Exhibit 10.04
CUSTOMER AGREEMENT
THIS CUSTOMER AGREEMENT (this "Agreement") made as of May 1, 2000,
by and among XXXXXX XXXXXXX XXXX XXXXXX SPECTRUM GLOBAL BALANCED L.P. a Delaware
limited partnership (the "Customer") and XXXXXX XXXXXXX & CO. INTERNATIONAL
LIMITED ("MSIL");
W I T N E S S E T H:
WHEREAS, Customer and MSIL wish to enter into this Agreement to set
forth the terms and conditions upon which MSIL will perform brokerage services
with respect to Client Contracts, Contracts and Transactions for Customer
through an account carried by MSIL on behalf and in the name of Customer (the
"Account").
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Incorporation by Reference. The Non-Private Customer Agreement
annexed hereto is hereby incorporated by reference herein and made a part hereof
to the same extent as if such document were set forth in full herein. If any
provision of this Agreement is or at any time becomes inconsistent with the
annexed document, the terms of this Agreement shall control.
2. Standard of Liability and Indemnity.
(a) Standard of Liability. MSIL and its affiliates (as defined
below) shall not be liable to Customer, the general partner or the limited
partners, or any of its or their respective successors or assigns, for any
act, omission, conduct, or activity undertaken by or on behalf of the
Customer pursuant to this Agreement which MSIL determines, in good faith,
to be in the best interest of the Customer, unless such act, omission,
conduct, or activity by MSIL or its affiliates constituted misconduct or
negligence. Without limiting the foregoing, MSIL shall have no
responsibility or liability to Customer hereunder (i) in connection with
the performance or non-performance by any Exchange, Clearing House or
other third party (including floor brokers not selected by MSIL) and/or
Broker to MSIL of its obligations in respect of any Contract or
Transaction or other property of Customer; (ii) as a result of any
prediction, recommendation or advice made or given by a representative of
MSIL whether or not made or given at the request of Customer; (iii) as a
result of MSIL's reliance on any instructions, notices and communications
that it believes to be that of an individual authorized to act on behalf
of Customer; (iv) as a result of any delay in the performance or
non-performance of any of MSIL's obligations hereunder directly or
indirectly caused by the occurrence of any contingency beyond the control
of MSIL including, but not limited to, the unscheduled closure of an
Exchange or Clearing House or delays in the transmission of orders due to
breakdowns or failures of transmission or communication facilities,
execution, and/or trading facilities or other systems, it being understood
that MSIL shall be excused from performance of its obligations hereunder
for such period of time as is reasonably necessary after such occurrence
to remedy the effects therefrom; (v) as a result of any action taken by
MSIL to comply with Market Requirements or Applicable Law; or (vi) for any
acts or omissions of those neither employed nor supervised by MSIL
(excluding floor brokers selected by MSIL). In no event will MSIL be
liable to Customer for consequential, incidental or special damages
hereunder.
(b) Indemnification by Customer. Customer shall indemnify, defend
and hold harmless MSIL and its affiliates from and against any loss,
liability, damage, cost or expense (including attorneys' and accountants'
fees and expenses incurred in the defense of any demands, claims or
lawsuits) actually and reasonably incurred arising from any act, omission,
conduct, or activity undertaken by MSIL on behalf of Customer, including,
without limitation, any demands, claims or lawsuits initiated by a limited
partner (or assignee thereof); provided that (i) MSIL has determined, in
good faith, that the act, omission, conduct, or activity giving rise to
the claim for indemnification was in the best interests of the Customer,
and (ii) the act, omission, conduct or activity that was the basis for
such loss, liability, damage, cost or expense was not the result of
misconduct or negligence. Notwithstanding the foregoing, no
indemnification of MSIL or its affiliates by Customer shall be permitted
for any losses, liabilities or expenses arising from or out of any alleged
violation of federal or state securities laws unless (i) there has been a
successful adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee, or (ii) such
claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnitee, or (iii) a court
of competent jurisdiction approves a settlement of the claims against the
particular indemnitee and finds that indemnification of the settlement and
related costs should be made, provided with regard to such court approval,
the indemnitee must apprise the court of the position of the SEC and the
positions of the respective securities administrators of Massachusetts,
Missouri, Tennessee and/or those other states and jurisdictions in which
the plaintiffs claim that they were offered or sold Units, with respect to
indemnification for securities laws violations before seeking court
approval for indemnification. Furthermore, in any action or proceeding
brought by a limited partner in the right of Customer to which MSIL or any
affiliate thereof is a party defendant, any such person shall be
indemnified only to the extent and subject to the conditions specified in
the Delaware Revised Uniform Limited Partnership Act, as amended, and this
Section 2. The Customer shall make advances to MSIL or its affiliates
hereunder only if: (i) the demand, claim lawsuit or legal action relates
to the performance of duties or services by such persons to Customer; (ii)
such demand, claim lawsuit or legal action is not initiated by a limited
partner; and (iii) such advances are repaid, with interest at the legal
rate under Delaware law, if the person receiving such advance is
ultimately found not to be entitled to indemnification hereunder.
(c) Indemnification by MSIL. MSIL shall indemnify, defend and hold
harmless Customer and its successors or assigns from and against any
losses, liabilities, damages, costs or expenses (including in connection
with the defense or settlement of claims; provided MSIL has approved such
settlement) incurred as a direct result of the activities of MSIL or its
affiliates, provided, further, that the act, omission, conduct or activity
giving rise to the claim for indemnification was the result of bad faith,
misconduct or negligence of MSIL or its affiliates.
(d) Limitation on Indemnities. The indemnities provided in this
Section 2 by Customer to MSIL and its affiliates shall be inapplicable in
the event of any losses, liabilities, damages, costs or expenses arising
out of, or based upon, any material breach of any agreement of MSIL
contained in this Agreement to the extent caused by such event. Likewise,
the indemnities provided in this Section 2 by MSIL to Customer and its
successors and assigns shall be inapplicable in the event of any losses,
liabilities, damages, costs or expenses arising out of, or based upon, any
material breach of any representation, warranty or agreement of Customer
contained in this Agreement to the extent caused by such breach.
(e) Definition of "Affiliate." As used in this Section 2, the term
"affiliate" of MSIL shall mean: (i) any natural person, partnership,
corporation, association, or other legal entity directly or indirectly
owning, controlling, or holding with power to vote 10% or more of the
outstanding voting securities of MSIL; (ii) any partnership, corporation,
association, or other legal entity 10% or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held with
power to vote by MSIL; (iii) any natural person, partnership, corporation,
association, or other legal entity directly or indirectly controlling,
controlled by, or under common control with, MSIL; or (iv) any officer or
director of MSIL. Notwithstanding the foregoing, "affiliates" for purposes
of this Section 2 shall include only those persons acting on behalf of
MSIL and performing services for Customer within the scope of the
authority of MSIL, as set forth in this Agreement.
3. MSIL Responsibilities. MSIL agrees to notify the applicable
trading advisor for the Customer immediately upon discovery of any error
committed by MSIL or any of its agents with respect to a trade for the Account
which MSIL believes was not executed or cleared in accordance with proper
instructions given by the Customer, its trading advisors or any other authorized
agent of Customer. Errors made by floor brokers appointed or selected by MSIL
shall constitute errors made by MSIL. However, MSIL shall not be responsible for
errors committed by the trading advisors.
MSIL agrees to report to Xxxx Xxxxxx Xxxxxxxx Inc. ("DWR") its own
errors and the errors of any trading advisor for the Account which MSIL becomes
aware of, provided that such reporting may be via telephone. Notwithstanding the
foregoing, the failure to comply with such reporting obligation does not
increase MSIL's liability for its own errors beyond that otherwise expressly set
forth in this Agreement, nor does it make MSIL in any way responsible for errors
committed by the trading advisors.
MSIL acknowledges that the other partnerships of which Demeter
Management Corporation (the general partner of Customer) is the general partner
or trading manager, do not constitute affiliates of the Customer.
4. Minimum Margins. All Contracts for the Account shall be margined
at the applicable Exchange or Clearing House minimum rates for speculative
accounts.
5. Payment of Interest. MSIL shall pay to DWR at each month-end
interest on Customer's funds in its possession as agreed between MSIL and DWR
from time to time. Customer understands that it will not receive any interest
income on its assets held by MSIL other than that paid by DWR pursuant to the
Customer's DWR Customer Agreement. DWR (and not the Customer) shall pay MSIL
interest on any debit balances in the Account at such rates as MSIL and DWR
shall agree from time to time.
6. Recording. Each of MSIL, the Customer, and the Customer's agents
(including DWR), in their sole and absolute discretion, may record, on tape or
otherwise, any telephone conversation between or among MSIL, the Customer or the
Customer's agents with respect to the Account and Transactions therein and each
of MSIL and the Customer hereby agrees and consents thereto.
7. Termination. This Agreement may be terminated at any time by any
party upon thirty (30) days' prior written notice to the other parties hereto.
In the event of such notice, Customer shall either close out open positions in
the Account or arrange for such open positions to be transferred to another
futures broker. Upon satisfaction by Customer of all of Customer's liabilities
to MSIL, MSIL shall transfer to another futures broker all Contracts, if any,
then held for the Account, and shall transfer to Customer or to another futures
broker, as Customer may instruct, all cash, securities and other property held
in the Account, whereupon this Agreement shall terminate. Notwithstanding the
foregoing, in the event MSIL is required by a regulatory authority to transfer
the Account to another futures broker or in the event that MSIL abandons the
futures brokerage business, then MSIL shall have the right to terminate this
Agreement by written notice effective the date contained therein, provided that
MSIL cooperates in the transfer of open positions to another futures broker and
that the termination of the Agreement is not made effective earlier than the
completion of the transfer.
8. Complete Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the matters referred to herein, and
no other agreement, verbal or otherwise, shall be binding as among the parties
with respect to such matters unless in writing and signed by the party against
whom enforcement is sought.
9. Assignment. This Agreement may not be assigned by any party
without the express written consent of the other parties.
10. Amendment. This Agreement may not be amended except by the
written consent of the parties and provided such amendment is consistent with
Customer's Limited Partnership Agreement.
11. Notices. All notices required or desired to be delivered under
this Agreement shall be sent to the following addresses:
if to the Partnership:
XXXXXX XXXXXXX XXXX XXXXXX SPECTRUM
GLOBAL BALANCED L.P .
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attention: Xxxxxx X. Xxxxxx
if to MSIL:
as set forth in the Non-Private Customer Agreement.
12. Survival. The provisions of this Agreement shall survive the
termination of this Agreement with respect to any matter arising while this
Agreement was in effect.
13. Headings. Headings of Sections herein are for the convenience of
the parties only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed for and on
behalf of the undersigned as of the day and year first above written.
XXXXXX XXXXXXX XXXX XXXXXX SPECTRUM GLOBAL BALANCED
L.P.
By: Demeter Management Corporation
General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Xxxxxx X. Xxxxxx
President
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
By: /s/ Xxxxx Xxxx
------------------------------------------------
Name: Xxxxx Xxxx
Title: Executive Director
XXXXXX XXXXXXX & CO.
INTERNATIONAL LIMITED
1. XXXXXX XXXXXXX
SECURITIES LIMITED
Customer Documents
(Market Counterparty / Non-Private Customer)
Exchange-traded Derivatives Only
May 1999
NON-PRIVATE CUSTOMER DOCUMENTS
(EXCHANGE-TRADED DERIVATIVES)
(a) TABLE OF CONTENTS
Please read the contents of Part One before signing the Customer Signatures
pages in Part Three.
Page
PART ONE: NON-PRIVATE CUSTOMER AGREEMENT 1
(Exchange-Traded Derivatives)
Chapter I Introduction 1
II Terms Applicable to Dealings 4
III Margin 6
IV Material Interests 9
V Powers and Exclusions of Liability 10
VI Authorisation 13
VII General 14
PART TWO: MASTER NETTING AGREEMENT 17
PART THREE: SCHEDULES 26
PART FOUR: CUSTOMER SIGNATURE PAGES 32
Non-Private Customer Documents
Customers Domiciled in Luxembourg only
Third Party Trading Authorisation
Certificates of Authority to Deal
Certificate of Trustees
PART ONE
NON-PRIVATE CUSTOMER AGREEMENT
(Exchange-Traded Derivatives)
Made in compliance with the Rules of The Securities and Futures Authority
Limited ("SFA")
THIS AGREEMENT is made as of the date specified on the first customer signature
page below
BETWEEN:
(A) You, as the client named on the customer signature page; and
(B) XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED ("MSIL") AND/OR XXXXXX
XXXXXXX SECURITIES LIMITED ("MSSL") both of 00 Xxxxx Xxxxxx, Xxxxxx
Xxxxx, Xxxxxx X00 0XX. MSIL is regulated by SFA, and MSSL is
regulated by SFA and a member of the London Stock Exchange.
IT IS HEREBY AGREED AS FOLLOWS:
We will treat you as a NON-PRIVATE CUSTOMER regarding all investment business
regulated by SFA which we carry on for or with you pursuant to this Agreement
other than for any business referred to below under "Market Counterparties".
All investment business mentioned in Clause 2 below which we carry out with you
or on your behalf as a Non-Private Customer will be carried out under the terms
and conditions set out below (as amended or supplemented from time to time) and
the Customer Documents.
Market Counterparties
The terms of this Agreement and the Customer Documents will also apply to
investment business which we carry out with you or on your behalf if, in respect
of such business, you are a market counterparty.
CHAPTER 1 - INTRODUCTION
1. Interpretation
In the Customer Agreement, the words and phrases below have the
following meanings:-
"acting in due capacity" in relation to you means as beneficial
owner or, where some other person is beneficial owner, as trustee or
agent for and (in either case) with all requisite authorities from
that other person;
"Applicable Law" includes without limitation
(a) Market Requirements, and
(b) the rules, regulations, orders, directives, announcements,
decisions, procedures, terms, other requirements and/or
customs made, given or issued by, or published under the
authority of any Regulatory Body, all as amended, supplemented
or replaced from time to time;
"Approved Custodian" means such bank, financial institution or
company approved by us, or any nominee company or trust corporation
which is a subsidiary thereof;
"Asset" means currencies, Securities (including futures or option
contracts), deposits or physical assets;
"Associated Firm" means any company in the Xxxxxx Xxxxxxx Xxxx
Xxxxxx & Co. group of companies and, as the context requires, any
other person connected with us.
"Broker" means such member of an Exchange and/or Clearing House as
is instructed by us to enter, clear or settle any transaction on an
Exchange;
"Charged Securities" means such Securities as
(a) with our agreement, you (or any person for your account) by
way of security have deposited with or transferred to or may
hereafter deposit with or transfer to us or our agents or
nominees (or with or to our or their order, account, direction
or control), wholly or partly in satisfaction of a demand for
Margin. We shall have sole discretion to determine the type,
amount and quality of the Securities that you may deposit or
transfer as Charged Securities;
(b) are or may at any time hereafter be held (in a clearance
system or otherwise)
(i) to our order by or for the account of an Approved
Custodian or
(ii) by, or to the order of, for the account of or under the
control or direction of us (or our agents or nominees)
and in either case which have, with our agreement, by
way of security been made subject to the terms of the
charge in Clause 19.2;
"Clearing House" means any clearing house providing settlement or
clearing or similar services for, or as part of, an Exchange;
"Client Contract" means a futures or option contract between us and
you, which is matched by an identical Contract;
"Client Money" means all initial and variation cash Margin, option
premiums and all other sums received from or due to you pursuant to
the Customer Documents which is "Client Money" within the meaning of
the Client Money Regulations;
"Client Money Regulations" means The Financial Services (Client
Money) Regulations 1991, The Financial Services (Client Money)
(Supplementary) Regulations 1991 and the related client money rules
in Chapter 4 of the rules of SFA;
"close out" means the entering into of a Contract equal and opposite
to a Contract previously entered into (and each matching a Client
Contract) to create a level position in relation to the Assets
underlying the Contracts, or in relation to the Contracts
themselves, and fix the amount of profit or loss arising from such
Contracts and the corresponding Client Contracts;
"Contract" means a futures or option contract entered into by us on
an Exchange or with or through a Broker pursuant to Clause 3;
"Customer Documents" means this Agreement, Master Netting Agreement,
any notice (including but not limited to any "Notice of treatment as
a Non-Private Customer" or "Notice of treatment as a Market
Counterparty") and any Further Schedules (including, without
limitation, confirmations, contract notes and statements) and
additional documents relating directly to or indirectly to the
services provided under Clause 2 below and accompanying this
Agreement whether or not expressly incorporated in this Agreement
and each as amended and/or supplemented from time to time;
"Exchange" means any exchange, market or association of dealers in
any part of the world on or through which investments or currencies
or assets underlying, derived from or otherwise related directly or
indirectly to investments or currencies are bought and sold and
includes, without limitation, any automated trading system
administered by an Exchange;
"FSA" means the Financial Services Authority and any successor
thereto, the central regulatory authority for United Kingdom
investment business;
"FSA1986" means the Financial Services Xxx 0000 of the United
Kingdom and any successor thereto;
"Further Schedule" means any further schedule or notice issued by us
to you after the date of this Agreement;
"a futures or option contract" means a contract, for future delivery
and/or settlement, to (a) buy or sell an Asset and/or (b) pay or
receive a sum of money by reference to an index or formula
(including without limitation the price or value of any Assets);
"LCH" means The London Clearing House Limited;
"LIFFE" means the London International Financial Futures and Options
Exchange and/or, as the context requires, LIFFE Administration and
Management;
"Margin" means the amount of cash (including premiums) as may from
time to time be demanded by us from you to protect us against any
loss or risk of loss on present, future or contemplated Contracts
and/or Client Contracts;
"Margin Account" means a client bank account with such approved bank
or banks as we may from time to time determine, which (in the case
of any such account in which Client Money is held) is a margined
transaction bank account within the meaning of the Client Money
Regulations;
"Market Requirements" means
(a) the constitution, by-laws, rules, regulations, orders,
directives, announcements, decisions, procedures, standard
terms and customs made, issued by, or published under the
authority of any Exchange, Clearing House, self-regulating
organisation or market of which we or any relevant Associated
Firm or any Broker is a member, or to whose authority we are
or any of them is subject, directly or indirectly, or where
the relevant transaction is executed and/or cleared, and
(b) any other requirements of the relevant Exchange, Clearing
House or Broker (including without limitation any and all
agreements and deeds entered into by us or any relevant
Associated Firm or Broker with or in favour of the relevant
Exchange, Clearing House or Broker),
all as amended, supplemented or replaced from time to time;
"Open Contract" means a Contract which has not been closed out and
which has not yet matured;
"Regulatory Body" means any Exchange, Clearing House, governmental,
quasi-governmental or other department, agency or self-regulating
organisation of which we are a member which has direct or indirect
regulatory or enforcement authority or responsibility over us (or to
any relevant Associated Firm or Broker), or any investment business
conducted by us or such relevant Associated Firm or Broker for or
with you;
"Rules" means the FSA Statements of Principle, the rules of SFA, the
Client Money Regulations and the Common Unsolicited Calls
Regulations;
"Securities" means securities, investments and financial
instruments;
"Taxes" means taxes, duties, imposts and fiscal and regulatory
charges of any nature, wherever and whenever imposed, including
without limitation, value added taxes, stamp and other documentary
taxes and Exchanges and Clearing House and investment industry
levies; and
"Transaction" means the entering into of a Contract, closing out or
effecting delivery and/or settlement of a Contract (which terms
shall include exercise or allocation of an option Contract) pursuant
to the Customer Documents.
