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EXHIBIT 10.5
NAME: HULL TRADING ASIA LIMITED
ACCOUNT NO:
A. CUSTOMER AGREEMENT
To: MEESPIERSON FUTURES CLEARING SERVICES (ASIA) LIMITED Date: March 11 1998
1. Introduction/General
(a) The following are the terms and conditions to which I/We will be
subject upon opening, and in respect of, any account held by me/us
with you.
(b) The following definitions are used herein.
- "the Agreement" means this document and the terms and
conditions set out herein.
- "the Clearing House" means HKFE Clearing Corporation Limited;
- "Commodities" shall include, but not be limited to, gold,
silver and other physical commodities, monies, foreign
currencies, securities (as defined from time to time in the
Securities Ordinance), stocks, currency options, foreign
exchange contracts, index options, index futures contracts,
commodity forward or futures contracts, securities futures
contracts, stock futures, commodity options, securities
futures options, stock options, currency forward [???]
relating to, commodities, foreign currencies or securities;
- "the CTO" means the Commodities Trading Ordinance, Chapter
250 of the Laws of Hong Kong as amended from time to time;
- "the Customer" means me/us. In addition, "the Customer"
wherever used shall where the Customer(s) is/are
individual(s) include his/their respective executors and
administrators and where the Customer is a sole
proprietorship include his executors and administrators and
his or their successors in the business and in the case of a
partnership firm include the partners who are the partners of
the firm at the time when the Customer's account or accounts
are being maintained and their respective executors and
administrators and any other person or persons who shall at
any time hereafter be or have been a partner of and in the
firm and his or their respective executors and administrators
and the successors to such partnership business and where the
Customer is a corporation include its successors;
- "the Exchange" means Hong Kong Futures Exchange Limited;
- "MeesPierson" means you;
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- "the SFC Ordinance" means the Securities and Futures
Commission Ordinance, Chapter 24 of the Laws of Hong Kong as
amended from time to time.
(c) This Agreement is subject to and governed by the provisions of the
CTO and Hong Kong law.
(d) The rules and regulations of the Exchange and the Clearing House
shall be binding on the Customer and MeesPierson. Those rules and
regulations contain provisions requiring MeesPierson in certain
circumstances to disclose the name and beneficial identity of the
Customer.
(e) MeesPierson, its directors and/or employees may trade on their own
account and, subject to the provisions of the CTO and the SFC
Ordinance. MeesPierson may take the opposite position to the
Customer's order in relation to any futures/options contract,
whether on MeesPierson own account or for the account of other
customers of MeesPierson, provided that such trade is executed
competitively on the floor in accordance with the rules and
regulation of the Exchange or other exchanges governing the
relevant markets.
(f) Unless otherwise confirmed in writing by MeesPierson and agreed by
the Customer and MeesPierson, MeesPierson is acting solely as
broker to any transactions made with MeesPierson by the Customer.
(g) In all transactions referred to in the Agreement MeesPierson may
contract as principal.
(h) The terms and conditions of the Agreement shall inure to the
benefit of, and bind MeesPierson, MeesPierson's successors and
assigns, whether by merger, consolidation or otherwise, as well as
the heirs, executors, administrators, legatees, successors,
personal representatives and assigns of the Customer.
(i) The Customer submits to the non-exclusive jurisdiction of the
Court of Hong Kong in respect of all disputes, differences and
claims relating to or arising out of the Agreement.
(j) Notices, and any other communications may be transmitted to the
Customer at the address, or telephone number or telex number or
fax number given herein, or at such other address or telephone
shall notify MeesPierson in writing and all communications so
transmitted, whether by mail, fax, telegraph, telephone, messenger
or otherwise, shall be deemed transmitted when telephoned or when
deposited in the mail, or when received by a transmitting agent.
(k) No provision of the Agreement shall in any respect be waived or
amended unless such waiver or amendment is in writing and signed
by an authorised officer of MeesPierson. This Agreement shall not
be revoked by the Customer except in writing. Such revocation,
however, shall not affect any transaction entered into by
MeesPierson pursuant to the Agreement before written notice of the
revocation has been received by MeesPierson.
(l) MeesPierson may take or omit to take any action which it considers
appropriate in order to ensure compliance with any such
constitution, rules and regulations, including (without
limitation) adjusting any account(s), disregarding any unexecuted
order or rescinding any executed transactions.
(m) If any provision hereof is inconsistent with any present or future
law, rules or regulations of any exchange, or any authority having
jurisdiction over the subject matter of the Agreement, such
provision shall be deemed to be rescinded or modified in
accordance with any such law, rules or regulations. In all other
respects, the Agreement shall continue and remain in full force
and effect.
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(n) Unless otherwise agreed, the Customer may not trade on margin and
MeesPierson is under no obligation to make credit facilities
available. Before MeesPierson conducts any transaction on the
Customer's behalf, the Customer will put MeesPierson in funds to
complete such transaction. Notwithstanding the foregoing, and
without prejudice to the other relevant provisions of the
Agreement, the Customer will at all times be liable for the
payment on demand of any debit balance or other obligation or
liability owing on any account which may arise for whatever
reason.
(o) The Customer will indemnify MeesPierson and its officers,
employees, agents and account executives for any loss, cost,
claim, liability or expense arising out of or connected with any
breach hereunder including any costs reasonably and necessarily
incurred in collecting any debts due or in connection with the
closure of any account.
(p) The Customer authorises MeesPierson to conduct a credit enquiry or
check on the Customer for the purpose of ascertaining the
Customer's financial situation and investment objectives.
