attribute to the Stop Order. If the market moves against your position and your original stop level is triggered then the order will function as a Stop Limit. If the market moves in your favor the stop level will move in predefined steps. The further in the money your position moves, the stop level will continue to move with it, still in the predefined steps. Once triggered it will function as a Stop Limit. The limit price set by the client. In fast moving markets slippage may occur.

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If a client has a stop to buy 1M EURUSD at a price of 1.10. Once the bid price touches 1.10 the order will be triggered and provided liquidity is available the order will get executed on the offer (the spread away). The order will be subject to slippage in fast moving markets. If a client has a stop order to buy 10M EURUSD at a limit price of 1.10. If there is only liquidity for 5M available at 1.10, 5M will be partially filled and the residual amount will continue working until done. If the next 5M is within the reload period it will be for a price of 10M, if after it will be for a price of 5M. If there is no liquidity available the order will be routed DMA and subject to sweep execution and partial fills.

What is an IOC order? IOC stands for Immediate-or-Cancel. An IOC order is an instruction to fill as much of the order as possible, immediately. Immediately means the order is placed with a 5 second Time-to-Live (TTL). If the order cannot be filled within the TTL any residual amount will be cancelled. It is important to note that whilst all IOC orders are placed with TTL, the speed of execution is not expected to change from what it is currently. IOC orders filled against internal liquidity will happen within milliseconds. A 5 second TTL is only applicable to those orders that are routed externally to liquidity available on a DMA basis in the broader market. Does BenchMark Finance offer Fill-or-Kill (FOK) orders? No, BenchMark Finance will no longer support FOK orders for FX Spot, FX Forwards and CFDs. FOK orders are also known as Full Amount or Nothing Done orders. Due to ECNs functioning with partial fills, and because we want to include these venues in the liquidity offering to our end clients, we can no longer guarantee full amount execution. Partial fills can be very advantageous to clients in certain circumstances. Does BenchMark Finance offer Iceberg orders? No, BenchMark Finance does not currently offer Iceberg orders on FX products. However by moving to an Order Driven Model this opens up the potential of being able to offer this type of order functionality in the future. Iceberg orders are available on Single Stock and Cash Equity products.

What is a Partial Fill and how does it work? A partial fill may occur in the event that there is not enough liquidity available at the limit price and/or at the size that the client wishes to trade. A Quick Trade IOC order will continue working until the full amount is filled as long as it is within the Time-to-Live (TTL). If a Quick Trade IOC order is only partially filled when the TTL runs out, any residual amount will be cancelled. Each partial fill will be confirmed to the client individually as separate trade confirmations; however multiple fills are aggregated into one trade with an average price. Resting orders with longer durations (i.e. Day, GoodTil-Cancelled etc) can also receive partial fills. If a Resting order is only partially filled any residual amount will rest on the order book with the same duration. Example 1. GBPUSD is trading at 1.3170. Client enters a 10mio GBPUSD Limit GTC order to buy at 1.3100, with the following related orders attached: Take Profit at 1.3150 Stop Loss at 1.3075 The order (10mio) total is filled in two separate (partial) fills: 1) 2mio at 1.3100

2) 8mio at 1.3095 Questions. If the 2mio and 8mio are filled 4 hours apart are we left with one (aggregate) position, or two separate positions? As long as the fills are received during the same trading day they will always be accumulated into one position. One pair of related orders will be attached. One Take profit order and one Stop Loss order related to the aggregate position, at the rates specified by the client (1.3150 and 1.3075). If the 2mio and 8mio are filled 2 days apart are we left with one (aggregate) position, or two separate positions? At the end of the trading day, if an order is not fully filled, it will be transferred to the next day but treated as a new and separate order. A fill on day 2 will be registered as a new and separate trade. Subsequent fills on day 2 will accumulate on the new position. Would the rates of the related Take Profit and Stop Loss orders matter if they were entered to be a pip differential from the original Limit GTC order to buy at 1.1300, as opposed to outright level entries of 1.3150 and 1.3075? I.e. Is that pip differential applied to the original Limit GTC order, or to the fill rate on the executed order? We do not support orders place as a differential to any other order (level or fill). Related orders are placed at specific level, regardless of which level the master order is filled at (or placed at). What you see in the GUI where you can select Price Tolerance (pip or percent) is just to help the client select a level. The actual order are placed at specific level, not as a difference to the master. Example 2. GBPUSD is trading at 1.3170. Client enters a 10mio GBPUSD Limit GTC order to buy at 1.3100, with the following related orders attached: Take Profit at 1.3150 Stop Loss at 1.3075 The order is partial filled for 2mio at 1.3100. Questions. Are we left with one pair of related orders, or two pairs of related orders? Initially the related orders are attached to the entry order. Once the entry order receives the first partial fill, the related orders are detached from the entry order and attached to the resulting position. The amount of the related orders are adjusted to match the amount of the position (the partial fill(s)). I.e. in the example above, we will have a 2mio position with a Take Profit of 2mio and a Stop Loss of 2mio. On subsequent fills of the entry order, the amount of the related orders are updated to match the new amount of the related position.

