EXHIBIT 10.04
CUSTOMER AGREEMENT
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THIS CUSTOMER AGREEMENT (this "Agreement") made as of the 1st day of
May, 2000, by and among XXXX XXXXXX PRINCIPAL PLUS FUND MANAGEMENT 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 ("Limited Partners") of Customer, or any of its or their respective
successors or assigns, for any act, omission, conduct, or activity undertaken by
or on behalf of Customer pursuant to this Agreement which MSIL determines, in
good faith, to be in the best interests of 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 pursuant to this Agreement, including,
without limitation, any demands, claims or lawsuits initiated by a Limited
Partner (or a limited partner of the 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 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 anything to the contrary
contained in the foregoing, neither MSIL nor any of its affiliates shall be
indemnified by Customer for any losses, liabilities or expenses arising from or
out of an 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 (or a limited partner
of the 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. 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 (or a limited partner of the 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 and 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 any of 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 event.
(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:
XXXX XXXXXX PRINCIPAL PLUS FUND MANAGEMENT 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.
XXXX XXXXXX PRINCIPAL PLUS FUND MANAGEMENT L.P.
By: Demeter Management Corporation
General Partner
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
President
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
By: /s/ X X Xxxxxxxxx
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Name: X X Xxxxxxxxx
Title:
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXX XXXXXXX SECURITIES LIMITED
Customer Documents
(Market Counterparty / Non-Private Customer)
Exchange-traded Derivatives Only
May 1999
NON-PRIVATE CUSTOMER DOCUMENTS
(EXCHANGE-TRADED DERIVATIVES)
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
(Exchange-Traded Derivatives)
Chapter I Introduction
II Terms Applicable to Dealings
III Margin
IV Material Interests
V Powers and Exclusions of Liability
VI Authorisation
VII General
PART TWO: MASTER NETTING AGREEMENT
PART THREE: SCHEDULES
PART FOUR: CUSTOMER SIGNATURE PAGES
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.
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 Principal Plus Fund Management 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
Form of Consent
- please read, insert customer name in first paragraph and sign
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
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.
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
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
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.
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.
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.
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.
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.
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.
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.
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.
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:
Principal Plus Fund Management L. P.
Name of Customer (please print)
Date: May 1, 2000......................
FORM OF CONSENT
In the event that a dispute arises between you, Diversified Futures Fund III
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:
Principal Plus Fund Management 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
TREASURY integrity and fair dealing in the carrying on of investment business,
| thereby providing effective protection for the investor.
|
| 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
SECURITIES AND INVESTMENTS UK financial services regulation will find this a useful introduction to
BOARD (SIBB) SFA. But before we take a closer look at SFA, it might be helpful to put
| it into a broader industry perspective.
|
| The history of the UK's financial services industry is well documented.
| Banking, insurance, shares trading and futures dealing have developed into
|--SFA* highly organised services and markets to make London one of the financial
| SECURITIESS AND DELIVERIES capitals of the world.
| DEALERS AND ADVISERS
| As the markets in financial services developed, rules were introduced and
| continually refined so that business could be conducted in an orderly and
| fair manner. Of course, rules are not a guarantee of successful
| investment. There is risk. World events, government policies, natural
|--IMRO disasters or just simply corporate decisions and company performance all
| FUND MANAGERS influence the way prices move. Nevertheless, professionals in the industry
| apply knowledge, experience and skill in order to make the best judgement
| for their clients 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 which heralded
|--PIA** a new system of financial services regulations.
| LIFE ASSURANCE AND UNIT
| TRUST SALESMEN, FINANCIAL With the primary aim of improving investor protection, the Financial
| INTERMEDIARIES/INDEPENDENT Services Xxx 0000 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.
*SFA WAS FORMED IN APRIL 1991 SIB devolved its powers so authorise and the task of day-to-day
FROM THE MERGER OF THE enforcement to specialist self-regulatory organisations (SROs), though it
SECURITIES ASSOCIATION AND retains the overall responsibility for ensuring that the regulatory system
THE ASSOCIATION OF FUTURES, is meeting its obligations.
BROKERS AND DEALERS
SROs must ensure that investment businesses and individuals that come
**PIA (PERSONAL INVESTMENT within their scope meet appropriate standards in order to be permitted to
AUTHORITY) WAS RECOGNIZED BY undertake business.
SIB IN JULY 1994 AND IS
TAKING OVER THE REGULATORY
FUNCTIONS OF LAUTRO AND
FMBRA AND 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 caused by members' insolvency, failure to meet
adequate standards of competence, or deliberate acts of deception.
... GOOD MARKET PRACTICE... Furthermore, 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
...ATTRACTIVE TO INTERNATIONAL driven to competing international markets.
BUSINESS
Member Firms
Firms regulated by SFA are involved in dealing or advising in securities
or derivatives. This encompasses shares, bonds, traded options, corporate
MEMBERS FIRMS ACTIVE ON: finance, financial futures and commodities futures on metals, oil,
cereals, coffee and others. Firms regulated by SFA are active on many UK
and overseas exchanges. Their earnings make a significant contribution to
-- LONDON STOCK EXCHANGE the British economy.
SFA has 1300 member firms. Many of them have a long and successful
-- LONDON INTERNATIONAL business pedigree; others are newer ventures created in response to demand
FINANCIAL FUTURES AND for new or specialised products and services. Most are located in London
OPTIONS EXCHANGE where the organised markets are, some are in other UK cities and towns
serving the needs of their regional client base.
The greater proportion are UK firms but significant numbers are
-- LONDON METAL EXCHANGE 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
-- INTERNATIONAL PETROLEUM advertisements. An updated list of members is published from time so time,
EXCHANGE and a claim to membership can always be verified by checking with SFA.
Whatever their activities or origin, all member firms endorse the
-- LONDON COMMODITIES principles of self regulation and through the payment of subscriptions
EXCHANGE 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
-- OPTIONS MARKET, LONDON 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
-- OVERSEAS EXCHANGES 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 information which demonstrates that they
are adequately funded, have viable business plans, that their management
AUTHORISATION OF FIRMS... 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 routine visits to firms to check on their
MONITORING TO CHECK compliance with the rules. In some cases the visits may be made without
COMPLIANCE WITH THE RULES 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 Investigation -- Where a more serious breach of rules is suspected either
NON-COMLIANCE IS SUSPECTED 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 a member has committed a
DISCIPLINE OF MEMBER FIRMS 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
INVESTORS CAN COMPLAIN TO SFA dispute between both parties Arbitration procedures are also available if
ABOUT ITS MEMBERS the firm's customer is not satisfied with the findings of 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
AN INDEPENDENT COMMISSIONER but to determine if they have been dealt with properly and fairly by the
CHECKS SFA'S COMPLAINTS Bureau. The Commissioner publishes an annual report on the work of the
PROCEDURES Bureau which is widely circulated.
Organisation
SFA has over two hundred full time staff reporting to the Chief Executive.
He is supported directly by an executive team, each member of which has
POLICY DETERMINED BY SENIOR senior management responsibility for a specific aspect of SFA's activity.
PRACTICIONERS AND INDEPENDENTS
SUPPORTED BY A PROFESSIOINAL Overseeing the work of the executive is the Chairman and Board of
EXECUTIVE AND STAFF 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, Public Relations
'CITY INSTITUTIONS,
PROFESSIONAL BODIES AND SFA's communication with the public, Parliament, `City' institutions,
THE PRESS 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
