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EXHIBIT 10.6
Name: Hull Trading Company, L.L.C.
Account No:
A. CUSTOMER AGREEMENT
To: MeesPierson Futures Clearing Services (Asia) Limited Date: August 26, 1998
1. Introduction/General
(a) The following are the terms and conditions to which I/We will be subject
upon opening, and in respect of, any account held by me/us with you.
(b) The following definitions are used herein:
- "the Agreement" means this document and the terms and conditions
set out herein.
- "the Clearing House" means HKFE Clearing Corporation Limited;
- "Commodities" shall include, but not be limited to, gold, silver
and other physical commodities, monies, foreign currencies,
securities (as defined from time to time in the Securities
Ordinance), stocks, currency options, foreign exchange contracts,
index options, index futures contracts, commodity forward or
futures contracts, securities futures contracts, stock futures,
commodity options, securities futures options, stock options,
currency forward or futures contracts, financial futures and
contracts for the future delivery of, or otherwise relating to,
commodities, foreign currencies or securities;
- "the CTO" means the Commodities Trading Ordinance, Chapter 250 of
the Laws of Hong Kong as amended from time to time;
- "the Customer" means me/us. In addition, "the Customer" wherever
used shall where the Customer(s) is/are individual(s) include
his/their respective executors and administrators and where the
Customer is a sole proprietorship include his executors and
administrators and his or their successors in the business and in
the case of a partnership firm include the partners who are the
partners of the firm at the time when the Customer's account or
accounts are being maintained and their respective executors and
administrators and any other person or persons who shall at any
time hereafter be or have been a partner of and in the firm and
his or their respective executors and administrators and the
successors to such partnership business and where the Customer is
a corporation include its successors;
- "the Exchange" means Hong Kong Futures Exchange Limited;
- "MeesPierson" means you;
- "the SFC Ordinance" means the Securities and Futures Commission
Ordinance, Chapter 24 of the Laws of Hong Kong as amended from
time to time.
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(c) This Agreement is subject to and governed by the provisions of
the CTO and Hong Kong law.
(d) The rules and regulations of the Exchange and the Clearing House
shall be binding on the Customer and MeesPierson. Those rules and
regulations contain provisions requiring MeesPierson in certain
circumstances to disclose the name and beneficial identity of the
Customer.
(e) MeesPierson, its directors and/or employees may trade on their
own account and, subject to the provisions of the CTO and the SFC
Ordinance, MeesPierson may take the opposite position to the
Customer's order in relation to any futures/options contract,
whether on MeesPierson own account or for the account of other
customers of MeesPierson, provided that such trade is executed
competitively on the floor in accordance with the rules and
regulation of the Exchange or other exchanges governing the
relevant markets.
(f) unless otherwise confirmed in writing by MeesPierson and agreed
by the Customer and MeesPierson, MeesPierson is acting solely as
broker to any transactions made with MeesPierson by the Customer.
(g) In all transactions referred to in the Agreement MeesPierson may
contract as principal.
(h) The terms and conditions of the Agreement shall inure to the
benefit of, and bind MeesPierson, MeesPierson's successors and
assigns, whether by merger, consolidation or otherwise, as well
as the heirs, executors, administrators, legatees, successors,
personal representatives and assigns of the Customer.
(i) The Customer submits to the non-exclusive jurisdiction of the
Court of Hong Kong in respect of all disputes, differences
and claims relating to or arising out of the Agreement.
(j) Notices, and any other communications may be transmitted to the
Customer at the address, or telephone number or telex Number or
fax number given herein, or at such other address or telephone
number or telex number or fax number as the Customer hereafter
shall notify MeesPierson in writing, and all communications so
transmitted, whether by mail, fax, telegraph, telephone,
messenger or otherwise, shall be deemed transmitted when
telephoned or when deposited in the mail, or when received by a
transmitting agent.
(k) No provision of the Agreement shall in any respect be waived or
amended unless such waiver or amendment is in writing and signed
by an authorised officer of MeesPierson. This Agreement shall not
be revoked by the Customer except in writing. Such revocation,
however, shall not affect any transaction entered into by
MeesPierson pursuant to the Agreement before written notice of
the revocation has been received by MeesPierson.
(l) MeesPierson may take or omit to take any action which it
considers appropriate in order to ensure compliance with any
such constitution, rules and regulations, including (without
limitation) adjusting any account(s), disregarding any unexecuted
order or rescinding any executed transactions.
(m) If any provision hereof is inconsistent with any present or
future law, rules or regulations of any exchange, or any
authority having jurisdiction over the subject matter of the
Agreement, such provision shall be deemed to be rescinded or
modified in accordance with any such law, rules or regulations.
In all other respects, the Agreement shall continue and remain in
full force and effect.
(n) Unless otherwise agreed, the Customer may not trade on margin and
MeesPierson is under no obligation to make credit facilities
available. Before MeesPierson conducts any transaction on the
Customer's behalf, the Customer will put MeesPierson in funds to
complete such
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transaction. Notwithstanding the foregoing, and without prejudice
to the other relevant provisions of the Agreement, the Customer
will at all times be liable for the payment on demand of any
debit balance or other obligation or liability owing on any
account which may arise for whatever reason.
(o) The Customer will indemnify MeesPierson and its officers,
employees, agents and account executives for any loss, cost,
claim, liability or expense arising out of or connected with any
breach hereunder including any costs reasonably and necessarily
incurred in collecting any debts due or in connection with the
closure of any account.
(p) The Customer authorises MeesPierson to conduct a credit enquiry
or check on the Customer for the purpose of ascertaining the
Customer's financial situation and investment objectives.
