RBC Capital Markets’ Role in the Global Fixed Income,Currencies, Commodities and Secured Financing Markets
Publication date: 30 August 2024
Overview
At Royal Bank of Canada, we are dedicated to the highest standards of integrity. We value our relationship withour clients and recognize that we need to earn the right to be your first choice. We believe that the best way to do
this is to build long term relationships based on accountability, transparency, and an open two-way dialogue. This
notice forms part of our ongoing relationship with you.
The aim of this notice is to provide you with enhanced transparency of the overarching standards and principles
that apply to your trading relationship with RBC Capital Markets (“RBCCM”)1 in the fixed income, currencies andcommodities (“FICC”) and secured financing transaction (“SFT”) markets. RBCCM provides a full range of products
and services to institutional clients and counterparties, including, but not limited to, transactions in fixed income(rates, credit, futures, and municipal products), currencies (“foreign exchange” or “FX”) (spot, forwards, swaps,
and options), commodities, repo, reverse repo, total return swaps, and securities lending and borrowing.
The standards and principles outlined in this notice are provided for transparency and information purposes only,
and are not intended to modify any applicable laws, regulations or rules (“Applicable Law”), or terms andconditions that govern your trading relationship with RBCCM or that may otherwise be relevant to a specifictransaction. Subject to this, such standards and principles shall apply globally to all your FICC and SFT trading
activities with RBCCM.

Principal Trading and Market Making••

1

In global FICC and SFT markets, RBCCM may engage in pricequoting, order taking, trade execution, and other related
activities. Unless otherwise agreed, RBCCM engages in these
activities as a principal and not as agent. RBCCM may tradeprior to, alongside, or following the execution of clienttransactions and receipt of client requests for quotes orindicative prices. The reasons for such trading may include theexecution of other client transactions, hedging or sourcing
liquidity for market making purposes, management of RBCCM’srisk, or as part of a previously commenced trading strategy.
RBCCM and its clients may have divergent or conflicting
interests in these activities and RBCCM will take reasonable
steps to identify and manage conflicts of interests inaccordance with Applicable Law.
RBCCM’s activities may affect a trigger, or the delay or
prevention of a trigger, of stop loss orders, barriers, knock-outs,
knock-ins, and other similar instruments which are dependent
on market movements. RBCCM employs reasonably designed

•

•

•

means to avoid undue market impact and to manage resulting
conflicts of interest.
RBCCM may utilize a number of internal and external sources ofliquidity in order to provide bids and offers, and to facilitatetransactions with clients.
RBCCM does not act as a fiduciary or an advisor, or in anothersimilar capacity on behalf of its clients, although RBCCM may
have certain obligations to its clients under Applicable Law. Anystatement provided by RBCCM should not be construed as arecommendation or as investment advice regarding the value oradvisability of any trading activity, and is not based on or
tailored to a client’s particular circumstances or characteristics.
A client is expected to evaluate the appropriateness of any
transaction based on their own assessment of the transaction’srisks and merits and all facts and circumstances in connection
therewith, in consultation with its own independent advisers as
appropriate.
During periods of volatile markets, RBCCM endeavours tocontinue to serve its clients but may not be able to provide the

RBCCM is the global brand name for the capital markets business of Royal Bank of Canada and certain of its subsidiaries.

R B C C A P I TA L MA R K E T S

RBC C M ’S ROLE IN THE GLOB AL F ICC AN D SEC U RED F IN AN C IN G MA R K E T S

product offering, level of execution, liquidity, or pricing as would
be the case under more normal market conditions. As such,
RBCCM is not responsible or liable for the impact that such
constraints may present.

Pre-Hedging•

RBCCM may trade prior to (including immediately before),concurrently with, or after (including immediately after) the
execution of client transactions and/or receipt of client requests
for quotes or indicative prices. The reasons for such trading
may include the execution of other client transactions, hedging,sourcing liquidity for market making purposes, management of
RBCCM’s risk, or as part of a previously commenced trading
strategy. Any of such reasons may conflict with client interests.
As noted, RBCCM may choose to pre-hedge a client order orclient transaction request to enable RBCCM to provide liquidity,
manage its risk, execute client orders and transactions, or forother legitimate business reasons. The aforementioned RBC
trades may impact the price of the underlying market andconsequently the price of client transactions. In addition, andregardless of how RBCCM chooses to hedge or manage its risk,
any profit or loss resulting from that activity will accrue to
RBCCM. Such trading will occur in compliance with Applicable
Law and any specifically agreed client terms.