If the 10mio GBPUSD Limit GTC order to buy at 1.3100 is filled for another 3mio the next day, will the 5mio position see its Take Profit and Stop Loss orders updated in size from 2mio to 5mio? At the end of the trading day, if an order is not fully filled, it will be transferred to the next day but treated as a new and separate order I.e. the entry order of 8mio will be transferred to a new day and replaced with a new entry order of 8mio. The order will be created with a Take Profit and Stop Loss of 8mio (also new orders). If after the 2mio is filled, the price goes up to 1.3150 which triggers the related Take Profit, what happens to the original entry order? The remaining part of the original entry order will be cancelled, and so will the two related orders. We will be left with a Buy of 2mio at 1.3100 and a Sell of 2mio at 1.3150. Everything else is cancelled.

What is Price Tolerance? Price Tolerance defines the minimum (when selling) price differential or the maximum (when buying) price differential that a client is comfortable accepting. Price Tolerance could otherwise also be known as slippage, but we choose this terminology instead to avoid a negative connotation. Price Tolerance will be added to/subtracted from the current bid/ask price when placing a Limit IOC order. In the Quick Trade ticket, a client can set a tolerance in pip or percentage terms for FX, or tick and percentage terms for CFDs. For FX, the default is set to 0.01% of the Spot price for all currency pairs, but is configurable on an individual currency pair level. Individual currency pair configuration persists the Price Tolerance state (On/Off), and remembers the pre-defined tolerance specified by the user for each currency pair. The trade tiles show the limit price inclusive of the specified tolerance amount. For example, if EURUSD is trading at 1.11660 / 1.11668 and you add Price Tolerance of 1.0 pips, the minimum price to sell is 1.11650 (1.11660 – 0.00010), and the maximum price to buy is 1.11678 (1.11668 + 0.00010). Please refer to the table below for the default Price Tolerance on CFD and Listed products: Product CFD, Indices CFD, Forex CFD, Commodities CFD, Interest Rates and Bonds CFD, Stocks & ETFs Stocks Futures Futures Spreads

Default value Price Tolerance US500.I=0.03%; Else=0.01% 0.01% OILUS*=1 tick; Else=0.01% 0.01% 0 ticks 0 ticks 0 ticks 0 ticks

How are orders prioritised? For FX, orders are prioritised by time, i.e. handled sequentially; whichever order gets triggered (for Resting) or received (for Quick Trade) first, will be processed first. For single stock and cash equities, BenchMark Finance prioritises orders by price first and then by time.

Will the speed of execution change? No. We expect the speed of execution to be of the same high quality as it has been.

Why will a client receive a rejection? A client can experience a rejection on a Quick Trade IOC order for the following reasons:  

There is not enough liquidity available for any portion of the clients requested notional amount at or better than the limit price, during the Time-to-Live (TTL) of the order The client doesn’t have enough margin to cover the trade

Have BenchMark Finance collected any performance statistics? Moving from a Quote Driven Model to an Order Driven Model is a fundamental change for BenchMark Finance and as such we will publish statistics as soon as we have begun to collect them

Is everyone (our competitors) doing this? An order driven model is not new and indeed many of our competitors are already offering this. BenchMark Finance is differentiating itself by becoming more transparent in our order handling process, thus enhancing our best execution practices. BenchMark Finance believes it is important for clients to understand the subtleties of best execution in more detail, and by publishing execution statistics we hope that this will lead to BenchMark Finance being seen as the most transparent and responsible FX and CFD trading provider.