(q) If any provision of the Agreement shall be held to be invalid or
unenforceable by any Court or regulatory agency or body, such
invalidity or unenforceability shall attach only to such
provision. The validity of the remaining provisions shall not be
affected thereby and the Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained
herein.
(r) Where the Agreement is signed by or on behalf of a firm or
otherwise by or on behalf of more than one person:
(i) any liability arising hereunder shall be deemed to be
the joint and several liability of the partners in the
firm of such persons as aforesaid;
(ii) MeesPierson has no obligation to inquire into the purpose
or propriety of any instruction or the application of any
funds affected, by any partner of the firm or any such
persons as aforesaid;
(iii) notwithstanding any other arrangements which have been
made between them, the rule of survivorship shall apply
to all accounts and, on the death of any of them, all
funds, securities and properties for the time being
standing to the credit of any account and anything held
by MeesPierson, whether by way of security or otherwise,
shall be held to the order of the survivor(s);
(iv) any one of them has full authority to give any
instruction with respect to any account; to receive
demands, notes, confirmations, reports, statements and
other communications of any kind, such communications
shall be binding on each of them notwithstanding that
such communications have not been actually sent to or
received by every one of them; generally to deal with
MeesPierson in connection with the Agreement as fully and
completely as if the others had no interest therein; and
(v) the Agreement continues to be valid and binding for all
purposes notwithstanding any change in the partnership or
constitution of the firm by the introduction of a new
partner or by the death, insanity or bankruptcy or
retirement of any partner.
If the Agreement is signed by or on behalf of more than one
person and any one or more of such persons is not bound by the
Agreement (whether by reason of his or their lack of capacity or
improper execution of the Agreement or otherwise), the remaining
person or persons shall continue to be bound by the Agreement as
if such other person or persons had never been party hereto.
(s) The Agreement shall remain in effect and binding on the Customer
notwithstanding (i) any amalgamation or merger that may be
effected by MeesPierson with any other company, (ii) any
reconstruction by MeesPierson involving the formation of and
transfer of the whole or any
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undertakings and assets to a new company or (iii) the sale or
transfer of all or any part of any undertakings and assets to
another company whether the company with which MeesPierson
amalgamates or merges or the company to which is transferred all
or any part of any undertakings and assets either on a
reconstruction or sale or transfer as aforesaid shall or shall
not differ from in its objects, character or constitution; the
Agreement shall remain valid and effectual in all respects, and
that the benefit thereof and all rights conferred upon
MeesPierson thereby may be assigned to and enforced by, any such
company and proceeded on in the same manner to all intents and
purposes as if such company had been named herein instead of or
in addition to MeesPierson.
(t) The Customer may not assign any contract entered into between the
Customer and MeesPierson or any of the rights or obligations
thereunder without the consent in writing from MeesPierson which
consent MeesPierson shall not be under any obligation to give.
2. Orders
(a) MeesPierson shall have no obligation to provide the Customer with
information with respect to the Customer's positions and shall have no
obligation but the right at the discretion of MeesPierson to close any
position in any account MeesPierson may carry on the Customer's
behalf. MeesPierson shall have the right (at the absolute discretion
of MeesPierson, and without assigning any reason therefor) to refuse
to act for the Customer in any particular transaction.
(b) In case of the sale of any Commodities or other properties by
MeesPierson at the direction of the Customer and the Customer's
failure to supply MeesPierson therewith, the Customer authorises
MeesPierson to borrow any Commodities, or other properties necessary
to make delivery thereof, and the Customer agrees to guarantee,
indemnify and hold MeesPierson harmless against any loss which
MeesPierson may sustain thereby, any premiums which MeesPierson may
be required to pay, or for any loss which MeesPierson may sustain by
reason of the inability of MeesPierson to borrow the Commodities or
other properties sold.
(c) Liquidating instruction and sufficient good funds where necessary on
open futures positions maturing in a current month must be given to
MeesPierson at least two business days prior to the first notice day
in the case of long positions and in the case of short positions, at
least five business days prior to the last trading day. If
instructions or good funds are not received by MeesPierson,
MeesPierson may, without notice, liquidate the Customer's position
upon such terms and by such methods which MeesPierson shall deem fit
and, having done so, MeesPierson shall not be liable for any loss or
liability which arises whether directly or indirectly as a result.
(d) MeesPierson shall not be responsible for delays in the transmission of
orders due to a breakdown or failure of transmission of communication
facilities, or to any other cause or causes beyond the control or
anticipation of MeesPierson. All orders, instructions or requests
whether by letter, facsimile or otherwise or made orally are accepted
and transmitted at the Customer's risk. On request the Customer shall
confirm in writing verbal orders, instructions or requests. It is
understood that the risk of instructions being given by persons
purporting to be the Customer's authorised representatives is borne
solely by the Customer and MeesPierson shall not be responsible nor
liable for any loss that may result from any unauthorised
instructions.
(e) The Customer may not withdraw nor amend any order or instruction after
the same has been given unless MeesPierson consents to such withdrawal
or amendment. In giving consent to such withdrawal or amendment,
MeesPierson may impose such conditions, including indemnities for
costs and expenses, as it deems fit.
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(f) When MeesPierson on behalf of the Customer executes sell or buy
orders, MeesPierson, MeesPierson's directors, officers, employees, and
agents of MeesPierson and, any floor broker may buy or sell for an
account in which any such person has interest, subject to the
limitations and conditions, if any, contained in the constitution,
rules, regulations, customs, usages, rulings, and interpretations then
extant or in force of the Exchange or other market upon which such buy
or sell orders are executed. MeesPierson may execute any order on
behalf of the customer by way of a cross-trade.
