PHILLIP SECURITIES PTE LTD ("PSPL")
This statement does
not disclose all of the risks and other significant aspects of trading in
securities. In light of the risks, the Customer should undertake such
transactions only if he/she understands the nature of securities, including
derivatives, and the contracts (and contractual relationship) which you are
entering into and the extent of your exposure to risk. The Customer should
carefully consider whether trading in securities is appropriate in the light of
his/her experience, objectives, financial resources, and other relevant
circumstances. If in any doubt, the
Customer should seek professional advice. Different securities involve
different levels of risk and in considering whether to trade in securities, the
Customer should be aware of the following points:
a)
Terms
and Conditions of Securities Trading
The
Customer should read and understand the terms and conditions spelt out (and
from time to time amended) in the CONDITIONS GOVERNING PHILLIP SECURITIES
TRADING ACCOUNTS and relevant INFORMATION SHEET(S) (for Investment Account,
Cash Management Account, Securities Borrowing/Lending, Foreign Markets, POEMS
service and Contracts for Differences), all of which are referred to and
construed as part of the agreement between PSPL and Customers.
b)
Risks
associated with Securities trading
i)
Price fluctuation
The price and value of
any investment in securities and the income, if any, from them, can fluctuate
and may fall against your interest. An individual security may experience
downward price movements and may under some circumstances even become
valueless. An inherent risk of trading securities is that losses may be
incurred, rather than profits made, as a result of buying and selling securities.
ii) Suspension or Restriction of Trading
Market
conditions (e.g. illiquidity) and/or the operation of the rules of certain
markets (e.g. the suspension of trading in any security because of price limits
or trading halts) may increase the risk of loss by making it difficult or
impossible to effect transactions or liquidate/offset positions.
iii) Warrants
A warrant is a time-limited right to subscribe for
securities and is exercisable against the original issuer of the underlying
securities. A relatively small movement in the price of the underlying security
results in a disproportionately large movement, favourable
or unfavourable, in the price of the warrant. The
prices of warrants can therefore be volatile. It is essential for anyone who is
considering purchasing warrants to understand that the right to subscribe which
a warrant confers is invariably limited in time with the consequence that if
the investor fail to exercise this right within the predetermined time-scale
then the investment becomes worthless.
(iv) Securitised
Derivatives (eg. structured warrants, contracts for
differences)
These instruments may give you a time-limited or
absolute right to acquire or sell one or more types of investments which is
normally exercisable against someone other than the issuer of that investment.
Or they may give you rights under a contract for differences (CFD) which allow
for speculation on fluctuations in the value of the underlying security. The
Customer should be aware of the credit, liquidity and market risks associated
with these instruments. CFDs carry a high degree of
risk as they often involve gearing or leverage, so that a relatively small
movement in the price of the underlying investment results in a much larger
movement, favourable or unfavourable,
in the price of the instrument. The price of these instruments can therefore be
volatile. These instruments have a limited life, and may expire worthless if
the underlying instrument does not perform as expected.
(v) Equity-linked investments
These are structured products based on underlying listed
securities that offer the potential for high returns but also involve
substantial risks including market, liquidity and credit risks. These
investments are intended to be held to maturity and are generally for investors
who expect the price of the reference security to be stable or moderately
bullish in the near future. The principal investment sum and interest are not
guaranteed and investors may suffer a capital loss, if the reference security price
is below the strike price on determination date, as investors will receive the
reference security instead of cash. In providing prices for Equity-linked investments, PSPL will
enter into the transaction with the customer as principal, unless otherwise stated.
Any transaction entered into by the Customer with PSPL could result in a loss
to the Customer and a gain to PSPL.
(vi) Debt Securities
Debt Securities and Debt-linked
investments offer fixed returns over a defined period and are intended to be
held to maturity. These instruments carry a significant amount of risk such as
credit, currency and liquidity risks. Credit risk arises from default events
that may result in the inability of the issuer to pay interest or principal.
Default risk is high when credit rating is non-investment grade or non-rated.
In a default situation, the buyer may lose both interest and
principal. Currency risk arises from holding Debt Securities that are
issued in foreign currency, hence exposing the buyer to fluctuations in exchange
rate. There is a high chance that if the currency moves adversely, the buyer
may lose more than his original interest and principal. Liquidity risk
refers to the availability of prices for buying or selling into a market.
It is common for most Debt Securities to suffer from poor liquidity
because they are quoted over-the-counter (OTC).
(vii) Over-the-counter
(OTC) Products
Over-the-counter (OTC) products are
not listed or available on an officially recognised
securities exchange, but traded directly between two parties (buyer and seller)
on a principal basis, unless otherwise stated. As a result, an OTC transaction
is individually negotiated between two parties and the Customer is thus exposed
to credit risk of the counterparty in which they enter into bilateral agreement
with. In addition, the Customer may be exposed to liquidity risk and PSPL
cannot and does not warrant that there is an active trading market and the
price PSPL secure for the Customer will at any time be the best price available
to the Customer. In entering into an OTC transaction with the Customer, PSPL
may make a profit despite the Customer incurring a loss. The customer should
consider carefully whether each OTC product is suitable in light of the
Customer’s investment experience, objective, financial position, risk
propensity and other relevant considerations. The customer should therefore
ensure that they understand the risks associated with OTC products and
transactions and seek independent advice, if necessary before making a decision
to invest in any of the OTC products.
