Spot & Same day FX transactions – Xe Help Centre

Target Market Determination - Spot

Issuer
Product description
Date of issue
Target market
Distribution conditions
Review triggers
Review periods
Reporting requirements
Record keeping

This Target Market Determination (TMD) is a publicly available document required under section 994B of the Corporations Act 2001 (Cth). It sets out the target market for the product, distribution conditions, circumstances in which this TMD must be reviewed and any reporting obligations. This TMD forms part of HiFX Limited trading as Xe New Zealand (Xe NZ)’s design and distribution framework for Australian customers.

This document is not a Product Disclosure Statement (PDS) or Supplementary Product Disclosure Statement (SPDS) and is not intended to provide financial advice regarding the product. Customers must refer to their Terms & Conditions, the PDS and / or SPDS for the product, which outline the relevant terms, conditions, and risks of the product, when making a decision about this product.

This TMD provides Xe NZ’s Australian customers with information regarding:

which customers this product is suitable for (the target market) and which customers this product is unsuitable for;
any distribution conditions and restrictions on distribution for this product; and
the review period and events or circumstances that may trigger a review.

This TMD describes the customers within our target market, but does not consider a customer's personal needs, objectives or financial situation. Customers should obtain their own advice in this regard.

Product:	Spot & Same day FX transactions (SPOT)
Product issuer:	Xe NZ
Effective date:	16 September 2022
First review date:	15 September 2023
Review period (Ongoing):	Annually

Issuer

Xe NZ.

Product description

A Spot transaction is an agreement to exchange one currency for another at an agreed Exchange Rate with settlement happening either on the same day or in 2 Business Days’ time.

The Product is suitable for customers who need to buy or sell a foreign currency for short term delivery on a specified date within 2 Business Days from the contract start date.

Date of issue

16 September 2022

Target Market

The target market for this Product is customers who are engaging or proposing to engage in foreign currency denominated transactions (whether importing, exporting or otherwise) where a payment or receipt is in a foreign currency.

These customers are likely to have the following objectives, needs and financial situation and must meet the eligibility and assessment criteria for this Product:

1.1 Customer Objectives and Needs

This Product is designed for individuals or entities who are looking to:

(a) buy or sell foreign currencies to facilitate foreign currency payments and/or receipts requirements;

(b) take delivery of the currency purchased;

either on the same day or in 2 Business Days’ time. The customers’ likely need is a product that manages foreign currency transactions and the financial risk from short term foreign currency movements.

This may include buying or selling a non-cash foreign currency or managing short-term foreign currency exchange risk.

1.2 Customer Financial Situation

(a) This Product is designed for individuals or entities who:

have an existing sum of currency they wish to exchange for an alternative currency;
are willing to pay the agreed Exchange Rate, and any fees; and
are willing to be without their currency for at least 2 Business Days.

(b) This Product is suited to customers with a narrow range of financial situations dealing with foreign currencies. The customer needs to be able to protect themselves against changes in the value of their payments or receipts due to short term foreign currency movements.

1.3 Customer Eligibility

The eligibility criteria of this Product include that individuals and entities must:

(a) accept the offer in Australia;

(b) have received and read the PDS and / or SPDS;

(d) successfully complete all 'Know-Your-Customer' processes in accordance with Anti-money Laundering and Counter-terrorism Financing laws.

And

(a) be an Australian registered corporation, or be a trustee of an Australian family, statutory, superannuation, unit or hybrid trust (the beneficiary and the Trustee must meet the eligibility criteria of an individual or a corporation); or

(b) be an Australian citizen, permanent resident, or resident with acceptable residency status, 18 years or older.

The Product has not been designed for individuals and entities who:

(a) wish to conduct currency exchanges for non-commercial reasons;

(b) wish to engage in foreign currency exchange trading or investment for speculative purposes;

(d) want to access to foreign currency through a credit facility;

(e) are unfamiliar with foreign currency or foreign currency exchange dealings; and

(f) are unable to pay the agreed Exchange Rate, and any fees without hardship.

1.4 Appropriateness of the target market

This Product is likely to be consistent with the likely objectives, financial situation and needs of the class of Customers in the target market. This is based on an analysis of the key terms, features and attributes of the Product and a finding that these are consistent with the identified class of Customers. The customer’s need to lock in current exchange rate for a short-term future payment or receipt and manage foreign currency exchange risk that can be met by the features such as agreed exchange rate and agreed value date.

We do not encourage clients to utilise this Product if the above key attributes do not align with their objectives, requirements and personal circumstances.

Distribution conditions

This Product will be distributed:

to customers with existing Xe accounts, who satisfy this TMD;
through Xe’s website; and
through Xe’s sales and dealer team.

Xe NZ does not have any third party distributors, save for HIFX Australia Pty Ltd, which is a related entity.