3. Lien & Power of Sale
(a) Without prejudice and in addition to any general lien, right of
set-off or similar right to which MeesPierson may be entitled by law,
all of the Customer's interest in any Commodities or other property
held by MeesPierson for any purpose or carried by MeesPierson in any
account for the Customer (either individually or jointly with others)
or which may be in the possession of MeesPierson, or in the possession
of any group companies of MeesPierson, at any time and for any
purpose, including safe-keeping, shall be subject to a general lien in
favour of MeesPierson. MeesPierson shall also have the right to cancel
any open orders for the sale or purchase of any Commodities and/or
sell such properties (and MeesPierson is authorised to do all such
things necessary in connection with such sale) and utilise the
proceeds to offset and discharge part or all of the obligations of the
Customer to MeesPierson or to any of its group companies, regardless
of whether any other person is interested in or MeesPierson has made
advances in connection with such properties, and irrespective of the
number of accounts the Customer may carry with MeesPierson.
(b) Whenever MeesPierson considers it necessary, it may cancel any open
orders for the sale or purchase of any Commodities and/or sell any
Commodities or other property belonging to the Customer or in which
the Customer has an interest with or without notice to the Customer.
Such sale or purchase may be public or private and may be made without
advertising or notice to the Customer and in such manner as
MeesPierson may at its sole discretion determine. At any such sale
MeesPierson may purchase the properties or any of them free of any
right of redemption and in respect of any such sale MeesPierson shall
have no liability for any loss incurred and the Customer will not make
any claim against MeesPierson concerning the manner of sale or timing
thereof. The proceeds of such transactions are to be applied to reduce
the indebtedness owing to MeesPierson.
(c) The Customer shall be liable for all losses whether or not the account
is liquidated and for any debts and deficiencies in the Customer's
accounts including all debts and deficiencies resulting from a
liquidation of the Customer's account.
(d) The Customer is bound by rule 631 of the Exchange which permits the
Chief Executive of the Exchange to take steps to limit positions or
require the closing out of contracts of the Customer who in the
opinion of the Chief Executive are accumulating positions which are or
may be detrimental to the Exchange's markets.
(e) The Customer agrees to maintain such collateral and/or margin as
MeesPierson may from time to time require. The Customer also agrees to
pay immediately on demand any amount owing to MeesPierson with respect
to any of the Customer's accounts. The Customer will be responsible
for all the expenses incurred by MeesPierson in connection with the
above and MeesPierson will not be liable for any loss that may thereby
be incurred. MeesPierson may without demand or notice close out open
positions. MeesPierson has reserved in the Agreement the right to
close out any open position(s) without notice (j) when the margins on
deposit with MeesPierson are exhausted, inadequate in the opinion of
MeesPierson to protect it against possible price fluctuations or any
adverse conditions or (ii) any other appropriate circumstances.
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(f) MeesPierson shall have the right to (i) satisfy any obligation the
Customer may have to MeesPierson (either directly or by way of
guaranty or suretyship) out of any properties belonging to the
Customer in the custody or under the control of MeesPierson and
(ii) cancel any outstanding orders in order to close the account
or accounts of the Customer, all without demand for margin or
additional margin, notice to the Customer, the Customer's heirs,
executors, administrators, legatees, personal representatives or
assigns, of sale or purchase or other notice of advertisement and
whether or not the ownership interest shall be solely the
Customer's or jointly with others, in the following
circumstances:- (i) whenever MeesPierson at its sole discretion
shall consider it necessary for the protection of MeesPierson,
because of margin requirements or otherwise, or, (ii) in the event
that a petition for bankruptcy or winding up (as the case may be),
or notice of the appointment of a receiver, is filed by or against
the Customer or, (iii) when an attachment is levied against the
account(s) of the Customer with MeesPierson, or, (iv) in the event
of the death or judicial declaration of incompetence of the
Customer. Any sale or purchase may be made at the discretion of
MeesPierson in any manner and on any market it thinks fit. In all
cases, a prior demand or call, or prior notice of the time or
place of sale or purchase shall not be considered a waiver of the
right of MeesPierson to sell or to buy without demand or notice as
herein provided. In all cases, the Customer shall be liable for
any deficiency remaining in such account(s) in the event the
liquidation thereof in whole or in part by MeesPierson or by the
Customer. Debit balance(s) in such account(s) shall be charged
with interest thereon at a rate to be determined by MeesPierson
from time to time and the Customer shall promptly settle, upon
demand, all liabilities outstanding to MeesPierson, together with
all costs of collection (including legal fees).
4. Customer's Account
(a) All monies or other properties received by MeesPierson from the
Customer or from any other person, including the Clearing House
for the account of the Customer in respect of the futures/options
contracts transacted on behalf of the Customer shall be held by
MeesPierson as trustee, segregated from MeesPierson's own assets
and paid into a segregated bank account.
(b) The Customer hereby authorises MeesPierson to apply any monies
which the Customer may pay to MeesPierson in order to (i) meet
the obligations of MeesPierson to the Clearing House (provided
that no withdrawal from the Customer's accounts with MeesPierson
may be made which would have the effect that the relevant margin
requirements or trading liabilities conducted on behalf of any
Customer are thereby financed by any other Customer), (ii) pay
commission, brokerage, levies and other proper charges for
contracts transacted by MeesPierson on behalf of the Customer,
(iii) make payments in accordance with the Customer's directions
(provided that no money may be paid into another account of the
Customer unless that account is also a segregated bank account).