Where PSPL re-sells an obligation of
an Issuer or Third Party, the Customer accepts that PSPL is not obliged to
settle the underlying obligation of such Issuer or Third Party and the
liability of non-payment by the Issuer or Third party is to be borne by the
Customer and that such a transaction shall be deemed settled upon the
Customer’s payment for the same.
c)
Risk
of Margin trading (eg. share margin financing, contracts for differences)
The
risk of loss in financing a transaction by deposit of collateral may be
significant. The Customer may sustain losses in excess of his/her cash and any
other assets deposited as collateral with PSPL. The Customer may be called upon
at short notice to make additional margin deposits or interest payments. If
required margin deposit or interest payment is not made within the prescribed
time, the Customer's collateral or positions may be liquidated by PSPL at a
loss without prior notification to the Customer. The Customer should therefore
carefully consider whether such a financing arrangement is suitable in light of
your own financial position and investment objectives.
d)
Commission,
Fees, Interest and Other Charges
The
Customer should obtain a clear explanation of all commissions, fees, interest
and charges, including charges for the custody of the Customer’s shares, and
understand that these charges may affect the Customer's net profit (if any) or
increase the Customer's loss. The Customer agrees that he/she will be liable
for these charges (as may be amended from time to time).
e)
Transactions
in Other Jurisdictions
Transactions
on markets in other jurisdictions, including markets formally linked to the
f)
Currency
Risks
The
potential for profit or loss from transactions on foreign markets or in foreign
currency-denominated securities (traded locally or in other jurisdictions) will
be affected by fluctuations in foreign exchange rates.
g)
Trading
Facilities and Electronic Trading
PSPL's trading facilities are supported
by computer-based component systems for the order-routing, execution, matching,
registration or clearing of trades. As with all facilities
and computer systems, customers will be exposed to risks associated with the
systems including the failure of hardware and software. The result of
any system failure may be that the Customer's order is either not executed
according to instructions or is not executed at all. The Customer should also
be aware that the Internet is not a completely reliable transmission medium and
there may be delays in service provisions.
h) Mobile Broking
If
the Customer's trading representative is, or becomes, a member of PSPL's team of mobile trading representatives, he/she will
be operating from outside PSPL's office premises. The
Customer's trade orders will be channelled through PSPL's proprietary online electronic broking system for
execution. As with any transaction carried out over telecommunications
networks, the Customer should be aware that there is the risk of possible delay
in trade processing or outages. It is in the Customer's own interest not to
provide a 'care-of' or 'PO Box' address as a mailing address for contract notes
and statements of account to be sent to. The Customer is also advised to place
trade orders only with the trading representative concerned. Complaints, if
any, should be directed to PSPL.
i) Securities
Borrowing and Lending
When
the Customer borrows securities from PSPL, the Customer will be required to
deposit a required level of collateral. The Customer may be called upon at
short notice to place additional deposits if the level of collateral is
inadequate in relation to the market value of borrowed securities. If the
required deposit is not made within the prescribed time, PSPL may buy-back the
borrowed securities without prior notification to the Customer. When the
Customer lends securities to PSPL, the Customer temporarily loses legal
ownership rights to the securities but in place, has a right to claim
equivalent securities. In so far as the Customer receives manufactured
dividends, the Customer may be required to treat the entire amount as income
for tax purposes.
j) Non-Advisory Nature of Relationship
Unless
the Customer has a specific agreement with PSPL for the provision of advisory
services or fund management services, the Customer should note and accept that PSPL’s relationship with the Customer in relation to the
Customer’s securities and securities-related transactions is purely as
execution-only broker / dealer or as a counterparty to
the Customer. In either case, while the Customer is entitled to expect PSPL or
its employees or representatives to answer the Customer’s queries, the
obligation in so answering is only to be honest. Such answers should not be
assumed to be backed by any prior reasonable due diligence or research or specifically
suitable for reliance by the Customer without the Customer first
independently confirming that the answer is intended as specific advice to and
is suitable for or to the Customer’s specific financial needs and objectives or
the Customer verifying the same with the Customer’s independent advisers on its
specific suitability for the Customer’s specific financial needs and
objectives. The Customer should also note clause 14 of Section 1,
Part
B of the Conditions Governing Phillip Securities Trading Accounts and ensure
that the Customer understands and accepts the same as a condition to the
Customer’s relationship with PSPL.
