EXHIBIT 10.07
FORM OF
CUSTOMER AGREEMENT
THIS CUSTOMER AGREEMENT (this "Agreement") made as of the ___
day of _____, 2002, by and among XXXXXX XXXXXXX CHARTER XXXXXXXX X.X. 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 of the Customer, or the
limited partners of the Customer ("Limited Partners"), or any of its or their
respective successors or assigns, for any act, omission, conduct, or activity
undertaken by or on behalf of the Customer pursuant to this Agreement which MSIL
determines, in good faith, to be in the best interest of the Customer, unless
such act, omission, conduct, or activity by MSIL or its affiliates constituted
misconduct or negligence. Without limiting the foregoing, MSIL shall have no
responsibility or liability to Customer hereunder (i) in connection with the
performance or non-performance by any Exchange, Clearing House or other third
party (including floor brokers not selected by MSIL) and/or Broker to MSIL of
its obligations in respect of any Contract or Transaction or other property of
Customer; (ii) as a result of any prediction, recommendation or advice made or
given by a representative of MSIL whether or not made or given at the request of
Customer; (iii) as a result of MSIL's reliance on any instructions, notices and
communications that it believes to be that of an individual authorized to act on
behalf of Customer; (iv) as a result of any delay in the performance or
non-performance of any of MSIL's obligations hereunder directly or indirectly
caused by the occurrence of any contingency beyond the control of MSIL
including, but not limited to, the unscheduled closure of an Exchange or
Clearing House or delays in the transmission of orders due to breakdowns or
failures of transmission or communication facilities, execution, and/or trading
facilities or other systems, it being understood that MSIL shall be excused from
performance of its obligations hereunder for such period of time as is
reasonably necessary after such occurrence to remedy the effects therefrom;
(v) as a result of any action taken by MSIL to comply with Market Requirements
or Applicable Law; or (vi) for any acts or omissions of those neither employed
nor supervised by MSIL (excluding floor brokers selected by MSIL). In no event
will MSIL be liable to Customer for consequential, incidental or special damages
hereunder.
(b) Indemnification by Customer. Customer shall indemnify, defend and
hold harmless MSIL and its affiliates from and against any loss, liability,
damage, cost or expense (including attorneys' and accountants' fees and expenses
incurred in the defense of any demands, claims or lawsuits) actually and
reasonably incurred arising from any act, omission, conduct, or activity
undertaken by MSIL on behalf of Customer, including, without limitation, any
demands, claims or lawsuits initiated by a Limited Partner (or assignee
thereof); provided that (i) MSIL has determined, in good faith, that the act,
omission, conduct, or activity giving rise to the claim for indemnification was
in the best interests of the Customer, and (ii) the act, omission, conduct or
activity that was the basis for such loss, liability, damage, cost or expense
was not the result of misconduct or negligence. Notwithstanding the foregoing,
no indemnification of MSIL or its affiliates by Customer shall be permitted for
any losses, liabilities or expenses arising from or out of any alleged violation
of federal or state securities laws unless (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular indemnitee, or (ii) such claims have been
dismissed with prejudice on the merits by a court of competent jurisdiction as
to the particular indemnitee, or (iii) a court of competent jurisdiction
approves a settlement of the claims against the particular indemnitee and finds
that indemnification of the settlement and related costs should be made,
provided, with regard to such court approval, the indemnitee must apprise the
court of the position of the SEC and the positions of the respective securities
administrators of Massachusetts, Missouri, Tennessee and/or those other states
and jurisdictions in which the plaintiffs claim that they were offered or sold
Units, with respect to indemnification for securities laws violations before
seeking court approval for indemnification. Furthermore, in any action or
proceeding brought by a Limited Partner in the right of Customer to which MSIL
or any affiliate thereof is a party defendant, any such person shall be
indemnified only to the extent and subject to the conditions specified in the
Delaware Revised Uniform Limited Partnership Act, as amended, and this Section
2. The Customer shall make advances to MSIL or its affiliates hereunder only if:
(i) the demand, claim lawsuit or legal action relates to the performance of
duties or services by such persons to Customer; (ii) such demand, claim lawsuit
or legal action is not initiated by a Limited Partner; and (iii) such advances
are repaid, with interest at the legal rate under Delaware law, if the person
receiving such advance is ultimately found not to be entitled to indemnification
hereunder.