The Customer acknowledges that MeesPierson may apply such monies
in or towards meeting MeesPierson's obligations to any party
insofar as such obligations arise in connection with or
incidental to all futures/options contracts transacted on the
Customer's behalf. The Customer agrees that MeesPierson may
retain interest on the Customer's money.
5. Clearing House Account
In respect of any account of MeesPierson maintained with the Clearing
House, whether or not such account is maintained wholly or partly in respect
of the futures/options contracts transacted on behalf of the Customer and
whether or not money paid by the Customer has been paid to the Clearing
House, as between MeesPierson and the Clearing House, MeesPierson deals as
principal and accordingly no such account is impressed with any trust or
other equitable interest in favour of the Customer and monies paid to the
Clearing House are thereby freed from the trust referred to in clause 4(a)
above.
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6. Margin Call
Margin calls must be met within the period specified by MeesPierson from
time to time. MeesPierson is obliged to report to the Exchange particulars
of all open positions in respect of which two successive margin calls
and/or demands for variation adjustment are not met within the period
specified by MeesPierson. MeesPierson may require more margin or variation
adjustment than that specified by the Exchange and/or the Clearing House
and/or other exchanges and may close out open positions unilaterally in
respect of which any margin calls and/or demands for variation adjustments
are not met.
7. Margin Requirements
The original and variation margin, to be determined from time to time by
MeesPierson at its sole discretion, will be maintained by the Customer in
any and all accounts the Customer may at any time carry with MeesPierson.
If MeesPierson determines that additional margin is required, the Customer
will deposit with MeesPierson such additional margin forthwith upon demand.
However, notwithstanding any demand for additional margin, MeesPierson may
at any time proceed in accordance with paragraph 3(e) above.
8. MeesPierson may at any time and at its sole discretion change margin
requirements. New margin requirements once established shall apply to
existing positions as well as to new positions. Margin requirements may be
met by a deposit of cash or securities or any other form acceptable by
MeesPierson and in accordance with the rules and regulations of the
Exchange or other exchanges governing the relevant markets.
9. Transactions in Foreign Currencies
In the event that the Customer directs MeesPierson to enter into any
contract on an exchange or other market on which such transactions are
effected in a foreign currency: (a) any profit or loss arising as a result
of a fluctuation in the exchange rate affecting such currency will be
entirely for the account and risk of the Customer; (b) all initial and
subsequent deposits for margin purposes shall be made in such currency in
such amounts as MeesPierson may, at its sole discretion, require; and (c)
when such a contract is liquidated MeesPierson shall debit or credit the
account of the Customer in the currency in which such account is
denominated at a rate of exchange (where the relevant contract is
denominated in a currency other than that of the account) determined by
MeesPierson at its sole discretion on the basis of the then prevailing
money market rates of exchange.
10. Levies & Commission
(a) Every contract executed on the floor of the Exchange shall be subject
to applicable Compensation Fund levies and levies pursuant to
Securities and Futures Commission Ordinance the cost of both of which
shall be borne by the Customer.
(b) Every contract executed in the Stock Index Futures Market on the floor
of the Exchange shall be subject to the charge of a special levy
pursuant to the Exchanges (Special Levy) Ordinance, the cost of which
shall be borne by the Customer.
(c) In respect of contracts executed in markets other than those organised
by the Exchange, any charges levied on such contracts by the relevant
markets shall be borne by the Customer.
(d) The Customer will pay commission and other charges which MeesPierson
may think fit at a rate to be determined by MeesPierson and charges
pursuant to Hong Kong law or the rules of the Exchange or other
exchanges governing the relevant markets.
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11. Rules & Laws
(a) All transactions shall be subject to the constitution, rules,
regulations, customs, usages, rulings and interpretations, from time
to time extant or in force of the Exchange or other markets (and of
their respective clearing house, if any), where the transactions are
executed by MeesPierson or MeesPierson agents. All transactions under
this agreement shall also be subject to any law, rule, or regulation
then applicable thereto, including but not by way of limitation, the
provisions of the CTO, as amended from time to time, and the rules and
regulations thereunder.
(b) All transactions entered between MeesPierson and the Customer relating
to any money, foreign currency, currency option, currency future, or
currency forward contract or foreign exchange contract shall be
governed by and subject to all the rules, regulations, orders and laws
of the country of the currency or money concerned and those of Hong
Kong and/or the by-laws, rules and regulations of the exchange
concerned in which the transaction is done.
(c) All transactions related to futures/options contracts executed in
markets other than those organised by the Exchange will be subject to
the rules and regulations of those markets and not those of the
Exchange, with the result that the Customer may have a markedly
different level and type of protection in relation to those
transactions as compared to the level and type of protection afforded
by the rules of the Exchange.
12. Confirmation & Statements
Written confirmations of the execution of the Customer's orders and
statements of the Customer's accounts shall be conclusive and deemed to be
accepted if not objected to in writing by the Customer directed to the
address stated herein (or such other address communicated in writing by
MeesPierson) within 2 working days after transmission thereof to the
Customer, by mail or otherwise.
13. Telephone recordings
MeesPierson may record all incoming and outgoing telephone conversations
with its dealing desks and marketing desks. All recordings shall be used
solely for the purpose of verifying instructions given and the accuracy of
transactions.
14. Indemnity
If MeesPierson commits a default and the Customer suffers pecuniary loss
thereby, the liability of the Compensation Fund will be restricted to valid
claims as provided for in the CTO and the SFC Ordinance and will be subject
to the monetary limits specified in the Ordinances and accordingly that
there can be no assurance that any pecuniary loss sustained by reason of
such a default will necessarily be recouped from the Compensation Fund in
full, in part or at all.
