- Business Continuity
- Customer ID Procedures Notice
- Electronic Communication Disclosure
- Extended Hours Trading Risk Disclosure
- Form CRS
- Investment Protection Principles
- SEC Rule 605 Order Execution Information
- SEC Rule 606 Order Routing Information – Enhanced Disclosures
- SEC Rule 606 Order Routing Information – Legacy Disclosures
- Trading Disclosures
In the past several years businesses have experienced varying degrees of business disruption. The disruptions have lasted from a few minutes to more than one week. SVB Securities LLC (“SVB Securities” or “Firm”) has and will continue to take steps to continue to operate its business in the event of a disruption impacting any or all of its offices. As a valued customer, you should be aware of the steps the firm has taken to be able to continue operating in the event of some form of disruption. The elements of the firm’s Business Continuity Plan (“Plan”) address:
- Data back-up and recovery (hard copy and electronic)
- All mission critical systems
- Financial and operational assessments
- Alternate communications between SVB Securities and our customers
- Alternate communications between SVB Securities and our employees
- Alternate physical location of employees
- Critical business constituent, bank, and counter-party impact
- Regulatory reporting
- Communications with regulators
- How SVB Securities assures customers’ prompt access to their funds and securities in the event that the firm determines that it is unable to continue its business.
The Plan anticipates the resumption of trading no later than the next business day following a wide-scale business disruption. The firm intends to continue its business during a disruption. The Plan reflects the firm’s intention to respond to events of varying scope. We all know too well that there may be occasions when one location is not able to be operational quickly because of external causes. All efforts will be undertaken to be operational as quickly as possible. With offices in Boston, Charlotte, Nashville, New York, and San Francisco, in the event of a disruption to a single building, a disruption to a business district, a city-wide disruption and a regional disruption, the Plan contemplates the transfer or re-routing of business operations, as necessary, from Boston to New York or Boston to San Francisco or New York to Boston. Various redundancies have been created to permit this transfer. Personnel would be re-located to permit the firm to continue its business.
Like most firms, SVB Securities relies on third-parties to provide a number of services. These services, among others, include: trading systems, accounting systems, telephone, and e-mail. Those firms have provided information about their own business continuity plans and have also identified emergency contact personnel.
Customers may contact the firm’s offices in the following ways:
53 State Street – 40th Floor
Boston, MA 02109
227 West Trade Street – Suite 2050
Charlotte, NC 28202
40 Burton Hills Blvd, Suite 200
Nashville, TN 37215
1301 Avenue of the Americas – 12th Floor
New York, NY 10019
255 California Street – 12th Floor
San Francisco, CA 94111
Key personnel have been equipped with various communications devices such as mobile telephones and laptop computers to facilitate communication during a disruption. In addition, access to the firm’s systems is available to key personnel from alternate sites, such as residences, satellite offices, and a mobile recovery site (TBD based on the event).
While all steps have been taken to permit the firm to continue its business after a disruption, we must assure our valued customers that they will have prompt access to funds and securities if it is determined that SVB Securities is unable to continue its business. Because the firm does not hold customer funds or securities, customers will be able to obtain their funds and/or securities by contacting Pershing LLC at 201-413-3635 or by facsimile at 201-413-5368. In the event that a customer is sending payment for a transaction or a stock certificate to SVB Securities when the firm is unable to continue its business, the payment should be sent to Pershing at One Pershing Plaza, P.O. Box 2065, Jersey City, NJ 07303. In all situations described in this paragraph, it is imperative that all communications directly with Pershing include the customer’s SVB Securities account number.
Customers should be aware that the Plan will be subject to on-going review and may be modified as the need arises. A copy of this document may be obtained by request as follows:
By mail: Chief Compliance Officer
SVB Securities LLC
53 State Street, 40th Floor
Boston, MA 02109
Customer ID Procedures Notice
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.
What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.