References herein to "we" or "us" shall mean MSIL and/or MSSL and/or
each or any of our Associated Firms or members of a relevant
Exchange to whom we have delegated pursuant to Clause 3 and /or (in
Clauses 9, 21 and 22) any associate of MSIL and/or MSSL, and
references to "our" shall be construed accordingly.
Any words or expressions to which a meaning is given in the Rules,
shall, except where the context indicates otherwise, have the same
meaning in the Customer Documents.
Words importing the singular shall, where the context permits,
include the plural and vice versa. The expression "person" shall
include any firm, partnership, association of persons and body
corporate and any such persons acting jointly and the personal
representatives or successors in title of any such person. Where the
customer comprises two or more persons the liabilities and
obligations under the Customer Documents shall be joint and several.
References to "writing" shall include telex, facsimile transmission
or transmission of text by any other electronic means. References to
statutory provisions, rules and regulations shall include any
modification, re-enactment or re-making thereof.
All headings are for convenience only and shall not affect the
interpretation of the Customer Documents.
2. Services to be provided
2.1 The services which we may provide to you are general investment and
dealing services in financial and commodity options, futures and
contracts for differences traded on an Exchange, together with
related research, advice, clearing and settlement facilities and any
other services agreed between us.
2.2 We shall not undertake discretionary transactions for you unless you
have signed and returned to us a Discretionary Trading
Authorisation.
3. Delegation
3.1 We may arrange for any of our Associated Firms or any other member
of a relevant Exchange to carry out the services to you, which we
agree to provide to you pursuant to this Agreement.
3.2 We may designate a Broker to execute, clear and/or settle any
transaction subject to the Rules and to such conditions as we may
impose.
4. Introduction of business
4.1. We may introduce you to any Associated Firm outside the United
Kingdom and you hereby authorise us on any such Associated Firm's
behalf to expressly invite it to call you with a view to entering
into investment transactions from time to time with or for you. If
such Associated Firm agrees to do so:
(a) you shall have a direct relationship solely with such
Associated Firm and, in any dispute between, or claim against,
you and/or any such Associated Firm, you shall have no
recourse to us; and
(b) you may place orders with us for the Associated Firm to
execute, subject to its terms. In any of these transactions,
we will act as agent for the Associated Firm, and nothing we
do in connection with such transactions will make us your
agent.
4.2 For any transaction or other investment services provided to you
by such Associated Firms, only the following provisions of this
Agreement will apply as between us and you, as the context may
require and each as amended from time to time;
(a) Clauses 1, 2, 4, 5.2, 8, 9, 21, 22, 26, 29-31and Chapters VI
and VII, Schedule 2 and Schedule 3; and
(b) in the case of the latest Notice of Treatment sent by us to
you as a non-private customer or market counterparty,
paragraphs 1 and 2 of that Notice.
5. Dealings and rules, regulations and restrictions
5.1 All Client Contracts and Transactions shall be subject to applicable
Market Requirements and Applicable Law; provided that:
(a) if there is a conflict between (i) the Customer Documents and
(ii) any such requirements and/or law, the latter will
prevail; and
(b) we are entitled to take or omit to take any action we consider
fit or appropriate to ensure compliance with such laws and
requirements; all actions we take will be binding on you.
5.2 We are authorised by you at any time to do any thing or disclose any
matters concerning you or your dealings (whether or not pursuant to
the Customer Documents) if required by any Applicable Law, or which
we are requested to do or disclose by any Regulatory Body.
CHAPTER II - TERMS APPLICABLE TO DEALINGS
6. Contracts and Client Contracts
6.1 If we carry out a Transaction on your request or pursuant to Clause
24 below:
(a) a corresponding Client Contract shall come into existence on
the purchase or sale of a Contract or, as the case may be
exercise and allocation of an option Contract in respect of
which the underlying Asset is a futures Contract. The Client
Contract will terminate when the Contract is closed out,
settled or delivered; and
(b) you will have the obligations in relation to the Transaction
and the Client Contract that are mentioned in this Agreement
and the Customer Documents.
6.2 For each Client Contract, we will have made or placed an equivalent
Contract on the floor of the relevant market (by open outcry on the
floor of, or on an automated trading system administered by, a
futures and options Exchange or the futures or options market of any
other Exchange) or will have entered into an equivalent Contract
with or through a Broker pursuant to Clause 3 and we shall thus have
an interest in the Transaction.
6.3 Any Contract which we acquire as a result of your instructions will,
unless the position has been closed out, result in you becoming
liable to us in relation to the corresponding Client Contract for
actual delivery of its underlying Asset or payment of the relevant
price, under and subject to Market Requirements.
7. Acceptance and execution of orders
7.1 Every order which we may take is accepted and executed, and every
Client Contract shall be entered into, on the basis that we contract
with you only as a principal and not as agent for you unless
otherwise required by Market Requirements.
7.2 If we have to carry out a Transaction as agent on an Exchange where
we would not deal as principal then, for that Transaction, you agree
to be bound by all Market Requirements of that Exchange and you
undertake to sign and deliver to us any further Customer Documents
as we may require. Unless we otherwise require, Market Requirements
of that Exchange will be incorporated herein.
8. Aggregation of orders
We may aggregate your orders with our own (in-house) orders and/or
orders of our associates, connected customers and/or other
customers. This aggregation may operate on some occasions to your
advantage and on others to your disadvantage.
9. Research and recommendations
9.1 We are under no obligation to provide research reports and
recommendations to you and, where provided, you may not receive them
at the same time as our other customers.
9.2 Our employees, officers and directors may receive, know about, act
upon or use such research reports and recommendations before they
are received by our customers. We are under no obligation to take
account of these reports or recommendations when we deal with or for
you.
10. Client actions
10.1 You will take any action and give us in relation to the
corresponding Client Contract any information that we ask for in
relation to the delivery, settlement, and, if a purchased Option
Contract, the exercise or allocation, of any Contract which has not
been closed out.
10.2 Notwithstanding Clause 10.1 above and regardless of any right of
equity, set-off or counterclaim which you may have or allege against
us, any of our Associated Firms or any person connected with us, you
will promptly take all action necessary (including the supply of
information) to enable us to settle or deliver any Contract which
you have instructed us to open and which has not been closed out at
the time such Contract is to be performed.
11. Closing Out
11.1 Subject in particular to Clauses 3 to 8 and 33.3, Market
Requirements and any further requirements we notify you of, you may
at any time before the date for performance of a Client Contract
request us to close out the matching Contract or, if a purchased
option Contract, exercise that Contract in accordance with its
terms. If the closing out or exercise results in a sum of money
being due to us, the relevant Exchange, Clearing House and/or
Broker, we shall notify you of that amount, which will be payable by
you immediately.
11.2 Unless we in our absolute discretion determine otherwise or we
accept instructions from you to do otherwise, equal and opposite
Contracts and Client Contracts (closing out being determined on a
"first in, first out" basis) will automatically fix the amount of
profit or loss in relation thereto.
12. Allocation
If the relevant Clearing House and/or Broker does not allocate long
Open Contracts at maturity directly to a specific account of ours or
to short Client Contracts (or vice versa) we may allocate those
Contracts at random or in a way which seems to us to be most
equitable as between clients. If dealings on our own account are
involved at the same time, allocation will be to all clients first,
and we will receive no allocation until all relevant Client
Contracts have been satisfied.
13. Delivery to you
When we receive any amounts and/or Assets (including documents of
title), pursuant to a Transaction, provided that you have fulfilled
all your obligations under this Agreement and subject to Clause 15,
18.3, 22.2 and 24.2, we will deliver such amounts and/or Assets to
you in respect of the corresponding Client Contract, after deduction
of any Charges and Taxes.
14. Option Premiums
In respect of an option Contract matching a Client Contract:-
(a) if you are a buyer, you will pay to us on demand any premium
payable under the rules of the relevant Exchange and/or
Clearing House (the "premium"); and
(b) if you are a seller, when we receive premium from the relevant
Exchange, Clearing House and/or Broker we will pay it into the
Margin Account as Margin for your account. You may be required
to pay further margin in respect of the relevant Contract and
corresponding Client Contract.
15. Alteration of Contracts
If the relevant Exchange, Clearing House or Broker requires any
terms or conditions of any Contract matching a Client Contract
(including the Assets subject to it) to be altered, we may take all
actions as may, in our absolute discretion, be necessary, desirable
or expedient to comply with such requirements or to avoid or
mitigate loss resulting from any alteration. All actions taken by us
will be binding on you, and any alteration will be deemed
incorporated into the corresponding Client Contract. We shall notify
you of any alteration (in advance, where reasonably practicable).
16. Charges
16.1 Our charges will either be a commission or a xxxx-up or xxxx-down on
the fee payable by us to any Exchange, Clearing House and/or Broker
for the relevant Transaction and/or such other amounts as may be
agreed from time to time between you and us. Our charges vary
according to the transaction and customer, so the charges you pay
for any particular transaction may differ from those another
customer may pay in a similar transaction.
16.2 We may share charges with our Associated Firms or other third
parties or receive remuneration from them for transactions carried
out with or for you. Details of any such arrangements will be made
available to you on your written request.
17. Interest
17.1 We will not pay interest to you on any Client Money or other money,
which we receive from you or hold on your behalf, unless we
separately agree to do so.
17.2 Interest will accrue on the amount that you have not paid us when
due until payment (as well after as before judgement). Such interest
will be calculated at the rate not to exceed 2 per cent per annum
above the base rate or prime rate (or local equivalent thereof) of
the bank (or if there is more than one bank, the one determined by
us in our absolute discretion) at which we maintain our principal
securities settlement or other relevant account in the relevant
currency. If such rate cannot be ascertained for any reason or is
insufficient in our sole judgement to compensate us for our loss or
expense, such interest shall be calculated at the rate per annum
conclusively determined by us to be equal to the loss of interest we
suffer or, as applicable, our cost of funding at prevailing markets
rates the amount you owe from such sources and for such periods as
we may decide.
(i) CHAPTER III - MARGIN
18. Margin payment and Client Money
18.1 You will pay to us upon demand such sums as we may in our absolute
discretion require from time to time as Margin in respect of all
present, future or contemplated Contracts and Client Contracts.
18.2 As soon as practicable we will pay or credit all Client Money or
other Margin to a Margin Account at an approved bank (which may be
any of our Associated Firms) that we select. The currency of the
Margin you pay to us shall be the currency of the relevant
underlying Contract or, if agreed by us and you, another currency.
Settlement of all transactions (including Margin payments thereon)
will be made in the currency of the relevant underlying Contract and
you bear all risk and cost in respect of any conversion of currency
in a Margin Account. Any such conversion will be made by us at such
reasonable market rate or rates as we will determine.
18.3 You agree that we will hold your interest under the trust declared
under the Client Money Regulations and all other Client Money, which
is in a Margin Account on trust in the following order of priority:
(a) for ourselves to the extent of all amounts which are or may
become due to us or payable by us on your behalf under or
pursuant to the Customer Documents; and, thereafter
(b) for you to the extent of any surplus which is due to you after
the payment of all amounts due to or payable by us under
paragraph (a) above.
18.4 We may withdraw Client Money and/or any other money held in a Margin
Account to pay to any Broker, Clearing House, Exchange or other
parties all margins, premiums and other sums on futures and options
Contracts demanded or due from us in respect of our clients, and for
any other purposes allowed under the Client Money Regulations.
18.5 Subject to the terms of the Client Money Regulations, any loss
incurred on default by any Exchange, Clearing House or Broker in
respect of Margin paid by us shall be borne by all of our clients at
the date of such loss pari passu, in proportion to their respective
entitlement to monies in the relevant Margin Account at that time.
18.6 Where you agree to effect transactions, or if you give instructions
to us to effect transactions in a jurisdiction outside the United
Kingdom, then we may need to appoint an intermediate broker,
settlement agent or custodian to undertake those transactions. In
order to meet the margin and settlement obligations to the relevant
Exchange or Clearing House, we may need to pass your money and/or
assets to an intermediate broker, settlement agent or custodian in
that jurisdiction. In that event you should note that there may be
different settlement and legal and regulatory requirements in these
overseas jurisdictions together with different practices for the
separate identification of your investments and your money might not
be protected as effectively when held by such an intermediate broker
as if it were held in a client bank account in the United Kingdom.
You should note that in the event of a shortfall arising on the
money available to meet the claims of segregated clients, your claim
will be restricted to the money held in our client bank accounts in
respect of transactions carried on through that intermediate broker
and to any money received from the intermediate broker relating to
those transactions.
18.7 The approved bank at which your money is held may be located outside
the United Kingdom. You should note that the legal and regulatory
regime applying to such banks may be different from that of the
United Kingdom and in the event of a default of the approved bank,
your money may be treated differently from the position that would
apply if the money was held by an approved bank in the United
Kingdom.
19. Margin Securities
19.1 Amounts you owe to us by way of Margin under Clause 18 may, in our
absolute discretion, be satisfied by way of deposit or transfer of
Charged Securities as security. We may, in our discretion, permit
you to deliver by way of Margin, Charged Securities other than those
accepted by the relevant Exchange or Clearing House as Margin. Our
charges for providing this facility to you will be separately agreed
with you. This Clause 19 will apply to all Securities delivered by
way of Margin. Charged Securities will not (unless we agree
otherwise) be registered in your name.
19.2 As continuing security for all your liabilities and obligations
under the Customer Documents, you acting in due capacity (and with
the intent that the security so constituted shall be a security in
our favour extending to all beneficial interests in the assets
hereby charged and to any proceeds of sale or other realisation
thereof, including any redemption monies paid or payable in respect
thereof) hereby assign, charge and pledge to us, free of all adverse
interests whatsoever by way of first fixed charge, all Charged
Securities. Each Approved Custodian will hold to our order all
Charged Securities held by it for its account.
19.3 You will forthwith execute on request all transfers, assignments,
mortgages, charges and other documents, give notices and directions
and do any other acts and things as we may specify, to enable us or
our nominee to be registered as the owner of or otherwise obtain
legal title to any Charged Securities, to perfect our rights with
respect to the security referred to in this Clause 19, to secure
further your liabilities and obligations, to facilitate the exercise
of our rights hereunder, or to satisfy any Market Requirements.
19.4 You will not, without our prior written consent, at any time during
the term of this Agreement, grant or agree to grant any option over,
sell, assign or transfer, or agree to attempt to sell, assign or
transfer, or create, agree or attempt to create, or allow to exist
any charge, lien, or other encumbrance on or over any or all of the
Charged Securities, except for the charge set out above.
19.5 We will hold all Charged Securities for the purposes of satisfying
any and all of your obligations and liabilities under the Customer
Documents. We may, without prior notice, free of any interest
therein of yours, any client of yours or any other person for whom
you are trustee or agent:
(a) deposit, charge, pledge or otherwise create security over the
Charged Securities with, to the order of or in favour of any
Exchange, Clearing House or Broker
(i) on such terms as such Exchange or Clearing House may
prescribe, and
(ii) on terms that, subject to the Rules, the Broker may deal
with the Charged Securities in accordance with Market
Requirements and any agreement made with us;
The relevant Exchange, Clearing House or Broker may enforce and
retain such deposit, charge, pledge or other security to satisfy any
obligations of yours or ours to the Exchange, Clearing House or
Broker; and
(b) register, sell, realise, charge or otherwise deal with the
Charged Securities on such terms (including as to the
consideration received therefor) as we may in our absolute
discretion think fit (with prior reference to you where
practicable, but in any case with subsequent notice to you,
and without being responsible for any loss or diminution in
price). Any consideration received will be credited to the
Margin Account.