(q) If any provision of the Agreement shall be held to be invalid or
unenforceable by any Court or regulatory agency or body, such
invalidity or unenforceability shall attach only to such
provision. The validity of the remaining provisions shall not be
affected thereby and the Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained herein.
(r) Where the Agreement is signed by or on behalf of a firm or
otherwise by or on behalf of more than one person:
(i) any liability arising hereunder shall be deemed to be the
joint and several liability of the partners in the firm or
of such persons as aforesaid;
(ii) MeesPierson has no obligation to inquire into the purpose or
propriety of any instruction or the application of any funds
affected, by any partner of the firm or any such persons as
aforesaid;
(iii) notwithstanding any other agreements which have been made
between them the rule of survivorship shall apply to all
accounts and, on the death of any one of them, all funds,
securities and properties for the time being standing to the
credit of any account and anything held by MeesPierson,
whether by way of security or otherwise, shall be held to
the order of the survivor(s);
(iv) any one of them has full authority to give any instruction
with respect to any account; to receive demands, notes,
confirmations, reports, statements and other communications
of any kind such communications shall be binding on each of
them notwithstanding that such communications have not been
actually sent to or received by every one of them; generally
to deal with MeesPierson in connection with the Agreement as
fully and completely as if the others had no interest
therein; and
(v) the Agreement continues to be valid and binding for all
purposes notwithstanding any change in the partnership or
constitution of the firm by the introduction of a new
partner or by the death, insanity or bankruptcy or
retirement of any partner.
If the Agreement is signed by or on behalf of more than one person
and any one or more of such persons is not bound by the Agreement
(whether by reason of his or their lack of capacity or improper
execution of the Agreement or otherwise), the remaining person or
persons shall continue to be bound by the Agreement as if such
other person or persons had never been party hereto.
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(s) The Agreement shall remain in effect and binding on the Customer
notwithstanding (i) any amalgamation or merger that may be
effected by MeesPierson with any other company, (ii) any
reconstruction by MeesPierson involving the formation of and
transfer of the whole or any undertakings and assets to a new
company or (iii) the sale or transfer of all or any part of any
undertakings and assets to another company whether the company
(with which MeesPierson amalgamates or merges or the company to
which is transferred all or any part of any undertakings and
assets either on a reconstruction or sale or transfer as aforesaid
shall or shall not differ from in its objects, character or
constitution; the Agreement shall remain valid and effectual in
all respects, and that the benefit thereof and all rights
conferred upon MeesPierson thereby may be assigned to and enforced
by, any such company and proceeded on in the same manner to all
intents and purposes as if such company had been named herein
instead of or in addition to MeesPierson.
(t) The Customer may not assign any contract entered into between the
Customer and MeesPierson or any of the rights or obligations
thereunder without the consent in writing from MeesPierson which
consent MeesPierson shall not be under any obligation to give.
2. Orders
(a) MeesPierson shall have no obligation to provide the Customer with
information with respect to the Customer's positions and shall
have no obligation but the right at the discretion of MeesPierson
to close any position in any account MeesPierson may carry on the
Customer's behalf. MeesPierson shall have the right (at the
absolute discretion of MeesPierson, and without assigning any
reason therefor) to refuse to act for the Customer in any
particular transaction.
(b) In case of the sale of any Commodities or other properties by
MeesPierson at the direction of the Customer and the Customer's
failure to supply MeesPierson therewith, the Customer authorises
MeesPierson to borrow any Commodities, or other properties
necessary to make delivery thereof, and the Customer agrees to
guarantee, indemnify and hold MeesPierson harmless against any
loss which MeesPierson may sustain thereby, any premiums which
MeesPierson may be required to pay, or for any loss which
MeesPierson may sustain by reason of the inability of MeesPierson
to borrow the Commodities or other properties sold.
(c) Liquidating instruction and sufficient good funds where necessary
on open futures positions maturing in a current month must be
given to MeesPierson at least two business days prior to the first
notice day in the case of long positions and in the case of short
positions, at least five business days prior to the last trading
day. If instructions or good funds are not received by
MeesPierson, MeesPierson may, without notice, liquidate the
Customer's position upon such terms and by such methods which
MeesPierson shall deem fit and, having done so, MeesPierson shall
not be liable for any loss or liability which arises whether
directly or indirectly as a result.
(d) MeesPierson shall not be responsible for delays in the
transmission of orders due to a breakdown or failure of
transmission of communication facilities, or to any other cause or
causes beyond the control or anticipation of MeesPierson. All
orders, instructions or requests whether by letter, facsimile or
otherwise or made orally are accepted and transmitted at the
Customer's risk. On request the Customer shall confirm in writing
verbal orders, instructions or requests. It is understood that the
risk of instructions being given by persons purporting to be the
Customer's authorised representatives is borne solely by the
Customer and MeesPierson shall not be responsible nor liable
for any loss that may result from any unauthorised instructions.
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(e) The Customer may not withdraw nor amend any order or instruction
after the same has been given unless MeesPierson consents to such
withdrawal or amendment. In giving consent to such withdrawal or
amendment, MeesPierson may impose such conditions, including
indemnities for costs and expenses, as it deems fit.
(f) When MeesPierson on behalf of the Customer executes sell or buy
orders, MeesPierson, MeesPierson's directors, officers, employees,
and agents of MeesPierson and, any floor broker may buy or sell
for an account in which any such person has interest, subject to
the limitations and conditions, if any, contained in the
constitution, rules, regulations, customs, usages, rulings, and
interpretations then extant or in force of the Exchange or other
market upon which such buy or sell orders are executed.