(c) Indemnification by MSIL. MSIL shall indemnify, defend and hold
harmless Customer and its successors or assigns from and against any losses,
liabilities, damages, costs 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.
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(d) Limitation on Indemnities. The indemnities provided in this Section
2 by Customer to MSIL and its affiliates shall be inapplicable in the event of
any losses, liabilities, damages, costs or expenses arising out of, or based
upon, any material breach of any agreement of MSIL contained in this Agreement
to the extent caused by such event. Likewise, the indemnities provided in this
Section 2 by MSIL to Customer and its successors and assigns shall be
inapplicable in the event of any losses, liabilities, damages, costs or expenses
arising out of, or based upon, any material breach of any representation,
warranty or agreement of Customer contained in this Agreement to the extent
caused by such breach.
(e) Definition of "Affiliate." As used in this Section 2, the term
"affiliate" of MSIL shall mean: (i) any natural person, partnership,
corporation, association, or other legal entity directly or indirectly owning,
controlling, or holding with power to vote 10% or more of the outstanding voting
securities of MSIL; (ii) any partnership, corporation, association, or other
legal entity 10% or more of whose outstanding voting securities are directly or
indirectly owned, controlled, or held with power to vote by MSIL; (iii) any
natural person, partnership, corporation, association, or other legal entity
directly or indirectly controlling, controlled by, or under common control with,
MSIL; or (iv) any officer or director of MSIL. Notwithstanding the foregoing,
"affiliates" for purposes of this Section 2 shall include only those persons
acting on behalf of MSIL and performing services for Customer within the scope
of the authority of MSIL, as set forth in this Agreement.
3. MSIL Responsibilities. MSIL agrees to notify the applicable trading
advisor for the Customer immediately upon discovery of any error committed by
MSIL or any of its agents with respect to a trade for the Account which MSIL
believes was not executed or cleared in accordance with proper instructions
given by the Customer, its trading advisors or any other authorized agent of
Customer. Errors made by floor brokers appointed or selected by MSIL shall
constitute errors made by MSIL. However, MSIL shall not be responsible for
errors committed by the trading advisors.
MSIL agrees to report to Xxxxxx Xxxxxxx XX Inc. ("Xxxxxx Xxxxxxx XX")
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 Xxxxxx Xxxxxxx XX at each
month-end interest on Customer's funds in its possession as agreed between MSIL
and Xxxxxx Xxxxxxx XX 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
Xxxxxx Xxxxxxx XX pursuant to the Customer's Xxxxxx Xxxxxxx XX Customer
Agreement. Xxxxxx Xxxxxxx XX (and not the Customer) shall pay MSIL interest on
any debit balances in the Account at such rates as MSIL and Xxxxxx Xxxxxxx XX
shall agree from time to time.
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6. Recording. Each of MSIL, the Customer, and the Customer's agents
(including Xxxxxx Xxxxxxx XX), in their sole and absolute discretion, may
record, on tape or otherwise, any telephone conversation between or among MSIL,
the Customer or the Customer's agents with respect to the Account and
Transactions therein and each of MSIL and the Customer hereby agrees and
consents thereto.
7. Termination. This Agreement may be terminated at any time by any
party upon thirty (30) days' prior written notice to the other parties hereto.
In the event of such notice, Customer shall either close out open positions in
the Account or arrange for such open positions to be transferred to another
futures broker. Upon satisfaction by Customer of all of Customer's liabilities
to MSIL, MSIL shall transfer to another futures broker all Contracts, if any,
then held for the Account, and shall transfer to Customer or to another futures
broker, as Customer may instruct, all cash, securities and other property held
in the Account, whereupon this Agreement shall terminate. Notwithstanding the
foregoing, in the event MSIL is required by a regulatory authority to transfer
the Account to another futures broker or in the event that MSIL abandons the
futures brokerage business, then MSIL shall have the right to terminate this
Agreement by written notice effective the date contained therein, provided that
MSIL cooperates in the transfer of open positions to another futures broker and
that the termination of the Agreement is not made effective earlier than the
completion of the transfer.
8. Complete Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the matters referred to herein, and no other
agreement, verbal or otherwise, shall be binding as among the parties with
respect to such matters unless in writing and signed by the party against whom
enforcement is sought.
9. Assignment. This Agreement may not be assigned by any party without
the express written consent of the other parties.