15. Limitation of MeesPierson's liability
(a) Without prejudice to the remainder of this clause 15, where the Customer's
account is a discretionary one the Customer agrees that MeesPierson's
liability for all and any damages, losses, expenses, costs (and interest
thereon) claimed by the Customer shall be excluded, save in respect of
personal injury or death and/or in the case of liability arising from
gross neglect, fraud or wilful default by a director or employee of
MeesPierson or where and to the extent that the CTO or the rules of the
Exchange prohibit
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such exclusion. Without prejudice to clause (2)(d) hereof, the Customer
acknowledges that MeesPierson will not be liable for any loss or damage
suffered by the Customer whether directly or indirectly as a result of any
inability or failure on the part of MeesPierson to comply with or fulfil
any instructions given by or on behalf of the Customer for any cause beyond
the reasonable control of MeesPierson, including but not limited to
government restrictions, rulings by any exchange or regulatory body,
changes in applicable laws or regulations, suspensions in trading, wars,
strikes, civil disorder or other circumstances having the same or similar
effect.
(b) The Customer warrants, undertakes and acknowledges that where trading is
conducted pursuant to this Agreement by or on the instructions or
directions or with the involvement of a Registered Trader (as defined in
Chapters 10 and/or 11 of the Exchange's Rules) who is an employee of the
Customer:-
(i) any act or omission or default on the part of the Registered Trader will be
(as between the Customer and MeesPierson and between either of them and any
third party) the sole responsibility of the Customer and the Customer will
fully indemnify and hold harmless MeesPierson against any liability of
whatsoever nature arising from any act or omission or default of the
Registered Trader and all costs, expenses and other liabilities of
MeesPierson arising therefrom and/or from any act taken by MeesPierson in
the light of the Registered Trader's activities which MeesPierson
considered at the time in question it was reasonable to take. To this end,
the Customer will maintain at all times a valid policy or policies of
insurance to cover risk to MeesPierson from the Registered Trader's
presence and activities on MeesPierson's premises;
(ii) unless provided otherwise by the Exchange's Rules or any agreement entered
into between the Exchange and MeesPierson, the Registered Trader shall not
be an employee of MeesPierson for any purpose;
(iii) the Customer shall use its best endeavours to ensure that at all times the
Registered Trader acts in a manner which does not involve any breach of
the Exchange's Rules or any applicable legislation or (subject to (iv)
below) which might in any way give cause for the Registered Trader's
registration with the Exchange or the SFC to be put at risk;
(iv) in its absolute discretion, MeesPierson may without prior notice to the
Customer impose such restrictions upon the Registered Trader (including
preventing him from conducting or being involved in any trading on any of
the Exchange's markets or making use of or having access to MeesPierson's
facilities and equipment) as MeesPierson thinks necessary in order to
protect the interests of MeesPierson's other customers, the Exchange or
MeesPierson itself;
(v) on request the Customer will provide forthwith to MeesPierson such
information about the Registered Trader and his trading activities
(including all relevant documents) as MeesPierson thinks fit;
(vi) the Customer undertakes and will ensure that the Registered Trader does
nothing which xxxxx the interests or reputation of any other customer of
MeesPierson, the Exchange, MeesPierson or any company within the
MeesPierson group of companies or any employee, officer or other
representative of any of them and in particular the Customer will ensure
that the Registered Trade does not misuse or disclose to any third party
any confidential information belonging to Mees Pierson;
(vii)the Customer will fully reimburse MeesPierson forthwith on demand for all
fees, costs and other expenses incurred by it (including the costs of
seeking legal or other advice) in respect of the application for
registration of the Registered Trader with the Exchange and the SFC and any
subsequent re-registrations or amendments to the terms of registration of
the Registered Trader, including the termination of any registration.
16. Appointment of Attorney
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The Customer appoints the Chief Executive of the Exchange (or such other
persons as the Board of the Exchange may appoint) as the Customer's
attorney to do all things necessary to transfer any open positions held by
MeesPierson on the Customer's behalf and money and securities standing to
the credit of the Customer's account with MeesPierson to another member of
the Exchange in the event of MeesPierson's membership being suspended or
revoked.
17. Client Information Statement
The Customer warrants that the information contained in the attached Client
Information Statement (which is required to be completed by the Customer
pursuant to Rule 601(a) of the Exchange Rules) is true and complete. The
Customer will notify MeesPierson forthwith of any material changes in the
information supplied in the Client Information Statement. MeesPierson is
entitled to rely on such information until it has received written notice
of any changes therein.
B. RISK DISCLOSURE STATEMENT
Introduction
1. This risk disclosure statement is furnished to all clients pursuant to the
rules and regulations of the Exchange.
2. The purpose of this statement is to ensure that clients only enter into
futures and options contracts on the Exchange having read and understood
the contents of this statement and, as a result, having understood the
nature and extent of the risks involved in, and their obligations and
rights in respect of, futures and options trading.
3. All clients must therefore receive a risk disclosure statement, read it,
have it explained to them, understand it and confirm (by signing the
acknowledgments by customer below) that they have read it and understood
it.
4. No member of the Exchange ("Member") can accept an order from a client or
transact any business on behalf of a client unless and until the
acknowledgment attached to the risk disclosure statement has been returned
to them having been duly completed by the client.
5. However, this risk disclosure statement is not intended to constitute a
comprehensive statement of the risks and other significant aspects of
trading in the futures and options trading. Clients must study futures and
options trading in any event before they trade.
6. Further, this statement must not be taken as an endorsement or promotion by
the Exchange of futures and option trading.