•

Pricing•

Order and Transaction Management2
•

•

•

2

Where RBCCM accepts a client order at a price, RBCCM isagreeing to attempt to complete the order as principal for the
price requested by the client. RBCCM will use its professional
judgment to determine whether the relevant price has beenreached, including where a third-party pricing source is adeterminant in establishing such price. RBCCM’s acceptance ofa client order is not a guarantee that RBCCM will be able tocomplete the transaction at the order price level requested orthat a tradeable market exists to execute at that level. RBCCM’sability or willingness to execute such an order may be impacted
by a number of factors, including, without limitation, its client
exposure, market exposure, and overall market strategy. RBCCM
retains discretion regarding the manner in which it may satisfy
such orders, which shall be exercised and appropriately
timestamped in accordance with Applicable Law. FX orders will
be timestamped when they are accepted, and when they are
triggered/executed or cancelled.
RBCCM will decide, at its discretion, whether to work an order,
and when and how to execute the order. This includes
determining whether to (i) aggregate or net the order with otherorders, (ii) execute all or part of the order, and (iii) execute theorder electronically or manually (unless we have otherwise
expressly agreed to different terms of execution).
RBCCM will attempt to execute the full size of a client ordersubject to prevailing market conditions and client instructions.
RBCCM will assume that partial fills are acceptable to clients
unless mutually agreed otherwise. There may be circumstanceswhere RBCCM is unable to accept a client order or clienttransaction request. Further, RBCCM’s undertaking to work aclient order or provide a quote does not create a contract
RBCCM’s SFT business operates solely on a request-for-quote basis

between the client and RBCCM that commits RBCCM to execute
any or all of the order or to execute the client transaction
request on the terms provided. Market risk shall only transfer to
RBCCM following RBCCM’s determination that an order has been
filled or a request for quote has been accepted, at which point it
will create an agreement between RBCCM and the client on theterms and conditions specified between the parties. Prior to thisdetermination, either party may cancel the order or request forquote subject to any existing arrangements agreed between
RBCCM and the client from time to time (provided that any fullor partial fill which has already been achieved by RBCCM prior
to such cancellation may be effective against the client).
Where RBCCM provides algorithmic trading services, RBCCM
determines internal routing preferences based on various
factors including (but not limited to) applicable best execution
obligations and ongoing liquidity analysis.

••

Unless otherwise notified, RBCCM provides what is commonlyreferred to as “all-in” pricing for FICC and SFT transactions.
Accordingly, unless we notify you otherwise, the price of any
FICC or SFT transaction may include what we believe to be areasonable bid-ask spread and/or a mark-up. Such “all-in”
pricing also applies to orders that RBCCM agrees to executeusing its discretion (including, but not limited to, “at best”
orders and orders executed over a specific period of time).
RBCCM’s pricing is based on a number of factors, including, but
not limited to, (i) the type of instrument and transaction
involved, (ii) prevailing market conditions, (iii) the accessibilityof quotations and other pricing information, (iv) thetransparency of the market, (v) RBCCM’s rate of return, (vi)hedging and market risk, (vii) credit risk, (viii) operational costs,(ix) applicable regulatory requirements, and (x) other internaland external factors.
Pricing may vary for different clients for the same or
substantially similar transaction. This is for a number ofreasons, including, but not limited to (i) the client’s trading
volumes, (ii) the service provided to the client by the sales teamand other support services, (iii) credit quality, and (iv) theclient’s overall relationship with the RBC group. Execution
metrics may be provided at the discretion of RBCCM or whereotherwise required by Applicable Law.

FX Fixing Orders•

On acceptance of an FX fixing order, RBCCM is exposed tomarket risk to the extent that it must fulfill the client order atwhatever price is established by the relevant fix. In order tomanage this risk, RBCCM may offset exposures derived fromdifferent client fixing orders, or may transact as principal,
directly in the relevant market and with other market
participants before, during, or after the relevant fixing window,
including but not limited to, via matching platforms and using
RBCCM’s algorithmic execution tools. As a trading participant on
a number of trading platforms that provide trading data to the
fixing administrators (who utilize such data to calculate the fix
price), RBCCM’s trading activity during the fixing window may beR B C C AP I TA L M A R K E T S•••

taken into account for such fix price calculation.
RBCCM’s trading activity before and during the relevant fixing
window may affect the price of the underlying market andconsequently the fix price. RBCCM’s trading activity in thisperiod may be at prices different to the relevant fix price andmay result in a profit or loss on such trading relative to therelevant fix price. Any profit or loss resulting from that activity
will accrue to RBCCM. Any such trading will occur in compliancewith Applicable Law.
RBCCM may apply an FX fixing fee to transact at the fix. This fee
will be negotiated bilaterally with clients.
In the event of the unavailability of a third party pricing source,materially adverse market conditions, or other exceptional
circumstances outside of the control of RBCCM, RBCCM reserves
the right to either suspend taking FX fixing orders or use analternative reference price that would be determined at the timeof such circumstance. RBCCM will endeavor to notify clients ofany such course of action as soon as reasonably practicable.

