Common use of Late Trading and Market Timing Clause in Contracts

Late Trading and Market Timing. If there is a suspicion that an applicant conducts late trading or market timing, the AIFM and/or the depositary will refuse acceptance of the application for subscription, conversion or redemption until the applicant has dispelled any doubts with regard to the application. Late trading Late trading is the acceptance of an application for subscription, conversion or redemption received after the cut- off time for applications on the relevant day and the execution of such applications at a price based on the net as- set value applicable on that day. By means of late trading, an investor may derive gains from the knowledge of events or information published after the cut-off time for applications but not reflected in the price at which the in- vestor’s application will be settled. This investor therefore has an advantage over those investors who observed the official cut-off time. The investor's advantage is even more marked when late trading and market timing are combined. Market timing Market timing is an arbitrage process in which an investor systematically subscribes shares of the same fund on a short-term basis and then either redeems or converts them by exploiting time differences and/or errors or weak- nesses within the system for the calculation of the net value of the fund.