MeesPierson may execute any order on behalf of the customer by way
of a cross-trade.
3. Lien & Power of Sale
(a) Without prejudice and in addition to any general lien, right of
set-off or similar right to which MeesPierson may be entitled by
law, all of the Customer's interest in any Commodities or other
property held by MeesPiersen for any purpose or carried by
MeesPierson in any account for the Customer (either individually
or jointly with others) or which may be in the possession of
MeesPierson, or in the possession of any group companies of
MeesPierson, at any time and for any purpose, including
safe-keeping, shall be subject to a general lien in favour of
MeesPierson. MeesPierson shall also have the right to cancel any
open orders for the sale or purchase of any Commodities and/or
sell such properties (and MeesPierson is authorised to do all such
things necessary in connection with such sale) and utilise the
proceeds to offset and discharge part or all of the obligations of
the Customer to MeesPierson or to any of its group companies,
regardless of whether any other person is interested in or
MeesPierson has made advances in connection with such properties,
and irrespective of the number of accounts the Customer may carry
with MeesPierson.
(b) Whenever MeesPierson considers it necessary, it may cancel any
open orders for the sale or purchase of any Commodities and/or
sell any Commodities or other property belonging to the Customer
or in which the Customer has an interest all on written notice to
the Customer. Such sale or purchase may be public or private and
may be made without advertising or notice to the Customer and in
such manner as MeesPierson may at its sole discretion determine.
At any such sale MeesPierson may purchase the properties or any of
them free of any right of redemption and in respect of any such
sale MeesPierson shall have no liability for any loss incurred and
the Customer will not make any claim against MeesPierson
concerning the manner of sale or timing thereof. The proceeds of
such transactions are to be applied to reduce the indebtedness
owing to MeesPierson.
(c) The Customer shall be liable for all losses whether or not the
account is liquidated and for any debts and deficiencies in the
Customer's accounts including all debts and deficiencies resulting
from a liquidation of the Customer's account.
(d) The Customer is bound by rule 631 of the Exchange which permits
the Chief Executive of the Exchange to take steps to limit
positions or require the closing out of contracts of the Customer
who in the opinion of the Chief Executive are accumulating
positions which are or may be detrimental to the Exchange's
markets.
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(e) The Customer agrees to maintain such collateral and/or margin as
MeesPierson may from time to time require. The Customer also
agrees to pay immediately on demand any amount owing to
MeesPierson with respect to any of the Customer's accounts. The
Customer will be responsible for all the expenses incurred by
MeesPierson in connection with the above and MeesPierson will not
be liable for any loss that may thereby be incurred. MeesPierson
may without demand or notice close out open positions. MeesPierson
has reserved in the Agreement the right to close out any open
positions(s) without notice (i) when the margins on deposit with
MeesPierson are exhausted, inadequate in the opinion of
MeesPierson to protect it against possible price fluctuations or
any adverse conditions or (ii) any other appropriate
circumstances.
(f) MeesPierson shall have the right to (i) satisfy any obligation the
Customer may have to MeesPierson (either directly or by way of
guaranty or suretyship) out of any properties belonging to the
Customer in the custody or under the control of MeesPierson and
(ii) cancel any outstanding orders in order to close the account
or accounts of the Customer, all without demand for margin or
additional margin, notice to the Customer, the Customer's heirs,
executors, administrators, legatees, personal representatives or
assigns, of sale or purchase or other notice of advertisement and
whether or not the ownership interest shall be solely the
Customer's or jointly with others, in the following circumstances:
(i) whenever MeesPierson at its sole discretion shall consider it
necessary for the protection of MeesPierson, because of margin
requirements or otherwise, or, (ii) in the event that a petition
for bankruptcy or winding up (as the case may be), or notice of
the appointment of a receiver, is filed by or against the Customer
or, (iii) when an attachment is levied against the account(s) of
the Customer with MeesPierson, or, (iv) in the event of the death
or judicial declaration of incompetence of the Customer. Any sale
or purchase may be made at the discretion of MeesPierson in any
manner and on any market it thinks fit. In all cases, a prior
demand or call, or prior notice of the time or place of sale or
purchase shall not be considered a waiver of the right of
MeesPierson to sell or to buy without demand or notice as herein
provided. In all cases, the Customer shall be liable for any
deficiency remaining in such account(s) in the event the
liquidation thereof in whole or in part by MeesPierson or by the
Customer. Debit balance(s) in such account(s) shall be charged
with interest thereon at a rate to be determined by MeesPierson
from time to time and the Customer shall promptly settle, upon
demand, all liabilities outstanding to MeesPierson, together with
all costs of collection (including legal fees).
4. Customer's Account
(a) All monies or other properties received by MeesPierson from the
Customer or from any other person, including the Clearing House
for the account of the Customer in respect of the futures/options
contracts transacted on behalf of the Customer shall be held by
MeesPierson as trustee, segregated from MeesPierson's own assets
and paid into a segregated bank account.
(b) The Customer hereby authorises MeesPierson to apply any monies
which the Customer may pay to MeesPierson in order to (i) meet the
obligations of MeesPierson to the Clearing House (provided that no
withdrawal from the Customer's accounts with MeesPierson may be
made which would have the effect that the relevant margin
requirements or trading liabilities conducted on behalf of any
Customer are thereby financed by any other Customer), (ii) pay
commission, brokerage, levies and other proper charges for
contracts transacted by MeesPierson on behalf of the Customer,
(iii) make payments in accordance with the Customer's directions
(provided that no money may be paid into another account of the
Customer unless that account is also a segregated bank account).