Electronic Communication Disclosure
SVB SECURITIES LLC AND AFFILIATES (COLLECTIVELY “SVB Securities” or “Firm”)
Electronic communications from SVB Securities may contain information that is proprietary, privileged, confidential, and/or exempt from disclosure under applicable law. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution, or use of the information contained herein (including any reliance thereon) is strictly prohibited. If you receive a message in error, please immediately contact the sender and destroy the material in its entirety, whether in electronic or hard copy format.
Electronic communications from the firm are for informational purposes only. They are not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Any market prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. Comments or statements made therein by an individual do not necessarily reflect the views of the firm or its affiliates.
Although electronic communications and any attachments from SVB Securities are believed to be free of viruses or other defects that might affect a computer system into which they may be received and opened, the firm cannot ensure that this is the case and it is the responsibility of the recipient to ensure that viruses, malware or other defects are blocked or neutralized. SVB Securities shall have no responsibility for any loss or damage arising in any way from the use or receipt of its electronic communications.
Information may not be secure or timely when transmitted electronically. As such, the firm shall have no responsibility for the contents of any email or other electronic communication or for any delays, inaccuracies or omissions in the receipt of your instructions or in the transmission of orders or other information and disclaims all liability to the fullest extent permitted by applicable law for any loss or damage arising from any reliance on or use of electronic communications in any way. You may not not transmit, nor is SVB Securities obligated to accept, orders, instructions or identifying information regarding your account(s) via email. Action-oriented messages, transaction orders, fund transfer instructions or check stop payment instructions should not be transmitted via email. The firm is not responsible for carrying out such orders and/or instructions. An order or instruction is not considered active or received until it is acknowledged and accepted by the firm.
Please note that any electronic communication that is transmitted within or through SVB Securities’ systems is subject to monitoring, review, retention, and external production.
SVB Securities LLC is a member of FINRA and SIPC.
For disclosures in respect of messages prepared by SVB Securities LLC Sales and Trading personnel, please see: www.svbsecurities.com/electronic-communication-disclosure/svb-securities-llc-sales-trading-disclosure/
For disclosures relating to specific companies referenced in SVB Securities Research, please see: www.svbsecurities.com/electronic-communication-disclosure/svb-securities-llc-research-disclosure/
For disclosures relating to Instant Messages, please see: https://www.svbsecurities.com/electronic-communication-disclosure/instant-messenger-disclaimer/
Extended Hours Trading Risk Disclosure
Extended Hours Trading Risk Disclosure Statement
FINRA Rule 2265 (Extended Hours Trading Risk Disclosure)
SVB Securities LLC (“SVB Securities” or “firm”) may facilitate an order for a customer in the pre-market or post-market sessions should the customer specifically request it. The following disclosures are provided so customers can make an informed decision regarding the placement of orders for execution during extended hours trading.
- Risk of Lower Liquidity. Liquidity refers to the ability of market participants to buy and sell securities. Generally, the more orders that are available in a market, the greater the liquidity. Liquidity is important because with greater liquidity more buyers and sellers are in the market. As a result, it is faster for investors to buy or sell securities which enables them to be more likely to pay or receive a competitive price for securities purchased or sold. There may be lower liquidity in extended hours trading as compared to regular market hours. As a result, your order may only be partially executed or not at all.
- Risk of Higher Volatility. Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater the price swings. There may be greater volatility in extended hours trading than in regular market hours. As a result, your order may only be partially executed or not at all, or you may receive an inferior price in extended hours trading than you would during regular market hours.
- Risk of Changing Prices. The prices of securities traded in extended hours trading may not reflect the prices either at the end of regular market hours, or upon the opening in the next morning. As a result, you may receive an inferior price in extended hours trading than you would during regular market hours.
- Risk of Unlinked Markets. Depending on the extended hours trading system or the time of day, the prices displayed on a particular extended hours trading system may not reflect the prices in other concurrently operating extended hours trading systems dealing in the same securities. Accordingly, you may receive an inferior price in one extended hours trading system than you would in another extended hours trading system.