This product should only be distributed under the following conditions:

to individuals that meet Customer Eligibility set out in section 1.3;
through Xe's approved distribution channels;
where there are any consumer queries or concerns, where they have been answered by an authorised Xe representative;
where they are eligible in accordance with the application or acceptance that has been approved in writing by Xe NZ and which complies with relevant laws;
by Xe NZ's authorised representatives, including corporate authorised representatives, where they have received training and relevant accreditation (if required) and have met annual compliance reviews.

It has been determined that the distribution conditions and restrictions will make it likely that Customers who purchase the Product are in the class of clients for which it has been designed. This is because:

Xe will programmatically prevent any person that directly opens an Xe account and who is not within the target market from accessing Xe issued spot FX contract;
Xe will have controls to ensure applying customers meet eligibility requirements; and
monitoring and supervision of customer suitability and on boarding processes.

Review triggers

Review triggers are event and circumstances that would reasonably suggest that the TMD is no longer appropriate. This may include:

(a) receipt of a Product Intervention Power order from ASIC requiring Xe NZ to cease distribution of this Product;

(b) receipt of a significant number of complaints from applicants who have acquired this Product that would suggests the TMD is no longer appropriate;

(c) occurrence of a significant dealing outside of the TMD that would reasonably suggest that this TMD is no longer appropriate;

(d) material change to key Product features, investment objectives, terms and conditions that would reasonably suggests that this TMD is no longer appropriate;

(e) any significant or continual poor performance of the Product or risk that the investment option is not likely to meet its investment objective over the minimum suggested investment timeframe, reasonably suggesting that this TMD is no longer appropriate;

(f) material discrete complaints, AFCA determinations or litigation relating to the Product;

(g) external events such as adverse media coverage or regulatory attention; and

(h) significant changes in review triggers covering matters such as:

- - inconsistency of product with target market’s likely needs, objectives or financial situation;
  - product design or implementation failures;
  - inconsistency of distribution with the TMD;
  - feedback received, including through industry forums; and
  - potential or actual harm to consumers;

(i) the nature of and number of complaints from consumers indicating that the risks of spot FX contracts are not well understood;

(j) the Target Market and Product attributes described in this TMD is found to include materially incorrect or misleading information that reasonably suggests that this TMD is no longer appropriate; and

(k) changes to legislation have come into effect which materially impacts upon the design or distribution of the Product and reasonably suggests that this TMD is no longer appropriate.

Review periods

To ensure that the TMD remains appropriate for the Product, Xe NZ will review the TMD:

(a) periodically, and at least annually from initial review;

(b) in response to the review triggers (see above); or

Xe NZ will integrate the review process into the Product governance arrangements, and controls will be put in place to ensure that meaningful reviews take place. Possible outcomes from the review process include:

(a) no change to the way the Product is distributed;

(b) changing the Product design, target market or distribution; or

If Xe NZ becomes aware of information that would reasonably suggest that the TMD is no longer appropriate (e.g. a review trigger has occurred), Xe NZ will stop issuing the Product and direct its authorised representatives to stop distributing until Xe NZ has reviewed the TMD and Product.

Reporting requirements

Complaints and general feedback about a financial Product are a useful indicator of whether the TMD may still be appropriate. Where Xe NZ engages its employees, contractors and authorised representative to distribute its Products, it requires the authorised representative to promptly provide any information about complaints and Product feedback it receives to Xe NZ.

Xe NZ requires its authorised representative to provide the following information:

(a) complaints under ASIC RG 271 and all related information;

(b) significant dealings outside the target market; and

The following is an example of the type of information that must be provided to Xe NZ by its authorised representative who engages in distribution of this Product:

Type of information	Description of information	Reporting period
Complaints	Authorised representatives name; Date of complaint; Product; Nature and outcome of the complaint; AFCA status (if applicable); and The distributor should provide all the content of the complaint, having regard to privacy	As soon as complaint is received by the distributor / quarterly
Significant dealings outside the target market	Nature and circumstances of the significant dealing; Reasons why the dealings occurred outside the Target Market; The date range of when the significant dealing occurred; The number of consumers to whom the report relates; Whether personal financial advice was provided (in writing); and Whether consumer harm or detriment has, or likely, occurred as a result of the significant dealing	As soon as practicable, and in any case, within 10 business days after becoming aware
Dealings outside the target market	Where an authorised representative arranges the Product acquisition they must confirm within the Product application form: Whether they believe the consumer is in the Target Market; Whether the Product application supports the implementation of personal financial Product advice; and Where the consumer is not in the Target Market, the reasons why the consumer is not in the Target Market	At the time the Product application is submitted

Record keeping

Xe will keep records of the reasonable steps it has taken to ensure that this product is sold in a manner consistent with this TMD.

Xe will also keep complete and accurate records of its decisions, and the reasons for those decisions about:

(a) all Target Market determinations for this product;

(b) identifying and tracking review triggers;

(d) the matters documented in this TMD.