Pre-Hedging Disclosure Notice

The purpose of this notice is to clarify the circumstances in which Banco Santander, S.A., (variously ‘Santander’, ‘we’ or ‘us’), may utilise pre-hedging in the fulfilment of any order or transaction placed with us. 

Nothing contained in this notice is intended to conflict with or override any relevant law, regulatory rule or other applicable requirement in any jurisdiction in which Santander operates, the terms of which may vary depending on the precise nature of a client's relationship with us and the jurisdiction(s) in which we operate. 

You should be aware that when you provide us with specific information for the purpose of obtaining a quote or request to enter into a transaction with us, such information, along with any other information available to us, may be used by us to canvas broker dealers or other intermediaries and engage in trading, market making and risk management activities, including pre-hedging and hedging activities, for our own account and without further disclosure to you. 

Pre-hedging describes execution by Santander (as principal, not as an agent for you) of a transaction in the same or similar instruments as those indicated in your order or transaction to mitigate the risk associated with the anticipated execution of your order or transaction.

Santander may use pre-hedging to ensure that your order or transaction is executed in an orderly fashion and in a manner not intended to disadvantage you or create undue market impact. Notwithstanding this general intention, and irrespective of any pre-hedging that Santander undertakes, there is no guarantee that these activities will result in the desired outcome. 

Such pre-hedging can be executed before, during or after receiving an indication of interest, live pricing request or firm order from you, could be at different prices from the price at which Santander executes your order or transaction, may affect the market prices or rates of or liquidity for, the financial products or instruments you are buying and/or selling and may result in profit, or loss, to Santander. 

Any pre-hedging will be in accordance with the principles of conduct established by our regulators and will take into consideration the prevailing market conditions and size and nature of the anticipated transaction. 

To discuss any of the principles contained herein in further detail, please contact your usual Santander contact.  

You may request that Santander execute a transaction with you where a mechanism to determine the execution price is agreed and specified at the outset of the transaction, through later market observation of a reference price (e.g. closing levels for a dealer administered index) (the “Reference Price”). This type of transaction is known as a “Reference Price Transaction”.

If Santander agrees to enter into a Reference Price Transaction with you, our activity as a submitter or contributor to the Reference Price or our pre-hedging and hedging activity in respect of transactions before, during or after the fixing time of the Reference Price Time (i.e. the later time at which the observation is taken) (the “Reference Time”) may adversely impact the level of the Reference Price.

While entering into a Reference Price Transaction allows you to remove the uncertainty over the difference between the Reference Price and the execution price for the transaction, you bear the risk that market activity following agreement of the Reference Price Transaction (including any pre-hedging and hedging activity) could result in an adverse price movement for you before the Reference Time.