Risks involved in futures trading
7. The risk of significant losses through trading futures contracts can be
substantial. Clients must therefore consider carefully in advance whether
such trading is suitable for them in the light of their financial condition
and investment objectives. In considering whether to trade in futures
contracts, clients should be aware of the following:
7.1 Clients may lose all of the initial margin fund and any additional
funds deposited by them with Members for the purpose of establishing
and/or maintaining a position in the futures market. If the market
moves against the clients' positions, the clients may be called upon
to deposit substantial amounts of additional margin funds at short
notice in order to maintain the position.
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If the required funds are not provided within the prescribed time, the
position may be liquidated unilaterally at a loss and the clients will
be liable for any resulting deficit.
7.2 Under certain market conditions, clients may find it difficult if not
impossible to liquidate/close out a position. This can occur when for
example the market makes a limit move.
7.3 Clients can place stop loss or stop limit orders with their brokers
with a view to automatically liquidating/closing out a position when
the market or loss incurred reaches a certain level. However, placing
such orders will not necessarily limit the clients' losses because
market conditions may make it impossible to execute such orders.
7.4 A spread position may be as risky as a simple "long" or "short"
position.
7.5 A high degree of leverage can often be achieved in futures trading
because of the relatively small margin requirements. This degree of
leverage can work against clients as well as for them - the leverage
can lead to large losses as well as large gains.
Risks involved in options trading
8. The purchase and/or writing of options involves a high degree of risk
because of, principally, the volatile nature of the stock and commodity
markets. Clients must therefore consider carefully in advance whether such
trading is suitable for them in the light of their financial condition and
investment objectives. In considering whether to trade in options
contracts, clients should be aware of the following:
8.1 Both buyer and seller of an option must be aware of the subject-matter
of the option and whether or not the subject-matter, e.g. a stock or a
commodity, is to be delivered or received or if the option is to be
settled by a cash-payment. If the option is on a future, the purchaser
will acquire a futures position with associated liabilities for margin
(see section 7 above).
8.2 If the market moves against the writers of options, additional margin
is likely to be required from the writers at short notice. Option
writers are liable for potentially unlimited losses whilst their gains
are limited to the option premium. The writer of an option will also
be exposed to the risk of the purchaser exercising the option, in
which case the writer will be obligated to either settle the option in
cash or to acquire or deliver the underlying interest. If the option
is on a future, the writer will acquire a position in a future with
associated liabilities for margin (see the section 7 above). If the
option is 'covered' by the writer holding a corresponding position in
the underlying interest or a future or another option, the risk may be
reduced. If the option is not covered, the risk of loss can be
unlimited.
8.3 Options are wasting assets; it is possible that option holders may
suffer the loss of the whole premium paid in respect of the option. In
order to close out an open option position (whether at a profit or
otherwise), it is necessary to either exercise the option or offset
the long position in the market through a closing trade. However,
market conditions may make it impossible to execute such orders.
8.4 Some options can be exercised only on the expiry date (e.g. Hang Seng
Index Options). Other options may be exercised at any time before
expiration.
8.5 A high degree of leverage can often be achieved in options trading.
This degree of leverage can work against clients as well as for them -
the leverage can lead to large losses as well as large gains.
8.6 Both buyers and sellers of options should calculate the extent to
which the value of the options must increase for your position to
become profitable, taking into account the
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premium and all transaction costs. If you are contemplating purchasing
deep-out-of-the-money options, you should be aware that the chance of
such options becoming profitable ordinarily is remote.
8.7 Certain exchanges in some jurisdictions permit deferred payment of
the option premium, exposing the purchaser to liability for margin
payments not exceeding the amount of the premium. The purchaser is
still subject to the risk of losing the premium and transaction costs.
When the option is exercised or expires, the purchaser is responsible
for any unpaid premium outstanding at that times.
Risks involved in trading in Hang Seng China Enterprises Index Futures Contracts
9. Trading in Hang Seng China Enterprises Index Futures Contracts is subject
to the risks described in section 7 above. In addition to those risks, the
trading will involve the following potential risks:
9.1 Political Risks: A change of leadership or political or social unrest
in the People's Republic of China ("the PRC") may lead to major
changes in economic and other policies. It is noted however that the
Government of the PRC has been carrying out an open-door policy since
1978.
9.2 Economic Risks: The PRC Government plans to replace the PRC's planned
economy with a socialist market economy. (The planned economy involves
the State Planning Commission directly influencing the development of
the economy, including the operation of businesses and control over
citizen's income, and consumption levels and patterns.) The PRC
economy is in a transition stage. Central government continues to
exercise an important influence on many aspects of the operation of
businesses in the PRC and the pace of economic development and change.
It may therefore be a considerable time before market forces become a
major factor in the allocation of resources in the PRC economy.
9.3 Foreign Currency Risks: The PRC Government controls and manages its
foreign exchange reserves through measures including import-export
restrictions and regulations directly controlling the conversion of
Renminbi ("RMB") into foreign currencies. With effect from 1st January
1994 the foreign exchange control system has been further reformed by
the incorporation of the official RMB and swap RMB exchange rates.
This has resulted in a centralised inter-bank foreign exchange trading
centre supervised and controlled by the People's Bank of China through
the State Foreign Exchange Administration. In the PRC all foreign
exchange transactions involving RMB must be effected through
authorised banks designated by the People's Bank and at rates
calculated by the People's Bank based on the price of the foreign
currency and taking into account:
9.3.1 dealings on the previous day in the inter-bank foreign
exchange market;
9.3.2 the median rate for daily foreign exchange rates between
RMB and U.S. dollars published after taking into account
fluctuations in the international foreign exchange market;
9.3.3 the exchange rates between RMB and other major currencies.