- Risk of News Announcements. Normally, issuers make news announcements that may affect the price of their securities after regular market hours. Similarly, important financial information is frequently announced outside of regular market hours. In extended hours trading, these announcements may occur during trading, and if combined with lower liquidity and higher volatility, may cause an exaggerated and unsustainable effect on the price of a security.
- Risk of Wider Spreads. The spread refers to the difference in price between what you can buy a security for and what you can sell it for. Lower liquidity and higher volatility in extended hours trading may result in wider than normal spreads for a particular security.
Please click here to review our complete Form CRS. Free and simple tools are available to research firms and financial professionals at Investor.gov, which also provides educational materials about broker-dealers, investment advisers, and investing. We encourage you to seek additional information and ask us questions.
Investment Protection Principles
Protecting Clients, Creating Wealth
SVB Securities abides by the following principles:
- Like all firm employees, analyst compensation is driven in part by overall firm profitability, which includes revenues from Institutional Equities and Investment Banking. Analysts are not compensated for specific investment banking transactions.
- Investment Banking has no input on analyst compensation.
- The Investment Policy Committee approves all changes on analyst ratings.
- Discontinuation of coverage is disclosed through a published research report with an explanation.
- Research reports disclose whether the firm has received or is entitled to receive compensation from a covered company over the past 12 months.
A senior attorney or compliance professional monitors the process to ensure compliance with these principles.
SVB Securities LLC (“SVB Securities” or “the Firm”) is committed to providing best execution for all of its customers. When SVB Securities receives a customer order, it uses reasonable diligence to ascertain the best market for the subject security so that the resultant price to the customers is as favorable as possible under prevailing market conditions. The firm will refrain from conduct that could disadvantage or harm the execution of a customer order or engage in activity that will place its financial interests ahead of its customers.
Depending on the circumstances, SVB Securities, while holding a customer order, may trade in the security for its own account either to:
- Facilitate the order; *
- Liquidate or cover an existing position established in connection with facilitating the order; * or
- Create or modify a bona fide hedge of the risk acquired in facilitating the order.
* (or the order of one or more other customers)
Whenever the firm trades for its own account while holding a customer order, it will do so in compliance with applicable SEC and SRO rules that are meant to protect customer interests, e.g. FINRA Rule 5310 (Best Execution and Interpositioning) and FINRA Rule 5320 (Prohibition Against Trading Ahead of Customer Orders). Customers should be aware that trading activity related to the facilitation of their orders could affect the market for the subject security, regardless of whether SVB Securities trades for its own account. For example, if a customer places a large order to buy a security, the firm’s facilitation (whether executing as agent or for its own account) may cause the price of the security to increase. SVB Securities may work to limit the risk or hedge before or after a customer order is received. Further, the firm may engage in hedging or facilitation activity prior to the execution of certain orders, such as VWAP orders.
Generally, SVB Securities handles VWAP and other similar type orders on a “best efforts” basis. In a best efforts situation, the firm will make every effort to execute the order at a price equal to or better than the VWAP. In some cases, SVB Securities will not be able to achieve the VWAP or better and the customer is expected to accept the final price; however, if the firm obtains a better price than the VWAP, 100% of the price improvement is passed to the customer. When SVB Securities accepts a VWAP order it may facilitate all or a portion of that order as principal (i.e., trade in its own account).
In trading for its own account, in accordance with the terms and conditions set forth above or other similar capital commitment situation, SVB Securities is considered to be “at risk’ because the firm is exposed to the potential upside or downside associated with its capital commitment. Customers may, at their discretion, negotiate with SVB Securities on an order-by-order basis to split any potential outperformance. Absent such negotiation, the firm is expected to accept any upside or downside resulting from the execution of the customer order.
FINRA defines a net transaction as a “principal transaction in which a market maker after having received an order to buy/sell an equity security, purchases/sells the equity security at one price (from/to another broker-dealer or another customer) and sells/buys the stock with the customer at a different price.” As per FINRA Rule 2124 (Net Transactions with Customers), SVB Securities is obligated to provide terms and conditions disclosure and obtain consent from the customer prior to executing a net transaction. Generally, an order will only be executed on a net basis when requested by customer.