If Charged Securities are denominated in a different currency from
that in which any relevant cost, damages, loss, liability or expense
is denominated, we may convert any amount realised at such rate as
we determine at the time.
19.6 Where we deposit, pledge or charge Charged Securities under Clause
19.5(a), the part of the proceeds of any sale of those securities
which exceeds your margin requirements to us will be subject, in the
event of our default, to the pooling rules under the Client Money
Regulations. This means that money held in our Client Money bank
accounts is pooled and distributed pari passu to meet the claims of
all customers who are entitled to protection under the Client Money
Regulations. If there is a shortfall in an overseas Client Money
bank account, a separate pool may be formed for all customers whose
money was held in that account.
19.7 When we are satisfied that all costs, damages, losses, liabilities
and expenses incurred under the Customer Documents have been
satisfied, discharged or otherwise released, we may re-transfer or,
re-deliver any certificates or documents of title relating to you
upon request.
19.8 You agree that if we re-transfer or re-deliver fungible Securities
(whether Charged Securities or otherwise) to you, these need not be
the identical Securities originally deposited, charged, or
transferred to us, and you will accept Securities of the same class
and denomination or other Securities which then represent the same.
19.9 Pending the re-transfer or re-delivery we will credit any income
received in respect of Charged Securities, net of any Taxes payable
by us (whether by withholding or otherwise) on the income, to the
Margin Account. You may direct us as to the exercise of any voting
or other rights attached to or conferred on any Charged Securities.
19.10 Unless the context otherwise requires, references in this Clause 19
to "we" or "us" includes references to any person holding any of the
Securities or in whose name any of them may be registered.
20. Custodian activities and documents of title
20.1 We may (subject to the Rules) act, or may appoint any of our
Associated Firms which are eligible custodians or any other eligible
custodian (as defined by the SFA) to act, as custodians of your
documents of title or certificates evidencing title to your assets
(including Charged Securities, except where absolute title passes to
us).
20.2 If we consider it appropriate to register your registrable assets in
a name other than your own, then we may arrange such registration in
the name of a nominee company, which is controlled by:
(a) ourselves;
(b) an Associated Firm;
(c) a recognised or designated investment exchange; or
(d) an eligible custodian (as defined by the Rules) which may be
an Associated Firm.
Such assets will be held by such nominee on trust for you, except
that, in the case of assets held by a custodian which is not an
affiliate of ours, the nominee shall hold its rights against such
custodian on trust for you.
20.3 Where, due to the nature of the law or market practice of an
overseas jurisdiction, it is in your best interests, or it is not
feasible to do otherwise we shall register your assets in the name
of an eligible custodian or ourselves. If your assets are registered
in our name you should note that your assets may not be segregated
from the assets of our firm and in the event of our default you may
not be as well protected.
20.4 Assets will only be held/registered outside the normal SFA
requirements upon your specific written instructions. You should
note that the consequences of doing so are entirely at your own
risk.
20.5 Where assets are held on your behalf overseas, you should note that
there may be different settlement, legal and regulatory requirements
in those jurisdictions from those applying in the UK, together with
different practices for the separate identification of your
investments.
20.6 Your assets may be pooled with those of one or more customers. This
means that individual customer entitlements may not be identifiable
by separate certificates, other physical documents of title or
equivalent electronic record and in the event of an unreconcilable
shortfall after the default of a custodian, customers may share in
that shortfall pro-rata.
20.7 We will collect any dividends, interest, or other entitlements, in
cash or in kind, to which you may be entitled and of which we are
notified and will remit to you such dividends or interest as soon as
possible after deduction of any Taxes payable or credit them to such
account of yours as we may consider appropriate.
20.8 In respect of any investments held on your behalf by us or a third
party appointed by us under or pursuant to the Customer Documents,
if we are notified of any voting and/or any other rights or
privileges (including without limitation conversion and subscription
rights and rights or privileges arising in connection with
takeovers, other offers or capital reorganistions) attaching to
those investments may be exercised, we will notify you as soon as
reasonably practicable of such rights and/or privileges.
If you unambiguously inform us in writing within 14 days of such
notice (or such shorter period as may be specified or appropriate)
that you wish us to exercise the rights and/or privileges and we
have sufficient cleared funds, we will do so but only on such terms
as you advise in writing and which are reasonably acceptable to us.
Otherwise we will not exercise any such rights and/or privileges.
Notwithstanding the absence of satisfactory instructions or
sufficient funds, in the event that we are notified that
subscription rights attach to any investments that we or such third
party hold on your behalf we may, in our or its absolute discretion,
dispose of such rights on your behalf in such manner as we think, or
it thinks, fit.
20.9 If we are notified by any third party appointed by us under or
pursuant to the Customer Documents, or by any company in which we or
such third party hold investments on your behalf that such company
intends to make calls upon those investments in respect of any
monies whatsoever unpaid on them, we will notify you as soon as
practicable of such calls. If you provide us with the relevant funds
in sufficient time for us to do so, we will satisfy such calls on
your behalf and on such terms as you advise in writing and which are
reasonably practicable to us. Otherwise we shall take no action on
your behalf and will have no liability whatsoever in respect of the
consequences of a failure to satisfy the calls made. However, where
the custodian is legally liable to meet such calls it may do so and
you will reimburse us forthwith upon demand.
20.10 Subject to Clauses 19, 20.11 and 24 and the Rules we are not
authorised to:
(a) borrow money on your behalf against the security of your
Securities; or
(b) lend any documents of title or certificates evidencing title
to any third party; or
(c) otherwise use your documents of title or other documents
evidencing title to investments belonging to you for our own
account or for the account of another of our customers.
In each case, unless we have first entered into a written agreement
with you giving us such authorisation.
20.11(a) Without prejudice to Clause 19.5, you hereby authorise MSIL at any
time or times to borrow, lend or otherwise use for its own purposes
any Charged Securities without giving notice of such borrowing,
lending or other use to you. MSIL may retain for its own account all
fees, profits and other benefits received in connection with any
such borrowing, loan or use. Upon such borrowing, lending or other
use, such Charged Securities will become the absolute property of
MSIL (or that of such transferee) free from the security created
hereunder and from any equity, right, title or interest of yours and
you will thereupon have a right against MSIL for the delivery of
Securities of the same issuer, forming part of the same issue and of
an identical type, nominal value, description and amount as such
Charged Securities (provided that where there has been any corporate
action or other events in relation to any such Charged Securities,
we may determine what assets (which may consist of and include money
or other property) are to be treated as equivalent for this purpose)
("Equivalent Securities").
20.11(b) MSIL may deliver, or procure the delivery of, Equivalent Securities
to you under Clause 20.11(a) by causing such Equivalent Securities
to be transferred, appropriated or designated to your account(s)
charged to it from which such Securities were held prior to such use
or, if not possible to do so, to such other of your accounts charged
to MSIL as MSIL shall determine. Such Securities shall upon such
transfer, appropriation or designation become subject to all the
provisions of the Customer Documents, including, without limitation,
those of Clause 19 and this Clause 20.11.
20.11(c) Our obligation to return Equivalent Securities under this paragraph
may, if we so elect, be included in any set-off of obligations of
ours to you against any obligation of yours to us (whether under
Clauses 24 or 28 below or otherwise), on the basis that there is for
that purpose due from us to you an amount equal to the Default
Market Value of such Equivalent Securities, and our obligation to
return Equivalent Securities shall, if and to the extent so
included, be extinguished accordingly. For this purpose -
(i) the "Default Market Value" of such Equivalent Securities means:
(A) if during the Default Valuation Period (as defined
below) we have sold Securities forming part of the same
issue and being of an identical type and description to
those Securities and in substantially the same amount as
those Securities, the net proceeds of sale (after
deducting all reasonable costs, fees and expenses
incurred in connection therewith); and
(B) failing such sale during the Default Valuation Period,
the market value of such Securities at the Default
Valuation Time as determined by us in good faith;
(ii) the "Default Valuation Period" means:
(A) if the relevant set-off occurs on a day that is a
dealing day in the most appropriate market for
Securities of the relevant description (as determined by
us), a period commencing on the opening of business on
that day and ending at the close of business on the
following dealing day; and
(B) in any other case, the close of business on the second
dealing day in that market after the day on which the
set-off occurs.
(iii) the "Default Valuation Time" means the end of the Default
Valuation Period.
Where the amount of any Securities sold as mentioned in (i)(A) above
is not identical to that of the Securities to be valued for the
purposes of this definition, the Default Market Value of those
Securities shall be ascertained by dividing the net proceeds of sale
by the amount of the Securities sold so as to obtain a net unit
price and multiplying that net unit price by the amount of the
Securities to be valued.
CHAPTER IV - MATERIAL INTERESTS
21.1 The relationship between you and us is as described in the Customer
Documents. Neither that relationship nor the services we provide nor
any other matter will give rise to any fiduciary or equitable duties
on our part which would prevent or hinder us from doing business for
or with you (whether acting as principal or agent), doing business
with associates, connected customers, and other investors and
generally acting as provided in the Customer Documents.
We may give advice or make recommendations to you, enter into
Transactions for or with you or act as your agent or provide any
other service pursuant to Clause 2 notwithstanding that we may have
a relationship, arrangement or interest that is material in relation
to the Transaction, advice or recommendation concerned and/or the
Asset underlying any Contract or Client Contract, including (but not
limited to) the following circumstances where:-
(a) we have acted, are acting or are seeking to act as a financial
adviser or lending banker to the issuer (or any of its
affiliated companies) of the Assets the subject of a
Transaction or have advised or are advising any person in
connection with a merger, acquisition or take-over by or for
such issuer (or any of its affiliated companies);
(b) we have sponsored or underwritten or otherwise participated
in, or are sponsoring or underwriting or otherwise
participating in the Assets the subject of a Transaction;
(c) we have a holding, dealing, or market-making position or may
otherwise be trading or dealing in the Assets the subject of a
Transaction or in investments (including without limitation
any futures or option Contracts) or assets of any kind
underlying, derived from or otherwise directly or indirectly
related to such investments;
(d) we have received or are receiving payments or other benefits
for giving business to the firm with which your order is
placed;
(e) we have been or are an associate of the issuer (or any of its
affiliated companies) of the Assets the subject of a
Transaction;
(f) we are matching your transaction with that of any other client
(including without limitation us, any Associated Firm,
connected customer or other customer of us) either by acting
on behalf of such person as well as on behalf of you ("agency
cross") or by executing matching transactions at or about the
same time with you and such persons ("back-to-back principal
trade").
21.2 No further disclosure to you is required of any relationship,
arrangement or interest which falls within one of the circumstances
referred to in Clause 21.1 above, and we will be entitled to retain
any profit or benefit arising as if no such relationship,
arrangement or interest existed.
21.3 We will not be obliged to disclose to you any matter, fact or thing,
whether or not such disclosure would or might be a breach of any
duty owed by us to any other person, and we shall not be obliged to
disclose to you any matter, fact or thing which comes to the notice
of any of our employees, officers or directors if the employee,
officer or director who is dealing for or with you is unaware of
such matter, fact or thing.
21.4 We may in our absolute discretion decline to carry out a Transaction
for or with you or to give advice or make a recommendation to you
where we may have an interest in respect thereof which will or may
conflict with your interests.
CHAPTER V - POWERS AND EXCLUSIONS OF LIABILITY
22. Exclusion and restriction of liability
22.1 Nothing in the Customer Documents shall exclude or restrict any
liability which we have under the Rules or the regulatory system
established by the FSA, and which may not be excluded or restricted
thereunder.
22.2 We shall not be liable to you in respect of any relevant Client
Contract, any matching Contract or otherwise if and to the extent
that the relevant Exchange, Clearing House and/or Broker has ceased
for any reason (including netting-off our positions with it) to
recognise the existence of any Contract or fails to perform or close
out any Contract or defaults in respect of margin or collateral.
This will not affect your obligations and liabilities hereunder in
respect of Contracts, which you have instructed us to open, and
which have not been closed out.
22.3 Neither we nor any of our employees, officers or directors will be
liable for any loss resulting from any act or omission made under or
in relation to or in connection with the Customer Documents, except
where such loss results from any bad faith, wilful default, fraud or
negligence of us or any of our employees, officers or directors.
22.4 Neither we nor our employees, officers or directors will be liable
for any consequential or special damages howsoever arising.
22.5 We will not be liable for the solvency, acts or omissions of:-
(i) any nominee, custodian or other third party with whom any
Charged Securities (or other investments) are held pursuant to
Clauses 19 and 20 above; or
(ii) any bank with which we maintain any client bank account; or
(iii) any other third party with whom we deal or transact business
or who is appointed by us in good faith on your behalf,
unless such nominee, custodian, bank or other third party is an
Associated Firm, but we will make available to you, when and to the
extent reasonably so requested, any rights that we may have against
such person.
22.6 If any claim is made by or against us or any of our employees,
officers or directors against or by any third party in connection
with this Agreement, any Contract acquired or Transaction effected
on your instructions or a corresponding Client Contract or arising
out of any act or omission by us or our employees, officers or
directors, you hereby agree to provide us or our employees, officers
or directors with any assistance which you may be reasonably asked
to give.
22.7 Neither we nor any of our directors, officers or employees will have
any responsibility or liability whatsoever for:
(a) any advice or opinion which may be given to you concerning the
Customer Documents; or
(b) any expense, loss or damage suffered by you as a result of (i)
our carrying out your instructions, if we acted in accordance
with such instructions or otherwise acted reasonably, or (ii)
properly carrying out or failing to carry out any actions
which we are permitted but not required to carry out under the
Customer Documents.
23. Indemnity
You will fully indemnify us, our Associated Firms and any of our or
their employees, officers or directors (each an "Indemnified
Person") against all costs, expenses, damages, liabilities and
losses which any such Indemnified Person may suffer or incur
directly or indirectly as a result of, or in connection with, or
arising out of the Customer Documents or any Transaction effected on
your instructions or arising out of any act or omission by such
Indemnified Person or by any other person permitted under the
Customer Documents, and against any claims which may be made against
any such Indemnified Person in the performance of the powers or
duties of any such Indemnified Person (including in any such case
any cost of enforcing the same). The indemnity will not extend to
any Indemnified Person if such costs, expenses, damages, liabilities
and losses result primarily from the bad faith, wilful default,
fraud or negligence of such Indemnified Person.
24. Xxxxxx Xxxxxxx'x xxxxxx
24.1 If we have determined, in our absolute discretion, that you have not
performed (or may not be able or willing in the future to perform)
any of your obligations to us under or pursuant to the Customer
Documents, we may (with prior notice only if reasonably practicable)
take such steps as we consider necessary or desirable to comply
with, perform, cancel or satisfy any of our obligations to the
relevant Exchange, Clearing House or Broker in respect of any
Contract or Contracts acquired on your instructions, or otherwise to
protect our position, including closing out and/or performing any or
all such Open Contracts. For such purpose, we may:
(a) buy or sell the Asset underlying any Open Contract in any
manner including to or from ourselves or any Connected
Company;
(b) buy or sell futures or options contracts;
(c) open new long or short positions in order to establish a
spread or straddle;
(d) borrow, buy or sell any currency;
(e) apply any Margin;
(f) cancel, terminate or otherwise liquidate any Transaction
between you and us; and/or
(g) set off any obligation to you against any of your obligations
to us;
in each case so that all amounts spent by us in connection with any
such actions that are in excess of the amount held in the Margin
Account for you shall be paid by you to us on demand.
24.2 On the exercise of our rights under Clause 24.1 above:
(a) we are not obliged to deliver to you in respect of any
corresponding Client Contract the underlying Asset or any
money received or receivable on closing out until all of your
liabilities to us are satisfied or discharged to our
satisfaction, and all amounts you owe us are paid, and:
(i) any such underlying Asset may be registered in our name
or that of our nominee (which may be an Associated
Firm), and we or such nominee may be the custodian of
the documents of title or certificates evidencing title
to such Asset;
(ii) if such amounts are not paid and/or liabilities to us
are not satisfied or discharged to our satisfaction, we
may sell or realise the underlying Asset upon terms
(including the consideration received therefor) as we in
our absolute discretion think fit, without being
responsible for any loss or diminution in price; any
consideration received therefor shall be credited to the
Margin Account; and
(iii) any income in respect of such Asset paid to us, net of
any Taxes payable by us (whether by withholding or
otherwise) in respect of such income, shall be credited
to the Margin Account; and
(b) all amounts owing to us hereunder will become immediately
payable.
24.3 We do not have to close out Contracts or take any other action in
respect of Open Contracts acquired on your instruction. In
particular (subject to Clause 24.1 above), no failure by you to pay
Margin when demanded will require us to close out any relevant
Contract to which such Margin is attributable.
24.4 We may convert any funds realised pursuant to this Clause 24 at such
rate and into such currencies as we may reasonably consider
appropriate at the relevant time.
25. Certificates conclusive
Our certificate that any of our rights under the Customer Documents
have been exercisable, or as to any amount payable or due under the
Customer Documents, will be conclusive and binding on you, absent
manifest error. No purchaser, pledgee or transferee of Charged
Securities will need to enquire whether any such power has become
enforceable, or to establish the proper application of any money
paid.
26. Time of the essence
Time shall be of the essence in relation to all matters arising
under or pursuant to the Customer Documents in respect of
Transactions or Client Contracts or otherwise in respect of your
dealing in futures or options.
27. Retention of title
Title to Securities purchased by you (whether upon exercise of an
option Client Contract or otherwise) will pass only when you pay the
amount due for such purchase.