The Customer acknowledges that MeesPierson may apply such monies
in or towards meeting MeesPierson's obligations to any party
insofar as such obligations arise in connection with or incidental
to all futures/options contracts
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transacted on the Customer's behalf. The Customer agrees that
MeesPierson may retain interest on the Customer's money.
5. Clearing House Account
In respect of any account of MeesPierson maintained with the Clearing
House, whether or not such account is maintained wholly or partly in
respect of the futures/options contracts transacted an behalf of the
Customer and whether or not money paid by the Customer has been paid to
the Clearing House, as between MeesPierson and the Clearing House,
MeesPierson deals as principal and accordingly no such account is
impressed with any trust or other equitable interest in favour of the
Customer and monies paid to the Clearing House are thereby freed from the
trust referred to in clause 4(a) above.
6. Margin Call
Margin calls must be met within the period specified by MeesPierson from
time to time. MeesPierson is obliged to report to the Exchange particulars
of all open positions in respect of which two successive margin calls
and/or demands for variation adjustment are not met within the period
specified by MeesPierson. MeesPierson may require more margin or
variation adjustment than that specified by the Exchange and/or the
Clearing House and/or other exchanges and may close out open positions
unilaterally in respect of which any margin calls and/or demands for
variation adjustments are not met.
7. Margin Requirements
The original and variation margin, to be determined from time to time by
MeesPierson at its sole discretion, will be maintained by the Customer in
any and all accounts the Customer may at any time carry with MeesPierson.
If MeesPierson determines that additional margin is required, the Customer
will deposit with MeesPierson such additional margin forthwith upon
demand. However, notwithstanding any demand for additional margin,
MeesPierson may at any time proceed in accordance with paragraph 3(e)
above.
8. MeesPierson may at any time and at its sole discretion change margin
requirements. New margin requirements once established shall apply to
existing positions as well as to new positions. Margin requirements may be
met by a deposit of cash or securities or any other form acceptable by
MeesPierson and in accordance with the rules and regulations of the
Exchange or other exchanges governing the relevant markets.
9. Transactions in Foreign Currencies
In the event that the Customer directs MeesPierson to enter into any
contract on an exchange or other market on which such transactions are
effected in a foreign currency: (a) any profit or loss arising as a result
of a fluctuation in the exchange rate affecting such currency will be
entirely for the account and risk of the Customer; (b) all initial and
subsequent deposits for margin purposes shall be made in such currency in
such amounts as MeesPierson may at its sole discretion, require; and (c)
when such a contract is liquidated MeesPierson shall debit or credit the
account of the Customer in the currency in which such account is
denominated at a rate of exchange (where the relevant contract is
denominated in a currency other than that of the account) determined by
MeesPierson at its sole discretion on the basis of the then prevailing
money market rates of exchange.
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10. Levies & Commission
(a) Every contract executed on the floor of the Exchange shall be
subject to applicable Compensation Fund levies and levies pursuant
to Securities and Futures Commission Ordinance the cost of both of
which shall be borne by the Customer.
(b) Every contract executed in the Stock Index Futures Market on the
floor of the Exchange shall be subject to the charge of a special
levy pursuant to the Exchanges (Special Levy) Ordinance, the cost
of which shall be borne by the Customer.
(c) In respect of contracts executed in markets other than those
organised by the Exchange, any charges levied on such contracts by
the relevant markets shall be borne by the Customer.
(d) The Customer will pay commission and other charges which
MeesPierson may think fit at a rate to be determined by
MeesPierson and charges pursuant to Hong Kong law or the rules of
the Exchange or other exchanges governing the relevant markets.
11. Rules & Laws
(a) All transactions shall be subject to the constitution, rules,
regulations, customs, usages, rulings and interpretations, from
time to time extant or in force of the Exchange or other markets
(and of their respective clearing house, if any), where the
transactions are executed by MeesPierson or MeesPierson agents.
All transactions under this agreement shall also be subject to any
law, rule, or regulation then applicable thereto, including but
not by way of limitation, the provisions of the CTO, as amended
from time to time, and the rules and regulations thereunder.
(b) All transactions entered between MeesPierson and the Customer
relating to any money, foreign currency, currency option, currency
future, or currency forward contract or foreign exchange contract
shall be governed by and subject to all the rules, regulations,
orders and laws of the country of currency or money concerned and
those of Hong Kong and or the by-laws, rules and regulations of
the exchange concerned in which the transaction is done.
(c) All transactions related to futures/options contracts executed in
markets other than those organised by the Exchange will be subject
to the rules and regulations of those markets and not those of the
Exchange, with the result that the Customer may have a markedly
different level and type of protection in relation to those
transactions as compared to the level and type of protection
afforded by the rules of the Exchange.
12. Confirmation & Statements
Written confirmations of the execution of the Customer's orders and
statements of the Customer's accounts shall be conclusive and deemed to be
accepted if not objected to in writing by the Customer directed to the
address stated herein (or such other address communicated in writing by
MeesPierson) within 2 working days after transmission thereof to the
Customer, by mail or otherwise.
13. Telephone recordings
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MeesPierson may record all incoming and outgoing telephone conversations
with its dealing desks and marketing desks. All recordings shall be used
solely for the purpose of verifying instructions given and the accuracy of
transactions.
14. Indemnity
If MeesPierson commits a default and the Customer suffers pecuniary loss
thereby, the liability of the Compensation Fund will be restricted to
valid claims as provided for in the CTO and the SFC Ordinance and will be
subject to the monetary limits specified in the Ordinances and accordingly
that there can be no assurance that any pecuniary loss sustained by reason
of such a default will necessarily be recouped from the Compensation Fund
in full, in part or at all.
