Wolverine Execution Services, LLC (WEX or the Firm) is a registered broker with the Securities and Exchange Commission (SEC) as well as several self-regulatory organizations, including the Financial Industry Regulatory Authority (FINRA). As a client, we would like to provide you with some important disclosures as required by our regulatory authorities as well as certain policies and procedures WEX has adopted as part of our business practices. Please note that this document is provided for informational purposes only and is meant to apply to multiple aspects of the Firm’s business. Therefore, not every disclosure will be applicable to every WEX client receiving this notice. WEX may amend the notices and disclosures herein as needed. Any such amendments shall be available on the Firm’s website (www.tradewex.com).
To help the government fight the funding of terrorism and money laundering activities, Federal law requires financial institutions to obtain, verify, and record information that identifies each person who handles transactions on behalf of others. Upon applying for the services of the Firm, WEX is required to collect (at a minimum) the following information from you:
You may also be asked to show your driver’s license, corporate documentation or other identifying documents. A corporation, partnership, trust or other legal entity may need to provide information such as its principal place of business, local office, employer identification number, certified articles of incorporation, government-issued business license, a partnership agreement or a trust agreement.
WEX developed its Business Continuity Plan (BCP) to provide reasonable assurance that WEX can maintain business continuity in the event that there are disruptions of normal business operations. The plan anticipates various types of potential disruptions to ensure that the Firm can react in an appropriate and timely manner. However, no contingency plan provides absolute assurance that an interruption will not occur or that a disruption of normal operations will result from a disruptive event. WEX may periodically update the plan in an effort to maintain as comprehensive of a plan as possible.
WEX provides agency execution services only. Accordingly, the Firm’s plan focuses on identifying potential risks that may inhibit the Firm’s ability to provide such execution services and implement the processes that are to be followed in order to reestablish business operations. The plan details actions and alternatives for the Firm’s systems, networking, applications, market data feeds, vital records, regulatory reports, relocation sites and employee tasks.
Should there be a serious business disruption, WEX clients are encouraged to access information via the WEX website (www.tradewex.com) or contact us at (888) 313-0664 for further information.
Prior to buying or selling an option, investors must be provided with a copy of the Options Disclosure Document (ODD), which explains the characteristics and risks of exchange traded options. WEX encourages all of our clients to read the full Disclosure Document and any related supplements. A copy of the most recent ODD, which includes all supplements, may be found on The Options Clearing Corporation website at: https://www.theocc.com/about/publications/character-risks.jsp. Please note that a Supplement to the ODD was released in October 2018.
A copy of the ODD may be obtained from WEX upon request. If you have any questions, please contact us at (888) 313-0664 or email@example.com.
WEX would like to remind its clients of their responsibility to mark orders properly when sending them to WEX for execution. Where applicable, clients must receive a locate or pre-borrow of stock for any sell orders marked “short”, and comply with long/short order marking provisions of Regulation SHO and all other relevant exchange and SEC rules, regulations or related orders.
Similarly, clients must mark all terms of their options orders correctly, which includes using the proper order origin code for each order. This includes, but is not limited to, the correct marking of professional customer orders, or orders for any client that had an average of more than 390 orders per day during any month of the prior calendar quarter. Further information about this requirement may be found, among other places, in ISE Regulatory Circulars 2014-007, 2011-011, and 2009-06 available at www.nasdaqtrader.com.
Pursuant to SEC Rule 606, WEX makes available a summary of all “non-directed orders” for NMS securities and provides this summary publicly through our website: www.tradewex.com. Additionally and upon request, WEX will make available to any client the identity of the venue(s) to which the client’s orders were routed for execution during the six months prior to the request. Requests for this information must be made in writing or submitted electronically to firstname.lastname@example.org and email@example.com and should include specific details regarding the trades or orders in question.
WEX is an indirect subsidiary of Wolverine Holdings, L.P., which owns several trading and investment entities under common control, some of which execute orders on a principal basis as a specialist or market maker in equity securities, options and futures.
