The purpose of this letter is to clarify the nature of the trading relationship between you and the Corporate & Investment Bank at JPMorgan Chase & Co. and its affiliates (together, “JPMorgan” or the “Firm”) and to disclose relevant practices of JPMorgan when acting as a dealer, on a principal basis, in the wholesale spot foreign exchange (“FX”) markets.  We want to ensure that there are no ambiguities or misunderstandings regarding those practices.

We ask that you read this letter because it sets forth our standard terms of spot FX dealing generally with our clients (together with other market participants, “counterparties”) in principal-to-principal transactions in the wholesale spot FX markets (as well as when you act as agent for another principal). It sets forth how we will communicate and transact in relation to requests for quotes, requests for indicative prices, discussion or placement of orders and all other expressions of interests that may lead to the execution of transactions and our management of potential or actual conflicts of interest in our principal-dealing and market-making activities.

JPMorgan is a global financial services firm that has operated and continues to operate as a dealer and market maker in the wholesale spot FX market. As such, JPMorgan engages in price quoting, order taking, trade execution and other related activities.  Unless otherwise agreed, JPMorgan engages in these transactions as principal for the benefit of the Firm. In that capacity, JPMorgan does not act as agent, fiduciary or financial advisor or in any similar capacity on behalf of its counterparties. JPMorgan is dedicated to upholding a high level of integrity and adhering to best practices and requirements published by relevant international groups and regulatory bodies in our dealings with counterparties.  Nonetheless, JPMorgan and its counterparties may have divergent or conflicting interests.

To the extent that you continue to discuss and/or enter into spot FX transactions with us and except as otherwise expressly agreed between JPMorgan and you (or otherwise provided in other applicable JPMorgan terms of dealing) or otherwise required by law or regulation, it will be on the basis of the terms disclosed in this letter.

Principal Trading

• When JPMorgan acts in a principal capacity, we act as an arm’s-length party to transactions with our counterparties.  The Firm does not act as agent, fiduciary, financial advisor or in any similar capacity on behalf of a counterparty and thus does not undertake any of the duties that an entity acting in that capacity ordinarily would perform, unless otherwise explicitly agreed between JPMorgan and the counterparty, and then only where we act with discretion in execution.  JPMorgan’s sales and trading personnel and FX electronic solutions do not serve as brokers or agents to a counterparty. JPMorgan will be truthful in its statements about any facts, but its statements should not be construed as recommendations or advice. A counterparty is expected to evaluate the appropriateness of any transaction based on the counterparty’s own facts and circumstances and its assessment of the transaction’s merits.
• When JPMorgan is willing to work a counterparty’s “order” (as such term is used herein) at a price (such as a limit order), JPMorgan is indicating a willingness to attempt to enter into the trade at the price requested by the counterparty. Unless otherwise specifically agreed, JPMorgan will exercise its discretion appropriately in deciding whether to work an order, which orders it would be willing to execute, when it would be willing to execute them, and how it would execute them, including whether to execute all or part of the order unless we have otherwise expressly agreed to different terms of execution. As such, JPMorgan’s receipt of an order or any indication of working an order received from a counterparty does not create a contract between the counterparty and JPMorgan that commits the Firm to execute any or all of the order in any particular way.
• As it relates to timing, JPMorgan may look for market opportunities that satisfy both a price where we can execute a counterparty’s order at the counterparty’s price and earn a reasonable return for that activity, including while managing and prioritizing other interests, positions and executions for JPMorgan and other counterparties. When JPMorgan is willing to execute an order with a counterparty, the price at which JPMorgan would do so may include a markup over the price at which JPMorgan transacted, or may have been able to transact, with other counterparties.