28. Lien and set-off
As further security for all of your obligations hereunder (but
subject to the Rules) we shall have the right to retain (and apply
as set out below) all of your property which we or any of our
Associated Firms hold for any purpose, including, but not limited
to, property held in any other of your accounts with us or any of
our Associated Firms, whether or not we have made any advances in
connection with such property. From time to time we may, without
notice, transfer and re-transfer any money or other property between
any such accounts. You shall execute such documents and take such
other action as we shall reasonably request in order to perfect our
rights with respect to any security referred to in this Clause 28.
29. Force majeure
We shall not be liable to you for the non-performance of any of our
obligations under this Agreement due to any cause beyond our
reasonable control, including without limitation any breakdown or
failure of transmission or communication or computer facilities,
postal or other strikes or similar industrial action, or the failure
of any relevant Exchange, Clearing House or Broker to perform its
obligations for any reason.
30. Taxes
30.1 All amounts which you must pay under the Customer Documents do not
include any applicable Taxes. You must pay any Taxes to us at the
same time as the amounts to which those Taxes relate.
30.2 You are fully responsible for paying all other Taxes due and the
making of all claims in relation thereto whether for exemption from
withholding taxes or otherwise, for filing any and all tax returns,
and for providing any relevant tax authorities with all necessary
information in relation to any investment business we carry on for
or with you or any investments which we hold on your behalf.
30.3 We will use all reasonable endeavours to send you any tax documents
which we receive relating to you or to any monies or investments we
hold under the Customer Documents.
31. Advice
31.1 You rely on your own judgement when you give orders or instructions
to us.
31.2 We do not provide any legal or tax advice. Accordingly, if you
consider it necessary you should consult your own legal or tax
advisers.
CHAPTER VI - AUTHORISATION
32. Due authorisation
32.1 You represent, warrant and undertake to us that:-
(a) in any investment business we carry on for or with you under
this Agreement, you are and will be acting either as principal
or as agent;
(b) you have and will have full power and capacity and have taken
all necessary corporate and other action, and in the case of a
trustee of a particular trust you have and will have full
power and capacity under the relevant trust deeds, to enter
into and perform your obligations under this Agreement
(including without limitation the powers and capacity to grant
us the charge and any other security herein provided for) and
to confer on us the rights and powers contained in or given
pursuant to this Agreement. Without limitation:
(i) your execution, delivery and performance of this
Agreement will not violate or conflict with any
Applicable Law or your constitution or any charge, trust
deed, contract or other instrument to which you are a
party or which is binding upon you or your assets; and
(ii) the terms and conditions contained in this Agreement
will be your legal, valid and binding obligations;
(c) you are (or some other person for whom you are trustee or
agent and from whom you hold and will at all times hold all
requisite authorities is) and will at all times during the
continuance of this Agreement be the sole beneficial owner of
all Charged Securities. In each case such Charged Securities
are and shall be fully paid and free from all mortgages,
charges, liens and other encumbrances other than those which
may arise in our favour. No other person has or will have any
rights or interests therein and you are lawfully entitled to
create in our favour the security evidenced or intended to be
evidenced hereby;
(d) when further Securities become Charged Securities or otherwise
subject to the charge in Clause 19.2 above you shall be deemed
to have made a further and separate representation and
warranty in the terms of paragraph (c) above;
(e) you and any person designated by you have and shall have, due
authorisation to act in all respects in relation to this
Agreement and each Transaction, Contract and Client Contract
and, in relation thereto, you have obtained, shall obtain and
shall maintain in effect all necessary authorisations,
consents or approvals (including without limitation any
required by any Regulatory Body) and shall comply with the
terms of the same and with all Applicable Law, and shall
provide us with copies or other evidence of such consents or
approvals and such evidence of compliance with such law as we
may reasonably require.
32.2 You agree that, in all investment business which we carry on for or
with you where you are acting as agent, only you will be our
customer and we shall have no responsibility to any principal of
yours as our customer.
32.3 If you are acting as agent for, or on behalf of another in relation
to any Contract and/or Client Contract carried out under this
Agreement then:
(a) you have and will have full power and capacity to enter into
this Agreement and to perform all obligations pursuant hereto
to be performed by your principal under this Agreement;
(b) you are expressly authorised by your principal to instruct us
in relation to such Contract and/or Client Contract in
accordance with the terms and conditions of this Agreement;
and
(c) you will be, and you will procure that your principal will be,
jointly and severally liable, each as if a principal, to us in
respect of all obligations and liabilities to be performed by
you pursuant to and in respect of any such Contract and/or
Client Contract.
32.4 You agree to supply us with such financial information about
yourself (or any immediate, intermediate or ultimate holding
company) as we may reasonably request.
33. Authorised instructions
33.1 You may from time to time notify us in writing of the names of those
persons who are authorised to give instructions on your behalf.
Until we receive notice in writing to the contrary, we shall be
entitled to assume that any of those persons have full and
unrestricted power to give us instructions on your behalf.
33.2 We are entitled to rely and act without further enquiry on any
instruction, notice, demand, request or information (by whatever
means transmitted and whether or not in writing) which purports or
appears to come and which we reasonably believe in good faith to
come from you or from any person who is or appears to us to be a
person designated in the attached Certificate (if any) or otherwise
authorised by you for the purpose of the Customers Documents or from
someone acting on your behalf, and we shall not be liable for any
actions taken or omitted to be taken in good faith pursuant thereto
nor shall we be under any obligation to confirm instructions before
they are executed or the accuracy or completeness of any such
information before it is acted or otherwise relied upon.
33.3 We are not under any obligation to execute or otherwise enter into
any particular Transaction, or to accept and act in accordance with
any order or instructions, nor shall we be obliged to give any
reasons for declining to do so.
33.4 If we decline to carry out a Transaction we will promptly notify
you. We will have no liability for any expense, loss or damage
incurred by you by reason of any omission so to notify you,
otherwise than as a result of our bad faith, wilful default or
negligence; in no event will we have any liability for any
consequential or special damage.
CHAPTER VII - GENERAL
34. Information
34.1 You warrant, represent and undertake that:
(a) you will notify us promptly in writing of any significant
change in your financial position (including changes in
assets, net assets or called-up share capital); and
(b) in entering into this Agreement, we have not made and you are
not relying upon any statements, representations, promises or
undertakings whatsoever that are not contained in this
Agreement;
34.2 You will:
(a) provide us on request all information in your agent's
possession or control of you or your agents as may be required
to be filed or disclosed pursuant to Applicable Law, in each
case regarding us, you, the Customer Documents or any
Contract, Client Contract;
(b) file (within any applicable time periods) such reports,
letters and other communications as may be required from time
to time by any Regulatory Body relating to you or us, you, the
Customer Documents, or any Contract, Client Contract; and
(c) send a copy of all such reports referred to in paragraph (b)
above to us promptly upon such filing, and we may send a copy
of the same to any relevant Exchange, Clearing House member or
Broker.
35. Confirmation and Statements
As soon as practicable after we have carried out a Transaction we
shall confirm details of that Transaction to you. We will provide to
you at agreed intervals a statement of your overall trading (and
Margin) positions with us at the then available current market
price.
36. Telephone recording
We may use voice record orders, instructions or conversations we
receive by telephone. Our voice records shall be prima facie
evidence of the order, instructions or conversations recorded, and
you agree that such records shall be admissible as such evidence in
any Proceedings (as defined in Clause 43.2).
37. Notices
37.1 Any instructions or requests you give, or demands or confirmations
by us may be given in writing or, where permitted under the Rules,
orally. Any notice in writing (including without limitation any
contract note, confirmation or demand) may be given by posting or
delivering it or by sending it by telex, facsimile transmission or
any other electronic transmission.
37.2 Any notice or demand given by post will be sent first class, or
where appropriate, by air mail and will, subject to Clauses 37.3 and
37.4 below, be deemed given seven business days after posting and
any notice given by delivery or by telex, facsimile transmission or
any other electronic transmission will be deemed given upon delivery
or transmission (as the case may be), and in proving service of
notice it shall be sufficient to prove, in the case of delivery by
post, that the letter was correctly addressed and was posted first
class or, where appropriate, air mail or, in the case of delivery
otherwise than by post, that it was delivered to the correct address
or, in the case of transmission by facsimile or telex, that it was
transmitted to the correct number and (in the case of telex)
received the proper answer back.
37.3 Any contract note, confirmation or account statement which we give
in writing shall be deemed correct, conclusive and binding on you if
not objected to in writing within the earlier of five business days
of despatch by us or one business day of your receipt thereof.
37.4 Any statement produced may be delivered by post, or by sending it by
telex, facsimile or other electronic transmission. Where you are
ordinarily resident outside of the UK, we may retain statements
relating to investments and collateral held by a custodian.
37.5 Communications from you under Clause 33.1, 33.2 and 40.1 and any
objection pursuant to Clauses 37.3 and 39.2 shall be deemed received
only if actually delivered.
38. Correct addresses and numbers
Our address for serving notices is shown at the front of this
document, and our facsimile and telex numbers are:
Fax No: 0000 000 0000/0000 000 0000
Telex No: 8812564 MORSTAN
We may change any of these details by written notice to you. Unless
you tell us otherwise we will assume that your correct address and
facsimile and telex numbers are those shown on any communication we
receive which we reasonably believe to come from you.
39. Entire agreement and amendments
39.1 This Agreement, together with all other Customer Documents,
represent the entire terms on which we will undertake for or with
your investment business in Exchange-traded futures and options
contracts which is regulated by SFA. Any alteration to the Customer
Documents must be agreed by us in writing.
39.2 We may amend or supplement our arrangements with you by sending you
Further Schedules or a revised Agreement or by written agreement
with you. Any amendment or supplement will, unless we have received
your written objection, take effect twenty-one days after despatch
to you or on such later date as we may specify, and will apply in
respect of any commitment or transaction entered into by us after
that date. Any amendment or supplement that relates to or results
from a change of Applicable Law may take effect immediately or
otherwise as we may specify.
40. Termination
40.1 Either party can terminate this Agreement without penalty by giving
notice in writing, which will take effect seven days after the
notice is given or after any other period specified in the notice.
40.2 Termination of this Agreement will not affect the rights or
liabilities of either party in respect of Contracts and any
corresponding Client Contracts for which you have already given an
instruction which we have accepted, or in respect of which there is
an outstanding liability with us. Any termination will be without
prejudice to our rights to all Margin and amounts in the Margin
Account. The Customer Documents will apply to these liabilities
until all Contracts have been closed out, settled or delivery
effected and all liabilities discharged.
40.3 Termination of this Agreement will not affect any provision of the
Customer Documents which is intended to survive termination.
41. Assignment and Transfer
41.1 The Customer Documents shall be binding upon, and inure to the
benefit of, MSIL and its successors and assigns.
41.2 MSIL may at any time cause all or any part of its rights, benefits
and/or obligations under the Customer Documents to be novated to any
subsidiary or holding company (as defined in section 736 of the
Companies Act 1985) of MSIL or a subsidiary of any such holding
company or any company otherwise affiliated with MSIL (any such
company being a "Connected Company") by delivering to you a written
substitution notice. Upon delivery of a substitution notice to you:
a) to the extent that in the substitution notice MSIL seeks to
cause its rights and/or its obligations hereunder to be
novated, you and MSIL shall be released from further
obligations to each other hereunder and their respective
rights against each other shall be cancelled;
b) you and the Connected Company shall acquire the same rights
and assume the same obligations between themselves as they
would have acquired or assumed by it as a result of such
novation.
41.3 You may not assign any of your rights under the Customer Documents,
any Contract or Client Contact without our prior written consent.
Any purported assignment of your rights will be invalid.
42. Miscellaneous
42.1 If any term or part of the Customer Documents is void, voidable or
unenforceable, the rest of the Customer Documents will not be
affected.
42.2 Our rights, remedies, powers and privileges in this Agreement are
cumulative and not exclusive of any rights or remedies provided by
law. Our failure to exercise, or delay in exercising, any of our
rights, remedies, powers or privileges will not operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof.
43. Governing Law
43.1 The Customer Documents and all Transactions thereunder shall be
governed by and construed in accordance with English Law.
43.2 Any suit action, claim or proceeding (together in this Clause
referred to as "Proceedings") arising out of or in connection with
the Customer Documents or any Transaction thereunder may be brought
in the English courts. Any objection that you or we may have now or
in the future to the laying of the venue of any Proceedings in any
English court, and any claim that any Proceedings have been brought
in an inconvenient forum, is waived.
43.3 If you are entitled in any jurisdiction to claim immunity for
yourself or for your property or assets from service of process,
jurisdiction, suit, judgement, execution, attachment (whether before
judgement, in aid of execution or otherwise) or legal process in
respect of your obligations under this Agreement, or to the extent
that in any jurisdiction there may be attributed to you or your
property or assets such immunity (whether or not claimed), you waive
such immunity to the fullest extent under the laws of such
jurisdiction.
43.4 You irrevocably and generally consent in respect of any legal action
or Proceedings arising out of or in connection with the Customer
Documents or any Transaction to the giving of any relief or the
issue of any process in connection with such action or Proceedings,
including, without limitation, the making, enforcement or execution
against any property, asset, or revenues whatsoever (irrespective of
their use or intended use) of any order or judgement which may be
made or given in such action or Proceedings.
IN WITNESS WHEREOF, this Agreement has been entered into on the date written in
the Customer Signature pages below.
Signed on behalf of
Xxxxxx Xxxxxxx & Co. International Limited
-and-
Xxxxxx Xxxxxxx Securities Limited
By:...../s/ X X Xxxxxxxxx..................
Name: X X Xxxxxxxxx
Title: Company Secretary
PART TWO
MASTER NETTING AGREEMENT
THIS MASTER NETTING AGREEMENT is made as of the date specified on the first
customer signature page
BETWEEN
(A) You, as the client named on the customer signature page; and
(B) XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED ("MSIL") AND/OR XXXXXX XXXXXXX
SECURITIES LIMITED ("MSSL") both of 00 Xxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxx
X00 0XX . MSIL is regulated by SFA, and MSSL is regulated by SFA and a
member of the London Stock Exchange.
IT IS HEREBY AGREED AS FOLLOWS:
1. Scope of this Agreement
1.1 Unless otherwise agreed in writing by the Parties in Annex 1 or
otherwise and subject to the next sentence, these terms and the
particular terms agreed by the Parties govern each Transaction
entered into or outstanding between any two Designated Offices of
the Parties on or after the date of execution of these terms. In the
case of Transactions within paragraph (i), (ii), (iii) or (iv) of
the definition of "Transaction", these terms govern only those
Transactions where the exchange mentioned in such definition is a
Specified Exchange.
1.2 These terms, the particular terms of, and applicable to, each and
every Transaction governed by these terms, the Schedules to these
terms and all amendments to any of such items shall together
constitute a single agreement between the Parties. The Parties
acknowledge that all Transactions governed by these terms, which are
entered into on or after the date of execution of these terms, are
entered into in reliance upon the fact that all such items
constitute a single agreement between the Parties.
2. Settlement and Exchange of Clearing Organisation Rules
2.1 Unless a Liquidation Date has occurred or has been effectively set,
a Party shall not be obliged to make any payment or delivery
scheduled to be made by that Party under a Transaction governed by
these terms for so long as an Event of Default or Potential Event of
Default with respect to the other Party has occurred and is
continuing.
2.2 Unless otherwise agreed in writing by the Parties, if the Parties
enter into any Transaction governed by these terms to close out any
existing Transaction between the Parties then their obligations
under such Transactions shall automatically and immediately be
terminated upon entering into the second Transaction, except for any
settlement payment due from one Party to the other in respect of
such closed-out Transactions.
2.3 These terms shall not be applicable to any Transaction to the extent
that action which conflicts with or overrides the provisions of this
agreement has been started in relation to that Transaction by a
relevant exchange or clearing organisation under applicable rules or
laws and is continuing.
3. Representations, Warranties and Covenants
3.1 Each Party represents and warrants to the other Party as of the date
of execution of these terms and, in the case of the representation
and warranty in (v) of the Clause 3.1 relating to the entering into
of Transactions, as of the date of entering into each Transaction
governed by these terms that: (i) it has authority to enter into
this agreement; (ii) the person entering into the agreement on its
behalf have been duly authorised to do so: (iii) this agreement and
the obligations created under this agreement are binding upon it and
enforceable against it in accordance with their terms (subject to
applicable principles of equity) and do not and will not violate the
terms of any agreements to which such Party is bound; (iv) no Event
of Default or Potential Event of Default has occurred and is
continuing with respect to it; and (v) it acts as principal and sole
beneficial owner (and not as trustee) in entering into these terms
and each and every Transaction governed by these terms.
3.2 Each Party covenants to the other Party that: (i) it will at all
times obtain and comply with the terms of and do all that is
necessary to maintain in full force and effect all authorisations,
approvals, licences and consents required to enable it lawfully to
perform its obligations under this agreement; and (ii) it will
promptly notify the other Party of the occurrence of any Event of
Default or Potential Event of Default with respect to itself or any
credit Support Provider in relation to it.