WEX receives order flow payments or “rebates” in varying amounts from U.S. equity and option exchanges and also from U.S. options specialists and/or market makers pursuant to the exchange sponsored marketing fee programs, which have been adopted by the exchanges and approved by the SEC. In many cases these rebates are netted against fees charged by the exchanges for order executions and other services. The net rebate (if any, after exchange fees) for any given order varies depending on the security, the bid/ask spread, the size of the order, its marketability, whether it takes or provides liquidity, and other factors. During any given month or quarter, the net value of rebates received will fluctuate depending upon the total number of eligible shares or option contracts executed at the various exchanges and the rebated rates offered by those exchanges and/or other liquidity providers. WEX receives the net rebates after month or quarter end, after the settlement of trades. Depending on each client’s negotiated agreement with WEX, it may keep or pass on to its clients the fees or rebates associated with the executions.
WEX uses many different criteria in making order routing decisions. If multiple exchanges are quoting at the National Best Bid and Offer (NBBO) for an option order and WEX has discretion as to where to route the order (or a portion of it), WEX will route the order to the venue which the Firm believes will deliver the best execution. In certain circumstances, this routing decision may result in the order being sent to a preferred venue from which WEX receives payment. WEX preferences certain options orders to the Firm’s affiliated options market maker, and to third party market makers for execution. Order routing decisions are based solely on fulfilling the Firm’s obligation to provide best execution of customer orders, and this obligation will not be compromised or influenced by the payment WEX receives for directing orders to a particular market. As described further in this notice, WEX may receive remuneration from an unaffiliated broker-dealer in consideration of such broker-dealer’s willingness to interact with a given order.
WEX considers the security of the information our clients provide to us on a daily and ongoing basis to be of the utmost importance. In order to provide brokerage services and maintain compliance with securities regulations, WEX may receive certain personal, non-public information from you, which is obtained from the following sources:
WEX uses the personal, non-public information that we collect to service your account, which includes qualifying you for trading various products and using the services available through the WEX system. The information may also be necessary to execute and confirm your WEX transactions. In doing so, we may share such information with our employees, agents, and affiliates. WEX restricts access of your personal, non-public information to those employees who need to know that information to provide products and/or services to you.
To protect your personal non-public information WEX maintains physical, electronic, and procedural safeguards. For example:
Only authorized WEX personnel can access the WEX system. In addition, WEX’s Internet-based systems include multiple security measures.
WEX does not disclose personal, non-public information to any parties that are not affiliated with WEX, except as required by law or upon request by exchange or other self-regulatory organization rules. WEX will only disclose or report such information where necessary to authorize, effect, administer, or enforce transactions that you request or authorize in order to: maintain and administer your account, provide you with account confirmations, statements and records; maintain appropriate archive records; where we believe that disclosure is required by applicable law, rules or regulations, to cooperate with law enforcement or regulatory or self-regulatory organizations, enforce our client and other agreements, meet our obligations, or to protect our rights and property.
When handling an order of 500 contracts or more on your behalf, WEX may solicit other parties to execute against your order and may thereafter execute your order using the Chicago Board Options Exchange’s (Cboe’s) AON AIM Solicitation Mechanism. This functionality provides a single-priced execution, unless the order results in price improvement for the entire quantity, in which case multiple prices may result. For further details on the operation of this mechanism, please refer to Cboe Rule 6.74B, which is available at www.cboe.org/Legal.
When handling an order of 500 contracts or more on your behalf, WEX may solicit other parties to execute against your order and may thereafter execute your order using the International Securities Exchange’s (ISE’s) Solicited Order Mechanism. This functionality provides a single-price execution only, so that your entire order may receive a better price after being exposed to the Exchange’s participants, but will not receive partial price improvement. For further details on the operation of this Mechanism, please refer to ISE Rule 716, which is available at www.ise.com/rules.