15. Limitation of MeesPierson's liability
(a) Without prejudice to the remainder of this clause 15, where the Customer's
account is a discretionary one the Customer agrees that MeesPierson's
liability for all and any damages, losses, expenses, costs (and interest
thereon) claimed by the Customer shall be excluded, save in respect of
personal injury or death and/or in the case of liability arising from
gross neglect, fraud or wilful default by a director or employee of
MeesPierson or where and to the extent that the CTO or the rules of the
Exchange prohibit such exclusion. Without prejudice to clause 2(d)
hereof, the Customer acknowledges that MeesPierson will not be liable for
any loss or damage suffered by the Customer whether directly or indirectly
as a result of any inability or failure on the part of MeesPierson to
comply with or fulfil any instructions given by or on behalf of the
Customer for any cause beyond the reasonable control of MeesPierson,
including but not limited to government restrictions, rulings by any
exchange or regulatory body, changes in applicable laws or regulations,
suspensions in trading, wars, strikes, civil disorder or other
circumstances having the same or similar effect.
(b) The Customer warrants, undertakes and acknowledges that where trading is
conducted pursuant to this Agreement by or on the instructions or directions or
with the involvement of a Registered Trader (as defined in Chapters 10 and/or 11
of the Exchange's Rules) who is an employee of the Customer:-
(i) any act or omission or default on the part of the Registered Trader will
be (as between the Customer and MeesPierson and between either of them and
any third party) the sole responsibility of the Customer and the Customer
will fully indemnify and hold harmless MeesPierson against any liability
of whatsoever nature arising from any act or omission or default of the
Registered Trader and all costs, expenses and other liabilities of
MeesPierson arising therefrom and/or from any act taken by MeesPierson in
the light of the Registered Trader's activities with MeesPierson
considered at the time in question it was reasonable to take. To this end,
the Customer will maintain at all times a valid policy or policies of
insurance to cover risk to MeesPierson from the Registered Trader's
presence and activities on MeesPierson's premises;
(ii) unless provided otherwise by the Exchange's Rules or any agreement entered
into between the Exchange and MeesPierson, the Registered Trader shall not
be an employee of MeesPierson for any purpose;
(iii) the Customer shall use its best endeavours to ensure that at all times the
Registered Trader acts in a manner which does not involve any breach of
the Exchange's Rules or any applicable legislation or (subject to (iv)
below) which might in any way give cause for the Registered Trader's
registration with the Exchange or the SFC to be put at risk;
(iv) in its absolute discretion, MeesPierson may without prior notice to the
Customer impose such restrictions upon the Registered Trader (including
preventing him from conducting or being involved in any trading on
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any of the Exchange's markets or making use of or having access to
MeesPierson's facilities and equipment) as MeesPierson thinks necessary in
order to protect the interests of MeesPierson's other customers, the
Exchange or MeesPierson itself;
(v) on request the Customer will provide forthwith to MeesPierson such
information about the Registered Trader and his trading activities
(including all relevant documents) as MeesPierson thinks fit;
(vi) the Customer undertakes and will ensure that the Registered Trader does
nothing which xxxxx the interests or reputation of any other customer of
MeesPierson, the Exchange, MeesPierson or any company within the
MeesPierson group of companies or any employee, officer or other
representative of any of them and in particular the Customer will ensure
that the Registered Trade does not misuse or disclose to any third party
any confidential information belonging to MeesPierson;
(vii) the Customer will fully reimburse MeesPierson forthwith on demand for all
fees, costs and other expenses incurred by it (including the costs of
seeking legal or other advice) in respect of the application for
registration of the Registered Trader with the Exchange and the SFC and
any subsequent re-registrations or amendments to the terms of registration
of the Registered Trader, including the termination of any registration.
16. Appointment of Attorney
The Customer appoints the Chief Executive of the Exchange (or such other
persons as the Board of the Exchange may appoint) as the Customer's
attorney to do all things necessary to transfer any open positions held by
MeesPierson on the Customer's behalf and money and securities standing to
the credit of the Customer's account with MeesPierson to another member of
the Exchange in the event of MeesPierson's membership being suspended or
revoked.
17. Client Information Statement
The Customer warrants that the information contained in the attached
Client Information Statement (which is required to be completed by the
Customer pursuant to Rule 601(a) of the Exchange Rules) is true and
complete. The Customer will notify MeesPierson forthwith of any material
changes in the information supplied in the Client Information Statement.
MeesPierson is entitled to rely on such information until it has received
written notice of any changes therein.
B. RISK DISCLOSURE STATEMENT
INTRODUCTION
1. This risk disclosure statement is furnished to all clients pursuant to
the rules and regulations of the Exchange.
2. The purpose of this statement is to ensure that clients only enter into
futures and options contracts on the Exchange having read and understood
the contents of this statement and, as a result, having understood the
nature and extent of the risks involved in, and their obligations and
rights in respect of, futures and options trading.
3. All clients must therefore receive a risk disclosure statement, read it,
have it explained to them, understand it and confirm (by signing the
acknowledgments by customer below) that they have read it and understood
it.
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4. No member of the Exchange ("Member") can accept an order from a client or
transact any business on behalf of a client unless and until the
acknowledgment attached to the risk disclosure statement has been returned
to them having been duly completed by the client.
5. However, this risk disclosure statement is not intended to constitute a
comprehensive statement of the risks and significant aspects of trading in
the futures and options trading. Clients must study futures and options
trading in any event before they trade.