k) Additional Risk Disclosure Statement
for CFD Trading
Customers
should undertake transactions in CFDs only if they
understand the nature of the contracts that they are entering into, the risks
involved and the true extent of their exposure to the risk of loss. Customers should carefully consider whether
such trading is appropriate for them in the light of their experience,
objectives, financial resources and other relevant circumstances. In
considering whether to trade, Customers should be aware of the following, in
addition to the risk factors disclosed above:
(i) Effect of ‘Leverage’ or ‘Gearing’
The
“gearing” or “leverage” in CFDs means that a small
deposit can lead to large gains as well as losses. It also means that a relatively small market
movement can lead to a proportionately much larger movement in the value of
your investment and this can work against you as well as for you. Investing in CFDs
carries a high degree of risk and Customers may sustain a total loss of the
margin the Customer has deposited to establish or maintain a position. If
Customers fail to comply with a request for additional funds within the time
prescribed, their positions may be liquidated at a loss and Customers will be
liable for any resulting deficit in their accounts.
(ii) Terms and Conditions of CFD Contracts
The
Customer should read and understand the terms and conditions spelt out (and
from time to time amended) in the CONDITIONS GOVERNING PHILLIP SECURITIES
TRADING ACCOUNTS and relevant INFORMATION SHEET(S), which are referred to
and construed as part of the agreement between PSPL and Customers.
(iii) Suspension or Restriction of Trading and Pricing Relationships
Market
conditions (e.g. illiquidity) and/or the operation of the rules of certain
markets (e.g. the suspension of trading in any underlying interest) may
increase the risk of loss by making it difficult or impossible to effect
transactions or liquidate/offset positions.
(iv) CFD – OTC Transactions
In
providing a liquid market and prices for
1.
PSPL shall be
entitled, but not bound, from time to time to pay the
sales proceeds and contra gains (the “sales proceeds”) arising from the
transactions effected through the Trading Account to the customer’s designated
Bank Account. PSPL may, at its option, elect to pay you the sales proceeds by cheque and such election shall be binding on you.
2.
No payments
shall be made by PSPL to the designated Bank Account through the Electronic
Payment For Shares service (the “service”) on
Saturdays or half business days of the Participating Banks or PSPL.
3.
PSPL shall be
entitled, but not bound, from time to time to:
a)
deem and treat
any payments made by you from time to time through the service (the ”electronic
payment”) as being paid on the market day following the date of the electronic
payment;
b)
apply all or
any amounts received pursuant to the electronic payment in payment of
outstanding purchases or contra losses (the “outstanding contracts”) made
through the Trading Account in chronological order so that the outstanding contract for which payment is due first will
be settled first, notwithstanding any instructions from you as to how the
electronic payment is to be applied; and
c)
set-off all or any amounts received pursuant to the electronic
payment against all or any amounts due and owing by you to PSPL before applying
the said electronic payment to settle any outstanding contracts, notwithstanding any instructions from you as
to which outstanding contract the electronic payment is to be applied.
4.
PSPL and the
Participating Bank are not responsible for any errors, inaccuracies or
omissions (the “omissions”) in the information that may be displayed or
transmitted by the Participating Bank to you for the purpose of making
electronic payments through the service such as the contract or contra
statement numbers and the amounts due thereunder.
Your liability to PSPL for all and any amounts owing to PSPL shall be
unaffected by the omissions.
5.
(a) You shall remain liable to PSPL for all and
any amounts owing to PSPL howsoever arising from transactions effected through the Trading Account until full payment is
received by PSPL.
(b)
An electronic
payment shall be deemed to be received by PSPL if PSPL ’s
bank account is credited with the electronic
payment. An instruction to the Participating Bank to debit the
designated Bank Account and/or to transfer any amount from the designated Bank
Account to PSPL shall not constitute payment to PSPL.
(c)
Nothing herein
shall prejudice or preclude PSPL from exercising its rights to recover any
amounts due and owing to PSPL howsoever arising from transactions effected
through the Trading Account, including the right to force-sell securities
purchased under outstanding contracts, until PSPL has received full payment therefor.
(d)
Where PSPL has
exercised its rights to force-sell any securities, PSPL shall be entitled to
apply all or any amounts received pursuant to the electronic payment in
accordance with condition 3(c) hereof.
6.
Neither PSPL,
the Participating Bank nor their respective agents shall be liable for any
loss, consequential loss, damages, costs and charges suffered by me or any
other party as a result of any failure by the Participating Bank to credit
payment of the sales proceeds into the designated Bank Account or as a result
of any failure by the Participating Bank to transfer any electronic payment
from the designated Bank Account to PSPL or as a result of any malfunction,
partial or total failure of any machine, data processing system, electronic
transmission or communications system or arising from causes or circumstances
beyond the control of PSPL, the Participating Bank or their respective agents.
7.
PSPL and/or
its agent’s records of the instructions, operations or transactions made or
performed, processed or effected through
the service by PSPL and/or its
agent or by or
purported to be by you or by the Participating Bank shall be binding and
conclusive on you for all purposes whatsoever and shall be conclusive evidence
of the instructions, operations or transactions.
8.
PSPL shall be
entitled to add, vary, rescind or amend any or all these terms and conditions
at any time at its discretion.