- For Non-Institutional customers, the firm requires written consent on an order-by-order basis prior to executing a transaction. The consent must also disclose that the customer understands the net terms and conditions of the order.
- For Institutional customers, the firm is authorized to execute a net transaction for an Institutional customer unless the customer opts out and notifies the firm that net transactions may not be executed on its behalf. Institutional accounts and persons placing orders for Institutional accounts may opt out and prohibit net trading by providing notice (i) with respect to any particular order, at the time of placing an order to the the firm representative taking the order, or (ii) with respect to all orders for your account in written form to SVB Securities LLC, Attn. Chief Compliance Officer, 1301 Avenue of the Americas, New York, NY 10019
PAYMENT FOR ORDER FLOW
SVB Securities does not receive payment for order flow from dealers who are purposely preferenced for order flow. Order routing is driven by best execution requirements.
In order to access a wide variety of execution venues, the firm does participate in the maker/taker model. Certain equities exchanges and third party trading centers to which the firm routes equities and options orders have implemented fee structures under which broker-dealer participants may receive rebates on certain orders. Under these fee structures, participants are charged a fee for orders that take liquidity from (or that provide liquidity to) the venue, and provided a rebate for orders that add liquidity to (or that remove liquidity from) the venue. Rebates received by the firm from a venue during any time period may or may not exceed the fees paid by the firm to the venue during that time period. Fee rates and rebate amounts on any given venue may change periodically. SVB Securities will provide customers additional information regarding fees and rebates upon written request, including the amount per order or per share received by the firm. Due to the activities above, SVB Securities is considered to be receiving payment for order flow.
SHORT SELLING AND AFFIRMATIVE DETERMINATION
When SVB Securities accepts a short sale order from a client, it is required to obtain the “borrow” information from the client and then document it on the order ticket prior to accepting the order. If the customer has the ability to send orders to the firm via electronic methods (i.e. “Financial Information Exchange” or “FIX”), the customer should be aware that the system will not accept the order unless the locate field is populated with the correct “borrow” information. It is mandatory that the information at least include where the “borrow” was obtained, but may also include who the customer spoke with, if applicable, and/or the quantity borrowed. If the “borrow” information contains only information evidencing where the “borrow” was obtained, SVB Securities will assume that the “borrow” is at least for the quantity of the entire order.
DETERMINING WHERE TO ROUTE CLIENT ORDERS
SVB Securities assesses the quality of the markets to which it routes order flow to obtain best execution on behalf of its clients. In this regard, the firm may, depending on several factors, including the security involved or the size of the order, execute the order with itself as principal or may route client orders to other market centers for execution. SVB Securities stands to share in 100 percent of whatever profits we generate by trading as principal against our customer orders. Several of the broker-dealer market makers and exchanges offer automated execution systems for reported securities as defined in SEC Rule 606 (Disclosure of Order Routing Information). Typically, the firm sends its small orders in reported securities to one of these automated trading centers for execution.
Orders sent to various OTC market makers in listed or OTC stocks may be exposed to certain exchanges and market centers for the purpose of obtaining price improvement. Orders sent to an exchange via an automated routing and execution system have the opportunity to be executed at prices better than the National Best Bid or Offer, either pursuant to a computerized pricing algorithm (in the case of orders in a stock with a spread greater than $0.01) or order exposure features of such systems.
EXECUTION QUALITY AND ORDER ROUTING DISCLOSURE (SEC RULES 605 AND 606)
The Securities and Exchange Commission (“SEC”) approved Rules 605 and 606 of Regulation NMS to improve public disclosure of order execution and routing information and to provide investors the right to certain information.
These reports can also be viewed on the SVB Securities website.
RULE 605 – In accordance with SEC Rule 605, the firm compiles and publishes a monthly report regarding the execution quality provided by its trading desk of orders in equities in which we are a market maker. This report is available at www.svbsecurities.com or http://vrs.vista-one-solutions.com/ within one month after the end of the month addressed in the report. These statistics represent only a portion of our executed order flow, and as such, investors should take into account a variety of factors in evaluating execution quality.