6. Further, this statement must not be taken as an endorsement or promotion
by the Exchange of futures and option trading.
Risks Involved in Futures Trading
7. The risk of significant losses through trading futures contracts can be
substantial. Clients must therefore consider carefully in advance whether
such trading is suitable for them in the light of their financial
condition and investment objectives. In considering whether to trade in
futures contracts, clients should be aware of the following:
7.1 Clients may lose all of the initial margin fund and any additional
funds deposited by them with Members for the purpose of
establishing and/or maintaining a position in the futures market.
If the market moves against the clients' positions, the clients
may be called upon to deposit substantial amounts of additional
margin funds at short notice in order to maintain the position. If
the required funds are not provided within the prescribed time,
the position may be liquidated unilaterally at a loss and the
clients will be liable for any resulting deficit.
7.2 Under certain market conditions, clients may find it difficult if
not impossible to liquidate/close out a position. This can occur
when for example the market makes a limit move.
7.3 Clients can place stop loss or stop limit orders with their
brokers with a view to automatically liquidating/closing out a
position when the market or loss incurred reaches a certain level.
However, placing such orders will not necessarily limit the
clients' losses because market conditions may make it impossible
to execute such orders.
7.4 A spread position may be as risky as a simple "long" or "short"
position.
7.5 A high degree of leverage can often be achieved in futures trading
because of the relatively small margin requirements. This degree
of leverage can work against clients as well as for them - the
leverage can lead to large losses as well as large gains.
Risks Involved in Options Trading
8. The purchase and/or writing of options involves a high degree of risk
because of, principally, the volatile nature of the stock and commodity
markets. Clients must therefore consider carefully in advance whether such
trading is suitable for them in the light of their financial condition and
investment objectives. In considering whether to trade in options
contracts, clients should be aware of the following:
8.1 Both buyer and seller of an option must be aware of the
subject-matter of the option and whether or not the
subject-matter, e.g. a stock or a commodity, is to be delivered or
received or if the option is to be settled by a cash-payment. If
the option is on a future, the purchase will acquire a futures
position with associated liabilities for margin (see section 7
above).
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8.2 If the market moves against the writers of options, additional
margin is likely to be required from the writers at short notice.
Option writers are liable for potentially unlimited losses whilst
their gains are limited to the option premium. The writer of an
option will also be exposed to the risk of the purchaser
exercising the option, in which case the writer will be obligated
to either settle the option in cash or to acquire or deliver the
underlying interest. If the option is on a future, the writer will
acquire a position in a future with associated liabilities for
margin (see the section 7 above). If the option is 'covered' by
the writer holding a corresponding position in the underlying
interest or a future or another option, the risk may be reduced.
If the option is not covered, the risk of loss can be unlimited.
8.3 Options are wasting assets; it is possible that option holders may
suffer the loss of the whole premium paid in respect of the
option. In order to close out an open option position (whether at
a profit or otherwise), it is necessary to either exercise the
option or offset the long position in the market through a
closing trade. However, market conditions may make it impossible
to execute such orders.
8.4 Some options can be exercised only on the expiry date (e.g. Hang
Seng Index Options). Other options may be exercised at any time
before expiration.
8.5 A high degree of leverage can often be achieved in options
trading. This degree of leverage can work against clients as well
as for them - the leverage can lead to large losses as well as
large gains.
8.6 Both buyers and sellers of options should calculate the extent to
which the value of the options must increase for your position to
become profitable, taking into account the premium and all
transaction costs. If you are contemplating purchasing
deep-out-of-the-money options, you should be aware that the chance
of such options becoming profitable ordinarily is remote.
8.7 Certain exchanges in some jurisdictions permit deferred payment of
the option premium, exposing the purchaser to liability for margin
payments not exceeding the amount of the premium. The purchaser is
still subject to the risk of losing the premium and transaction
costs. When the option is exercised or expires, the purchaser is
responsible for any unpaid premium outstanding at that times.
RISKS INVOLVED IN TRADING IN HANG SENG CHINA ENTERPRISES INDEX FUTURES CONTRACTS
9. Trading in Hang Seng China Enterprises Index Futures Contracts is subject
to the risks described in section 7 above. In addition to those risks, the
trading will involve the following potential risks:
9.1 Political Risks: A change of leadership or political or social
unrest in the People's Republic of China ("the PRC") may lead to
major changes in economic and other policies. It is noted however
that the Government of the PRC has been carrying out an open-door
policy since 1978.
9.2 Economic Risks: The PRC Government plans to replace the PRC's
planned economy with a socialist market economy. (The planned
economy involves the State Planning Commission directly
influencing the development of the economy, including the
operation of businesses and control over citizen's income, and
consumption levels and patterns.) The PRC economy is in a
transition stage. Central government continues to exercise an
important influence on many aspects of the operation of businesses
in the PRC and the pace of economic development and change. It may
therefore be a considerable time before market forces become a
major factor in the allocation of resources in the PRC economy.
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9.3 Foreign Currency Risks: The PRC Government controls and manages
its foreign exchange reserves through measures including
import/export restrictions and regulations directly controlling
the conversion of Renminbi ("RMB") into foreign currencies. With
effect from 1st January 1994 the foreign exchange control system
has been further reformed by the incorporation of the official RMB
and swap RMB exchange rates. This has resulted in a centralised
inter-bank foreign exchange trading centre supervised and
controlled by the People's Bank of China through the State Foreign
Exchange Administration. In the PRC all foreign exchange
transactions involving RMB must be effected through authorized
banks designated by the People's Bank and at rates calculated by
the People's Bank based on the price of the foreign currency and
taking into account:
9.3.1 dealings on the previous day in the inter-bank foreign
exchange market;
9.3.2 the median rate for daily foreign exchange rates between
RMB and U.S. dollars published after taking into account
fluctuations in the international foreign exchange
market;
9.3.3 the exchange rates between RMB and other major
currencies.
