Barclays Bank plc (together with its affiliates “Barclays”) is a foundation investor in Barrenjoey Group Holdings Pty Limited ACN 644 241 510 (“Barrenjoey Holdings”) and Barclays has entered into a Co-operation Agreement (the “Cooperation Agreement”) with Barrenjoey Holdings, the parent company of Barrenjoey Markets Pty Limited ACN 636 976 059 (“Barrenjoey Markets”). The Co-operation Agreement states that Barclays views Barrenjoey Holdings as a strategic ally in Australia and New Zealand.
Barclays currently has a 9.99% economic interest and a 4.99% voting interest in Barrenjoey Holdings and has a representative on the board of directors of Barrenjoey Holdings.
The Cooperation Agreement covers product distribution, research, cross border advisory and debt capital markets, and makes available significant balance sheet capacity for Barrenjoey to support its clients.
In connection with this arrangement, Barclays may share some or all of its revenues, fees and/or commissions with Barrenjoey and Barrenjoey may share some or all of their revenues, fees and/or commissions with Barclays.
As shareholder, Barclays is not involved in the day-to-day management of Barrenjoey. Barclays does not control Barrenjoey.
Barclays operates financial services businesses that are separate from Barrenjoey.
Joint business activities
Barclays has entered into the Cooperation Agreement to enable it to offer its clients access to key capital markets and cross-border investment opportunities in Australia, New Zealand and other countries through Barrenjoey, whilst providing Barrenjoey’s clients access to Barclays’ strong capabilities in the UK, Europe, and other key Asian markets.
Drawing on Barclays’ and Barrenjoey’s complementary capabilities, the parties will undertake joint activities in relation to the sales and trading of certain financial instruments. In order to carry out those arrangements:
(i) Barrenjoey will be the sole price-maker for the following rates products distributed by Barclays: AUD/NZD nominal government bonds; AUD/NZD inflation-linked government bonds; AUD nominal semi-government bonds; AUD semi-government inflation linked bonds; AAA Rated (or equivalent) AUD SSA and AUD/NZD cleared IRS; and
(ii) Barrenjoey staff will also originate AUD/NZD uncleared interest rate and currency swap transactions, sub-AAA rated AUD SSA bonds, as well as non-AUD/NZD rates, FX and credit trades, which will be referred to Barclays for execution.
As noted above and subject to the Conduct Risk control framework referenced below, Barclays and Barrenjoey may share: (1) revenues, fees and/or commissions in connection with the joint activities above; and (2) confidential information, necessary to give effect to these arrangements. Barrenjoey may also generate and share axes with Barclays in relation to the products mentioned in (i) above, which Barclays may then share with its clients. Clients receiving such axes should therefore note that these have been originated by Barrenjoey and not by Barclays.
To the extent that Barrenjoey is the sole price-maker for any of the products mentioned in (i) above, where a client trades those products with Barclays, the final price received by the client will include Barrenjoey’s margin and the following will apply:
· no additional costs will be applied by Barclays to the final price provided to the client;
· for each trade entered into with a client, Barclays will enter into a back to back trade with Barrenjoey; and
· once Barclays settles the back to back trade, it will receive a payment from Barrenjoey, which will correspond to a share of Barrenjoey’s revenue on the back to back trade; the amount of such payment will be in the range of 10% and 30% of the pre-determined expected revenue, depending on the product traded.
With regards to the products mentioned in (ii) above, once Barclays settles the trade, Barrenjoey will receive a payment from Barclays which will correspond to 30% (or such amount as is otherwise agreed) of Barclays’ pre-determined, expected revenue on the trade.
Further information on the above arrangements may be made available upon request.
Disclosure of information
In order to effect the arrangements described above, Barclays will be disclosing some or all of the following information to Barrenjoey which will be anonymised: trade and instructions details, indications of interest and feedback provided by clients regarding why a trade was not dealt. Barclays will not disclose such information unless it has received explicit consent from each relevant client. Clients providing consent, which will only be obtained once, shall be deemed to accept and acknowledge that such consent shall override any non-disclosure or other confidentiality agreements or arrangements they may have in place with Barclays either now or in the future unless such agreement or arrangement expressly references this consent to disclose. Save for the consent described above, the existing non-disclosure or other confidentiality agreements or arrangements that a client has in place with Barclays will remain in full force and effect.
Risk control framework
Consistent with our commitments and responsibilities, Barclays has developed a robust Conduct Risk control framework to manage our legal, regulatory and reputational risks, including any actual, potential or perceived conflict of interest. This control framework includes, but is not limited to, the following arrangements:
· Information barriers intended to ensure that Barclays’ business is independent from that of third parties, including related parties (such as Barrenjoey), and access to information, including client confidential information, is appropriately restricted;
· Conflict clearance and business selection procedures followed prior to engaging in any joint client activity with any third party, including Barrenjoey;
· Information sharing protocols for any joint business activities, which would apply where such joint business activities are undertaken with Barrenjoey and would limit information shared to what is necessary to give effect to the joint activities and ensure that such information cannot be used for any other purpose;
· Fair allocations policies for capital markets transactions; and
· Best execution policies that require Barclays to take sufficient steps to obtain the best possible result for its clients on a consistent basis when executing transactions on their behalf.