4. Termination and Liquidation
4.1 If, at any time:
(i) a Party fails to make any payment when due under or to make or
take delivery of any property when due under, or to observe or
perform any other provision of, this agreement (including any
Transaction governed by these terms) and such failure
continues for two business days after notice of
non-performance has been given by the other Party to the
defaulting Party;
(ii) a Party commences a voluntary case or other procedure seeking
or proposing liquidation, reorganisation, an arrangement or
composition, a freeze or moratorium, or other similar relief
with respect to itself or to its debts under any bankruptcy,
insolvency, regulatory, supervisory or similar law (including
any corporate or other law with potential application to an
insolvent Party), or seeking the appointment of a trustee,
receiver, liquidator, conservator, administrator, custodian,
examiner or other similar official (each a "Custodian") of it
or any part of its assets; or takes any corporate action to
authorise any of the foregoing; and, in the case of a
reorganisation, arrangement or composition, the other Party
does not consent to the proposals;
(iii) an involuntary case or other procedure is commenced against a
Party seeking or proposing liquidation, reorganisation, an
arrangement or composition, a freeze or moratorium, or other
similar relief with respect to it or its debts under any
bankruptcy, insolvency, regulatory, supervisory or similar law
(including any corporate or other law with potential
application to an insolvent Party) or seeking the appointment
of a Custodian of it or any part of its assets and such
involuntary case or other procedure either (a) has not been
dismissed within five days of its institution or presentation
or (b) has been dismissed within such period but solely on the
grounds of an insufficiency of assets to cover the costs of
such case or other procedure;
(iv) a Party dies, become of unsound mind, is unable to pay its
debts as they fall due or is bankrupt or insolvent, as defined
under any bankruptcy or insolvency law applicable to such
Party; or indebtedness of a Party is not paid on the due date
therefor or becomes, or becomes capable at any time of being
declared, due and payable under agreements or instruments
evidencing such indebtedness before it would otherwise have
been due and payable, or proceedings are commenced for any
execution, any attachment or garnishment, or any distress
against, or an encumbrancer takes possession of, the whole or
any part of the property, undertaking or assets (tangible and
intangible) of a Party;
(v) a Party or any Credit Support Provider in relation to a Party
(or any Custodian acting on behalf of a Party or any Credit
Support Provider in relation to a Party) disaffirms, disclaims
or repudiates any obligation under this agreement (including
any Transaction governed by these terms) or any Credit Support
Document;
(vi) any representation or warranty made or deemed made by a Party
pursuant to this agreement or pursuant to any Credit Support
Document proves to have been false or misleading in any
material respect as at the time it was made or given;
(vii) (a) any Credit Support Provider in relation to a Party or the
relevant Party itself fails to comply with or perform any
agreement or obligation to be complied with or performed by it
in accordance with the applicable Credit Support Document; (b)
any Credit Support Document relating to a Party expires or
ceases to be in full force and effect prior to the
satisfaction of all obligations of such Party under this
agreement (including any Transaction governed by these terms),
unless the other Party has agreed in writing that this shall
not be an Event of Default; (c) any representation or warranty
made or deemed made by any Credit Support Provider in relation
to a Party pursuant to any Credit Support Document proves to
have been false or misleading in any material respect as at
the time it was made or given or deemed made or given; or (d)
any event referred to in (ii) to (iv) or (viii) of this Clause
4.1 occurs in respect of any Credit Support Provider in
relation to a Party;
(viii)a Party is dissolved, or in respect of a Party whose existence
is dependent upon a formal registration, such registration is
removed or ends, or any procedure is commenced seeking or
proposing a Party's dissolution or the removal or ending of
such a registration of a Party; or
(ix) any event of default (however described) occurs under any
terms of business in place between the Parties or any other
event specified for these purposes in Annex 1 or otherwise
occurs, then the other Party (the "Non-Defaulting Party") may
exercise its rights under Clause 4.2, except that, if so
agreed in writing by the Parties (whether by specifying as
such in Annex 1 hereto or otherwise), in the case of the
occurrence of any Event of Default specified in paragraph (ii)
or (iii) above the provisions of Clause 4.3 shall apply.
4.2 Subject to Clause 4.3, at any time following the occurrence of an
Event of Default, the Non-Defaulting Party may, by notice to the
Defaulting Party, specify a Liquidation Date for the termination and
liquidation of Transactions in accordance with the provisions of
Clause 4.4.
4.3 If the Parties have so agreed, the date of the occurrence of any
Event of Default specified in paragraph (ii) or (iii) of Clause 4.1
shall automatically constitute a Liquidation Date, without the need
for any notice by either Party and to the intent that the provisions
of Clause 4.4 shall then apply.
4.4 Upon the occurrence of a Liquidation Date:
(i) neither Party shall be obliged to make any further payments or
deliveries under any Transactions governed by these terms
which would, but for this Clause, have fallen due for
performance on or after the Liquidation Date and such
obligations shall be satisfied by settlement (whether by
payment, set-off or otherwise) of the Liquidation Amount;
(ii) the Non-Defaulting Party shall (on, or as soon as reasonably
practicable after, the Liquidation Date) determine
(discounting if appropriate), in respect of each Transaction
governed by these terms, its total cost, loss or, as the case
may be, gain, in each case expressed in the Non-Defaulting
Party's Base Currency (and, if appropriate, including any loss
of bargain, cost of funding or, without duplication, cost,
loss or, as the case may be, gain as a result of the
termination, liquidation, obtaining, performing or
re-establishing of any hedge or related trading position), as
a result of the termination, pursuant to this agreement, of
each payment or delivery which would otherwise have been
required to be made under such Transaction (assuming
satisfaction of each applicable condition precedent and having
due regard to, if appropriate, such market quotations
published on, or official settlement prices set by, a relevant
exchange or clearing organisation as may be available on, or
immediately preceding, the date of calculation); and
(iii) the Non-Defaulting Party shall treat each cost or loss to it,
determined as above, as a positive amount and each gain by it,
so determined, as a negative amount and aggregate all of such
amounts to produce a single, net positive or negative amount,
denominated in the Non-Defaulting Party's Base Currency (the
"Liquidation Amount").
4.5 If the Liquidation Amount determined pursuant to Clause 4.4 is a
positive amount, the Defaulting Party shall pay it to the
Non-Defaulting Party and if it is a negative amount, the
Non-Defaulting Party shall pay it to the Defaulting Party. The
Non-Defaulting Party shall notify the Defaulting Party of the
Liquidation Amount, and by which Party it is payable, immediately
after the calculation of such amount.
4.6 Unless the Parties specify otherwise in Annex 1 or otherwise, where
termination and liquidation occurs in accordance with Clause 4.4,
the Non-Defaulting Party shall also be entitled, at its discretion,
to apply the provisions of Clause 4.4 to any other Transactions
entered into between the Parties which are then outstanding, as if
each such Transaction were a Transaction governed by these terms.
4.7 The amount payable by one Party to the other Party pursuant to the
provisions of Clause 4.5, or any applicable laws or regulations,
shall be paid in the Non-Defaulting Party's Base Currency by the
close of business on the business day following the completion of
the termination and liquidation under Clause 4.4, or any laws or
regulations having a similar effect, (converted as required by
applicable law into any other currency, any costs of such conversion
to be borne by, and (if applicable) deducted from any payment to,
the Defaulting Party). Any such amount which is not paid on the due
date therefor shall bear interest, at the average rate at which
overnight deposits in the currency of such payment are offered by
major banks in the London interbank market as of 11.00 a.m. (London
time) (or, if no such rate is available, at such reasonable rate as
the Non-Defaulting Party may select) plus 1% per annum, for each day
for which such amount remains unpaid.
4.8 For the purpose of any calculation hereunder, the Non-Defaulting
Party may convert amounts denominated in any other currency into the
Non-Defaulting Party's Base Currency at such rate prevailing at the
time of the calculation as it shall reasonably select.
4.9 The Non-Defaulting Party's rights under this Clause 4 shall be in
addition to, and not in limitation or exclusion of, any other rights
which the Non-Defaulting Party may have (whether by agreement,
operation of law or otherwise).
5. Set-Off
Without prejudice to any other right or remedy which it may have,
either Party may, on or after the occurrence of a Liquidation Date
and the determination of the Liquidation Amount, set off any amount
owing by it (whether actual or contingent, present or future and
including, if applicable and without limitation, the Liquidation
Amount and any amount due and payable on or before the Liquidation
Date but remaining unpaid) to the other Party against any amount
owing by such other Party (whether actual or contingent, present or
future and including, if applicable and without limitation, the
Liquidation Amount and any amount due and payable before the
Liquidation Date but remaining unpaid) to the first Party.
6. Currency Indemnity
If a Party (the first Party) receives or recovers any amount in
respect of an obligation of the other Party (the second Party) in a
currency other than that in which such amount was payable, whether
pursuant to a judgement of any court or otherwise, the second Party
shall indemnify and hold harmless the first Party from and against
any cost (including costs of conversion) and loss suffered by the
first Party as a result of receiving such amount in a currency other
than the currency in which it was due.
7. Assignments and Transfers
Neither Party may assign, charge or otherwise transfer or purport to
assign, charge or otherwise transfer its rights or obligations under
this agreement (including the Transactions governed by these terms)
or any interest therein without the prior written consent of the
other Party, and any purported assignment, charge or transfer in
violation of this Clause shall be void.
8. Notices
Unless otherwise agreed, all notices, instructions and other
communications to be given to a Party under this agreement shall be
given to the address, telex (if confirmed by the appropriate
answerback) or facsimile (confirmed if requested) number and to the
individual or department specified in Annex 1, the Customer
Signature page or by notice in writing by such Party. Unless
otherwise specified, any notice, instruction or other communication
given in accordance with this Clause shall be effective upon
receipt.
9. Termination, Waiver and Partial Invalidity
9.1 Either of the Parties hereto may terminate this agreement at any
time by seven days' prior notice to the other Party and termination
shall be effective at the end of such seventh day; provided,
however, that any such termination shall not affect any then
outstanding Transactions governed by these terms, and the provisions
of this agreement shall continue to apply until all the obligations
of each Party to the other under this agreement (including the
Transactions governed by these terms) have been fully performed.
9.2 A Party may waive any right, power or privilege under this agreement
only by (and to the extent of) an express statement in writing.
9.3 If, at any time, any provision of these terms is or becomes illegal,
invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of
the remaining provisions of these terms nor the legality, validity
or enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.
10. Time of Essence
Time shall be of the essence in this agreement.
11. Payments
Every payment to be made by a Party under these terms shall be made
in same day (or immediately available) and freely transferable funds
to the bank account designated by the other Party for such purpose.
12. Governing Law and Jurisdiction
Unless the Parties specify otherwise in Annex 1 or otherwise:
12.1 These terms shall be governed by, and construed in accordance with,
the laws of England and Wales.
12.2 With respect to any Proceedings, each Party irrevocably (i) agrees
that the courts of England shall have exclusive jurisdiction to
determine any Proceedings and irrevocably submits to the
jurisdiction of the English courts and (ii) waives any objection
which it may have at any time to the bringing of any Proceedings in
any such court and agrees not to claim that such Proceedings have
been brought in an inconvenient forum or that such court does not
have jurisdiction over such Party.
12.3 Each Party irrevocably waives to the fullest extent permitted by
applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the
grounds of sovereignty or other similar ground from (i) suit, (ii)
jurisdiction of any courts, (iii) relief by way of injunction, order
for specific performance or for recovery of property, (iv)
attachment of its assets (whether before or after judgement) and (v)
execution or enforcement of any judgement to which it or its
revenues or assets might otherwise be entitled in any Proceedings in
the courts of any jurisdiction and irrevocably agrees to the extent
permitted by applicable law that it will not claim any such immunity
in any Proceedings. Each Party consents generally in respect of any
Proceedings to the giving of any relief or the issue of any process
in connection with such Proceedings, including, without limitation,
the making, enforcement or execution against any property whatsoever
of any order or judgement which may be made or given in such
Proceedings.
13. Interpretation
13.1 In these terms:
"Base Currency" means, as to a Party, the currency specified as such
in Annex 1 or agreed as such in relation to it in writing between
the Parties or, failing any such specification or agreement, the
lawful currency of the United Kingdom;
"Credit Support Document" means, as to a Party (the first Party), a
guarantee, hypothecation agreement, margin or security agreement or
document, or any other document containing an obligation of a third
party ("Credit Support Provider"), or of the first Party, in favour
of the other Party supporting any obligations of the first Party
under this agreement;
"Credit Support Provider" has the meaning given to it in the
definition of Credit Support Document;
"Custodian" has the meaning given to it in Clause 4.1;
"Defaulting Party" means the Party in respect of which, or related
to a Credit Support Provider in respect of which, an Event of
Default has occurred;
"Designated Office(s)" means, as to a Party, the office identified
with its name on page 1 of these terms and any other office(s)
specified in Annex 1 or otherwise agreed by the Parties to be its
Designated Office(s) for the purpose of this agreement;
"Liquidation Date" means a day on which, pursuant to the provisions
of Clause 4, the Non-Defaulting Party commences the termination and
liquidation of Transactions or such a termination and liquidation
commences automatically;
"Potential Event of Default" means any event which may become (with
the passage of time, the giving of notice, the making of any
determination hereunder or any combination thereof) an Event of
Default;
"Proceedings" means any suit, action, or other proceedings relating
to this agreement;
"Specified Exchanges" means the exchanges specified in Annex 2 and
any other exchanges agreed by the Parties to be Specified Exchanges
for the purpose of Clause 1.1; and "Specified Exchange" means any of
them;
"Transaction" means:
(i) a contract made on an exchange or pursuant to the rules of an
exchange;
(ii) a contract subject to the rules of an exchange; or
(iii) a contract which would (but for its term to maturity only) be
a contract made on, or subject to the rules of, an exchange
and which, at the appropriate time, is to be submitted for
clearing as a contract made on, or subject to the rules of, an
exchange,
in any of cases (i), (ii), (iii) being a future, option, contract
for differences, spot or forward contract of any kind in relation to
any commodity, metal, financial instrument (including any security),
currency, interest rate, index or any combination thereof;
(iv) a transaction which is back-to-back with any transaction
within paragraph (i), (ii) or (iii) of this definition; or
(v) any other transaction which the Parties agree shall be a
Transaction.
13.2 In these terms, "Event of Default" means any of the events listed in
Clause 4.1; "Liquidation Amount" has the meaning ascribed to it in
Clause 4.4; and "Non-Defaulting Party" has the meaning ascribed to
it in Clause 4.1.
13.3 Any reference in these terms to:
a "business day" shall be construed as a reference to a day (other
than a Saturday or Sunday) on which:
(i) in relation to a date for the payment of any sum denomination
in (a) any currency (other than ecu or euro), banks generally
are open for business in the principal financial centre of the
country of such currency; (b) ecu, the Ecu Clearing and
Settlement System operated by the Ecu Banking Association,
(or, if such clearing system ceases to be operative, any other
clearing or settlement system determined by the Parties) is
open for business; or (c) euros, settlement of payments
denominated in euros is generally possible in London or any
other financial centre in Europe selected by the Parties; and
(ii) in relation to a date for the delivery of any property,
property of such type is capable of being delivered in
satisfaction of obligations incurred in the market in which
the obligation to deliver such first property was incurred;
a "Clause" or "Annex" shall be construed as a reference to,
respectively, a clause or Annex of these terms, unless the context
requires otherwise;
a "currency" shall be construed so as to include any unit of
account;
"indebtedness" shall be construed so as to include any obligation
(whether present or future, actual or contingent, as principal or
surety or otherwise) for the payment or repayment of money;
"Parties" shall be construed as a reference to the parties to this
agreement and shall include their successors and permitted assigns;
and "Party" shall be construed as a reference to which of the
Parties is appropriate in the context in which such expression may
be used;
a Party to which a Credit Support Provider relates shall be
construed as a reference to the Party whose obligations under this
agreement are supported by that Credit Support Provider; and
these "terms" or this "agreement" shall be construed as including
the Annexes and as a reference to these terms or this agreement as
the same may be amended, varied, novated or supplemented from time
to time.
ANNEX 1 TO MASTER NETTING AGREEMENT
1. Scope of Agreement
(a) Each of the following shall be a Transaction for the purpose
of paragraph (v) of the definition of "Transaction" in Clause
13.1: Not applicable.
(b) For the purposes of Clause 1.1, these terms shall not apply to
[all] [the following] Transactions outstanding between the
Parties on the date of execution of these terms: Not
applicable.
(c) In the event of a discrepancy between these terms and the
Customer Documents for Exchange-traded Derivatives, these
terms will govern in relation to close out netting of
Transactions but without prejudice to any other rights that
Xxxxxx Xxxxxxx may have under the Customer Documents for
Exchange-traded Derivatives.
2. Designated Offices
Each of the following shall be a Designated Office: The offices
specified in Section 7 "Notices" below or in the Customer Signature
page.
3. Representations, Warrants and Covenants
Clause 3.1 is hereby amended by deleting the words "in the case of
the representation and warranty in (v) of the Clause 3.1 relating to
the entering into of Transactions,".
4. Additional Event(s) of Default
Each of the following shall be an Event of Default for the purpose
of paragraph (ix) of Clause 4.1: Not Applicable
5. Automatic Termination
Upon the occurrence of any Event of Default specified in paragraph
(ii) or (iii) of Clause 4.1, the provisions of Clause 4.3 shall
apply.
6. Termination of Other Transactions
The provisions of Clause 4.6 shall not apply.
7. Notices
Xxxxxx Xxxxxxx
Name : Xxxxxx Xxxxxxx & Co. International Limited
Address : 00 Xxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxx X00 0XX
Telephone Numbers : 00-000-000-0000
Telex number : 8812564
Facsimile number : 00-000-000-0000
Name of individual or department to whom notices are to be sent:
Compliance
8. No Reliance
In connection with these terms and the Customer Documents for
Exchange-Traded Derivatives, each Transaction and any other
documentation relating to these terms, both Parties represent and
acknowledge that (i) it is entering into each Transaction with a
full understanding of all material terms and risks thereof, and it
is capable of assuming those risks; (ii) it has made its investment
and trading decisions (including decisions regarding the suitability
of any transaction) based upon its own judgement and upon any advice
from such advisors as it has deemed necessary, and not in reliance
upon any view expressed by the other Party; (iii) the other Party is
not acting as a fiduciary or an advisor for it, and all decisions
have been the results of arm's length negotiations between the
Parties; and (iv) the other Party has not given to it any assurance
or guarantee as to the expected performance or result of any
Transaction.