Such adopted rates float within a range prescribed by the People's Bank.
Although the conversion of RMB into Hong Kong dollars or other currencies
is generally completed without delay at the authorised banks, there is no
guarantee that such conversions can be carried out at all times. All
foreign exchange income of Chinese enterprises (apart from enterprises
with foreign investments) must be settled and sold to authorised banks in
accordance with the authorised bank's published exchange rates.
9.4 Legal and regulatory risks:
(a) Corporate law: PRC company law is in its infancy;
provisions for the protection of shareholders' rights and
access to corporate information are different from those
in Hong Kong and other developed countries. There are no
nationally applicable corporate PRC laws, apart from the
Standard Opinion which currently forms the basis of the
legal framework governing joint stock limited companies.
(b) Securities law: PRC securities law is incomplete. The
regulatory framework of the PRC securities industry is
in its infancy. Currently there is no PRC law applicable
to PRC enterprises seeking to issue shares and obtain
listings outside the PRC, although the securities rules
and regulations applicable to PRC companies seeking to
issue shares and obtain listings within the PRC are
generally applied.
(c) Tax law: Shares in PRC companies are a relatively new
form of investment in the PRC. It is uncertain whether
income or capital gains arising from dealings in such
shares will be chargeable to tax and, if so, how.
Generally, PRC company law is materially different from Hong Kong company
law, particularly in the area of investor protection. The lack of
investor protection in the PRC is compensated to some extent by the
mandatory requirements of the Stock Exchange of Hong Kong Limited that PRC
companies listed in Hong Kong have certain provisions in their Articles of
Association. Key material differences between PRC and Hong Kong company
law include: derivative actions by minority shareholders and other
minority protection; remedies against misfeasant directors, financial
disclosure, variation of class rights, general meeting procedures and
payment of dividends.
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Risks Involved in Trading in Currencies Futures and Options Contracts
10. Trading in currencies futures and options contracts is subject to the
risks described in sections 7 and 8 above. Clients must ensure in advance
of any trading that they are familiar with those risks and the systemic
risks involved in trading in currencies generally, including volatility,
exchange restrictions and the risk of major systemic collapses in currency
markets.
11. The profit or loss in transactions in foreign currency-denominated
contracts (whether they are traded in your own or another jurisdiction)
will be affected by fluctuations in currency rates where there is a need
to convert from the currency denomination of the contract to another
currency.
12. The One Day Rolling Currency Futures Contract ("ODRCF Contract"), similar
to other exchange-traded futures contracts, provides a versatile and
well-leveraged investment vehicle to investors. However, increases in both
the volatility of the relative currency value and the volume of world
trade have resulted in an exposure to dramatically higher foreign exchange
risk in recent years. It has not been uncommon for major currencies to
fluctuate in value by twenty or thirty percent vis-a-vis the U.S. dollar
in a period of less than one year. In addition, a variety of other factors
including interest rate movements, macro and micro economic conditions and
political stability may also affect the value of currencies.
13. Investors should only participate in the ODRCF market if they fully
appreciate the risks inherent in the foreign exchange market and employ
strategies consistent with their currency value expectations, investment
objectives and tolerance for risk. Investors should also be aware of the
potential risks associated with possible exchange rate fluctuations where
foreign exchange investments are priced and/or settled in a currency other
than their home currency.
Other Risks Involved in Trading Futures and Option Contracts
14. You should ask the firm with which you deal about the terms and conditions
of the specific futures or options which you are trading and associated
obligations (e.g. the circumstances under which you may become obliged to
make or take delivery of the underlying interest of a futures contract
and, in respect of options, expiration dates and restrictions on the time
for exercise). Under certain circumstances the specifications of
outstanding contracts (including the exercise price of an option) may be
modified by the exchange or clearing house to reflect changes in the
underlying interest.
15. Market conditions (e.g. illiquidity) and/or the operation of the rules of
certain markets (e.g. the suspension of trading in any contract or
contract month because of price limits or 'circuit breakers') may increase
the risk of loss by making it difficult or impossible to effect
transactions or liquidate/offset positions. If you have sold options, this
may increase the risk of loss.
16. Further, normal pricing relationships between the underlying interest and
the future, and the underlying interest and the option may not exist. This
can occur when, for example, the futures contract underlying the option is
subject to price limits while the option is not. The absence of an
underlying reference price may make it difficult to judge 'fair' value.
17. You should familiarize yourself with the protections accorded money or
other property you deposit for domestic and foreign transactions,
particularly in the event of a firm insolvency or bankruptcy. The extent
to which you may recover your money or property may be governed by
specific legislation or local rules. In some jurisdictions, property which
had been specifically identifiable as your own will be pro-rated in the
same manner as cash for purposes of distribution in the event of a
shortfall.
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18. Before you begin to trade, you should obtain a clear explanation of all
commissions, fees and other charges for which you will be liable. These
charges will affect your net profit (if any) or increase your loss.