Such adopted rates float within a range prescribed by the People's Bank.
Although the conversion of RMB into Hong Kong dollars or other currencies
is generally completed without delay at the authorised banks, there is no
guarantee that such conversions can be carried out at all times. All
foreign exchange income of Chinese enterprises (apart from enterprises with
foreign investments) must be settled and sold to authorised banks in
accordance with the authorised bank's published exchange rates.
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9.4 Legal and regulatory risks:
(a) Corporate law: PRC company law is in its infancy; provisions for
the protection of shareholders' rights and access to corporate
information are different from those in Hong Kong and other
developed countries. There are no nationally applicable corporate
PRC laws, apart from the Standard Opinion which currently forms
the basis of the legal framework governing joint stock limited
companies.
(b) Securities law: PRC securities law is incomplete. The regulatory
framework of the PRC securities industry is in its infancy.
Currently there is no PRC law applicable to PRC enterprises
seeking to issue shares and obtain listings outside the PRC,
although the securities rules and regulations applicable to PRC
companies seeking to issue shares and obtain listings within the
PRC are generally applied.
(c) Tax law: Shares in PRC companies are a relatively new form of
investment in the PRC. It is uncertain whether income or capital
gains arising from dealings in such shares will be chargeable to
tax and, if so, how.
Generally, PRC company law is materially different from Hong Kong company
law, particularly in the area of investor protection. The lack of investor
protection in the PRC is compensated to some extent by the mandatory
requirements of the Stock Exchange of Hong Kong Limited that PRC companies
listed in Hong Kong have certain provisions in their Articles of
Association. Key material differences between PRC and Hong Kong company law
include: derivative actions by minority shareholders and other minority
protection; remedies against misfeasant directors, financial disclosure,
variation of class rights, general meeting procedures and payment of
dividends.
Risks involved in trading in currencies futures and options contracts
10. Trading in currencies futures and options contracts is subject to the
risks described in sections 7 and 8 above. Clients must ensure in advance
of any trading that they are familiar with those risks and the systemic
risks involved in trading in currencies generally, including volatility,
exchange restrictions and the risk of major systemic collapses in currency
markets.
11. The profit or loss in transactions in foreign currency-denominated
contracts (whether they are traded in your own or another jurisdiction)
will be affected by fluctuations in currency rates where there is a need to
convert from the currency denomination of the contract to another currency.
12. The One Day Rolling Currency Futures Contract ("ODRCF Contract"),
similar to other exchange-traded futures contracts, provides a versatile
and well-leveraged investment vehicle to investors. However, increases in
both the volatility of the relative currency value and the volume of world
trade have resulted in an exposure to dramatically higher foreign exchange
risk in recent years. It has not been uncommon for major currencies to
fluctuate in value by twenty or thirty percent vis-a-vis the U.S. dollar in
a period of less than one year. In addition, a variety of other factors
including interest rate movements, macro and micro economic conditions and
political stability may also affect the value of currencies.
13. Investors should only participate in the ODRCF market if they fully
appreciate the risks inherent in the foreign exchange market and employ
strategies consistent with their currency value expectations, investment
objectives and tolerance for risk. Investors should also be aware of the
potential risks associated with possible exchange rate fluctuations where
foreign exchange investments are priced and/or settled in a currency other
than their home currency.
Other risks involved in trading futures and option contracts
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14. You should ask the firm with which you deal about the terms and conditions
of the specific futures or options which you are trading and associated
obligations (e.g. the circumstances under which you may become obliged to
make or take delivery of the underlying interest of a futures contract and,
in respect of options, expiration dates and restrictions on the time for
exercise). Under certain circumstances the specifications of outstanding
contracts (including the exercise price of an option) may be modified by
the exchange or clearing house to reflect changes in the underlying
interest.
15. Market conditions (e.g. illiquidity) and/or the operation of the rules of
certain markets (e.g. the suspension of trading in any contract or contract
month because of price limits or 'circuit breakers') may increase the risk
of loss by making it difficult or impossible to effect transactions or
liquidate/offset positions. If you have sold options, this may increase the
risk of loss.
16. Further, normal pricing relationships between the underlying interest and
the future, and the underlying interest and the option may not exist. This
can occur when, for example, the futures contract underlying the option is
subject to price limits while the option is not. The absence of an
underlying reference price may make it difficult to judge 'fair' value.
17. You should familiarize yourself with the protections accorded money or
other property you deposit for domestic and foreign transactions,
particularly in the event of a firm insolvency or bankruptcy. The extent to
which you may recover your money or property may be governed by specific
legislation or local rules. In some jurisdictions, property which had been
specifically identifiable as your own will be pro-rated in the same manner
as cash for purposes of distribution in the event of a shortfall.
18. Before you begin to trade, you should obtain a clear explanation of all
commissions, fees and other charges for which you will be liable. These
charges will affect your net profit (if any) or increase your loss.
19. If you wish your broker to trade for you in markets other than those
operated by the Exchange, you must ensure that your broker is permitted to
trade in those markets and that you are familiar with the requirements of,
and types of redress in, those markets. The Exchange cannot and will not
supervise your broker's trading in those markets and the Compensation Fund
established under the Commodities Trading Ordinance is not available for
defaults in trading on those markets. Transactions on markets in other
jurisdictions, including markets formally linked to a domestic market, may
expose you to additional risk. Such markets may be subject to regulation
which may offer different or diminished investor protection. Your local
regulatory authority will be unable to compel the enforcement of the rules
of regulatory authorities or markets in other jurisdictions where your
transactions have been effected.