10. Amendment. This Agreement may not be amended except by the written
consent of the parties and provided such amendment is consistent with Customer's
Limited Partnership Agreement.
11. Notices. All notices required or desired to be delivered under this
Agreement shall be sent to the following addresses:
if to the Partnership:
XXXXXX XXXXXXX CHARTER XXXXXXXX X.X.
c/o Demeter Management Corporation
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
if to MSIL:
as set forth in the Non-Private Customer Agreement.
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12. Survival. The provisions of this Agreement shall survive the
termination of this Agreement with respect to any matter arising while this
Agreement was in effect.
13. Headings. Headings of Sections herein are for the convenience of
the parties only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed for and on behalf
of the undersigned as of the day and year first above written.
XXXXXX XXXXXXX CHARTER
XXXXXX X.X.
By: _______________________________________
Demeter Management Corporation
General Partner
By: _______________________________________
Xxxxxx X. Xxxxxx
President
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
By: _______________________________________
Name:
Title:
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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) 1
Chapter I Introduction 1
II Terms Applicable to Dealings 4
III Margin 6
IV Material Interests 10
V Powers and Exclusions of Liability 11
VI Authorisation 14
VII General 15
PART Two MASTER NETTING AGREEMENT 19
PART Three SCHEDULES 28
PART Four CUSTOMER SIGNATURE PAGES 34
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 I - 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
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(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;
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"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.
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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, 29-31 and
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
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(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,
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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.
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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.
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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;
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(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.
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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
Page 10
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.
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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.
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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.
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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.
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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.
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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.
Page 16
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.
Page 17
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: _____________________________________
Name: X X Xxxxxxxxx
Title: Company Secretary
Page 18
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.
Page 19
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
Page 20
(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.
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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 with out 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.
Page 22
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 of 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;
Page 23
"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.
Page 24
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
Page 25
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
us), 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.
Page 26
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:_________________________________________
Name: X X Xxxxxxxxx
Title: Company Secretary
Page 27
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
Page 28
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.
Page 29
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.
Page 30
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.
Page 31
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.
Page 32
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.
Page 33
PART FOUR
CUSTOMER SIGNATURE PAGES
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: ____________________ ____________________
Signed: ____________________ ____________________
Name(s): ____________________ ____________________
[Print]
Authorised Signatory(ies)
for and on behalf of _____________________________
[Print Name of Client (Non-Private Customer)]
All notices or other documents pursuant to this booklet shall be served at the
following address:
Address:
For the attention of:
Telex and Answerback:
Fax:
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:
Page 34
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:
Page 35
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).
Page 36
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
Page 37
XXXXXX XXXXXXX & CO.
INTERNATIONAL LIMITED
CUSTOMER DOCUMENTS
Exchange-Traded Derivatives Only
Additional Documents for U.S. Customers
OCTOBER 1995
XXXXXX XXXXXXX & CO.
INTERNATIONAL LIMITED
Exchange-Traded Derivatives Only
ADDITIONAL DOCUMENTS FOR U.S. CUSTOMERS
The documents in this booklet supplement for U.S. customers our standard
customer document booklet for dealing in financial and commodity futures and
options. The standard booklet contains our terms and conditions of dealing and
risk warnings required by regulatory authorities in the United Kingdom.
The Commodity Futures Trading Commission (CFTC) has granted Xxxxxx Xxxxxxx & Co.
International Limited an exemption from registering as a Futures Commission
Merchant (FCM) and from certain requirements of its rules in respect of trading
foreign (i.e. non-U.S.) futures and options with customers resident in the
United States. This booklet is issued to satisfy certain conditions of that
exemption and other CFTC requirements relating to the offer or sale of foreign
futures and options in the U.S. It modifies our standard terms in certain
respects and contains additional disclosures relating to options generally and
to non-U.S. futures and options in particular.
This disclosure document meets the risk disclosure requirements in the
jurisdictions identified below ONLY for those instruments which are specified.
United States: commodity futures, options on commodity futures and
options on commodities subject to the Commodity Exchange Act.
United Kingdom: futures, options on futures, options on commodities
and options on equities traded by members of the United
Kingdom Securities and Futures Authority pursuant to the
Financial Services Xxx, 0000.
Ireland: financial futures and options and options on financial futures
traded by members of futures exchanges on exchanges whose
rules have been approved by the Central Bank of Ireland under
Chapter VIII of the Central Bank Act, 1989.