9. Governing Law and Jurisdiction
The following provisions shall not apply in place of the provisions
of Clause 12:
12.1 These terms shall be governed by, and construed in accordance
with, the laws of the State of New York without giving effect
to conflict of law provisions.
12.2 With respect to any Proceedings, each Party irrevocably (i)
submits to the non-exclusive jurisdiction of the courts of the
State of New York and the United States District Court located
in the Borough of Manhattan in New York City and (ii) waives
any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court and agrees
not to claim that such Proceedings have been brought in any
inconvenient forum or that such court does not have
jurisdiction over such Party.
12.3 Each party irrevocably waives to the fullest extent permitted
by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all
immunity of the grounds of sovereignty or other similar
grounds from (i) suit, (ii) jurisdiction of any courts, (iii)
relief by way of injunction, order for specific performance or
for recovery of property, (iv) attachment of its assets
(whether before or after judgement) and (v) execution or
enforcement of any judgement to which it or its revenues or
assets might otherwise be entitled in any Proceedings in the
courts of any jurisdiction and irrevocably agrees to the
extent permitted by applicable law that it will not claim any
such immunity in any Proceedings. Each Party consents
generally in respect of any Proceedings to the giving of any
relief or the issue of any process in connection with such
Proceedings, including, without limitation, the making
enforcement or execution against any property whatsoever of
any order or judgement which may be made or given in such
Proceedings.
12.4 Each Party hereby irrevocably waives any and all right to
trial by jury in any Proceedings.
10. Base Currency: US Dollars
11. Selected Financial Centres for Euro Settlements: Not Applicable
12. FDICIA Representations
The following provisions shall not apply to this agreement. Each
Party represents and warrants to the other Party that it is a
financial institution under the provisions of Title IV of the
Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), and the Parties agree that this agreement shall be a
netting contract, as defined in FDICIA, and each receipt or payment
or delivery obligation hereunder shall be a covered contractual
payment entitlement or covered contractual payment obligations,
respectively, as defined in and subject to FDICIA.
ANNEX 2 TO MASTER NETTING AGREEMENT
Specific Exchanges
The following exchanges are Specified Exchanges for the purposes of Clause 1.1;
Any Recognised Exchange, Recognised Investment Exchange, Designated Investment
Exchange or Approved Exchange as defined by the Financial Services Authority or
the Securities and Futures Authority and as amended from time to time.
IN WITNESS WHEREOF, this Agreement has been entered into on the date written in
the Customer Signature pages.
Signed on behalf of
Xxxxxx Xxxxxxx & Co. International Limited
-and-
Xxxxxx Xxxxxxx Securities Limited
By:.../s/ X X Xxxxxxxxx..........
Name: X X Xxxxxxxxx
Title Company Secretary
PART THREE
SCHEDULE 1
SELECTED ASSOCIATED FIRMS OF
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
AND XXXXXX XXXXXXX SECURITIES LIMITED
Xxxxxx Xxxxxxx Group Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx Xxxxxxx Market Products Inc.
Xxxxxx Xxxxxxx Capital Services Inc.
Xxxxxx Xxxxxxx Capital Group Inc.
Xxxxxx Xxxxxxx & Co. International Limited Incorporated
Xxxxxx Xxxxxxx Japan Limited
Xxxxxx Xxxxxxx Bank AG*
Xxxxxx Xxxxxxx XX
Xxxxxx Xxxxxxx Asia Limited
Xxxxxx Xxxxxxx & Co. Limited
Xxxxxx Xxxxxxx & Co. International Holdings Limited
Morstan Nominees Limited
Xxxxxx Xxxxxxx Services (UK) Limited
Xxxxxx Xxxxxxx Canada Limited
Xxxxxx Xxxxxxx Asset Management Singapore Limited
Xxxxxx Xxxxxxx Asset Management Limited
Xxxxxx Xxxxxxx Asset Management Inc.
MS Securities Services Inc.
Xxxxxx Xxxxxxx SpA
Xxxxxx Xxxxxxx Capital Group Singapore Pte Limited
Xxxxxx Xxxxxxx Xxxx Kong Securities Limited
Xxxxxx Xxxxxxx Xxxx Kong Nominees Limited
Xxxxxx Xxxxxxx Futures Hong Kong Limited
Xxxxxx Xxxxxxx Futures Singapore Limited
Xxxxxx Xxxxxxx Australia Limited
Xxxxxx Xxxxxxx Global Securities Services Incorporated
Bank Xxxxxx Xxxxxxx XX*
* Approved Banks
PART THREE
SCHEDULE 2
ADDITIONAL PROVISIONS FOR LIFFE
The provisions of this Schedule 2 apply where the Contract is a futures or
options contract subject to the Rules of LIFFE.
1. General Provisions
1.1 Xxxxxx Xxxxxxx & Co. International Limited is an individual clearing
member of LIFFE. Xxxxxx Xxxxxxx Securities Limited is a non-clearing
member of LIFFE.
1.2 You accept that in relation to LIFFE:
(a) any allocation pursuant to Clause 12 of this Agreement shall
be made as follows. We shall allocate as between clients,
first, on the basis of a first in first out (FIFO) basis and,
secondly, pro rata in respect of Open Contracts for which
there is a corresponding Client Contract;
(b) any dispute arising from or relating to this Agreement,
insofar as it relates to Contracts or Clients Contracts
subject to the rules of LIFFE, and any dispute arising from or
relating to any such Contract or Client Contract as aforesaid
and made hereunder shall, unless resolved between us, be
referred to the arbitration rules of LIFFE, or to such other
organisation as LIFFE may direct before either of us resorts
to the jurisdiction of the courts (other than to obtain an
injunction or an order for security for a claim). Clause 43 of
this Agreement shall be subject to the agreement contained in
this sub-paragraph; and
(c) subject to the arbitration clause in sub-paragraph (b) above,
disputes arising from this Agreement or from Contracts or
Client Contracts made under or pursuant to this Agreement
shall (for our benefit) be subject to the exclusive
jurisdiction of the English courts to which both parties
hereby irrevocably submit.
(d) in both our interests, LIFFE may from time to time sanction
the making of contracts by us outside the pit or outside its
electronic trading system in order to satisfy your order,
where there has been an error in the execution of your order.
Where a better price (an improvement) can be obtained, we will
seek to secure and offer that improvement to you. However, you
should note that where, in response to your order, we have
bought or sold in accordance with the instruction in your
order to buy or, as the case may be, to sell but have traded
the wrong delivery/expiry month or wrong exercise price of the
relevant contract, then we may in accordance with LIFFE's
Rules offset any loss arising from that trade against any
improvement achieved for you in the course of correctly
satisfying your order, thus offering you only the net
improvements, if any.
2. Exclusion of Liability
2.1 As a member of LIFFE and pursuant to the Rules of LIFFE, we are
required to include a provision dealing with exclusion of liability
in our agreement with you. The following provisions and paragraph
3.1 shall apply without prejudice to the generality of Clauses 22,
23, 27 and 28 of this Agreement with you.
2.2 LIFFE Administration and Management (the "Exchange") is obliged
under the FSA1986 to ensure that business conducted by means of its
market facilities is conducted in an orderly manner and so as to
afford proper protection to investors. We and the Exchange wish to
draw to your attention that, inter alia, business on the market may
from time to time be suspended or restricted, or the market may from
time to time be closed for a temporary period or for such longer
period as may be determined in accordance with LIFFE's rules on the
occurrence of one or more events which require such action to be
taken in the interests of, inter alia, maintaining a fair and
orderly market. Any such action may result in our being unable, and
through us you and your clients (if any) may from time to time be
prevented from or hindered in entering into contracts in accordance
with LIFFE's rules as a result of a failure of some or all market
facilities. We and the Exchange wish to draw the following exclusion
of liability to your attention and to the attention of your clients
(if any). Unless otherwise expressly provided in LIFFE's rules or in
any other agreement to which LIFFE is party, we and LIFFE shall not
be liable to you or any client of yours for loss (including any
indirect or consequential loss including, without limitation, loss
of profit), damage, injury or delay, whether direct or indirect,
arising from any of the circumstances or occurrences referred to
above, or from any act or omission of the Exchange, its officers,
employees, agents or representatives, under LIFFE's rules or
pursuant to the Exchange's obligations under statute, or from any
breach of contract by or any negligence howsoever arising of the
Exchange, its officers, employees, agents or representatives.
2.3 Paragraphs 2.1 and 2.2 of this Schedule 2 shall be construed as
applying to, and having the same effect in relation to, business
which we transact, or which we would transact, but for one of the
events referred to in this Paragraph occurring, on other futures and
options markets.
3. Linked Contracts
DEFINITIONS
"LCH" means The London Clearing House Limited;
"LIFFE" means LIFFE Administration and Management;
"LIFFE Contract" means an Exchange Contract to which a Linked
Participating Exchange Contract is linked;
"Linked LIFFE Contract" means an Exchange Contract made available
for trading on the market pursuant to a
Link, which is specified as such in a
General Notice published from time to time
by the Exchange and is linked to a
Participating Exchange Contract;
"Linked Participant Exchange
Contract" means a Participating Exchange Contract
specified as such in a General Notice
published from time to time by the Exchange
and is linked to an Exchange Contract;
"Participating Exchange" means an exchange which has concluded one or
more agreements in relation to a Link with
the Exchange and/or LCH pursuant to which:
(i) contracts in the terms of one or more
Linked LIFFE Contracts are to be transferred
to, for clearing by, such exchange or its
clearing house; or (ii) contracts in the
terms of a Linked Participating Exchange
Contract are to be transferred to, for
clearing by, LCH. The term "Participating
Exchange" shall include any clearing house,
which from time to time provides clearing
services to such exchange;
"Participating Exchange Contract" in respect of a Participating Exchange,
means a class of contract permitted to be
made by Participating Exchange Members under
Participating Exchange rules.
GENERAL PROVISIONS
3.1 Exclusion of Liability
We and LIFFE Administration and Management ("LIFFE") wish to draw to
your attention that LIFFE shall have no liability whatsoever to any
member or client in contract, tort (including, without limitation,
negligence), trust, as fiduciary or under any other cause of action
(except in respect of gross negligence, wilful default or fraud on
its part), in respect of any damage, loss, cost or expense of
whatsoever nature suffered or incurred by any member or client, as
the case may be, as a result of: any suspension, restriction or
closure of the market administered by either a Participating
Exchange or LIFFE, whether for a temporary period or otherwise, or
as a result of a decision taken on the occurrence of a market
emergency; any failure by a Participating Exchange, LIFFE or LCH to
supply each other with data or information in accordance with
arrangements from time to time established between all or any of
them; the failure of communications facilities or technology
supplied, operated or used by either a Participating Exchange, LIFFE
or LCH for the purposes of the Link; any event which is outside its
or their control; any act or omission of either a Participating
Exchange (where a Participating Exchange is acting otherwise than in
connection with its clearing function) or LIFFE in connection with
any Participating Exchange Contract, Linked LIFFE Contract or Linked
Participating Exchange Contract or any act or omission of a
Participating Exchange, LIFFE, or LCH (as the case may be) in
connection with the operation of the Link or the arrangements for
the transfer of contracts.
3.2 Governing Law
This agreement and all contracts in the terms of LIFFE Contracts
made under this agreement shall be subject to and construed in
accordance with English Law.
3.3 Margin and Client Money/Assets
Following the transfer of a contract in the terms of a Linked LIFFE
Contract and the creation of a contract in the terms of a
Participating Exchange Contract or prior to the transfer of a
contract in the terms of a Linked Participating Exchange Contract
and the creation of a contract in the terms of a LIFFE Contract (as
the case may be), margin requirements will be determined in
accordance with the rules of the Participating Exchange rather than
LIFFE Rules. Any money or assets held in any country other than the
UK may be subject to the applicable law of that country rather than
UK client money and other assets rules, and you should satisfy
yourself that this is acceptable to you before instructing us to
transact any such business.
PROVISIONS RELATING TO OUTWARD TRANSFERS OF LINKED LIFFE CONTRACTS
3.4 Rules of LIFFE
All contracts in the terms of a Linked LIFFE Contract made on LIFFE
shall be subject to the Rules of LIFFE as from time to time in
force.
3.5 Transfer
We shall endeavour to secure the transfer through the relevant Link
of each contract in the terms of a Linked LIFFE Contract made
between us which is intended for transfer. Upon confirmation by the
relevant Participating Exchange of receipt of trade/position details
from LCH, rights and obligations under such contract, save for
outstanding obligations with respect to fees and margin and those
rights and obligations referred to in the Rules of LIFFE and the
Regulations of LCH, shall be discharged and there shall arise
simultaneously a contract in the terms of a Participating Exchange
Contract between us. The contract in terms of a Participating
Exchange Contract shall be subject to the rules of the relevant
Participating Exchange and shall not be subject to the provisions of
this agreement.
3.6 Delayed Transfer
In the event that, on any LIFFE trading day, LCH is unable for
whatever reason to transmit details of all contracts in the terms of
a Linked LIFFE Contract, or the relevant Participating Exchange is
unable to receive or acknowledge receipt of all such details, any
such contract made between us on that day shall remain as an
undischarged contract in the terms of a Linked LIFFE Contract (but
without prejudice to any default provisions agreed between us which
may be operated to discharge such contract), subject to the Rules of
LIFFE and the General Regulations and Default Rules of LCH as from
time to time in force, until such time as transfer can be achieved.
3.7 Impossibility of Transfer
If it is not possible for whatever reason for details of contracts
in the terms of the Linked LIFFE Contract to be transmitted by LCH,
or for the relevant Participating Exchange to receive or acknowledge
receipt of all such details, so that transfer of such contracts
cannot occur on any particular day, and any circumstances preventing
such transfer continues so that the Link is suspended or terminated,
any such contract made between us during any such period shall
remain as an undischarged contract in the terms of a Linked LIFFE
Contract, subject to the Rules of LIFFE and the Regulations of LCH
as from time to time in force, and shall be performed in accordance
with its terms or may be closed out or otherwise discharged, in
accordance with the Rules and any agreement reached between us.
PROVISIONS RELATING TO INWARD TRANSFERS OF LINKED PARTICIPATING EXCHANGE
CONTRACTS
3.8 Transfer
In respect of each contract in the terms of a Linked Participating
Exchange Contract made between us which is intended for transfer
through the relevant Link, rights and obligations under such
contract, save for outstanding obligations with respect to fees or
margin and any other rights or obligations referred to in the Rules
of the Participating Exchange, shall be discharged upon confirmation
by LCH of receipt of trade/position details from the Participating
Exchange and there shall arise simultaneously a contract in the
terms of a LIFFE Contract between us. The LIFFE Contract shall be
subject to the Rules of LIFFE and the General Regulations and
Default Rules of LCH.
3.9 Delayed Transfer
In the event that, on any Participating Exchange trading day, the
relevant Participating Exchange is unable for whatever reason to
transmit details of all contracts in the terms of a Linked
Participating Exchange Contract, or LCH is unable to receive or
acknowledge receipt of all such details, any such contract made
between us on that Participating Exchange on that day shall remain
an undischarged contract in the terms of a Linked Participating
Exchange Contract (but without prejudice to any default provisions
agreed between us which might be operated to discharge such
contract), subject to the rules of the Participating Exchange as
from time to time in force, until such time as transfer can be
achieved.
3.10 Impossibility of Transfer
If it is not possible for whatever reason for details of contracts
in the terms of a Linked Participating Exchange Contract to be
transmitted by the relevant Participating Exchange, or for LCH to
receive or acknowledge receipt of all such details, so that transfer
of such contracts cannot occur on any particular day, and any
circumstance preventing such transfer continues so that the Link is
suspended or terminated, any such contract made between us on that
Participating Exchange during that period shall remain as an
undischarged contract in the terms of a Linked Participating
Exchange Contract, subject to the rules of the Participating
Exchange as from time to time in force and shall be performed in
accordance with its terms or may be closed out or otherwise
discharged in accordance with the Rules and any agreement reached
between us.
PART THREE
SCHEDULE 3
ELECTRONIC TRADING AND ORDER ROUTING SYSTEMS
FIA DISCLOSURE STATEMENT
Electronic trading and order routing systems differ from traditional open
outcry pit trading and manual order routing methods. Transactions using an
electronic system are subject to the rules and regulations of the
exchange(s) offering the system and/or listing the contract. Before you
engage in transactions using an electronic system, you should carefully
review the rules and regulations of the exchange(s) offering the system
and/or listing contracts you intend to trade.
DIFFERENCES AMONG ELECTRONIC TRADING SYSTEMS
Trading or routing orders through electronic systems varies widely among
the different electronic systems. You should consult the rules and
regulations of the exchange offering the electronic system and/or listing
the contract traded or order routed to understand, among other things, in
the case of trading systems, the system's order matching procedure,
opening and closing procedures and prices, error trade policies, and
trading limitations or requirements; and in the case of all systems,
qualifications for access and grounds for termination and limitations on
the types of orders that may be entered into the system. Each of these
matters may present different risk factors with respect to trading on or
using a particular system. Each system may also present risks related to
system access, varying response times, and security. In the case of
internet-based systems, there may be additional types of risks related to
system access, varying response times and security, as well as risks
related to service providers and the receipt and monitoring of electronic
mail.