19. If you wish your broker to trade for you in markets other than those
operated by the Exchange, you must ensure that your broker is permitted to
trade in those markets and that you are familiar with the requirements of,
and types of redress in, those markets. The Exchange cannot and will not
supervise your broker's trading in those markets and the Compensation Fund
established under the Commodities Trading Ordinance is not available for
defaults in trading on those markets. Transactions on markets in other
jurisdictions, including markets formally linked to a domestic market, may
expose you to additional risk. Such markets may be subject to regulation
which may offer different or diminished investor protection. Your local
regulatory authority will be unable to compel the enforcement of the rules
of regulatory authorities or markets in other jurisdictions where your
transactions have been effected.
20. Most open-outcry and electronic trading facilities are supported by
computer-based component systems for the order-routing, execution,
matching, registration or clearing of trades. As with all facilities and
systems, they are vulnerable to temporary disruption or failure. Your
ability to recover certain losses may be subject to limits on liability
imposed by the system provider, the market, the clearing house and/or
member firms. Such limits may vary: you should ask the firm with which you
deal for details in this respect.
21. Trading on an electronic trading system may differ not only from trading
in an open-outcry market but also from trading on other electronic
trading systems. If you undertake transactions on an electronic trading
system, you will be exposed to risks associated with the system including
the failure of hardware and software. The result of any system failure may
be that your order is either not executed according to your instructions
or is not executed at all.
22. In some jurisdictions, and only then in restricted circumstances, firms
are permitted to effect off-exchange transactions. The firm with which you
deal may be acting as your counterparty to the transactions. It may be
difficult or impossible to liquidate an existing position, to assess the
value, to determine a fair price or to assess the exposure to risk. For
these reasons, these transactions may involve increased risks.
Off-exchange transactions may be less regulated or subject to a separate
regulatory regime. Before you undertake such transactions, you should
familiarize yourself with applicable rules and attendant risks.
C. Disclosure of Company information
1. In accordance with Rule 601(c) of the Exchange's Rules, we disclose the
following to you:
Company Name : MeesPierson Futures Clearing
Services (Asia) Limited
Membership category : Futures Commission Merchant
Registration number (required by
the Commodities Trading Ordinance) : CDC 000370
Staff responsible for your
account :
Dealing Director/
Name Dealer Representative Registration No.
---- --------------------- ----------------
Michiel Xxxxxxxxx xx Xxxx Dealing Director CD 001089
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Emma Xxxx XxXxxxxx Dealer's Representative CDR 011746
D. Explanation of Margin Procedures and Unilateral Closing Out of Clients'
Positions
Pursuant to Rule 602(q) of the Exchange's Rules, MeesPierson is required
to explain the margin procedures and the circumstances under which the
Customer's positions may be closed out without the Customer's consent. For
the purposes of Rule 602(q), the following explanation is given.
Margin Procedures
1. The Agreement sets out detailed provisions regarding the
operation of margin calls and requirements: see in particular
clauses 6 and 7 of the Agreement.
2. MeesPierson follows all margin rules laid down by all Exchanges on
which products are traded on margin.
3. Any changes in margin requirements (whether imposed by the
Exchange or by MeesPierson) will be communicated to the Customer
by MeesPierson's representatives in an appropriate manner.
Unilateral closing out of the Customer's positions
4. The Customer must remember that, in the event of a default,
MeesPierson may close out the Customer's open positions without
prior notice to or consent from the Customer as provided for by
the terms of the Agreement. MeesPierson has reserved in the
Agreement the right to close out any open positions(s) without
notice (i) when the margins on deposit with MeesPierson are
exhausted, inadequate in the opinion of MeesPierson to protect it
against possible price fluctuations or any adverse conditions or
(ii) any other appropriate circumstances.
5. No conduct or omission on behalf of MeesPierson, nor any agreement
purportedly entered into on MeesPierson's behalf (save an
agreement in accordance with the terms of the Agreement), shall
constitute any form of waiver or variation or relaxation
MeesPierson's rights to close out the Customer's positions
unilaterally.
6. Any steps taken by MeesPierson to close out the Customer's
positions unilaterally will be entirely without prejudice to
MeesPierson's other rights under the Agreement and otherwise, in
particular the right to payments from the Customer of all amounts
outstanding.
E. Statement of Particulars of Approved Contracts
MeesPierson is licensed to trade in the products approved by the Exchange
from time to time. MeesPierson will provide contract specifications for
those products to the client.
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F. Acknowledgements by Customer
I/We acknowledge that:
(i) I/We have read carefully the Agreement (section A) and additional
sections B to E above.
(ii) the contents of the Agreement and the additional sections have
been fully explained to me/us in a language which I/we understand.
I/We have agreed to the Agreement, the additional sections and the
attachments referred to in those documents being in English and
with their contents.
(iii) I/We have been given an adequate opportunity to ask questions of
MeesPierson's representatives and to consult my/our own legal
advisers about the Agreement, the additional sections and the
attachments.
(iv) I/We have received the Agreement, the additional sections and the
attachments.
(v) I am/We are trading on my/our own account.
Signed by (if an individual) or for and on behalf of (if a corporation)
/s/ XXXXXX XXXXXX XXXXX
the customer: HULL TRADING ASIA LIMITED
Dated: March 11, 1998 (Company Chop)
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For Corporation(s) :
Signed on behalf of the Corporation below-mentioned pursuant to a resolution
duly passed at a duly convened and held meeting of the Board of Directors
thereof, a certified copy of which is annexed hereto.
For and on behalf of: HULL TRADING ASIA LIMITED
Name : Xxxxxx Xxxxxx Xxxxx
Title : Director
/s/ XXXXXX XXXXXX XXXXX
-------------------------------
Signature
Accepted by :
Name : For and on behalf of
MeesPierson Futures Clearing
Services (Asia) Limited
------------------------------- -------------------------------
Signature Director
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