When handling an option order of 500 contracts or more on your behalf, WEX may buy or sell a hedging stock, security futures or futures position following receipt of the option order but prior to announcing the option order to the trading crowd. The option order may thereafter be executed using the Cboe’s tied hedge procedures. These procedures permit the option order and hedging position to be presented for execution as a net-priced package subject to certain requirements. For further details on the operation of the procedures, please refer to Cboe Rule 6.74.10, which is available at www.cboe.org/Legal.
When executing block transactions on behalf of its clients, WEX may source liquidity from a number of providers, including, but not limited to, affiliated broker-dealers and market-makers, in an effort to improve execution quality. Such liquidity providers may engage in hedging or other transactions to fulfill or facilitate the execution of the client’s order, which will occur prior to or at the same time as the execution of the client’s order(s). The purpose of these transactions will be to source liquidity for WEX’s client at the best available terms, including price, speed of execution, and minimization of market impact.
When handling orders on your behalf, WEX will take all reasonable steps to obtain the best possible execution based on the specific instructions of each order. WEX applies pre-trade checks to all orders that it receives and, in its discretion, may reject any order back to a client for any reason. When making a determination regarding how best to fill an order, the Firm will consider a variety of factors, including but not limited to price, the need for timely execution, the liquidity of the relevant market, the size of the order, the trading characteristics of the security involved, and the cost of the transaction. The Firm may attempt to obtain best execution by filling an order in the over-the-counter market, or by routing orders on your behalf to market centers, including national securities exchanges, alternative trading systems, electronic communications networks, and other broker-dealers.
The Firm will always take into account all specific instructions provided on an order. However, in the absence of express instructions from a counterparty, all orders routed to WEX will be deemed not held, and the Firm may exercise its own discretion based on its professional expertise with regard to both the timing and pricing of any such incoming orders.
Order size is a key factor when determining how to achieve best execution for an order. Because there is typically a correlation between the size of an order and its impact on the execution price of a security, orders in large size and/or less liquid products may not be filled at the quotes displayed by market data services (which typically apply only to orders of a limited size), or may be worked over a period of time so as to not exert undue pressure on the price of the security in question, as the Firm will attempt to minimize market impact to achieve the fastest and best possible fill for each order.
Additionally, WEX may use all available exchange-provided functionality, including various order types, exchange auction mechanisms, attributed orders, and preferenced orders, in addition to soliciting requests for quotes from one or more affiliated or unaffiliated market makers in order to provide best execution and, when available, price improvement relative to the published markets. In certain instances, WEX will solicit Wolverine Trading, an affiliated market-maker, to provide liquidity for orders routed to the Firm.
WEX clients may select from a number of order routing and execution options, based on each client’s needs and preferences. A brief description of the currently available services follows:
WEX clients may license the Firm’s proprietary WEX Trading Platform (WTP) in order to direct the routing of their orders to a number of liquidity providers and market centers. The WTP offers functionality for clients to enter orders in equities, options and futures. Clients may choose to utilize functionality which, based on user-determined parameters, permits trading in spreads and/or baskets as well as automated hedging and volatility trading.
WEX clients may submit orders via phone and/or email to brokers on the Firm’s upstairs agency trading desk or on various options exchange trading floors. WEX brokers may solicit one or more affiliated or unaffiliated liquidity providers in order to seek to obtain the best price for any such order(s).
WEX clients may enter orders via a third-party front end application in order to route such orders via FIX connection to multiple dynamic proprietary algorithms offered by the Firm. These applications may route orders in equities, options and futures based on the needs and preferences communicated to WEX by each individual client firm, including, but not limited to, minimization of market impact and price slippage, immediacy of order execution, market volatility, user-provided option delta, and time-weighted or volume-weighted (TWAP/VWAP) functionality.