Market Making

• As a market maker that manages a portfolio of positions for multiple counterparties’ competing interests, as well as JPMorgan’s own interests, JPMorgan acts as principal and may trade prior to or alongside a counterparty’s transaction to execute transactions for JPMorgan or to facilitate executions with other counterparties, to manage risk, to source liquidity or for other reasons.  These activities can have an impact on the prices we offer a counterparty on a transaction and the availability of liquidity at levels necessary to execute counterparty orders.  They also can trigger stop loss orders, barriers, knock-outs, knock-ins and similar conditions. In conducting these activities, JPMorgan endeavors to employ reasonably designed means to avoid undue market impact.
• In addition, as a market maker, JPMorgan may receive requests for quotations and multiple orders for the same or related currency pairs. JPMorgan acts as principal and may seek to satisfy the requests of all of its counterparties and its independent risk management objectives, but it retains discretion with respect to how to satisfy its counterparties, including with respect to order execution, aggregation, priority and pricing. JPMorgan is not required to disclose to a counterparty when the counterparty attempts to leave an order that JPMorgan is handling other counterparties’ orders or JPMorgan orders ahead of, or at the same time as, or on an aggregated basis with, the counterparty’s order.  JPMorgan is under no obligation to disclose to a counterparty why JPMorgan is unable to execute the counterparty’s order in whole or in part, provided that JPMorgan will be truthful if we agree to disclose such information.
• Unless otherwise agreed, any firm or indicative price quoted by JPMorgan to a counterparty is an “all-in” price, inclusive of any markup above the price at which JPMorgan may be able to transact, or has transacted, with other counterparties, regardless of the circumstances under which a counterparty receives or overhears a price. JPMorgan’s sales and trading personnel are not obligated to disclose the amount of revenue JPMorgan expects to earn from a transaction, nor are they required to disclose the components of JPMorgan’s all-in price. While we do not have any duties to disclose to a counterparty any mark-up included in the order price, we will be truthful with the counterparty if we make a disclosure about whether and how much markup is included in the price. 
• If and when a counterparty’s order can be executed at the order price, it does not mean that JPMorgan held, acquired, or would acquire, inventory to complete the transaction at the order price level or that there exists a tradable market at that level. As principal, JPMorgan always attempts to execute an order to make an appropriate return on the transaction if possible, taking into account JPMorgan’s position, including its inventory strategy and overall risk management strategies, its costs, its risks and other business factors and objectives, in JPMorgan’s discretion.
• When solicited for, and prior to the execution of, a transaction, JPMorgan may risk-mitigate or hedge any exposure that would be created by such transaction.
• JPMorgan has discretion to offer different prices to different counterparties for the same or substantially similar transactions.
• It should be expected that JPMorgan’s sales, trading and other personnel will consult, including with respect to a counterparty’s interests, trading behavior and expectations, markup, spread, and any other relevant factors, on a need-to-know basis in order to manage JPMorgan’s market-making positions, and for the benefit of JPMorgan’s trading positions and the handling of other counterparty transactions.

Information Handling

• Protecting the confidentiality and security of counterparty information is an important part of how we do business. JPMorgan has policies and controls that are designed to protect a counterparty’s confidential information. However, a counterparty should understand that JPMorgan makes use of information provided to it as principal in order to effectuate and risk manage transactions.  Specifically, unless otherwise agreed, JPMorgan may use the economic terms of a transaction (but not the counterparty identity) in order to source liquidity and/or execute risk-mitigating transactions. In addition, as part of its obligations as a regulated entity, JPMorgan also shares counterparty information as required by its global regulators.
• With regard to executed transactions, JPMorgan analyzes this information on an individual and aggregate basis for a variety of purposes, including counterparty risk management, sales coverage, and counterparty relationship management.
• We also may analyze, comment on, and disclose anonymized and aggregated information regarding executed transactions, together with other relevant market information, internally and to third parties, as market color.

If you have questions after reading this letter or concerning JPMorgan’s dealings with you, we encourage you to contact your senior JPMorgan representative. This letter is also available at www.jpmorgan.com and may be updated from time to time in order to address changing regulatory, industry and other developments.