20. Most open-outcry and electronic 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
systems, they are vulnerable to temporary disruption or failure. Your
ability to recover certain losses may be subject to limits on liability
imposed by the system provider, the market, the clearing house and/or
member firms. Such limits may vary: you should ask the firm with which you
deal for details in this respect.
21. Trading on an electronic trading system may differ not only from trading
in an open-outcry market but also from trading on other electronic trading
systems. If you undertake transactions on an electronic trading system, you
will be exposed to risks associated with the system including the failure
of hardware and software. The result of any system failure may be that your
order is either not executed according to your instructions or is not
executed at all.
22. In some jurisdictions, and only then in restricted circumstances, firms
are permitted to effect off-exchange transactions. The firm with which you
deal may be acting as your counterparty to the transactions. It may be
difficult or impossible to liquidate an existing position, to assess the
value, to determine a fair price or to assess the exposure to risk. For
these reasons, these transactions may
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involve increased risks. Off-exchange transactions may be less regulated or
subject to a separate regulatory regime. Before you undertake such
transactions, you should familiarize yourself with applicable rules and
attendant risks.
C. DISCLOSURE OF COMPANY INFORMATION
1. In accordance with Rule 601(c) of the Exchange's Rules, we disclose the
following to you:
Company Name : MeesPierson Futures Clearing Services
(Asia) Limited
Membership category : Futures Commission Merchant
Registration number (required
by the Commodities Trading
Ordinance) : CDC 370
Staff responsible for your
account :
Dealing Director/
Name Dealer Representative Registration No.
---- --------------------- ----------------
Michiel Xxxxxxxxx xx Xxxx Dealing Director CD 1089
Emma Xxxx XxXxxxxx Dealer Director CD 1221
D. EXPLANATION OF MARGIN PROCEDURES AND UNILATERAL CLOSING OUT OF CLIENTS'
POSITIONS
Pursuant to Rule 602(q) of the Exchange's Rules, MeesPierson is required
to explain the margin procedures and the circumstances under which the
Customer's positions may be closed out without the Customer's consent. For
the purposes of Rule 602(q), the following explanation is given.
Margin Procedures
1. The Agreement sets out detailed provisions regarding the operation of
margin calls and requirements: see in particular clauses 6 and 7 of
the Agreement.
2. MeesPierson follows all margin rules laid down by all Exchanges on
which products are traded on margin.
3. Any changes in margin requirements (whether imposed by the Exchange or
by MeesPierson) will be communicated to the Customer by MeesPierson's
representatives in an appropriate manner.
Unilateral closing out of the Customer's positions
4. The Customer must remember that, in the event of a default,
MeesPierson may close out the Customer's open positions without prior
notice to or consent from the Customer as provided for by the terms of
the Agreement. MeesPierson has reserved in the Agreement the right to
close out any open position(s) without notice (i) when the margins on
deposit with MeesPierson are
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exhausted, inadequate in the opinion of MeesPierson to protect it
against possible price fluctuations or any adverse conditions or (ii)
any other appropriate circumstances.
5. No conduct or omission on behalf of MeesPierson, nor any agreement
purportedly entered into on MeesPierson's behalf (save an agreement in
accordance with the terms of the Agreement), shall constitute any form
of waiver or variation or relaxation MeesPierson's rights to close out
the Customer's positions unilaterally.
6. Any steps taken by MeesPierson to close out the Customer's positions
unilaterally will be entirely without prejudice to MeesPierson's other
rights under the Agreement and otherwise, in particular the right to
payments from the Customer of all amounts outstanding.
E. STATEMENT OF PARTICULARS OF APPROVED CONTRACTS
MeesPierson is licensed to trade in the products approved by the Exchange
from time to time. MeesPierson will provide contract specifications for
those products to the client.
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F. ACKNOWLEDGEMENTS BY CUSTOMER
I/We acknowledge that:
(i) I/We have read carefully the Agreement (section A) and additional
sections B to E above.
(ii) the contents of the Agreement and the additional sections have been
fully explained to me/us in a language which I/we understand. I/We
have agreed to the Agreement, the additional sections and the
attachments referred to in those documents being in English and with
their contents.
(iii) I/We have been provided with a copy of the Exchange's disclaimer in
relation to indices and proprietary products developed by the
Exchange and I/We confirm that I/We have read this disclaimer prior
to entering into this Agreement.
(iv) I/We have been given an adequate opportunity to ask questions of
MeesPierson's representatives and to consult my/our own legal
advisers about the Agreement, the additional sections and the
attachments.
(iv) I/We have received the Agreement, the additional sections and the
attachments.
(v) I am/We are trading on my/our own account.
Signed by (if an individual) or for and on behalf of (if a corporation)
/s/ XXXXXX XXXXXX XXXXX XX.
the customer: Hull Trading Company, L.L.C.
Dated: August 26, 1998 (Company Chop)
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FOR CORPORATION(S) :
Signed on behalf of the Corporation below-mentioned pursuant to a resolution
duly passed at a duly convened and held meeting of the Board of Directors
thereof, a certified copy of which is annexed hereto.
For and on behalf of Hull Trading Company, L.L.C.
Name : Xxxxxx Xxxxxx Xxxxx, Xx.
Title : Principal
/s/ XXXXXX XXXXXX XXXXX XX.
_____________________________________
Signature
ACCEPTED BY :
Name : For and on behalf of
MeesPierson Futures Clearing Services
(Asia) Limited
_____________________________________ ______________________________________
Signature Director
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