RULE 606 – In accordance with SEC Rule 606, the firm compiles and publishes a quarterly report regarding its routing of non-directed customer orders in national market system securities and listed options. This report is available at www.svbsecurities.com or http://vrs.vista-one-solutions.com/ within one month after the end of the quarter addressed in the report.
Customers may request a written copy of the report free of charge. In addition, customers may request the firm to furnish a report identifying the venue to which their orders in national market system securities and listed options were routed for execution in the six months prior to the request, whether the orders were directed orders or non-directed orders, and the time of the transactions, if any, resulting from such orders. Please contact your SVB Securities Sales representative to request SEC Rule 606 order routing information.
TRADING ALONG WITH CUSTOMERS
FINRA Rule 5320 states that a member that accepts and holds an order in an equity security from its own customer or a customer of another broker-dealer without immediately executing the order is prohibited from trading that security on the same side of the market for its own account at a price that would satisfy the customer order, unless it immediately thereafter executes the customer order up to the size and at the same or better price at which it traded for its own account.
- Institutional Accounts and Large Orders. Regarding the orders of an “institutional account,” as defined in FINRA Rule 4512 (Customer Account Information) or for Large Orders (10,000 shares or more and greater than $100,000 in value), Rule 5320 permits a broker-dealer to, and SVB Securities may, trade an equity security on the same side of the market for its own account at a price that would satisfy such customer order provided that the firm has provided clear and comprehensive written disclosure to such customer at account opening and annually thereafter and the customer is provided a meaningful opportunity to opt in to the Rule 5320 protections with respect to all or any portion of the order. Institutional accounts and persons placing orders for 10,000 shares or more not otherwise subject to the protections afforded by Rule 5320 may “opt in” to the Rule 5320 protections by providing written notice (i) with respect to any particular order, at the time of placing an order to the SVB Securities representative taking your order, and (ii) with respect to all orders for your account to SVB Securities LLC Attn. Chief Compliance Officer, 1301 Avenue of the Americas, New York, New York, 10019.
- Market Making Activities. The firm engages in market making activity in various equity securities. With respect to NMS stocks, as defined in Rule 606 of SEC Regulation NMS, SVB Securities may send orders for NMS stocks to other market centers on an agency basis. The firm has developed and implemented internal controls, including information barriers, that operate to prevent its market making desk from obtaining knowledge of customer orders not routed to it, and accordingly, our market making desk may trade for our own account prior to completion of a customer order and at the same or a better price.
INDICATIONS OF INTEREST
An indication of interest, otherwise referred to as an “IOI”, is a sales message sent from a broker-dealer over the Financial Information Exchange (“FIX”) protocol to institutional customers reflecting an indication of interest to either buy or sell securities. These messages typically are used to attract institutional trading business and contain the security names, prices and share amounts the broker-dealer seeks to transact during a defined period on a particular day.
SVB Securities uses the term “natural” IOI to represent:
- Interest of a customer order already in hand;
- An indication of interest (as opposed to an order) from an institutional customer;
- Interest for the broker-dealer’s own account on a proprietary or principal basis or as a result of facilitation; or
- Any combination of the interest described above.
Regardless of the source of the interest, a “natural” IOI from the firm represents a commitment for the subject shares that the firm will honor if contacted within the appropriate time.
Information may not be secure or timely when transmitted electronically. As such, SVB Securities does not accept any responsibility for the contents of any email or other electronic communication or for any delays, inaccuracies or omissions in the receipt of customer instructions or in the transmission of orders or other information and disclaims all liability to the fullest extent permitted by applicable law for any loss or damage arising from any reliance on or use of this message in any way. An order or instruction is not considered active or received until it is acknowledged and accepted by the firm.
More detailed disclosure regarding Electronic Communication is located at https://www.svbsecurities.com/electronic-communication-disclosure. Specific disclosures concerning Instant Messages are located at https://www.svbsecurities.com/electronic-communication-disclosure/instant-messenger-disclaimer.