RISKS ASSOCIATED WITH SYSTEM FAILURE
Trading through an electronic trading or order routing system exposes you
to risks associated with system or component failure. In the event of
system or component failure, it is possible that, for a certain time
period, you may not be able to enter new orders, execute existing orders,
or modify or cancel orders that were previously entered. System or
component failure may also result in loss of orders or order priority.
SIMULTANEOUS OPEN OUTCRY PIT AND ELECTRONIC TRADING
Some contracts offered on an electronic trading system may be traded
electronically and through open outcry during the same trading hours. You
should review the rules and regulations of the exchange offering the
system and/or listing the contract to determine how orders that do not
designate a particular process will be executed.
LIMITATION OF LIABILITY
Exchanges offering an electronic trading or order routing system and/or
listing the contract may have adopted rules to limit their liability, the
liability of FCMs, and software and communication system vendors and the
amount of damages you may collect for system failure and delays. These
limitations of liability provisions vary among the exchanges. You should
consult the rules and regulations of the relevant exchange(s) in order to
understand these liability limitations.
PART FOUR
NON-PRIVATE CUSTOMER DOCUMENTS
(Exchange-traded Derivatives)
CUSTOMER SIGNATURES
To: Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxx Xxxxxxx Securities Limited
The undersigned agrees to the terms of the Non-Private Customer Documents
(Exchange-traded Derivatives) including without limitation, the indemnities,
exclusions and restrictions of duties and liabilities in your favour therein and
any additional enclosures, all of which we have read and understood.
Date: May 1, 2000............. ...........................
Signed: Demeter Management Corporation, General Partner..............
Name(s): By: Xxxxxx X. Xxxxxx, President & Chairman..................
[Signed] /s/ Xxxxxx X. Xxxxxx
Authorised Signatory(ies)
for and on behalf of
Xxxxxx Xxxxxxx Xxxx Xxxxxx Spectrum Global Balanced L.P.
[Print Name of Client (Non-Private Customer)]
All notices or other documents pursuant to this booklet shall be served at the
following address:
Address: c/o Demeter Management Corporation
Two World Trade Center,. 62nd Floor
New York, NY 10048
For the
attention of: Xxxxxx X. Xxxxxx
Telex and
Answerback:
Fax: (000) 000-0000
Corporate Registered Office:
(if different from above)
Designated Offices for the purposes of Master Netting Agreement:
(if different from above)
CUSTOMERS DOMICILED IN LUXEMBOURG ONLY
I/We confirm that I/we specifically and expressly consent to Clause 9, 21, 22,
23, 32, 33, 34, 39, 40 and 42 of the above Agreement for the purposes of Article
1135-1 of the Civil Code and Article 1 of the Protocol annexed to the Convention
on Jurisdiction and the Enforcement of Judgements in Civil and Commercial
Matters signed in Brussels on 27th September 1968.
Signed:
THIRD PARTY TRADING AUTHORISATION
THIS DOCUMENT SHOULD BE COMPLETED ONLY BY CUSTOMERS WHO HAVE SIGNED THE CUSTOMER
SIGNATURE PAGES BUT WHO WISH TO DELEGATE AUTHORITY TO AN INVESTMENT ADVISOR,
INVESTMENT MANAGER OR OTHER THIRD PARTY.
To: Xxxxxx Xxxxxxx & Co. International Limited
Xxxxxx Xxxxxxx Securities Limited
Dear Sirs
I/We refer to the Non-Private Customer Documents (Exchange-traded Derivatives)
set out on the preceding pages of this booklet which is supplemented hereby.
Terms used herein have the same meanings as ascribed to them in the Agreement
and any Customer Documents referred to therein.
I/We hereby authorise the individual or organisation named as agent (in the
"Agent's Details" section below) and hereinafter referred to as the "Agent" as
my/our agent to purchase, sell and trade generally in, exercise, and otherwise
enter into and carry out transactions and give other instructions relating to
financial and commodity futures, options and contracts for differences (and any
related transactions including without limitation, foreign exchange transactions
to facilitate any of the foregoing), on margin or otherwise, for my/our account
and risk and in my/our name or number on your books, including trades which will
or may result in me/us having short position in any such investment. I/We
authorise you to accept and act on:
(a) any and all orders and instructions received in connection with such
transactions; and
(b) any other instructions of the Agent in any respect concerning my/our
account(s) with you (including, without limitation, delivering or
otherwise transferring as the Agent may order or direct, and whether
or not any such delivery or other transfer is to be made against
payment, or any such payment is to be made against delivery or other
transfer).
In all matters or things mentioned above or otherwise concerning or incidental
to any of my/our accounts(s) with you, the Agent is authorised to act for me/us
and on my/our behalf in the same manner and with the same effect as I/we
myself/ourselves might or could do. The Agent may from time to time appoint (in
writing, effective upon receipt thereof by you) individuals to sign documents
and give instructions pursuant to this authorisation.
I/We acknowledge that any Transaction entered into by the Agent pursuant to the
above authority will be governed by the Customer Documents and that I/we shall
have all the rights and obligations in respect thereof as are contained in the
Customer Documents and, without prejudice to the generality of the foregoing,
I/we shall indemnify you and hold you harmless from, and pay you promptly on
demand, any and all losses, costs, expenses, damages and liabilities whatsoever
(including consequential and special damage) arising directly or indirectly from
any such Transaction or debt balances due thereon.
This authorisation and indemnity is in addition to, and in no way limits or
restricts, any rights which you may have under the Customer Documents and any
other agreement or agreements entered between us.
I/We acknowledge that neither you nor any of your associates nor any of your or
their directors, officers or employees will be liable for any loss howsoever
suffered by me/us pursuant to this authorisation unless loss arises from your
negligence, bad faith, wilful default, or fraud. I/We have carefully examined
the provisions of the documents by which I/we have given trading authority or
control over my/our account(s) to the Agent and understand fully the obligations
which I/we have assumed by executing that document. I/We understand that neither
you nor any of your associates are in any way responsible for any loss to me/us
occasioned by the actions of the Agent, and you do not, by implication or
otherwise, endorse the operating methods of the Agent. We further understand
that to the extent that we now or hereafter give to the Agent authority to
exercise any of my/our account(s) I/we do so at our my/own risk.
This authorisation may be terminated by me/us at any time with effect from
actual receipt by you of written notice of termination. Termination of this
authorisation shall not affect any liability resulting from transactions
initiated prior to such termination. This authorisation and indemnity shall
inure to your benefit and that of your successors and assigns.
Yours faithfully
Signed:
AGENT'S DETAILS (please print)
Name of Agent:
Address of Agent:
Telephone:
Telex and Answerback:
CERTIFICATES OF AUTHORITY TO DEAL
FOR USE BY COMPANIES AND PARTNERSHIPS
Certificate of Company Secretary/Authorised Partner*
Extracts from the Minutes of the Meeting of the Board of
Directors/Partners/Management Committee* of ...................... (the
"Company/Partnership") held at ......................... on
..................... 19....
IT WAS RESOLVED THAT:
(1) the Company/Partnership* is by its Memorandum and Articles of
Association/Partnership Agreement/constitutional documents*
empowered to trade in financial and commodity futures, options and
contracts for differences ("investments") and to enter into and
perform the Non-Private Customer Documents between the Company and
Xxxxxx Xxxxxxx & Co. International Limited and Xxxxxx Xxxxxxx
Securities Limited concerning investment and dealing and related
services (including such transactions in such investments);
(2)+ trading or dealing in financial and commodity futures, options and
contracts for differences and/or other investments pursuant to the
Non-Private Customer Documents would be carrying on the ordinary
business of the Partnership;
(2/3*) any one/two* of the undermentioned designated persons be hereby
authorised, on behalf of the Company/Partnership*
(a) to accept and sign the Non-Private Customer Documents;
(b) to sign all documents in connection with, and give all
instructions relating to, trading in investments and otherwise
howsoever under and pursuant to the Non-Private Customer
Documents; and
(c) to delegate authority to one or more persons to sign any
documents, give any instructions and do anything else
permitted to be signed given or done by such designated
person.
DESIGNATED PERSONS
Name Position Signature
I certify that the above is a true extract from the Minutes of a duly convened
and held meeting of the Board of Directors/Partners/Management Committee* of the
Company/Partnership*
Signed:
Name:
Title: Secretary/Director/Authorised Partner*
Date:
*Delete as appropriate
+ Partnerships
Note: Companies incorporated outside the UK, British Dependent Territories
and Commonwealth may, instead of extract minutes comprising a
director's resolution, provide a certificate signed by a duly
authorised officer of the Company (and showing the officer's name
and title) and comprising both paragraphs (1) and (2) as applicable
to companies but preceded by the words "This is to certify that".
Corporate general partners of a limited partnership should
provide a certificate as a company but including appropriate
additional references to the partnership (including paragraph
2 for partnerships).
CERTIFICATE OF TRUSTEES
(FOR USE BY TRUSTEES)
Extracts from the Minutes of a Meeting of the trustees of
(the "Trust") held at .................... on..............19....
IT WAS RESOLVED THAT all the Trustees accept and authorise the signature on
behalf of each of them of the Non-Private Customer Documents between the
Trustees and Xxxxxx Xxxxxxx & Co. International Limited and Xxxxxx Xxxxxxx
Securities Limited concerning transactions in financial and commodity futures,
options and contracts for difference and that, in connection therewith:
(1) The Trustees, after taking legal advice, were satisfied that they
were empowered by the Trust Deed(s) constituting the Trust to enter
into and perform the Non-Private Customer Documents and all
liabilities and obligations attaching to the "Private Customer" (as
defined) thereunder;
(2) The exercise of all rights and privileges of the "Non-Private
Customer" (as so defined) under the Non-Private Customer Documents
would be carried out only in accordance with the said powers
contained in the Trust Deed(s) constituting the Trust and in
particular after obtaining all proper and requisite investment
advice;
(3) The Trustees were satisfied that they were empowered by the said
Trust Deed(s) to delegate the requisite powers and pursuant to that
power any one/two* of the undermentioned persons be hereby
authorised, on behalf of the Trustees:
(a) to sign the Non-Private Customer Documents and all documents
in connection with, and give all instructions relating to, the
Non-Private Customer Documents; and
(b) to delegate authority to one or more persons to sign any
documents, give any instructions and do anything else
permitted to be signed, given or done by such designated
person;
DESIGNATED PERSONS
Name Position Signature
(4) The Trustees would give to Xxxxxx Xxxxxxx & Co. International
Limited and Xxxxxx Xxxxxxx Securities Limited written notice in the
terms if sub-paragraph (3) above each time there was an alteration
in the persons authorised as referred to in such sub-paragraph.
I certify that the above is a true extract from the Minutes of a duly convened
and held meeting of all the Trustees of the Trust.
Signed: ............ ............
Name: ............ ............
Title: Chairman of the Trustees/Authorised Trustee*
............ ............
Date: ............ ............
* Delete as appropriate
XXXXXX XXXXXXX & CO.
INTERNATIONAL LIMITED
CUSTOMER DOCUMENTS
Exchange-Traded Derivatives Only
Additional Documents for U.S. Customers
OCTOBER 1995
XXXXXX XXXXXXX & CO.
INTERNATIONAL LIMITED
Exchange-Traded Derivatives Only
ADDITIONAL DOCUMENTS FOR U.S. CUSTOMERS
The documents in this booklet supplement for U.S. customers our
standard customer document booklet for dealing in financial and commodity
futures and options. The standard booklet contains our terms and conditions of
dealing and risk warnings required by regulatory authorities in the United
Kingdom.
The Commodity Futures Trading Commission (CFTC) has granted Xxxxxx
Xxxxxxx & Co. International Limited an exemption from registering as a Futures
Commission Merchant (FCM) and from certain requirements of its rules in respect
of trading foreign (i.e. non-U.S.) futures and options with customers resident
in the United States. This booklet is issued to satisfy certain conditions of
that exemption and other CFTC requirements relating to the offer or sale of
foreign futures and options in the U.S. It modifies our standard terms in
certain respects and contains additional disclosures relating to options
generally and to non-U.S. futures and options in particular.
This disclosure document meets the risk disclosure requirements in
the jurisdictions identified below ONLY for those instruments which are
specified.
United States: commodity futures, options on commodity futures and options
on commodities subject to the Commodity Exchange Act.
United Kingdom: futures, options on futures, options on commodities and
options on equities traded by members of the United Kingdom
Securities and Futures Authority pursuant to the Financial
Services Xxx, 0000.
Ireland: financial futures and options and options on financial futures
traded by members of futures exchanges on exchanges whose
rules have been approved by the Central Bank of Ireland under
Chapter VIII of the Central Bank Act, 1989.
Finally, the booklet contains a form of consent whereby you would
agree that, in the event of a dispute, you would exhaust certain mediation or
conciliation procedures made available by our principal UK regulator (the
Securities and Futures Authority ("SFA")) prior to starting NFA or SFA
arbitration proceedings. As required, we enclose details of these
mediation/conciliation procedures and SFA arbitration proceedings.
CONTENTS
Page
Risk Disclosure Statement for Futures and Options
- please read and sign acknowledgement 4
Form of Consent
- please read, insert customer name in first paragraph and sign 7
Enclosures: the Securities and Futures Authority publications
i) An outline of the SFA
ii) Complaints Bureau of the SFA
- for information only.
RISK DISCLOSURE STATEMENT FOR FUTURES AND OPTIONS
This brief statement does not disclose all of the risks and other
significant aspects of trading in futures and options. In light of the risks,
you should undertake such transactions only if you understand the nature of the
contracts (and contractual relationships) into which you are entering and the
extent of your exposure to risk. Trading in futures and options is not suitable
for many members of the public. You should carefully consider whether trading is
appropriate for you in light of your experience, objectives, financial resources
and other relevant circumstances.
Futures
2. Effect of `Leverage' or `Gearing'
Transactions in futures carry a high degree of risk. The amount of
initial margin is small relative to the value of the futures
contract so that transactions are `leveraged' or `geared'. A
relatively small market movement will have a proportionately larger
impact on the funds you have deposited or will have to deposit: this
may work against you as well as for you. You may sustain a total
loss of initial margin funds and any additional funds deposited with
the firm to maintain your position. If the market moves against your
position or margin levels are increased, you may be called upon to
pay substantial additional funds on short notice to maintain your
position. If you fail to comply with a request for additional funds
within the time prescribed, your position may be liquidated at a
loss and you will be liable for any resulting deficit.
3. Risk-reducing orders or strategies
The placing of certain orders (e.g. `stop-loss' orders, where
permitted under local law, or `stop-limit' orders) which are
intended to limit losses to certain amounts may not be effective
because market conditions may make it impossible to execute such
orders. Strategies using combinations of positions, such as `spread'
and `straddle' positions may be as risky as taking simple `long' or
`short' positions.
Options
4. Variable degree of risk
Transactions in options carry a high degree of risk. Purchasers and
sellers of options should familiarise themselves with the type of
option (i.e. put or call) which they contemplate trading and the
associated risks. You should calculate the extent to which the value
of the options must increase for your position to become profitable,
taking into account the premium and all transaction costs.
The purchaser of options may offset or exercise the options or allow
the options to expire. The exercise of an option results either in a
cash settlement or in the purchaser acquiring or delivering the
underlying interest. If the option is on a future, the purchaser
will acquire a futures position with associated liabilities for
margin (see the section on Futures above). If the purchased options
expire worthless, you will suffer a total loss of your investment
which will consist of the option premium plus 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.
Selling (`writing' or `granting') an option generally entails
considerably greater risk than purchasing options. Although the
premium received by the seller is fixed, the seller may sustain a
loss well in excess of that amount. The seller will be liable for
additional margin to maintain the position if the market moves
unfavourably. The seller will also be exposed to the risk of the
purchaser exercising the option and the seller 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 seller will
acquire a position in a future with associated liabilities for
margin (see the section on Futures above). If the option is
`covered' by the seller 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. 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
time.
Additional risks common to futures and options
5. Terms and conditions of contracts
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 obligated 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.
6. 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
contract or contract month because of the 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.
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.
7. Deposited cash and property
You should familiarise 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 specified 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.
8. Commission and other charges
Before you begin to trade, you should obtain a clear explanation of
all commission, fees and other charges for which you will be liable.
These charges will affect your net profit (if any) or increase your
loss.
9. Transactions in other jurisdictions
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. Before you trade, you
should enquire about any rules relevant to your particular
transactions. 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. You should ask the firm with which you deal for details
about the types of redress available in both your home jurisdiction
and other relevant jurisdictions before you start to trade.
10. Currency risks
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.
11. Trading facilities
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.
12. Electronic trading
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 risk 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.
13. Off-exchange transactions
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
transaction. 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 involve increased risks. Off-exchange transactions
may be less regulated or subject to a separate regulatory regime.
Before you undertake such transactions, you should familiarise
yourself with applicable rules and attendant risks.
-------------------------------------------------------------------------------
I/we hereby acknowledge that 1/we have received and understood this
risk disclosure statement furnished to me/us by Xxxxxx Xxxxxxx & Co.
International Limited.
Signature(s):........./s/ Xxxxxx X. Xxxxxx
Name(s): Demeter Management Corporation, General Partner
Title(s):By: Xxxxxx X. Xxxxxx, President & Chairman
Authorised Signatory(ies) for and on behalf of:
Xxxxxx Xxxxxxx Xxxx Xxxxxx Spectrum Global Balanced L.P.
Name of Customer (please print)
Date:.............May 1, 2000
FORM OF CONSENT
In the event that a dispute arises between you, Xxxxxx Xxxxxxx Xxxx
Xxxxxx Spectrum Global Balanced L.P., (Customer's name) and Xxxxxx Xxxxxxx & Co.