Finally, the booklet contains a form of consent whereby you would agree that, in
the event of a dispute, you would exhaust certain mediation or conciliation
procedures made available by our principal UK regulator (the Securities and
Futures Authority ("SFA")) prior to starting NFA or SFA arbitration proceedings.
As required, we enclose details of these mediation/conciliation procedures and
SFA arbitration proceedings.
CONTENTS
Page
Risk Disclosure Statement for Futures and Options
- please read and sign acknowledgement 4
Form of Consent
- please read, insert customer name in first paragraph and sign 7
Enclosures: the Securities and Futures Authority publications
i) An outline of the SFA
ii) Complaints Bureau of the SFA
- for information only.
RISK DISCLOSURE STATEMENT FOR FUTURES AND OPTIONS
This brief statement does not disclose all of the risks and other significant
aspects of trading in futures and options. In light of the risks, you should
undertake such transactions only if you understand the nature of the contracts
(and contractual relationships) into which you are entering and the extent of
your exposure to risk. Trading in futures and options is not suitable for many
members of the public. You should carefully consider whether trading is
appropriate for you in light of your experience, objectives, financial resources
and other relevant circumstances.
Futures
I. 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.
II. 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
III. 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.
- 4 -
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
IV. 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.
V. 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.
- 5 -
VI. 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.
VII. 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.
VIII. 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.
IX. 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.
X. 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.
XI. 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.
- 6 -
XII. 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): .................................................
Name(s): .................................................
Title(s): .................................................
Authorised Signatory(ies) for and on behalf of:
....................................................
Name of Customer (please print)
Date: ........................................
- 7 -
FORM OF CONSENT
In the event that a dispute arises between you, [______________]., (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): .................................................
Name(s): .................................................
Title(s): .................................................
Authorised Signatory(ies) for and on behalf of:
....................................................
Name of Customer (please print)
Date: ........................................
- 8 -
'A service for investors'
THE COMPLAINTS BUREAU OF SFA
THE SECURITIES AND FUTURES AUTHORITIY
- 9 -
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.
- 10 -
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.
- 11 -
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.
- 12 -
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.
- 13 -
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.
- 14 -
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
- 15 -
'Putting the investor first!'
AN OUTLINE OF THE SFA
THE SECURITIES AND FUTURES AUTHORITY
- 16 -
PARLIAMENT
|
TREASURY
|
Securities and
Investments Board (SIBB
|
|
SFA*
Securities and derivatives
dealers and advisers
|
|
IMRO
Fund managers
|
|
PIA**
Life assurance and unit trust
salesmen, financial
intermediaries/independent
financial advisers
|
|
*SFA was formed in April 1991 from
the merger of The Securities
Association and the Association
of Futures, Brokers and Dealers
**PIA (Personal Investment Authority)
was recognised by SIB in July 1994
and is taking over the regulatory
functions of LAUTRO and FIMBRA who
will be de-recognised in 1995.
Introduction
The Securities and Futures Authority (SFA) is responsible for
regulating firms involved in the securities and futures sectors of the
financial services industry. Its aim is to promote and maintain high
standards of integrity and fair dealing in the carrying on of
investment business, thereby providing effective protection for the
investor.
The purpose of this leaflet is to outline SFA's role and briefly to
describe what it does and how it does it. Those who are not familiar
with UK financial services regulation will find this a useful
introduction to SFA. But before we take a closer look at SFA, it might
be helpful to put it into a broader industry perspective.
The history of the UK's financial services industry is well documented.
Banking, insurance, shares trading and futures dealing have developed
into highly organised services and markets to make London one of the
financial capitals of the world.
As the markets in financial services developed, rules were introduced
and 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 disasters or just simply corporate decisions and
company performance all influence the way prices move. Nevertheless,
professionals in the industry apply knowledge, experience and skill in
order 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 a new system of financial
services regulations.
With the primary aim of improving investor protection, the Financial
Services Xxx 0000 brought about a major restructuring in the way
investment services are regulated. Is became a criminal offence to
carry on investment business if not authorised to do so. A new
organisation, the Securities and Investments Board (SIB) was
established to oversee the implementation of the Act.
SIB devolved its powers so authorise and the task of day-to-day
enforcement to specialist self-regulatory organisations (SROs), though
it retains the overall responsibility for ensuring that the regulatory
system is meeting its obligations.