WEX purchases orders from broker-dealers that aggregate individual orders from their end-clients. For these purchased orders, WEX solicits contra-side interest from another broker-dealer which may provide liquidity for the purchased order. This solicitation is typically of Wolverine Trading, LLC (WT), an affiliated broker-dealer that is an options market-making firm. If WT is willing to interact with an order, WEX will submit a paired order for both the initiating broker-dealer client and WT to an options exchange auction mechanism, where additional price improvement may be received from exchange member auction participants. For certain option classes, WEX may solicit an unaffiliated broker-dealer, in an attempt to source liquidity on a confidential basis if WEX reasonably believes that superior execution quality may be obtained. If the unaffiliated broker dealer is willing to interact with an order, WEX will submit a paired order for both the initiating broker-dealer client and the unaffiliated broker-dealer to an options exchange auction mechanism, where additional price improvement may be received from exchange member auction participants. Any such paired order will be routed on a confidential basis via automated means in order to avoid information leakage. In such instances, WEX may receive remuneration from such unaffiliated broker-dealer in consideration of such broker-dealer’s willingness to interact with a given order. The willingness of WT or the unaffiliated broker-dealer to provide liquidity for a purchased order depends on many factors, including, but not limited to, its existing inventory positions, risk appetite, market conditions and its theoretical value calculation for the option. When WEX pairs an order, it will do so at the NBBO or better, and the ultimate execution price for the order will be determined by the exchange auction process (which will often be different from the solicited broker-dealers theoretical value calculation). WEX does not exercise discretion over whether WT or the unaffiliated broker-dealer may be willing to provide liquidity for a WEX client order or the price at which it may be willing to interact. An interaction between WEX and an unaffiliated broker-dealer, as described above, is contingent upon WEX’s determination that such broker-dealer has the means to provide superior execution quality in a given option class as well as procedures in place that are reasonably designed to prevent information leakage. Such interaction would commence on a test or pilot basis and gradually expand to include additional option classes to the extent that WEX determines that the foregoing requirements have been sufficiently met. WEX regularly monitors and compares execution quality for orders paried with WT or unaffiliated broker-dealers and will adjust its routing practices for various option classes in order to ensure that superior execution quality is consistently achieved for its clients. For orders where WEX is not to able submit a paired order to an auction, such option orders typically are routed to a U.S. option exchange, where such orders would post to the exchange’s displayed order book. Finally, WEX anticipates that, in certain instances, an unaffiliated broker-dealer may solicit WEX to source liquidity in certain option classes where such broker-dealer reasonably believes that WEX may provide superior execution quality in such option classes.
WEX’s RFQ System allows clients to solicit pre-trade RFQs from their desired pool of multiple liquidity providers, and to control the terms of those RFQs, including the time allowed to respond and whether liquidity providers must respond with a one- or two-sided market.
Pursuant to NASDAQ Rule 4631 and BATS Rule 3.21, all member firms must disclose to their customers any inherent risks should they choose to conduct trading activities outside of normal market hours, and that each customer should consider the following:
FINRA Rule 2267 requires WEX to provide the following information to its clients once every calendar year in writing (which may be in electronic format):
WEX is a member of the Securities Investor Protection Corporation (SIPC). Clients may obtain information about SIPC, including the SIPC brochure, by contacting SIPC via phone at (202) 371-8300 or e-mail at firstname.lastname@example.org or by visiting the SIPC website at www.sipc.org.
WEX is required to inform its clients about the National Futures Association’s (NFA) Background Affiliation Status Information Center (“BASIC”), which contains Commodity Futures Trading Commission (CFTC) registration and NFA membership information and futures-related regulatory and non-regulatory actions contributed by NFA, the CFTC and the U.S. futures exchanges. BASIC is available at https://www.nfa.futures.org/basicnet/welcome.aspx.
Should you have any questions regarding the materials provided by this notice, please contact us at (877) 310-8155 or email@example.com.
Should you have a complaint regarding WEX, including, but not limited to, any employee of the Firm or services you have received, please direct such complaint to:
Wolverine Execution Services, LLC
Attn: Compliance and Legal Department
175 W. Jackson Blvd., Suite 200
Chicago, IL 60604
Thank you for your continued business.