International Limited with respect to transactions subject to Part 30 of the
Commodity Futures Trading Commission's Rules, various forums may be available
for resolving the dispute, including courts of competent jurisdictions in the
United States and United Kingdom.
In the event you wish to initiate an arbitration proceeding against
this firm to resolve such dispute under the applicable rules of the National
Futures Association ("NFA") in the United States, you hereby consent that you
will first commence mediation or conciliation in accordance with such procedures
as may be available by the relevant United Kingdom regulator, information for
which is provided to you herewith. The outcome of such United Kingdom mediation
or conciliation is non-binding. You may subsequently accept this resolution, or
you may proceed either to binding arbitration under the rules of the relevant
United Kingdom regulator or to binding arbitration in the United States under
the rules of NFA. In this connection, you should know that NFA will reject any
request for arbitration involving a claim arising primarily out of delivery,
clearing, settlement or floor practices on any foreign exchange. If you accept
the mediated or conciliated resolution or elect to proceed to arbitration, or to
any other form of binding resolution under the rules of the relevant United
Kingdom regulator or foreign exchange, you will be precluded for subsequently
initiating an arbitration proceeding at NFA.
You may initiate an NFA arbitration proceeding upon receipt of
documentation from the relevant United Kingdom regulator:
(i) evidencing completion of the mediation or conciliation process and
reminding you of your rights of access to NFA's arbitration
proceeding;
OR
(ii) representing that more than nine months have elapsed since you
commenced the mediation or conciliation process and that such a
process is not yet complete and reminding you of your right of
access to NFA's arbitration proceedings.
The documentation referred to above must be presented to NFA at the
time you initiate the NFA arbitration proceeding. NFA will exercise its
discretion not to accept your demand for arbitration absent such documentation.
By signing this consent, you are now waiving any other rights to any
other legal remedies available under law.
-------------------------------------------------------------------------------
Signature(s):........./s/ Xxxxxx X. Xxxxxx
Name(s): Demeter Management Corporation, General Partner
Title(s):By: Xxxxxx X. Xxxxxx, President & Chairman
Authorised Signatory(ies) for and on behalf of:
Xxxxxx Xxxxxxx Xxxx Xxxxxx Spectrum Global Balanced L.P.
Name of Customer (please print)
Date:.............May 1, 2000
`A service for investors'
THE COMPLAINTS BUREAU OF SFA
THE SECURITIES AND FUTURES AUTHORITIY
Introduction
THE SECURITIES AND FUTURES AUTHORITY (SFA) is responsible for
regulating firms involved in the securities and futures sectors of
the financial services industry. It is recognised under the
Financial Services Xxx 0000 as a self regulating organisation and
through the Securities and Investments Board is responsible,
ultimately to Parliament, for protecting investors from incompetent
or fraudulent practice by its member firms.
A xxxxxx explanation of SFA's role and of its regulatory process is
given in a separate leaflet entitled "Putting the investor first!"
which is available on request.
Member firms of SFA aim to provide a wholly satisfactory service to
their customers and are expected to respond to their clients'
requirements with skill and consideration. Though the common aim is
to secure a profitable return, it cannot be guaranteed; the markets
are not without risk. Occasionally however, an investor may feel
dissatisfied with the service provided. If you, as a customer of an
SFA member firm, are unhappy with the way it has conducted your
affairs, you can complain to us. (See note)
This leaflet is an introduction to our complaints service. It
describes the role of our Complaints Bureau and outlines the purpose
of the Consumer Arbitration Scheme. It also explains the function of
the independent Complaints Commissioner.
Note: The Financial Services Act (Section 62) allows you to seek
compensation in the courts if you have suffered loss as a result of a
member firm's breach of our rules. This remedy is separate from SFA`s
complaints procedures and you should seek independent legal advice.
First step . . .
Complain to the firm first. All member firms must deal with
customers' complaints promptly. If you cannot resolve your complaint
with your usual contact at that firm you should write to its
compliance officer. This person is a senior employee of the firm,
responsible for ensuring that it observes SFA's rules. Most
complaints are resolved at this stage, many of them proving to be
simply a misunderstanding.
If your complaint is not properly remedied, the firm is obliged to
inform you of your right to refer the matter to us and may do this
by sending you a copy of this leaflet.
. . . then contact us
If you are not satisfied with the member firm's findings or with the
way it has dealt with your complaint, write giving details to our
Complaints Bureau. Before you do so however, please note that we
can, in most cases, only consider your complaint if:
(a) It is not already the subject of litigation or arbitration.
(b) It is about something which happened on or after 29 April 1988
(i.e. when the Financial Services Act came into force).
We will:
-- acknowledge your letter within one day of receipt.
-- require answers from the member firm within ten working days.
-- aim to resolve all complaints within three months.
What we will do
We will look into the complaint. No payment is required for this
service. We may ask you to provide further details and it is usual
for us to ask the firm for its comments and help too. Firms are
obliged to co-operate fully and promptly with us.
After considering your complaint we will make a decision as quickly
as possible:
o In some cases we may refer the matter back to the member firm.
We will do this if we are confident that the firm can settle
the dispute satisfactorily itself.
o In other cases we will endeavour to conciliate between you and
the firm to reach a fair settlement. If this is achieved, our
participation will have ended, and the dispute cannot normally
be re-opened in court, or through our arbitration proceedings.
o If we find evidence suggesting that a member firm has breached
our rules the matter will be further examined by our
enforcement inspectors. Disciplinary action against the firm
could ensue.
o It may be that we conclude that the complaint does not warrant
action by us. If we do we will explain to you why we have
taken that view.
Arbitration
If we have been unable to resolve the dispute to your satisfaction,
you have the right to refer the matter to our Consumer Arbitration
Scheme. This is restricted to private customers where the claim is
not more than (pound)50,000. You will be asked to make a payment of
(pound)50 for this service.
For claims falling outside the Consumer Arbitration Scheme, there is
also a separate SFA Full Arbitration Scheme which is available by
mutual agreement between yourself and the firm. If you arbitrate you
may not seek to resolve the same dispute in the courts.
Dissatisfied with us?
If you are unhappy with the way we have handled your complaint, you
may write to the Complaints Commissioner. His is an independent
role, the purpose of which is to oversee the work undertaken by the
Complaints Bureau. He will not consider the merits of the complaint
itself but will look at the way we have handled it and will consider
whether we have dealt with it correctly, fairly and promptly. The
Commissioner may require us to look at your complaint again. He
reports to the Securities and Investments Board each year on our
complaints handling process, and his annual report is published.
Summary
1. Make your complaint to the member firm in question. Give the
firm a reasonable opportunity to look into the matter.
2. If dissatisfied with the firm's response, notify us in writing
and we will investigate the complaint.
3. We will try to arrange a settlement between you and the firm
or we may conclude no further action is necessary.
4. If no settlement is reached, you may have recourse to
arbitration.
5. If our handling of your complaint does not satisfy you, you
can apply to the independent Complaints Commissioner for a
review of the process.
Who to contact
If you have tried unsuccessfully to get your complaint dealt with by
the member firm and you want us to deal with the matter, write to:
The Complaints Bureau,
The Securities and Futures Authority,
Xxxxxxx Xxxxxx,
Xxxxxxx Xxxx,
Xxxxxx SEl 2QB.
If you have had your complaint dealt with by us but are unhappy with
the way we have handled it, write to:
The Complaints Commissioner.
c/o SFA Tribunal Secretariat,
Cottons Centre,
Cottons Lane,
London SEl 2QB.
Further information
Further details are available concerning our complaints service and
arbitration procedures:
o Consumer Arbitration Scheme Rules.
o Full Arbitration Scheme Rules.
o Annual Report of the Complaints Commissioner.
Other publications
"Putting the investor first!" An outline of SFA.
o Professional Dealing Handbook*
o Rulebook and amendment service*
o Board Notices*
o Membership Directory*
o Briefing, SFA's membership newsletter
o Annual Report and Accounts
* Available by subscription
sfa
The Securities and Futures Authority Limited
Xxxxxxx Xxxxxx
Xxxxxxx Xxxx
Xxxxxx XX0 0XX
Tel: 000 000 0000
Fax: 000 000 0000
Registered in England and Wales No. 1998622
Registered Office as above
Published May 1994
`Putting the investor first!'
AN OUTLINE OF THE SFA
The Securities and Futures Authority
PARLIAMENT Introduction
|
| The Securities and Futures Authority (SFA) is
| responsible for regulating firms involved in
| the securities and futures sectors of the
| financial services industry. Its aim is to
| promote and maintain high standards of
| integrity and fair dealing in the carrying on
| of investment business, thereby providing
| effective protection for the investor.
TREASURY
| The purpose of this leaflet is to outline
| SFA's role and briefly to describe what it
| does and how it does it. Those who are not
| familiar with UK financial services regulation
| will find this a useful introduction to SFA.
| But before we take a closer look at SFA, it
| might be helpful to put it into a broader
| industry perspective.
SECURITIES AND
INVESTMENTS The history of the UK's financial services
BOARD industry is well documented. Banking,
(SIBB insurance, shares trading and futures dealing
| have developed into highly organised services
| and markets to make London one of the
| financial capitals of the world.
|
| As the markets in financial services
| developed, rules were introduced and
|---SFA* continually refined so that business could be
| Securities and conducted in an orderly and fair manner. Of
| derivatives course, rules are not a guarantee of
| dealers and successful investment. There is risk. World
| advisers events, government policies, natural disasters
| or just simply corporate decisions and company
| performance all influence the way prices move.
| Nevertheless, professionals in the industry
| apply knowledge, experience and skill in order
|---IMRO to make the best judgement for their clients
| Fund managers and for themselves. But there are those who
| through fraudulent of incompetent practice.
| place their clients' money in jeopardy. To
| combat this, Parliament introduced legislation
|---PIA** which heralded a new system of financial
| Life assurance services regulations.
| and unit trust
| salesmen, financial With the primary aim of improving investor
| intermediaries/ protection, the Financial Services Xxx 0000
| independent brought about a major restructuring in the way
| financial advisers investment services are regulated. Is became a
| criminal offence to carry on investment
| business if not authorised to do so. A new
| organisation, the Securities and Investments
| Board (SIB) was established to oversee the
| implementation of the Act.
SIB devolved its powers so authorise and the
*SFA was formed in April task of day-to-day enforcement to specialist
1991 from the merger of The self-regulatory organisations (SROs), though
Securities Association and it retains the overall responsibility for
the Association of Futures, ensuring that the regulatory system is meeting
Brokers and Dealers its obligations.
**PIA (Personal Investment SROs must ensure that investment businesses
Authority) was recognised and individuals that come within their scope
by SIB in July 1994 and is meet appropriate standards in order to be
taking over the regulatory permitted to undertake business.
functions of LAUTRO and
FIMBRA who will be
de-recognised in 1995.
SFA's Role
Investor protection... SFA's role is to help protect investors, both
private and professional, from financial loss
...good market practice... caused by members' insolvency, failure to meet
adequate standards of competence, or
...attractive to international deliberate acts of deception. Furthermore,
business good market practice is one of London's
attractions for international business. SFA's
aim is to deliver effective regulation which
will not stifle innovation or be so
restrictive that business would be driven to
competing international markets.
Member Firms
Member firms active on: Firms regulated by SFA are involved in dealing
or advising in securities or derivatives. This
-- London Stock Exchange encompasses shares, bonds, traded options,
corporate finance, financial futures and
-- London International commodities futures on metals, oil, cereals,
Financial Futures and coffee and others. Firms regulated by SFA are
Options Exchange active on many UK and overseas exchanges.
Their earnings make a significant contribution
-- London Metal Exchange to the British economy.
-- International Petroleum SFA has 1300 member firms. Many of them have
Exchange a long and successful business pedigree;
others are newer ventures created in
-- London Commodities Exchange response to demand for new or specialised
products and services. Most are located in
-- Options Market, London London where the organised markets are, some
are in other UK cities and towns serving the
-- Overseas Exchange needs of their regional client base.
The greater proportion are UK firms but
significant numbers are incorporated overseas,
notably in North America, Japan and Western
Europe, with branches in the UK.
Member firms will state their membership of
SFA on their stationery or advertisements. An
updated list of members is published from time
so time, and a claim to membership can always
be verified by checking with SFA.
Whatever their activities or origin, all
member firms endorse the principles of self
regulation and through the payment of
subscriptions cover the cost of its
administration. The taxpayer does not pay for
investor protection.
Through representation on the Board and in
committees, members help to develop and refine
the rules by bringing to bear their practical
knowledge and experience. Furthermore, there
is a senior person in each firm directly
responsible for ensuring that this is in
compliance with the rules.
The Process
The regulatory process undertaken by SFA has
four main parts:
Authorisation -- This is the initial vetting
of a firm to ensure that it is suitable to be
permitted to conduct investment business.
Firms that seek authorisation must provide
Authorisation of firms... information which demonstrates that they are
adequately funded, have viable business plans,
that their management and staff are suitably
experienced and competent and that there is no
history of malpractice. SFA check the
information and if applicant firms are
considered to be "fit and proper" they are
granted authorisation (i.e. licensed) and
become members of SFA. They are obliged to
comply with SFA's rules.
Authorisation includes the individual
registration of directors, managers and
investment staff in the firm. Some will have
to take an examination to show that they
understand the fundamentals of market practice
and regulation. Those who are not registered
are not permitted to deal or to give customer
advice.
...and key individuals
Monitoring is an important task for SFA. Once
a firm has been authorised, and becomes a
member, it is not the end of the regulatory
story. All members are required to provide a
wide range of financial and other information
to SFA on a regular basis and sometimes upon
special request. Teams of inspectors make
Monitoring to check compliance routine visits to firms to check on their
with the rules compliance with the rules. In some cases the
visits may be made without warning.
If the monitoring process uncovers
non-compliance with rules, steps are quickly
taken by SFA to ensure that the investors'
interests are protected. In most instances the
"infringement" is only of a minor
administrative nature offering no immediate
danger to the investor. Firms usually put
things right as soon as it is brought to their
attention.
Detailed investigation when non- Investigation -- Where a more serious breach
compliance is suspected of rules is suspected either as a result of
routine monitoring, or from reports received
from other sources, a more focussed
investigation is undertaken to gather the
relevant facts. Monitoring and investigation
may sometimes involve liaison with other UK
and overseas regulatory authorities.
Prosecution can result in Prosecution -- If the investigators feel that
discipline of member firms a member has committed a serious breach of the
rules, or if other good reason exists, the
case is considered at a more formal level. If
the judgement is against the firm the nature
of the breach will determine the penalty. It
could be a warning, a direction, a fine, a
temporary order to stop trading or expulsion
from membership i.e. de-authorisation. SFA
cannot undertake criminal prosecution through
the courts. Should such a prosecution be
necessary the results of SFA's investigations
are passed to a relevant body e.g. the
Department of Trade and Industry or the
Police.
Complaints and Arbitration
Member firms are expected to service their
customers' needs with skill and consideration.
Occasionally things go wrong and a customer
may have a complaint. Where the firm and its
customer are unable to reach agreement between
themselves the customer can refer the matter
to SFA's Complaints Bureau. The Bureau will
consider the complaint and attempt to resolve
the dispute between both parties Arbitration
procedures are also available if the firm's
Investors can complain to SFA customer is not satisfied with the findings of
about its members the Bureau.
The work of the Complaints Bureau is overseen
by a completely independent Complaints
Commissioner. His role is not to re-examine
the detail of cases but to determine if they
have been dealt with properly and fairly by
An independent Commissioner the Bureau. The Commissioner publishes an
checks SFA's complaints annual report on the work of the Bureau which
procedures is widely circulated.
Organisation
SFA has over two hundred full time staff
reporting to the Chief Executive. He is
Policy determined by senior supported directly by an executive team, each
practitioners and independents member of which has senior management
supported by a professional responsibility for a specific aspect of SFA's
executive and staff activity.
Overseeing the work of the executive is the
Chairman and Board of Directors. These are not
employees of SFA but are either senior
practitioners from member firms or persons
independent of SFA and its firms who represent
the interests of the investor. The Board
delegates responsibility for the detail of
policy, rulemaking and disciplinary procedures
to specialist committees which are also
composed of practitioners and independents.
Supported by a professional staff, this
combination provides for effective and
flexible self-regulation.
Regular contact with government
bodies, `City' institutions, Public Relations
professional bodies and the press
SFA's communication with the public,
Parliament, `City' institutions, professional
bodies and other regulators, at home and
abroad, plays an important part in the process
of developing confidence in SFA members'
businesses and in furthering the success of
the regulatory system as a whole. Accordingly
SFA maintains regular contact with the press
and other media. Press coverage of
disciplinary action taken by SFA acts as a
reassurance to the public and to the financial
community that SFA is actively seeking to help
promote good practice in London's markets.
Further information
More details are available on the various aspects of SFA's work and what it does
to put the investor first.
Other publications include:
o Rule Book and amendment service*
o Professional Dealing Handbook*
o Board Notices*
o Membership Directory*
o Briefing, SFA's Membership newsletter
o Annual Report and Accounts (with Regulatory Plan)
o Complaints Bureau
o Annual Report of the Complaints Commissioner
o Annual Report of the Chairman of the Arbitration Panel
o Consumer Arbitration Scheme
o Full Arbitration Scheme Rules
o Membership Application Pack**
o Available by subscription
** For applicant firms (after a preliminary discussion)
SFA
The Securities and Futures Authority Limited
Xxxxxxx Xxxxxx
Xxxxxxx Xxxx
Xxxxxx XX0 0XX
Tel: 000 000 0000
Fax: 000 000 0000
Registered in England and Wales No 1998622
Registered Office as above
Fifth edition July 1994