Precious Metals Fixing Orders••

On acceptance of a precious metals fixing order, RBCCM is
exposed to market risk to the extent that it must fulfill the client
order at whatever price is established by the relevant fix.
RBCCM will look to manage its market risk by hedging its
exposure with third party auction participants. Precious metals
fixing orders are filled at the published auction fixing price, plus
or minus an execution fee. This fee will be negotiated bilaterallywith clients.
In the event of the unavailability of a third party pricing source,materially adverse market conditions, or other exceptional
circumstances outside of the control of RBCCM, RBCCM reserves
the right to either suspend taking precious metals fixing orders
or use an alternative reference price that would be determinedat the time of such circumstance. RBCCM will endeavor to notify
clients of any such course of action as soon as reasonably
practicable.

RBC C M ’S ROLE IN THE GLOB AL F ICC AN D SEC U RED F IN AN C IN G MA R K E T S

look” to electronic FX trading. “Symmetrical last look” refers tocircumstances where client trade requests are rejected if therequested rate is outside of the deal acceptance parameter
threshold, regardless of whether the rate is positive or negativeto RBCCM. Clients have the option (upon their prior writtenconsent) to opt-out of “symmetrical last look” and have“asymmetrical last look” applied to their trading. “Asymmetricallast look” refers to circumstances where client trade requests
are rejected if the requested rate is outside the deal acceptanceparameter threshold and is negative to RBCCM. If the client
trade request is outside of the deal acceptance parameter
threshold and is positive to RBCCM, then the deal would still be
accepted.

Client Information
•

•

•

•

Protecting client information is of fundamental importance to
RBCCM. RBCCM has arrangements in place designed to protect
and safeguard client information in accordance with Applicable
Law.
RBCCM makes use of certain client information contained inorders, transaction requests, and executed transactions.
Subject to the terms in place between RBCCM and a client, andwhere permitted by Applicable Law, RBCCM may use theeconomic terms of orders, transaction requests, and executedtransactions to manage its risk and to test or source liquidity, as
well as to evaluate and implement its risk mitigation strategies
and transactions.
RBCCM may share client information outside the RBC group inaccordance with Applicable Law or as otherwise set out in ourapplicable terms and conditions. RBCCM may also disseminate
aggregated and anonymized information regarding transactions
and other client processes for certain purposes, including
financial reporting, data contribution, and production of market
colour.
RBCCM may share client information within the RBC group forinternal purposes, including for client relationship management,risk management, and business management purposes.

Electronic FX Trading – “Last Look”••“Last Look” generally describes the FX trade acceptanceprocess in which RBCCM checks message validity, operational
validity and credit limits, and compares the rate at which clientsare attempting to trade versus the latest price available to
RBCCM. Trade requests are then accepted or rejected based ona set of tolerances. All electronic FX trades are subject to a Last
Look check. Implementing Last Look functionality can allow
RBCCM as a market maker to maintain tighter bid-offer spreads
for its clients. Consistent with the FX Global Code, RBCCM does
not, during the Last Look window, (i) apply a Last Look holdperiod, (ii) engage in pre-hedging activity in relation to therelevant trade, or (iii) utilize trade information for trading
purposes.
Unless otherwise agreed, RBCCM will apply “symmetrical last

Our Culture of Integrity••

RBCCM is committed to adhering to the highest expected
standards of behavior, acting with integrity, and complying with
Applicable Law and published industry best practices. We arefocused on ensuring that RBCCM continues to act in thetrustworthy and responsible manner that our clients have cometo expect.
RBCCM’s staff receive regular training on relevant policies andprocedures, including Royal Bank of Canada’s Code of Conduct(the “Code”). The Code sets out the ethical principles to which
all Royal Bank of Canada employees are required to abide by,including how we deal with clients and how we conduct ourbusiness. The full text of the Code is available here.

R B C C A P I TA L MA R K E T S

RBC C M ’S ROLE IN THE GLOB AL F ICC AN D SEC U RED F IN AN C IN G MA R K E T S

If you have any questions regarding this notice, we encourage you to contact your account representative or
regulatorycommunications@rbccm.com. RBCCM believes that the cornerstone of a long-term relationship is an open,
two-way dialogue, and we look forward to continuing this with you.
The contents of this notice may be updated from time to time. The latest version of this notice is available on our
Policies, Disclaimers and Disclosures webpage.