SROs must ensure that investment businesses and individuals that come
within their scope meet appropriate standards in order to be permitted
to undertake business.
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Investor protection...
....good market practice...
....attractive to international business
SFA's Role
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.
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 driven to competing international markets.
Members firms active on:
-- London Stock Exchange
-- London International Financial
Futures and Options Exchange
-- London Metal Exchange
-- International Petroleum
Exchange
-- London Commodities Exchange
-- Options Market, London
-- Overseas Exchanges
Member Firms
Firms regulated by SFA are involved in dealing or advising in
securities or derivatives. This encompasses shares, bonds, traded
options, corporate 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 the British economy.
SFA has 1300 member firms. Many of them have a long and successful
business pedigree; others are newer ventures created in response to
demand for new or specialised products and services. Most are located
in London 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
incorporated overseas, notably in North America, Japan and Western
Europe, with branches in the UK.
Member firms will state their membership of SFA on their stationery or
advertisements. An updated list of members is published from time so
time, and a claim to membership can always be verified by checking with
SFA.
Whatever their activities or origin, all member firms endorse the
principles of self regulation and through the payment of subscriptions
cover the cost of its administration. The taxpayer does not pay for
investor protection.
Through representation on the Board and in committees, members help to
develop and refine the rules by bringing to bear their practical
knowledge and experience. Furthermore, there is a senior person in each
firm directly responsible for ensuring that this is in compliance with
the rules.
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Authorisation of firms...
....and key individuals
Monitoring to check compliance
with the rules
Detailed investigation when non-
compliance is suspected
Prosecution can result in
discipline of member firms
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 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.
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 compliance with the rules. In some cases the visits may
be made without warning.
If the monitoring process uncovers non-compliance with rules, steps are
quickly taken by SFA to ensure that the investors' interests are
protected. In most instances the "infringement" is only of a minor
administrative nature offering no immediate danger to the investor.
Firms usually put things right as soon as it is brought to their
attention.
Investigation -- Where a more serious breach of rules is suspected
either as a result of routine monitoring, or from reports received from
other sources, a more focussed investigation is undertaken to gather
the relevant facts. Monitoring and investigation may sometimes involve
liaison with other UK and overseas regulatory authorities.
Prosecution -- If the investigators feel that a member has committed a
serious breach of the rules, or if other good reason exists, the case
is considered at a more formal level. If the judgement is against the
firm the nature of the breach will determine the penalty. It could be a
warning, a direction, a fine, a temporary order to stop trading or
expulsion from membership i.e. de-authorisation. SFA cannot undertake
criminal prosecution through the courts. Should such a prosecution be
necessary the results of SFA's investigations are passed to a relevant
body e.g. the Department of Trade and Industry or the Police.
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Investors can complain to SFA
about its members
An independent Commissioner
checks SFA's complaints
procedures
Complaints and Arbitration
Member firms are expected to service their customers' needs with skill
and consideration. Occasionally things go wrong and a customer may have
a complaint. Where the firm and its customer are unable to reach
agreement between themselves the customer can refer the matter to SFA's
Complaints Bureau. The Bureau will consider the complaint and attempt
to resolve the dispute between both parties Arbitration procedures are
also available if the firm's 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 but to determine if they have been dealt with properly
and fairly by the Bureau. The Commissioner publishes an annual report
on the work of the Bureau which is widely circulated.
Policy determined by senior
practitioners and independents
supported by a professional
executive and staff
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 senior management responsibility for a specific aspect of
SFA's activity.
Overseeing the work of the executive is the Chairman and Board of
Directors. These are not employees of SFA but are either senior
practitioners from member firms or persons independent of SFA and its
firms who represent the interests of the investor. The Board delegates
responsibility for the detail of policy, rulemaking and disciplinary
procedures to specialist committees which are also composed of
practitioners and independents. Supported by a professional staff, this
combination provides for effective and flexible self-regulation.
Regular contact with government
bodies, 'City' institutions,
professional bodies and the press
Public Relations
SFA's communication with the public, Parliament, `City' institutions,
professional bodies and other regulators, at home and abroad, plays an
important part in the process of developing confidence in SFA members'
businesses and in furthering the success of the regulatory system as a
whole. Accordingly SFA maintains regular contact with the press and
other media. Press coverage of disciplinary action taken by SFA acts as
a reassurance to the public and to the financial community that SFA is
actively seeking to help promote good practice in London's markets.
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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
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