Inducements and Conflicts of Interest Disclosure

Inducements and Conflicts of Interest Disclosure

1. Introduction

This notice is issued by Payward Europe Digital Solutions (CY) Limited ("the Company," "Kraken," "we," "us," or "our") in accordance with Article 24(9) of Directive 2014/65/EU on Markets in Financial Instruments ("MiFID II") and its implementing measures, which require investment firms to disclose to clients, in a manner that is comprehensive, accurate, and understandable, the existence, nature, and amount of any fee, commission, or benefit paid or received in connection with the provision of an investment or ancillary service, prior to the provision of that service and on an ongoing basis thereafter.

This notice applies to clients who open an account with the Company following a referral or introduction from MEXC (insert exact entity) ("the Introducer").

2. Nature of the Arrangement

The Company has entered into a commercial arrangement with the Introducer, pursuant to which the Company pays the Introducer a commission in connection with clients who open an account with the Company as a result of the Introducer's referral.

A practical example is illustrated in Annex I.

3. Role of the Introducer

The Introducer's role is limited to referring prospective clients to the Company. The Introducer does not provide investment advice, does not receive, transmit, or execute client orders, and does not hold or safeguard client funds or financial instruments.

Clients should note that all investment services provided to clients are provided directly, and independently, by Kraken, which alone is responsible for compliance with its regulatory obligations.

Where personal data relating to a client has been provided to the Company by the Introducer in connection with a referral, further information regarding the processing of that data is available in the Company's Privacy Notice.

4. Purpose of the Arrangement

The commission referred to in Section 2 is intended to support the following services provided to referred clients:

• dedicated client support channels;
• continuity of historic trading records and account data;
• multilingual client assistance; and
• communications relating to the transition of a client's account to the Company.

Clients may request further information regarding these services from the Kraken using the contact details in Section 8.

5. No Impact on Client Pricing

The commission described in Section 2 is paid by the Company from its own revenue. It does not result in any increase to the fees, spreads, or other charges payable by a client, and pricing is identical for clients irrespective of whether their account was opened through this referral arrangement.

6. Identification and Management of the Conflict of Interest

The Company recognises that this arrangement gives rise to a conflict of interest. Specifically, clients referred through this arrangement are provided with a prioritised onboarding and support experience (including dedicated support channels, expedited handling during the transition period, and priority access to migration-related assistance) as part of the services funded by the commission described in Section 2. This differs from the standard onboarding and support pathway applicable to clients who do not arrive through this arrangement.

The Company manages this conflict, and ensures it does not result in unfair treatment of clients generally, through the following measures:The Company manages this conflict, and ensures it does not result in unfair treatment of clients generally, through the following measures:

(a) the prioritisation described above is limited to the onboarding and support experience during the transition period; it does not extend to, and has no effect on, order execution, pricing, spreads, fees, or the substantive quality of investment services provided to any client;

(b) every client referred through this arrangement is subject to the Company's own independent client onboarding process, including "know your customer," anti-money laundering, client categorisation, and appropriateness assessments; the Company does not rely on any equivalent determination previously made by the Introducer, and this process is not abridged or expedited in a manner that reduces its rigour;

(c) the fees, spreads, and other terms applicable to a client's account are identical irrespective of whether the account was opened through this arrangement;

(d) the Company monitors service levels provided to non-referred clients to ensure that resourcing allocated to the prioritised support described above does not result in a material reduction in the standard of service, or in response times, provided to other clients;

7. Ongoing Disclosure

In addition to this disclosure, the Company will provide clients with a periodic disclosure, not less than annually, of the actual costs, charges, and inducements associated with their account, including, where applicable, amounts paid under this arrangement. A client may request a more detailed, transaction-level breakdown of such amounts at any time by contacting the Company's Compliance function.

Should this arrangement be materially amended, extended, or terminated in a manner affecting the substance of this disclosure, the Company will notify affected clients accordingly.

8. Further Information and Complaints

Clients with questions concerning this disclosure, or who wish to raise a complaint in connection with this arrangement, may contact Kraken by submitting their claim through the dedicated Complaints form:

Complaints Form

Any such complaint will be handled in accordance with the Company's Complaints Handling Policy, via the Company's website.

This notice is issued pursuant to Article 24(9) of MiFID II and forms part of the pre-contractual and ongoing disclosure provided by the Company to its clients. It should be read together with the Company's Terms of Service, Privacy Notice, Conflicts of Interest Policy, Risk Disclosures and other applicable client disclosures.

---

Annex I

Commission illustration

Contract: BTC-USD Multi-Collateral Perpetual (PF_BTCUSD)

• Trader tier: $0+ tier → Maker 0.02%, Taker 0.05%
• Position: Long, 1 BTC notional, entry price $60,000 
• Entry: market order (taker)
• Funding rate: assume a steady +0.01% per hour - this is illustrative; real rates fluctuate every hour and can flip sign, please refer to the platform for the updated rates.
• Exit: two scenarios - market order (taker) vs. resting limit order (maker)

Entry fee (one-time)

Taker fee = 0.05% × $60,000 = $30

Funding accrued

For ease of reference the funding rate used was fixed, however, funding is realized hourly. At +0.01%/hour on $60,000 notional:

$60,000 × 0.01% = $6/hour paid by the long to the short

Notice this grows linearly with time held - there's no cap, it's charged every single hour, for as long as the position stays open.

Exit fee (one-time)

• Exit via taker (market order): 0.05% × $60,000 = $30
• Exit via maker (limit order that rests and fills): 0.02% × $60,000 = $12

Total all-in cost by holding period

The commission is calculated by reference to the Company's own trading fee revenue - that is, the maker and taker fees charged by the Company on order execution - generated by the referred client's activity. It does not apply to, and is not calculated by reference to, funding rate payments, which are periodic payments exchanged directly between long and short position holders in connection with perpetual futures contracts and do not constitute revenue earned by the Company. Accordingly, the commission payable to the Introducer represents a 60% share of the trading fees actually retained by the Company, and not a share of the total cost incurred by the client, which may include funding payments substantially in excess of the trading fees paid.

So, in the 2-day hold example above, Kraken's own revenue from this trade is :

$30 (entry) + $30 or $12 (exit) = $60 (taker exit) or $42 (maker exit) 

and MEXC's 60% commission would be calculated on that figure

That works out to $36 (taker exit) or $25.20 (maker exit) paid to MEXC per round-trip trade.